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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
(Mark One)
[X]         ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                      EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 2000
                                       OR
[ ]         TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
                     EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from            to
                              ------------  ------------
Commission file number 0-14659
                       -------
                                 TECHDYNE, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

              FLORIDA                                    59-1709103
    -------------------------------                   ----------------
    (State or other jurisdiction of                   (I.R.S. Employer
     incorporation or organization)                  Identification No.)

          2230 W. 77TH STREET, HIALEAH, FLORIDA               33016
         ----------------------------------------           ----------
         (Address of principal executive offices)           (Zip Code)

                  Registrant's telephone number (305) 556-9210
                                                --------------

              Securities registered under Section 12(b) of the Act:
                                      None

              Securities registered under Section 12(g) of the Act:

                               Title of each class
                          ----------------------------
                          Common Stock, $.01 par value

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

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

         The aggregate market value of the voting stock held by non-affiliates
of the registrant computed by reference to the closing price at which the stock
was sold on March 20, 2001 was approximately $1,391,000.

         As of March 20, 2001 the company had 6,556,990 shares of its common
stock.

DOCUMENTS INCORPORATED BY REFERENCE

         Registrant's Registration Statement on Form SB-2 dated July 26, 1995,
as amended August 21, 1995 and September 1, 1995, Registration No. 33-94998-A
Part II, Item 27, Exhibits.

         Registrant's Registration Statement on Form S-3 dated December 11,
1996, Registration No. 333-15371, Part II, Item 16, Exhibits.

         Annual Report, Form 10-K, for the years ended December 31, 1995, 1997,
and 1999 Part IV, Exhibits.

         Annual Reports for Registrant's Parent, Medicore, Inc., Forms 10-K for
the years ended December 31, 1994 and 1998, Part IV, Exhibits.

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<PAGE>

                                 TECHDYNE, INC.

                       Index to Annual Report on Form 10-K
                          Year Ended December 31, 2000

                                                                            PAGE

                                     PART I

Item 1.    Business.........................................................   1

Item 2.    Properties.......................................................  11

Item 3.    Legal Proceedings................................................  12

Item 4.    Submission of Matters to a Vote of Security Holders..............  12


                                     PART II


Item 5.    Market for Registrant's Common Equity and Related Stockholder
           Matters..........................................................  13

Item 6.    Selected Financial Data..........................................  13

Item 7.    Management's Discussion and Analysis of Financial Condition
           and Results of Operations........................................  14

Item 7A.   Quantitative and Qualitative Disclosure About Market Risk........  19

Item 8.    Financial Statements and Supplementary Data......................  20

Item 9.    Changes in and Disagreements with Accountants on Accounting and
           Financial Disclosure.............................................  20


                                    PART III


Item 10.   Directors and Executive Officers of the Registrant...............  21

Item 11.   Executive Compensation...........................................  21

Item 12.   Security Ownership of Certain Beneficial Owners and Management...  21

Item 13.   Certain Relationships and Related Transactions...................  21


                                     PART IV


Item 14.   Exhibits, Financial Statement Schedules and Reports on Form 8-K..  22

<PAGE>

                                     PART I

             CAUTIONARY NOTICE REGARDING FORWARD-LOOKING INFORMATION

         The statements contained in this Annual Report on Form 10-K that are
not historical are forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
the 1934. The Private Securities Litigation Reform Act of 1995 contains certain
safe harbors regarding forward-looking statements. Certain forward-looking
statements include management's expectations, intentions and beliefs with
respect to the growth of Techdyne, Inc., the nature of the electronics industry
in which it is engaged as a manufacturer, our business strategies and plans for
future operations, needs for capital expenditures, capital resources, liquidity
and operating results, and similar expressions concerning matters that are not
historical facts. See Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations." Words such as "anticipate," "estimate,"
"expects," "projects," "intends," "plans" and "believes," and words and terms of
similar substance used in connection with any discussions of future operating or
financial performance, or the sale of control of our company, identify
forward-looking statements. Such forward-looking statements, like all statements
about expected future events, are subject to risks and uncertainties that could
cause actual results to materially differ from those expressed in the
statements, including general economic, market and business conditions,
opportunities taken or abandoned, competition and other factors discussed
periodically in our reports and filings. Many of the foregoing factors are
beyond our control.

         All forward-looking statements included in this document are based on
information available to us on the date hereof. We assume no obligation to
update any such forward-looking statement to reflect events after the date made.
The following cautionary statements are being made pursuant to the provisions of
the Reform Act with the intention of Techdyne, Inc. obtaining the benefits of
the safe harbor provisions of the Reform Act. Among the factors that could cause
actual results to differ materially are the factors detailed in the risks
discussed in the "Risk Factors" section included in our Registration Statements,
as filed with the SEC, Form SB-2 (effective September 13, 1995) and Form S-3,
effective December 11, 1996. Accordingly, readers are cautioned not to place too
much reliance on such forward-looking statements, which speak only as of the
date made.


ITEM 1.  BUSINESS

         Techdyne, Inc. is an international contract manufacturer of electronic
and electro-mechanical products, primarily manufactured to customer
specifications and designed for original equipment manufacturers and
distributors in the data processing, telecommunications, instrumentation and
food preparation equipment industries. Custom-designed products primarily
include complex printed circuit boards, conventional and molded cables and wire
harnesses, and electro-mechanical assemblies. In addition, the company provides
original equipment manufacturers with value-added, turnkey contract
manufacturing services and total systems assembly and integration. The company
also delivers manufacturing and test engineering services and materials
management, with flexible and service-oriented manufacturing and assembly
services for its customers' high-tech and rapidly changing products.

         Approximately 91% of sales are domestic, a substantial amount generated
by our domestic wholly-owned subsidiary, Lytton Incorporated, and 9% are
effected by our wholly owned subsidiary, Techdyne (Europe) Limited in the
European markets and to a limited extent in the Middle East. Techdyne (Europe)
has a wholly-owned subsidiary, Techdyne (Livingston) Limited. There have been
significant reductions in sales for our European facility. See Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
<PAGE>

         Included among our customers are several Fortune 500 companies.
Services and products are marketed through an in-house sales/marketing staff of
16 persons, in conjunction with regional sales representatives.

         The company was incorporated in Florida in 1976, acquired by Medicore,
Inc., our parent, in 1982, and became a public company in 1985. Medicore, a
Nasdaq SmallCap Market company, owns approximately 71.3% of our common stock.

         Our executive offices are located at 2230 West 77th Street, Hialeah,
Florida 33016. The company's telephone number is (305) 556-9210 and its Internet
address is www.tcdn.com.


ELECTRONIC MANUFACTURING INDUSTRY

         In recent years, the electronic contract manufacturing industry has
exhibited significant growth. We believe this growth has resulted from a vastly
increased number of OEMs adopting an external manufacturing philosophy coupled
with the growth of the electronics industry. This philosophy is motivated by the
increased capital necessary to acquire modern, highly automated manufacturing
equipment for the OEMs to access leading manufacturing technologies and
capabilities, to reduce inventory, and to realize the cost benefits of the
improved purchasing power, labor efficiency and overall cost benefits of
contract manufacturers. We believe that many OEMs view contract manufacturers as
an integral part of their manufacturing strategy. Using outsourcing for their
manufacturing of electronic assemblies also enables OEMs to focus on product
development, reduce working capital requirements, improve inventory management
and marketability. OEMs are looking more to contract manufacturers, like our
company, to provide a broader scope of value-added services, including
manufacturing, engineering and test services. OEMs rely on contract
manufacturers not only for partial component assemblies but complete turnkey
manufacturing of entire finished products. We assist our customers from initial
design and engineering through materials procurement, to manufacturing of the
complete product and testing. Greater efficiencies are obtained by OEMs through
"concurrent engineering" which gives contract manufacturers greater impact in
product design, component selection, production methods and the preparation of
assembly drawings and test schematics. This also gives the customer the ability
to draw upon our manufacturing expertise at the outset and minimize
manufacturing bottlenecks.

         Another factor which leads OEMs to utilize contract manufacturers is
reduced time-to-market. Due to the intense competition in the electronics
industry, OEMs are faced with increasingly shorter product life-cycles which
pressures OEMs to reduce time constraints in bringing a product to market. This
can be accomplished by using a contract manufacturer's established manufacturing
expertise with its sophisticated, technically advanced and automated
manufacturing processes. This, coupled with the elements discussed above, such
as reduced production costs through economies of scale in materials procurement,
improved inventory management, access to our manufacturing technology,
engineering, testing and related expertise, motivates OEMs to work with
electronic contract manufacturers.


BUSINESS STRATEGY

         Our objective is to become a stronger competitive force in the
electronics manufacturing services industry. In response to industry trends,
particularly in view of constantly changing and improving technology and,
therefore, shorter product life cycles, we focus on product development and
marketing, in order to become competitive provider of electronic contract
manufacturing services for OEM customers. We continue to seek to develop strong,

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<PAGE>

long-term alliances with major-growth OEMs of complex, market leading products.
We believe that creating and maintaining long-term relationships with customers
requires providing high quality, cost-effective manufacturing services marked by
a high degree of customer responsiveness and flexibility. Therefore, our
strategy is to focus on leading manufacturers of advanced electronic products
that generally require custom-designed, more complex interconnect products and
short lead-time manufacturing services. Additionally, in 2001 we will target
other large contract manufacturers as potential customers.

         We continue to build on our integrated manufacturing capabilities,
final system assemblies and testing. In addition to PCBs, our custom cable
assembly capabilities provide us with further opportunities to leverage our
vertical integration and to provide greater value added services and be more
competitive. In addition, vertical integration provides us with greater control
over quality, delivery and cost.

         To further satisfy customer needs, we develop long-term customer
relationships by using our state-of-the-art technology to provide timely and
quick-turnaround manufacturing and comprehensive support for materials purchases
and inventory control. Through our electronic data interchange, the customer is
able to convey its inventory and product needs on a weekly basis based on a
rolling quantity forecast. More emphasis is placed on value-added turnkey
business for the manufacture of complete finished assemblies. This is
accomplished with extended technology, continuous improvement of our processes,
and our early involvement in the design process using our computer-aided design
system.

         We believe that we can develop closer and more economically beneficial
relationships with our customers through our geographically diverse
manufacturing and assembly operations, presently located in Florida, Texas,
Massachusetts, Ohio and Scotland. Our diverse locations have multiple advantages
by helping satisfy costs, timely deliveries and local market requirements of our
customers. We continue to pursue expansion in different markets to better serve
existing customers and to obtain additional new customers.  A proposed sale of
our common stock by our parent to Simclar International Limited, a United
Kingdom company engaged in similar operations as we are, is being negotiated
for approximately $10,000,000 and a percent of revenues over the next several
years.  If an agreement is reached, the proposed sale by our parent would be
subject to the approval of its shareholders. An alliance with Simclar would
further our geographic diversification and expansion goals.  We anticipate
experiencing faster growth and ability to increase our global presence and
competitive position.  There is no assurance our parent's shareholders will
approve its proposed sale, or that the transaction will be completed.


PRODUCTS AND SERVICES

         The company manufactures approximately 850 products, including complete
turnkey finished products, sub-assemblies, molded and non-molded cable
assemblies, wire harnesses, PCBs, injection molded and electronic assembly
products, for over 100 OEM customers.

         Printed Circuit Boards

         PCB assemblies are electronic assemblies consisting of a basic printed
circuit laminate with electronic components including diodes, resistors,
capacitors and transistors, inserted and wave soldered. PCBs may be used either
internally within the customer's products or in peripheral devices. The PCBs
produced by the company include pin-through-hole assemblies, low and medium
volume surface mount technology assemblies, and mixed technology PCBs, which
include multilayer PCBs.

                                       3
<PAGE>

         In pin-through-hole assembly production electronic components with pins
or leads are inserted through pre-drilled holes in a PCB and the pins are
soldered to the electrical surface of the PCB. In surface mount technology
production, electronic components are attached and soldered directly onto the
surface of a circuit board rather than inserted through holes. Surface mount
technology components are smaller so they can be spaced more closely together
and, unlike pin-through-hole components, surface mount technology components can
be placed on both sides of a PCB. This allows for product miniaturization, while
enhancing the electronic properties of the circuit. Surface mount technology
manufacturing requires substantial capital investment in expensive, automated
production equipment, which requires high usage. We are utilizing computerized
testing system in order to verify that all components have been installed
properly and meet certain functional standards, that the electrical circuits
have been properly completed, and that the PCB assembly will perform its
intended functions.

         In 1997, we acquired Lytton, whose Ohio operations, with six automated
lines, are more focused on PCB manufacturing, primarily for the food preparation
equipment industry. We also established a 5,500 square foot manufacturing
facility in Massachusetts in 1997. These expansions resulted in PCB
manufacturing amounting to approximately 56% and 55% of our sales revenues in
2000 and 1999, respectively.


         Cable and Harness Assemblies

         A cable is an assembly of electrical conductors insulated from each
other, twisted around a central core and jacketed. Cables may be molded or
non-molded.

         Techdyne offers a wide range of custom manufactured cable and harness
assemblies for molded and mechanical applications. These assemblies include
multiconductor, ribbon, co-axial cable, and discrete wire harness assemblies. We
use advanced manufacturing processes, in-line inspection and computerized
automated test equipment.

         We maintain a large assortment of standard tooling for D-Subminiature,
DIN connectors and phono connectors. D-Subs are connectors which are over-molded
with the imprint of the customer's name and part number. DIN connectors are
circular connectors consisting of two to four pairs of wires used for computer
keyboards.

         Flat ribbon cable or ribbon cable assemblies are cables with wires
(conductors) on the same plane with connectors at each end. Flat ribbon cables
are used in computer assemblies and instrumentation.

         Discrete cable assemblies are wires with contacts and connectors.
Harnesses are prefabricated wiring with insulation and terminals ready to be
attached to connectors. Our cable sales comprised approximately 34% and 35% of
total sales revenue for 2000 and 1999, respectively.

         Contract Manufacturing

         Contract manufacturing involves the manufacture of complete finished
assemblies with all sheet metal, power supplies, fans, PCBs as well as complete
sub-assemblies for integration into an OEM's finished products, such as speaker
and lock-key assemblies and diode assemblies that consist of wire, connectors
and diodes that are over-molded, packaged and bar coded for distribution. These
products can be totally designed and manufactured by the company through our
computer-aided design system, engineering and supply procurement. We develop
manufacturing processes and tooling, and test sequences for new products of our
customers. We provide design and engineering services in the early stages of
product development thereby assuring mechanical and electrical considerations
are integrated with a total system. Alternatively, the customer may provide
specifications and we will assist in the design and engineering or manufacture
to the customer's specifications.

                                       4
<PAGE>

         Reworking and Refurbishing

         Customers provide the company with materials and sub-assemblies
acquired from other sources, which the customer has determined, require modified
design or engineering changes. We redesign, rework, refurbish and repair these
materials and sub-assemblies.

         Contract manufacturing, medical product sales, reworking and
refurbishing together amounted to approximately 10% of sales for each of 2000
and 1999. We believe that PCB sales and contract manufacturing will provide us
with substantial increases in revenues over the next few years.


