`UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K
       (MARK ONE)
          (X)     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                     FOR THE FISCAL YEAR ENDED JUNE 30, 2005

                                       OR

          (  )      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                         FOR THE TRANSITION PERIOD FROM
                                 ______TO_______


                          COMMISSION FILE NUMBER 1-9125

                        AMERICAN TECHNICAL CERAMICS CORP.
               (EXACT NAME OF COMPANY AS SPECIFIED IN ITS CHARTER)

            DELAWARE                                         11-2113382
 ------------------------------                          ---------------------
  (STATE OR OTHER JURISDICTION                            (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION)                         IDENTIFICATION NO.)

 1 NORDEN LANE, HUNTINGTON STATION, NY                          11746
----------------------------------------                     -----------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                      (ZIP CODE)

         COMPANY'S TELEPHONE NUMBER, INCLUDING AREA CODE: (631) 622-4700
           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

       TITLE OF EACH CLASS             NAME OF EACH EXCHANGE ON WHICH REGISTERED
-------------------------------------- -----------------------------------------
COMMON STOCK, PAR VALUE $.01 PER SHARE           AMERICAN STOCK EXCHANGE

        SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

         INDICATE BY CHECK MARK WHETHER THE COMPANY (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 COMPANY
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 THE COMPANY'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 ]

         INDICATE BY CHECK MARK WHETHER THE COMPANY IS AN ACCELERATED FILER AS
DEFINED IN EXCHANGE ACT RULE (2b-2).
                                YES [ ] NO [ X ]

         INDICATE BY CHECK MARK WHETHER THE COMPANY IS A SHELL COMPANY AS
DEFINED IN EXCHANGE ACT RULE (12b-2).
                                YES [ ] NO [ X ]

         AS OF THE LAST BUSINESS DAY OF THE COMPANY'S MOST RECENTLY COMPLETED
SECOND FISCAL QUARTER ENDED DECEMBER 31, 2004, THE AGGREGATE MARKET VALUE OF THE
COMPANY'S COMMON STOCK (BASED UPON THE CLOSING SALES PRICE OF THE COMPANY'S
COMMON STOCK ON THE AMERICAN STOCK EXCHANGE ON SUCH DATE) HELD BY NONAFFILIATES
OF THE COMPANY WAS APPROXIMATELY $36,685,572. (FOR PURPOSES OF THIS REPORT, ALL
OFFICERS AND DIRECTORS HAVE BEEN CLASSIFIED AS AFFILIATES, WHICH CLASSIFICATION
SHALL NOT BE CONSTRUED AS AN ADMISSION OF THE AFFILIATE STATUS OF ANY SUCH
PERSON.)

         ON SEPTEMBER 12, 2005, THE COMPANY HAD OUTSTANDING 8,523,923 SHARES OF
COMMON STOCK.

         DOCUMENTS INCORPORATED BY REFERENCE: PORTIONS OF THE COMPANY'S PROXY
STATEMENT RELATING TO ITS ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON NOVEMBER
15, 2005, ARE INCORPORATED INTO PART III OF THIS REPORT BY REFERENCE.




                                     PART I
ITEM 1.           BUSINESS

           GENERAL

         The Company was incorporated in New York in 1966 as Phase Industries,
Inc., and changed its name to American Technical Ceramics Corp. in June 1984.
The Company was merged into a Delaware corporation in 1985 in order to change
its jurisdiction of incorporation. Unless the context indicates otherwise,
references to the Company herein include American Technical Ceramics Corp., a
Delaware corporation, and its subsidiaries, all of which are wholly-owned.

         The Company designs, develops, manufactures and markets
RF/Microwave/Millimeter-Wave ceramic capacitors, thin film products and other
passive components. The Company's products are focused primarily in the high
reliability market for ultra-high frequency ("UHF") and microwave applications,
including wireless electronics, medical electronics, semiconductor equipment,
satellite equipment and fiber optics. Capacitors function within electronic
circuits by storing and discharging precise amounts of electrical power. The
Company believes that it is a leading manufacturer of multilayer capacitors
("MLCs") for UHF and microwave applications. Selling prices for the Company's
MLCs typically range from $.10 to $7.50 or higher, whereas selling prices for
commodity-type MLC units typically range from $.005 to $.05. Thin film products
are ceramic substrates on which circuit patterns are printed by means of thin
film processes, and are used by customers as building blocks in electronic
circuits. Management believes the Company operates in only one industry segment
- the electronic components industry.

         The recovery in the technology and telecommunications sectors that
began in the second half of fiscal year 2004 continued in fiscal year 2005. The
Company experienced substantial increases in sales and bookings in fiscal year
2005. Bookings from customers in all of the Company's largest markets increased
during this period.

