<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

                                   (Mark one)

       [X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2001

     [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                         Commission file number: 1-10938

                                SEMX CORPORATION
                                ----------------
                    (Name of Business Issuer in Its Charter)

         Delaware                                               13-3584740
(State or other jurisdiction of                               (IRS Employer
incorporation or organization)                            Identification Number)

         1 Labriola Court
         Armonk, New York                                         10504
(Address of principal executive offices)                        (Zip Code)


Issuer's telephone number, including area code: (914) 273-5500

Securities registered pursuant to Section 12(b) of the Exchange Act:

                                                   Name of Each Exchange
     Title of Each Class                             on Which Registered
     -------------------                             -------------------
     Common Stock, $.10 par value                 NASDAQ National Market

Securities registered pursuant to Section 12(g) of the Exchange Act:  None.

Check whether the Registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. YES [X] NO [ ]

Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
is not contained herein, and will not be contained, to the best of Registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

                     The Exhibit Index is located on page 21

<PAGE>

At March 22 2002 the aggregate market value of the voting stock of the
Registrant held by non-affiliates was approximately $12,636,806.

At March 22, 2002 the Registrant had 6,330,703 shares of Common Stock
outstanding, $.10 par value ("Common Stock"). In addition, at such date, the
Registrant held 337,800 shares of Common Stock in treasury.

                      DOCUMENTS INCORPORATED BY REFERENCE:

DOCUMENT                                  Parts Into Which Incorporated
--------                                  -----------------------------
An Amendment to this 10-K containing      Part III, Directors and Executive
proxy information will be filed within    Officers of the Registrant, Executive
the allowed 120 day period following      Compensation, Security Ownership of
December 31, 2001.                        Certain Beneficial Owners and
                                          Management, and Certain Relationships
                                          and Related Transactions.



                                      -ii-
<PAGE>

                                     PART I

ITEM 1: BUSINESS
----------------

General. SEMX Corporation consists of a Delaware corporation and its wholly
owned and majority owned subsidiaries (collectively the "Company"). The Company
principally manufactures proprietary thermal management materials,
microelectronic ceramic products and packages and interconnect products and
materials for critical components and other specialized microelectronic devices
through its Microelectronic Packaging and Materials Group. In conjunction with a
strategy to focus on its core business in the fourth quarter of 2001, the
Company's Board of Directors made a decision to discontinue the operations of
its Wafer Reclaim Services Group. The Company's Wafer Reclaim Services Group
reclaims silicon test wafers for the semiconductor industry through facilities
located in North America, Europe and Asia. The Company completed the sale of the
assets and selected liabilities of its North American operations on February 28,
2002. Accordingly, most of the discussion herein will focus on the Company's
continuing Microelectronic Packaging and Materials Group as its core remaining
business. The discontinued Wafer Reclaim Services operations are segregated from
the continuing operations in both the narrative and financial portions of this
filing.

CONTINUING OPERATIONS:

At December 31, 2001, the Company's Microelectronic Packaging and Materials
Group consisted mainly of the operating division of the parent company
Semiconductor Packaging Materials Company ("SPM") and its subsidiaries, Polese
Company, Inc. ("Polese"), Semiconductor Materials S.A.R.L. ("S.A.R.L.") and
SPM(M) SDN.BHD ("MSDN.BHD"). The Microelectronic Packaging and Materials Group
primarily (1) designs, develops, manufactures and markets metal matrix and other
heat dissipation products, (2) assembles and produces components, which include
a high proportion of proprietary ceramic materials that utilize heat dissipation
products, and (3) interconnect and miscellaneous products, which include bonding
wire, precision metal stampings, seal frames, tape on reel packaged products and
other specialty products and materials. The Company's products are incorporated
into all types of electronic components. The Company also serves selected
markets outside of the electronics industry. The Company's products are sold
through internal sales personnel and a network of independent sales
representatives, principally to designers, manufacturers and assemblers of
electronic devices.

HISTORY - The registrant, SEMX Corporation, is a Delaware corporation
incorporated in 1988 as a successor to a company started in 1981. In December
1991, the Company had an initial public offering of its securities and listed on
the American Stock Exchange. In April 1998, the stockholders of the Company
approved an amendment to the Company's Certificate of Incorporation to change
the name of the Company to SEMX Corporation when it moved to the NASDAQ National
Market.

The Company has historically attained significant revenue growth beginning from
a sales level of approximately six million dollars in 1991 when it went public.
A substantial portion of that growth has been realized through the acquisition
of businesses and by applying financial and management resources to further the
growth of the companies.

Financial Information about Industry Segments - Following the sales of its RF
connector operation in February 1999, the Company has operated in two industry
segments: Microelectronic Packaging and Materials and the discontinued Wafer
Reclaim Services operations, during each of its last three years.

Description of the Business - The business is described above. To accomplish its
growth, the Company has built strong core competencies in engineering,
manufacturing and specialized niche areas of material science.

PRIMARY PRODUCTS:

Thermal Management - The Company's thermal management products are used to
primarily conduct heat away from critical areas of electronic components. Polese
utilizes both patented and proprietary methods to manufacture metal matrix
composite and other types of heat dissipation products. The Company has
developed or acquired a family of thermal management materials to become a full
service provider of thermal management solutions.

<PAGE>

Ceramic Products and Packages - Multi-layer ceramic technology is used for
packaging and housing of microelectronic devices such as chips. Polese has
concentrated primarily on ceramic applications, which also have thermal
management issues. Custom and standard designs provide mechanical protection,
manage heat and enable electrical interconnection.

Wire, Stampings and Tape on Reel Products - The Company manufactures bonding
wire that is used to conduct electrical signals between two points of a circuit
and produces precision metal stampings out of various metals for interconnect or
heat dissipation purposes. Tape on reel packaging services are used to deliver
the Company's stampings as well as third party products to reduce labor
intensive activities of many surface mount assembly operations.

Other Products - The Company also manufactures other products which include
assembled products and specialized metallic products.

RAW MATERIALS AND PRINCIPAL SUPPLIERS:

The Company, in most cases, utilizes two or more alternative sources of supply
for each of its raw materials. In certain instances, however, the Company will
use a single source of supply when directed by a customer or by need. In order
to ensure the quality of the Company's products, the Company follows strict
supplier evaluation and qualification procedures.

The SPM operating unit makes extensive use of precious metals, including gold,
as raw materials in the manufacture of certain products. Substantially all of
SPM's gold requirements are currently purchased from Fleet Precious Metals
("Fleet") pursuant to a consignment agreement. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations".

PRODUCTION PROCESS:

Products manufactured to customer specifications account for almost all of the
Company's total revenues.

The manufacturing process for powdered metal matrix composite thermal management
products consists of manufacturing a tool and die for the specific part,
pressing the powdered materials in a powdered metal press, sintering the parts
in a furnace, and machining them to the customer's specifications, when
required. The parts are cleaned, plated, when required, tested and packaged for
shipment. Other thermal management products are produced through various
production processes.

Most ceramic products transfer customer specified activity using metallic ink
paste on alumina tape to create arrays of circuits. These tapes are laminated
and fired at high temperature.

Wire and metal ribbon are manufactured by casting pure metals with selected
additives into cylindrical shapes which are then drawn through a series of
diamond dies to progressively reduce the metal to a finished size. Wire is then
either annealed in batches or strands and spooled to customer's specifications.
Metal ribbon is made by rolling wire into a flat shape or by slitting strip into
narrow widths and then spooling to customer's specifications.

The manufacturing process for stamping consists of buying standard materials or
casting specific metals or alloy combinations into ingots which are passed
through a series of rolling mills to meet specified thickness requirements, and
then slit to specified widths. The material is stamped in a press that contains
the die for the customer's part and packaged as required by the customer.

CAPACITY:

Management believes that the Company possesses sufficient capacity to
significantly expand production of its existing products.

QUALITY CONTROL:

The Company utilizes extensive in-house statistical process quality control
procedures ("SPC"), selected manufacturing personnel and a staff of full-time
quality control personnel to perform inspection, measurement, documentation and
other functions in its continuing operations.

                                      -2-
<PAGE>

The Company is certified ISO 9000 (an international quality standard for the
European community) at all of its operations, and holds various quality awards
throughout the industries it serves. The Company believes that its ISO 9000
certifications are important in establishing the Company as a world class
supplier to the electronics industry and greatly aids the Company in penetrating
markets for the Company's products throughout the world. The Company is also
designated as a "Q-1" supplier by The Ford Motor Company. SPM, S.A.R.L. and
MSDN.BHD are QS 9000 Quality certified. The Company believes that QS 9000
certification is important to the Company's status as a world class supplier,
especially within the automotive industry.

MARKETING AND SALES:

The Company engages independent sales representatives in various regions
throughout the United States, Europe, Asia, the Far East and South America.
Pursuant to agreements with these representatives, such representatives are
prohibited from carrying a line of products that compete with the Company's
products. The Company believes that additional sales representatives are
available, if required.

The Company also employs sales and marketing personnel who are responsible for
direct sales to the Company's customers. The Company's sales and engineering
personnel also work closely with customers to solicit future orders and to
render technical assistance and advice. Other marketing efforts include
generation and distribution of the Company's product catalogs and brochures and
attendance at trade shows. The Company also advertises in trade publications.

PRODUCT AND PROCESS DEVELOPMENT:

The Company does product and process development work in anticipation of
expected market requirements, but many of these activities are customer directed
and related. These services are expensed in the period incurred and factored
into the price that is charged to the customer. In recent years, these efforts
have led to the development of various new proprietary products and processes.

CUSTOMERS:

Currently, the Company's products are sold principally to customers servicing
the Internet server and router, wireless communications, automotive, aerospace,
military, medical, semiconductor and other primarily electronic industries. The
Company's main customers in 2001 included Agilent, Analog Devices, Chows
Electronics, Cirent Technologies, Cisco Systems, Delphi Automotive Systems,
Egide, Harris, Hewlett-Packard, IBM, Interpoint, JDS Uniphase, Kyocera America,
LM Ericsson, Lockheed, Lucent Technologies, Medtronic, Motorola, Northern
Telecom, Olin Aegis, ST Microelectronics, Sun Microsystems, Teledyne
Technologies, Texas Instruments and Visteon Automotive Systems.

For the years ended December 31, 2001 and 2000, sales of the Company's products
to the Company's five largest customers accounted for approximately 51% and 50%,
respectively, of the Company's revenues from its continuing operations. For the
years ended December 31, 2001 and 2000, one customer accounted for approximately
25% and 22%, respectively of the Company's revenues from its continuing
operations, although some of the revenues to that one customer were dependent on
several penultimate customers.

The Company does not maintain contracts with many of its customers and generally
sells its products pursuant to customer purchase orders. Certain of the
customers purchase orders provide for annual requirements of a particular
product with production quantity releases varying as demand fluctuates. A
substantial portion of the Company's orders for products, which include precious
metals, provide that the initial price quotation is adjusted to reflect changes
in the price of precious metals at the time of shipment.

For the years ended December 31, 2001 and 2000, direct sales of the Company's
products into foreign markets (unaffiliated customers) accounted for
approximately 17% and 20%, respectively, of the Company's consolidated revenues
from its continuing operations. The Company believes that a portion of its
revenues will continue to be derived from the sale of its products in foreign
markets. These revenues may be subject to risks associated with foreign sales,
including economic or political instability, shipping delays, fluctuations in
foreign currency exchange rates, custom duties and export quotas and other trade
restrictions. The Company is not aware of any

                                      -3-
<PAGE>

foreign tariffs with respect to products marketed by the Company. Although
export sales are subject to certain governmental restrictions, the Company has
not experienced any difficulties with foreign or domestic trade restrictions.

BACKLOG:

At December 31, 2001 and 2000, the Company's backlog of orders for its
continuing operations was approximately $12,980,000 and $29,289,000,
respectively. Since many orders in the backlog may be canceled under certain
conditions without significant penalty to the customer or to accommodate
customer requests, the decline during 2001 developed as many of the Company's
customers experienced downturns in their businesses. The Company believes that
the majority of the Company's backlog of orders existing as of December 31, 2001
will be shipped over the next twelve months. The Company has experienced a
significant increase in its orders since December 15, 2001.

COMPETITION:

The market for the Company's products is highly competitive. The Company
competes with several well-established foreign and domestic companies, many of
which possess substantially greater financial, marketing, personnel and other
resources than the Company.

The Company believes it maintains competitive advantages in selected patented or
proprietary materials, customer development projects, customer service, response
time, pricing and quality. The Company also believes that it is one of a limited
number of manufacturers that produces the majority of its primary products and
services and that this capability creates an advantage in the marketing of
products to customers that seek to limit the total number of their suppliers.
Further, it is one of the few companies in the world that combines both thermal
management materials and ceramics manufacturing capabilities.

PATENTS AND PROPRIETARY INFORMATION:

The Company's ability to compete effectively may be materially dependent upon
the proprietary nature of its technologies. The Company has numerous patents and
additional patents pending, which protect various Company products and/or
processes.

The Company relies on proprietary know-how and employs various methods to
protect its processes, concepts, ideas and documentation associated with its
proprietary products. However, such methods may not afford complete protection
and there can be no assurance that other companies will not independently
develop such processes, concepts, ideas and documentation. Although the Company
has, and expects to enforce, confidentiality agreements with its employees,
there can be no assurance that such agreements adequately protect the Company's
trade secrets.

GOVERNMENT REGULATION:

The Company is subject to regulations administered by the United States
Environmental Protection Agency, the Occupational Safety and Health
Administration, various state governmental agencies and county and local
governmental authorities. Among other things, these regulatory bodies impose
restrictions to control air, soil and water pollution and dictate safety in the
workplace. The extensive regulatory framework imposes significant compliance
burdens and risks on the Company. Governmental authorities have the power to
enforce compliance with these regulations and to obtain injunctions and/or
impose civil and criminal fines or sanctions in the case of violations.

The Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), imposes strict, joint and several liability on the
present and former owners and operators of facilities which release hazardous
substances into the environment. The Resource Conservation and Recovery Act of
1976, as amended ("RCRA"), regulates the generation, transportation, treatment,
storage and disposal of hazardous waste. The Company is also subject to various
state and local laws, which are the counterparts of CERCLA and/or RCRA in the
jurisdictions where the Company maintains facilities (New York and California).
The management of the Company believes that the Company is in substantial
compliance with all material federal and state

                                      -4-
<PAGE>

laws and regulations governing its operations. The Company continually evaluates
its environmental and safety practices with respect to such requirements and
maintains all required licenses or permits.

Various laws and regulations that relate to safe working conditions are
applicable to the Company, including the Occupational Safety and Health Act. The
Company believes it is currently in substantial compliance with all material
federal, state and local laws and regulations regarding safe working conditions.
The Company believes that the cost of compliance with such government and
environmental regulations is a normal cost of its operation and included as an
expense in the period in which it is incurred.

EMPLOYEES:

As of December 31, 2001, the Company's continuing operations employed
approximately 288 persons compared to 601 at the beginning of the year. All
manufacturing personnel are paid on an hourly basis. The majority of employees
are employed full-time. None of the Company's employees are covered by a
collective bargaining agreement. The Company considers its relationship with its
employees to be good.

DISCONTINUED OPERATIONS:

Although the Company's Wafer Reclaim Services Group earned sizable returns in
this business in 1994-1997 as a result of the sizable investment which the
Company made during that period, it experienced significant operating losses as
a result of high depreciation and amortization. Accordingly, when the
semiconductor business turned down, as selected competitors reduced their prices
significantly over the last few years and as Japanese based companies realized
currency advantages against non Japanese based companies in the past year, this
Group's performance deteriorated.

As at December 31, 2001, the Company's Wafer Reclaim Services Group, which is
classified as a Discontinued Operation, consisted of its American Silicon
Products, Inc. ("ASP") and American Silicon Products B.V. ("ASP B.V.")
subsidiaries and a majority owned Singapore corporation, International
Semiconductor Products Pte Ltd. ("ISP"). Each of these companies primarily
provide silicon wafer polishing and reclaiming services to the semiconductor
industry. Reclaimed wafers are used in the evaluation and testing of equipment
and processes in semiconductor fabrication. ISP is 50.1% owned by the Company.

