<PAGE>

                          SECURITIES AND EXCHANGE COMMISSION

                               WASHINGTON, D.C.   20549

                                     FORM 10-KSB
(Mark One)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 [NO FEE REQUIRED]

For the fiscal year ended February 28, 1998

                                          OR

[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from                 to
                               ---------------    ---------------

                     Commission file number   1-12680
                                            ---------------

                                ORYX TECHNOLOGY CORP.
--------------------------------------------------------------------------------
             (Name of Small Business Issuer as specified in its charter)

           Delaware                                              22-2115841
-------------------------------                              -------------------
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

1100 Auburn Street, Fremont, California                            94538
-----------------------------------------------                  ----------
(Address of principal executive offices)                         (Zip Code)

     Issuer's Telephone Number, including area code:  (510) 492-2080
                                                    ------------------
     Securities registered pursuant to Section 12(b) of the Act:

                                        Name of each exchange
    Title of each class                  On which registered
    -------------------                  -------------------

Common Stock, $.001 par value           NASDAQ/Pacific Exchange
-----------------------------           ------------------------
Common Stock Purchase Warrants          NASDAQ/Pacific Exchange
------------------------------          ------------------------

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

                                        None
--------------------------------------------------------------------------------
                                   (Title of class)

--------------------------------------------------------------------------------
                                   (Title of class)

     Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the Issuer 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 there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of the Issuer's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.  [ X ]
                                        ---

     Issuer's revenues from continuing operations for its most recent fiscal
year were $8,449,000.

     As of May 15, 1998, 13,124,821 shares of Common Stock and Preferred Stock
convertible into 52,515 shares of Common Stock of Registrant were outstanding.
The aggregate market value of the shares of Common Stock held by non-affiliates
of Registrant, based on the average of the closing bid and asked prices on April
30, 1998: $1 and $1-1/32 quoted by the National Association of Securities
Dealers Automated Quotation System ("NASDAQ"), was approximately $12,543,561.(1)

     13,124,821 shares of the Company's Common Stock were outstanding as of
April 30, 1998.

     Transitional Small Business Disclosure Format (check one):
Yes       No  X
    ---      ---


                         DOCUMENTS INCORPORATED BY REFERENCE


<PAGE>

Portions of the definitive Proxy Statement to be delivered to stockholders in
connection with the 1998 Annual Meeting of Stockholders are incorporated by
reference into Part III.




-------------------
     (1) For purposes of this Report, shares held by non-affiliates were 
determined by aggregating the number of shares held by officers and directors 
of the Registrant, and by others who, to Registrant's knowledge, own 5% or 
more of Registrant's Common Stock including shares of Preferred Stock 
convertible into Common Stock, and subtracting those shares from the total 
number of shares outstanding.  The price quotations supplied by NASDAQ 
represent prices between dealers and do not include retail mark-up, mark-down 
or commission and do not represent actual transactions.

<PAGE>

     SOME OF THE INFORMATION IN THIS REPORT, INCLUDING THE DISCUSSION OF THE
COMPANY'S STRATEGY, PRODUCTION PLANS, DISTRIBUTION STRATEGIES AND VARIOUS
STATEMENTS CONCERNING THE COMPANY'S PLANS FOR EXPANSION AND EXPECTATIONS FOR
GROWTH FOR BOTH THE COMPANY AND THE MARKETS IN WHICH THE COMPANY COMPETES
CONSTITUTE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE
SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE
ACT OF 1934, AS AMENDED.  ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
PROJECTED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF THE RISKS AND
UNCERTAINTIES DESCRIBED UNDER THE CAPTION "RISK FACTORS" SET FORTH IN PART I OF
THIS REPORT AND THOSE IDENTIFIED BY THE COMPANY FROM TIME TO TIME IN OTHER
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION"), PRESS
RELEASES AND OTHER COMMUNICATIONS.


                                       PART I

                                       BUSINESS

Item 1.   DESCRIPTION OF BUSINESS

Introduction

     Oryx Technology Corp. ("Oryx" or the "Company") restructured its operations
during fiscal 1998.  Through fiscal 1998, the Company designed, manufactured and
marketed specialized components, analytical equipment and instrumentation
products for original equipment manufacturers ("OEMs") in the information
technology industry.  This industry includes office equipment, computers,
telecommunications and consumer electronics.  During fiscal 1998, the Company
operated three majority owned subsidiaries, as depicted below, focusing in three
distinct market segments: (i) power conversion products (Oryx Power Products
Corporation), (ii) electrical surge protection products (SurgX), and (iii)
materials analysis and test equipment and specialized materials products (Oryx
Instruments and Materials Corporation). During fiscal 1998 the Company embarked
upon a major restructuring program which resulted in the sale on February 27,
1998 of the test equipment portion of the business of Oryx Instruments and
Materials Corporation ("Instruments and Materials") and the sale on March 2,
1998 of substantially all of the assets of Oryx Power Products Corporation.

                       -----------------
                      | Oryx Technology |
                      |       Corp.     |
                       -----------------
                               |
          --------------------------------------------
         |                     |                      |
  ----------------     -----------------     ------------------
 |      Oryx      |   |       SurgX     |   | Oryx Instruments |
 | Power Products |   |    Corporation  |   |   and Materals   |
 |   Corporation  |   |                 |   |    Corporation   |
  ----------------     -----------------     ------------------

  -  Power Conversion   -  Surge Protection     -  Instruments (Test Equipment)
     Products              Components           -  Specialized Materials
  -  Contract Manufacturing                     -  Contract R&D


     Effective with the 1999 fiscal year (ending February 28, 1999), the Company
has now restructured itself as a materials based business.  Today, Oryx designs,
licenses and sells its proprietary technologies to provide electrostatic
discharge (ESD) protection and to coat materials used in the disk drive industry
(with Intragene, a patented process, and other ceramic metallization and joining
system products).


                                          1
<PAGE>

                  -----------------
                 | Oryx Technology |
                 |       Corp.     |
                  -----------------
                          |
              ---------------------------
             |                           |
      ---------------          -------------------
     |   Materials   |        | SurgX Corporation |
     |   Division    |        |                   |
      ---------------          -------------------

     -  Specialized Materials      -  Surge Protection
     -  Contract R&D                  Components

     Oryx' customer base for its current product lines includes the following
OEMs: Akashic Memories, Cooper/Bussmann Corporation ("Bussmann"), DAS Devices
Inc., IBM Corporation, Read Rite Corp., Seagate Technology, Inc., Trace Storage
Technology Corp., and Western Digital Media Corporation.  The Company currently
plans to market its existing product lines to these and other OEMs during fiscal
1999.  The Company has also undertaken research programs with the Department of
Defense ("DoD") and plans to pursue further joint research programs with major
companies in or supporting the information technology industry.

     The Company's predecessor, Advanced Technology, Inc. ("ATI"), was
incorporated on April 21, 1976 in New Jersey.  On July 25, 1993, ATI formed the
Company as a wholly-owned Delaware subsidiary, and on September 29, 1993, ATI
merged into the Company.

SURGX CORPORATION

     SurgX Corporation ("SurgX") is currently the principal subsidiary through
which the Company designs, manufactures and sells its surge protection
technology. The underlying technologies developed by SurgX are licensed
exclusively to two licenses, Bussmann, a division of Cooper Industries
("Bussmann") and Iriso, a Japanese connector manufacturer. Products manufactured
by these licensees utilizing SurgX's proprietary technology, are sold to OEMs in
the computer and electronics industries to provide protection against ESD events
through connectors and discretes at the printed circuit board level.

     BACKGROUND

     As the information technology industry increases capacity, speed and
performance, it is simultaneously moving toward faster circuit performance,
smaller chip geometries and using lower operating voltages.  These developments
have been accompanied by increases in both product susceptibility to failure
from over-voltage threats as well as more widespread incidences of such threats.
Failure to address these problems can result in the destruction of chips and
circuitry. These threats can originate from inside or outside the products and
can arise from such factors as human body electrostatic discharge, induced
lightning effects, spurious line transients and other complex over-voltage
sources. During the last decade, new products emerged to address this need to
protect integrated circuits from ESD. Related specialized products range from
wrist straps worn by electronics assembly workers, to special anti-static
packaging of both components and sub-assemblies and on board level protection
devices such as diodes, varistors and other surge protection devices.

     The global market for all surge protection devices is predicted to reach
$1.9 billion in calendar 1998, and is comprised of some mature devices such as
gas discharge tubes, varistors, "TVS" (transient voltage suppression), diodes
and thyristors.  The key markets using surge protection devices and technologies
are telecommunication, automotive and computers. Sales of surge protection
devices are split between 40% for varistors, 40% for diodes, and 20% for gas
discharge tubes and surge resistor networks.  Though proven for performance and
reliability, each of these technologies has only a narrow range of application.
In addition, none achieves the desired combination of high speed, elevated power
handling capability, low clamping voltage and low capacitance.  Furthermore,
present conventional devices and methodologies are expensive for use on all
signal lines on a given circuit board.  The major suppliers for surge protection
products include General Instrument Corp., Harris Semiconductor, Inc., Motorola
Corp., Panasonic, Shinko, and Siemens Components, Inc.

     BUSINESS

     In 1993, the Company assembled a product design team for the development
and manufacture of a family of specialized components designed to protect
integrated circuits, integrated circuit modules, and assembled printed circuit
boards. The Company completed preliminary prototypes of its SurgX-TM- products
in fiscal 1995 with first production releases being shipped in beginning
calendar year 1998.


                                          2
<PAGE>

     The proprietary SurgX technology for over-voltage protection is comprised
of a specialized polymer formulation containing inorganic solids, metal
particles and adhesion-promoting agents which can be tailored for use against
surge threats with different voltage and power levels.  The Company continues to
optimize the electrical performance of the technology to stay abreast of the
fast changing requirements of the industry. In 1996, the formulations designed
in 1994 were modified to fit unique requirements of the Bussmann manufacturing
process, and to improve response voltage performance.

     As part of its efforts to establish brand name recognition for its SurgX
product line, the Company intends to register unique names for its products with
different applications.  For instance, the trademark SurgX-TM- was registered
with the US Patent and Trademark Office on March 17, 1998.  The company is in
the process of filing statements for SurgTape-TM- which are due by July 20,
1998.  SurgTape-TM- should be registered two months thereafter.  The SurgAid-TM-
trademark registration, intended for use on SurgTape-TM- labels for ESD
protection of flex circuit applications was abandoned in 1998 and replaced with
SurgFlex-TM-.  The company will start the trademark application process for
SurgFlex-TM- in May 1998.  In 1997, SurgX filed a service mark application for
the SurgX logo design which was favorably received by SurgX customers.

     The original two patents filed by the company in 1995 on manufacturing
processes, methods of making the SurgX compositions, materials and on devices
have been divided up by the patent office into 11 different inventions for
filings as individual patents.  To date three of these patents have been filed
and a fourth is drafted for filing.  In May 1998, the company received notice
from the Patent Office that the patent on the method of manufacturing has been
approved and will issue in August 1998.  In 1997, foreign filings were initiated
in 10 countries plus Europe on the two original patents.  Except for the grant
of both applications by Singapore, all of the foreign patents are in process.  A
third patent on surface mount devices and connector component designs was filed
in the US in 1996, and in Europe in 1997.  In 1998, two additional patents on
overvoltage protection inside the IC package were prepared for filing.  As SurgX
products are commercialized, the company plans to review for filing the relevant
invention disclosures from 1996 and 1997. These disclosures cover significantly
proprietary art in devices, processes and materials.

     SurgX's approach to the market had consisted of two parallel paths. The
first product group was based on board-level ESD protection, incorporating
SurgX's liquid polymer-based material into discrete ESD protection devices.
These products are now being produced and sold in limited quantities by Bussmann
and IRISO.  The second product group, SurgTape, was intended to provide on-chip
protection by placing SurgX-based tape inside the IC package on the leadframe.
This product has not been commercially developed and development efforts have
been shifted to develop SurgTape for use in board level protection by applying
it on discrete ESD protection devices.

     The Company is directing substantially all of its development effort to
achieve lower response voltage performance and cost reductions in manufacturing
and packaging processes for the board level protection product.  It is the
Company's belief that if these improvements can be realized, it will expand the
number of markets which SurgX's technology can address.  Efforts to develop
SurgTape for on-board level protection and laser machining techniques are
methods the Company is pursuing to achieve these objectives.  However, there can
no assurances these technologies can be commercially developed or that customers
will accept these products as solutions for ESD protection.

     The discrete diode is the primary market addressed by SurgX. This market is
forecast to be approximately $700 million in 1998 with a growth rate predicated
between 9% to 10% annually. To a lesser extent, SurgX will seek to participate
in the varistor market, approximately the same size as the diode segment.  The
low capacitance requirement of ESD protection devices in many circuit designs
will provide the initial entry into this market segment. With further product
development, SurgX intends to address the larger, overall ESD protection market.

     SurgTape was conceived as an inexpensive, on-board surge protection device
for direct installation into the IC package. Due to inconclusive initial
development trials, insufficient funding and the need to develop a more easily
manufacturable version of SurgTape-TM- as an improved alternative to current
board-level protection techniques, efforts to develop SurgTape-TM- for on-chip
protection have been suspended.  Management believes that the development of low
cost, small size, and easy to use SurgTape-TM-  or variation of SurgTape-TM-,
for application inside the integrated circuit package remains a viable
alternative to existing ESD protection devices; however, given the Company's
resource constraints, the Company will continue this development effort only if
technology improvements are realized and development funds are available. There
can be no assurance that SurgX will be able to raise development funding, that
SurgTape can be commercially developed, or that IC manufacturers will embrace
this technology and replace or supplement existing on-chip ESD protection
devices with SurgTape-TM-.

     PRODUCTS AND DISTRIBUTION

     In fiscal year 1996, a strategic review of the SurgX business was
undertaken as part of the Company's overall business review.  The Company
determined that it would be more efficient to establish a relationship with an
experienced corporate partner who could provide the necessary high volume
manufacturing and distribution channels.

     In fiscal year 1997, an exclusive, world wide (except for Japan) license
was granted to Bussmann for the manufacture and marketing of SurgX surface mount
and connector array components.  In consideration for this license, Bussmann
paid $750,000 in development funding, and, subject to terms of the license
agreement, will pay royalties for approximately 11 years to SurgX based upon
Bussmann's sales of surface mount components and connectors. In September of
1997, this license agreement was amended, extending the term of the agreement to
20 years, granting the rights to Bussmann for SurgTape for board-level ESD
protection and providing SurgX with


                                          3
<PAGE>

$1,700,000 (in the form of non-refundable minimum royalties) of funding for 
the development and commercialization of SurgTape.  If SurgTape is 
successfully commercialized, this product will be marketed by Bussmann under 
the SurgX trademark.

     Bussmann is a leading manufacturer of fuses, and, prior to entering the
license agreement with SurgX, was seeking new circuit protection technology.
Bussmann's target market for SurgX is the rapidly growing electronics market.
Since the signing of the license agreement in July 1996, Bussmann has taken on
the manufacturing of SurgX components using liquid SurgX manufactured by SurgX
and the product launch with the Bussmann sales and marketing organization was
initiated in early calendar year 1998 with limited quantities currently being
shipped.