MANUFACTURING

         We manufacture components and products that are custom designed and
developed to fit specific customer requirements and specifications. Such service
includes computer integrated manufacturing and engineering services,
quick-turnaround manufacturing and prototype development, materials procurement,
inventory management, developing customer oriented manufacturing processes ,
tooling and test sequences for new products from product designs received from
its customers or developed by Techdyne from customer requirements. Our
industrial, electrical and mechanical engineers work in close liaison with our
customers' engineering departments from inception through design, prototypes,
production and packaging. We evaluate customer designs and if appropriate,
recommend design changes to improve quality of the finished product, reduce
manufacturing costs or other necessary design modifications. Upon completion of
engineering, Techdyne produces prototype or preproduction samples. Materials
procurement includes planning, purchasing and warehousing electronic components
and materials used in the assemblies and finished products. Our engineering
staff reviews and structures the bill of materials for purchase, coordinates
manufacturing instructions and operations, and reviews inspection criteria with
the quality assurance department. The engineering staff also determines any
special capital equipment requirements, tooling and dies, which must be
acquired.

         We attempt to develop a "partnership" relationship with many of our
customers by providing a responsive, flexible, total manufacturing service. We
have "supplier partnerships" with certain customers which provide for the
company to satisfy in-house manufacturing requirements of the customer that are
based on the customer's need on a weekly basis based on a rolling quarterly
forecast.

         The company's PCB assembly operations are geared toward advanced
surface mount technology. Our Lytton subsidiary provides PCB production through
state-of-the-art manufacturing equipment and processes and a highly trained and
experienced engineering and manufacturing workforce. We also offer a wide range
of custom manufactured cables and harnesses for molded and mechanical
applications. We use advanced manufacturing processes, in-line inspection and
testing to focus on process efficiencies and quality. The cable and harness
assembly process is accomplished with automated and semi-automated preparation
and insertion equipment and manual assembly techniques.

         Finished turnkey assemblies include the entire manufacturing process
from design and engineering to purchasing raw materials, manufacturing and
assembly of the component parts, testing, packaging and delivery of the finished
product to the customer. By contracting assembly production, OEMs are able to
keep pace with continuous and complex technological changes and improvements by
making rapid modifications to their products without costly retooling and
without any extensive capital investments for new or altered equipment.

                                       5
<PAGE>

         At all of our facilities we maintain modern state-of-the-art equipment
for crimping, stripping, terminating, soldering, sonic welding and sonic
cleaning which permits us to produce conventional and complex molded cables. We
also maintain a large assortment of standard tooling. New manufacturing jobs may
require new tooling and dies, but most presses and related equipment are
standard.

         The European manufacturing facility, located in Livingston, Scotland,
focuses on the electronics industry producing primarily wire harnesses,
electro-mechanical assemblies, and molded cables, incorporating multifaceted
design and production capabilities. Significant reductions in sales of Techdyne
(Europe) have resulted in net losses for this subsidiary amounting to $328,000
for 2000, and $577,000 for 1999 and $442,000 for 1998, and we are evaluating the
future prospects for that facility. See Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations."


SUPPLIES AND MATERIALS MANAGEMENT

         Materials used in our operations consist of metals, electronic
components such as cable, wire, resistors, capacitors, diodes, PCBs and plastic
resins. For over six months in 2000, a worldwide shortage of key electronic
components adversely impacted our sales and earnings. The shortage has
diminished during the first quarter of 2001.

         The company procures components from a select group of vendors which
meet our standards for timely delivery, high quality and cost effectiveness. In
order to control inventory investment and avoid material obsolescence,
components are generally ordered when we have a purchase order or commitment
from our customer for the completed assembly. Techdyne uses ERP management
technologies and manages our material pipelines and vendor base to allow our
customers to increase or decrease volume requirements within established
frameworks. We have a Visual Manufacturing computerized software system
providing us with material requirements planning, purchasing, and sales and
marketing functions. See "Business Strategy" above and Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

         We have improved our overall efficiency of manufacturing, particularly
in the area of inventory management, including purchasing which is geared more
closely to current needs resulting in reduced obsolescence problems. Except for
a worldwide shortage of key electronic components in 2000 that adversely
impacted our sales and earnings, we have not otherwise experienced any
significant disruptions from shortages of materials or delivery delays from
suppliers and we believe that our present sources and the availability of our
required materials are adequate. See Item 7, "Management's Discussion and
Analysis of Financial Condition and Results of Operations."


QUALITY AND PROCESS CONTROL

         Our Florida and Texas facilities received from Underwriter's
Laboratories, an independent quality assurance organization, the ISO 9002
quality assurance designation, which is the international standard of quality
with respect to all systems of operations, including, among others, purchasing,
engineering, manufacturing, sales, inventory control and quality. Techdyne
(Europe) has a BS 5750 quality assurance designation from British Standards
Institute. Lytton holds its ISO 9002 quality designation from Eagle
Registrations, Inc. These quality assurance designations are only provided to
those manufacturers which exhibit stringent quality and process control
assurances after extensive evaluation and auditing by these independent quality
assurance organizations. Quality control is essential to the company's
operations since customers demand strict compliance with design and product
specifications, and high quality production is a primary competitive standard

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<PAGE>

vital to our services. Our Milford, Massachusetts facility will have a final
assessment for ISO 9002 by Underwriters Laboratories during the second quarter
of 2001. See "Competition" below.

         Product components, assemblies and sub-assemblies manufactured by the
company are thoroughly inspected visually and electronically to assure all
components are made to strict specifications and are functional and safe. Strict
process controls relating to the entire manufacturing process are part of our
standard operating procedure. We strive for a CPK of two, i.e., twice as
critical as customer tolerances. We believe we are one of the manufacturers of
choice for the major Fortune 500 companies, some of which are our customers,
based upon our excellent record of quality production.

         Over the years our product and manufacturing quality have received
excellent ratings. Total quality, timely delivery and customer satisfaction is
our philosophy. High levels of quality in every area of Techdyne's operations
are essential. Quality standards are established for each operation, performance
tracked against those standards, and identifying workflow and implementing
necessary changes to deliver higher quality levels. We maintain regular contact
with our customers to assure adequate information exchange and other activities
necessary to assure customer satisfaction and to support our high level of
quality and on-time delivery. Any adverse change in our excellent quality and
process controls could adversely affect our relationships with customers and
ultimately our revenues and profitability.


CUSTOMERS

         Techdyne serves a wide range of businesses from emerging growth
companies to multinational OEMs involved in a variety of markets including
computer networking systems, computer workstations, telecommunications, mass
data storage systems, instrumentation and food preparation equipment industries.
Our revenue is distributed over the following industry segments:

                                             Year Ended December 31,
                                    ----------------------------------------
                                    2000             1999               1998
                                    ----             ----               ----
Data processing                      15%              22%                29%
Telecommunications                   22%              22%                20%
Instrumentation                      19%              23%                17%
Food preparation equipment           22%              17%                18%


         We seek to serve a sufficiently large number of customers to avoid
dependence on any one customer or industry. Nevertheless, historically a
substantial percentage of our net sales have been to multiple locations of a
small number of customers. Significant reductions or delays in sales to any of
those major customers would have a material adverse effect on our results of
operations. In the past, certain customers have terminated their manufacturing
relationship with us, or otherwise significantly reduced their product orders.
There can be no assurance that any major customer may not terminate or otherwise
significantly reduce or delay manufacturing orders, any of which such
terminations or changes in manufacturing orders could have a material adverse
effect on our results of operations. We are dependent upon the continued growth,
viability and financial stability of our customers, which are in turn
substantially dependent on the growth of the personal computer, computer
peripherals, the communications, instrumentation, data processing and food
preparation equipment industries. Most of these industries have been
characterized by rapid technological change, short product life cycles, pricing
and margin pressures. In addition, many of our customers in these industries are
affected by general economic conditions. The factors affecting these industries
in general, and/or our customers in particular, could have a material adverse
effect on our results of operations. In addition, we generate significant
accounts receivable in connection with providing manufacturing services to our

                                       7
<PAGE>

customers. If one or more of our customers were to become insolvent or otherwise
were unable to pay us for provided manufacturing services, our operating results
and financial condition would be adversely affected. In 2000, 44% of our sales
were made to numerous locations of three major customers. See Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

         The table below sets forth the respective portion of sales for the
applicable period attributable to customers and related suppliers who accounted
for more than 10% of sales in any respective period.

                                      Percentage of Sales
                                      -------------------

                                                 2000          1999         1998
                                                 ----          ----         ----

Illinois Tool Works (formerly
PMI Food Equipment Group)                         19%           15%          18%
Trilithic                                         12%            *            *
Alcatel                                           12%            *            *
Motorola, Inc.                                     *            13%          10%


---------------

*        less than 10% for that year

         Techdyne sells to approximately 100 additional other companies, which
comprise the remaining 57% of sales for 2000. Lytton focuses primarily on PCB
production, and had approximately 38% of its sales for fiscal 2000 to ITW
(formerly PMI Food Equipment Group).


MARKETING AND SALES

         We are pursuing expansion and diversification of our customer base. We
are seeking to develop long-term relationships by working closely with customers
starting the initial product design and development stage, and continuing
throughout the manufacturing and distribution process. Our principal sources of
new business are the expansion in the volume and scope of services provided to
existing customers, referrals from customers and suppliers, direct sales through
our sales managers and executive staff, and through independent sales
representatives. Domestic operations generate sales through four regional sales
managers covering the Northeast, Southeast, West and Southwest regions of the
United States. There are 14 in-house sales/marketing personnel in the United
States and 2 internationally. In addition to sales through sales representatives
and in-house sales personnel, sales are also generated through our website
http://www.tcdn.com, catalogues, brochures and trade shows.

         The independent manufacturer sales representatives, primarily marketing
electronic and similar high-technology products, are retained under exclusive
sales representative agreements for specific territories and are paid on a
commission basis. Unless otherwise approved by Techdyne, the sales
representatives cannot represent any other person engaged in the business of
manufacturing services similar to those of the company, nor represent any person
who may be in competition with us. The agreements further prohibit the sales
representative from disclosing trade secrets or calling on our customers for a
period of six months to one year from termination of their agreement.

         Techdyne (Europe) has two in-house sales personnel who market its
products, primarily ribbon, harness and cable assemblies, electro-mechanical
products, and molded cable assemblies, as well as its reworked and refurbished

                                       8
<PAGE>

products (see "Business - Products - Reworking and Refurbishing" above) to
customers in Scotland, England, Ireland, Germany and the Middle East.

         Substantially all of our sales and reorders are effected through
competitive bidding. Most sales are accomplished through purchase orders with
specific quantity, price and delivery terms. Some productions, such as our
supplier partnerships, are accomplished under open purchase orders with
components released against customer request.


BACKLOG

         At December 31, 2000, our backlog of orders amounted to approximately
$18,676,000, of which approximately 66% or $12,310,000, was represented by the
orders from Lytton operations and approximately 9%, or $1,711,000, was
represented by orders from Techdyne (Europe) operations. Last year the backlog
of orders amounted to approximately $14,643,000, of which approximately
$8,179,000 (56%) was represented by the orders from our Lytton operations and
approximately $959,000 (7%) was represented by orders from our Techdyne (Europe)
operations. Based on past experience and relationships with our customers and
knowledge of our manufacturing capabilities, we believe that most of our backlog
orders are firm and should be filled within six months. Most of the purchase
orders within which the company performs do not provide for cancellation. Over
the last several years cancellations have been minimal and management does not
believe that any significant amount of the backlog orders will be canceled.
However, based upon relationships with its customers, we occasionally allow
cancellations and frequently the rescheduling of deliveries. The variations in
the size and delivery schedules of purchase orders received by the company may
result in substantial fluctuations in backlog from period to period. Since
orders and commitments may be rescheduled or cancelled, and customers' lead
times may vary, backlog does not necessarily reflect the timing or amount of
future sales.


PATENTS AND TRADEMARKS

         We do not have nor do we rely on patents or trademarks to establish or
protect our market position. Dependency is placed more on design, engineering
and manufacturing, cost containment, quality, and marketing skills to establish
or maintain market position.


COMPETITION

         Techdyne is a part of highly competitive electronic manufacturing
services industry. We face competition from divisions of large electronics and
high-technology firms, as well as numerous smaller specialized companies.
Certain competitors have broader geographic coverage and competitive price
advantage based on their less expensive offshore operations, particularly in the
Far East. Many of the competitors are larger and more geographically diverse and
have greater financial, manufacturing and marketability resources. Our main
competitors in PCB area include ACT Manufacturing, Inc., Vickers Electronics
Systems, Diversified Systems, Inc., Epic Technologies, Inc, and others. We have
numerous competitors in the cable and harness assembly market, including Volex
Interconnect Systems, Inc., Foxconn, ACT Manufacturing, Inc., and Escod
Industries.

         We believe that we are favorably positioned with regard to primary
competitive factors - price, quality of production, manufacturing capability,
prompt customer service, timely delivery, engineering expertise, and technical
support. We also believe that Techdyne (Europe), our European manufacturing and

                                       9
<PAGE>

marketing operation, internationally enhances our competitive position. However,
recent consolidation trends in the electronic manufacturing services industry
are resulting in changes in the competitive landscape. Increased competition
could result in lower priced components and lower profit margins, or loss of
customers, which could have a material adverse effect on our business, financial
condition and result of operations. Compared to manufacturers who have greater
direct buying power with component suppliers or who have lower cost structure,
we may be operating at a cost disadvantage.

         Due to the number and variety of competitors, reliable data reflective
to our competitive position in the electronic components and assembly industry
is difficult to develop and is not know.


GOVERNMENTAL REGULATION

         Our operations are subject to certain federal, state and local
regulatory requirements relating to environmental waste management and health
and safety matters. We believe that we comply with applicable regulations
pertaining to health, safety and the use, storage and disposal of materials that
are considered hazardous waste under applicable law. To date our costs for
compliance and governmental permits and authorizations have not been material.
However, additional or modified requirements that may require substantial
additional expenditures may be imposed in future.


EMPLOYEES

         We presently have 370 employees in domestic operations and 88 employees
in Europe, 29 of which are employed as temporary help. Of our employees,
approximately 350 are engaged in manufacturing, quality assurance, related
operations and support activities, 37 are in material handling and procurement,
15 are in sales and marketing, 29 are in engineering, and 27 are in
administrative, accounting and support activities.

         We have no unions and we believe that the relationship with our
employees is good.

                                       10
<PAGE>

ITEM 2.  PROPERTIES

         The following chart summarizes the properties leased by the company.

SPACE                    PROPERTY                             TERM
-----                    --------                             ----
16,000 sq. ft.           2230 W 77th St.             10 yrs. to August 31, 2010
(exec. offs., mfg.)      Hialeah, FL(1)

12,000 sq. ft.           2200 W 77th St.             10 yrs. to August 31, 2010
(warehouse)              Hialeah, FL(1)

15,000 sq. ft.           7110 Brittmore              5 yrs. to August 31, 2002,
(mfg., offs. &           Houston, TX(2)              one five year renewal
warehouse)

5,500 sq. ft.            Rte. 495 Commerce Park      5 yrs. to March 31, 2002,
(mfg. & offs.)           Milford, MA                 one five year renewal

18,225 sq. ft.           800 Paloma Dr.              5 yrs. to May 31, 2002,
(mfg., offs. &           Round Rock (Austin),        one five year renewal
warehouse)               TX

77,800 sq. ft.           1784 Stanley Ave.           5 yrs. to July 31, 2002,
(mfg., offs. &           Dayton, Ohio(3)             two five year renewals
warehouse)

         We also have a month-to-month lease for a warehouse space (1,000 square
feet) in Milford, Massachusetts.

----------

(1)      The landlord is our parent. The lease is as favorable as may be
         obtained from unaffiliated third parties.
(2)      This facility has been closed and the property subleased for the
         remainder of the term to an unaffiliated party for substantially
         similar rent.
(3)      The landlord is owned by the former President, now Assistant to the
         President and director of Lytton and director of the company. See Item
         13, "Certain Relationships and Related Transactions.". The company has
         a right of first refusal and an option to purchase these premises. This
         lease is guaranteed by the company.