Silicon wafer polishing and reclaiming services begin with incoming inspection
of customer wafers. The wafers are sorted for reclaim suitability and
conformance to customer specifications. The wafers are then processed to remove
all diffusions and deposited layers, polished and cleaned. Portions of the
process depend upon sensitive processes, Class 1 certified clean rooms, state of
the art deionized water systems and highly specialized mechanical and electronic
equipment.

In 2001, the Wafer Reclaim Services Group's main customers were companies in the
semiconductor industries among which included Alcatel, Chartered Semiconductor,
National Semiconductor Corporation, Philips Electronics, SONY, WaferNet and
Winbond.

In February 2002, the Company completed the sale of most of the assets and
selected liabilities of ASP US. The Company expects that it will dispose of the
remaining two companies. The results of these operations are segregated on the
accompanying financial statements as income or loss from Discontinued operations
and are also referenced in Note 3.

This Wafer Reclaim Services Group recorded a net loss of $2,015,000 for fiscal
year 2001, income of $274,000 for 2000, and a loss of $224,000 in 1999 before
write-off of discontinued operations.

ITEM 2: PROPERTIES:
-------------------

The Company's executive offices and SPM's manufacturing facility are located in
a Company-owned 43,700 square foot building in Armonk, New York. SPM leases a
3,000 square foot facility in Casablanca, Morocco to supply various products to
North Africa and Europe and leases a 31,000 square foot facility in Penang,
Malaysia to supply the Asian markets. All of SPM's facilities are suitable for
the Company's current and anticipated needs and are well maintained and in good
condition.

                                      -5-
<PAGE>

In San Diego, California, Polese leases approximately 24,211 square feet of
industrial space at 10103 Carroll Canyon Road, 34,615 square feet at 10111
Carroll Canyon Road and 22,976 square feet at 10121 Carroll Canyon Road. In
December 2000, Polese purchased the Miralani Business Park building located on
3.3 acres at 8680 Miralani Drive, San Diego, California where the Company houses
its plating operation. The building is approximately 34,240 square feet and
Polese currently utilizes approximately 60% of the building's capacity. The
remaining 40% of the building is leased out on a month-to-month basis and is
available for future expansion. The facilities are suitable for the Company's
current and anticipated needs. The properties are well maintained and are in
good condition.

This listing excludes the property of the Company's Discontinued Operations.

ITEM 3: LEGAL PROCEEDINGS:
--------------------------

The Company is subject to claims and suits in the ordinary course of business.
As at December 31, 2001, management believes that the ultimate resolution of
such proceedings will not have a material adverse effect on the Company.

ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS:
------------------------------------------------------------

No matter was submitted to a vote of security holders during the quarter ended
December 31, 2001.


                                      -6-
<PAGE>

                                     PART II

ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS:

The Company's Common Stock trades on the NASDAQ National Market (Ticker Symbol:
SEMX). The high and low prices of the Company's Common Stock for each quarter
during 2001 and 2000 were as follows:

<TABLE>
<CAPTION>
                                                     2001                               2000
                                                     ----                               ----
                                            High              Low              High              Low
                                        -------------     -------------    -------------     -------------
<S>                                       <C>               <C>             <C>                <C>
1st Quarter.........................      $ 6.375           $ 3.750         $ 14.250           $ 6.750
2nd Quarter.........................        5.250             3.500           12.375             6.750
3rd Quarter.........................        4.040             1.360            8.625             5.000
4th Quarter.........................        2.800             1.460            7.625             3.500
</TABLE>


On April 9, 2001, the NASDAQ successfully completed the process of converting
its quotation, trading and trade reporting systems from fractions to decimals
and the above information is presented accordingly.

As of March 22, 2002, there were approximately 95 holders of record of the
Company's Common Stock. On March 21, 2002, the high and low bid price of the
Common stock was $2.43 and $2.42 per share, respectively. The Company paid no
dividends on its Common Stock in 2001 or 2000.

On March 26, 1999, the Company's Board of Directors unanimously adopted a
shareholders rights plan (the "Rights Plan"), commonly referred to as a poison
pill. Under the Rights Plan, as amended in June, 2000, shareholders of record on
June 15, 1999 (unless excepted under the terms of the Rights Plan), until the
distribution date, will receive rights to purchase a unit consisting of one
one-thousandth of a Series of Preferred Shares of the Company at $50 per unit.

The Rights Plan provides that the Board of Directors may declare a distribution
date within ten (10) business days following (i) the acquisition of or right to
acquire, by a person or group, fifteen (15) percent or more of the outstanding
shares of the Company or (ii) the commencement of a tender offer or exchange
offer that would, if consummated, result in a person or group owning fifteen
(15) percent or more outstanding shares of the Company. Upon the declaration of
a distribution date, each holder of the right will have the right to receive,
upon exercise, common shares having a value equal to two times the exercise
price of the right. In the alternative, the Board of Directors, at its option,
may exchange all outstanding and exercisable rights for common shares at an
exchange ratio of one common share per each right. The Board may redeem the
rights prior to an event triggering a distribution date at $.001 per right.

On June 1, 2000, the Company raised $10,000,000 in gross proceeds from the sale
of Series B Redeemable Preferred Stock to a group led by ACI Capital Company
("ACI"). Attached to the instrument were warrants to purchase 1 million shares
of SEMX Common Stock with an exercise price initially valued at $10.00 per
share, subsequently reset to $7.00 per share. The Series B Preferred Stock is
subject to mandatory redemption in five years for $10,000,000 and cash dividends
are payable semiannually at a rate of 6%, in preference to any dividends on the
Company's Common Stock, and are subject to successive rate increases in the
event of uncured late dividend payments or other events of default. The
Liquidation Preference of the Series B Preferred Stock is equal to the stated
value plus accrued and unpaid dividends to the date of liquidation. The Series B
Preferred Stock granted ACI the right to add two directors to the SEMX Board of
Directors.

                                      -7-


<PAGE>



ITEM 6: SELECTED FINANCIAL DATA:
-------------------------------

The following data incorporates a variety of acquisition and divestment
transactions as well as the classification of the Wafer Reclaim Services Group
as a Discontinued Operation in late 2001. Please note the footnote disclosures
and Item 1-Business.

<TABLE>
<CAPTION>
                                                                        YEAR ENDED DECEMBER 31,
 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)             1997         1998         1999          2000         2001
                                                 ------------------------------------------------------------------
<S>                                               <C>          <C>          <C>            <C>         <C>
Operating Data:
   Net Sales                                       $  31,584    $  47,524    $  46,666     $  53,632    $  39,355
-------------------------------------------------------------------------------------------------------------------
Income (Loss) From:
   Continuing Operations                               2,066       (3,907)       7,607         2,340       (4,866)
   Discontinued Operations                             1,727       (8,051)        (224)          274      (13,549)
-------------------------------------------------------------------------------------------------------------------
   Net income (loss)                               $   3,793    $ (11,958)   $   7,383     $   2,614    $ (18,415)
-------------------------------------------------------------------------------------------------------------------

Earnings (loss) Per Common Share - Basic:
Earnings (loss) from continuing operations         $     .34    $    (.65)   $    1.26     $     .30    $    (.90)
Earnings (loss) from discontinued operations       $     .28    $   (1.33)   $    (.04)    $     .04    $   (2.14)
-------------------------------------------------------------------------------------------------------------------
Earnings (loss) Per Common Share - Basic           $     .62    $   (1.98)   $    1.22     $     .34    $   (3.04)
-------------------------------------------------------------------------------------------------------------------
Earnings (loss) Per Common Share - Diluted:
  Earnings (loss) from continuing operations       $     .33    $    (.65)   $    1.22     $     .28    $    (.90)
  Earnings (loss) from discontinued operations     $     .28    $   (1.33)   $    (.03)    $     .04    $   (2.14)
-------------------------------------------------------------------------------------------------------------------
Earnings (loss) Per Common Share - Diluted         $     .61    $   (1.98)   $    1.19     $     .32    $   (3.04)
-------------------------------------------------------------------------------------------------------------------

Weighted Average number of common and common
equivalent shares:
   Basic                                               6,070        6,054        6,047         6,213        6,325
   Diluted                                             6,232        6,054        6,223         6,601        6,325
-------------------------------------------------------------------------------------------------------------------
Common Stock Dividends declared                            -            -            -             -            -
-------------------------------------------------------------------------------------------------------------------

Balance Sheet Data:
   Working capital (deficiency)                    $   9,486    $ (14,064)   $   4,213     $   8,412    $   3,561
-------------------------------------------------------------------------------------------------------------------
   Total assets                                    $  91,865    $  82,324    $  61,488     $  80,089    $  48,201
-------------------------------------------------------------------------------------------------------------------

   Tangible Assets                                 $  71,000    $  65,423    $  52,018     $  68,985    $  45,113
-------------------------------------------------------------------------------------------------------------------

   Long-term obligations excluding current
   portion                                         $  32,717    $  13,055    $  13,335     $  15,845    $   5,592
-------------------------------------------------------------------------------------------------------------------
</TABLE>


                                      -8-
<PAGE>

<TABLE>
<CAPTION>
<S>                                               <C>          <C>          <C>            <C>         <C>
   Shareholders' equity                            $  37,458    $  25,371    $  32,564     $  36,544    $   18,104
-------------------------------------------------------------------------------------------------------------------
   Net Tangible Equity                             $  16,593    $   8,470    $  23,094     $  25,440    $   15,016
-------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)      Financial data presented includes the results of the following
         acquisitions and disposition: Acquisitions - American Silicon Products
         in December 1994, Retconn in January 1996, Silicon Materials Service in
         January 1997 and ST Electronics in July 1997. For details relating to
         these transactions please reference the Management Discussion and
         Analysis, Liquidity and Capital Resources sections. Dispositions - On
         February 19, 1999, the Company sold its Retconn and ST businesses and
         recorded a net after tax gain of $3,903 on the transaction.

(2)      During 2001, the Company's Board of Directors resolved to pursue the
         sale of the Company's Wafer Reclaim Services. The Selected Financial
         Data for prior years income statement items only have been reclassified
         to present the Wafer Reclaim Services Group as discontinued operations.
         See Item 1 "Business - Discontinued Operations."

(3)      Amounts per common share for the year ended prior to December 31, 1997
         have been restated to conform to the provisions of Statement of
         Financial Accounting Standards No. 128, Earnings per Share, which was
         adopted during the fourth quarter of 1997.

(4)      Amount noted as discontinued operations in 2001 includes $11,534 loss
         on disposal.



                                      -9-
<PAGE>




ITEM 7:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
--------------------------------------------------------------------------------
OF OPERATIONS:
-------------------------------------------------------------------------------

Prior to the fourth quarter of 2001, the Company operated in two business
segments;the Microelectronic Packaging and Materials Group and the Wafer Reclaim
Services Group. In conjunction with a strategy to focus on its core business,
during the fourth quarter of 2001, the Company's Board of Directors made a
decision to discontinue the operations of its Wafer Reclaim Services Group.
Accordingly most of the discussion herein will focus on the continuing
operations of the Microelectronic Packaging and Materials Group as the Company's
one remaining business.

In accordance with generally accepted accounting principles, the Company accrued
an estimated after tax loss on disposal of discontinued operations of
approximately $11,534,000 as of December 31, 2001, based on the expected
proceeds from the divestment of these businesses. After taxes and adjustment for
corporate allocations, the net loss from discontinued operations was $2,015,000
in 2001, compared to net income from discontinued operations of $274,000 in 2000
and net loss from discontinued operations of $224,000 in 1999.

The 2001 Consolidated Balance Sheet and Statements of Operations for 2001, 2000
and 1999 have been reclassified to segregate the Discontinued Operations results
from the continuing Microelectronic Packaging and Materials Group operating
results. Management's Discussion and Analysis presented herein follows this
presentation, unless the context indicates otherwise.

The following table sets forth, for continuing operations, for the periods
indicated, certain financial data as a percentage of net sales:

<TABLE>
<CAPTION>
Fiscal Year Ended December 31, - Continuing Operations               2001            2000            1999
--------------------------------------------------------------    -----------     -----------     -----------
<S>                                                               <C>             <C>             <C>
Net sales                                                            100.0           100.0           100.0
Cost of sales                                                         85.3            69.3            62.9
Gross profit                                                          14.7            30.7            37.1
Selling, general and administrative expenses                          31.8            22.1            23.3
Operating income (loss)                                              (15.1)            8.6            13.9
Interest expense (net)                                                 3.1             1.9             2.1
Income (loss) before income taxes                                    (18.3)            6.8            29.8
Provision (credit) for income taxes                                   (5.9)            2.4            13.5
Income (loss) from continuing operations                             (12.4)            4.4            16.3
</TABLE>

RESULTS OF OPERATIONS (2001 COMPARED TO 2000)

CONTINUING OPERATIONS:

After having reached record sales levels in January and February 2001, on March
21, 2001, a pressure valve on an ammonia tank, at SEMX's Polese Company
subsidiary, released, causing an ammonia gas discharge at its principal
manufacturing facility. As a result, during March and extending through the
third quarter, production and scheduled shipments were disrupted, furnaces and
inventory were damaged and additional operating expenses were incurred. In May
2001, the Company received a property settlement of $350,000 for repair and
replacement of damaged equipment. A $500,000 business interruption advance was
received in August 2001 and the final cash settlement of $1,000,000 of the



                                      -10-
<PAGE>


insurance claim relating to the ammonia discharge was received in November 2001.
Litigation with various parties, continues as they seek to collect amounts not
covered by the insurance companies.

Total revenue for the year 2001 of $39,355,000 decreased $14,277,000 or 26.6%
from the comparable 2000 period, reflecting deteriorating customer requirements
in the electronics sectors that the Group serves. SPM's 2001 sales decreased by
$3,761,000 or 21.5% as compared to the comparable 2000 period reflecting
difficult market conditions and decreased gold wire sales, although sales were
stronger at the overseas locations. Polese Company's 2001 sales decreased by
$10,516,000, or 29.1% as compared to the prior year's period reflecting a market
slowdown and continuing disruptions caused by the ammonia release, as discussed
above.

The Company does a significant amount of international business, both from its
domestic locations as well as through overseas manufacturing locations. Domestic
and international sourced sales of the Company's products into foreign markets,
as a percentage of consolidated revenue during 2001 was 16.7%, as compared to
19.5% for 2000. Domestically sourced sales of the Company's products into
foreign markets, as a percentage of consolidated revenue during 2001 was 12.2%,
as compared to 16.4% for 2000. The majority of domestically sourced foreign
sales contracts are written in US Dollars with payment remitted directly in US
dollars. Therefore, there is a reduced risk of currency exposure.

The Company has foreign manufacturing in Morocco, Semiconductor Materials
S.A.R.L. ("S.A.R.L.") and in Malaysia, SPM(M) SDN.BHD. During 2001, the
Company derived revenue, from S.A.R.L. of $1,096,000, from SPM(M) of
$1,177,000. Sales for S.A.R.L., and SPM(M) are conducted in the local
currencies of Dirhams and Ringits, respectively, and constitute a foreign
sales percentage of 5.8% in 2001 and 3.1% in 2000. These sales are subject to
currency fluctuations, although exchange rate fluctuations have not
historically been large during the periods the Company has operated in these
jurisdictions.

The Company's consolidated backlog from continuing operations as of December 31,
2001 was approximately $12,980,000 compared to backlog of approximately
$29,289,000 at December 31, 2000. The decrease in consolidated backlog during
2001 was led by Polese's decrease from approximately $27,009,000 at December 31,
2000 to approximately $11,110,000 at December 31, 2001 primarily in the fiber
optics and wireless markets. The backlog for SPM decreased approximately
$410,000 from beginning of year levels, to $1,870,000 at December 31, 2001
reflecting a softening in the general electronics market, but to a lesser extent
than the Polese business as it serves a broader range of customers. The Company
believes that the majority of the backlog of orders existing as of December 31,
2001 will be shipped over the next twelve months. The Company expects the
consolidated backlog to begin to recover in each of its markets during the
second quarter of 2002 and to continue building throughout the year.