     In November 1997, Iriso made an equity investment of $500,000 in SurgX in
exchange for an ownership interest of approximately 3%. In conjunction with this
equity investment, Iriso received a 15 year co-license to manufacture and sell
the Company's SurgX technology for board level ESD protection exclusively in
Japan. These products will be marketed under the SurgX trademarks. Iriso is
currently providing samples to prospective customers and plans the market launch
of SurgX surface mount and connector components in mid calendar year 1998.

     In fiscal 1997, SurgX entered into two SurgTape milestone-based product
development agreements with two manufacturers of integrated circuits. While
SurgX completed the electrical proof of concept milestone with one such
manufacturer, the Company was unable to repeat this success with the second
manufacturers.  Subsequently, these manufacturers did not commit additional
funding for any further development and substantially all development efforts
for SurgTape for on-chip protection have been abandoned. The two manufacturers
who funded the initial development expressed interest in testing and evaluating
SurgTape when the performance and design parameters are improved to the levels
required by their proprietary integrated circuits and their package
requirements.

     After development efforts for the board level protection products are
successfully completed, management will renew efforts to investigate new
development contracts for on-chip protection with integrated circuit
manufacturers.  However, there can be no assurance that SurgX will be able to
consummate any of these relationships, that any such relationship will be on
commercially advantageous terms to SurgX, or that any of the products will be
ultimately developed.

ORYX INSTRUMENTS AND MATERIALS CORPORATION

     Prior to February 27, 1998 Oryx Instruments and Materials Corporation
("Instruments and Materials") designed, manufactured and marketed test
equipment, specialized materials and electromagnet systems for the hard disk
drive and semiconductor industries. On February 27, 1998, a third party acquired
8,000,000 shares of Class A Common Stock of Oryx Instruments and Materials
Corporation for a purchase price of $500,000.  As part of the sale transaction,
Oryx Instruments and Materials then redeemed 8,000,000 shares of the Company's
10,000,000 share holdings of Class A Common Stock for an aggregate price of
$1,500,000.  Terms of the 8,000,000 share stock redemption include $500,000 paid
on the closing, and $333,000 payable on February 27, 1999 and $667,000 
payable on February 27, 2000, memorialized via a promissory note and stock 
pledge agreement. As part of the sale, Oryx Instruments & Materials 
distributed all the assets and liabilities of the Materials business segment 
and certain other assets of Instruments business segment to the Company. The 
Company retains an ownership interest of 19.9% in Instruments and Materials.

     MATERIALS BUSINESS UNIT BACKGROUND

     The Company currently owns and operates the former materials division of
Instruments and Materials. This division offers specialized materials assemblies
based upon the patented Intragene-TM- ceramic metallization and joining system.

     The materials division product line consists of Intragene-TM--based
sputtering target assemblies and electromagnent systems. The sputtering target
assemblies have been sold into the rigid disk market since 1986 and are
considered one of the most reliable such assemblies in the market today.

     Sputtering target assemblies are manufactured by materials companies and
sold to end-users as source materials for coating other materials via a vacuum
based process called sputtering. Sputtering is employed as the primary method
for depositing thin film functional and protective layers on rigid magnetic
media (hard disks), as well as in many semiconductor manufacturing operations.
Once a target is made, it must usually be incorporated into the sputtering
apparatus by joining it to a backing plate to make sound electrical, thermal and
mechanical contact. The bonding of a target to the backing plate, which is
usually made of copper, forms what is known as the "bonded target assembly."

     The materials division manufactures these high quality sputtering target
assemblies based primarily on its patented Intragene-TM- metal to non-metal and
metal to metal joining process. The Intragene-TM- process is a proprietary
methodology developed by metallurgists and materials scientists at the Company
and has been granted six U.S. patents as well as national phase patents based on
two European patent applications and three Japanese patents. The Intragene-TM-
process facilitates the ability to metallize, solder or braze a wide range of
engineering ceramics, graphite and refractory metals.  The materials division
also manufactures electromagnet systems which produce very accurate and high
level electromagnet fields. These products are sold to magnetic recording head
manufacturers who often utilize these systems for wafer plating.

     The materials division employs personnel with extensive backgrounds in
engineering materials and joining. This has allowed it to develop several
approaches to bonding brittle solids of low to intermediate thermal expansion to
typical high-expansion backing plate


                                          4
<PAGE>

materials such as copper and aluminum. The Company's experience in assembly,
design and stress reduction, combined with the ability to produce bonded target
assemblies, has enabled it to become a supplier of such products selling
directly to the thin-film magnetic media manufacturers.

     The materials division's primary customers of the bonded targets are Fuji
Electric, Hyundai Electronics America (Max Media Corp.), Seagate Recording
Media, Inc. (formerly, Conner Peripherals and Seagate Magnetics), StorMedia
Corporation, Trace Technology, and Western Digital Media Corporation. Materials'
primary customers for the materials division's electromagnet system are DAS
Devices Inc, and Read Rite Corp.

      The materials division derives substantially all of its revenue from rigid
magnetic media manufacturers.  During the fourth quarter of fiscal 1998 the disk
drive industry experienced a significant slow down which had a direct impact on
the Company's sales.  Demand for bonded sputtering target assemblies continues
to be suppressed as world-wide demand for rigid magnetic media are at low
levels.  Management currently believes that demand for product will increase
toward the end of fiscal 1999 as the disk drive industry itself recovers.

     Magnetic media manufacturers are presently working on new technologies
which could significantly reduce the demand for the Company's sputtering target
assemblies. Currently, magnetic media manufacturers are exploring Chemical Vapor
Deposition ("CVD") techniques as alternatives to the sputtering target assembly
due to expected superior product performance and reduced cost.  The company is
exploring the feasibility of being a supplier of this new technology as well as
offering new synergistic products to its current customer base. There can be no
assurances that the Company will be able to develop and supply new products or
that its current products will not be rendered obsolete by new technologies.

     The Company's operations in the ESD and materials businesses have been
partially funded through government contracts.

     The Company has also undertaken research programs with the DoD, and has
been the recipient of four Phase I and two Phase II SBIR (Small Business
Innovative Research) contracts from NASA, two Phase I contracts from the DoD,
and one Phase I contract from the National Science Foundation during its
1992-1997 fiscal years, most of which involve applications of its Intragene-TM-
and related core technology. The contracts represent grants totaling over $2
million.

     The Company recently was awarded two Phase II SBIR research and development
contracts.  One such contract with the US Army Tank Automotive Comma in Warren,
Michigan, is valued at $600,000 and is for development of impact absorbing
materials.  The other, from BMDO, monitored through the Office of Naval
Research, is geared toward the development of a fabrication protocol for the
high volume manufacturing of the Company's SurgX devices for ESD surge
suppression.  This contract is valued at approximately $1.5 million with
one-half being provided as matching funds from Oryx or partner companies.

ORYX POWER PRODUCTS CORPORATION (DISCONTINUED OPERATION)

     Oryx Power Products Corporation ("Power Products") designed, manufactured
and marketed custom and standard AC/DC switching power supplies and high density
DC/DC power conversion products for various electronics products, and provided
contract manufacturing services to OEMs.  On March 2, 1998, Oryx's Power
Products business was sold in its entirety through a disposition of
substantially all of its assets and liabilities to Todd Power Products.

REGULATION AND ENVIRONMENTAL MATTERS

     The Company is subject to various federal, state and local laws,
regulations and recommendations relating to safe working conditions, laboratory
and manufacturing practices, and the use and disposal of hazardous or
potentially hazardous substances. The Company believes that its facilities and
practices for controlling and disposing of the limited amount of waste and
potentially hazardous materials it produces comply with applicable environmental
laws and regulations. The development of any additional manufacturing operations
by the Company may require the Company to comply with government regulations
designed to protect the environment from wastes and emissions and from hazardous
substances, particularly with respect to the emission of air pollutants, the
discharge of cooling water, the disposal of residues and the storage of
hazardous substances.  The extent of government regulation which might result
from any future legislation or administrative action cannot be accurately
predicted.

PATENTS AND PROPRIETARY RIGHTS

     Proprietary protection for the Company's products, processes and know-how
is important to its business. The Company currently has numerous patents issued
and in process. The Company's policy is to file patent applications to protect
its technology, inventions and improvements as soon as practicable.  The Company
also relies upon trade secrets, know-how and continuing technological innovation
to develop and maintain its competitive position.

     The Company owns and will maintain six patents, which are associated with
the Intragene process.  The Intragene patents expire in 1999 and 2000.  The
Company plans to file improvement patent applications which may effectively
broaden proprietary protection.  There can be no assurances, however, that such
improvement patent applications will be granted.  The Company does not believe
that the expiration of such patents will have a materially adverse effect on its
competitive position relative to the marketing of its ceramic metallization and
bonding system products.


                                          5
<PAGE>

EMPLOYEES

     As of April 30, 1998, the Company employed 17 people on a full-time basis.
Included among full time employees are 2 executive officers, 2 managers and
executive personnel, 4 engineering personnel, 3 administrative personnel and 6
manufacturing personnel.  The Company's employees are not covered by any
collective bargaining agreements, and the Company believes its employee
relations are satisfactory.

                                          6
<PAGE>

                                     RISK FACTORS

     HISTORY OF UNPROFITABILITY; SUBSTANTIAL RECENT OPERATING LOSSES AND 
ACCUMULATED DEFICIT

     Since its initial public offering in April 1994, the Company has not been
profitable on a quarterly or annual basis except for the quarters ended May 31,
1996, August 31, 1996 and November 30, 1996.  At February 28, 1998, the Company
had an accumulated deficit of $17,384,000.  The Company expects that it will not
be profitable for the fiscal year ending February 28, 1999 and there can be no
assurance that the Company will be profitable thereafter.

     RESTRUCTURING

     In fiscal 1998, the Company undertook substantial restructuring of its
operations, such that the majority of the Company's activities may properly be
deemed "developmental." In the course of selling various business units
described above, the Company disposed of operations which had accounted for a
substantial majority of its revenues.  While the Company believes that this
downsizing will substantially reduce its losses and enable it to focus on key
strategic businesses, the actual impact cannot be certain. In the absence of
increased sales from its remaining businesses, and key technology developments,
such restructuring may have sharply reduced the Company's revenues while not yet
creating opportunities to offset the lost revenues.

     LIQUIDITY AND CAPITAL RESOURCES

     The Company's working capital decreased from $7,406,000 at February 28,
1997 to $1,501,000 at February 28, 1998 primarily due to operating losses. The
Company's ratio of current assets to current liabilities was 3.7:1 at February
28, 1997 and 1.6:1 at February 28, 1998. At February 28, 1998 the Company had
$129,000 outstanding under its Inventory credit line related to continuing
operations. In February 1998 and March 1998 the Company sold the business of its
Power Products subsidiary and its majority interest in Instruments and
Materials. These two actions substantially reduced the Company's on-going
operating losses and provided sufficient capital to meet its current fiscal 1999
operating plan. However, in the event the Company does not meet its current
operating plan and it requires additional equity or attempts to raise capital
through an asset sale or development contract, there can be no assurance that
such transactions can be effected in a timely manner to meet all of the
Company's needs, or at all, or that any such transaction will be on terms
acceptable to the Company or in the interest of its stockholders.

     RISKS OF NEW PHASE OF DEVELOPMENT

     During fiscal 1998, the Company amended its licensing agreement with
Bussmann, in addition to other considerations, to fund $1,700,000 for continued
development activities for SurgX's board level ESD protection technology.  Prior
to fiscal 1999, the Company has invested substantially in the development of its
proprietary ESD surge protection.  These funds were primarily exhausted in
February 1998 and the Company revamped its development efforts to bring its
operating costs in line with projected available funds. As a result of these
steps, substantially all development activities related to on-chip ESD
protection was halted.  The Company believes it is employing adequate resources
to support product enhancements for on-board ESD and will increase development
efforts if development funds become available. To the extent additional
development is required, there can be no assurance that the Company will be able
to successfully raise the necessary development funds or that these enhancements
can be commercialized or developed into financially viable businesses.
Development results in the future will be influenced by numerous factors,
including the availability of funding, technological developments by the
Company, its customers and competitors, increases in expenses associated with
product development, market acceptance of the Company's products, the ability of
the Company successfully to control its costs of development, overhead and other
costs, the capacity of the Company to develop and manage the introduction of new
products, and competition.

     RISKS ASSOCIATED WITH MANAGEMENT OF GROWTH; INTERNAL CONTROL
DEFICIENCIES

     In connection with the audit of fiscal year 1995, a reportable condition 
was identified with respect to the Company's record keeping for equity 
financing and share issuance transactions.  In connection with the Company's 
audit for the fiscal year ended February 29, 1996, the Company's independent 
accountants identified a further reportable condition relating to physical 
inventory procedures specifically with regard to substantial adjustments that 
resulted from physical inventories taken during the fiscal year ended 
February 29, 1996. The resulting adjustments were reflected in the fiscal 
year 1996 financial statements. A reportable condition indicates that a 
material error or irregularity may occur in the Company's quarterly and 
year-end financial statements and may not be detected on a timely basis by 
the Company's employees, thereby possibly resulting in a misstatement of the 
Company's financial statements. Management has taken actions to resolve these 
conditions and there have been no reportable conditions for the period ended 
February 28, 1997 and February 28, 1998, respectively.

     SIGNIFICANT CUSTOMER DEPENDENCE

     The Company entered into two exclusive license agreements for use of its
SurgX technology for ESD protection on discrete components and connector arrays.
The Company receives a royalty equal to a percentage of each licensee's gross
profit on sales of products utilizing the SurgX technology.  While the Company
has and will assist the licensees in their efforts to exploit this technology,
the Company's future royalties are based solely upon the successful sales,
marketing and manufacturing efforts of its licenses.  While the license
agreements contains minimum annual royalty payment requirements for the licenses
to maintain their exclusive rights, there can be no assurances that the licenses
will pay the minimum royalty or that these minimum payments will provide enough
liquidity to continue to support the Company's operations.  In the case of
Bussmann, minimum royalty payments through 2001 have been satisfied to maintain
exclusivity, and


                                          7
<PAGE>

there can be no assurances that the Company will receive any royalty payments
from Bussmann through this time period since Bussmann would have to be
successful in selling products using SurgX to exceed the minimum royalty
payments, and at present, such sales have not yet been material.

     RELIANCE ON THIRD PARTY MANUFACTURERS MAY DISRUPT OPERATIONS

     The Company relies on third-party manufacturers for the supply of
substantially all key components for its products.  In the case of the materials
division, it relies on one supplier for its raw materials for sputtering target
assemblies. While reliance on a single supplier, involves several risks,
including without limitation, a potential inability to obtain an adequate supply
of required components and reduced control over pricing, quality, cost, and
timely delivery of components, the Company believes its sole source arrangement
has provided a lower cost, higher quality product then sourcing material from
multiple sources.  However, any inability to obtain adequate deliveries or any
other circumstances that would require the Company to seek alternative sources
of supply could lead to disruption of the operations of the Company, product
deficiencies, unanticipated and fluctuating expenses, unpredictable revenues,
and may have a material adverse effect on the Company's business and operations.