         Techdyne (Europe) owns an approximately 31,000 square foot facility in
Livingston, Scotland. The property is subject to a 15-year mortgage due July,
2009, which had a U.S. dollar equivalency of approximately $414,000 at December
31, 2000. See Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

         The company maintains state-of-the-art manufacturing, quality control,
testing and packaging equipment at all of its facilities in Florida, Ohio,
Massachusetts, Texas and Europe.

         We believe that our equipment and facilities are adequate for our
current operations.

                                       11
<PAGE>

         We are subject to a variety of environmental regulations relating to
our manufacturing processes and facilities. See Item 1, "Business - Government
Regulations."


ITEM 3.  LEGAL PROCEEDINGS

         The company is a party in a pending proceeding entitled Lemelson
Medical Education & Research Foundation, Limited Partnership v. Esco Electronics
Corporation, ET AL., initiated in August, 2000, pending in the United States
District Court for the District of Arizona. Lemelson brought a suit against 91
named defendants, including our company, for infringement of a variety of
patents owned by Lemelson, primarily relating to Lemelson's machine vision and
bar code scanning patents. Each of the defendants is involved, as is the
company, in the manufacture of electronic or semiconductor products. Lemelson
simultaneously filed similar lawsuits in the same court against approximately
another 350 defendants in different categories of electronic manufacturing. The
matter has been referred to patent counsel, who filed jointly with the majority
of the other named defendants, a motion to stay any further proceedings pending
a final, non-appealable judgment addressing the issue of the equitable defense
of "prosecution laches" in an action entitled Symbol Technologies, Inc., ET AL.
v. Lemelson. The equitable defense of prosecution laches is based on the
assertion that Lemelson filed initial patent applications with USPTO in the
1950's and continued the patent prosecution through the 1990's continually
amending his applications to include products and methods that have become
prevalent in the market. If the Federal Court of Appeals in the Symbol
Technologies case finds that prosecution laches is a viable defense to patent
infringement claims, such determination would be very favorable and could end
the patent infringement action against the company.

         We assemble custom products to the specifications of our customers, and
we rely on our customers' patents, designs, know-how and other intellectual
property. At this early stage in the litigation, we are evaluating the Lemelson
litigation and our potential exposure, but are unable to project the merits of
Lemelson's claims, whether the litigation might result in material damages, or
whether, if necessary, we could obtain a license from Lemelson. Should we be
required to obtain such a license from Lemelson, there can be no assurance that
a license could be obtained on acceptable terms. Any litigation of this type may
result in substantial costs and diversion of our resources.


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

         No matter was submitted during the fourth quarter of our fiscal year to
a vote of security holders through the solicitation of proxies or otherwise.
Since Medicore owns approximately 71% of our equity, proxies are not solicited,
but rather we provide our shareholders with an Information Statement and an
Annual Report. The Information Statement provides similar information to
shareholders as does a proxy statement, except there is no solicitation of
proxies. Shareholders who are entitled to vote at the annual meeting scheduled
for May 23, 2001, which are those shareholders of record on April 6, 2001, will
receive an Information Statement which provides certain information relating to
"Directors and Executive Officers," "Executive Compensation," "Security
Ownership of Certain Beneficial Owners and Management," and "Certain
Relationships and Related Transactions," and which information is incorporated
by reference into this Annual Report on Form 10-K for the year ended December
31, 2000. See Part III of this Annual Report, Items 10, 11, 12 and 13.

                                       12
<PAGE>

                                     PART II


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

         The table below reflects the high and low closing sales prices for the
common stock as reported by the Nasdaq National Market for 1999 and by the
Nasdaq SmallCap Market for 2000. On February 18, 2000, our common stock
transferred to the Nasdaq SmallCap Market, since the market value of the public
float was not equal to or greater than $5,000,000 for a 90-day period in 1999,
as required under the Nasdaq Marketplace rule 4450(a)(2), Maintenance Standard
1.

         1999
                                             HIGH               LOW
         1st Quarter...............         $4.25              $2.13
         2nd Quarter...............         $4.00              $2.38
         3rd Quarter...............         $4.63              $2.13
         4th Quarter...............         $4.00              $1.75

         2000
                                             HIGH               LOW
         1st Quarter...............         $3.63              $2.25
         2nd Quarter...............         $3.19              $2.00
         3rd Quarter...............         $2.75              $1.35
         4th Quarter...............         $1.88              $ .75

         At March 20, 2001, the closing sales price of the common stock was
$.75.

         At March 20, 2001, we had 63 shareholders of record and based upon data
obtained from our transfer agent, and we have approximately 603 beneficial
owners of our common stock.

         We have not paid, nor do we have any present plans to pay cash
dividends on our common stock in the immediate future.

         On September 30, 1999, our parent Medicore, converted the balance of
our unsecured demand promissory note, which amounted to $2,531,941, including
interest, into 1,446,823 shares of our common stock, at a rate of $1.75 per
share. This conversion was effected under an exemption, Sections 3(a)(9) and
4(c) from the registration requirements of the Securities Act.


ITEM 6.  SELECTED FINANCIAL DATA

         The following selected financial data should be read in conjunction
with the consolidated financial statements, related notes and other financial
information included herein.

                                       13
<PAGE>
<TABLE>
<CAPTION>

                                        CONSOLIDATED STATEMENTS OF OPERATIONS DATA
                                          (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)

                                                  Years Ended December 31,
                               -------------------------------------------------------------
                                 2000         1999          1998(1)       1997(1)      1996
                               -------      -------       -------       -------      -------
<S>                            <C>          <C>           <C>           <C>          <C>
Revenues                       $52,767      $48,383       $44,927       $33,169      $24,434
Net income                         565          303           798         1,426          743
Earnings per share:
    Basic                      $   .09      $   .05       $   .15       $   .32      $   .18
    Diluted                    $   .09      $   .05       $   .13       $   .24      $   .14


                                             CONSOLIDATED BALANCE SHEET DATA
                                                       (IN THOUSANDS)

                                                        December 31,
                               -------------------------------------------------------------
                                 2000         1999          1998(1)       1997(1)      1996
                               -------      -------       -------       -------      -------
<S>                            <C>          <C>           <C>           <C>          <C>
Working capital                $12,443      $10,986       $ 9,321       $ 9,547      $ 6,597
Total assets                    27,876       26,796        23,818        24,625       13,224
Long-term debt (2)               8,582        7,962         7,581         6,926        3,842
Total liabilities               16,295       15,631        14,357        15,116        8,056
Shareholders' equity            11,581       11,165         9,461         9,509        5,168
</TABLE>

--------------------

(1)      Reflects operations of Lytton commencing August 1, 1997. Lytton was
         acquired on July 31, 1997.

(2)      Includes advances from parent for years prior to 2000.


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


GENERAL

         Our operations have continued to depend upon a relatively small number
of customers for a significant percentage of our net revenue. Significant
reductions in sales to any of our large customers would have a material adverse
effect on our results of operations. The level and timing of orders placed by a
customer vary due to the customer's attempts to balance its inventory, design
modifications, changes in a customer's manufacturing strategy, acquisitions of
or consolidations among customers, and variation in demand for a customer's
products due to, among other things, product life cycles, competitive conditions
and general economic conditions. Termination of manufacturing relationships or
changes, reductions or delays in orders could have an adverse effect on our
results of operations and financial condition, as has occurred in the past. Our
results also depend to a substantial extent on the success of our OEM customers
in marketing their products. We continue to seek to diversify our customer base
to reduce our reliance on our few major customers. See "Business Strategy" and
"Customers" under Item 1, "Business."

                                       14
<PAGE>

         The industry segments we serve, and the electronics industry as a
whole, are subject to rapid technological change and product obsolescence.
Discontinuance or modification of products containing components manufactured by
the company could adversely affect our results of operations. The electronics
industry is also subject to economic cycles and has in the past experienced, and
is likely in the future to experience, recessionary periods. A general recession
in the electronics industry as we have experienced in the first quarter of 2001,
could have a material adverse effect on our business, financial condition and
results of operations. We typically do not obtain long-term volume purchase
contracts from our customers, but rather we work with our customers to
anticipate future volumes of orders. Based upon such anticipated future orders,
we will make commitments regarding the level of business we want and can
accomplish the timing of production schedules and the levels of and utilization
of facilities and personnel. Occasionally, we purchase raw materials without a
customer order or commitment. Customers may cancel, delay or reduce orders,
usually without penalty, for a variety of reasons, whether relating to the
customer or the industry in general, which orders are already made or
anticipated. Any significant cancellations, reductions or order delays could
adversely affect our results of operations.

         We use ERP techniques through our Visual Manufacturing system (see Item
1, "Business - Business Strategy") in our efforts to continuously develop
accurate forecasts of customer volume requirements. We are dependent on the
timely availability of many components. Component shortages could result in
manufacturing and shipping delays or increased component prices, which could
have a material adverse effect on our results of operations. For six months of
2000 there was a worldwide shortage of key electronic components, which
adversely impacted our sales and earnings. It is important for us to efficiently
manage inventory, proper timing of expenditures and allocations of physical and
personnel resources in anticipation of future sales, the evaluation of economic
conditions in the electronics industry and the mix of products, whether PCBs,
wire harnesses, cables, or turnkey products, for manufacture. See "Electronic
Manufacturing Industry" and "Supplies and Materials Management" under Item 1,
"Business" and "Results of Operations" below.

         We must continuously develop improved manufacturing procedures to
accommodate our customers' needs for increasingly complex products. To continue
to grow and be a successful competitor, we must be able to maintain and enhance
our technological capabilities, develop and market manufacturing services which
meet changing customer needs and successfully anticipate or respond to
technological changes in manufacturing processes on a cost-effective and timely
basis. Although we believe that our operations utilize the assembly and testing
technologies and equipment currently required by our customers, there can be no
assurance that our process development efforts will be successful or that the
emergence of new technologies, industry standards or customer requirements will
not render our technology, equipment or processes obsolete or uncompetitive. In
addition, to the extent that we determine that new assembly and testing
technologies and equipment are required to remain competitive, the acquisition
and implementation of such technologies and equipment are likely to require
significant capital investment.

         During periods of recession in the electronics industry, as we have
experienced in the first quarter of 2001, our competitive advantages in the
areas of quick-turnaround manufacturing and responsive customer service may be
of reduced importance to electronic OEMs, who may become more price sensitive.

         Our results of operations are also affected by other factors, including
price competition, the level and timing of customer orders, fluctuations in
material costs (due to availability), the overhead efficiencies achieved by
management in managing the costs of our operations, our experience in
manufacturing a particular product, the timing of expenditures in anticipation
of increased orders, selling, and general and administrative expenses.
Accordingly, gross margins and operating income margins have generally improved
during periods of high volume and high capacity utilization. We generally have
idle capacity and reduced operating margins during periods of lower-volume
production.

                                       15
<PAGE>

         We compete with much larger electronic manufacturing entities for
expansion opportunities. Any acquisitions may result in potentially dilutive
issuance of equity securities, the incurrence of debt and amortization expenses
related to goodwill and other intangible assets, and other costs and expenses,
all of which could materially adversely affect our financial results.
Acquisition transactions also involve numerous business risks, including
difficulties in successfully integrating the acquired operations, technologies
and products or formalizing anticipated synergies, and the diversion of
management's attention from other business concerns.


RESULTS OF OPERATIONS

2000 COMPARED TO 1999

         Consolidated revenues increased approximately $4,384,000 (9%) for the
year December 31, 2000 compared to the preceding year. There was an increase in
domestic sales of $3,341,000(8%), and a increase in European sales of $1,051,000
(28%) compared to the preceding year. Interest and other income decreased by
approximately $9,000 compared to the preceding year. The decrease reflects a
decrease in interest income as a result of a reduction in invested funds.

         Significant reductions in sales of Techdyne (Europe) during recent
years have resulted in continuing losses. Net losses for this subsidiary
amounted to $328,000 for the year ended December 31, 2000 and $577,000 for the
preceding year. Techdyne (Europe) has continued its efforts at new business
development; however, continuing losses have resulted in management's ongoing
evaluation of the prospects for this facility.

         Approximately 43% of our consolidated sales for 2000 were made to three
customers. Customers generating at least 10% of sales included ITW (formerly PMI
Food Equipment Group) (19%), Alcatel (12%) and Trilithic (12%). Approximately
$9,107,000 (34%) of Lytton's sales for 2000 were to its major customer, ITW. The
loss of, or substantially reduced sales to any major customer would have an
adverse effect on our operations if such sales are not replaced. See Item 1,
"Business-Customers."

         Cost of goods sold as a percentage of sales amounted to 88% for the
year ended December 31, 2000 and for the preceding year. We experienced
increases in component costs during 2000 which had a negative effect on our
profit margins; however, changes in product mix and a diversification of our
customer base have offset this negative impact.

         Selling, general and administrative expenses although increasing by
approximately $349,000 (8%) for the year ended December 31, 2000 compared to the
preceding year amounted to approximately 9% of sales for both periods. The
increase in 2000 included increases in the cost of support personnel and
increased marketing costs associated with efforts to increase sales.

         Interest expense increased approximately $101,000 for the year ended
December 31, 2000 compared to the preceding year reflecting the increased
borrowings of Lytton, a portion of which were utilized to fund the remaining
$1,100,000 payment in July, 1999, on the Lytton acquisition purchase price
guarantee and increases relating to increased borrowings under our new credit
facilities. These increases were partially offset by a reduction of $112,000 for
the year ended December 31, 2000 in interest on loans from the Parent due to the
Parent's conversion on September 30, 1999 of approximately $2,532,000 of a
convertible note receivable from us. The prime rate was 9.50% at December 31,
2000 and 8.50% at December 31, 1999.

                                       16
<PAGE>

1999 COMPARED TO 1998

         Consolidated revenues increased approximately $3,456,000 (8%) for the
year December 31, 1999 compared to the preceding year. There was an increase in
domestic sales of $4,482,000 (11%), and a decrease in European sales of $828,000
(18%) compared to the preceding year. Interest and other income decreased by
approximately $198,000 compared to the preceding year.

         The decline in European-based sales was attributable to a decrease of
approximately $982,000 (82%) in sales to Compaq (Europe) by Techdyne (Europe)
which was partially offset by increased sales to other customers. Significant
reductions in sales of Techdyne (Europe) have resulted in net losses for this
subsidiary amounting to $577,000 for the year ended December 31, 1999 and
$442,000 for the preceding year. Techdyne (Europe) has continued its efforts at
new business development; however, continuing losses have resulted in
management's ongoing evaluation of the future prospects for this facility.

         Approximately 41% of our consolidated sales for 1999 were made to four
customers. Customers generating at least 10% of sales included Motorola (13%)
and PMI Food Equipment Group (15%). Approximately $7,195,000 (32%) of Lytton's
sales for 1999 were to its major customer, PMI Food Equipment Group. The loss
of, or substantially reduced sales to any major customer would have an adverse
effect on our operations if such sales are not replaced. See Item 1, "Business -
Customers."

         Cost of goods sold as a percentage of sales remained relatively stable
amounting to 88% for the year ended December 31, 1999 and for the preceding
year.

         Selling, general and administrative expenses, although increasing by
approximately $350,000 (9%) for the year ended December 31, 1999 compared to the
preceding year, amounted to approximately 9% of sales for both periods. The
increase in 1999 included increases in the cost of support personnel and
increased marketing costs associated with efforts to increase sales.

         Interest expense increased $76,000 for the year ended December 31, 1999
compared to the preceding year. The primary contributor to the increase in
interest expense was the increased borrowings of Lytton, which were utilized to
fund the remaining $1,100,000 payment in July, 1999, on the Lytton acquisition
purchase price guarantee. The prime rate was 8.50% at December 31, 1999 and
7.75% at December 31, 1998.