GROSS PROFIT:

The Microelectronic Packaging Group's 2001 gross profit of $5,789,000 decreased
by $10,681,000 or 64.9% compared to 2000. The Microelectronic Packaging and
Materials Group's gross profit decrease primarily reflects operating its
manufacturing facilities at a level, which exceeded that necessary to generate
the revenue earned in the period. In addition the group incurred expenses
related to the ammonia incident without the corresponding revenue, as described
above. As a result of the above, the Microelectronic Packaging and Materials
Group's gross margin decreased from 30.7% in 2000 to 14.7% in 2001. The
Microelectronic Packaging Group's 2001 gross profit reflects the write off
during the second quarter of approximately $326,000 of inventory damaged as a
result of the ammonia release and accompanying incurrence of expenses without
associated revenue due to disruptions in production. In response to the
decreases in 2001 sales, and softness in the microelectronic industries, the
Microelectronic Packaging Group reduced its headcount several times during the
period. As December 31, 2001, headcount was approximately 48% of the beginning
of the year levels.



                                      -11-
<PAGE>


SELLING, GENERAL AND ADMINISTRATIVE:

Selling, general and administrative ("SG&A") expenses of $12,545,000 in 2001
were comparable to expenses of $11,844,000 in 2000. SG&A expenses in the early
part of 2001 remained high, building off strong fourth quarter 2000 sales which
were continuing in the first quarter of 2001. During 2001, the Company
instituted a number of cost cutting moves and successive headcount reductions in
an effort to adjust to the sharp decline in revenues in the third and fourth
quarters although SG&A expenses as a percentage of revenue increased from 22.1%
in 2000 to 31.8% for 2001 reflecting the decrease in revenue for 2001, as well
as the costs and other disruptions generated by the ammonia release incident.

IMPAIRMENT OF FIXED ASSETS:

In accordance with the Company's policy for assessing the carrying value of its
long term assets, an impairment and utilization review of its assets was
conducted during the fourth quarter of 2001. As part of this review, during
2001, the Company evaluated projections by customer and future cash flows
expected to be generated by certain equipment related to the production of a
specialized thermal management material. As the Company has determined that it
may be more economical currently to source the material produced by this
equipment externally, an impairment of $1,037,000 was recorded during the fourth
quarter of 2001 to write this equipment down to estimated fair value, although
the equipment may subsequently be used.

OTHER OPERATING INCOME:

During the second quarter of 2001, SEMX's Polese Company subsidiary reached an
agreement with a principal supplier which included retroactive price adjustments
for raw materials purchased during 2001 and 2000. As a result of this agreement,
Polese Company lowered its material costs during the second and third quarters
and will realize a future benefits. $335,000 of the total $527,000 received was
related to prior periods and accordingly was recorded as Other Operating Income
in order to segregate this amount from current period Cost of Goods sold.
Business Interruption insurance recoveries, mentioned earlier, were also
included in this line item in the third and fourth quarters of 2001 when they
were received.

INTEREST EXPENSE (NET):

Net interest expense for 2001 increased by $236,000 from 2000. The increase in
net interest expense 2001 is due to higher average borrowings and assets
financed by capital leases, partially offset by lower interest rates on bank
term and revolver borrowings which are indexed to the prime rate. Included in
interest expense for all periods presented are fees paid under the Company's
gold consignment arrangement with Fleet Precious metals as described below.
Consignment fees included in interest expense, amounted to $56,000 for 2001,
$59,000 for 2000.

PROVISION (CREDIT) FOR INCOME TAXES:

A credit of $2,324,000 for income taxes from continuing operations has been
recorded at an effective rate of 32.3% for 2001 as compared to a provision of
$1,290,000, at an effective rate of 35.5% for 2000. The lower effective rates
utilized in the 2001 periods reflect valuation allowances recorded by the
Company due to uncertainty as to whether certain state income tax benefits from
net operating loss and credit carryforwards will be utilized before their
expiration.




                                      -12-
<PAGE>


INCOME (LOSS) FROM CONTINUING OPERATIONS:

As a result of the above, net loss from continuing operations of $4,866,000 for
2001 increased by $7,206,000 from net income from operations of $2,340,000 in
the comparable 2000 period.

NET INCOME (LOSS) ATTRIBUTABLE  TO COMMON SHAREHOLDERS:

Net income (loss) attributable to common shareholders is the numerator in the
Company's calculation of Basic and Diluted Income (loss) per common share and
reflects dividends payable to Preferred Stockholders and accretion of the costs
related to the issuance of the Company"s Series B Preferred Stock on June 1,
2000. The Company accrues approximately $67,000 per month representing dividends
payable and cost accretion related to the Series B Preferred Stock.


RESULTS OF OPERATIONS (2000 COMPARED TO 1999)

CONTINUING OPERATIONS:

Total revenue for the year 2000 of $53,632,000 increased by $6,966,000 or 14.9%
from the comparable 1999 period. The 1999 period included sales of $2,122,000
from the Company's connector business, ("Retconn") through the February 1999
disposition date. Excluding Retconn sales, total revenue for 2000 increased
$9,088,000 or 20.4% compared to 1999.

The Microelectronic Packaging and Materials Group included the Company's SPM and
Polese business units as well as the Retconn business unit through February
1999. SPM's 2000 sales increased by $4,263,000 or 32.3% as compared to the
comparable 1999 periods. SPM sales have increased due to increased sales of gold
wire as well as improved sales from overseas locations in Morocco and Penang.
Polese Company's 2000 sales increased by $4,825,000 or 15.4% as compared to the
prior year period. Polese sales have increased due to improved sales of thermal
management products, microprocessor lids, wireless technology products and
assembled products, made possible by the second quarter 2000 acquisitions of
assets and technology of a ceramics company and a electroless gold plating
company.

The Company does a significant amount of international business, both from its
domestic locations, as well as through overseas manufacturing locations. Direct
sales of the Company's products into foreign markets, as a percentage of
consolidated revenue ("foreign sales percentage") during 2000 was 19.5% compared
to 18.0% for 1999. The Company currently maintains foreign manufacturing
operations in Morocco, Semiconductor Materials S.A.R.L. ("S.A.R.L.") and in
Malaysia, SPM ("MSDN.BHD"). In 2000, the Company derived revenue from S.A.R.L.
of $843,000 and from MSDN.BHD of $821,000. Foreign sales made through the
Company's domestic operations are made through foreign manufacturer's
representatives and are priced and paid for in U.S. dollars. Sales for S.A.R.L.
and MSDN.BHD are conducted in the local currencies of Dirhams and Ringits,
respectively and are subject to currency fluctuations. These sales constitute a
foreign sales percentage of 3.1% in 2000 and 1.9% for 1999.

The Company's consolidated backlog as of December 31, 2000 was approximately
$29,288,000 compared to backlog of approximately $11,558,000 at December 31,
1999. The increase in consolidated backlog during 2000 was led by Polese's
increase from approximately $8,117,000 at December 31, 1999 to approximately
$27,009,000 at December 31, 2000. The backlog for SPM has decreased
approximately $1,161,000 from beginning of year levels, to $2,280,000 at
December 31, 2000.

GROSS PROFIT:

Gross profit of $16,470,000 for 2000 decreased by $848,000 or 4.9%, from the
comparable 1999 period. Excluding Retconn from all periods presented, 2000 gross
profit decreased by $140,000 or 0.8%, from 1999 levels. The Microelectronic



                                      -13-
<PAGE>


Packaging and Materials Group's gross profit decrease primarily reflects
temporary decreases in Polese's manufacturing efficiencies due to the
acquisition, integration and relocation of the ceramics and electroless gold
plating businesses.

SELLING, GENERAL AND ADMINISTRATIVE:

Selling, general and administrative ("SG&A") expenses in 2000 increased by
$991,000 or 9.1% from the comparable 1999 period. The increase in SG&A in 2000
reflects increased sales levels in the Microelectronic Packaging and Materials
Group. SG&A expenses as a percentage of revenue decreased from 23.3% in 1999 to
22.1% in 2000 as a result of the above.

GAIN ON SALE OF CONNECTOR BUSINESS:

Income before income taxes for 1999 includes a pretax gain of $8,430,000 on the
sale of Retconn to Litton Corporation on February 19, 1999.


INTEREST EXPENSE (NET):

Net interest expense for 2000 of $996,000 increased by $8,000 from the
comparable 1999 period. The increase in net interest expense is due to higher
borrowings under capital leases partially offset by reduced bank debt levels
during 2000 partially as a result of Preferred Stock financing as described
below in Liquidity and Capital Resources.

PROVISION FOR INCOME TAXES:

A provision of $1,290,000 for income taxes has been recorded at an effective
rate of 35.5% for 2000 as compared to a provision of $6,300,000 at an effective
rate of 45.3% for 1999. The lower effective rates utilized in the 2000 periods
reflect state investment credits. The provision for 1999 includes taxes of
$4,527,000 associated with the gain on the sale of Retconn.

INCOME FROM CONTINUING OPERATIONS:

As a result of the above, income from continuing operations of $2,340,000 for
2000 decreased by $5,267,000 from the comparable 1999 period.

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS:

Net income attributable to common shareholders is the numerator in the Company's
calculation of Basic and Diluted Income per common share and reflects dividends
payable to Preferred Stockholders and accretion of costs related to the issuance
of the Series B Preferred Stock on June 1, 2000. The Company accrues
approximately $67,000 per month representing dividends payable and cost
accretion related to the Series B Preferred Stock.



DISCONTINUED OPERATIONS  2001, 2000 AND 1999

During the fourth quarter of 2001, the Company's Board of Directors made a
decision to dispose of the Wafer Reclaim Services Group. The Company recognized
a loss from discontinued operations of $2,015,000 in 2001, compared to income


                                      -14-
<PAGE>


of $274,000 in 2000 and loss of $224,000 in 1999. During 2001, the Company
accrued an estimated loss on disposal of Discontinued Operations of
$11,534,000.

The Company's Wafer Reclaim Services Group includes American Silicon Products
("ASP"), American Silicon Products B.V. ("ASP B.V.") and Singapore based,
International Semiconductor Products Pte. Ltd. ("ISP") business units. The
Wafer Reclaim Services Group's 2001 revenues were $16,035,000 as compared to
revenues of $20,547,000 in 2000 and revenues of $16,858,000 in 1999. The Wafer
Reclaim Services Group revenue decrease for 2001 compared to 2000 was the
result of a slowdown in the semiconductor industry in the U.S., Europe and
Asia. The Wafer Reclaim Services Group's 2000 revenue increase was primarily
due to increased demand for reclaimed wafers at the ISP business unit, improved
market conditions and increased manufacturing capacity.

Due to declines in gross profit for 2001 primarily due to decreases in sales,
the Wafer Reclaim Services Group recognized losses from discontinued operations
of $2,015,000 as the group's facilities struggled to adjust their breakeven
level of operations. The Company recognized income from discontinued operations
of $274,000 in 2000 and a loss of $224,000 in 1999. The income in 2000 was due
to higher sales levels during that year.

The estimated loss on disposal of $11,534,000 accrued in 2001, is based on a
comparison of the net assets of these operations, including Goodwill of
approximately $7,300,000 to the estimated expected sales proceeds. The Company
has also included an estimate of $320,000 for anticipated operating losses of
the Wafer Reclaim Services Group through expected disposition dates. In February
2002, the Company completed the sale of the assets of the ASP US business as
described more fully below in Liquidity and Capital Resources.


                                      -15-
<PAGE>


                         LIQUIDITY AND CAPITAL RESOURCES

GENERAL:

To maintain its growth, the Company has historically made significant
investments to expand its facilities and manufacturing capability as well as
meet its working capital needs. The Company has financed its capital needs
through a combination of cash flow from operations, its line of credit facility
and term loans from banks, Preferred Stock issuances, other bank financing
including gold consignment supply agreements, capital leases and Common Stock
issuance.

SUMMARY OF 2001 ACTIVITY:

At December 31, 2001, the Company had cash and cash equivalents of $395,000, and
an available balance on its revolving credit facility of $744,000 as compared to
$1,300,000 and $4,907,000 respectively at December 31, 2000.

Net cash provided by operating activities during 2001 amounted to $4,084,000 as
compared to cash provided of $5,374,000 in the comparable 2000 period. Cash
provided by operations decreased compared to 2000 principally as a result of
2001 income and working capital changes.

Cash used by investing activities during 2001 amounted to $1,809,000, compared
to cash used of $15,817,000 during the year ended December 31, 2000. During the
years ended December 31, 2001 and 2000, the Company invested $4,298,000 and
$13,218,000, respectively, in property and equipment, including the purchase of
a building in 2000 used for manufacturing. This investment excludes $2,976,000
and $991,000, respectively, in the 2001 and 2000 periods for equipment acquired
under capital leases.

Net cash used by financing activities amounted to $2,672,000 during 2001 as
compared to cash provided of $11,378,000 during 2000. During the year ended
December 31, 2000 the Company issued $10,000,000 of Series B Preferred Stock and
realized net proceeds of $9,100,000. During 2001 the Company made payments of
$2,658,000 under Capital Leases and borrowed $1,224,000 under its revolving
credit facility. During the year ended December 31, 2001 the Company repaid
$3,033,000 under bank term loan facilities and borrowed an additional $2,363,000
under various facilities, including $1,447,000 that was used to repay revolving
credit borrowings.

CREDIT FACILITIES:

On November 1, 1999, the Company entered into a Revolving Credit, Term Loan and
Security Agreement with the Business Credit section of PNC Bank. The Credit
Facility replaced a revolving credit and term loan facilities the Company had
with other banks. The current Credit Facility, has a three-year term, which
expires on October 31, 2002. It consists of a formula based $10,000,000
revolving credit facility and an original $6,234,000 term loan, that are
collectively secured by substantially all of the Company's domestic assets and
the stock of the Company's foreign subsidiaries. Revolving credit facility
availability of up to S$4,000,000 Singapore dollars (approximately $2,200,000
US) is reserved for issuance of a standby letter of credit in support of the
Company's partial guarantee of ISP's debt. The interest rate on revolving credit
borrowings are, at the Company's option, based on either the prime rate or a
floating Eurodollar rate plus a margin of 2.75%. At the Company's option, the
term loan interest rate is based on either prime plus 0.5% or a floating
Eurodollar rate plus a margin of 3.0%. Principal payments under the $6,234,000
term loan are due in equal monthly installments of $74,214 over the three-year
term. Full payment of outstanding debt is due on October 31, 2002. The Company
is current on its payments of interest and principal to the Bank. In April 2001,
the Company entered into an additional $1,447,000



                                      -16-
<PAGE>


term borrowing under the PNC facility, subject to the same terms and
amortization as the original term loan. The proceeds from the term loan were
used to pay down an equivalent amount of revolving credit borrowings. At the
February 28, 2002 closing of the sale of the assets of the ASP US subsidiary to
Rockwood Industries, the Company repaid $1,300,000 of the term loan balance and
PNC placed a reserve of $1,200,000 upon the Company's formula based borrowing.
As of December 31, 2001, the Company was not in compliance with certain
financial ratio covenants as defined in the Credit Facility. PNC has waived the
covenant violation existing at December 31, 2001 and has modified the agreement
to address covenant compliance through the maturity of the facility. The Company
is current on its payments of all interest and principal under the Credit
Facility.