     TECHNOLOGICAL CHANGES AFFECTING PRODUCTS AND PRODUCT DEVELOPMENT RISKS

     The development design and manufacture of technology constantly undergoes
rapid and significant change.  The Company's success will depend upon its
ability to maintain a competitive position with respect to its proprietary and
other enhanced technology and to continue to attract and retain qualified
personnel in all phases of its operations.  The Company's business is, to a
large degree, dependent upon the enhancement of SurgX's current technology.
Critical to the Company's success and future profitability will be its capacity
to improve these technologies. Product development and enhancement involve
substantial research and development expenditures and a high degree of risk, and
there is no assurance that the Company's product development efforts will be
successful, will be accepted by the market, or that such development efforts can
be completed on a cost-effective or timely basis, or that there will be
sufficient funds to support development efforts.  There can be no assurance that
future technological developments will not render existing or proposed products
of the Company uneconomical obsolete or that the Company will not be adversely
affected by competition or by the future development of commercially viable
products by others.

     QUARTERLY FLUCTUATIONS OF OPERATING RESULTS

     The Company's quarterly operating results have in the past been, and will
in the future be, subject to significant fluctuation.  The Company's operating
results are impacted by numerous factors, such as, market acceptance of the
Company's SurgX' products; Bussmann's continued marketing, sales and financial
support of SurgX technology, containment of development costs, the level of
activity of the disk drive industry, purchasing patterns of OEMs and other
customers, delays in, or failure to receive, orders due to customer financial
difficulties, and overall economic trends.  In addition, customer orders may
involve design in requirements, thus making the timing of customer orders
difficult to predict and uneven.  Any delay or failure to receive anticipated
orders, or any deferrals or cancellation of existing orders, would adversely
affect the Company's financial performance.  The Company's expense levels are
based in part on its expectations as to future revenues and, in particular, the
successful launch of SurgX products by Bussmann and the recovery of the disk
drive industry.  The Company may be unable to adjust spending in a timely manner
to compensate for any delay in product development, or revenue shortfall, or the
recovery of the disk drive industry.  Accordingly, operating results in any one
quarter could be materially adversely affected by, among other factors, a
failure to receive, ship or obtain customer acceptance of sufficient orders in
that quarter and any weakening in demand for the Company's products or delays in
acceptance of the SurgX's technology could have a material adverse effect on the
Company's operating results.

     BACKLOG AND INVENTORY

     Backlog at the beginning of a quarter typically does not include all sales
required to achieve the Company's sales and operating targets for a quarter,
which targets depend on the Company's shipping orders scheduled to be sold
during that quarter.  The terms of customer purchase orders generally provide
that the customer may delay a substantial portion of the order with limited
notice and with little or no penalty.  The Company has experienced rescheduling
in the past and expects that it will experience such changes in the future.
Moreover, as the Company transitions to a licensing operation for the majority
of its revenues, it will have far less direct control over shipments of products
resulting in revenues to it, and hence, less visibility as to financial
performance and projected earnings, if any. In such case, the Company will have
to rely on the success of its licensees, Bussmann and Iriso, in selling products
incorporating the Company's technology.

     COMPETITION

     The Company is engaged in certain highly competitive and rapidly changing
segments of the electronic components industry in which technological advances,
costs, consistency and reliability of supply are critical to competitive
position.  In addition, the competition for recruitment of personnel in the
technologically-advanced manufacturing industry is continuous and highly
intense.  The Company competes or may subsequently compete, directly or
indirectly, with a large number of companies which may provide products or
components comparable to those provided by the Company.  In addition, many
present or prospective competitors are larger, better capitalized, more
established and have greater access to resources necessary to produce a
competitive advantage.

     NO ASSURANCES OF PROTECTION FOR PATENTS AND PROPRIETARY RIGHTS; RELIANCE 
ON TRADE SECRETS

                                          8
<PAGE>

     The Company relies on a combination of patent, copyright, trademark and
trade secret laws, non-disclosure agreements and other intellectual property
protection methods to protect its proprietary technology.  There can be no
assurance that any existing or subsequently obtained patents will provide the
Company with substantial competitive advantages, or that challenges will not be
instituted against the validity or enforceability of any patents owned by the
Company, or if initiated, that such challenges will not be successful.  To the
extent the Company wishes to assert its patent rights, there can be no assurance
that any claims of the Company's patents will be sufficient to protect the
Company's technology, and the cost of any litigation to uphold the validity of a
patent and prevent infringement can be substantial even if the Company prevails.
In addition, there can be no assurance that others will not independently
develop similar technologies, duplicate the Company's technology, or
legitimately design around the patented aspects of the Company's technology.
Competitors or potential competitors may have filed applications for or received
patents, and may obtain additional patents and proprietary rights relating to
technology competitive with that of the Company.  Furthermore, if additional
patents do not issue from present or future patent applications, the Company may
be subject to greater competition.

     In certain cases, the Company also relies on trade secrets to protect
proprietary technology and processes which it has developed or may develop in
the future.  There can be no assurance that secrecy obligations will be honored
or that others will not independently develop similar or superior technology.
The protection of proprietary technology through claims of trade secrets status
has been the subject of increasing claims and litigation by various companies,
both in order to protect proprietary rights, and for competitive purposes, even
where proprietary claims are unsubstantiated.  The prosecution of proprietary
claims or the defense of such claims is costly and uncertain given the rapid
development of the principles of law pertaining to this area.

     NO DIVIDENDS ON COMMON STOCK

     The Company has not paid any cash dividends on its Common Stock since its
inception and does not anticipate paying cash dividends on its Common Stock in
the foreseeable future.  The future payment of dividends is directly dependent
upon future earnings of the Company, its financial requirements and other
factors to be determined by the Company's Board of Directors, as well as the
possible consent of lenders, underwriters or others.  For the foreseeable
future, it is anticipated that any earnings which may be generated from the
Company's operations will be used to finance the growth of the Company and will
not be paid to holders of Common Stock.

     RISK OF SIGNIFICANT DILUTION

     The Company retained Yorkton Securities, Inc. ("Yorkton") to act as
placement agent pursuant to that certain Agency Agreement dated as of December
4, 1996 and amended as of January 23, 1997 (the "Agency Agreement"). Under the
terms of the Agency Agreement, the Company issued Yorkton warrants to purchase
90,730 and 72,800 shares of Common Stock for a per share exercise price of $1.90
(the "Yorkton Warrants").  The Yorkton Warrants are exercisable for a period of
five years from the date of each closing of the Regulation S offering.

     On February 27, 1998 the Company entered into a financing arrangement which
provided the Company with a six month bridge loan for an amount up to
$1,000,000.  In consideration for this loan, the Company issued warrants to
purchase 174,546 shares of Common Stock at a per share price of $1.15.  The
Warrants are exercisable for a period of three years from the inception date of
the bridge loan agreement.

     As a result of these and various other transactions previously entered by
the Company, as of February 28, 1998, there were convertible securities and
warrants and options of the Company currently outstanding for the conversion and
purchase of up to approximately 6,838,648 shares of Common Stock.  These
represent significant additional potential dilution for existing stockholders of
the Company.  These underlying shares of Common Stock are not included in
currently outstanding shares.  In addition, as a result of the anti-dilution
provisions included in certain of these derivative securities, there may be
further dilution based on the price that the Company issues other securities in
the future.

     VOLATILITY OF STOCK PRICE

     The market price of the Company's Common Stock has fluctuated substantially
since the Company's initial public offering in April 1994.  The Company believes
that a variety of factors could cause the price of the Company's Common Stock to
continue to fluctuate substantially, including, for example, announcements of
developments related to the Company's business, liquidity and financial
viability, fluctuations in the Company's operating results and order levels,
general conditions in the industries served by the Company, the technology
industry in general or the United States or worldwide economy, announcements of
technological innovations, new products or product enhancements by the Company
or its competitors, developments in patents or other intellectual property
rights, and developments in the Company's relationships with its customers,
distributors and suppliers.  In addition, in recent years, the stock market in
general and the market for shares of small capitalization stocks in particular
has experienced extreme price fluctuations which have often been unrelated to
the operating performance of affected companies. Such fluctuations could
adversely affect the market price of the Company's Securities and ability to
obtain additional financing.


     AUTHORIZATION OF PREFERRED STOCK


                                          9
<PAGE>

     The Board of Directors is authorized to issue shares of preferred stock and
to fix the dividend, liquidation, conversion, redemption and the rights,
preferences and limitation of such shares without any further vote or action of
the stockholders. Accordingly, the Board of Directors is empowered, without
stockholder approval, to issue preferred stock with dividend, liquidation,
conversion, voting or other rights which could adversely affect the voting power
of other rights of the holder of the Company's Common Stock.  In the event of
issuance, the preferred stock could be utilized, under certain circumstances, as
a method of discouraging and delaying or preventing a change of control of the
Company.  As of February 28, 1998, the Company had 4,500 shares of Preferred
Stock outstanding with an obligation to pay dividends thereon at the rate of
$0.25 per share.  Although the Company has no present intention to issue any
additional shares of its preferred stock, there can be no assurance that the
Company will not do so in the future.

Item 2.   DESCRIPTION OF PROPERTY

      The Company presently operates its material business in two separate
facilities and SurgX and Corporate have been consolidated into one building.  On
July 12, 1995, the Company entered into a lease agreement with SCI Limited
Partnership, for 3,600 square feet of manufacturing space located in Fremont,
California. The term of the lease is three years and lease payments are $3,510
per month including operating expenses. month, and the lease continues for a
period of five years.  On August 12, 1996, SurgX entered into an agreement with
E.B.J. Partners LP to lease a 22,000 square foot facility in Fremont,
California.  The monthly rental fee is $18,151 and the term of the lease expires
August 30, 2001.  The Company also leases another smaller manufacturing space on
a short term basis.

     Each of the properties described above is in satisfactory condition for the
purpose for which it is used.

Item 3.   LEGAL PROCEEDINGS

     The Company knows of no material litigation or claims pending, threatened
or contemplated to which the Company is or may become a party.

Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     During the fourth quarter of the Company's fiscal year ended February 28,
1998, no matters were submitted to a vote of security holders.

                                      PART II

Item 5.   MARKET FOR THE COMPANY'S UNITS, COMMON STOCK AND WARRANTS AND RELATED
STOCKHOLDER MATTERS

     Since the Company's initial public offering of the Common Stock and
Warrants on April 6, 1994, the Company's Common Stock and Warrants have traded
principally on the NASDAQ Small Cap Market under the symbols "ORYX" AND "ORYXW,"
respectively.  Prior to April 6, 1994, there was no public market for the
Company's securities.  From April 6, 1994 through June 6, 1994, the Company had
Units which were also traded on NASDAQ, at which time the Company requested
withdrawal of such listing.  The following table sets forth the high and low bid
quotations for the Common Stock and Warrants for the periods indicated, as
reported by NASDAQ. These quotations reflect prices between dealers, do not
include retail mark-ups, mark-downs or commissions and may not necessarily
represent actual transactions.

<TABLE>
<CAPTION>
                      Common Stock               Warrants
                      ------------               --------
                    High        Low          High        Low
                    ----        ---          ----        ---
<S>                 <C>         <C>          <C>         <C>
1997 Fiscal Year
----------------
1st Quarter         $3-11/16    $1-1/4       $2-11/16    $0-1/2
2nd Quarter         $4-1/16     $2-5/16      $3-5/8      $1-7/8
3rd Quarter         $3-3/16     $2-1/8       $2-19/32    $1-1/2
4th Quarter         $2-15/16    $2-1/16      $2-7/8      $1-9/16

1998 Fiscal Year
----------------
1st Quarter         $2-7/16     $0-3/4       $2-1/4      $1-3/32
2nd Quarter         $1-9/16     $0-13/16     $1-15/32    $0-3/16
3rd Quarter         $2-3/16     $1-1/8       $2          $0-3/4
4th Quarter         $1-17/32    $0-15/16     $1-13/32    $0-19/32
</TABLE>

     On May 20, 1998, the per share closing price for the Common Stock was
$1.31, and for the Warrants was $0.56.

     The Company's Common Stock and Warrants are also listed for trading on the
Pacific Exchange under the symbols "ORYX" and "ORYXW," respectively.  Prior to
June 6, 1994, the Company's Units were also traded on the Pacific Exchange, at
which time the Company requested withdrawal of the listing for the Units.  On
May 20, 1998, the closing sales prices for the Common Stock and Warrants, as
reported on the Pacific Exchange were the same as on NASDAQ.


                                          10
<PAGE>

     As of April 30, 1998 the number of record holders of the Company's Common
Stock and Warrants were approximately 107 and 12, respectively.

     The Company has never paid cash dividends on its Common Stock.  The Company
presently intends to retain future earnings, if any, to finance the expansion of
its business and does not anticipate that any cash dividends will be paid in the
foreseeable future.  The Company is also substantially restricted from the
payment of dividends under the terms of its Underwriting Agreement with J.W.
Charles, Inc.  Future dividend policy will depend on the Company's earnings,
capital requirements, expansion plans, financial condition and other relevant
factors as well as the possible need to obtain the consent of any of its
lenders, J. W. Charles and placement agents, for its recent private offerings.

Item 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS

     THE FOLLOWING DISCUSSION IN THE SECTION "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS" CONTAINS TREND
ANALYSIS AND OTHER FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A
OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.  ACTUAL RESULTS COULD DIFFER MATERIALLY FROM
THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF RISK FACTORS,
INCLUDING, WITHOUT LIMITATION, THOSE SET FORTH ABOVE IN THE SECTION "RISK
FACTORS."


     BUSINESS SEGMENTS

     Through fiscal year 1998, the Company operated in three main business
segments through its subsidiaries: Power Products, Instruments and Materials,
and SurgX. In addition, a corporate segment included certain activities that
were not directly related to any other operations. The businesses were
segregated and operated separately.  As noted above in Part I, during fiscal
year 1998, the Company embarked upon a major restructuring program. This
resulted in the sale on February 27, 1998 of most of the Company's majority
interest in Oryx Instruments and Materials Corporation and the sale on March 2,
1998 of substantially all of the assets of  Power Products Corporation.  As part
of the sale of its majority position in Instruments and Materials, the Company
retained certain assets from Instruments and Materials relating to sputtering
targets assembly.  Management believes that the effect of these steps was to
staunch the flow of losses of these subsidiaries to enable the Company to
concentrate on its ESD protection business.

<TABLE>
<CAPTION>

    Segment/Subsidiary                  Businesses
    ------------------                  ----------
    <S>                                 <C>
    SurgX Corporation                   - Surge Protection Components
    Oryx Instruments and Materials      - Specialized Materials
    Corporation                           Assemblies
                                        - Contract R&D
                                        - Instruments (Test Equipment):
                                          Sold 2/27/98

    Discontinued Operation:
    Oryx Power Products                 - Power Conversion Products
    Corporation                         - Contract Manufacturing
</TABLE>

     CONSOLIDATED RESULTS OF CONTINUING OPERATIONS

     For the fiscal year ended February 28, 1998, revenues from continuing
operations increased $1,979,000 or 30.6% from $6,470,000 for the year ended
February 28, 1997 to $8,449,000 for the year ended February 28, 1998.  The
growth in revenues was primarily attributable to increased shipments of the
TTS-2000 process monitoring tool and sputtering target assemblies. Due to the
sale of the Company's instruments business, revenue for the 1999 fiscal year
will primarily be derived from the sale of sputtering target assemblies. Due to
the downturn in the disk drive industry, fiscal year 1999 target assemblies
revenues are anticipated to be lower than fiscal year 1998 levels of $4,678,000.
The Company also anticipates that royalty revenue from its SurgX technology for
fiscal year 1999 will be minimal since volume shipments from its licensees will
not occur until the end of fiscal year 1999.