           PRODUCTS

         The Company's traditional line of MLCs are available in predominantly
four physical sizes designated "A" (.055 inch cube), "B" (.110 inch cube), "C"
(.250 inch cube) and "E" (.380 inch cube); in three types of dielectrics:
low-loss porcelain (the 100 series), zero temperature coefficient (the 700
series) and high dielectric constant (the 200 series); and in a variety of
capacitance values. The 100 series, the Company's basic product line, is widely
used in microwave equipment. The 700 series, because of its lower temperature
coefficient, is used in tuning circuits in UHF/Microwave and lower frequency
applications. The 200 series has high packaging density and is used in
microcircuits where high capacitance value is needed in a small space. The
Company's traditional line of MLCs is one of three product lines that accounts
for more than 10% of the Company's consolidated revenue, accounting for
approximately 69%, 70% and 73%, of the Company's revenues in fiscal years 2005,
2004 and 2003, respectively.

         The Company's MLCs are generally designed for critical performance
applications, and are characterized by a high degree of reliability, low power
dissipation and ruggedness. The MLCs can be broadly classified as either
commercial or "Hi-Rel", based primarily upon the amount of testing involved. All
are subject to precise measurement of capacitance, dissipation factor and
insulation resistance. The Company's products are used in commercial and
military applications, including wireless cellular and personal communications
systems (PCS), medical imaging (i.e., magnetic resonance imaging), radio
frequency power sources for semiconductor manufacturing, satellite
communications, numerous aerospace systems, including radar and electronic
warfare, and certain high-speed digital processing equipment.

         Approximately 92% of the Company's sales in each of fiscal years 2005
and 2004 and approximately 89% of sales in fiscal year 2003 were to commercial
(i.e., applications other than Hi-Rel) customers. The Company estimates that
approximately 8% of the Company's sales in fiscal years 2005 and 2004 and
approximately 11% of sales in fiscal year 2003 were sales of Hi-Rel products.
See "Item 1. BUSINESS -- CUSTOMERS AND MARKETING -- FOREIGN SALES."



                                       2



         Hi-Rel MLCs are principally utilized in applications such as satellites
(including commercial communications satellites), high performance military
aircraft, spacecraft and missiles, and other defense applications such as radar
and electronic countermeasures. The Company produces its Hi-Rel MLCs to precise
customer specifications and subjects each Hi-Rel MLC to a battery of performance
and environmental tests. Such performance tests measure capacitance, dissipation
factor, insulation resistance and dielectric withstanding voltage. The
environmental tests are either designated by customers or specified by the
military and include temperature shock tests, humidity tests and tests of life
expectancy at elevated temperature and voltage levels.

         For commercial applications, the Company produces MLCs to precise
performance specifications similar to Hi-Rel MLCs, individually tests them for
certain electrical performance characteristics and conducts additional tests on
samples from production lots. However, the Company does not subject all
commercial MLCs to environmental tests.

         The Company has historically pursued the high-performance MLC market in
which its products are typically applied in the manufacture of high-value
capital equipment and which has commanded higher unit selling prices. The MLCs
required for many of these applications constitute a small part of the circuit
cost and, because performance and reliability requirements are stringent and the
cost of component failure high, customers have been willing to pay the price
premium associated with higher performance products such as those the Company
makes. In recent years, the Company has further automated its manufacturing
processes to enable it to produce certain of its existing MLCs for the medium -
priced niche market driven by wireless base-station infrastructure applications.

         The Company markets its 600 series products to higher volume markets.
These products are targeted toward the high-performance, lower-priced segment of
the wireless industry. The Company manufactures predominantly three physical
sizes designated "S" (.06" x .03" rectangle), "L" (.04 x .02 rectangle), and "F"
(.08 x .05 rectangle). These are lower-priced than the Company's traditional
MLCs (approximately two-thirds the price of the lowest-priced comparable part),
and use a newer ceramic proprietary formulation developed by the Company to
optimize performance for cellular and PCS operating frequencies. Sales from this
product line amounted to approximately 13%, 10% and 6% of the Company's revenues
in fiscal years 2005, 2004 and 2003, respectively.

         The Company also offers specialized capacitors designed to perform at
frequencies higher than the useful range of typical microwave MLCs. The
Company's Microcap(R), a single layer ceramic capacitor, was developed to meet
certain applications where small size is critical and which operate at
frequencies extending higher than those for which MLCs are typically chosen.
Manufactured and sold in both Hi-Rel and commercial versions, these products are
used in wideband wireless data communications, satellite communications,
military systems and other microwave and millimeter-wave applications. Another
product tailored to the same market, the 500S Broadband Microwave Capacitor
(BMC), is based on a patented construction designed to be compatible with
customers' high-volume surface-mount assembly technologies. Sales of these two
product types combined amounted to approximately 2% of the Company's revenues in
each of fiscal years 2005, 2004 and 2003.