In December 1996, the Company entered into a consignment agreement (the "Gold
Consignment Agreement") with Fleet Precious Metals ("FPM") which, as amended,
expires June 30, 2002. Under the Gold Consignment Agreement, the Company
utilizes gold in its manufacturing process. This consigned gold is not owned by
the Company and accordingly is not included in inventory on the accompanying
financial statements. As the Company ships finished goods manufactured with the
consigned gold from FPM, it purchases gold in the open market to replenish the
consignment. The Gold Consignment Agreement provides for gold on consignment not
to exceed the lesser of 6,500 troy ounces of gold or gold having a market value
of $2,400,000. At December 31, 2001 the Company's obligation under the Gold
consignment Agreement was approximately 3,776 troy ounces of gold valued at
approximately $1,044,000. The Gold Consignment Agreement requires the Company to
pay a consignment fee, presently at a rate of 5.1% per annum, based upon the
value of all gold consigned to the Company. This consignment fee is included in
interest expense. As of December 31, 2001, the Company was not in compliance
with certain financial ratio covenants. FPM has agreed to waive the covenant
violation existing at December 31, 2001 and is in discussions with the Company
towards modifying the agreement. FPM has asked and the Company has verbally
agreed to convert the consignment facility to a demand facility and to add
additional collateral. Should FPM demand return of the collateral and the
Company be unable to replace the consignment facility, there could be a material
adverse impact to the Company. The Company is current on its payment of interest
on the FPM consignment interest and is maintaining the required Gold levels
under the agreement.

In August, 2000, the Company's 50.1% owned ISP subsidiary refinanced its
existing debt and entered into a credit facility with Keppel Tatlee Bank. The
facility provides for a total of S$11,950,000 (approximately $6,500,000 US) in
term and overdraft borrowings secured by ISP's property and equipment and is
partially guaranteed by the Company. Interest on the facility is payable at
rates ranging from 3.5% to 6.75% and the loans are repayable in monthly
installments over a period of five to ten years. In conjunction with the
refinancing the Company was able to reduce its guarantee of ISP's debt from
S$5,000,000 Singapore dollars (approximately $2,700,000 US) to S$4,000,000
(approximately $2,200,000 US). The reduced guarantee is secured by a standby
letter of credit of up to S$4,000,000 issued by PNC Bank in favor of ISP's
lenders. In the event of default, as defined by ISP's lending agreements, Keppel
Tatlee Bank could draw down the S$4,000,000 standby letter of credit provided by
the Company's Bank.

PREFERRED STOCK ISSUANCE:

On June 1, 2000, the Company received $10,000,000 in gross proceeds from the
issuance of Series B Redeemable Preferred Stock ("Preferred Stock") to a group
of investors led by ACI Capital Co., Inc. ("ACI investors"). In connection with
the issuance of the Preferred Stock, warrants ("Warrants") to purchase one
million shares of the common stock of the Company were issued to the ACI
investors. The Preferred Stock is subject to mandatory redemption on May 31,
2005 and cash dividends are payable semi-annually at a rate of 6%, subject to
rate increases up to 18% in the event of a triggering event as defined in the
Preferred Stock. To avoid the possibility of there being a current or a future
triggering event under a certain financial covenant provision of the Preferred
Stock that would allow the ACI investors to call for immediate redemption of the
Preferred Stock, the Company and the ACI investors entered into an agreement on
November 13, 2001 that was amended and restated in its entirety on


                                      -17-
<PAGE>


March 29, 2002. The Restated Agreement provided, among other things, that: (i)
the redemption price for the Preferred Stock would not in any event be due prior
to January 3, 2003, (ii) any increase in the dividend rate to which the ACI
investors might otherwise be entitled to would not go into effect prior to
January 3, 2003 and (iii) Section 14.1 of the Warrants that now provides that
the Company would be obligated to purchase the Warrants (at a price which would
provide the ACI investors with a 20% internal rate of return calculated from the
date of issuance of the Preferred Stock, after taking into account dividends
theretofore paid to the holders of the Preferred Stock and the value determined,
as provided in the Warrants, of the shares of common stock of the Company, if
any, issued pursuant to any exercises of the Warrants by the holders of the
Warrants) upon a change of control pursuant to the formula therein set forth
(the "Warrant Repurchase Agreement") was amended to apply also to a Bankruptcy
event as therein defined. In addition, the Warrant Repurchase Formula would not
apply to any redemption of the Preferred Stock unless, for calendar year 2002,
there was no period of twenty consecutive trading days for which the daily
market price of the Company's Common Stock was greater than $5.00 per share, and
(iv) additional warrants to purchase 250,000 shares of the Company's common
stock were granted to the ACI investors, with an exercise price of $3.00 per
share. During March 2002 the Company notified the ACI investors that it has
elected to pass on the semi annual dividend due March 31, 2002 as is permitted
one time without penalty under the Preferred Stock agreement.

DISCONTINUED OPERATIONS:

The Company completed the sale of the assets of its ASP US business to Rockwood
Specialties on February 28, 2002 for cash proceeds of approximately $6,100,000.
$1,300,000 was used to pay down term debt outstanding under the PNC Credit
Facility and the balance after severance and professional fees was used to pay
the revolving credit borrowings. In conjunction with the debt reduction, PNC
instituted an additional $1,200,000 reserve against the formula based revolving
credit availability. The Company has received a letter of intent for the
purchase of its Netherlands based ASP BV subsidiary and is in discussions
regarding alternatives for its 50.1% interest in Singapore based ISP. As of
December 31, 2001, the Company has recorded accruals for the estimated loss on
sale of the Discontinued Operations as well as operating losses through the
expected disposition dates. Both the ASP B.V. and ISP subsidiaries have
sufficient liquidity from operations and banking facilities, so that no
additional funding from continuing operations is anticipated.

OTHER:

In conjunction with the Company's acquisition of Polese Company, on May 27,
1993, the Company acquired from Frank J. Polese, the former sole shareholder of
Polese Company, all of the rights, including a subsequently issued patent, for
certain powdered metal technology and its application to the electronics
industry. For a period from May 1993 through the expiration in December 2003,
Mr. Polese has the right to receive a portion of (i) the annual pre-tax profit
from the copper tungsten product line, after allocating operating costs and (ii)
the proceeds of the sale, if any, by the Company of the powdered metal
technology. During 2001, the Company has recorded no charges against operations
under this agreement.

The Company continually seeks to broaden its product lines by various means,
including acquisitions of product lines or entire Companies. The Company intends
to pursue only those acquisitions for which it will be able to arrange the
necessary financing by means of the issuance of additional equity, the use of
its available cash, through other financing or contractual arrangements such as
royalty payments. The ability to issue additional equity may be impacted if the
Company's Common Stock continues to trade below book value, and may result in
additional dilution to current Shareholders.

FORWARD LOOKING STATEMENTS:

Portions of the narrative set forth in this document that are not historical in
nature may be forward-looking statements. These forward-looking statements speak
only as of the date of this document, and the Company expressly disclaims any
obligation or undertaking to publicly release any updates or revisions to any
forward-looking statements contained herein. The Company's actual performance
may differ materially from that contemplated by the forward-looking statements
as a result of a variety of factors that include, but are not limited to, the
general economic or business climate, business conditions of the electronic,
microelectronic and semiconductor markets and the automotive and communications
industry which the Company serves, the disposition of the discontinued
operations and the economic volatility in geographic markets, such as Asia.



                                      -18-
<PAGE>

ITEM 7(A): QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK:
---------------------------------------------------------------------

Not applicable. - Disclosures required herein are presented in Item 7,
Managements Discussion and Analysis.

ITEM 8: FINANCIAL STATEMENTS:
------------------------------

The Company's consolidated financial statements are set forth herein in Part IV
beginning at Page F-1.

ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
-----------------------------------------------------------------------
FINANCIAL DISCLOSURE:
---------------------

None.





                                      -19-
<PAGE>

                                    PART III

ITEM 10, 11, 12 AND 13:
-----------------------

Directors and Executive Officers of the Registrant, Executive Compensation,
Security Ownership of Certain Beneficial Owners and Management, and Certain
Relationships and Related Transactions.

The information required by these Items is omitted because the Company will file
an amendment to this 10-K with the Commission, not later than 120 days after the
end of the fiscal year (December 31, 2001), which information will be herein
incorporated by reference as if set out in full.





                                      -20-
<PAGE>

                                     PART IV

ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K:
-------------------------------------------------------------------------

The following is an index of the financial statements of the Company which are
incorporated herein.

<TABLE>
<CAPTION>
<S>                                                                         <C>
(a) (1) Financial Statements:

        Independent Auditor's Report                                            F-2

        Consolidated Balance Sheets as of December 31, 2001 and 2000            F-3

        Consolidated Statements of Operations for the Years

        Ended December 31, 2001, 2000 and 1999                                  F-4

        Consolidated Statements of Shareholders' Equity for the Years

        Ended December 31, 2001, 2000 and 1999                                  F-5

        Consolidated Statements of Cash Flows for the Years

        Ended December 31, 2001, 2000 and 1999                                  F-6

        Notes to Consolidated Financial Statements                           F-7 - F-22
</TABLE>


(a) (2) Financial Statement Schedules:

All schedules have been omitted because of the absence of conditions under which
they are required or because the required information is given in the above
financial statements or the notes thereto included in this report.

     (b) Reports on Form 8-K -- NONE

(a) (3) Exhibits:

3.1      Certificate of Incorporation of the Company (1)

3.2      Amendment to Certificate of Incorporation (1)

3.3      Bylaws of the Company (1)

10.10    (a) Company's Employee Stock Option Plan (2)

         (b) Company's Amended Employee Stock Option Plan (4)

10.12    (a) Stock Purchase Agreement dated April 30, 1993 by and between
             Registrant and Frank J. Polese (3)

         (b) Asset Purchase Agreement dated April 30, 1993 by and between the
             Registrant and Frank J. Polese (3)

10.49    1994 Amendment to Employees' Incentive Stock Option Plan (5)



                                      -21-
<PAGE>


10.50    1995 Amendment to Employees' Incentive Stock Option Plan (5)

10.58    Joint Venture Agreement dated August 28, 1996 between Semiconductor
         Alliance Pte Ltd., the Company and International Semiconductor Products
         Pte Ltd. (6)

10.59    Intellectual Property License Agreement dated August 28, 1996 between
         American Silicon Products, Inc. and International Semiconductor
         Products Pte Ltd. (6)

10.60    Purchase Agreement dated as of January 16, 1997 between American
         Silicon Products, Inc. and Air Products & Chemicals, Inc. (7)

10.63    Fifth Amendment and Forbearance Agreement among SEMX Corporation and
         Subsidiaries and First Union Bank dated as of January 13, 1999 (8)

10.64    Asset Purchase Agreement by and among Litton Systems, Incorporated and
         SEMX Corporation, Retconn Incorporated, ST Electronics, Inc. and
         Retconn SPM (Malaysia) SDN.BHD. Dated as of January 26, 1999 and
         related documents. (8)

10.65    Sixth Amendment and Forbearance Agreement among SEMX Corporation and
         Subsidiaries and First Union National Bank dated as of February 19,
         1999 (8)

10.66    Rights Agreement, dated as of June 15, 1999, between the Company and
         Continental Stock Transfer and Trust Company (9)

10.67    Seventh Amendment and Forbearance Agreement among SEMX Corporation and
         Subsidiaries and First Union National Bank dated as of June 29,1999
         (10)

10.68    Employment agreement dated as of August 1, 1999 between the Company and
         Gilbert D. Raker (10)

10.69    Employment agreement dated as of August 1, 1999 between the Company and
         Frank J. Polese (10)

10.70    Revolving Credit, Term Loan and Security Agreement between the Company
         and Subsidiaries and PNC Bank National Association (as agent and
         lender) dated November 1, 1999 (11)

10.71    Seventh Amendment, Waiver and Modification to the Consignment agreement
         between Fleet Precious Metal Inc. and SEMX Corporation dated February
         1, 2000(12)

10.72    Form of Intellectual Property Protection Agreement (12)

10.73    Employment agreement dated as of May 1, 1999 between American Silicon
         Products, Inc. and SEMX Corporation and Richard Brown (12)

10.74    Agreement between International Semiconductor Products Pte Ltd. and
         Keppel Tatlee Bank dated August 2000 (13)


                                      -22-
<PAGE>


10.75    Facility Agreement between International Semiconductor Products Pte
         Ltd. and Keppel Tatlee Bank Limited dated August 2000 (13)

10.77    Amendment to Certificate of Designation described in Preferred Stock
         Option Agreement dated June 1, 2000 (14)

10.78    Asset Purchase Agreement among Rockwood Specialties, Inc., Exsil Inc.,
         SEMX Corporation and American Silicon Products, Inc. (15)

10.79    Fifth Amendment to Revolving Credit, Term Loan and Security Agreement
         between the Company and Subsidiaries and PNC Bank National Association
         (as agent and lender) dated as of February 27, 2002

22.0     List of Subsidiaries of the Company

23.1     The Consent of Goldstein Golub Kessler LLP, the Company's independent
         certified pubic accountants, to incorporation by reference to
         Registration Statement on Form S-8 of their report dated February 3,
         2001

         (1)   Incorporated herein by reference to the Company's Registration
               Statement No. 33-43640-NY on Form S-18, filed with the Securities
               and Exchange Commission on November 1, 1991

         (2)   Incorporated herein by reference to Amendment No. 2 to the
               Company's Registration Statement No. 33-43640-NY on Form S-18,
               filed with the Securities and Exchange Commission on December 20,
               1991

         (3)   Incorporated herein by reference to Current Report on Form 8-K
               filed with the SEC on June 11, 1993, as amended by Form 8-K/A

         (4)   Incorporated herein by reference to the Company's Registration
               Statement No. 33-70876 on Form S-3 filed, with the Securities and
               Exchange on October 28, 1993 and as amended on December 30, 1993,
               January 20, 1994 and February 7, 1994

         (5)   Incorporated herein by reference to the Company's Registration
               Statement No. 33-93502 on Form SB-2 filed, with the Securities
               and Exchange on June 16, 1995 and as amended on July 19, 1995 and
               July 26, 1995

         (6)   Incorporated by reference to the Company's 10-QSB filed for the
               quarter ended September 30, 1996

         (7)   Incorporated by reference to the Company's Form 8-K filed
               February 4, 1997 and amended by Form 8-K/A

         (8)   Incorporated by reference to the Company's Annual Report for the
               year ended December 31, 1998, filed with the Securities and
               Exchange Commission on April 15, 1999

         (9)   Incorporated by reference to the Company's Form 8-K filed June
               24, 1999

         (10)  Incorporated by reference to the Company's 10-Q filed for the
               second quarter ended June 30, 1999


                                      -23-
<PAGE>

         (11)  Incorporated by reference to the Company's 10-Q filed for the
               third quarter ended September 30, 1999

         (12)  Incorporated by reference to the Company's Annual Report for the
               year ended December 31, 1999 filed with the Securities and
               Exchange Commission on March 30, 2000.

         (13)  Incorporated by reference to Company's 10-K Report for the year
               ended December 31, 2000 filed with the Commissioner on March 23,
               2001

         (14)  Incorporated by reference to the Company's 10-Q filed for the
               third quarter ended September 30, 2001

         (15)  Incorporated by reference to the Company's 8-K filed March 7,
               2002



                                      -24-
<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, hereunto duly authorized.

                                          SEMX CORPORATION
                                            (Registrant)

                                   By: /s/ Gilbert D. Raker
                                       --------------------
                                       Gilbert D. Raker, Chairman of the Board
                                       of Directors, Director and Interim CFO

Dated: April 4, 2002

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Company and in
the capacities and as of the date indicated.


/s/ Gilbert D. Raker                                          April 4, 2002
--------------------
Gilbert D. Raker, Chairman of
the Board


/s/ Frank J. Polese                                           April 4, 2002
-------------------
Frank J. Polese, President,
Chief Executive Officer, Director


/s/ Mark A. Pinto                                             April 4, 2002
-----------------
Mark A. Pinto, Director


/s/ John U. Moorhead, II                                      April 4, 2002
------------------------
John U. Moorhead, II, Director


/s/ Andrew Lozyniak                                           April 4, 2002
-------------------
Andrew Lozyniak, Director


/s/ Kevin A. Penn                                             April 4, 2002
-----------------
Kevin A. Penn, Director


/s/ Douglas S. Holladay, Jr.                                  April 4, 2002
----------------------------
Douglas S. Holladay, Jr., Director



                                      -25-
<PAGE>

EXHIBIT-22.0

List of Subsidiaries of the Company

Polese Company, Inc.