     The Company's gross profit increased $350,000 or 18.8 % from $1,865,000 for
the fiscal year ended February 28, 1997 to $2,215,000 for the year ended
February 28, 1998. Cost of sales as a percentage of revenues increased to 73.8%
for the year ended February 28, 1998 from 71.2% for the fiscal year ended
February 28, 1997.  The increase in gross profit for the year ended February 28,
1997 was primarily attributable to reductions in manufacturing start-up costs at
SurgX and increases in shipments of sputtering target assemblies.

     Operating expenses for the fiscal year ended February 28, 1998 increased
$516,000 or 8.3% from $6,205,000 for the fiscal year ended February 28, 1997 to
$6,721,000.  This increase was primarily attributable to the funding of a
development project to commercialize SurgTape-TM- for use in on-chip ESD
protection. Due to inconclusive development results and the lack of available
development funds from potential customers, the Company suspended this effort
during the middle of the fiscal year 1998. In  addition, the Company undertook
further reductions in development expenditures at the end of the fiscal year
1998. These resulted primarily in reductions in head count and outside
consulting services.


                                          11
<PAGE>

      Marketing and selling expenses increased $32,000 or 2.9%, from $1,109,000
for the fiscal year ended February 28, 1997 to $1,141,000 for the year ended
February 28, 1998.  This increase is attributable to applications development
associated with the TTS-2000 process monitoring tool.  The Company expects
selling and marketing expenses to decrease dramatically during fiscal year 1999
since primarily all of the Company's sales and marketing activities will be
carried out by SurgX's licensees.

     General and administrative expenses decreased $28,000  or 1%  from
$2,939,000 for the fiscal year ended February 28, 1997 to $2,911,000 for the
year ended February 28, 1998.   This decrease in general and administrative
expenses primarily reflects the Company's reduced use of outside consultants.
The Company anticipates further reductions in general and administrative costs
during fiscal year 1999 as the Company's new corporate structure will not
require the same level of general and administrative support.

     Research and development expenses increased $512,000 or 23.7% from
$2,157,000 for the fiscal year ended February 28, 1997 to $2,669,000 for the
year ended February 28, 1998.  The increase in expenses was attributable to
costs associated with attempts to commercialize SurgTape-TM- for on-chip ESD
protection. Since these efforts have been suspended, the Company expects
research and development expenditures to decrease significantly in fiscal year
1999. In fiscal year 1998, SurgX recognized development funding of $1,307,000
received from third parties to assist in the development and commercialization
of certain products, as an offset to its R&D expenses. This compares to
$1,107,000 of development funding recorded in fiscal year 1997. The Company
expects research and development expenses will be at lower levels in fiscal year
1999 than in fiscal 1998 due to the cancellation of the on-chip development
program and recent cost reductions in general development expenditures. However,
if development-funding contracts can be obtained, the Company will increase its
research and development efforts to focus on alternative uses and additional
market opportunities for the SurgX technology. SurgX is currently exploring
various funding opportunities, however, there can be no assurances that SurgX
will be able to secure additional development funding.

     Net interest expense increased $360,000 from $10,000 of interest income for
the fiscal year ended February 28, 1997 to $350,000 of net interest expense for
the year ended February 28, 1998, or 3,600%.  This increase consisted of
interest expense, loan origination fees and the fair market value of issued
warrants attributable to obligations under the Accounts Receivable Batch
Facility and Inventory Line of Credit executed May 1997 and the Bridge Loan
Facility executed in February 1998.

     During fiscal year 1998, the Company recorded a $1,383,000 gain on the sale
of part of its equity investment in DAS Devices,  Inc. versus  a recorded loss
of $20,000  in fiscal year 1997.  During fiscal year 1997, DAS Devices, Inc.
completed a plan of recapitalization under new management involving the sale of
additional securities which reduced the Company's ownership interest in DAS
Devices, Inc. from 40% to approximately 5% on a fully diluted basis. During
fiscal year 1998, the Company sold, to qualified private investors, 2,000,000
shares of its Series A Preferred Stock holdings in DAS Devices for $1,400,000.
As of February 28, 1998 the Company retained ownership of 2,000,000 shares of
Series A Preferred Stock and 800,000 shares of Common Stock of DAS Devices, Inc.

     During the 1999 fiscal year, the Company anticipates that it will
experience additional operating losses. The Company anticipates that its
materials business segment operating profits will not cover the operating losses
of SurgX and corporate expenses although these expenses have been reduced. The
Company anticipates being profitable in fiscal year 2000 as royalty revenue from
its SurgX technology is expected to increase with its licensees shipping
SurgX-TM- discrete devices and connectors in volume. However, there can be no
assurances that the Company's licensees will be able to successfully launch
SurgX-TM- products, that certain technology enhancements by SurgX currently
under development, will be realized, or that target assemblies will not be
rendered obsolete as a result of the adoption of  new technologies by customers.


     SEGMENT RESULTS

                                  SURGX CORPORATION

<TABLE>
<CAPTION>
                                                February 28,      February 28,
(dollars in thousands)                              1998              1997
--------------------------------------------------------------------------------
<S>                                             <C>               <C>
Revenues                                               $ 83               $ 36
Cost of sales                                              0               282
Operating Expenses                                     2,705             1,741
Development Funding*                                  (1,307)           (1,107)
                                                      ------            ------
*(Offset against R &D)
Operating Income (Loss)                              $(1,315)            $(880)
                                                      ------            ------
                                                      ------            ------
</TABLE>

     Cost of sales for fiscal year ended February 28, 1997 represents the costs
associated with establishing and testing the manufacturing process to sell SurgX
material to Bussmann pursuant to a license agreement executed in fiscal year
1997 as well as the costs associated with the sale of specialized test
equipment. Since start-up manufacturing costs were incurred in fiscal year 1997,
and the Bussmann product launch was delayed until the beginning of fiscal year
1999, there were no costs of sales recorded in fiscal year 1998. The Company
anticipates at the present time that there will be minimal, if any, costs of
sale incurred in fiscal year 1999 attributable to SurgX-TM--based product.


                                          12
<PAGE>

     Operating expenses increased $964,000 or 55.4% from $1,741,000 for the
fiscal year ended February 28, 1997 to $2,705,000 for the year ended February
28, 1998.  The increase in operating expenses primarily reflects the costs
associated with SurgX development efforts for on-chip ESD protection. As noted
above, this development project was suspended during the 1998 fiscal year.
During fiscal year 1998, SurgX received $1,307,000 in development funding from
third parties compared to $1,107,000 of such funding in fiscal year 1997, an
increase of $200,000 or 18.1%. Due to the higher level of research and
development expenses associated with the on-chip ESD protection program, the
loss from operations increased $435,000 or 49.4% from $880,000 for the fiscal
year ended February 28, 1997 to $1,315,000 for the fiscal year ended February
28, 1998. While SurgX is looking to its customers, or to potential joint venture
partners, to continue to fund development efforts, there can be no assurance
that those efforts will be successful. In the event that SurgX is unable to
secure additional development funding, there can be no assurance that the
current or proposed level of development efforts for fiscal year 1998 can
continue or that any product, other than the Bussmann product, will be made
commercially available.

                     ORYX INSTRUMENTS AND MATERIALS CORPORATION

     On February 27, 1998, a third party acquired 8,000,000 shares of Class A
Common Stock of Oryx Instruments and Materials Corporation for a purchase price
of $500,000.  As part of the sale transaction, Oryx Instruments and Materials
then redeemed 8,000,000 shares of the Company's 10,000,000 share holdings of
Class A Common Stock  for an aggregate price of $1,500,000.  Terms of the
8,000,000 share stock redemption include $500,000 paid on the closing, and
$333,000 payable on February 27,1999 and $667,000 payable on February 27, 2000,
memorialized via a promissory note and stock pledge agreement.  As part of the
sale, Oryx Instruments & Materials distributed all the assets and liabilities of
the materials business segment and certain other assets to the Company.  A
deferred gain of approximately $646,000 was recorded by the Company on this
transaction.  As a result of the transaction, the Company has fully reserved its
remaining 19.9% ownership investment in Oryx Instruments and Materials at
February 28, 1998.

     For segment reporting purposes, Oryx Instruments and Materials will be
split between the instruments business segment (sold February 1998) and the
materials business segment (on going).

Material Business Segment
     -    Specialized Materials
     -    Contract R&D

<TABLE>
<CAPTION>
                                                 Year Ended        Year Ended
                                                February 28,      February 28,
(dollars in thousands)                              1998              1997
--------------------------------------------------------------------------------
<S>                                             <C>               <C>
Revenues                                            $  4,678          $  4,240
Cost of Sales                                          3,300             2,900
                                                       -----             -----
Gross Profit                                           1,378             1,340
                                                       -----             -----
Operating Income(Loss)                              $  1,378          $  1,340
                                                       -----             -----
                                                       -----             -----
</TABLE>

     Revenues for fiscal year 1998 increased $438,000 or 10.3% to $4,678,000 for
the year ended February 28, 1998 from $4,240,000 for the year ended  February
28, 1997.  The increase in revenue was primarily attributable to growth in the
sputtering target assemblies business which experienced increased demand as the
hard disk drive industry expanded manufacturing capacity.

     Gross profit increased $38,000 or 2.8% from $1,340,000 for the year ended
February 28, 1997 to $1,378,000 for the year ended February 28, 1998.  The
improvement in gross profit was primarily due to increased revenues.

     Because the hard disk drive industry is experiencing a cyclical downturn in
calendar year 1998, the Company expects that the results of operations for
sputtering target assemblies in fiscal year 1999 will be adversely affected and
consequently that its gross profits and gross profit margins  are likely to
decline in fiscal year 1999.

Instruments Business Segment (sold February 27, 1998)

<TABLE>
<CAPTION>
                                                 Year Ended        Year Ended
                                                February 28,      February 28,
(dollars in thousands)                              1998              1997
--------------------------------------------------------------------------------
<S>                                             <C>               <C>
Revenues                                             $ 3,688          $  2,194
Cost of Sales                                          2,934             1,423
                                                       -----             -----
Gross Profit                                             754               771
Operating Expenses                                     3,073             3,422
                                                       -----             -----
Operating Income(Loss)                               $(2,319)         $( 2,651)
                                                       -----             -----
                                                       -----             -----
</TABLE>

     Revenues for fiscal year 1998 increased $1,494,000 or 68.1% to $3,688,000
for the year ended February 28, 1998 from $2,194,000 for the year ended February
28, 1997.  The increase in revenue was primarily attributable to growth in sales
volume of the TTS-2000 process monitoring tool.


                                          13
<PAGE>

     Gross profit decreased $17,000 or 2.2% from $771,000 for the fiscal year
ended February 28, 1997 to $754,000 for the fiscal year ended February 28, 1998.
The decrease in gross profit was primarily due to higher manufacturing costs
associated with creating a manufacturing infrastructure to support increased
systems sales, higher material costs, and increased warranty expense.

     Operating expenses decreased $349,000 or 10.2% to $3,073,000 for the fiscal
year ended February 28, 1998 from $3,422,000 for the year ended February 28,
1997.  This decrease was primarily a result of reduced development expenses for
such items as prototype materials and outside consultants.

     The loss from operations for the year decreased $332,000 or 12.5% from
$2,651,000 for the fiscal year ended February 28, 1997 to $2,319,000 for the
year ended February 28, 1998.


                                     CORPORATE
<TABLE>
<CAPTION>
                                                 Year Ended        Year Ended
                                                February 28,      February 28,
(dollars in thousands)                              1998              1997
--------------------------------------------------------------------------------
<S>                                             <C>               <C>
Operating Expenses                                   $ 2,250           $ 2,149
                                                       -----             -----
Operating Income(Loss)                               $(2,250)          $(2,149)
                                                       -----             -----
                                                       -----             -----
</TABLE>

     The increase in operating expenses and loss from corporate operations of
$101,000 or 4.7% from $2,149,000 for the fiscal year ended February 28, 1997 to
$2,250,000 for the fiscal year ended February 28, 1998 primarily relates to
one-time severance costs associated with changes in management personnel.

     LIQUIDITY AND CAPITAL RESOURCES

     The Company's working capital decreased $5,905,000 or 79.7% from a surplus
of $7,406,000 at February 28, 1997, to a surplus of $1,501,000 at February 28,
1998.  The Company's ratio of current assets to current liabilities was 3.7:1 at
February 28, 1997, and 1.6:1 at February 28, 1998.

     Net cash used in operations for the year the ended February 28, 1998 was
$4,513,000 consisting of $3,687,000 from continuing operations and $826,000 from
discontinued operations.  Net cash used in operations consists primarily of
operating losses offset by an increase in accrued liabilities.  Net cash used in
operations for the fiscal year ended February 28, 1997, was $4,394,000
consisting of $6,645,000 from continuing operations offset by $2,251,000 of
funds provided by discontinued operations.

     Net cash provided by investing activities was $1,062,000 from the fiscal
year ended February 28, 1998, primarily attributable to the Company's sale of
securities of DAS Devices, Inc. Net cash used in investing activities was
$956,000 for the fiscal year ended 1997 and consisted primarily of capital
expenditures.  The Company does not expect to have material capital expenditures
for the year ended February 28, 1999.

     Net cash provided by financing activities was $1,784,000 for the fiscal
year ended February 28, 1998. Cash provided by financing activities was
primarily from the sale of securities in SurgX to Iriso, the Company's Japanese
partner, and the accounts receivable financing pursuant to the Accounts
Receivable Revolving Batch Facility.  This represents a decline of $2,040,000 or
53.3% from the net cash raised through financing activities in fiscal 1997.

     Net cash provided by financing activities for fiscal year ended February
28, 1997 was $3,824,000 primarily from the issuance of common stock. In the
fiscal year ended February 28, 1997, the Company raised additional capital of
$4,143,000, net of issuance costs of $681,000, pursuant to private placement
offerings in which it issued and sold an aggregate of 2.8 million shares of its
common stock to certain qualified institutional investors under Regulation S of
the Securities Act of 1933, as amended.  In consideration for these offerings,
the Company also issued warrants to its placement agent to purchase 32,000
shares of common stock at $1.375 per share and 163,530 shares of Common stock at
$1.90 per share.  In September 1996, the placement agent exercised 100,000
warrants issued in connection with prior Regulation S financings, resulting in
proceeds to the Company of $137,500.  In September 1996, the Company's
underwriters in its initial public offering exercised 100,000 unit purchase
warrants resulting in net proceeds of $371,000.  Subject to terms of the unit
purchase warrant, 200,000 common shares and 100,000 warrants to purchase 190,000
shares of common stock at $3.50 per warrant were issued to the underwriters.  In
December 1996, the Company repurchased and retired from the underwriters the
remaining 223,961 unit purchase warrants for $475,000 and 40,000 warrants to
purchase 76,000 common shares at $3.50 per warrant.