         The Company has diversified its product line through the development of
custom product capability based on thin film technologies. The Company produces
metallized circuits and passive components on high-quality ceramic substrates to
customers' drawings and specifications. Thin film layers deposited on the
ceramic substrate may consist of a variety of materials with specific
conductive, resistive, capacitive and other properties enabling the build-up of
the desired circuit pattern. As with a typical circuit board, the customer may
then attach discrete components and chips to complete the circuit. Thin film
products are used by the Company's customers in a broad range of applications,
including microwave components, fiber optic repeaters and high-density packaging
of devices, typically where requirements for high reliability, small size and
dimensional precision are paramount. In fiscal years 2005, 2004 and 2003, thin
film sales represented approximately 11%, 14% and 13% of the Company's revenues,
respectively.



                                       3



         In June 2000, the Company introduced a line of high power, passive
resistive products. In fiscal year 2002, the Company added thin film resistor
manufacturing capability to its resistive products line. Typically, thin film
resistors offer a higher degree of reliability and are better able to handle
power than their thick film counterparts. The Company's products, including
standard resistors, terminations, attenuators and other customized products,
consist of resistive and conductive layers deposited on a substrate of aluminum
nitride, a base material chosen for its high thermal conductivity and its
non-toxic properties. High power resistive products are used in many of the same
types of equipment as the Company's capacitor products. Other applications for
these products, which reflect an expansion of the Company's customer base,
include RF and microwave products, including power amplifiers, up and down
converters, and high power combiner/dividers. The markets for these products
include the wireless and telecommunication markets, including base station and
satellite communications, and a broad range of medical, military and other
commercial applications. Resistive product sales represented 2% of the Company's
revenues in fiscal year 2005 and less than 1% in each of the fiscal years 2004
and 2003.

         Since fiscal year 2002, the Company has offered, on a limited basis,
certain products based upon a new high-density electronic packaging technology
for radio frequency (RF) and microwave frequency broadband applications. This
technology, commonly referred to as Low Temperature Co-fired Ceramic ("LTCC"),
is based on high performance dielectric ceramic materials, some manufactured by
the Company and others purchased from leading electronic materials
manufacturers. The Company markets this technology under the name Co-fired
Ceramic Packaging ("CCP"). Traditional RF and microwave circuits have been
limited in size and performance by the use of only two dimensions to incorporate
all RF elements and passive components, such as inductors, capacitors and
resistors. LTCC technology enables the user to design circuits in the third
dimension with the integration of the RF elements and passive components in the
body of the electronic circuit. LTCC technology also provides the ability to
design circuits with integrated RF components such as couplers, power
dividers/combiners, filters and impedance transformers, and passive devices. CCP
sales accounted for 2% of the Company's revenues in fiscal year 2005 and less
than 1% of the Company's revenues in fiscal years 2004 and 2003. See "Item 1.
BUSINESS -- MANUFACTURING and -- RESEARCH AND DEVELOPMENT."

           MANUFACTURING

         The manufacturing process for MLC's involves four primary stages. The
first, or "white room" stage, includes tape casting, multi-layer lamination,
dicing and firing of ceramic chips. In this phase, layers of electrically
conducting material are printed onto ceramic tape in patterns, which eventually
form the electrodes of the capacitor. The screen-printing technology used for
the printing of such layers is referred to as "thick film". In the second, or
"termination" stage, the ceramic chips are coated with silver. In the third, or
"finishing" stage, the parts are then customized to specific order requirements
for commercial applications. This stage includes, but is not limited to, chip
plating, soldering of leads, laser marking and chip packaging. The chips are
tested electrically and inspected throughout the entire process. If the
customer's specifications call for a higher level of performance assurance, the
parts are put through a fourth stage, the Hi-Rel stage, where additional testing
is performed.

         The Company currently manufactures MLC's at its facilities in
Huntington Station, New York and Jacksonville, Florida. Its primary MLC
manufacturing site is Huntington Station, consisting of four manufacturing
facilities which aggregate approximately 76,000 square feet. Two of these
facilities house the Company's state-of-the-art chip fabrication operations.
These facilities are designed to provide optimum control of the Company's
manufacturing processes and product quality, while substantially increasing its
output capability. The other two facilities provide "finishing" process steps or
key manufacturing support activities.