Type III, Inc.

Thermal Packaging Solutions, Inc.

American Silicon Products, Inc. (Classified as part of Discontinued Operations)

SPM Holdings Corporation

American Silicon Products, B.V. (Classified as part of Discontinued Operations)

International Semiconductor Products Pte Ltd. (50.1%) (Classified as part of
Discontinued Operations)

Semiconductor Materials S.A.R.L.

SPM (M) SDN. BHD.

SEMX (UK), Ltd.


                                      -26-
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                          INDEX TO FINANCIAL STATEMENTS
================================================================================




Independent Auditor's Report                                            F-2

Consolidated Balance Sheets as of December 31, 2001 and 2000            F-3

Consolidated Statements of Operations for the Years Ended
    December 31, 2001, 2000 and 1999                                    F-4

Consolidated Statements of Shareholders' Equity for the Years
    Ended December 31, 2001, 2000 and 1999                              F-5

Consolidated Statements of Cash Flows for the Years Ended
    December 31, 2001, 2000 and 1999                                    F-6

Notes to Consolidated Financial Statements                           F-7 - F-22





                                      -F1-
<PAGE>

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors
SEMX Corporation

We have audited the accompanying consolidated balance sheets of SEMX Corporation
and Subsidiaries as of December 31, 2001 and 2000 and the related consolidated
statements of operations, shareholders' equity, and cash flows for each of the
three years in the period ended December 31, 2001. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of SEMX Corporation and
Subsidiaries as of December 31, 2001 and 2000 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001 in conformity with accounting principles generally accepted in
the United States of America.


GOLDSTEIN GOLUB KESSLER LLP
New York, New York


January 29, 2002, except for Note 3,
as to which the date is February 28, 2002
and Note 11 as it relates to Redeemable
Preferred Stock, as to which the date is
March 29, 2002

                                      -F2-
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                    (in thousands, except per share amounts)

<TABLE>
<CAPTION>

====================================================================================================================================

December 31,                                                                                              2001             2000
---------------------------------------------------------------------------------------------------    ------------    -------------
<S>                                                                                                      <C>             <C>
ASSETS
Current Assets:
   Cash and cash equivalents                                                                             $     395       $   1,300
   Accounts receivable, less allowance for doubtful accounts of $857 and $354, respectively                  3,415          11,524
   Inventories                                                                                               5,629           8,074
   Assets attributable to discontinued operation, at net realizable value                                    5,512               -
   Income tax refunds receivable                                                                             1,745               -
   Deferred income tax assets                                                                                1,270             165
   Prepaid expenses and other current assets                                                                   817           1,802
---------------------------------------------------------------------------------------------------    ------------    -------------
Total current assets                                                                                        18,783          22,865
---------------------------------------------------------------------------------------------------    ------------    -------------
Property, Plant and Equipment, net                                                                          22,674          44,009
---------------------------------------------------------------------------------------------------    ------------    -------------
Other Assets:
   Net non-current assets attributable to discontinued operations                                              600              --
   Goodwill                                                                                                  1,514           9,350
   Technology rights and intellectual property                                                               1,574           1,754
   Deferred income tax asset                                                                                 2,351              --
   Other                                                                                                       705           2,111
---------------------------------------------------------------------------------------------------    ------------    -------------
Total other assets                                                                                           6,744          13,215
---------------------------------------------------------------------------------------------------    ------------    -------------
Total Assets                                                                                             $  48,201       $  80,089
---------------------------------------------------------------------------------------------------    ------------    -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
   Accounts payable                                                                                      $   3,390       $   6,368
   Accrued expenses                                                                                          1,907           2,955
   Income taxes payable                                                                                          -             131
   Current portion of long-term debt and short-term obligations                                              8,147           2,556
   Current portion of obligations under capital leases                                                       1,778           2,443
---------------------------------------------------------------------------------------------------    ------------    -------------
Total current liabilities                                                                                   15,222          14,453
Deferred income tax liabilities                                                                                  -           2,610
Long-term debt                                                                                               2,420          12,862
Non-current portion of obligations under capital leases                                                      3,172           2,983
---------------------------------------------------------------------------------------------------    ------------    -------------
Total liabilities                                                                                           20,814          32,908
---------------------------------------------------------------------------------------------------    ------------    -------------
Minority Interest in Subsidiary                                                                                  -           1,564
Redeemable Preferred Stock:
Preferred stock - $.10 par value; authorized 1,000,000 shares;
   designated as Series B Preferred Stock: $100 stated value; 100,000 shares issued and outstanding          9,283           9,073
Commitments and Contingencies
Common Shareholders' Equity:
   Common stock - $.10 par value; authorized 20,000,000 shares, issued 6,663,503 and 6,645,128
   shares, respectively                                                                                        666             665
    Additional paid-in capital                                                                              30,136          30,098
    Accumulated other comprehensive income (loss)                                                               25            (722)
    Retained earnings (accumulated deficit)                                                                (12,504)          6,715
---------------------------------------------------------------------------------------------------    ------------    -------------
                                                                                                            18,323          36,756
Less treasury stock: 337,800 and 334,600 shares, at cost, respectively                                        (219)           (212)
---------------------------------------------------------------------------------------------------    ------------    -------------
Total Common Shareholders' Equity                                                                           18,104          36,544
---------------------------------------------------------------------------------------------------    ------------    -------------
Total Liabilities and Shareholders' Equity                                                               $  48,201       $  80,089
---------------------------------------------------------------------------------------------------    ------------    -------------
</TABLE>

         The accompanying notes are an integral part of these statements

                                      -F3-
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     (in thousands, except per share amounts)

<TABLE>
<CAPTION>
==================================================================================================================================

Year Ended December 31,                                                               2001              2000             1999
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>               <C>              <C>
Net sales                                                                          $    39,355       $    53,632      $    46,666
Cost of goods sold                                                                      33,566            37,162           29,348
----------------------------------------------------------------------------------------------------------------------------------
Gross profit                                                                             5,789            16,470           17,318
Selling, general and administrative expenses                                           (12,545)          (11,844)         (10,853)
Impairment of fixed assets                                                              (1,037)                -                -
Other operating income                                                                   1,835                 -                -
----------------------------------------------------------------------------------------------------------------------------------
Operating income (loss)                                                                 (5,958)            4,626            6,465
Gain on sale of connector business                                                           -                 -            8,430
Interest expense - net                                                                  (1,232)             (996)            (988)
----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations before provision (benefit) for income taxes    (7,190)            3,630           13,907
Provision (benefit) for income taxes                                                    (2,324)            1,290            6,300
----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations                                                (4,866)            2,340            7,607
Discontinued operations:
Income (loss) from discontinued operations, adjusted for applicable provision
(benefit) for income taxes of $(1,157), $289 and $(99), respectively, and
minority interest of $(220), $287 and $31, respectively                                (2,015)              274             (224)
Loss on disposal of discontinued operations, net of $4,911 of income tax benefit       (11,534)                -                -
----------------------------------------------------------------------------------------------------------------------------------
Net income (loss)                                                                      (18,415)            2,614            7,383
Preferred Stock Dividends and Accretion                                                   (804)             (473)               -
----------------------------------------------------------------------------------------------------------------------------------
Net income (loss) attributable to common shareholders                              $   (19,219)      $     2,141      $     7,383
----------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) per common share - basic:
   Earnings (loss) from continuing operations                                            ($.90)             $.30            $1.26
   Earnings (loss) from discontinued operations                                         ($2.14)             $.04            ($.04)
----------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) per common share - basic                                                ($3.04)             $.34            $1.22
----------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) per common share - diluted:
   Earnings (loss) from continuing operations                                            ($.90)             $.28            $1.22
   Earnings (loss) from discontinued operations                                         ($2.14)             $.04            ($.03)
----------------------------------------------------------------------------------------------------------------------------------
Earnings (loss) per common share - diluted                                              ($3.04)             $.32            $1.19
----------------------------------------------------------------------------------------------------------------------------------
Shares used in computing earnings (loss) per common share:
   Basic                                                                                 6,325             6,213            6,047
   Diluted                                                                               6,325             6,601            6,223
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

         The accompanying notes are an integral part of these statements

                                      -F4-
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                             (dollars in thousands)

<TABLE>
<CAPTION>
====================================================================================================================================
                                                                      Accumulated      Retained
                                                        Additional       Other         Earnings                            Total
                                      Common Stock        Paid-in     Comprehensive  (Accumulated     Treasury Stock   Shareholders'
                                     Shares    Amount    Capital     Income (Loss)      Deficit)    Shares     Amount     Equity
<S>                                <C>         <C>       <C>         <C>             <C>           <C>         <C>       <C>
Balance at January 1, 1999         6,375,616   $  638    $  28,199      $  (322)      $  (2,932)   (334,600)   $ (212)   $  25,371
Proceeds from exercise of
  stock options                       20,625        2           56            -               -           -         -           58
Compensation expense from
  stock grants                             -        -           41            -               -           -         -           41
Comprehensive income:

    Net Income                             -        -            -            -           7,383           -         -            -
    Foreign currency translation
      adjustment - net of
      deferred taxes of $160               -        -            -         (289)              -           -         -            -
Total comprehensive income                 -        -            -            -               -           -         -        7,094
------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1999       6,396,241      640       28,296         (611)          4,451    (334,600)     (212)      32,564
Proceeds from exercise of
  stock options                      153,929       16          369            -               -           -         -          385
Issuance of shares for
  acquisitions                        94,958        9        1,416            -               -           -         -        1,425
Issuance of common stock
  warrants                                 -        -          250            -               -           -         -          250
Common stock warrants issuance
  costs                                    -        -         (110)           -               -           -         -         (110)
Dividends and cost accretion
  on preferred stock                       -        -         (123)           -            (350)          -         -         (473)
Comprehensive Income:

    Net Income                             -        -            -            -           2,614           -         -            -
    Foreign currency translation
      adjustment - net of
      deferred taxes of $84                -        -            -         (111)              -           -         -            -
Total comprehensive income                 -        -            -            -               -           -         -        2,503
------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2000       6,645,128      665       30,098         (722)          6,715    (334,600)     (212)      36,544
Proceeds from exercise of
  stock options                       18,375        1           38            -               -           -         -           39
Purchase of treasury stock                 -        -            -            -               -      (3,200)       (7)          (7)
Dividends and cost accretion
  on preferred stock                       -        -            -            -            (804)          -         -         (804)
Adjustment for disposal of
  discontinued operations                  -        -            -          722               -           -         -          722
Comprehensive Loss:

    Net Loss                               -        -            -            -         (18,415)          -         -            -
    Foreign currency translation
      Adjustment - net of
        deferred taxes                     -        -            -           25               -           -         -            -
    Total comprehensive loss               -        -            -            -               -           -         -      (18,390)
------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 2001       6,663,503   $  666    $  30,136      $    25       $ (12,504)   (337,800)   $ (219)   $  18,104
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

         The accompanying notes are an integral part of these statements


                                      -F5-

<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
====================================================================================================================================

Year ended December 31,                                                                  2001             2000             1999
-----------------------------------------------------------------------------------  -------------    -------------    -------------
<S>                                                                                   <C>              <C>              <C>
Cash flows from operating activities:
   Net income (loss)                                                                    $ (18,415)       $   2,614        $   7,383
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
     Gain on sale of connector business                                                         -                -           (8,430)
     Loss on disposal of discontinued operations - net of income tax benefit               11,534                -                -
     (Gain) on sale/loss on impairment of property, plant and equipment                     1,205                -              (11)
     Depreciation and amortization of property, plant and equipment                         6,919            5,438            5,079
     Amortization of intangibles                                                              986              619              629
     Compensation expense from issuance of stock grants                                         -                -               41
     Provision (benefit) for deferred income taxes, continuing and discontinued
         operations                                                                        (1,736)           1,013            4,906
     Minority interest in subsidiary income (loss)                                           (220)             287               31
   Changes in operating assets and liabilities:
     (Increase) decrease in accounts receivable                                             6,617           (3,923)          (2,007)
     (Increase) decrease in inventories                                                     1,139           (2,067)          (1,537)
     Increase in income tax refunds receivable                                             (1,745)               -                -
     (Increase) decrease in prepaid expenses and other current assets                         355             (661)            (217)
     Increase (decrease) in accounts payable                                               (1,599)           2,141              (67)
     Increase (decrease) in accrued expenses                                                 (825)             353             (497)
     Increase (decrease) in income taxes payable                                             (131)            (440)             579
-----------------------------------------------------------------------------------  -------------    -------------    -------------
         Net cash provided by operating activities                                          4,084            5,374            5,882
-----------------------------------------------------------------------------------  -------------    -------------    -------------
Cash flows from investing activities:
     Purchase of property and equipment                                                    (4,298)         (13,218)          (2,719)
     Proceeds from sale of property and equipment                                             225                -                -
     Net proceeds from sales of connector business                                              -                -           22,191
     Payments for acquisition of subsidiaries, net of cash acquired                             -           (1,858)               -
     Proceeds from sale of property and equipment                                               -                -               64
     (Increase) decrease in other assets                                                    2,264             (741)              25
-----------------------------------------------------------------------------------  -------------    -------------    -------------
         Net cash provided by (used in) investing activities                               (1,809)         (15,817)          19,561
-----------------------------------------------------------------------------------  -------------    -------------    -------------
Cash flows from financing activities:
     Proceeds from exercise of stock options                                                   39              385               58
     Net proceeds under revolving credit lines                                              1,224            1,906              528
     Payments under capital leases                                                         (2,658)          (2,184)          (2,487)
     Payments of long-term debt                                                            (3,033)          (2,546)         (30,041)
     Proceeds from long-term debt                                                           2,363            4,918            6,234
     Net proceeds from issuance of preferred stock                                              -            9,100                -
     Payment of dividends on preferred stock                                                 (600)            (201)               -
     Payment of financing costs                                                                 -                -             (423)
     Purchase of treasury stock                                                                (7)               -                -
-----------------------------------------------------------------------------------  -------------    -------------    -------------
         Net cash provided by (used in) financing activities                               (2,672)          11,378          (26,131)
-----------------------------------------------------------------------------------  -------------    -------------    -------------
     Effect of foreign translation on cash                                                      -              (51)             (37)
-----------------------------------------------------------------------------------  -------------    -------------    -------------
     Net increase (decrease) in cash and cash equivalents                                    (397)             884             (725)
     Cash and cash equivalents at beginning of year                                         1,300              416            1,141
     Less cash reclassification to net assets of discontinued operations                     (508)               -                -
-----------------------------------------------------------------------------------  -------------    -------------    -------------
     Cash and cash equivalents at end of year                                           $     395        $   1,300        $     416
===================================================================================  =============    =============    =============
Supplemental disclosures of cash flow information:
   Cash paid during the year for:
     Interest                                                                           $   1,756        $   1,626        $   2,111
===================================================================================  =============    =============    =============
     Income taxes                                                                       $     272        $   1,468        $     664
===================================================================================  =============    =============    =============
Supplemental schedule of noncash investing and financing activities:
     Machinery and equipment, net of trade-in, acquired under capital leases            $   2,976        $     991        $     896
===================================================================================  =============    =============    =============
     Intellectual property rights acquired with restricted common stock                         -        $   1,000                -
===================================================================================  =============    =============    =============
     Acquisition finders' fee paid with nonqualified stock options                              -        $     426                -
===================================================================================  =============    =============    =============
</TABLE>

         The accompanying notes are an integral part of these statements

                                      -F6-
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 (dollars in thousands, except per share amounts)
================================================================================

1.   PRINCIPAL BUSINESS ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING
     POLICIES:

     The accompanying consolidated financial statements include the accounts of
     SEMX Corporation ("SEMX") and its wholly owned and majority-owned
     subsidiaries (collectively, the "Company"). All significant intercompany
     transactions and balances have been eliminated.