     In May 1997, the Company secured a $5,500,000 borrowing facility.  The
facility includes an Accounts Receivable Revolving Batch Facility and an
Inventory Line of Credit. The Accounts Receivable Revolving Batch Facility
allows the Company to factor up to $4,000,000 in receivable balances, provided
that any amount in excess of $3,500,000 must be supported by an equal amount of
unused availability under the Inventory Line of Credit. The Inventory Line of
Credit allows the Company to borrow up to $1,500,000 ($750,000 of which is
subject to an inventory appraisal). In February 1998, the Company augmented its
borrowing facility to include a six-month


                                          14
<PAGE>

bridge loan for an amount up to $1,000,000 (the "Bridge facility").  In
consideration for this Bridge facility, the Company issued a warrant to purchase
174,456 of the Company's common shares at $1.15 per share.  In March 1998, the
borrowing facility was amended to reduce the accounts receivable, batch facility
and inventory credit line to a maximum borrowing of $500,000 each.

     The Company believes that existing cash on hand will be sufficient to meet
its currently anticipated working capital requirements through fiscal year 1999.
However, in the event the Company fails to meet its fiscal year 1999 operating
plan, the Company will need to secure additional funding by selling assets,
raising additional equity, or taking other steps to obtain the financing
necessary to continue operations at their currently anticipated levels.  If the
Company requires additional equity financing or attempts to raise capital
through an asset sale, there can be no assurance that such transactions can be
effected in time to meet the Company's needs, if at all, or that any such
transaction will be on terms acceptable to the Company or in the interest of its
stockholders.

     YEAR 2000 ISSUE

     The Company has commenced, for all of its information systems, a year 2000
date conversion project to address all necessary code changes, testing and
implementation.  The "Year 2000 Computer Problem" creates risk for the Company
from unforeseen problems in its own computer systems and from third parties with
whom the Company deals on financial transactions worldwide.  Such failures of
the Company's and/or third parties' computer systems could have a material
impact on the Company's ability to conduct its business, and especially to
process and account for the transfer of funds electronically.  Management has
not yet assessed the year 2000 compliance expense and related potential effect
on the Company's earnings.

             ORYX POWER PRODUCTS CORPORATION (Discontinued operations)

     On March 7, 1998, Todd Power Corporation, a New York corporation, ("Todd")
acquired substantially all of the properties, assets, rights, business and
certain liabilities of Oryx Power Products Corporation ("Power Products") for a
purchase price of $2,000,000 in cash and a contingent additional amount of up to
$4,000,000 to be calculated based upon future sales of certain of Power
Products' specified products to certain named customers during the fourteen
month period immediately following the sale. See note 6 of the Consolidated
Financial Statements. The disposal of Power Products has been accounted for as a
discontinued operation and accordingly the net assets held for disposal and
operating results of Power Products were segregated and reported as discontinued
operations.  As the Company has estimated a loss on disposal, all losses were
recognized as if the transaction was completed as of February 28, 1998.  Prior
year financial statements have been restated to reflect the discontinuance of
the Power Products operations.  Revenue from Power Products were $10,00,000 and
$20,390,000 for the years ended February 28, 1998 and 1997 respectively.  Income
(loss) from discontinued operations, net of taxes, were $(3,666,000) and
$2,348,000 for the years ended February 28, 1998 and 1997, respectively.

Item 7.   FINANCIAL STATEMENTS


     The response to this item is submitted in a separate section of this 
report.

Item 8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

     Not applicable.

Item 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
          COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

     The information required by this item is incorporated by reference from the
information under the caption "Election of Directors," with respect to
Directors, and under the caption "Management," with respect to Executive
Officers, contained in the Company's definitive Proxy Statement which will be
filed with the Commission in connection with the solicitation of proxies for the
Company's 1998 Annual Meeting of Stockholders (the "Proxy Statement").



Item 10.  EXECUTIVE COMPENSATION

     The information required by this item is incorporated by reference to the
information under the caption "Executive Compensation" to be contained in the
Proxy Statement.

Item 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information required by this item is incorporated by reference to the
information under the caption "Security Ownership of Certain Beneficial Owners
and Management" to be contained in the Proxy Statement.

Item 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


                                          15
<PAGE>

     The information required by this item is incorporated by reference to the
information under the caption "Certain Transactions" to be contained in the
Proxy Statement.

Item 13.  EXHIBITS, LISTS AND REPORTS ON FORM 8-K

     (a)  FINANCIAL STATEMENTS AND SCHEDULES

     The financial statements listed on the index to financial statements on
page F-1 are filed as part of this Form 10-KSB.

     (b)  REPORTS ON FORM 8-K

     The Company filed with the Commission two Reports on Form 8-K subsequent to
the fiscal quarter ended February 28, 1998.  The first such Report was filed on
March 16, 1998 for the purpose of reporting the sale of a majority interest in
Oryx Instruments & Materials Corporation.  The second such Report was filed on
March 23, 1998 for the purpose of reporting the sale of Oryx Power Products
Corporation.

     (c)  EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT NO.   DESCRIPTION OF EXHIBITS
<S>           <C>
   3.1        Certificate of Incorporation of the Registrant dated July 26,
                1993(1)
   3.2        Bylaws of the Registrant dated July 26, 1993(1)
   3.3          Certificate of Amendment to Certificate of Incorporation dated
                July 23, 1993(1)
   3.3A       Certificate of Amendment of Certificate of Incorporation dated
                February 7, 1996(4)
   4.1        Specimen Common Stock Certificate(1)
   4.2        Specimen Common Stock Purchase Warrant(1)
   4.3        Warrant Agency Agreement including Statement of Rights, Terms and
                Conditions for Callable Stock Purchase Warrants(2)
   4.4        Incentive and Nonqualified Stock Option Plan, as Amended(5)
   4.4A       1996 Directors Stock Option Plan(5)
   4.5        Form of Promissory Note issued to Series A Preferred Stock
                investors(1)
   4.6        Unit Purchase Warrant(1)
   4.7        Form of Warrants issued to Yorkton Securities, Inc. in December
                1996 and February 1997(7)
   10.1       Lease Agreement with Renco Investment Company re: Fremont,
                California office, a laboratory and manufacturing facility(1)
   10.2       Lease Agreement with FINSA re: Reynosa, Mexico, manufacturing
                facility(3)
   10.3       Lease Agreement with Greer Enterprises re: Fremont, California
                manufacturing facility(3)
   10.4       Lease Agreement with Hospitak/Meditron re: McAllen, Texas,
                warehouse facility(3)
   10.5       Lease Agreement with Security Capital Industrial Trust re:
                Fremont, California manufacturing facility(4)
   10.6       Lease Agreement with OTR, State Teachers Retirement System of
                Ohio re: Mt. Prospect, Illinois office(4)
   10.7       Lease Agreement with E.B.J. Partners LP re: Fremont, California
                office and manufacturing facility(11)
   10.8       Letter of Separation Agreement with Andrew Wilson(11)
   10.9       Letter of Employment Agreement with Mitchel Underseth(11)
   10.10      Letter of Employment Agreement with Philip Micciche(11)
   10.11      Letter of Employment and Non-Competition Agreement with Andrew
                Intrater(1)
   10.12      Agreement for the Purchase and Sale of Stock with Intek
                Diversified Corporation(1)
   10.13      Asset Purchase Agreement with Zenith Electronics Corporation(1)
   10.14      Promissory Notes issued in interim debt financing(1)
   10.15      Common Stock Purchase Warrants issued in interim debt
                financing(3)
   10.16      Placement Agency Agreement between the Company and Yorkton
                Securities, Inc. dated February 8, 1996, as amended April 22,
                1996(4)
   10.17      Form of Subscription Agreement between the Company and various
                investors in Yorkton Private Placement dated February 29, 1996
                and May 13, 1996(4)
   10.18      Offering Memorandum dated February 8, 1996 and Supplement thereto
                dated April 22, 1996, relating to Yorkton private placement(4)
   10.19      Settlement Agreement between the Company and Zenith Electronics
                Corporation dated February 29, 1996, as amended April 16, 
                1996(4)
   10.20      Agreement between the Company and Bussmann dated July, 1996(11)
   10.21      Agreement between the Company and National Semiconductor dated
                June 7, 1996(11)
   10.22      Agreement between the Company and LSI Logic dated September 30,
                1996(11)
   10.23      Agency Agreement between the Company and Yorkton Securities, Inc.
                dated December 4, 1996, as amended January 23, 1997(7)
   10.24      Form of Subscription Agreement between the Company and various
                investors in Yorkton Private Placement dated December 4, 1996(8)


                                          16
<PAGE>

   10.25      Asset Purchase Agreement relating to the acquisition of Power
                Sensors Corporation by Oryx Power Products Corporation dated
                December 19, 1996(6)
   10.26      Stock Purchase and Reorganization Agreement by and among the
                Company, Corus Investment, Ltd. and Oryx Instruments and
                Materials Corporation Dated February 27, 1998(9)
   10.27      Stockholders' Agreement Dated February 27, 1998(9)
   10.28      Pledge Agreement Dated February 27, 1998(9)
   10.29      Promissory Note Dated February 27, 1998(9)
   10.30      Asset Purchase Agreement by and among the Registrant, Todd Power
                Corporation and Oryx Power Products Corporation Dated March 2,
                1998(10)
   10.31      License Agreement with Iriso Electronics Limited*+
   10.32      Stock Purchase Agreement with Iriso Electronics Limited*
   10.33      Agreement with Office of Naval Research*
   10.34      Das Devices Inc. Preferred Stock Purchase Agreement*
   10.35      Arvind Patel Separation Agreement*
   10.36      Amended Bussmann License Agreement*
   10.37      Revolving Account Transfer and Purchase Agreement*+
   10.38      First Amendment to Loan Agreement*+
   10.39      Revolving Credit Promissory Note*+
   10.40      Second Amendment to Loan Agreement*+
   21         Subsidiaries of the Registrant(4)
   23         Consent of Independent Accountants*
   27.1       Financial Data Schedule
   27.2       Restated Financial Data Schedule
   27.3       Restated Financial Data Schedule
</TABLE>

*    Filed herewith.
+    Confidential treatment has been requested with respect to certain portions
     of these Exhibits.  Such portions have been omitted from this filing and
     have been filed separately with the Securities and Exchange Commission.

(1)  Previously filed as an exhibit to the Company's Registration Statement on
     Form SB-2 (Registration No. 33-72104) which became effective on April 6,
     1994 and is incorporated herein by reference.

(2)  Previously filed as an exhibit to the Company's Current Report on Form 8-K
     filed with the Commission on March 27, 1995.

(3)  Previously filed as an exhibit to the Company's Annual Report on Form
     10-KSB for the fiscal year ended February 28, 1995.

(4)  Previously filed as an exhibit to the Company's Annual Report on Form
     10-KSB (as Amended) for the fiscal year ended February 29, 1996.

(5)  Previously filed as an exhibit to the Company's Registration Statement on
     Form S-8 (Registration No. 333-13887) filed with the Commission on October
     10, 1996 and is incorporated herein by reference.

(6)  Previously filed as an exhibit to the Company's Current Report on Form 8-K
     filed with the Commission on January 3, 1997.

(7)  Previously filed as an exhibit to the Company's Current Report on Form 8-K
     filed with the Commission on February 21, 1997.

(8)  Previously filed as an exhibit to the Company's Registration Statement on
     Form S-3 Registration No. 333-23317) which became effective on March 31,
     1997 and is incorporated herein by reference.

(9)  Previously filed as an exhibit to the Company's Current Report on Form 8-K
     filed with the Commission on March 16, 1998.

(10) Previously filed as an exhibit to the Company's Current Report on Form 8-K
     filed with the Commission on March 23, 1998.

(11) Previously filed as an exhibit to the Company's Annual Report on Form
     10-KSB for the fiscal year ended February 28, 1997.

                                          17


<PAGE>

                                     SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this Report to be signed on its behalf by the undersigned thereunto duly
authorized on this 28th day of May, 1998.

                                   ORYX TECHNOLOGY CORP.



                                   By: /s/ Philip J. Micciche
                                       ----------------------
                                       Philip J. Micciche,
                                       President & CEO


     In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Registrant, and in the capacities and on
the date indicated.

Signature                          Title                    Date
---------                          -----                    ----


                                   President, CEO
/s/ Philip J. Micciche             and Director             May 29, 1998
----------------------
Philip J. Micciche


                                   Secretary, Treasurer     May 29, 1998
/s/ Andrew Intrater                and Director
----------------------
Andrew Intrater


                                   Chief Financial          May 29, 1998
/s/ Mitchel Underseth              Officer and Director
----------------------
Mitchel Underseth


/s/ John H. Abeles                 Director                 May 29, 1998
----------------------
John H. Abeles


(signatures continued next page)


                                          18

<PAGE>

(signatures continued from previous page)

Signature                          Title                    Date
---------                          -----                    ----


/s/ Jay M. Haft                    Director                 May 29, 1998
----------------------
Jay M. Haft



/s/ Richard Hubbard                Director                 May 29, 1998
----------------------
Richard Hubbard


/s/ Doug McBurnie                  Director                 May 29, 1998
----------------------
Doug McBurnie


/s/ Ted D. Morgan                  Director                 May 29, 1998
----------------------
Ted D. Morgan


                                          19

<PAGE>

ORYX TECHNOLOGY CORP.
Index to Consolidated Financial Statements
February 28, 1998 and February 28, 1997
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                           Page
                                                                           ----
<S>                                                                        <C>
Report of Independent Accountants. . . . . . . . . . . . . . . . . . . .    F-2

Consolidated Balance Sheet at February 28, 1998
     and 1997. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    F-3

Consolidated Statement of Operations for the
     years ended February 28, 1998 and 1997. . . . . . . . . . . . . . .    F-4

Consolidated Statement of Stockholders' Equity for the
     years ended February 28, 1998 and 1997. . . . . . . . . . . . . . .    F-5

Consolidated Statement of Cash Flows for the
     years ended February 28, 1997 and 1997. . . . . . . . . . . . . . .    F-6

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

                                         F-1

<PAGE>

                         REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Shareholders of
Oryx Technology Corp.


In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, of stockholders' equity and of cash flows
present fairly, in all material respects, the financial position of Oryx
Technology Corp. and its subsidiaries at February 28, 1998 and 1997, and the
results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.  These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits.  We conducted our audits of these statements in accordance with
generally accepted auditing standards which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation.  We
believe that our audits provide a reasonable basis for the opinion expressed
above. 