         During the year ended December 31, 1999, we recorded an adjustment to
the valuation allowance relating to our deferred tax assets of approximately
$300,000, which was recorded in the fourth quarter of 1999, resulting in a 1999
tax provision of approximately $350,000. During the year ended December 31, 1998
we recorded an adjustment to the valuation allowance relating to our deferred
tax assets of approximately $400,000 related to domestic operations in the
fourth quarter of 1998 resulting in a 1998 tax provision of approximately
$130,000.


LIQUIDITY AND CAPITAL RESOURCES

         We had working capital of $12,443,000 at December 31, 2000, an increase
of $1,457,000 (13%) during 2000. Included in the changes in components of
working capital was an increase of $316,000 in cash and cash equivalents, which
included net cash provided by operating activities of $503,000, net cash used in
investing activities of $1,330,000 (including $950,000 from additions to
property and equipment and additional consideration of $396,000 regarding the

                                       17
<PAGE>

Lytton acquisition) and net cash provided by financing activities of $1,122,000
(including net line of credit borrowings of $1,562,000, borrowings under
Lytton's equipment acquisition note of $150,000, and payments on long-term debt
of $562,000).

         On February 9, 2000, we entered into two credit facilities with The
Provident Bank in Ohio for an aggregate borrowing of $5,500,000. This new
financing replaced a line of credit and four commercial loans which had a total
outstanding principal balance of $3,297,000 at December 31, 2000. Medicore is
not guaranteeing our financing with the Provident Bank, but one of the negative
covenants precludes loans to or the payment of loans from affiliates, other than
the pre-existing balance on the advances from parent, which includes Medicore.

         The new financing includes a three-year revolving line of credit,
renewable annually at the discretion of the bank, which credit line carries an
interest rate of prime minus .25%, or at a fixed rate equal to the relevant
quoted LIBOR rate plus 2.5%, at our election. Also part of the financing is a
five-year term loan of $1,000,000 at the same interest rate as the revolving
line of credit. The financing is guaranteed by Lytton, which subsidiary has
provided the bank with a Security Agreement securing its guaranty of our
financing. The Security Agreement includes all of Lytton's property, including
accounts receivable, equipment, inventory, general intangibles, and the proceeds
of such collateral. Lytton has also provided the bank with a Conditional
Assignment of Lease, assigning all of its right, title and interest as tenant
under the lease to the bank as further security for its guaranty of our
financing. The Conditional Assignment of Lease takes effect only if Lytton
defaults in any of its obligations under the lease or any of its obligations
under its guaranty. That lease is with Stanley Avenue Properties, Ltd., a
limited liability company whose membership includes Lytton and Patricia
Crossley, the wife of Lytton Crossley, former President of Lytton and a director
of the company. Mr. Crossley also Assistant to the President of Lytton under an
employment agreement requiring 40 hours per month at an annual salary of
$30,000.

         The financing, evidenced by an Asset Based Loan and Security Agreement,
provides for all the assets of the company to collateralize the financing, as
well as affirmative and negative covenants. Certain of the affirmative covenants
require maintenance of a consolidated tangible net worth at all times greater
than $7,500,000, a ratio of consolidated liabilities to consolidated tangible
net worth of not more than 2.6 to 1.0, a debt coverage ratio of at least 1.5 to
1.0. Some of the negative covenants, among others, include prohibiting sale of
any of its assets or properties except inventory in the ordinary course of
business, declaring or paying any dividends or making any other payments on our
capital stock, consolidating or merging with any other corporation or acquiring
or purchasing any equity interest in any other entity, or assuming any
obligations of any other entity the value of which exceeds $100,000, except for
notes and receivables acquired in the ordinary course of business, incur,
assume, guaranty or remain liable with respect to any indebtedness, except for
certain existing indebtedness disclosed in our financial statements, or
undertake any capital expenditures in excess of $1,000,000 in any one fiscal
year.

         On July 31, 1997, we acquired Lytton, which is engaged in the
manufacture and assembly of PCBs and other electronic products for commercial
customers. The Stock Purchase Agreement provided for incentive consideration to
be paid in cash based on specific sales levels of Lytton for each of three
successive specified years, resulting in additional consideration of
approximately $396,000, $290,000 and $154,000 paid in April 2000, April 1999,
and April 1998, respectively. See Note 10 to "Notes to Consolidated Financial
Statements."

         Lytton also entered into amendments to its financing agreements with
the Provident Bank. Lytton had an Asset Based Loan and Security Agreement with
that bank dated April 14, 1995, amended over the last several years, evidenced
by a $3,000,000 Revolving Credit Promissory Note, together with a Term Loan
Promissory Note in the amount of $1,400,000, and an Equipment Acquisition

                                       18
<PAGE>

Promissory Note in the amount of $500,000 (collectively the "Notes"). The line
of credit , which was amended to a three-year term coinciding with the term of
the Company's line of credit, had an outstanding balance of $2,786,000 at
December 31, 2000 and $2,830,000 at December 31, 1999. Lytton's term loan had an
outstanding balance of $1,028,000 at December 31, 2000 and $1,283,000 at
December 31, 1999. The equipment acquisition loan had an outstanding balance of
$150,000 at December 31, 2000 with no outstanding balance at December 31, 1999.
The Provident Bank also agreed to reduce the interest rates charged under the
Notes, and Lytton and the Provident Bank entered into modification and
amendments of the aggregate $4,900,000 loan agreements and Notes, restated at
the same interest rates, at the election of Lytton, as has been provided to the
company in its credit facilities. We are guaranteeing Lytton's financing, which
guaranty is unconditional and is secured by a Security Agreement between the
company and the Provident Bank which provides the bank with a continuing first
priority security interest on all of our property. See Note 2 to "Notes to
Consolidated Financial Statements."

         Lytton has an equipment loan maturing in April, 2002, which had an
outstanding balance of $66,000 at December 31, 2000 and $113,000 at December 31,
1999. In July, 1994 Techdyne (Europe) purchased the facility in Scotland housing
its operations for approximately $730,000, obtaining a 15-year mortgage which
had a U.S. dollar equivalency of approximately $414,000 at December 31, 2000 and
approximately $489,000 at December 31, 1999, based on exchange rates in effect
at each of these dates. See Note 2 to "Notes to Consolidated Financial
Statements."

         We believe that current levels of working capital and working capital
from operations will be adequate to successfully meet liquidity demands for at
least the next twelve months.


NEW ACCOUNTING PRONOUNCEMENTS

         In June, 1998, the Financial Accounting Standards Board issued
Financial Accounting Standards Board Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (FAS 133). FAS 133 is effective
for fiscal years beginning after June 15, 2000. FAS 133 establishes accounting
and reporting standards for derivative instruments and for hedging activities
and requires, among other things, that all derivatives be recognized as either
assets or liabilities in the statement of financial position and that these
instruments be measured at fair value. We are in the process of determining the
impact that the adoption of FAS 133 will have on its consolidated financial
statements. Due to the Company's limited use of derivative financial
instruments, the adoption of FAS 133 is not expected to have a significant
effect on its consolidated results of operations, financial position or cash
flows.


INFLATION

         Inflationary factors have not had a significant effect on our
operations. We attempt to pass on increased costs and expenses by increasing
selling prices when and where possible and by developing different and improved
products for our customers that can be sold at targeted profit margins.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The company is exposed to market risks from changes in interest rates
and foreign currency exchange rates.

                                       19
<PAGE>

         Sensitivity of results of operations to interest rate risks on our
investments is managed by conservatively investing liquid funds in short-term
government securities and interest-bearing accounts at financial institutions in
which we had approximately $403,000 invested at December 31, 2000.

         Interest rate risks on debt is managed by negotiation of appropriate
rates on new financing obligations based on current market rates. There is an
interest rate risk associated with our variable rate debt agreements which
totaled approximately $9,095,000 at December 31, 2000.

         We have exposure to both rising and falling interest rates. A 1/2 %
decrease in rates on our year-end investments would result in a negative impact
of approximately $1,000 on our results of operations. A 1% increase in rates on
our year-end variable rate debt would result in a negative impact of
approximately $56,000 on our results of operations.

         Our exposure to market risks from foreign currency exchange rates
relates to our European subsidiary whose results of operations when translated
into U.S. dollars are impacted by changes in foreign exchange rates. A 10%
strengthening of the U.S. dollar against the local Scottish currency, the pound,
would have negatively impacted 2000 earnings by approximately $33,000. We have
not incurred any significant realized losses on exchange transactions and does
not utilize foreign exchange contracts to hedge foreign currency fluctuations.
If realized losses on foreign transactions were to become significant, we would
evaluate appropriate strategies, including the possible use of foreign exchange
contracts, to reduce such losses.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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


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

         Effective August 6, 1999, the board of directors, upon the
recommendation of the audit committee, terminated Ernst & Young LLP as our
independent accountants, and engaged new independent accountants, Wiss &
Company, LLP, for the company's annual audit for our 1999 fiscal year. This
matter was previously reported on our Current Report on Form 8-K dated August
27, 1999. Our audit committee recommended Wiss & Company, LLP for our annual
audit for our 2000 fiscal year, and shareholders ratified that recommendation at
our annual meeting held on May 24, 2000.

                                       20
<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The executive officers of the company are appointed each year by the
board of directors at its first meeting following the annual meeting of
shareholders, to serve during the ensuing year. The following information
indicates their positions with the company and age of the executive officers at
March 20, 2001. There are no family relationships between any of the executive
officers and directors of the Company.


       NAME           AGE     POSITION WITH THE COMPANY      POSITION HELD SINCE

Thomas K. Langbein     55     Chairman of the Board and               1982
                              Chief Executive Officer                 1990

Barry Pardon           49     President                               1991
                              and Director                            1990

Joseph Verga           49     Senior Vice President,                  1988
                              Treasurer                               1985
                              Director                                1984

Daniel R. Ouzts        54     Vice President - Finance Controller     1986


         For more detailed information about our executive officers and
directors you are referred to the caption "Information About Directors and
Executive Officers" of our Information Statement relating to the annual meeting
of shareholders anticipated to be held on May 23, 2001, which is incorporated
herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

         Information on executive compensation is included under the caption
"Executive Compensation" of our Information Statement relating to the annual
meeting of shareholders anticipated to be held on May 23, 2001, incorporated
herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Information on beneficial ownership of our voting securities and the
voting securities of our parent, Medicore, by each director and all officers and
directors of our company as a group, and for each of the named executive
officers disclosed in the Summary Compensation Table (see "Executive
Compensation" of our Information Statement relating to the annual meeting of
shareholders anticipated to be held on May 23, 2001, incorporated herein by
reference), and by any person known to beneficially own more than 5% of any
class of our voting security, is included under the caption "Security Ownership
of Certain Beneficial Owners and Management" of our Information Statement
relating to the annual meeting of shareholders anticipated to be held on May 23,
2001, incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information on certain relationships and related transactions is
included under the caption "Certain Relationships and Related Transactions" of
our Information Statement relating to the annual meeting of shareholders
anticipated to be held on May 23, 2001, incorporated herein by reference.

                                       21
<PAGE>

                                     PART IV

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

(a)      The following is a list of documents filed as part of this report.

         1.       All financial statements - See Index to Consolidated Financial
                  Statements.

         2.       Financial statement schedules - See Index to Consolidated
                  Financial Statements.

(b)      Current Reports on Form 8-K filed during the fourth quarter.

         (i)      Item 5, "Other Events" re: unsolicited buy-back of shares,
                  October 20, 2000.

(c)      Exhibits

         (3)(i)   Articles of Incorporation (incorporated by reference to the
                  Company's Registration Statement on Form SB-2 dated July 26,
                  1995, as amended August 21, 1995 and September 1, 1995,
                  Registration No. 33-94998-A ("Form SB-2"), Part II, Item 27,
                  3(a)). *

           (ii)   By-Laws (incorporated by reference to the Company's Form SB-2,
                  Part II, Item 27, 3(b)). *

         (4)(i)   Form of Common Stock Certificate (incorporated by reference to
                  the Company's Form SB-2, Part II, Item 27, 4(a)). *

           (ii)   Form of 1997 Stock Option Plan (incorporated by reference to
                  the Company's Current Report on Form 8-K dated June 24, 1997
                  ("June 24, 1997 Form 8-K"), Item 7(c)(4)(i)). *

          (iii)   Form of 1997 Incentive Stock Option (incorporated by reference
                  to the Company's June 24, 1997 Form 8-K, Item 7(c)(4)(ii)). *

           (iv)   Form of 1997 Non-Qualified Stock Option (incorporated by
                  reference to the Company's June 24, 1997 Form 8-K, Item
                  7(c)(4)(iii)). *

        (10)(i)   Lease Agreement between the Company and Medicore, Inc.(1)
                  dated August 29, 2000 (incorporated by reference to Medicore
                  Inc.'s(1) Current Report on Form 8-K dated September 1,
                  2000.)*

           (ii)   Form of Exclusive Sales Representative Agreement (incorporated
                  by reference to Medicore, Inc.'s(1) Annual Report on Form 10-K
                  for the year ended December 31, 1994, Part IV, Item 14 (a) 3
                  (10)(lxiv)). *

          (iii)   Employment Agreement between the Company and Barry Pardon
                  dated September 27, 2000.

           (iv)   Mortgage by Techdyne (Europe) Ltd.(2) to the Royal Bank of
                  Scotland dated August 8, 1994 (incorporated by reference to
                  Medicore, Inc.'s(1) Quarterly Report on Form 10-Q for the
                  quarter ended June 30, 1994 ("Medicore June, 1994 Form 10-Q"),
                  Part II, Item 6(a)(28)(vi)). *

                                       22
<PAGE>

            (v)   Promissory Note to Medicore, Inc.(1) dated April 10, 1995
                  (incorporated by reference to the Company's Form SB-2, Part
                  II, Item 27, 10 (a)(a)). *

           (vi)   Service Agreement between the Company and Medicore, Inc.(1)
                  dated October 25, 1996 (incorporated by reference to the
                  Company's Registration Statement on Form S-3, Registration No.
                  333-15371, Part II, Item 16, Exhibit 10(a)).*

          (vii)   Service Agreement renewal letter from Medicore, Inc.(1) to the
                  Company dated September 30, 2000.