     SEMX Corporation ("SEMX") and its subsidiaries principally manufacture
     proprietary thermal management materials, microelectronic ceramic products
     and packages, and interconnect products and materials for critical
     components and other specialized microelectronic devices and systems. The
     Company was also engaged in reclaiming of silicon test wafers for the
     semiconductor industry, which business was discontinued in 2001 (see
     Note 3).

     In conjunction with a strategy to focus on its core business, in the fourth
     quarter of 2001 the Company's Board of Directors made a decision to
     discontinue the operations of its Wafer Reclaim Services Group. The
     Company's Wafer Reclaim Services Group reclaims silicon test wafers for the
     semiconductor industry through facilities located in North America, Europe
     and Asia. The Company completed the sale of the assets and selected
     liabilities of its North American operations on February 28, 2002.

     As of December 31, 2001 SEMX operates in one principal segment:
     Microelectronic Packaging and Materials. The Microelectronic Packaging and
     Materials Group includes the Company's Semiconductor Packaging Materials
     Co. ("SPM") division, Polese Company, Inc. ("Polese") and Retconn (through
     the February 1999 disposition). The discontinued Wafer Reclaim Services
     Group included the Company's American Silicon Products, Inc. ("ASP"),
     American Silicon Products B.V. ("ASP B.V.") and 50.1% owned International
     Semiconductor Products Pte Ltd. ("ISP") business units.

     Revenue from the sale of products is recognized at the date of shipment to
     customers. The Company's products are manufactured to specifications and
     shipped pursuant to customers purchase orders wherein title and risk of
     loss passes to the customer at the time of delivery.

     The Company considers all investments purchased with an original maturity
     of three months or less to be cash equivalents.

     The Company maintains cash in bank accounts which, at times, may exceed
     federally insured limits. The Company has not experienced any loss on these
     accounts.

     The financial position and results of operations of the Company's foreign
     subsidiaries are measured using local currency as the functional currency.
     Assets and liabilities of these subsidiaries have been translated at
     current exchange rates, and related revenue and expenses have been
     translated at average monthly exchange rates. The aggregate effect of
     translation adjustments, net of deferred taxes, is reflected as a separate
     component of shareholders' equity until there is a sale or liquidation of
     the underlying foreign investment. Amounts related to ASP B.V. and ISP have
     been reclassified to net assets of discontinued operations.

     Inventories include raw materials, labor and manufacturing expenses and
     are stated at the lower of cost, determined by the first-in, first-out
     method, or market.

     Deferred income taxes arise from differences in bases between income tax
     reporting and financial reporting (see Note 9).

     Depreciation and amortization of property and equipment is provided for by
     the straight-line method over the estimated useful lives of the related
     assets with selected higher valued assets having various residual values.

     The preparation of financial statements in conformity with generally
     accepted accounting principles requires use of estimates by management
     affecting the reported amounts of assets and liabilities and revenue and
     expenses and the disclosure of contingent assets and liabilities. Actual
     results could differ from those estimates.

                                      -F7-
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (dollars in thousands, except per share amounts)
================================================================================

     For comparability, certain 2000 amounts have been reclassified, where
     appropriate, to conform to the financial statement presentation used in
     2001 including the adjustments necessary to conform to the discontinued
     operations presentation of the Wafer Reclaim Services Group during 2001.

     The excess of cost over the fair value of net assets acquired (goodwill),
     amounting to approximately $1,775 and $11,800 (prior to the write off of
     goodwill for the discontinued operations) at December 31, 2001 and 2000,
     respectively, is being amortized over periods ranging from 15 to 40 years
     using the straight-line method (see Note 2). Accumulated amortization at
     December 31, 2001 and 2000 was approximately $261 and $2,450, respectively.
     The Company reviews the carrying value of goodwill for impairment,
     periodically or whenever events or changes in circumstances indicate that
     the amounts may not be recoverable. The review for recoverability includes
     an estimate by the Company of the future undiscounted cash flows expected
     to result from the use of the assets acquired and their eventual
     disposition. An impairment will be recognized if the carrying value of the
     assets exceeds the estimated future undiscounted cash flows of those assets
     (see Note 5).

     Certain technology rights, proprietary rights and intellectual property,
     amounting to approximately $2,343 at December 31, 2001 and 2000, are being
     amortized over periods ranging from 11 to 17 years using the straight-line
     method. Accumulated amortization at December 31, 2001 and 2000 was
     approximately $769 and $589, respectively.

     The Company elected to measure compensation cost using Accounting
     Principles Board Opinion No. 25 as is permitted by Statement of Financial
     Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based
     Compensation, and has elected to comply with other provisions and the
     disclosure only requirements of SFAS No. 123 (see Note 11).

     Basic earnings per common share are computed using the weighted-average
     number of shares outstanding. Diluted earnings per common share is computed
     using the weighted-average number of shares outstanding adjusted for the
     incremental shares attributed to outstanding options to purchase common
     stock. Incremental shares of 387,198 in 2000 and 175,878 in 1999 were used
     in the calculation of diluted earnings per common share. No incremental
     shares were used in the 2001 calculation of diluted earnings per common
     share since they would have had an antidilutive effect. Net income (loss)
     available to common shareholders reflects preferred stock dividends and the
     accretion of costs related to the issuance of the Company's Redeemable
     Preferred Stock on June 1, 2000.

     In June 2001, SFAS No. 141 "Business Combinations" was issued. SFAS No. 141
     is effective for purchase business combinations for which the date of
     acquisition is July 1, 2001 or later. The Company does not believe that
     SFAS No. 141 will have a material impact on its financial position or
     results of operations.

     Also in June 2001, SFAS No. 142 "Goodwill and Other Intangible Assets," was
     issued. SFAS No. 142 is required to be applied for fiscal years beginning
     after December 15, 2001. The Company adopted SFAS No. 142 as of January 1,
     2002. SFAS No. 142 eliminates the amortization of goodwill and certain
     other intangible assets. It also requires a test for impairment of these
     assets at least annually. The Company is in the process of analyzing its
     intangible assets but is unable to report the effect that the adoption of
     SFAS No. 142 will have on its financial position or results of operations.

     The Company does not believe that any other recently issued but not yet
     effective accounting standards will have a material effect on the Company's
     consolidated financial position or results of operations.

2.   ACQUISITIONS AND DISPOSITIONS:

     On May 1, 2000, the Company's Polese subsidiary purchased the technology
     and assets of Engelhard Corporation's ("Engelhard") electroless gold
     plating business in Anaheim, CA for total cash consideration of $317. In
     addition, a finders' fee consisting of non qualified stock options to
     purchase 40,000 shares of SEMX common stock, valued at $426 was recorded.
     The fair value of assets acquired, including $426 allocated to goodwill,
     amounted to $743. Electroless gold plated deposits satisfy manufacturing
     requirements for wire bonding, die-attachment and corrosion resistance, but
     eliminate many of the design restrictions brought about by conventional
     electrolytic gold plating. Polese Company vacated the Anaheim premises as
     of July

                                      -F8-
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (dollars in thousands, except per share amounts)
================================================================================

     31, 2000 and has completed the integration of the electroless gold plating
     operations into Polese Company's existing facilities as of October 2000.

     On April 10, 2000, the Company's Polese Company subsidiary acquired the
     assets of Advanced Packaging Concepts ("APC"), a Vista, CA based
     manufacturer of ceramic packages for the wireless markets, in a business
     combination accounted for as a purchase. Polese Company acquired the assets
     of APC for $300 in cash and assumed selected liabilities amounting to
     $1,000 which was financed in part by a $1,000 interim term loan that was
     repaid during the second quarter of 2000. In addition, Polese Company paid
     approximately $241 in costs associated with the acquisition of APC. The
     fair value of assets acquired, including approximately $817 allocated to
     Goodwill, amounted to approximately $1,541. In a companion transaction,
     associated intellectual property rights were acquired for approximately
     95,000 shares of restricted SEMX common stock, valued at $1,000. The
     transaction provides the sellers of APC a royalty of 2-1/2% against future
     sales to certain existing customers for a period of three years. At
     closing, the Company advanced a total of $150 to the sellers against this
     royalty. The Company vacated the Vista premises as of July 31, 2000 and
     completed the physical integration of APC's operations into Polese
     Company's existing facilities in October 2000. The results of operations of
     APC are included in the Company's consolidated financial statements from
     the dates of acquisition. The effects of the operations of APC from January
     1, 1999 to the date of the acquisition on the Company's results of
     operations was immaterial.

     In February 1999, the Company sold its connector businesses, Retconn and
     ST, to Litton Corporation ("Litton"). Litton acquired the specified assets
     and assumed certain liabilities of Retconn and ST, as defined in the
     purchase agreement, in consideration for a cash payment to the Company of
     $23,871. The liabilities assumed by Litton amounted to approximately
     $3,500. The purchase price was subject to adjustment for changes in
     Retconn's closing date balance sheet and in December 1999, the Company paid
     Litton $320 in settlement of the final purchase price adjustment. In
     addition, the Company is prevented from directly competing in the connector
     business for a period of three years. The Company recorded a pretax gain,
     during the first quarter of 1999, of $8,430 on the transaction.

3.   DISCONTINUED OPERATIONS:

     In conjunction with a strategy to focus on its core business, during the
     fourth quarter of 2001, the Company's Board of Directors made a decision to
     discontinue the operations of its Wafer Reclaim Services Group. Accordingly
     the Company reported the results of operations of the Wafer Reclaim
     Services Group and the expected loss on disposal as discontinued
     operations.

     On February 28, 2002, the Company completed the sale of the assets of its
     Wafer Reclaim Services Group's, ASP US subsidiary for cash proceeds of
     approximately $6,100. The Company has received a letter of intent for the
     purchase of its Netherlands based ASP B.V. subsidiary and is in discussions
     regarding alternatives for its 50.1% interest in its Singapore-based ISP
     business unit.

     Certain information with respect to discontinued operations is summarized
     below:

                                      -F9-
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 (dollars in thousands, except per share amounts)
================================================================================

<TABLE>
<CAPTION>
Year ended December 31,                                                          2001                2000               1999
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>                 <C>                <C>
Net Revenue                                                                  $   16,035          $   20,547         $   16,858
----------------------------------------------------------------------------------------------------------------------------------
   Earnings (loss) before income taxes and minority interest in
     consolidated subsidiary                                                     (3,392)                850               (292)
   Income tax - (benefit) expense                                                (1,157)                289                (99)
   Minority interest in income (loss) of consolidated subsidiary                   (220)                287                 31
----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from discontinued operations, net                                  (2,015)                274               (224)
Loss on disposal of discontinued operations, net of income tax
     benefit of $4,911                                                          (11,534)                  -                  -
----------------------------------------------------------------------------------------------------------------------------------
  Earnings (loss) from discontinued operations                               $  (13,549)         $      274         $     (224)
----------------------------------------------------------------------------------------------------------------------------------
  Earnings (loss) per common share - basic:
     Discontinued operations                                                 $     (.32)         $      .04         $     (.04)
     Loss on disposal                                                        $    (1.82)         $        -         $        -
----------------------------------------------------------------------------------------------------------------------------------
  Earnings (loss) per  common share - diluted:
     Discontinued operations                                                 $     (.32)         $      .04         $     (.03)
     Loss on disposal                                                        $    (1.82)         $        -         $        -



</TABLE>

     Assets attributable to discontinued operation, at net realizable value,
     relate to ASP US and are classified as current assets on the 2001
     consolidated balance sheet due to the February 2002 sale of ASP US. The net
     noncurrent assets attributable to discontinued operations relate to ISP and
     ASP B.V., are classified as noncurrent assets and are net of liabilities
     including debt and the estimated loss on disposal.


     The charge recorded during 2001 for loss on disposal of the Wafer Reclaim
Services Group includes the following:

<TABLE>
<CAPTION>
Year ended December 31, 2001
------------------------------------------------------------------------------------------------------
<S>                                                                                   <C>
Carrying value of net assets in excess of anticipated proceeds                         $   15,525
Expenses of asset disposal and anticipated  operating loss of $320 from December
31, 2001 through the estimated date of disposal                                               920
------------------------------------------------------------------------------------------------------
Loss on disposal before income tax benefit                                                 16,445
Income tax benefit                                                                          4,911
------------------------------------------------------------------------------------------------------
Loss on disposal                                                                       $   11,534
------------------------------------------------------------------------------------------------------
</TABLE>

4.   INVENTORIES:

     The components of inventories are as follows:

<TABLE>
<CAPTION>
December 31,                                           2001               2000
---------------------------------------------     ---------------    ---------------
<S>                                                  <C>                <C>
Raw materials                                        $  2,574           $  3,814
Work-in-process                                         1,851              3,374
Finished goods                                          1,204                886
---------------------------------------------     ---------------    ---------------
                                                     $  5,629           $  8,074
=============================================     ===============    ===============
</TABLE>

                                      -F10-
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 (dollars in thousands, except per share amounts)
================================================================================


     The Company has a consignment arrangement with a bank, as described in Note
     10, which provides for the leasing of precious metals by the Company. The
     Company pays for these precious metals based on actual usage.

5.   PROPERTY, PLANT AND EQUIPMENT:

     Property, plant and equipment, at cost, consists of the following:

<TABLE>
<CAPTION>
                                                                                                       Estimated
December 31,                                                        2001              2000            Useful Life
-----------------------------------------------------------     -------------     -------------    ------------------
<S>                                                              <C>              <C>               <C>
Land                                                             $   1,976        $    2,169
Buildings and leasehold improvements                                 7,552            13,545        1.5 to 39 years
Machinery and equipment                                             30,397            50,424          3 to 15 years
Construction-in-progress                                                31             1,134
-----------------------------------------------------------     -------------     -------------    ------------------
                                                                    39,956            67,272
Less accumulated depreciation and amortization                      17,282            23,263
-----------------------------------------------------------     -------------     -------------    ------------------
Property, plant and equipment, net                              $   22,674        $   44,009
===========================================================     =============     =============    ==================
</TABLE>

     Net Property, Plant and Equipment in the amount of $19,366 was reclassified
     to discontinued operations in 2001.

     Included in machinery and equipment are approximately $11,080 and $16,220
     at December 31, 2001 and 2000, respectively, of property acquired under
     capital leases. Amortization of these assets is included in depreciation
     and amortization expense. Accumulated amortization of these assets amounted
     to approximately $2,544 and $6,444 at December 31, 2001 and 2000,
     respectively. The property held under these leases is collateral for the
     related capital lease obligations described in Note 8. Included in
     machinery and equipment and in leasehold improvements are $0 and $15,
     respectively, of capitalized interest for the year ended December 31, 2001.

     In accordance with the Company's policy for assessing the carrying value of
     its long-term assets, an impairment and utilization review of its assets
     was conducted during the fourth quarter of 2001. As part of this review,
     during 2001, the Company evaluated projections by customer and future cash
     flows expected to be generated by certain equipment related to the
     production of a specialized thermal management material. As the Company has
     determined that it may be more economical currently to source the material
     produced by this equipment externally, an impairment of $1,037 was recorded
     during the fourth quarter of 2001 to write this equipment down to estimated
     fair value.