PRICE WATERHOUSE LLP

San Jose, California
May 22, 1998


                                         F-2

<PAGE>

ORYX TECHNOLOGY CORP.
Consolidated Balance Sheet
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                        FEBRUARY 28,    FEBRUARY 28,
                                                            1998            1997
                      ASSETS
<S>                                                    <C>             <C>
Current assets:
  Cash and cash equivalents                            $    722,000     $   2,389,000
  Accounts receivable, net of allowance for doubtful
   accounts of $93,000 and $60,000                        1,100,000         1,617,000
  Inventories                                               397,000         2,132,000
  Other current assets                                      670,000            73,000
  Net assets of discontinued operations                   1,060,000         3,900,000
                                                       ------------     -------------
     Total current assets                                 3,949,000        10,111,000

Property and equipment, net                                 490,000         1,200,000
Other assets                                              1,114,000           226,000
                                                       ------------     -------------
                                                       $  5,553,000     $  11,537,000
                                                       ------------     -------------
                                                       ------------     -------------


        LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities: 
  Bank borrowings                                      $    129,000     $           -
  Capital lease obligations                                  16,000            38,000
  Deferred revenue                                          874,000           450,000
  Accounts payable                                          431,000         1,317,000
  Accrued liabilities                                       998,000           900,000
                                                       ------------     -------------
     Total current liabilities                            2,448,000         2,705,000

Deferred gain (Note 5)                                      646,000                 -
Capital lease obligations, less current portion              12,000            35,000
                                                       ------------     -------------
     Total liabilities                                    3,106,000         2,740,000
                                                       ------------     -------------


Commitments and contingencies (Notes 1 and 13)

Stockholders' equity:
  Series A 2% Convertible Cumulative Preferred Stock,
   $0.001 par value; 3,000,000 shares authorized; 
   4,500 shares issued and outstanding, 
   liquidation value $113,000                               107,000           107,000
  Common Stock, $0.001 par value; 25,000,000 shares 
   authorized; 13,124,821 and 12,961,692 issued 
   and outstanding                                           13,000            13,000
  Additional paid-in capital                             19,711,000        18,920,000
  Accumulated deficit                                   (17,384,000)      (10,243,000)
                                                       ------------     -------------
     Total stockholders' equity                           2,447,000         8,797,000
                                                       ------------     -------------
                                                       $  5,553,000     $  11,537,000
                                                       ------------     -------------
                                                       ------------     -------------

</TABLE>
 

The accompanying notes are an integral part of these financial statements.


                                         F-3

<PAGE>

ORYX TECHNOLOGY CORP.
Consolidated Statement of Operations
--------------------------------------------------------------------------------
 
<TABLE>
<CAPTION>

                                                                          YEAR ENDED               YEAR ENDED
                                                                         FEBRUARY 28,             FEBRUARY 28,
                                                                             1998                     1997
<S>                                                                      <C>                      <C>
Net revenue                                                              $  8,449,000             $  6,470,000
Cost of sales                                                               6,234,000                4,605,000
                                                                         ------------             ------------
  Gross profit                                                              2,215,000                1,865,000
                                                                         ------------             ------------

Operating expenses:
  Marketing and selling                                                     1,141,000                1,109,000
  General and administrative                                                2,911,000                2,939,000
  Research and development                                                  2,669,000                2,157,000
                                                                         ------------             ------------
    Total operating expenses                                                6,721,000                6,205,000
                                                                         ------------             ------------

Loss from operations                                                       (4,506,000)              (4,340,000)
Interest income (expense), net                                               (350,000)                  10,000
Equity in loss of investee                                                          -                  (20,000)
Net gain on sales of investment                                             1,383,000                        -
                                                                         ------------             ------------

Loss from continuing operations                                            (3,473,000)              (4,350,000)

Discontinued operations:
  Income (loss) from discontinued operations                               (3,588,000)               2,348,000
  Loss on disposal of discontinued operations                                 (78,000)                       -
                                                                         ------------             ------------
    Income (loss) from discontinued operations                             (3,666,000)               2,348,000
                                                                         ------------             ------------

Net loss                                                                   (7,139,000)              (2,002,000)
Dividends                                                                      (2,000)                 (10,000)
                                                                         ------------             ------------
    Net loss attributable to Common Stock                                $ (7,141,000)            $ (2,012,000)
                                                                         ------------             ------------
                                                                         ------------             ------------

Basic and diluted loss per common share from continuing operations       $      (0.26)            $      (0.41)
Basic and diluted income (loss) per common share from discontinued 
    operations                                                                  (0.28)                    0.22
                                                                         ------------             ------------
    Basic and diluted net loss per common share (Note 2 )                $      (0.54)            $      (0.19)
                                                                         ------------             ------------
                                                                         ------------             ------------

Weighted average common shares used to compute 
  basic and diluted net loss per share (Note 2 )                           13,105,000               10,650,000
                                                                         ------------             ------------
                                                                         ------------             ------------

</TABLE>
 

The accompanying notes are an integral part of these financial statements.


                                         F-4

<PAGE>

ORYX TECHNOLOGY CORP.
Consolidated Statement of Stockholders' Equity
--------------------------------------------------------------------------------
 
<TABLE>
<CAPTION>
 

                                               SERIES A 2%
                                         CONVERTIBLE CUMULATIVE                         ADDITIONAL
                                             PREFERRED STOCK         COMMON STOCK         PAID-IN        ACCUMULATED
                                            SHARES     AMOUNT      SHARES      AMOUNT     CAPITAL          DEFICIT         TOTAL
<S>                                        <C>       <C>        <C>           <C>       <C>             <C>             <C>
Balance at February 29, 1996                34,875   $ 832,000   9,228,668    $  9,000  $ 13,629,000    $ (8,231,000)   $ 6,239,000

Issuance of Common Stock and warrants 
  in private placements, net of issuance
  costs of $681,000                              -           -   2,836,130       4,000     4,139,000               -      4,143,000
Issuance of Common Stock upon exercise 
  of options                                     -           -     187,318           -       230,000               -        230,000
Issuance of Common Stock upon exercise 
  of warrants                                    -           -     349,590           -       599,000               -        599,000
Issuance of warrants in exchange for 
  services                                       -           -           -           -        60,000               -         60,000
Repurchase of underwriter units                  -           -           -           -      (475,000)              -       (475,000)
Conversion of Preferred Stock to Common 
  Stock                                    (30,375)   (725,000)    366,875           -       738,000               -         13,000
Net Loss                                         -           -           -           -             -      (2,002,000)    (2,002,000)
Preferred Stock dividend                         -           -           -           -             -         (10,000)       (10,000)
                                           -------   ---------  ----------    --------  ------------    ------------    -----------
Balance at February 28, 1997                 4,500     107,000  12,968,581      13,000    18,920,000     (10,243,000)     8,797,000

Proceeds from SurgX Corporation 
  subsidiary stock sale, net of issuance
  costs of $15,000                               -           -           -           -       485,000               -        485,000
Issuance of Common Stock upon exercise 
  of warrants                                    -           -     156,240           -       213,000               -        213,000
Issuance of warrants in exchange for 
  financing services                             -           -           -           -        93,000               -         93,000
Net Loss                                         -           -           -           -             -      (7,139,000)    (7,139,000)
Preferred Stock dividend                         -           -           -           -             -          (2,000)        (2,000)
                                           -------   ---------  ----------    --------  ------------    ------------    -----------
Balance at February 28, 1998                 4,500   $ 107,000  13,124,821    $ 13,000  $ 19,711,000    $(17,384,000)   $ 2,447,000
                                           -------   ---------  ----------    --------  ------------    ------------    -----------
                                           -------   ---------  ----------    --------  ------------    ------------    -----------

</TABLE>
 

The accompanying notes are an integral part of these financial statements.


                                         F-5

<PAGE>

ORYX TECHNOLOGY CORP.
Consolidated Statements of Cash Flows
--------------------------------------------------------------------------------
 
<TABLE>
<CAPTION>

                                                                                    YEAR ENDED     YEAR ENDED
                                                                                   FEBRUARY 28,   FEBRUARY 28,
                                                                                       1998           1997
<S>                                                                               <C>            <C>
Cash flows from operating activities:
  Net loss                                                                        $  (7,139,000) $  (2,002,000)
  Adjustments to reconcile net loss to net cash used in operating activities:
    Loss (income) from discontinued operations                                        3,666,000     (2,348,000)
    Equity in loss of investee                                                                -         20,000
    Gain on sale of investment                                                       (1,383,000)             -
    Value of warrants issued for services and debt issuance                              93,000         60,000
    Depreciation and amortization                                                       458,000        248,000
      Changes in assets and liabilities (net of effects from disposal of
      subsidiaries):
        Accounts receivable                                                            (483,000)      (877,000)
        Inventories                                                                     548,000     (1,546,000)
        Other current assets                                                           (148,000)       105,000
        Other assets                                                                     20,000         14,000
        Deferred revenue                                                                609,000        117,000
        Accounts payable                                                               (622,000)      (862,000)
        Accrued liabilities                                                             694,000        426,000
                                                                                  -------------  -------------
          Net cash used in continuing operating activities                           (3,687,000)    (6,645,000)
          Net cash provided by (used in) discontinued operations                       (826,000)     2,251,000
                                                                                  -------------  -------------
          Net cash used in operations                                                (4,513,000)    (4,394,000)
                                                                                  -------------  -------------
Cash flows from investing activities:
  Capital expenditures                                                                 (321,000)      (931,000)
  Investment in development stage company                                                     -        (25,000)
  Net proceeds from sale of an investment                                             1,383,000              -
                                                                                  -------------  -------------
          Net cash provided by (used in) investing activities                         1,062,000       (956,000)
                                                                                  -------------  -------------
Cash flows from financing activities:
  Accounts receivable financing                                                       1,000,000              -
  Borrowings from (repayment of) bank line of credit                                    129,000       (352,000)
  Repayment of notes payable                                                                  -       (400,000)
  Payment of capital lease obligations                                                  (38,000)       (21,000)
  Proceeds from sale of minority interest in SurgX Corp.                                485,000              -
  Proceeds from issuance of Common Stock and warrants, net                                    -      4,143,000
  Proceeds from exercise of options for Common Stock                                          -        243,000
  Proceeds from exercise of warrants for Common Stock                                   213,000        599,000
  Repurchase of underwriter units                                                             -       (475,000)
  Payment of preferred stock dividend                                                    (2,000)       (10,000)
  Other                                                                                  (3,000)        97,000
                                                                                  -------------  -------------
          Net cash provided by financing activities                                   1,784,000      3,824,000
                                                                                  -------------  -------------
Net decrease in cash and cash equivalents                                            (1,667,000)    (1,526,000)
Cash and cash equivalents at beginning of period                                      2,389,000      3,915,000
                                                                                  -------------  -------------
Cash and cash equivalents at end of period                                        $     722,000  $   2,389,000
                                                                                  -------------  -------------
                                                                                  -------------  -------------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Interest paid during the period                                                 $     298,000  $      50,000
                                                                                  -------------  -------------
                                                                                  -------------  -------------
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
  Property and equipment acquired under capital lease obligations                 $       8,000  $      54,000
                                                                                  -------------  -------------
                                                                                  -------------  -------------

</TABLE>
 


                                         F-6
<PAGE>

Oryx Technology Corp.
Notes to Consolidated Financial Statements
-------------------------------------------------------------------------------

1.   THE COMPANY

     Oryx Technology Corp. ("Oryx" or the "Company"), a Delaware corporation,
     and its subsidiaries manufacture assemblies used in the production of
     computer memory disks, electromagnets, electrostatic discharge test
     equipment, secondary ion mass spectrometer measurement devices, and are
     developing products that provide electrostatic discharge protection.

     In April 1994, the Company completed an initial public offering of 2.2
     million shares of Common Stock which resulted in proceeds to the Company of
     approximately $6.0 million, net of issuance costs of approximately $1.7
     million.  Since its initial public offering, the Company has completed a
     number of private placement sales of its Common Stock.  Common Stock sold
     in private placement offerings during fiscal years 1997, 1996 and 1995
     totaled approximately 2.8 million shares, 4.8 million shares and 0.9
     million shares and resulted in net proceeds of $4,143,000, $4,759,000 and
     $575,000, respectively.

     The Company's cumulative losses and cash used in fiscal 1998 operations
     result in uncertainty about the Company's future viability.  However,
     management believes the recent restructuring, the sale of a portion of the
     Instruments and Materials business (see Note 5), and the sale of Oryx Power
     Product Corporation ("Power Products") (see Note 6) will significantly
     reduce operating losses, and the net proceeds generated from these
     transactions and outstanding credit facilities will enable the Company to
     continue as a going concern through February 28, 1999.

     MANAGEMENT ESTIMATES
     The preparation of financial statements in accordance with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities,
     disclosures of contingent assets and liabilities at the date of the
     financial statements, and the reported amounts of revenues and expenses
     during the reported period.  Actual results could differ from those
     estimates.


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     BASIS OF PRESENTATION
     The Company's fiscal year ends on the last day of February.  The year ended
     February 28, 1998 is referred to as fiscal 1998.

     PRINCIPLES OF CONSOLIDATION
     The consolidated financial statements include the accounts of Oryx
     Technology Corporation and its wholly owned subsidiaries.  All significant
     intercompany transactions and accounts have been eliminated.


                                         F-7
<PAGE>

     CASH AND CASH EQUIVALENTS
     The Company considers all highly liquid instruments with an original
     maturity of three months or less to be cash equivalents.

     INVENTORIES
     Inventories are stated at the lower of cost, determined on a first-in,
     first-out basis, or market.

     PROPERTY AND EQUIPMENT
     Property and equipment are stated at cost.  Depreciation is computed using
     the straight-line method over the estimated useful lives of the assets,
     generally three to ten years.  Leasehold improvements are amortized using
     the straight-line method over the shorter of the lease term or the
     estimated useful lives of the assets.  The Company periodically reviews the
     recovery of property and equipment based upon estimated cash flows.

     INTANGIBLE ASSETS
     The cost of intangible assets is amortized using the straight line method
     over the estimated useful lives of the assets, seventeen years for patents
     and seven years for goodwill and purchased technology.  The Company
     periodically reviews recoverability of intangible assets based upon
     estimated future cash flows. Intangible assets have been included in net
     assets of discontinued operations.

     EQUITY IN DAS DEVICE INC.
     The fiscal 1997 consolidated statements of operations include charges of
     $20,000 for the equity in net loss of an investee accounted for on the
     equity method.  As a result of additional outside investors in the
     investee's common stock during fiscal 1997, the Company's net ownership in
     the investee was reduced from 40% to less than 5%.  As a result of this
     reduction, the Company's investment was accounted for using the cost method
     for the year ended February 28, 1998. In fiscal 1998, the Company sold 42%
     of its holdings in DAS Device Inc. and realized a gain of $1,383,000.

     REVENUE RECOGNITION
     Revenues are generally recognized upon shipment of product.  However, where
     a shipment is subject to customer acceptance criteria, revenue is deferred
     until customer acceptance. Revenue from research contracts in process is
     recognized under the percentage of completion method.

     INCOME TAXES
     Deferred income taxes are provided for temporary differences between the
     financial reporting basis and the tax basis of the Company's assets and
     liabilities.  The benefits from utilization of net operating loss
     carryforwards will be reflected as part of the income tax provision if and
     when realizable.


                                         F-8
<PAGE>

     NET LOSS PER SHARE
     Basic earnings per share is computed by dividing loss available to common
     stockholders by the weighted average common shares outstanding for the
     period. Diluted earnings per share reflects the weighted average common
     shares outstanding plus the potential effect of dilutive securities which
     are convertible to common shares such as option, warrants, and preferred
     stock. Due to the net losses from continuing operations incurred in fiscal
     1998 and 1997, all common stock equivalents outstanding were considered
     anti dilutive and were excluded from the calculations of diluted net loss
     per share. No adjustments were made to net loss attributable to common
     stock in the calculation of basic or diluted earnings per share in fiscal
     1998 or 1997. Anti dilutive securities and common stock equivalents at
     February 28, 1998 which could be dilutive in future periods include common
     stock options to purchase 2,562,000 shares of common stock, warrants to
     purchase 4,224,000 shares of common stock, 4,500 shares of Series A
     preferred stock which may be converted into 53,000 shares of common stock
     and the minority interest investment and subsidiary stock options to
     purchase 304,000 shares in the Company's SurgX subsidiary which could
     reduce the Company's share of profits in the calculation of earnings per
     share in future periods.

     RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
     In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
     No. 130 ("SFAS 130"), "Reporting Comprehensive Income." SFAS 130
     establishes standards for reporting and display of comprehensive income and
     its components in a financial statement that is displayed with the same
     prominence as other financial statements for the periods beginning after
     December 15, 1997. Comprehensive income, as defined, includes all changes
     in equity (net assets) during a period from nonowner sources including
     unrealized gains and losses an available-for-sale securities.
     Reclassification of financial statements for earlier periods for
     comparative purposes is required. The Company will adopt SFAS 130 beginning
     in fiscal 1999 and does not expect such adoption to have a material effect
     on the consolidated financial statements.

     In June 1997, the FASB issued SFAS No. 131 ("SFAS 131"), "Disclosure about
     Segments of and Enterprise and Related Information." This statement
     establishes standards for the way companies report information about
     operations segments in annual financial statements for the periods
     beginning after December 15, 1997. It also establishes standards for
     related disclosures about products and services, geographic areas, and
     major customers. It is not expected that adoption of SFAS 131 will have an
     impact to the Company's consolidated financial statements.

                                         F-9
<PAGE>

3.   DETAILS OF BALANCE SHEET COMPONENTS
<TABLE>
<CAPTION>

                                                  FEBRUARY 28,   FEBRUARY 28,
                                                       1998         1997
<S>                                                <C>          <C>
     Inventories:
       Raw materials                               $  84,000    $ 1,211,000
       Work-in-progress                                    -        153,000
       Finished goods                                313,000        768,000
                                                   ---------    -----------
                                                   $ 397,000    $ 2,132,000
                                                   ---------    -----------
                                                   ---------    -----------

     Property and equipment:
       Machinery and equipment                     $ 459,000    $   852,000
       Furniture and fixtures                        225,000        759,000
       Automobiles                                    11,000         11,000
       Leasehold improvements                        105,000        225,000
                                                   ---------    -----------
                                                     800,000      1,847,000
       Less:  Accumulated depreciation              (310,000)      (647,000)
                                                   ---------    -----------
                                                   $ 490,000    $ 1,200,000
                                                   ---------    -----------
                                                   ---------    -----------

     Accrued liabilities:
       Compensation                                $ 316,000    $   205,000
       Professional fees                             199,000        203,000
       Warranty                                            -        150,000
       Facilities                                     31,000         72,000
       Disposal related costs                        138,000              -
       Other                                         314,000        270,000
                                                   ---------    -----------
                                                   $ 998,000    $   900,000
                                                   ---------    -----------
                                                   ---------    -----------
</TABLE>


                                         F-10
<PAGE>

4.   ACQUISITION OF POWER SENSORS CORPORATION

     In December 1996, the Company acquired certain assets and assumed certain
     liabilities of Power Sensors Corporation ("PSC") in exchange for 600,000
     shares of Class A Common Stock of Oryx Power Products Corporation, a
     wholly-owned subsidiary of the Company.  The stock issued represented
     approximately 6% of the outstanding stock of Power Products at February 28,
     1997.  The acquisition was accounted for as a purchase; accordingly, the
     purchase price and costs of the acquisition were allocated to the assets
     and liabilities acquired based upon their estimated fair market values at
     the date of acquisition as follows:

<TABLE>
<S>                                               <C>
     Current assets                               $  338,000
     Furniture and equipment                         300,000
     Research and development in process             670,000
     Purchased technology                            340,000
     Goodwill                                        355,000
                                                  ----------
       Total assets                                2,003,000
                                                  ----------

     Accounts payable and accrued liabilities        460,000
     Capital lease assumed                           268,000
     Bank loans assumed                              555,000
                                                  ----------
       Total liabilities                           1,283,000
                                                  ----------
          Total purchase price                    $  720,000
                                                  ----------
                                                  ----------
</TABLE>

     The total purchase price was derived based on the estimated fair value of
     the stock issued of $600,000 and acquisition expenses of $120,000.  The
     agreement allowed the holders of such stock, under certain conditions, on
     the three year anniversary of the acquisition to require the Company to
     redeem the stock issued for a promissory note of $1.5 million payable in
     equal annual installments over four years commencing in the year 2000.
     Accordingly, the stock was accounted for as mandatorily redeemable
     securities at estimated fair value and accretes up to the redemption value
     in accordance with the terms of the agreement. In connection with the
     disposal of Power Products (see Note 6) the stock balance was included in
     net assets from discontinued operations and the accretion of redemption
     value in the amount of $189,000 and $37,000 for the years ended February
     28, 1998 and 1997, respectively, were included in income (loss) from
     discontinued operations.

     On March 2, 1998, the Company disposed of Power Products, and accordingly,
     the results of PSC as well as Power Products have been accounted for as a
     discontinued operation (see Note 6).


                                         F-11
<PAGE>

5.   DISPOSITION

     On February 27, 1998, a third party acquired 8,000,000 newly issued shares
     of the authorized  Class A Common Stock of Oryx Instruments and Materials
     Corporation ("I&M") from I&M in exchange for $500,000 in cash (the "Sale").
     Prior to the Sale, I&M was essentially a wholly owned subsidiary of the
     Company.

     As part of the Sale, I&M repurchased 8,000,000 of the 10,000,000 shares of
     Class A Common Stock held by the Company for an aggregate redemption price
     of $1,500,000 payable $500,000 in cash and a $1,000,000 in a non-interest
     bearing note (the "Note Receivable"). The Note Receivable balance is
     payable one-third on February 27, 1999 and two-thirds on February 27, 2000.
     The transaction resulted in a gain of $646,000 for the Company, which is
     being deferred until receipt of payments under the Note Receivable. As a
     result of the transaction, the Company has fully reserved its remaining
     19.9% ownership investment in I&M at February 28, 1998. The Note Receivable
     is included in other assets at February 28, 1998.

     Immediately prior to the repurchase, I&M distributed to the Company
     substantially all of the assets and liabilities comprising the materials
     business previously conducted by I&M as well as certain other assets. Net
     assets retained by the Company totaled $1,300,000. Revenues from the sold
     Instruments portion of I&M were $3,688,000 and $2,194,000 for the years
     ended February 28, 1998 and 1997, respectively.

6.   DISCONTINUED OPERATIONS

     On March 2, 1998, the Company sold substantially all of the properties,
     assets, rights, business and certain liabilities of Oryx Power Products
     Corporation ("Power Products") for $2,000,000 in cash and a contingent
     additional amount up to $4,000,000 to be calculated based upon sales of
     certain specified products to specified customers during the fourteen month
     period immediately following the closing of the transaction. The disposal
     of Power Products has been accounted for as a discontinued operation and
     accordingly the net assets held for disposal and operating results of Power
     Products were segregated and reported as discontinued operations. As the
     Company has estimated a loss on disposal, all losses were recognized as if
     the transaction was completed as of February 28, 1998. Prior year financial
     statements have been restated to reflect the discontinuance of the Power
     Products operations. Revenue from Power Products were $10,022,000 and
     $20,390,000 for the years ended February 28, 1998 and 1997, respectively.


                                         F-12
<PAGE>

     The components of net assets of discontinued operations included in the
     Consolidated Balance Sheet are as follows:

<TABLE>
<CAPTION>

                                                FEBRUARY 28,   FEBRUARY 28,
                                                    1998          1997
<S>                                             <C>            <C>
     Cash                                        $    13,000    $   691,000
     Accounts receivable                             228,000      1,840,000
     Inventory                                     2,571,000      2,663,000
     Other current assets                             95,000         98,000
                                                  ----------     ----------
       Current Assets                              2,907,000      5,292,000

     Property & equipment, net                     1,158,000      1,474,000
     Non current assets                              632,000        909,000
                                                  ----------     ----------
       Total assets                                4,697,000      7,675,000

     Current liabilities                          (2,567,000)    (2,284,000)
     Non current liabilities                      (  245,000)    (  854,000)
     Mandatorily redeemable securities            (  825,000)    (  637,000)
                                                  ----------     ----------
       Total liabilities                          (3,637,000)    (3,775,000)
                                                  ----------     ----------
       Net assets of discontinued operations     $ 1,060,000    $ 3,900,000
                                                 -----------    -----------
                                                 -----------    -----------
</TABLE>

     Income (loss) from discontinued operations are net of income taxes of
     $25,000 and $40,000 for the years ended February 28, 1998 and 1997,
     respectively. The tax benefit resulting from the loss on disposal of Power
     Products was immaterial. Transaction costs related to the disposal were
     $1,018,000.

7.   FINANCING ARRANGEMENTS

     On December 4, 1996, the Company entered into a credit facility with a
     financial institution for borrowings of $530,000 bearing interest at 10.5%.
     The credit facility is payable over 48 monthly payments of principal and
     interest and is collaterized by specified manufacturing equipment.  At
     February 28, 1998, the Company had borrowings outstanding of $360,000 under
     this facility which was included in net assets of discontinued operations.

     At February 28, 1997, the Company had outstanding borrowings of $530,000
     under a loan assumed in connection with PSC acquisition. The loan was
     collaterized by business assets of the Company. During the year ended
     February 28, 1998, the Company paid off the entire balance of this loan.


                                         F-13
<PAGE>

     In May 1997, the Company entered into a facility which included an Accounts
     Receivable Revolving Batch Facility and an Inventory Line of Credit with a
     financial institution.  The Inventory Line of Credit provides for
     borrowings of up to $1.5 million ($750,000 of which is subject to an
     inventory appraisal).  The Accounts Receivable Revolving Batch Facility
     allows the Company to factor up to a maximum of $4 million, provided that
     any amount in excess of $3.5 million is supported by an equal amount of
     unused availability under the Inventory Line of Credit.  Under the
     facility, the Company is required to sell on an undiscounted, non recourse
     basis all accounts receivable.  In exchange, advances are available to the
     Company up to 85% of the face amount of eligible accounts receivable (as
     defined) up to a maximum amount of $4 million. Accounts receivable in the
     amount of $1,100,000 at February 28, 1998 were due from lender. Financing
     costs under the arrangement are equal to the greater of the institution's
     base rate plus 1.25% or 7.0%. In March 1998, the agreement was amended to
     reduce the Account Receivable Revolving Batch Facility and the Inventory
     Credit Line to a maximum borrowings of $500,000 each. Under the amended
     agreement, the Accounts Receivable Revolving Batch Facility expires in
     March 1999 and the Inventory Line of Credit expires in May 1999.

     At February 28, 1998, the Company had borrowings outstanding of $465,000
     under the Inventory Line of Credit, of which $336,000 was included in net
     assets of discontinued operations, and advances of $1,691,000 under the
     Accounts Receivable Revolving Batch Facility, of which $691,000 related to
     discontinued operations.

     In February 1998, the Company entered into a bridge loan facility with a
     financial institution for borrowings of amounts up to $1,000,000 bearing
     interest at the institution's base rate plus 4% with a minimum of 7% per
     annum. The facility expires on September 15, 1998. As consideration upon
     signing the facility, the financial institution received warrants to
     purchase 174,546 shares of common stock exercisable through February 2001
     at an exercise price of $1.15. The Company recorded an expense of $93,000
     upon issuance of the warrants. At February 28, 1998, there were no
     borrowings under this credit facility.

8.   SERIES A 2% CONVERTIBLE CUMULATIVE PREFERRED STOCK

     The Company has authorized 3,000,000 shares of Preferred Stock with a par
     value of $0.001 per share of which 45,000 of such shares are designated
     Series A 2% Convertible Cumulative Preferred Stock (the Series A Stock).
     Each share of Series A Stock may be converted, at the option of the holder,
     into approximately 11.67 shares of Common Stock.  As of February 28, 1998,
     the Company had reserved 52,515 shares of Common Stock for issuance upon
     conversion of the Series A Stock.  The holders of Series A Stock are
     entitled to receive a cumulative dividend of $0.50 per share per annum,
     subject to any restrictions imposed by the Delaware General Corporation
     Law.  The dividend is payable semi-annually.  In the event of


                                         F-14
<PAGE>

     liquidation and to the extent assets are available, the holders of the
     Series A Stock are entitled to a liquidation preference distribution of
     $25.00 per

     share plus accrued but unpaid dividends.  Each share of the Series A Stock
     is entitled to one vote per share on all matters submitted to a vote of
     stockholders of the Company.

9.   STOCK PLANS AND WARRANTS

     ORYX STOCK PLANS
     In March 1993, the Company adopted the Incentive and Nonqualified Stock
     Option Plan (the "1993 Plan").  The 1993 Plan, which expires in 2003,
     provides for incentive as well as nonstatutory stock options.  The Board of
     Directors may terminate the 1993 Plan at any time at its discretion.

     Options under the 1993 Plan are granted at prices determined by the Board
     of Directors, subject to certain conditions.  Generally, these conditions
     require that the exercise price of options granted may not be below 110%
     for persons owning more than 10% of the Company's capital stock and 100%
     for options issued to other persons for incentive options, or 85% of the
     fair market value of the stock at the date of grant for non statutory
     options.  Options granted to persons owning more than 10% of the Company's
     capital stock may not have a term in excess of five years, and all other
     options must expire within ten years.  Options vest over a period
     determined by the Board of Directors, generally four years, and are
     adjusted pro rata for any changes in the capitalization of the Company,
     such as stock splits and stock dividends.

     In 1995 and 1996, the Company adopted the 1995 and 1996 Directors Stock
     Option Plan (the "Directors' Plans").  The 1995 and 1996 Directors' Plan,
     which expires in 2005 and 2006, respectively, provide for nonstatutory
     stock options to be granted to nonemployee directors of the Company.  The
     Board of Directors may terminate the Directors' Plans at anytime at its
     discretion.  Options under the Directors' Plans are granted at prices
     determined by the Board of Directors, subject to certain conditions more
     fully described in the Directors' Plans.  Generally, these conditions
     require that the exercise price of options granted may not be below 110%
     for persons owning more than 10% of the Company's capital stock and 100%
     for options issued to other persons of the fair market valve of the stock
     at the date of grant.  Options must expire within ten years of grant.  The
     1995 and 1996 Directors' Plan provides that each nonemployee director
     receive options to purchase 45,000  and 30,000 shares, respectively, of the
     Company's Common Stock with 15,000 and 10,000, respectively, vested and
     exercisable upon grant with the remainder vesting in equal annual
     installments over a three year period.  The Company has 225,000 shares
     authorized under the 1995 Directors' Plan of which 195,000 options were
     outstanding with an average exercise price of $1.56 per share as of
     February 28, 1998.   The Company has 120,000 shares authorized under the
     1996


                                         F-15
<PAGE>

     Directors' Plan of which 90,000 options were outstanding with an average
     exercise price of $1.77 per share as of February 28, 1998.