         (viii)   Lease Agreement between the Company and Route 495 Commerce
                  Park Limited Partnership dated March 25, 1997 (incorporated by
                  reference to the Company's Quarterly Report on Form 10-Q for
                  the first quarter of 1997, Item 6(a), Part II(10)).*

           (ix)   Lease Agreement between the Company and PruCrow Industrial
                  Properties, L.P. dated April 30, 1997 (incorporated by
                  reference to the Company's Current Report on Form 8-K dated
                  June 4, 1997 ("June, 1997 Form 8-K"), Item 7(c)(10)(i)).*

            (x)   Lease Agreement between the Company and EGP Houston Partners
                  Ltd. dated April 29, 1997 (incorporated by reference to the
                  Company's June, 1997 Form 8-K, Item 7(c)(10)(ii)).*

           (xi)   Form of Stock Option to The Investor Relations Group, Inc.
                  (incorporated by reference to the Company's Current Report on
                  Form 8-K dated May 28, 1998, Item 7(c)(10)(i)).*

          (xii)   Sublease between the Company and United Consulting Group dated
                  August 23, 1999. (incorporated by reference to the Company's
                  Annual Report on Form 10-K for the year ended December 31,
                  1999; Part IV, Item 14(a)(10)(xiv).*

         (xiii)   Asset Based Loan and Security Agreement between the Company
                  and The Provident Bank dated February 9, 2000 (incorporated by
                  reference to the Company's Current Report on Form 8-K dated
                  March 1, 2000 ("March, 2000 Form 8-K"), Item 7(c)(10)(i)).*

          (xiv)   Line of Credit Promissory Note for $4,500,000 from the Company
                  to The Provident Bank dated February 9, 2000 (incorporated by
                  reference to the Company's March, 2000 Form 8-K, Item
                  7(c)(10)(ii)).*

           (xv)   Term Loan Promissory Note for $1,000,000 from the Company to
                  The Provident Bank dated February 9, 2000 (incorporated by
                  reference to the Company's March, 2000 Form 8-K, Item
                  7(c)(10)(iii)).*

          (xvi)   Guaranty of the Company for the Lytton Incorporated(2)
                  financing with The Provident Bank dated February 9, 2000
                  (incorporated by reference to the Company's March, 2000 Form
                  8-K, Item 7(c)(10)(iv)).*

         (xvii)   Security Agreement of the Company for its Guaranty of the
                  Lytton Incorporated(2) financing with The Provident Bank dated
                  February 9, 2000 (incorporated by reference to the Company's
                  March, 2000 Form 8-K, Item 7(c)(10)(v)).*

                                       23
<PAGE>

        (xviii)   Amendment to Asset Based Loan and Security Agreement between
                  Lytton Incorporated(2) and The Provident Bank dated February
                  9, 2000 (incorporated by reference to the Company's March,
                  2000 Form 8-K, Item 7(c)(10)(vi)).*

          (xix)   Amended and Restated Revolving Credit Promissory Note for
                  $3,000,000 from Lytton Incorporated(2) to The Provident Bank
                  dated February 9, 2000 (incorporated by reference to the
                  Company's March, 2000 Form 8-K, Item 7(c)(10)(vii)).*

           (xx)   Amended and Restated Term Loan Promissory Note for $1,400,000
                  from Lytton Incorporated(2) to The Provident Bank dated
                  February 9, 2000 (incorporated by reference to the Company's
                  March, 2000 Form 8-K, Item 7(c)(10)(viii)).*

          (xxi)   Amended and Restated Equipment Acquisition Loan Promissory
                  Note for $500,000 from Lytton Incorporated(2) to The Provident
                  Bank dated February 9, 2000 (incorporated by reference to the
                  Company's March, 2000 Form 8-K, Item 7(c)(10)(ix)).*

         (xxii)   Guaranty of Lytton Incorporated(2) for the Company's financing
                  with The Provident Bank dated February 9, 2000 (incorporated
                  by reference to the Company's March, 2000 Form 8-K, Item
                  7(c)(10)(x)).*

        (xxiii)   Security Agreement for Lytton Incorporated(2) with respect to
                  its Guaranty of the Company's financing with The Provident
                  Bank dated February 9, 2000 (incorporated by reference to the
                  Company's March, 2000 Form 8-K, Item 7(c)(10)(xi)).*

         (xxiv)   Conditional Assignment of Lease by Lytton Incorporated(2) to
                  The Provident Bank dated February 9, 2000 (incorporated by
                  reference to the Company's March, 2000 Form 8-K, Item
                  7(c)(10)(xii)).*(3)

          (xxv)   Amended Consent to Sublease between the Company, United
                  Consulting Group, Inc., and United Computing Group, Inc.

         (21)     Subsidiaries of the registrant.

         (23)     Consents of experts and counsel.

                  (i)     Consent of Ernst & Young, LLP, Independent Certified
                          Public Accountants.

                  (ii)    Consent of Wiss & Company, LLP, Independent Certified
                          Public Accountants.

         (27)     Financial Data Schedule (for SEC use only).

-----------------

*        Documents incorporated by reference not included in Exhibit Volume.

(1)      Parent of the Company owning 71.3% of the Company's outstanding shares.

(2)      Wholly-owned subsidiary.

(3)      Lytton executed two identical documents, each conforming to this
         exhibit, one for the guaranty and one for the indebtedness.

                                       24
<PAGE>

Schedule II - Valuation and Qualifying Accounts
Techdyne, Inc. and Subsidiaries
December 31, 2000
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
                COL. A                         COL. B                        COL. C                    COL. D              COL. E
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                    Additions
                                              Balance at    Additions (Deductions)  Charged to      Other Changes         Balance
                                              Beginning     Charged (Credited)to  Other Accounts     Add (Deduct)        at End of
            Classification                    of Period      Cost and Expenses       Describe          Describe            Period
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>                <C>               <C>               <C>                 <C>
YEAR ENDED DECEMBER 31, 2000:
Reserves and allowances deducted
from asset accounts:
Allowance for uncollectable accounts         $    67,000        $    25,000                         $    28,000(1)      $   120,000
Reserve for inventory obsolescence               709,000            422,000                            (348,000)(2)         783,000
Valuation allowance for deferred tax asset       303,000           (303,000)                                ---                 ---
                                             -----------        -----------       -----------       -----------         -----------
                                             $ 1,079,000        $   144,000       $         0       $  (320,000)        $   903,000
                                             ===========        ===========       ===========       ===========         ===========
YEAR ENDED DECEMBER 31, 1999:
Reserves and allowances deducted
from asset accounts:
Allowance for uncollectable accounts         $    47,000        $     2,000                         $    18,000(1)      $    67,000
Reserve for inventory obsolescence               544,000            405,000                            (240,000)(2)         709,000
Valuation allowance for deferred tax asset       448,000           (145,000)                                 --             303,000
                                             -----------        -----------       -----------       -----------         -----------
                                             $ 1,039,000        $   262,000       $         0       $  (222,000)        $ 1,079,000
                                             ===========        ===========       ===========       ===========         ===========
YEAR ENDED DECEMBER 31, 1998:
Reserves and allowances deducted
from asset accounts:
Allowance for uncollectable accounts         $    54,000        $     2,000                         $    (9,000)(1)     $    47,000
Reserve for inventory obsolescence               223,000            437,000                            (116,000)(2)         544,000
Valuation allowance for deferred tax asset       850,465           (402,465)                                 --             448,000
                                             -----------        -----------       -----------       -----------         -----------
                                             $ 1,127,465        $    36,535       $         0       $  (125,000)        $ 1,039,000
                                             ===========        ===========       ===========       ===========         ===========
</TABLE>

(1)      Uncollectable accounts written off, net of recoveries.
(2)      Net write-offs against inventory reserves.

                                       25
<PAGE>

                                   SIGNATURES

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

                               TECHDYNE, INC.

                               By /s/ THOMAS K. LANGBEIN
                                  -----------------------------------
                                  THOMAS K. LANGBEIN, Chairman of the
                                  Board of Directors and Chief Executive Officer


March 28, 2001


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

NAME                                   TITLE                           DATE

                               Chairman of the Board
                                of Directors, Chief
/s/ THOMAS K. LANGBEIN           Executive Officer                March 28, 2001
---------------------------
    Thomas K. Langbein


/s/ BARRY PARDON               President and Director             March 28, 2001
---------------------------
    Barry Pardon


/s/ JOSEPH VERGA               Senior Vice President,             March 28, 2001
---------------------------    Treasurer and Director
    Joseph Verga


/s/ DANIEL R. OUZTS            Vice President and Controller      March 28, 2001
---------------------------
    Daniel R. Ouzts


/s/ DAVID WATTS                Chief Financial Officer            March 28, 2001
---------------------------
    David Watts


/s/ PETER D. FISCHBEIN         Director                           March 28, 2001
---------------------------
    Peter D. Fischbein


/s/ ANTHONY C. D'AMORE         Director                           March 28, 2001
---------------------------
    Anthony C. D'Amore


/s/ LYTTON CROSSLEY            Director                           March 28, 2001
---------------------------
    Lytton Crossley


/s/ EDWARD DIAMOND             Director                           March 28, 2001
---------------------------
    Edward Diamond

                                       26
<PAGE>


                           ANNUAL REPORT ON FORM 10-K

                  ITEM 8, ITEM 14 (a) (1) and (2), (c) and (d)

         LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

                   FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

                                CERTAIN EXHIBITS

                         FINANCIAL STATEMENTS SCHEDULES

                          YEAR ENDED DECEMBER 31, 2000

                                 TECHDYNE, INC.

                                HIALEAH, FLORIDA


<PAGE>

                        FORM 10-K--ITEM 14(a)(1) AND (2)

                         TECHDYNE, INC. AND SUBSIDIARIES

                          LIST OF FINANCIAL STATEMENTS


The following consolidated financial statements of Techdyne, Inc. and
subsidiaries are included in Item 8:

                                                                           PAGE

    Consolidated Balance Sheets - December 31, 2000 and 1999.               F-4

    Consolidated Statements of Income - Years ended December 31,
    2000, 1999, and 1998.                                                   F-5

    Consolidated Statements of Stockholders' Equity - Years ended
    December 31, 2000, 1999 and 1998.                                       F-6

    Consolidated Statements of Cash Flows - Years ended December 31,
    2000, 1999, and 1998.                                                   F-7

    Notes to Consolidated Financial Statements - December 31, 2000.         F-8

The following financial statement schedule of Techdyne, Inc. and subsidiaries is
included in Item 14(d):

         Schedule II - Valuation and qualifying accounts.

         All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable, and therefore have been
omitted.

                                      F-1
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Shareholders and Board of Directors
Techdyne, Inc.

We have audited the accompanying consolidated balance sheets of Techdyne, Inc.
and subsidiaries as of December 31, 2000 and 1999, and the related consolidated
statements of income, stockholders' equity and cash flows for each of the two
years in the period ended December 31, 2000. Our audits also included the
financial statement schedule listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Techdyne, Inc. and subsidiaries at December 31, 2000 and 1999, and the
consolidated results of their operations and their cash flows for each of the
two years in the period ended December 31, 2000 in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.


                                            /s/ WISS & COMPANY LLP
                                            ----------------------------------
                                            Wiss & Company LLP

March 9, 2001
Livingston, New Jersey

                                      F-2
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Shareholders and Board of Directors
Techdyne, Inc.


We have audited the accompanying consolidated statements of income,
stockholders' equity and cash flows of Techdyne, Inc. and Subsidiaries for the
year ended December 31, 1998. Our audit also included the information related to
the year ended December 31, 1998 on the financial statement schedule listed in
the Index at Item 14(a). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated results of operations and
cash flows of Techdyne, Inc. and Subsidiaries for the year ended December 31,
1998, in conformity with accounting principles generally accepted in the United
States. Also, in our opinion, the related financial statement schedule for the
year ended December 31, 1998, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.


                                              /s/ ERNST & YOUNG LLP
                                              -----------------------------
                                              Ernst & Young LLP

March 22, 1999
Miami, Florida

                                      F-3
<PAGE>

                         TECHDYNE, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                                                           DECEMBER 31,    DECEMBER 31,
                                                                               2000            1999
                                                                           ------------    ------------
                                     ASSETS
<S>                                                                        <C>             <C>
Current assets:
  Cash and cash equivalents                                                $    506,824    $    190,343
  Accounts receivable, less allowances of $120,000 at December 31, 2000
    and $67,000 at December 31, 1999                                          7,851,926       8,074,567
  Inventories, less allowances for obsolescence of $783,000 at
    December 31, 2000 and $709,000 at December 31, 1999                      10,183,134       9,492,309
  Prepaid expenses and other current assets                                     701,507         296,193
  Deferred tax asset                                                            498,097         440,759
                                                                           ------------    ------------
             Total current assets                                            19,741,488      18,494,171

Property and equipment:
  Land and improvements                                                         178,800         193,200
  Buildings and building improvements                                           690,431         746,036
  Machinery and equipment                                                     7,654,995       7,853,621
  Tools and dies                                                                450,583         843,202
  Leasehold improvements                                                        621,788         559,961
                                                                           ------------    ------------
                                                                              9,596,597      10,196,020
  Less accumulated depreciation and amortization                              4,605,128       4,836,365
                                                                           ------------    ------------
                                                                              4,991,469       5,359,655
Deferred expenses and other assets                                               41,193          94,435
Costs in excess of net tangible assets acquired, less accumulated
     amortization of $459,000 at December 31, 2000
     and $317,000 at December 31, 1999                                        3,101,635       2,848,038
                                                                           ------------    ------------
                                                                           $ 27,875,785    $ 26,796,299
                                                                           ============    ============
                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                                         $  4,248,750    $  5,049,456
  Accrued expenses                                                            1,826,546       1,679,513
  Current portion of long-term debt                                             625,048         576,239
  Income taxes payable                                                           99,433         203,043
  Advances from parent                                                          498,900              --
                                                                           ------------    ------------
          Total current liabilities                                           7,298,677       7,508,251
Deferred gain on sale of real estate                                            161,047         161,047
Long-term debt, less current portion                                          8,582,289       7,463,224
Advances from parent                                                                 --         498,315
Deferred income taxes                                                           252,600              --

Commitments and contingencies

Stockholders' equity:
  Common stock, $.01 par value, authorized 10,000,000 shares; issued and
    outstanding 6,556,990 shares in 2000 and 6,451,990 shares in 1999            65,570          64,520
  Capital in excess of par value                                             11,592,995      11,371,503
  Retained earnings (deficit)                                                   560,582          (4,445)
  Accumulated other comprehensive loss                                         (222,325)       (102,766)
  Notes receivable from options exercised                                      (415,650)       (163,350)
                                                                           ------------    ------------
             Total stockholders' equity                                      11,581,172      11,165,462
                                                                           ------------    ------------
                                                                           $ 27,875,785    $ 26,796,299
                                                                           ============    ============
</TABLE>

See notes to consolidated financial statements.

                                      F-4
<PAGE>

                         TECHDYNE, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>

                                                           YEAR ENDED DECEMBER 31,
                                                 ---------------------------------------
                                                     2000          1999          1998
                                                 -----------   -----------   -----------
<S>                                              <C>           <C>           <C>
Revenues:
  Sales                                          $52,712,819   $48,320,096   $44,665,925
  Interest and other income                           53,693        62,664       260,806
                                                 -----------   -----------   -----------
                                                  52,766,512    48,382,760    44,926,731
Cost and expenses:
  Cost of goods sold                              46,510,042    42,579,142    39,277,746
  Selling, general and administrative expenses     4,761,240     4,411,685     4,061,205
  Interest expense                                   839,660       738,794       662,856
                                                 -----------   -----------   -----------
                                                  52,110,942    47,729,621    44,001,807
                                                 -----------   -----------   -----------

Income before income taxes                           655,570       653,139       924,924

Income tax provision                                  90,543       349,648       127,212
                                                 -----------   -----------   -----------

            Net income                           $   565,027   $   303,491   $   797,712
                                                 ===========   ===========   ===========

Earnings per share:
  Basic                                          $       .09   $       .05   $       .15
                                                 ===========   ===========   ===========
  Diluted                                        $       .09   $       .05   $       .13
                                                 ===========   ===========   ===========
</TABLE>

                 See notes to consolidated financial statements.