6.   ACCRUED EXPENSES:

     Accrued expenses consist of the following:

<TABLE>
<CAPTION>
                December 31,                                                               2001               2000
                ------------------------------------------------------------------    ---------------     --------------
                <S>                                                                   <C>                 <C>
                Accrued payroll, bonuses and vacations                                    $   681            $ 1,161
                Other (all amounts are less than 5% of total current liabilities)           1,226              1,794
                ------------------------------------------------------------------    ---------------     --------------
                                                                                          $ 1,907            $ 2,955
                                                                                      ===============     ==============
</TABLE>



                                     -F11-
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (dollars in thousands, except per share amounts)
================================================================================


7.   LONG-TERM DEBT AND SHORT-TERM OBLIGATIONS:

       Long-term debt and short-term obligations consist of the following:

<TABLE>
<CAPTION>

December 31,                                                   2001                2000
------------------------------------------------------     --------------     ---------------
<S>                                                        <C>                <C>
Term loan (a) (g)                                            $   5,824          $   5,271
Line of credit (b) (g)                                           2,211              2,434
Term loan (c) (h)                                                2,449              2,473
Term loan and overdraft facility (d) (h)                             -              4,362
Term loan (e) (h)                                                    -                530
Term loan (f) (h)                                                    -                348
Other                                                               83                  -
------------------------------------------------------     --------------     ---------------
Total long-term debt and short-term obligations                 10,567             15,418
Less current maturities                                          8,147              2,556
------------------------------------------------------     --------------     ---------------
Long-term debt                                               $   2,420          $  12,862
======================================================     ==============     ===============
</TABLE>

     (a)    The Company entered into a Term Loan and Security Agreement (and a
            revolving credit agreement discussed in (b)) in November 1999 with
            PNC Bank N.A. ("PNC") which has a three-year term and is secured by
            substantially all of the Company's domestic assets. The term loan
            interest, at the Company's option, is based on either prime plus
            1/2% or a floating Eurodollar rate plus an additional margin of 3%.
            At December 31, 2001, the interest rate was 5.25%. The term loan is
            payable in equal monthly installments of $74.

     (b)    Pursuant to the November 1999 financing with PNC, the Company
            entered into a Revolving Credit Borrowing and Security Agreement, as
            amended ("the revolving credit facility"). The revolving credit
            facility has a three-year term and provides for up to $10,000 in
            borrowings based upon eligible accounts receivable and inventory.
            The revolving credit facility includes a standby letter of credit
            for approximately $2,200 (S$4,000 Singapore dollars) reserved for
            possible issuance under a continuing guarantee of a foreign
            subsidiary's debt. The interest rate is based on either prime or a
            floating Eurodollar rate plus a margin of 2.75%. At December 31,
            2001, the interest rate was 5.00% and the excess revolving credit
            borrowing availability was $744.

     (c)    In conjunction with the purchase of a building in December 2000, the
            Company entered into a term loan with CNL Bank, in the principal
            amount of $2,473. The term loan bears interest at a fixed rate of
            10.05% with principal payable monthly over 25 years, and is subject
            to a prepayment penalty for the first five years.

     (d)    In August 2000, the Company's 50.1% owned ISP subsidiary refinanced
            its existing debt and entered into a credit facility with Keppel
            Tatlee Bank. The facility provides for a total of S$11,950
            (approximately $6,500 US) in term and overdraft borrowings secured
            by ISP's property and equipment and is partially guaranteed by the
            Company. Interest on the facility is payable at rates ranging from
            3.5% to 6.75% and the loans are repayable in monthly installments
            over a period of 5 to 10 years. In conjunction with the refinancing,
            the Company was able to reduce its guarantee of ISP's debt from
            S$5,000 (approximately $2,700 US) to S$4,000 (approximately $2,200
            US). The reduced guarantee is secured by a standby letter of credit
            of up to S$4,000 issued by PNC Bank in favor of ISP's lenders. In
            the event of default, as defined by ISP's lending agreements, Keppel
            Tatlee Bank could draw down the S$4,000 standby letter of credit
            provided by the Company's Bank. During 2001, the net assets and
            liabilities of the Wafer Reclaim Services Group were reclassified to
            Discontinued Operations - See Note 3.

     (e)    In conjunction with the acquisition of a building, the Company
            entered into a term loan with a foreign bank in August 1998 in the
            principal amount of 1,300 Dutch Guilders (approximately $523
            translated at December 31, 2001 exchange rates). The loan bears
            interest at 5.25% for three years which increases to 5.5% for the
            remaining life of the loan and is payable in quarterly installments
            of approximately $9, plus interest, which commenced on December 15,
            1998. The facility matures

                                     -F12-
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (dollars in thousands, except per share amounts)
================================================================================


            in 2018. During 2001, the net assets and liabilities of the Wafer
            Reclaim Services Group were reclassified to discontinued operations
            - see note 3.

     (f)    In addition, the Company entered into a 1,000 Dutch Guilder
            (approximately $402 translated at December 31, 2001 exchange rates)
            overdraft facility with the foreign bank, which is collateralized by
            accounts receivable. Interest is payable monthly at the rate of
            1.75% plus the central bank's promissory note discount rate. The
            facility matures in 2018. During 2001, the net assets and
            liabilities of the Wafer Reclaim Services Group were reclassified to
            discontinued operations - see note 3.

     (g)    Because the interest rates will change with changes in the prime
            rate and Eurodollar rate, the fair value of the bank debt
            approximates the carrying amount.

     (h)    Based on market rates currently available to the Company for loans
            with similar terms and maturities, the fair value of the long-term
            debt does not vary significantly from the carrying amount.

     Maturities of long-term debt and short-term obligations are as follows:

                  Year ending December 31,
                            2002                       $   8,147
                            2003                              32
                            2004                              36
                            2005                              40
                            2006                              44
                         Thereafter                        2,268

                  ------------------------           ------------
                                                       $  10,567
                                                     ============

     The above bank loan agreements provide, among other things, that the
     Company is subject to restrictions related to the issuance of additional
     indebtedness, additional liens and security interests, capital expenditures
     and the payment of dividends. In addition, the above loans are
     collateralized by a blanket lien on substantially all the Company's assets,
     and require that the Company maintain certain financial ratios and
     targets. As of December 31, 2001 the Company was in default of several
     financial ratio covenants under its PNC Credit Facilities. The Company has
     obtained a waiver from PNC and signed an amendment to the Revolving Credit
     Facility.

8.   Obligations Under Capital Leases:

     The Company is the lessee of property and equipment acquired under capital
     leases expiring in various years through 2006.

     Future lease payments under capital leases are as follows:


                                     -F13-
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (dollars in thousands, except per share amounts)
================================================================================


              Year ending December 31,

                        2002                          $   2,163
                        2003                              1,579
                        2004                              1,015
                        2005                                783
                        2006                                398
              --------------------------------    ----------------
                                                          5,938
              Less amount representing interest             988
              --------------------------------    ----------------
                                                          4,950
              --------------------------------    ----------------
              Less current portion                        1,778
              --------------------------------    ----------------
                                                      $   3,172
                                                  ================

     Interest rates on these capital leases range from 7.42% to 16.67% per
     annum.

9.   INCOME TAXES

     The provision (benefit) for income taxes for the years ended December 31,
     2001, 2000 and 1999 consists of the following components:

Year ended December 31,             2001              2000             1999
-----------------------------   --------------   ---------------  --------------
Current:
   Federal                         $ (1,745)        $    796         $  4,229
   State                                  -               45              983
Deferred:
  Federal                              (727)             420              915
  State                                  74               28              173
  Foreign                                74                1                -
-----------------------------   --------------   ---------------  --------------
                                   $ (2,324)        $  1,290         $  6,300
=============================   ==============   ===============  ==============

     The provision (benefit) for income taxes for the years ended December 31,
     2001, 2000 and 1999 differs from the amount computed using the federal
     statutory rate of 34% as a result of the following:

<TABLE>
<CAPTION>
Year ended December 31,                                                     2001               2000               1999
------------------------------------------------------------------     ---------------    ---------------     --------------
<S>                                                                         <C>                <C>                 <C>
Tax at federal statutory rate                                                (34.0%)             34.0%               34.0%
Change in valuation allowance                                                  8.3               (2.1)               (0.3)
State tax credit carry forwards generated                                     (4.5)              (0.7)               (1.4)
State income tax provision (benefit), net of federal tax effect               (3.0)               2.1                 4.8
Effect of permanent differences                                               (0.3)               2.6                 7.5
Other                                                                          1.2               (0.4)                0.7
------------------------------------------------------------------     ---------------    ---------------     --------------
                                                                             (32.3%)             35.5%               45.3%
                                                                       ===============    ===============     ==============
</TABLE>


                                     -F14-
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (dollars in thousands, except per share amounts)
================================================================================


     The tax effects of available tax carryforwards and temporary differences
     that give rise to the net short-term deferred income tax assets are
     presented below:

<TABLE>
<CAPTION>
          December 31,                                                  2001                 2000
          -----------------------------------------------------    ---------------     ----------------
          <S>                                                         <C>                   <C>
          Federal net operating loss carryforwards                    $   680               $     -
          Other                                                           590                   165
          -----------------------------------------------------    ---------------     ----------------
                                                                      $ 1,270               $   165
                                                                   ===============     ================
</TABLE>


       The tax effects of available tax carryforwards, temporary differences and
       foreign currency translation adjustments that give rise to the net
       long-term deferred income tax assets (liabilities) are presented below:

<TABLE>
<CAPTION>

          December 31,                                                             2001                 2000
          ---------------------------------------------------------------    -----------------     ----------------
<S>                                                                           <C>                   <C>
             Accelerated depreciation                                           $ (1,912)             $ (3,740)
             Basis difference in amortization of intangibles                         212                  (797)
             Federal net operating loss carryforwards                                349                    --
             Loss carryforwards regarding discontinued operations                  3,671                    --
             Net ( income) loss in foreign subsidiaries                              (68)                  533
             State tax, net operating loss carryforward                            1,145                   644
             State investment tax credit carryforward                              1,178                   825
             Accumulated translation adjustment                                       --                   460
             Other                                                                   229                   172
                                                                             -----------------     ----------------
             Net deferred income tax asset (liability)                             4,804                (1,903)
             Less valuation allowance                                             (2,453)                 (707)
          ---------------------------------------------------------------    -----------------     ----------------
             Net long-term deferred income tax assets (liabilities)             $  2,351              $ (2,610)
          ---------------------------------------------------------------    -----------------     ----------------
</TABLE>

     At December 31, 2001, the Company has state net operating loss
     carryforwards aggregating $19,124 of which $16,141 expire through 2006 and
     the remainder expire in 2021. State investment tax credit and research
     credit carryforwards aggregating $1,325 at December 31, 2001 expire at
     various dates from 2003 through 2016. A valuation allowance has been
     established for the tax effect of those state net operating loss
     carryforwards and state investment tax credit and research credit
     carryforwards (including a portion of the loss carryforwards regarding
     discontinued operations) which are not expected to be realized.

     The Company files a consolidated federal income tax return that includes
     the results of all its domestic subsidiaries and separate state and local
     income tax returns.

10.  COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS:

     The Company has noncancelable operating leases expiring through 2004 for
     the rental of office and manufacturing facilities. The leases also require
     payments for real estate taxes and other operating costs. The Company also
     leases office space at one of its foreign subsidiaries. This lease expires
     in January 2026 with an option to renew for an additional 29 years.

     Approximate aggregate minimum future rental payments, exclusive of payments
     for real estate taxes and other operating costs under these leases, are as
     follows:


                                     -F15-
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (dollars in thousands, except per share amounts)
================================================================================


          Year ending December 31,
                   2002                        $     756
                   2003                              705
                   2004                              363
                   2005                               52
                   2006                               52
                Thereafter                           993
          ------------------------------    --------------
                                               $   2,921
                                            ==============

     Rent expense charged to operations for the years ended December 31, 2001,
     2000 and 1999 amounted to $820 $618 and $741, respectively.

     The Company has employment agreements with five officers (the "Officers")
     expiring through 2004. The approximate aggregate commitment for future
     salaries, excluding bonuses, under these employment agreements is as
     follows:

           Year ending December 31,
                   2002                        $     711
                   2003                              250
                   2004                              125
         -------------------------------    --------------
                                               $   1,086
                                            ==============

     The employment agreement with one of these Officers automatically extends
     for one year and for two Officers automatically extend on a year to year
     basis unless modified or terminated by one of the parties.

     The Officers have agreed not to engage in a business that is competitive
     with the Company during the term of their agreement and for a period of one
     year thereafter.

     In December 1996, the Company entered into a consignment agreement (the
     "Gold Consignment Agreement") with Fleet Precious Metals ("FPM") which, as
     amended, expires June 30, 2002. Under the Gold Consignment Agreement, the
     Company utilizes gold in its manufacturing process. This consigned gold is
     not owned by the Company and accordingly is not included in inventory on
     the accompanying financial statements. As the Company ships finished goods
     manufactured with the consigned gold from FPM, it purchases gold in the
     open market to replenish the consignment. The Gold Consignment Agreement
     provides for gold on consignment not to exceed the lesser of 6,500 troy
     ounces of gold or gold having a market value of $2,400. At December 31,
     2001, the Company's obligation under the Gold Consignment Agreement was
     approximately 3,776 troy ounces of gold valued at approximately $1,044.
     The Gold Consignment Agreement requires the Company to pay a consignment
     fee, presently at a rate of 5.1% per annum, based upon the value of all
     gold consigned to the Company. This consignment fee is included in interest
     expense. As of December 31, 2001, the Company was not in compliance with
     certain financial ratio covenants. FPM has waived the covenant violation
     existing at December 31, 2001 and is in discussions with the Company
     towards modifying the agreement. FPM has asked and the Company has verbally
     agreed to convert the consignment facility to a demand facility and to add
     additional collateral. Should FPM demand return of the collateral and the
     Company be unable to replace the consignment facility, there could be a
     material adverse impact to the Company. The Company is current on its
     payment of interest on the FPM consignment interest and is maintaining the
     required Gold levels under the agreement.

     In connection with the Company's acquisition of Polese in 1993, for a
     period of 10 years from the date of acquisition, the former sole
     shareholder of Polese and a current executive officer of the Company is
     entitled to receive 10% of (i) the pretax profit from the Company's
     copper/tungsten product line after allocating operating costs, and (ii) the
     proceeds of the sale, if


                                     -F16-
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (dollars in thousands, except per share amounts)
================================================================================


     any, by the Company of the powdered metal technology. This agreement
     expires December 31, 2002. Amounts due pursuant to this agreement will be
     charged to operations as incurred. For the years ended December 31, 2001,
     2000 and 1999 $0, $249, and $500, respectively, has been charged to
     operations pursuant to this agreement.

11.  CAPITAL TRANSACTIONS:

     Redeemable Preferred Stock: On June 1, 2000, the Company received $10,000
     in gross proceeds from Series B Redeemable Preferred Stock from a group led
     by ACI Capital Company ("ACI"). Attached to the instrument were warrants to
     purchase 1 million shares of SEMX Common Stock with an exercise price
     initially valued at $10.00 per share, subsequently reset to an exercise
     price of $7.00 per share during 2001. On the accompanying Balance Sheet, a
     value of $250 was assigned to the warrants and an initial value of $9,750
     was assigned to the redeemable preferred stock. The $250 value assigned to
     the warrants was credited to additional paid-in capital and will be
     accreted to the value of the Series B Preferred Stock over the five year
     term. The Company paid approximately $900 in investment banking, financing,
     legal and accounting fees in conjunction with the offering. A total of $800
     of the fees associated with the offering were accounted for as a reduction
     in the carrying value of the preferred stock on the accompanying balance
     sheet and will be accreted to the value of the Series B Preferred Stock
     over the five-year term. The remaining costs were allocated to expenses of
     issuing the warrants and were charged to paid-in capital. Of this total
     approximately $300 was paid to a firm affiliated with John Moorhead, who is
     a member of the SEMX Board of Directors, for services rendered in
     assistance with the financing. Additionally, warrants to purchase an
     aggregate of 60,000 shares of SEMX common stock at an exercise price of
     $7.00 per share were issued to an investment banking firm; a firm
     associated with John Moorhead; and certain other individuals. The Series B
     Preferred Stock is subject to mandatory redemption in five years for
     $10,000 and cash dividends are payable semiannually at a rate of 6%, and in
     preference to any dividends on the Company's common stock, and are subject
     to successive rate increases in the event of uncured late dividend payments
     or other events of default. The Liquidation Preference of the Series B
     Preferred Stock is equal to the stated value plus accrued and unpaid
     dividends to the date of liquidation. The Series B Preferred Stock granted
     ACI the right to add two directors to the SEMX Board of Directors.