     A summary of stock option activity under the 1993 Plan and the Directors'
     Plans is as follows:

<TABLE>
<CAPTION>
                                                     OPTIONS OUTSTANDING
                                                   -------------------------
                                                                    WEIGHTED-
                                        SHARES                       AVERAGE
                                       AVAILABLE                     EXERCISE
                                          FOR                         PRICE
                                         GRANT          SHARES      PER SHARE
<S>                                  <C>            <C>             <C>
     Balance at February 28, 1996       608,382        738,618        $1.54

     Additional shares authorized       620,000              -            -
     Options granted                   (786,500)       786,500        $1.94
     Options canceled                   143,253       (143,253)       $1.90
     Options exercised                        -       (187,318)       $1.22
                                      ---------     ----------
     Balance at February 28, 1997       585,135      1,194,547        $1.81

     Additional shares authorized     1,000,000              -            -
     Options granted                 (1,530,000)     1,530,000        $1.54
     Options canceled                   162,621       (162,621)       $1.96
     Options exercised                        -              -            -
                                      ---------     ----------
     Balance at February 28, 1998       217,756      2,561,926        $1.64
                                      ---------     ----------
                                      ---------     ----------
</TABLE>

     The following table summarizes information about employee stock options
     outstanding at February 28, 1998:
 
<TABLE>
<CAPTION>
                                  OPTIONS OUTSTANDING                    OPTIONS EXERCISABLE
                      ---------------------------------------------- -----------------------------
                                    WEIGHTED-AVERAGE
                                       REMAINING         WEIGHTED-                    WEIGHTED-
     RANGE OF            NUMBER       CONTRACTUAL         AVERAGE        NUMBER        AVERAGE
     EXERCISE PRICES   OUTSTANDING       LIFE          EXERCISE PRICE  EXERCISABLE  EXERCISE PRICE
     ---------------   -----------  ----------------   --------------  -----------  --------------

<S>                   <C>           <C>                <C>             <C>          <C>
     $1.00 - 1.38       911,040          8.3            $  1.27        273,589        $  1.14
     $1.58 - 2.25     1,625,886          8.5               1.82        627,458           1.95
     $2.38 - 3.00        25,000          6.2               2.95         18,770           2.95
                      ---------                                       --------
        Total         2,561,926          8.4            $  1.64        919,817        $  1.73
                      ---------                                       --------
                      ---------                                       --------
</TABLE>
 


                                         F-16


<PAGE>

     FAIR VALUE DISCLOSURES
     Had compensation cost for the Plans been determined based on the fair value
     of each stock option on its grant date, as prescribed in SFAS 123, the
     Company's net loss and net loss per share in fiscal 1998 would have been
     $7,491,000 and $0.57, respectively, and in fiscal 1997 would have been
     $2,395,000 and $0.22, respectively.

     The fair value of each option is estimated on the date of grant using the
     Black-Scholes option pricing model with the following weighted average
     assumptions used for grants during the applicable period:  dividend yields
     of 0% for both periods; expected volatility of 77% for fiscal 1998 and 60%
     for fiscal 1997; risk-free interest rate of 6.10% for fiscal 1998 and 6.29%
     for fiscal 1997 for options granted; and a weighted average expected option
     term of five years for both periods.  The weighted average fair value of
     options granted during fiscal years 1998 and 1997 was $0.87 and $0.73,
     respectively.  The weighted average fair value of options to purchase
     common shares of the Company's subsidiaries were not material during fiscal
     years 1998 and 1997.

     SUBSIDIARY STOCK PLAN
     In November 1995, the Company's subsidiary, SurgX Corporation, adopted
     stock option plans under which the Board of Directors granted options to
     management to purchase Class B common shares in the subsidiary at their
     fair market values as determined by the Board of Directors.  Class B common
     shares authorized for issuance in the subsidiary are identical to the ten
     million shares of Class A common shares owned by the Company, except the
     Class A shares possess a liquidation preference.  The Board of Directors
     authorized 1.5 million shares of Class B common shares to be available for
     issuance under this stock plan.  Such options are not transferable except
     in the event of a public offering of the subsidiary's stock or an
     acquisition of the subsidiary, and may be repurchased by the Company at its
     option.  Grants under the plan are for amounts, vesting periods and option
     terms established by the Company's Board of Directors.  The Company's
     ownership percentage of this subsidiary will change as a result of future
     exercises of stock options and, to the extent this subsidiary contributes
     profits, outstanding subsidiary stock options may dilute the Company's
     share of profits in the calculation of earnings per share.

     At February 28, 1998, there were 304,000 options to purchase shares of
     SurgX Corporation class B common stocks of which 161,000 were vested. These
     options had an average exercise price of $0.80 and an average remaining
     contractual life of 7.4 years.

     During fiscal 1998, the Company sold 333,000 Class A shares of SurgX
     Corporation for net proceeds of $485,000. At February 28, 1998, there were
     10,333,000 Class A common shares of SurgX Corporation outstanding and with
     the exception of 333,000 shares of SurgX Corporation sold in fiscal 1998,
     all of the subsidiary Class A shares outstanding were owned by the Company.


                                         F-17
<PAGE>

     WARRANTS
     The following warrants at February 28, 1998, and the number of shares of
     the Company's Common Stock which may be purchased at exercise, were
     outstanding and exercisable at February 28, 1998:

<TABLE>
<CAPTION>


      ORIGINAL      ISSUABLE          WARRANT       WARRANT          WARRANT
      WARRANTS       COMMON        COMMENCEMENT   EXPIRATION         EXERCISE
     OUTSTANDING     SHARES            DATE          DATE             PRICE

    <S>            <C>             <C>            <C>                <C>
      1,173,900    2,291,495         Oct. 1994     Oct. 1999          $3.50
         37,500       37,500         Oct. 1994     Oct. 2004          $2.00
        379,000      558,585         Nov. 1994     Oct. 2004          $2.00
        322,551      322,551         Feb. 1996     Jan. 2001          $1.25
        400,000      400,000         Feb. 1996     Mar. 2001          $1.00
        100,000      100,000         Feb. 1996     Mar. 2001          $5.00
        100,000      100,000         Apr. 1996     Mar. 2001          $1.31
         90,730       90,730         Dec. 1996     Dec. 2001          $1.90
         40,000       76,000         Dec. 1996     Apr. 1999          $3.50
         72,800       72,800         Feb. 1997     Feb. 2002          $1.90
        174,546      174,546         Feb. 1998     Feb. 2001          $1.15
      ---------    ---------
      2,891,027    4,224,207
      ---------    ---------
      ---------    ---------
</TABLE>


     In addition to the foregoing, in connection with the Company's initial
     public offering, the Company sold to the underwriters, for an aggregate
     price of $110, noncallable warrants ("Underwriters' Warrants") entitling
     the holder to purchase from the Company 110,000 units at an exercise price
     of $11.55 per unit, subject to dilution provisions.  Each unit consisted of
     two shares of Common Stock and one callable warrant to purchase one
     additional share of Common Stock at an exercise price of $3.50 (also
     subject to dilution provisions).  As a result of subsequent dilutive
     offerings, the Underwriters' Warrants were convertible into 323,916 units
     at a exercise price of $3.71 per unit and each underlying warrant was
     convertible into 1.9 common shares.  During fiscal 1997, 100,000 units were
     exercised resulting in proceeds of $371,000.  In December 1996, the Company
     repurchased and retired the remaining units in exchange for $475,000 and
     40,000 warrants to purchase 76,000 shares at $3.50 per warrant, which may
     be exercised through April 1999.

     In connection with a bridge loan facility described in Note 7, in fiscal
     1998 the Company issued to a financial institution 174,546 shares of common
     stock exercisable through February 2001 at an exercise price of $1.15.

                                         F-18
<PAGE>

     In certain circumstances and defined time frames, the Company may call
     certain of the above warrants.  The terms of most warrants are subject to
     adjustment in certain circumstances including antidilution protection.


10.  RESEARCH CONTRACTS AND DEVELOPMENT FUNDING

     The Company is party to certain research contracts which are accounted for
     on a percentage of completion basis.  Revenues and cost of sales recorded
     under such contracts totaled $716,000 and $734,000 during fiscal 1998 and
     $627,000 and $403,000 during fiscal 1997, respectively.


     During fiscal 1998 and fiscal 1997, the Company received development
     funding from third parties to assist in the commercialization of certain of
     the Company's products.  Such funding is recorded as an offset to research
     and development expenses when contract specified technical milestones have
     been achieved.  During fiscal 1998 and fiscal 1997, $1,307,000 and
     $1,107,000, respectively, was credited to research and development expenses
     under these arrangements.


11.  SALES TO MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK

     The Company's customers are primarily in the office equipment,
     semiconductor and computer disk drive manufacturing industries.  The
     Company maintains reserves for potential credit losses; historically, such
     losses have been minor and within management's expectations.  The Company's
     accounts receivable are principally derived from sales in the United
     States.  All transactions are denominated in U.S. dollars.  At February 28,
     1998, 100% of the accounts receivable balance was due from the lender
     described in Note 7.

                                         F-19
<PAGE>

12.  INCOME TAXES

     Deferred income taxes reflect the tax effects of temporary differences
     between carrying amounts of assets and liabilities for financial reporting
     and income tax purposes. The Company provides a valuation allowance for
     deferred tax assets when it is more likely than not, based on currently
     available evidence, that some portion or all of the deferred tax assets
     will not be realized. Management believes that the available objective
     evidence creates sufficient uncertainly regarding the realizability of
     deferred tax assets such that a full valuation allowance is required at
     February 28, 1998.

     Deferred tax assets (liabilities) comprise the following:

<TABLE>
<CAPTION>

                                                 FEBRUARY 28,   FEBRUARY 28,
                                                    1998           1997

     <S>                                         <C>            <C>
     Net operating loss carryforwards            $ 3,511,000    $ 2,438,000
     Inventory reserves                              149,000         60,000
     R&D credit carryforwards                        366,000        330,000
     Intangibles                                           -        283,000
     Other                                           600,000        394,000
                                                 -----------    -----------
       Gross deferred tax assets                   4,626,000      3,505,000
     Fixed assets                                    (36,000)       (67,000)
                                                 -----------    -----------
     Net deferred tax assets                       4,590,000      3,438,000
     Deferred tax assets from discontinued
       operations                                    750,000        763,000
                                                 -----------    -----------
                                                   5,340,000      4,201,000
     Valuation allowance                          (5,340,000)    (4,201,000)
                                                 -----------    -----------
       Net deferred tax asset                    $         -    $         -
                                                 -----------    -----------
                                                 -----------    -----------
</TABLE>

     No provision for federal income taxes has been recorded because of losses
     incurred.


     At February 28, 1998, the Company had federal net operating loss
     carryforwards of approximately $9,700,000 which may be utilized to reduce
     future taxable income through 2013, subject to certain limitations.  In
     accordance with section 382 of the Internal Revenue Code, the amounts of
     and the benefits from net operating losses that can be carried forward are
     limited in certain circumstances, including a cumulative stock ownership
     change of more than 50% over a three-year period.  The Company's initial
     public offering and subsequent private placements have triggered ownership
     changes of greater than 50% and, accordingly, the future utilization of tax
     carryforwards generated through the date of such offerings are limited.

                                         F-20
<PAGE>

13.  COMMITMENTS AND CONTINGENCIES

     The Company leases its facilities and certain equipment under operating
     lease agreements, which expire in various periods through 2002.  The
     Company also leases certain assets under long-term lease agreements that
     are classified as capital leases.  The total amount of assets acquired
     under capital lease arrangements which are included in property and
     equipment is $47,000 and $324,000 and accumulated amortization on such
     assets totaled of $14,000 and $107,000, at February 28, 1998 and
     February 28, 1997, respectively.


     Future minimum lease obligations are payable as follows:

 
<TABLE>
<CAPTION>

                                                       CAPITALIZED         OPERATING
  YEAR ENDING FEBRUARY                                    LEASES             LEASES            TOTAL

<S>                                                    <C>               <C>                <C>
     1999                                               $  21,000        $    727,000       $    748,000
     2000                                                   9,000             467,000            476,000
     2001                                                       -             358,000            358,000
     2002                                                       -             116,000            116,000
                                                        ---------        ------------       ------------
     Total minimum lease payments                          30,000        $  1,668,000       $  1,698,000
     Less amount representing interest                     (2,000)       ------------       ------------
                                                        ---------        ------------       ------------
     Present value of minimum lease payments               28,000
     Less current portion                                 (16,000)
                                                        ---------
     Long-term portion of obligations
        under capitalized leases                        $  12,000
                                                        ---------
                                                        ---------
</TABLE>


     Rental expense for the years ended February 28, 1998 and 1997 was $516,000
     and $345,000, respectively.


14.  SEGMENT INFORMATION

     The Company groups its business into two operating segments and a corporate
     segment:  (i) Instruments and Materials includes specialized materials
     produced through a patented bonding process and the Company's electrostatic
     discharge and  secondary ion mass spectrometer measurement devices; and
     (ii) SurgX, a development stage operation that utilizes the Company's
     patented technology that protects microchips and related products from
     overvoltage.


     The segment information has been restated to reflect the discontinuance of
     operations of the Power Products segment (see Note 6). All results of 
     operations relating to the Instruments

                                         F-21
<PAGE>

     portion of Instruments and Materials segment prior to its disposition have
     been included in the consolidated information (see Note 5).

     Consolidated business segment information as of February 28, 1998 and
     February 28, 1997, and for each of the years then ended is summarized as
     follows:

 
<TABLE>
<CAPTION>

                                                         1998                1997

<S>                                                  <C>                <C>
     Revenues:
      Instruments and Materials
        Instruments                                  $  3,688,000       $  2,194,000
        Materials                                       4,678,000          4,240,000
      SurgX                                                83,000             36,000
      Corporate                                                 -                  -
                                                     ------------       ------------
                                                     $  8,449,000       $  6,470,000
                                                     ------------       ------------
                                                     ------------       ------------

     Operating income/(loss):
      Instruments and Materials
        Instruments                                  $ (2,319,000)      $ (2,651,000)
        Materials                                       1,378,000          1,340,000
      SurgX                                            (1,315,000)          (880,000)
      Corporate                                        (2,250,000)        (2,149,000)
                                                     ------------       ------------
                                                     $ (4,506,000)      $ (4,340,000)
                                                     ------------       ------------
                                                     ------------       ------------

     Depreciation and amortization expense:
      Instruments and Materials
        Instruments                                  $    312,000       $    181,000
        Materials                                          43,000             37,000
      SurgX                                                88,000             13,000
      Corporate                                            15,000             17,000
                                                     ------------       ------------
                                                     $    458,000       $    248,000
                                                     ------------       ------------
                                                     ------------       ------------

     Identifiable assets:
      Instruments and Materials :
        Instruments (see Note 5)                     $          -       $  3,931,000
        Materials                                       1,518,000            694,000
      SurgX                                               375,000            507,000
      Corporate                                         2,600,000          2,505,000
                                                     ------------       ------------
                                                        4,493,000          7,637,000
      Plus: Net assets of discontinued operations       1,060,000          3,900,000
                                                     ------------       ------------
                                                     $  5,553,000       $ 11,537,000
                                                     ------------       ------------
                                                     ------------       ------------

     Capital expenditures:
      Instruments and Materials :
        Instruments (see Note 5)                     $     98,000       $    478,000
        Materials                                          47,000             80,000

 
                                         F-22
<PAGE>
 
      SurgX                                               172,000            317,000
      Corporate                                             4,000             56,000
                                                     ------------       ------------

</TABLE>
 


                                         F-23