                                      F-5
<PAGE>

                         TECHDYNE, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                      CAPITAL IN                      RETAINED
                                         COMMON       EXCESS OF     COMPREHENSIVE     EARNINGS
                                         STOCK        PAR VALUE         INCOME        (DEFICIT)
                                     ------------    ------------    ------------    ------------
<S>                                  <C>             <C>             <C>             <C>
Balance at January 1, 1998           $     51,351    $ 10,612,691                    $ (1,105,648)
Comprehensive income:
   Net income                                                        $    797,712         797,712
   Other comprehensive income:
   Foreign currency translation
     adjustments                                                           17,848
                                                                     ------------
       Comprehensive income                                          $    815,560
                                                                     ============
Exercise of stock options and
  warrants                                  1,150         113,850
Consultant stock options                                   12,750
Subsidiary acquisition price
  adjustment                                              400,000
Advance on subsidiary acquisition
  price guarantee
                                     ------------    ------------    ------------    ------------
Balance at December 31, 1998               52,501      11,139,291                        (307,936)
Comprehensive income:
   Net income                                                        $    303,491         303,491
   Other comprehensive loss:
   Foreign currency translation
     adjustments                                                          (71,128)
                                                                     ------------
       Comprehensive income                                               232,363
                                                                     ============
Note conversion by Medicore
  (1,446,823 shares)                       14,469       2,517,473
Exercise of stock options                     500          49,500
Consultant stock options                                   40,000
Settlement subsidiary acquisition
  price guarantee                          (2,950)     (2,374,761)
                                     ------------    ------------                    ------------
Balance at December 31, 1999               64,520      11,371,503                          (4,445)
Comprehensive income:
   Net income                                                        $    565,027         565,027
   Other comprehensive loss:
   Foreign currency translation
     adjustments                                                         (119,559)
                                                                     ------------
         Comprehensive income                                        $    445,468
                                                                     ============
Exercise of stock options                   1,450         252,300
Repurchase of 40,000 shares                  (400)        (30,808)
                                     ------------    ------------                    ------------
Balance at December 31, 2000         $     65,570    $ 11,592,995                    $    560,582
                                     ============    ============                    ============


                                      ACCUMULATED       NOTES          ADVANCE
                                        OTHER         RECEIVABLE      SUBSIDIARY
                                     COMPREHENSIVE      STOCK           PRICE
                                     INCOME (LOSS)     OPTIONS        GUARANTEE          TOTAL
                                     ------------    ------------    ------------    ------------
<S>                                  <C>             <C>             <C>             <C>
Balance at January 1, 1998           $    (49,486)                                   $  9,508,908
Comprehensive income:
   Net income
   Other comprehensive income:
   Foreign currency translation
     adjustments                           17,848

       Comprehensive income                                                               815,560

Exercise of stock options and
  warrants                                               (113,850)                          1,150
Consultant stock options                                                                   12,750
Subsidiary acquisition price
  adjustment                                                                              400,000
Advance on subsidiary acquisition
  price guarantee                                                      (1,277,711)     (1,277,711)
                                     ------------    ------------    ------------    ------------
Balance at December 31, 1998              (31,638)       (113,850)     (1,277,711)      9,460,657
Comprehensive income:
   Net income
   Other comprehensive loss:
   Foreign currency translation
     adjustments                          (71,128)

       Comprehensive income                                                               232,363

Note conversion by Medicore
  (1,446,823 shares)                                                                    2,531,942
Exercise of stock options                                 (49,500)                            500
Consultant stock options                                                                   40,000
Settlement subsidiary acquisition
  price guarantee                                                       1,277,711      (1,100,000)
                                     ------------    ------------    ------------    ------------
Balance at December 31, 1999             (102,766)       (163,350)             --      11,165,462
Comprehensive income:
   Net income
   Other comprehensive loss:
   Foreign currency translation
     adjustments                         (119,559)

         Comprehensive income                                                             445,468

Exercise of stock options                                (252,300)                          1,450
Repurchase of 40,000 shares                                                               (31,208)
                                     ------------    ------------    ------------    ------------
Balance at December 31, 2000         $   (222,325)   $   (415,650)   $         --    $ 11,581,172
                                     ============    ============    ============    ============
</TABLE>

                                      F-6
<PAGE>

                         TECHDYNE, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                           YEAR ENDED DECEMBER 31,
                                                                -----------------------------------------
                                                                    2000           1999           1998
                                                                -----------    -----------    -----------
<S>                                                             <C>            <C>            <C>
Operating activities:
  Net income                                                    $   565,027    $   303,491    $   797,712
  Adjustments to reconcile net income to net cash
    (used in) provided by operating activities:
      Depreciation                                                1,261,455      1,192,204        996,919
      Amortization                                                  178,019        138,817        118,104
      Bad debt expense                                               25,000          1,714          2,179
      Provision for inventory obsolescence                          421,888        404,762        437,095
      Deferred income taxes (benefit)                                14,400         40,100        (10,295)
      Consultant stock option expense                                23,448         16,552         12,750
      Increase (decrease) relating
       to operating activities from:
        Accounts receivable                                         131,756     (2,324,576)       (55,293)
        Inventories                                              (1,155,456)    (2,036,063)        22,274
        Prepaid expenses and other
         current assets                                            (334,999)      (110,005)       410,884
        Accounts payable                                           (782,886)     1,820,943       (987,521)
        Accrued expenses                                            183,452        152,294       (213,984)
        Income taxes payable                                        (28,239)        83,016         13,362
                                                                -----------    -----------    -----------
          Net cash provided by (used in) operating activities       502,865       (316,751)     1,544,186

Investing activities:
  Subsidiary acquisition payments                                  (395,806)    (1,389,531)      (153,818)
  Advance on subsidiary acquisition price guarantee                      --             --     (1,277,711)
  Additions to property and equipment,
    net of minor disposals                                         (950,213)    (1,565,048)      (823,419)
  Deferred expenses and other assets                                 16,296         (1,329)        (3,520)
                                                                -----------    -----------    -----------
          Net cash used in investing activities                  (1,329,723)    (2,955,908)    (2,258,468)

Financing activities:
  Borrowings to finance subsidiary acquisition                           --             --        600,000
  Line of credit net borrowings (payments)                        1,562,445      1,867,590        413,709
  Other short-term bank borrowings                                       --        375,000             --
  Payments on short-term bank borrowings                                 --       (375,000)            --
  Exercise of stock options                                           1,450            500          1,150
  Proceeds from long-term borrowings                                150,000        783,333             --
  Payments on long-term borrowings                                 (561,534)      (724,942)      (916,470)
  Increase (decrease) in advances from parent                           585       (100,331)       823,367
  Repurchase of stock                                               (31,208)            --             --
                                                                -----------    -----------    -----------
          Net cash provided by financing activities               1,121,738      1,826,150        921,756

Effect of exchange rate fluctuations on cash                         21,601        (22,885)           699
                                                                -----------    -----------    -----------
Increase (decrease) in cash and cash equivalents                    316,481     (1,469,394)       208,173
Cash and cash equivalents at beginning of year                      190,343      1,659,737      1,451,564
                                                                -----------    -----------    -----------
Cash and cash equivalents at end of year                        $   506,824    $   190,343    $ 1,659,737
                                                                ===========    ===========    ===========
</TABLE>

                 See notes to consolidated financial statements.

                                      F-7
<PAGE>

                         TECHDYNE, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

         The Company is in one business segment, the manufacture of electronic
and electro-mechanical products primarily manufactured to customer
specifications in the data processing, telecommunication, instrumentation and
food preparation equipment industries.

Consolidation

         The consolidated financial statements include the accounts of Techdyne,
Inc. ("Techdyne") and its subsidiaries, including Lytton Incorporated
("Lytton"), Techdyne (Europe) Limited ("Techdyne (Europe)"), and Techdyne
(Livingston) Limited which is a subsidiary of Techdyne (Europe), collectively
referred to as the "Company." All material intercompany accounts and
transactions have been eliminated in consolidation. The Company is a 71.3% owned
subsidiary of Medicore, Inc. (the "Parent").

Major Customers

         A majority of the Company's sales are to certain major customers. The
loss of or substantially reduced sales to any of these customers would have an
adverse effect on the Company's operations if such sales were not replaced.

Inventories

         Inventories, which consist primarily of raw materials used in the
production of electronic components, are valued at the lower of cost (first-in,
first-out and/or weighted average cost method) or market value. The cost of
finished goods and work in process consists of direct materials, direct labor
and an appropriate portion of fixed and variable-manufacturing overhead.
Inventories are comprised of following:

                                        DECEMBER 31,     DECEMBER 31,
                                            2000             1999
                                        -----------      -----------
Finished goods                          $   658,966      $ 1,018,131
Work in process                           2,586,900        2,463,191
Raw materials and supplies                6,937,268        6,010,987
                                        -----------      -----------
                                        $10,183,134      $ 9,492,309
                                        ===========      ===========

Property and Equipment

         Property and equipment is stated on the basis of cost. Depreciation is
computed by the straight-line method over the estimated useful lives of the
assets, which are generally 25 years for buildings and improvements; 3 to 10
years for machinery, computer and office equipment; 3 to 10 years for tools and
dies; and 5 to 15 years for leasehold improvements based on the shorter of the
lease term or estimated useful life of the property. Replacements and
betterments that extend the lives of assets are capitalized. Maintenance and
repairs are expensed as incurred. Upon the sale or retirement of assets the
related cost and accumulated depreciation are removed and any gain or loss is
recognized.

                                      F-8
<PAGE>

                         TECHDYNE, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--CONTINUED

Long-Lived Asset Impairment

         Pursuant to Financial Accounting Standards Board Statement No. 121
"Accounting for the Impairment of Long-Lived Assets to be Disposed of,"
impairment of long-lived assets, including intangibles related to such assets,
is recognized whenever events or changes in circumstances indicate that the
carrying amount of the asset, or related groups of assets, may not be fully
recoverable from estimated future cash flows and the fair value of the related
assets is less than their carrying value. The Company, based on current
circumstances, does not believe any indicators of impairment are present.

Deferred Expenses

         Deferred expenses, except for deferred loan costs, are amortized on the
straight-line method, over their estimated benefit period ranging to 60 months.
Deferred loan costs are amortized over the lives of the respective loans.

Cost in Excess of Net Tangible Assets Acquired

         Cost in excess of net tangible assets acquired is being amortized on a
straight-line basis over 25 years. If, in the opinion of management, an
impairment of value occurs, based on the undiscounted cash flow method, any
writedowns will be charged to expense.

Foreign Operations

         The financial statements of the foreign subsidiary have been translated
into U.S. dollars in accordance with FASB Statement No. 52. All balance sheet
accounts have been translated using the current exchange rates at the balance
sheet date. Income statement accounts have been translated using the average
exchange rate for the period. The translation adjustments resulting from the
change in exchange rates from period to period have been reported separately as
a component of accumulated other comprehensive (loss) income included in
stockholders' equity. Foreign currency transaction gains and losses, which are
not material, are included in the results of operations. These gains and losses
result from exchange rate changes between the time transactions are recorded and
settled, and for unsettled transactions, exchange rate changes between the time
the transactions are recorded and the balance sheet date.

Customer Payment Terms

         The majority of the Company's sales are made at payment terms of net
amount due in 30-45 days, and do not require collateral.

Income Taxes

         Deferred income taxes at the end of each period are determined by
applying enacted tax rates applicable to future periods in which the taxes are
expected to be paid or recovered to differences between the financial accounting
and tax basis of assets and liabilities.

                                      F-9
<PAGE>

                         TECHDYNE, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--CONTINUED

Stock-Based Compensation

         The Company follows Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25) and related Interpretations
in accounting for its employee stock options. Financial Accounting Standards
Board Statement No. 123, "Accounting for Stock-Based Compensation" (FAS 123),
permits a company to elect to follow the accounting provisions of APB 25 rather
than the alternative fair value accounting provided under FAS 123 but requires
pro forma net income and earnings per share disclosures as well as various other
disclosures not required under APB 25 for companies following APB 25.

Earnings per Share

         Diluted earnings per share gives effect to potential common shares that
were dilutive and outstanding during the period, such as stock options and
warrants using the treasury stock method and average market price, shares
assumed to be converted relating to the convertible promissory note to the
Company's Parent (with earnings adjusted for interest expense related to the
convertible promissory note which is assumed to be converted) and contingent
shares for the stock price guarantee for the acquisition of Lytton.

Following is a reconciliation of amounts used in the basic and diluted
computations:
<TABLE>
<CAPTION>

                                                                  YEAR ENDED DECEMBER 31,
                                                          ------------------------------------
                                                             2000         1999         1998
                                                          ----------   ----------   ----------
<S>                                                       <C>          <C>          <C>
Net income - numerator basic computation                  $  565,027   $  303,491   $  797,712
Effect of dilutive securities:
Interest adjustment on convertible note                           --           --      134,436
                                                          ----------   ----------   ----------
Net income, as adjusted for assumed conversion-
   Numerator diluted computation                          $  565,027   $  303,491   $  932,148
                                                          ==========   ==========   ==========

Weighted average shares - denominator basic computation    6,575,200    5,647,174    5,193,140
Effect of dilutive securities:
Stock options                                                 24,256       68,039      238,033
Contingent stock - acquisition                                    --      164,131      373,285
Convertible note                                                  --           --    1,347,729
                                                          ----------   ----------   ----------
Weighted average shares, as adjusted - denominator         6,599,456    5,879,344    7,152,187
                                                          ==========   ==========   ==========

Earnings per share:
   Basic                                                  $      .09   $      .05   $      .15
                                                          ==========   ==========   ==========
   Diluted                                                $      .09   $      .05   $      .13
                                                          ==========   ==========   ==========
</TABLE>

         The Company has various stock options; however, only those options
which were dilutive during the periods being reported on have been included
in the earnings per share computations.

                                      F-10
<PAGE>

                         TECHDYNE, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--CONTINUED

Cash and Cash Equivalents

         The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents. The carrying amounts
reported in the balance sheet for cash and cash equivalents approximate their
fair values. The credit risk associated with cash and cash equivalents is
considered low due to the high quality of the financial institutions in which
the assets are invested.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities is comprised as follows:

                                               DECEMBER 31,      DECEMBER 31,
                                                   2000              1999
                                               -----------       -----------
             Accrued compensation              $   518,436       $   466,481
             Other                               1,308,110         1,213,032
                                               -----------       -----------
                                               $ 1,826,546       $ 1,679,513
                                               ===========       ===========


Estimated Fair Value of Financial Instruments

         The carrying value of cash, accounts receivable and debt in the
accompanying financial statements approximate their fair value because of the
short-term maturity of these instruments, or in the case of debt because such
instruments bear variable interest rates which approximate market.

Use of Estimates

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from these estimates.

Comprehensive Income

         The Company follows Financial Accounting Standards Board Statement No.
130, "Reporting Comprehensive Income" (FAS 130) which contains rules for the
reporting of comprehensive income and its components. Comprehensive income
consists of net income and foreign currency translation adjustments and is
presented in the Consolidated Statement of Shareholders' Equity.

                                      F-11
<PAGE>

                         TECHDYNE, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--CONTINUED

New Pronouncements

         In June, 1998, the Financial Accounting Standards Board issued
Financial Accounting Standards Board Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (FAS 133). FAS 133 is effective
for fiscal quarters of fiscal years beginning after June 15, 2000. FAS 133
establishes accounting and reporting standards for derivative instruments and
for hedging activities and requires, among other things, that all derivatives be
recognized as either assets or liabilities in the statement of financial
position and that those instruments be measured at fair value. The Company is in
the process of determining the impact that the adoption of FAS 133 will have on
its consolidated financial statements. Due to the Company's limited use of
derivative financial instruments, the adoption of FAS 133 is not expected to
have a significant effect on its consolidated results of operations, financial
position or cash flows.

NOTE 2--LONG-TERM DEBT

         The Company had a five-year $1,500,000 commercial term loan and a
$1,600,000 commercial revolving line of credit which became effective December
27, 1997. The line of credit had an outstanding balance of $1,600,000 at
December 31, 1999. This line had a scheduled maturity of May 1, 2000 with
monthly payments of interest at prime. The commercial term loan, with an
outstanding balance of $900,000 at December 31, 1999 had a scheduled maturity
date of December 15, 2002 with monthly principal payments of $25,000 plus
interest.  Both credit facilities were collateralized by the corporate assets
of Techdyne.