     To avoid the possibility of there being a current or a future triggering
     event under a certain financial covenant provision of the Preferred Stock
     that would allow the ACI investors to call for immediate redemption of the
     Preferred Stock, the Company and the ACI investors entered into an
     agreement on November 13, 2001 that was amended and restated in its
     entirety on March 29, 2002. The Restated Agreement provided, among other
     things, that: (i) the redemption price for the Preferred Stock would not in
     any event be due prior to January 3, 2003, (ii) any increase in the
     dividend rate to which the ACI investors might otherwise be entitled to
     would not go into effect prior to January 3, 2003 and (iii) Section 14.1 of
     the Warrants that now provides that the Company would be obligated to
     purchase the Warrants (at a price which would provide the ACI investors
     with a 20% internal rate of return calculated from the date of issuance of
     the Preferred Stock, after taking into account dividends theretofore paid
     to the holders of the Preferred Stock and the value determined, as provided
     in the Warrants, of the shares of common stock of the Company, if any,
     issued pursuant to any exercises of the Warrants by the holders of the
     Warrants) upon a change of control pursuant to the formula therein set
     forth (the "Warrant Repurchase Agreement") was amended to apply also to a
     Bankruptcy event as therein defined. In addition, the Warrant Repurchase
     Formula would not apply to any redemption of the Preferred Stock unless,
     for calendar year 2002, there was no period of twenty consecutive trading
     days for which the daily market price of the Company's Common Stock was
     greater than $5.00 per share, and (iv) additional warrants to purchase
     250,000 shares of the Company's common stock were granted to the ACI
     investors, with an exercise price of $3.00 per share. During March 2002 the
     Company notified the ACI investors that it has elected to pass on the semi
     annual dividend due March 31, 2002 as is permitted one time without penalty
     under the Preferred Stock agreement.

     Shareholder Rights Plan: On March 26, 1999, the Company's Board of
     Directors unanimously adopted a shareholder rights plan (the "Rights
     Plan"), commonly referred to as a "poison pill." Under the Rights Plan,
     shareholders of record on June 15, 1999 (unless excepted under the terms of
     the Rights Plan) will receive rights until the distribution date to
     purchase a unit consisting of one one-thousandth of a Series of Preferred
     Shares of the Company at $50 per unit.

     The Board of Directors may declare a distribution date within ten (10)
     business days following (i) the acquisition of or right to acquire, by a
     person or group, fifteen (15%) percent or more of the outstanding shares of
     the Company or (ii) the commencement of a tender offer or exchange offer
     that would, if consummated, result in a person or group owning fifteen
     (15%) percent or more of the outstanding shares of the Company. Upon the
     declaration of a distribution date, each holder of a right will have the
     right to receive, upon exercise, common shares having a value equal to two
     times the exercise price of the

                                     -F17-
<PAGE>

                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (dollars in thousands, except per share amounts)
================================================================================


     right. In the alternative, the Board of Directors, at its option, may
     exchange all outstanding and exercisable rights for common shares at an
     exchange ratio of one common share per each right. The Board may redeem the
     rights prior to an event triggering a distribution date at $.001 per right.

     Stock Options: The Company's incentive stock option plan (the "Incentive
     Plan"), as amended, under which 900,000 common shares have been reserved
     for future issuance terminated as of December 20, 2001 and no additional
     grants are permitted under this plan. The Company will submit a proposal
     for a new plan as part of the proxy for its upcoming annual meeting. The
     Incentive Plan provided for the sale of shares to employees of the Company
     at a price not less than the fair market value of the shares on the date of
     the stock option grant, provided that the exercise price of any stock
     option granted to an employee owning more than 10% of the outstanding
     common shares of the Company may not be less than 110% of the fair market
     value of the shares on the date of the stock option grant. The term of each
     stock option and the manner of exercise is determined by the board of
     directors, but in no case can the stock options be exercisable in excess of
     10 years beyond the date of grant. In May 1995, the Company adopted a
     nonqualified stock option plan (the "Nonqualified Plan"), as amended, under
     which 300,000 shares have been reserved for future issuance.

     At December 31, 2001, stock options to purchase 849,192 and 256,500 shares
     of common stock (excluding lapsed shares) have been granted under the
     Incentive Plan and the Nonqualified Plan, respectively, since the inception
     of both plans. In addition, at December 31, 2001, options to purchase
     123,750 shares of common stock have been granted outside the Incentive Plan
     and the Nonqualified Plan at a price equal to the fair market value of the
     shares at the date of grant.

     A summary of the status of the Company's stock options as of December 31,
     2001, 2000 and 1999, and changes during the years then ended is presented
     below:

<TABLE>
<CAPTION>

December 31,                                      2001                            2000                            1999
-----------------------------------    ---------------------------     ---------------------------     ---------------------------
                                                       Weighted-                       Weighted-                       Weighted-
                                                        Average                         Average                         Average
                                                       Exercise                        Exercise                        Exercise
                                         Shares          Price           Shares          Price           Shares          Price
-----------------------------------    ------------    -----------     -----------     -----------     -----------    ------------
<S>                                    <C>            <C>              <C>            <C>              <C>           <C>
Outstanding at Beginning of year         897,613        $   4.62         740,025        $   3.58         492,925       $   5.01
Canceled                                (150,875)           5.83         (48,983)           4.23        (135,275)          6.11
Granted                                  112,300            2.84         360,500            5.84         403,000           2.64
Exercised                                (18,375)           2.15        (153,929)           2.08         (20,625)          2.83
-----------------------------------    ------------    -----------     -----------     -----------     -----------    ------------
Outstanding at end of year               840,663        $   4.22         897,613        $   4.62         740,025       $   3.58
-----------------------------------    ------------    -----------     -----------     -----------     -----------    ------------
Options exercisable at year-end          546,825                         408,851                         467,025
-----------------------------------    ------------    -----------     -----------     -----------     -----------    ------------
Weighted - average fair value of
options granted during the year                         $   1.29                        $   4.00                       $   1.54
-----------------------------------    ------------    -----------     -----------     -----------     -----------    ------------
</TABLE>


                                     -F18-
<PAGE>


                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (dollars in thousands, except per share amounts)
================================================================================


       The following table summarizes information about fixed stock options
outstanding at December 31, 2001:

<TABLE>
<CAPTION>
                                 Options Outstanding                             Options Exercisable
                           --------------------------------    -------------------------------------------------
                                              Weighted-
                               Number          Average            Weighted-         Number          Weighted-
                           Outstanding at     Remaining            Average        Exercisable        Average
     Range of               December 31,     Contractual           Exercise       at December       Exercise
  Exercise Prices               2001             Life               Price           31, 2001          Price
------------------------   ---------------  ---------------    ---------------  ---------------  ---------------
<S>                         <C>               <C>               <C>               <C>             <C>
 $  0.10 - $  1.79              238,425           5.1               $ 1.61            81,800          $ 1.63
 $  1.85 - $  3.94              179,738           3.2                 3.23           125,025            3.37
 $  4.00 - $  6.63              195,750           3.4                 4.63           120,750            5.03
 $  7.13 - $  8.25              208,250           8.2                 7.16           208,250            7.16
 $  9.25 - $  9.88               18,500           7.0                 9.64            11,000            9.65
------------------------   ---------------  ---------------    ---------------  ---------------  ---------------
 $  0.10 - $  9.88              840,663           6.8               $ 4.22           546,825          $ 5.04
------------------------   ---------------  ---------------    ---------------  ---------------  ---------------
</TABLE>

     The Company has elected, in accordance with the provisions of SFAS No. 123,
     to apply the current accounting rules under APB Opinion No. 25 and related
     interpretations in accounting for its stock options and, accordingly, has
     presented the disclosure only information as required by SFAS No. 123. If
     the Company had elected to recognize compensation cost based on the fair
     value of the options granted at the grant date as prescribed by SFAS No.
     123, the Company's net income (loss) and earnings (loss) per common share
     for the years ended December 31, 2001, 2000 and 1999 would approximate the
     pro forma amounts indicated in the table below:

<TABLE>
<CAPTION>

Year ended December 31,                                                  2001                2000                1999
----------------------------------------------------------------   ----------------   -----------------   -----------------
<S>                                                                 <C>                <C>                 <C>
Net income (loss) attributable to common shareholders -
 as reported                                                          $  (19,219)         $    2,141          $    7,383
================================================================   ================   =================   =================
Net income (loss) attributable to common shareholders -
 pro forma                                                            $  (19,620)         $    1,771          $    7,124
================================================================   ================   =================   =================
Earnings (loss) per share - as reported:
   Basic                                                              $    (3.04)         $      .34          $     1.22
   Diluted                                                            $    (3.04)         $      .32          $     1.19
================================================================   ================   =================   =================
Earnings (loss) per share - pro forma:
   Basic                                                              $    (3.10)         $      .29          $     1.18
   Diluted                                                            $    (3.10)         $      .27          $     1.14
================================================================   ================   =================   =================
</TABLE>

     The fair value of each stock option grant is estimated on the date of grant
     using the Black-Scholes option-pricing model with the following
     weighted-average assumptions used for the years ended December 31, 2001,
     2000 and 1999, respectively: expected volatility of 55.54%, 85.11% and
     79.3%, respectively; risk-free interest rates of 3.9%, 6.09% and 5.2%,
     respectively; and expected lives of 3.7 years, 4.3 years and 4.1 years,
     respectively.

12.  SEGMENT INFORMATION

     The Company operates in one industry segment, the Microelectronic Packaging
     Group as a result of the discontinuance of the Wafer Reclaim Services
     Group.

     The Company's areas of operation are principally in the United States.
     Operations outside the United States are worldwide and are primarily in
     Europe, North Africa and Asia. No single foreign country or geographic area
     is significant to the consolidated operations. Revenue from one customer
     accounted for 25% of the Company's total revenue from its continuing
     operations for the year ended December 31, 2001 and 22% of the Company's
     total revenue from its continuing operations for the year ended December
     31, 2000. Revenue from the same customer accounted for 29% of the Company's
     total revenue from its continuing operations for the year ended December
     31, 1999


                                     -F19-
<PAGE>


                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (dollars in thousands, except per share amounts)
================================================================================


13.  EXPORT REVENUE:

     For the years ended December 31, 2001, 2000 and 1999, export revenue to
     unaffiliated customers amounted to approximately 17%, 20% and 18%,
     respectively, of the Company's consolidated revenue from its continuing
     operations.

14.  ALLOWANCE FOR DOUBTFUL ACCOUNTS:

     Information relating to the allowance for doubtful accounts is as follows:

<TABLE>
<CAPTION>
                                           Balance at          Charged to
                                          Beginning of          Costs and                             Balance at End
Year ended December 31,                       Year              Expenses            Deductions            of Year

<S>                                        <C>                  <C>             <C>                      <C>
                2001                        $  354               $  655              $  152 (a) (b)       $  857
=====================================   =================    ================    =================    ================
                2000                        $  656               $   64              $  366 (a)           $  354
=====================================   =================    ================    =================    ================
                1999                        $  245               $  417              $    6 (a)           $  656
=====================================   =================    ================    =================    ================
</TABLE>


     (a) Write-off of uncollectible accounts receivable.

     (b) Includes reclassification of allowance to net assets of discontinued
         operations


                                     -F20-
<PAGE>


                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (dollars in thousands, except per share amounts)
================================================================================


15.  QUARTERLY FINANCIAL DATA:

     The following is a summary of the unaudited quarterly results of operations
     for the years ended December 31, 2001 and 2000:

<TABLE>
<CAPTION>
                                                        2001 Quarters Ended

                                                March 31       June 30       September 30       December 31         Total
                                             -------------- -------------  ----------------  ----------------   --------------
<S>                                            <C>            <C>            <C>                <C>               <C>
Net sales                                      $  14,155      $  11,219      $   8,645          $   5,336         $  39,355
------------------------------------------------------------------------------------------------------------------------------
Gross Profit                                       3,298          3,129          1,329             (1,967)            5,789
------------------------------------------------------------------------------------------------------------------------------
Loss from continuing operations                      (98)           (76)          (890)            (3,802)           (4,866)
Loss from discontinued operations                    (45)          (608)          (608)              (754)           (2,015)
Loss on disposal of discontinued operations            -           -  -           -  -            (11,534)          (11,534)
------------------------------------------------------------------------------------------------------------------------------
Net loss                                            (143)          (684)        (1,498)           (16,090)          (18,415)
------------------------------------------------------------------------------------------------------------------------------
Net loss attributable to common shareholders        (344)          (885)        (1,699)           (16,291)          (19,219)
------------------------------------------------------------------------------------------------------------------------------

Basic loss per common share:
   Continuing operations                       $    (.04)     $    (.04)     $    (.17)         $    (.63)        $    (.90)
   Discontinued operations                     $    (.01)     $    (.10)     $    (.10)         $   (1.94)        $   (2.14)
------------------------------------------------------------------------------------------------------------------------------
                                               $    (.05)     $    (.14)     $    (.27)         $   (2.57)        $   (3.04)
------------------------------------------------------------------------------------------------------------------------------

Diluted loss per common share:
   Continuing operations                       $    (.04)     $    (.04)     $    (.17)         $    (.63)        $    (.90)
   Discontinued operations                     $    (.01)     $    (.10)     $    (.10)         $   (1.94)        $   (2.14)
------------------------------------------------------------------------------------------------------------------------------
                                               $    (.05)     $    (.14)     $    (.27)         $   (2.57)        $   (3.04)
------------------------------------------------------------------------------------------------------------------------------

Weighted  average  number of  common  shares
outstanding:
   Basic                                           6,317          6,324          6,331              6,325             6,325
   Diluted                                         6,317          6,324          6,331              6,325             6,325
------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                     -F21-
<PAGE>



                        SEMX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                (dollars in thousands, except per share amounts)
================================================================================

<TABLE>
<CAPTION>
                                                          2000 Quarters Ended

                                               March 31         June 30       September 30       December 31        Total
                                             --------------  --------------  ----------------  ----------------  -------------
<S>                                            <C>             <C>             <C>               <C>               <C>
Net sales                                      $  12,016       $  12,657       $  13,916         $  15,043         $  53,632
------------------------------------------------------------------------------------------------------------------------------
Gross Profit                                       4,322           4,045           3,617             4,486            16,470
------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations                    917             500             205               718             2,340
Income (loss) from discontinued operations           (74)            109             109               130               274
------------------------------------------------------------------------------------------------------------------------------
Net income                                           843             609             314               848             2,614
------------------------------------------------------------------------------------------------------------------------------
Net income attributable to common shareholders       843             555             112               631             2,141
------------------------------------------------------------------------------------------------------------------------------

Basic income (loss) per common share:
   Continuing operations                       $     .15       $     .07       $     .00         $     .08               .30
   Discontinued operations                     $    (.01)      $     .02       $     .02         $     .02               .04
------------------------------------------------------------------------------------------------------------------------------
                                               $     .14       $     .09       $     .02         $     .10               .34
------------------------------------------------------------------------------------------------------------------------------

Diluted income (loss) per common share:
   Continuing operations                       $     .14       $     .07       $     .00         $     .08               .28
   Discontinued operations                     $    (.01)      $     .01       $     .02         $     .02               .04
------------------------------------------------------------------------------------------------------------------------------
                                               $     .13       $     .08       $     .02         $     .10               .32
------------------------------------------------------------------------------------------------------------------------------

Weighted average number of common shares
outstanding:
   Basic                                           6,079           6,208           6,256             6,298             6,213
   Diluted                                         6,551           6,676           6,580             6,582             6,601
------------------------------------------------------------------------------------------------------------------------------
</TABLE>



                                     -F22-