         The Company had two other commercial term loans with the same bank
handling its December 29, 1997 loans, one for $712,500 for five years maturing
on February 7, 2001 at an annual rate of interest equal to 8.28% with a monthly
payment of principal and interest of $6,925 based on a 15-year amortization
schedule with the unpaid principal and accrued interest due on the maturity
date. This term loan had an outstanding balance of approximately $606,000 at
December 31, 1999 and was secured by a mortgage on properties in Hialeah,
Florida owned by the Company's Parent, two of which properties are leased to the
Company and one parcel being vacant land used as a parking lot. Under this term
loan the Company was obligated to adhere to a variety of affirmative and
negative covenants.

         The second commercial term loan was for the principal amount of
$200,000 for a period of five years bearing interest at a per annum rate of
1.25% over the bank's prime rate and requiring monthly principal payments with
accrued interest of $3,333 through maturity on February 7, 2001. This $200,000
term loan which had a balance of approximately $47,000 at December 31, 1999 was
secured by all of Techdyne's tangible personal property, goods and equipment,
and all cash or noncash proceeds of such collateral.

                                      F-12
<PAGE>

                         TECHDYNE, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 2--LONG-TERM DEBT--CONTINUED

         The Parent unconditionally guaranteed the payment and performance by
the Company of the revolving loan and the three commercial term loans and
subordinated the Company's intercompany indebtedness to the Parent to the bank's
position. There were cross defaults between the revolving line and term loans
exclusive of the $200,000 term loan.

         In February, 2000, the Company refinanced its line of credit and term
loans through the same bank which handles Lytton's financing. One credit
facility is a $4,500,000 three year committed line of credit facility maturing
February, 2003 with interest at prime minus 1/4% and an option to fix the rate
for up to 180 days at Libor plus 2.50%. This line of credit had an outstanding
balance of approximately $3,883,000 at December 31, 2000. The bank also extended
a $1,000,000 five year term loan maturing February 2005 with the same interest
rate as for the line of credit. This loan had an outstanding balance of
approximately $833,000 at December 31, 2000. The interest rate on both loans was
9.25% as of December 31, 2000. The loans are secured by the business assets of
the Company and are cross collateralized with the debt of Lytton.

         Lytton had a $1,500,000 revolving bank line of credit requiring monthly
interest payments at prime plus 1/2% maturing June 30, 1999 which was increased
to $3,000,000 and extended to June 30, 2000. In conjunction with the Company's
refinancing, the bank amended this line of credit to coincide with the Company's
loan agreements. Accordingly, the maturity was extended to February 2003 and the
interest rate was reduced to prime minus 1/4% with an option to fix the rate for
180 days at Libor plus 2.50%. There was an outstanding balance on this loan of
approximately $2,786,000 at December 31, 2000 and $2,830,000 December 31, 1999.
Lytton had a $1,000,000 installment loan with the same bank maturing August 1,
2002, with an annual rate of intereste of 9% until July 1999, with monthly
payments of $16,667 plus interest. Lytton replaced this loan at June 30, 1999
with a $1,400,000 installment loan with interest at prime plus 1/2% and monthly
payments of $23,333 plus interest payable in 60 monthly installments commencing
August 1, 1999 with the final installment due June 30, 2004. The balance
outstanding on this loan was approximately $1,028,000 at December 31, 2000 and
$1,283,000 at December 31, 1999. Lytton also has a $500,000 equipment loan
agreement with the same bank maturing February 2003 with monthly interest
payments until January 2001 and monthly principal payments of $6,000 plus
interest commencing January 2001 with interest originally at prime plus 1/2%.
This loan had an outstanding balance of $150,000 at December 31, 2000 with no
outstanding balance as of December 31, 1999. In conjunction with the Company's
refinancing, the bank amended the interest rate on these term loans to prime
minus 1/4% with an option to fix the rate for 180 days at Libor plus 2.50%.
The interest rate on all of the Lytton bank loans was 9.25% as of December 31,
2000. All of these bank loans are secured by the business assets of Lytton,
and are cross collateralized with the debt of the Company.
<TABLE>
<CAPTION>

Long-term debt is as follows:                                                  DECEMBER 31,
                                                                        ---------------------------
                                                                            2000            1999
                                                                        -----------     -----------
<S>                                                                     <C>             <C>
Three year line of credit agreement, secured by business assets of
   the Company and cross collateralized by the business assets of
   Lytton.  Monthly payments of interest as described above.            $ 3,883,058             ---

Installment loan secured by business assets of the Company and
   cross collateralized by the business assets of Lytton.  Monthly
   payments of principal and interest as described above.                   833,330             ---

Term loan secured by real property of Parent.  Monthly payments of
   principal and interest as described above.                                   ---     $   605,584
</TABLE>

                                      F-13
<PAGE>

                         TECHDYNE, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 2--LONG-TERM DEBT--CONTINUED
<TABLE>
<CAPTION>

                                                                               DECEMBER 31,
                                                                        ---------------------------
                                                                            2000            1999
                                                                        -----------     -----------
<S>                                                                     <C>             <C>

Term loan secured by tangible personal property, goods and
   equipment.  Monthly payments of principal and interest as
   described above.                                                              ---         46,764

Commercial term loan secured by corporate assets of the Company.
   Monthly payments of principal and interest as described above.                ---        900,000

Three year revolving line of credit agreement maturing May 1, 2000.
   Secured by corporate assets of the Company. Monthly payments
   of interest as described above.                                               ---      1,600,000

Mortgage note secured by land and building with a net book value
   of $699,000 at December 31, 2000. Quarterly payments of
   approximately $18,000 based on exchange rates at December 31,
   2000 for 15 years commencing October 1994 including interest
   at 2% above bank base rate.                                              413,608         489,308

Line of credit agreement, refinanced in February 2000 as described
   above. Secured by business assets of Lytton and cross
   collateralized by the business assets of the Company.  Monthly
   payments of interest as described above.                               2,786,442       2,829,997

Installment loan secured by business assets of Lytton and cross
   collateralized by the business assets of the Company.  Monthly
   payments of principal and interest as described above.                 1,028,337       1,283,333

Equipment loan secured by business assets of Lytton and cross
   collateralized by the business assets of the Company.  Monthly
   payments of principal and interest as described above.                   150,000             ---

Equipment loan requiring monthly payments of $4,298 including
   interest at 5.5% and maturing in April 2002. The loan is secured
   by equipment of Lytton with a carrying value of approximately
   $277,000 at December 31, 2000.                                            66,157         112,693

Other                                                                        46,405         171,784
                                                                        -----------     -----------
                                                                          9,207,337       8,039,463
Less current portion                                                        625,048         576,239
                                                                        -----------     -----------
                                                                        $ 8,582,289     $ 7,463,224
                                                                        ===========     ===========
</TABLE>

         The prime rate was 9.50 as of December 31, 2000 and 8.50% as of
December 31, 1999.

         In July 1994, Techdyne (Europe) purchased the facility housing its
operations obtaining a 15 year mortgage which had a U.S. dollar equivalency of
approximately $414,000 at December 31, 2000 and $489,000 at December 31, 1999,
based on exchange rates in effect at each of these dates.

                                      F-14
<PAGE>

                         TECHDYNE, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 2--LONG-TERM DEBT--CONTINUED

         Scheduled maturities of long-term debt outstanding at December 31, 2000
are approximately: 2001---$625,000; 2002---$597,000; 2003---$7,467,000;
2004---$261,000; 2005---$91,000; thereafter---$166,000. Interest payments on all
of the above debt amounted to approximately $784,000, $581,000 and $513,000 in
2000, 1999 and 1998, respectively.

         The Company's line of credit and term loan contain certain restrictive
covenants that, among other things, restrict the payment of dividends, restrict
additional indebtedness, and require maintenance of certain financial ratios.

NOTE 3--INCOME TAXES

         The Company files separate federal and state income tax returns from
its Parent, with its income tax liability reflected on a separate return basis.
The Company has net operating loss carryforwards of approximately $170,000 and
$1,000,000 at December 31, 2000 and 1999.

         Deferred income taxes reflect the net tax effect of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. For financial
reporting purposes a valuation allowance of $303,000 at December 31, 1999 was
recognized to offset the deferred tax assets. Significant components of the
Company's deferred tax liabilities and assets are as follows:

                                                              DECEMBER 31,
                                                      -------------------------
                                                          2000          1999
                                                      -----------   -----------
         Deferred tax liabilities:
            Depreciation                              $   252,600   $   377,525
                                                      -----------   -----------
                  Total deferred tax liability        $   252,600   $   377,525
         Deferred tax assets:
            Inventory obsolescence                        275,501       327,733
            Cost capitalized in ending inventory           70,328        69,074
            Accrued expenses                               49,017
            Tax credits                                        --       303,000
            Other                                          36,979        40,174
                                                      -----------   -----------
               Sub-total                                  431,825       739,981
         Net operating loss carryforwards                  66,272       417,400
                                                      -----------   -----------
                     Total deferred tax assets            498,097     1,157,381
         Valuation allowance for deferred tax assets           --      (303,000)
                                                      -----------   -----------
            Net deferred tax assets                       498,097       854,381
                                                      -----------   -----------
            Net deferred tax asset                    $   245,497   $   476,856
                                                      ===========   ===========

         A valuation allowance was provided to offset a portion of the deferred
tax asset recorded at December 31, 1999 as management believed that it was more
likely than not, based on the weight of the available evidence, this portion of
the deferred tax asset would not be realized.

                                      F-15
<PAGE>

                         TECHDYNE, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 3--INCOME TAXES--CONTINUED

Deferred taxes in the accompanying balance sheets consist of the following
components:

                                                            DECEMBER 31,
                                                    --------------------------
                                                       2000            1999
                                                    -----------    -----------
         Current deferred tax asset                 $        --    $   473,975
         Current deferred tax liability                (252,600)       (33,216)
                                                    -----------    -----------
         Net current deferred tax asset
           (liability)                                 (252,600)       440,759
         Long-term deferred tax asset                   498,097        413,622
         Long-term deferred tax liability                    --       (377,525)
                                                    -----------    -----------
         Net long-term deferred tax asset
           (liability)                                  498,097         36,097
                                                    -----------    -----------

         Net deferred tax asset                     $   245,497    $   476,856
                                                    ===========    ===========


For financial reporting purposes, income before income taxes includes the
following components:

                                                 YEAR ENDED DECEMBER 31,
                                      -----------------------------------------
                                          2000           1999           1998
                                      -----------    -----------    -----------
         United States income         $   983,848    $ 1,229,773    $ 1,462,390
         Foreign loss                    (328,278)      (576,634)      (537,466)
                                      -----------    -----------    -----------
                                      $   655,570    $   653,139    $   924,924
                                      ===========    ===========    ===========

Significant components of the provision (benefit) for income taxes are as
follows:

                                                 YEAR ENDED DECEMBER 31,
                                      -----------------------------------------
                                          2000           1999           1998
                                      -----------    -----------    -----------
         Current:
            Federal                  $    20,000    $   247,619    $    53,992
            State                         60,600         69,369         83,515
                                     -----------    -----------    -----------
                                          80,600        316,988        137,507
         Deferred:
            Federal                      (18,489)        32,660         85,602
            Foreign                           --             --        (95,897)
            State                         28,432             --             --
                                     -----------    -----------    -----------
                                           9,943         32,660        (10,295)
                                     -----------    -----------    -----------
                                     $    90,543    $   349,648    $   127,212
                                     ===========    ===========    ===========

Techdyne (Europe) files separate income tax returns in the United Kingdom.

         The reconciliation of income tax attributable to income before income
taxes computed at the U.S. federal statutory rates to income tax expense
(benefit) is:
<TABLE>
<CAPTION>

                                                                    YEAR ENDED DECEMBER 31,
                                                         -----------------------------------------
                                                             2000           1999           1998
                                                         -----------    -----------    -----------
<S>                                                      <C>            <C>            <C>
         Statutory tax rate (34%) applied to
             income before income taxes                  $   222,894    $   222,067    $   314,474
         Increases (reduction) in taxes resulting from:
            State income taxes-net of federal
              income tax effect                               53,196         44,021         74,628
</TABLE>

                                      F-16
<PAGE>

                         TECHDYNE, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 3--INCOME TAXES--CONTINUED

<TABLE>
<CAPTION>

<S>                                                            <C>          <C>          <C>
            Tax rate differential relating to tax benefit of
               foreign operating loss                            111,615      196,056       86,841
            Non deductible items                                   9,592       23,657       40,780
           Change in deferred tax valuation allowance           (303,000)    (145,000)    (402,465)
         Other                                                    (3,754)       8,847       12,954
                                                               ---------    ---------    ---------
                                                               $  90,543    $ 349,648    $ 127,212
                                                               =========    =========    =========
</TABLE>

         Undistributed earnings of the Company's foreign subsidiary amounted to
approximately $1,390,000 at December 31, 2000 and $1,718,000 December 31, 1999.
Those earnings are considered to be indefinitely reinvested and, accordingly, no
provision for U.S. federal and state income taxes has been provided thereon.
Upon distribution of those earnings in the form of dividends or otherwise, the
Company would be subject to both U.S. income taxes (subject to an adjustment for
foreign tax credits) and withholding taxes payable to the various foreign
countries. Determination of the amount of unrecognized deferred U.S. income tax
liability is not practicable because of the complexities associated with its
hypothetical calculation; however, foreign tax credits may be available to
reduce some portion of the U.S. liability. Withholding taxes of approximately
$69,000 and $86,000 would be payable upon remittance of all previously
unremitted earnings at December 31, 2000 and December 31, 1999, respectively.

         Income tax payments were approximately $368,000, $227,000 and $32,000
in 2000, 1999 and 1998, respectively.

NOTE 4--TRANSACTIONS WITH PARENT

         The Parent provides certain financial and administrative services to
the Company pursuant to a service agreement. The amount of expenses allocated by
the Parent and those covered under the service agreement totaled $360,000,
$408,000 and $408,000 in 2000, 1999 and 1998.

         The advances from Parent were made under a demand convertible
promissory note with interest at 5.7%. The balance of the note including accrued
interest, which amounted to $2,427,000 at December 31, 1998, was convertible
into common stock of the Company at the option of the Parent at a conversion
price of $1.75 per share. On September 30, 1999, the Parent converted the note
balance which amounted to $2,531,942, including accrued interest into 1,446,823
shares of the Company's common stock resulting in an increase in the Parent'
ownership interest to 72.5%. The Parent had previously converted $350,000 of
this note into 200,000 common shares in June 1996 and $875,000 into 500,000
common shares in November 1997. Advances from the Parent on the balance sheet
represent an advance payable to the Parent of approximately $499,000 at December
31, 2000 and $498,000 at December 31, 1999 with interest at 5.7%. Interest on
the net advances amounted to $31,000, $143,000 and $156,000, in 2000, 1999 and
1998, respectively, and is included in the net balance due the Parent. It is
anticipated that the advances will be repaid within one year; accordingly, the
advances are reflected as current at December 31, 2000.

                                      F-17
<PAGE>

                         TECHDYNE, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 4--TRANSACTIONS WITH PARENT--CONTINUED

         The Company has deferred the gain on the sale of real property to its
Parent of approximately $161,000. The premises are leased from the Parent under
a 10-year net lease expiring August 31, 2010 at an annual rental of $150,000
plus applicable taxes.

         The Company manufactured certain products for the Parent through
February 1999. Sales of the products were $23,000 and $172,000 in 1999 and 1998,
respectively.

NOTE 5--RELATED PARTY TRANSACTIONS

         For the years ended December 31, 2000, 1999 and 1998, respectively, the
Company paid premiums of approximately $588,000, $467,000 and $348,000, for
insurance through a director and stockholder, and the relative of a director and
stockholder.

         For the years ended December 31, 2000, 1999 and 1998, respectively,
legal fees of $52,000, $45,000 and $47,000, were paid to an attorney who acts
as general counsel and Secretary for the Company and the Parent and is a
director of the Parent.

         Subcontract manufacturing is performed for the Company by a company of
which a director of the Company is President and one of the owners. Subcontract
manufacturing purchases from this company amounted to approximately $2,302,000,
$1,728,000 and $2,245,000 in 2000, 1999 and 1998, respectively.

NOTE 6--COMMITMENTS AND CONTINGENCIES

Commitments

         Lytton leases its operating facilities from an entity, which is owned
by Lytton's former owner and former President. The operating lease, which
expires July 31, 2002, requires annual lease payments of approximately $218,000,
adjusted each year based on the Consumer Price Index, and contains renewal
options for a period of five to ten years at the then fair market rental value.
The Company leases several facilities including that of Lytton and those under
lease from its Parent which expire at various dates through 2010 generally with
renewal options for five years at the then fair market rental value. The
Company's aggregate lease commitments at December 31, 2000, are approximately:
2001---$706,000, 2002---$542,000, 2003---$402,000, 2004---$410,000 and
2005---$491,000. Total rent expense was approximately $818,000, $806,000 and
$817,000 for the years ended December 31, 2000, 1999 and 1998, respectively.

         Lytton sponsors a 401(k) Profit Sharing Plan covering substantially all
of its employees. The Company adopted this plan as a participating employer
effective July 1, 1998. The discretionary profit sharing and matching expense,
including that of the Company and Lytton amounted to approximately $80,000 for
the year ended December 31, 2000 and $86,000 for the year ended December 31,
1999.

                                      F-18
<PAGE>

                         TECHDYNE, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 7--STOCK OPTIONS

         The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" (APB 25) and related
Interpretations in accounting for its employee stock options because, as is
discussed below, Financial Accounting Standards Board Statement No. 123,
"Accounting for Stock Based Compensation" (FAS 123), requires use of option
valuation models that were not developed for use in valuing employee stock
options. Under APB 25, because the exercise price of the Company's stock options
equals the market price of the underlying stock on the date of grant, no
compensation expense was recognized.

         In May 1994, the Company adopted a stock option plan for up to 250,000
options. Pursuant to this plan, in May 1994, the board of directors granted
227,500 options to certain of its officers, directors and employees. These
options were exercisable for a period of five years at $1 per share. On June 30,
1998, 115,000 of these options were exercised and on May 10, 1999, 50,000 of the
remaining options were exercised. The Company received cash payment of the par
value and the balance in three year promissory notes, presented in the
stockholders' equity section of the balance sheet with interest at 5.16% for the
June 1998 exercises and 4.49% for the May 1999 exercises.

         On February 27, 1995 the Company granted non-qualified stock options,
not part of the 1994 Plan, to directors of Techdyne and its subsidiary for
142,500 shares exercisable at $1.75 per share for five years. In April 1995, the
Company granted a non-qualified stock option for 10,000 shares which vested
immediately, not part of the 1994 Plan, to its general counsel at the same price
and terms as the directors' options. On February 25, 2000, 145,000 of these
options were exercised. The Company received cash payment of the par value and
the balance in three year promissory notes presented in the stockholders' equity
section of the balance sheet, with interest at 6.19%.

         In June 1997, the Company adopted a stock option plan for up to 500,000
options, and pursuant to this plan the board granted 375,000 options exercisable
for five years through June 22, 2002 at $3.25 per share, with 325,000 of these
options outstanding at December 31, 2000. On June 30, 1999, the Company granted
52,000 options exercisable for three years through September 29, 2002 at $4.00
per share with 10,000 options outstanding at December 31, 2000. On August 25,
1999, the Company granted 16,000 options exercisable for three years through
August 24, 2002 at $4.00 per share with 13,000 options outstanding at December
31, 2000. On December 15, 1999 the Company granted 19,000 options exercisable
for three years through December 14, 2002 at $4.00 per share with 13,000 options
outstanding at December 31, 2000. On May 24, 2000, the Company granted 3,000
options exercisable for three years through May 23, 2003 at $4.00 per share,
which remain outstanding at December 31, 2000. On October 16, 2000, the Company
granted 90,000 three year stock options exercisable at $2.00 per share through
October 15, 2002, with one-third of the options vesting immediately, one-third
vesting on October 16, 2001 and one-third vesting on October 16, 2002.

         In May, 1998, as part of the consideration pursuant to an agreement for
investor relations and corporate communications services, the Company granted
options for 25,000 shares of its common stock exercisable for three years
through May 14, 2001 at $4.25 per share. Options for 6,250 shares of the
Company's common stock vested during 1998 with no additional options to vest due
to cancellation of this agreement in August, 1998. Pursuant to FAS 123, the
Company recorded $13,000 expense for options vesting under this agreement.

                                      F-19
<PAGE>

                         TECHDYNE, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 7--STOCK OPTIONS--CONTINUED

         The Company entered into a consulting agreement on July 1, 1999 for
financial advisory services which ended on September 15, 2000. As compensation,
the consultant received non-qualified stock options to purchase 100,000 shares
of the Company's common stock exercisable at $3.50 per share that expired on
September 15, 2000. These options were valued at $40,000 resulting in
approximately $23,000 expense during 2000 and $17,000 expense during 1999.

         Pro forma information regarding net income and earnings per share is
required by Statement 123, and has been determined as if the Company had
accounted for its employee stock options under the fair value method of that
Statement. The fair value for these options was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted-average
assumptions for the options issued during 2000, 1999 and 1998, respectively:
risk-free interest rate of 5.88%, 5.20% and 5.55%; no dividend yield; volatility
factor of the expected market price of the Company's common stock of .85, .67
and .58; and an expected life of the options of 3 years, 1.8 years, and 3 years.

         The Black-Scholes options valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective input assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different than those of traded options and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee's stock options.

         For purposes of pro forma disclosures, the estimated fair value of
options is amortized to expense over the options' vesting period. The Company's
pro forma information for options issued is as follows:

                                                2000         1999         1998
                                              --------     --------     --------
       Pro forma net income                   $557,000     $233,000     $790,000
                                              ========     ========     ========
       Pro forma earnings per share:
          Basic                               $    .09     $    .04     $    .15
                                              ========     ========     ========
          Diluted                             $    .09     $    .04     $    .13
                                              ========     ========     ========

                                      F-20
<PAGE>

                         TECHDYNE, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 7--STOCK OPTIONS--CONTINUED

         A summary of the Company's stock option activity, for the years ended
December 31, follows:
<TABLE>
<CAPTION>

                                                  2000                          1999                          1998
                                       --------------------------    --------------------------    --------------------------
                                                  WEIGHTED-AVERAGE              WEIGHTED-AVERAGE              WEIGHTED-AVERAGE
                                       OPTIONS     EXERCISE PRICE    OPTIONS     EXERCISE PRICE    OPTIONS     EXERCISE PRICE
                                       --------    --------------    --------    --------------    --------    --------------
<S>                                    <C>                <C>        <C>                <C>        <C>                 <C>
Outstanding-beginning of year           688,250                       590,350                       699,100
Granted                                  93,000           $2.06       187,000           $3.73         6,250            $4.25
Exercised                              (145,000)           1.75       (50,000)           1.00      (115,000)           $1.00
Expired                                (176,000)           3.57       (39,100)           2.77            --
                                       --------                      --------                      --------
Outstanding-end of year                 460,250                       688,250                       590,350
                                       ========                      ========                      ========
Outstanding and exercisable
  at end of year:
May 1994 options                             --                            --                        56,600             1.00
February and April 1995 options              --                       150,000           $1.75       152,500             1.75
June 1997 options                       325,000           $3.25       345,000            3.25       375,000             3.25
May 1998 options                          6,250            4.25         6,250            4.25         6,250             4.25
June, August and December 1999
   options, and May 2000 options         39,000            4.00        87,000            4.00            --
July 1999 options                            --                       100,000            3.50            --
October 2000 options                     30,000            2.00            --                            --
                                       --------                      --------                      --------
                                        400,250                       688,250                       590,350
                                       ========                      ========                      ========
Weighted-average fair value of
   options granted during the year     $    .44                      $    .59                      $   2.04
                                       ========                      ========                      ========
</TABLE>

         The remaining average contractual life at December 31, 2000 is 2.8
years for the October 2000 options, 3.6 years for the June 1999, August 1999,
December 1999 and May 2000 options, .4 years for the 1998 options and 1.5 years
for the June 1997 options. There are 90,000 October 2000 options with a $2.00
exercise price which are included in outstanding options at December 31, 2000 of
which 30,000 were vested and reflected as exercisable.

NOTE 8--COMMON STOCK

         The Company has 460,250 shares reserved for future issuance at December
31, 2000, including: 325,000 shares for 1997 options; 6,250 shares for 1998
options; 36,000 shares for 1999 options; and 93,000 shares for 2000 options.

NOTE 9--QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

         The following summarizes certain quarterly operating data:
<TABLE>
<CAPTION>

                                     YEAR ENDED DECEMBER 31, 2000                      YEAR ENDED DECEMBER 31, 1999
                              --------------------------------------------     -------------------------------------------
                              MARCH 31    JUNE 30     SEPT. 30     DEC. 31     MARCH 31     JUNE 30    SEPT. 30    DEC. 31
                              --------    -------     --------     -------     --------     -------    --------    -------
                                                            (In thousands except per share data)
<S>                           <C>         <C>         <C>          <C>          <C>         <C>        <C>         <C>
Net Sales                     $12,638     $12,280     $13,616      $14,178      $ 9,835     $10,457    $14,129     $13,899
Gross profit                    1,162       1,420       1,700        1,920        1,016       1,257      2,079       1,389
Net income (loss)                (201)        (36)        224          578         (149)          2        626        (176)
Earnings (loss) per share:
   Basic                      $  (.03)    $  (.01)    $   .03      $   .09      $  (.03)    $    --    $   .12     $  (.03)
   Diluted                    $  (.03)    $  (.01)    $   .03      $   .09      $  (.03)    $    --    $   .10     $  (.03)
</TABLE>

                                      F-21
<PAGE>

                         TECHDYNE, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 9--QUARTERLY FINANCIAL INFORMATION (UNAUDITED)--CONTINUED

         Since the computation of earnings per share is made independently for
each quarter using the treasury stock method, the total of four quarters
earnings do not necessarily equal earnings per share for the year.

         The Company recorded an adjustment to the valuation allowance relating
to its deferred tax asset of approximately $303,000 during the fourth quarter of
2000, $145,000 during the fourth quarter of 1999 and $400,000 during the fourth
quarter of 1998.

NOTE 10--ACQUISITION

         On July 31, 1997, the Company acquired Lytton, which manufactures and
assembles printed circuit boards and other electronic products, for $2,500,000
cash, paid at closing, and issuance of 300,000 shares of the Company's common
stock. The Company guaranteed that the seller would realize a minimum of
$2,400,000 from the sale of these shares of common stock based on Lytton having
achieved certain earnings objectives. The total purchase price in excess of the
fair value of net assets acquired is being amortized over 25 years. Additional
contingent consideration was due if Lytton achieved pre-defined sales levels.
Additional consideration of approximately $396,000, $290,000 and $154,000 was
paid in April 2000, April 1999 and April 1998, respectively, based on sales
levels. As the contingencies have been resolved, additional consideration due,
has been recorded as goodwill, and is being amortized over the remainder of the
initial 25 year life of the goodwill.

         In July, 1998, the Company advanced the seller approximately $1,278,000
("Advance") toward the guarantee for the sale of the Company's common stock in
addition to the prior sales by the seller. Subsequently, the Company guaranteed
the seller aggregate proceeds of no less than $1,100,000 from the sale of the
remaining common stock if sold on or prior to July 31, 1999. In July, 1999, the
Company forgave the Advance and issued payment of $1,100,000 to the seller,
which together with the proceeds realized by the seller from the sale of stock
in 1998 satisfied the Company's remaining obligation under the $2,400,000
guarantee. The remaining 295,000 shares of common stock held by the seller as
security for the remaining $2,378,000 guarantee were returned to the Company and
were cancelled.

NOTE 11--CAPITAL EXPENDITURES, GEOGRAPHIC AREA DATA AND MAJOR CUSTOMERS

         Summarized financial information in accordance with FAS 131 for the
Company's one reportable segment is shown in the following table.

       CAPITAL EXPENDITURES             2000            1999            1998
       --------------------         ------------    ------------   ------------
                                    $    893,269    $  1,475,823    $    832,410
                                    ============    ============    ============

       GEOGRAPHIC AREA SALES                            2000            1999
       ---------------------        ------------    ------------    ------------
       United States                $ 47,843,141    $ 44,501,810    $ 40,019,478
       Europe(1)                       4,869,678       3,818,286       4,646,447
                                    ------------    ------------    ------------
                                    $ 52,712,819    $ 48,320,096    $ 44,665,925
                                    ============    ============    ============

(1)      Techdyne (Europe) sales are primarily to customers in the United
         Kingdom.

                                      F-22
<PAGE>

                         TECHDYNE, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 2000


NOTE 11--CAPITAL EXPENDITURES, GEOGRAPHIC AREA DATA AND MAJOR CUSTOMERS
<TABLE>
<CAPTION>
GEOGRAPHIC AREA PROPERTY, PLANT AND EQUIPMENT (NET)           2000            1999           1998
---------------------------------------------------       -------------   ------------   ------------
<S>                                                       <C>             <C>            <C>
United States                                             $   3,918,081   $  4,074,801   $  3,689,894
Europe                                                        1,073,388      1,284,854      1,386,142
                                                          -------------   ------------   ------------
                                                          $   4,991,469   $  5,359,655   $  5,076,036
                                                          =============   ============   ============


         Sales to major customers are as follows:
                                                                     YEAR ENDED DECEMBER 31,
                                                          -------------------------------------------
MAJOR CUSTOMERS                                               2000            1999           1998
---------------                                           -------------   ------------   ------------
<S>                                                       <C>             <C>            <C>
Motorola(1)                                               $          --   $  6,338,000   $  4,488,000
Illinois Tool Works                                          10,196,000      7,195,000      8,183,000
Alcatel(2)                                                    6,179,000             --             --
Trilithic(2)                                                  6,177,000             --             --
</TABLE>

(1)      Less than 10% of sales for 2000.
(2)      Less than 10% of sales for 1999 and 1998.

         A majority of the Company's sales are to certain major customers. The
loss of or substantially reduced sales to any of these customers would have an
adverse affect on the Company's operations if such sales were not replaced.

         Sales to Illinois Tool Works (PMI Food Equipment Group) by Lytton,
represented approximately 38% and 32% of Lytton's sales and 19% and 15% of
consolidated sales for the years ended December 31, 2000 and 1999, respectively.

         Sales to Compaq Computer Corp., which at one time was a major customer
of Techdyne (Europe) amounted to $139,000 in 2000, $209,000 in 1999 and
$1,192,000 in 1998 representing 3%, 5% and 26% of the sales of Techdyne (Europe)
for 2000, 1999 and 1998, respectively.

NOTE 12--REPURCHASE OF COMMON STOCK

         In October, 2000, the Company repurchased and cancelled 40,000 shares
of its common stock with a repurchase cost of approximately $31,000. The Company
currently has no formal plan to repurchase additional shares.

                                      F-23