         The Company manufactures its 500 and 600 series capacitors at its
facility in Jacksonville, Florida. Over the past three fiscal years the Company
expanded the offering of the 600 series to include an additional case size each
year to better serve the EIA (Electronic Industry Association) product
standardization used by its customers. The Jacksonville facility is also the
site of manufacture for the Company's thin film, Microcap(R) SLC, resistor and
CCP product lines, and serves as the Company's new product technology center.
The Jacksonville facilities aggregate over 109,000 square feet of space with
37,000 square feet committed to custom circuit operations.



                                       4



         Portions of the Jacksonville facility have been redesigned over the
last few years in order to accommodate what the Company refers to as its
"Factory of the Future". Utilizing recently developed and acquired materials,
processes and equipment, the Company can manufacture MLC products at this
facility at higher degrees of precision and control and at a substantially lower
cost with accompanying high output. Moreover, the manufacturing operations at
this facility are flexible, enabling the Company to produce ceramic structures
of a wide variety of sizes, shapes and internal configurations. The Company
installed several high speed test and packaging systems currently processing in
excess of 100,000 units per hour, which is a several fold increase compared to
the previous systems.

         As differentiated from the "thick film" technology used in MLC
manufacturing, the manufacture of thin film circuits involves a method for the
deposition of layers of conducting and other materials using "sputtering"
technology. Unlike the manufacture of capacitors, where all products flow
through the same manufacturing sequences, manufacturing processes for custom
thin film products vary significantly in accordance with each customer's
specifications.

         Utilizing its core competencies in the manufacture of MLC devices, over
the past two years the Company has developed the capability to manufacture
microelectronic ceramic circuits. Starting in fiscal year 2004, the Company has
been using this technology in connection with its CCP product line. Similar to
commercial printed circuit board manufacturing, the Company can manufacture
multiple layer boards with layer-to-layer interconnects and circuitry on each
layer in a ceramic structure. The CCP product line, much like the Company's thin
film product line, operates in a build-to-order format. The Company typically
receives drawings for custom devices and packages from its customers and builds
products to their specification, utilizing multiple layer circuit technology.

         Microcap(R) SLCs, resistive products and BMCs all utilize various
combinations of the production methods described in the preceding paragraphs.
The manufacture of each of these product lines involves dedicated equipment in
addition to the equipment used in connection with the manufacture of the product
lines previously discussed.

         The Company utilizes a wide variety of specialized equipment for the
fabrication, handling and testing of its products, including equipment that it
has designed and constructed. The Company considers its capability to create its
own unique equipment solutions tailored to the particular needs of its product
lines and technologies to be a competitive advantage.

         Before full market introduction of a new product, the Company generally
establishes a production line for the product and manufactures substantial
quantities to evaluate and verify its ability to consistently meet quality and
performance standards. Such efforts involve the dedication of equipment,
materials and labor, and, to the extent that these efforts do not result in
saleable product, all costs are expensed. During fiscal years 2003 and 2004, the
Company's CCP product line was in the development phase. During fiscal year
2005, the Company completed the development of this product line.

         To complement its own manufacturing efforts and to provide a wide
variety of product offerings to its customers, the Company has from time to time
entered into arrangements with other manufacturers to produce certain products
to the Company's specifications. These products accounted for approximately 1%,
3% and 5% of the Company's consolidated revenues in fiscal years 2005, 2004 and
2003, respectively.

         The historical pattern of industry price declines has largely prevented
MLC producers, including the Company, from increasing prices and has forced the
Company and competitors to rely on advances in productivity and efficiency in
order to improve profit margins. Accordingly, the Company continuously looks to
improve the production yields and efficiency of its manufacturing processes. The
Company conducts continuous improvement programs targeted at streamlining
manufacturing processes and increasing yields, and has established statistical
process control techniques for maintaining key process steps within specified
bounds and providing data to support continuous improvement. For additional
information with respect to yields and efficiencies, see "Item 1.
BUSINESS -- RESEARCH AND DEVELOPMENT."



                                       5





         In fiscal year 2003, the Company attained ISO-9001:2000 status, which
includes product design capability. It is a higher level certification than the
Company previously had. The Company's European sales and distribution office
achieved ISO-9001:2000 certification status during fiscal year 2003. During
fiscal year 2004, the Company established an Environmental Management System in
accordance with ISO-14001 requirements, and the New York manufacturing facility
received certification to ISO-14001 during fiscal year 2005.

           CUSTOMERS AND MARKETING

         The Company markets its products primarily to customers in the wireless
infrastructure, fiber optic telecommunications, military, medical, semiconductor
equipment manufacturing and aerospace industries. The customers included within
these industries are manufacturers of microwave, high frequency and fiber optic
systems, subsystems and equipment, including original equipment manufacturers
(OEMs) and Electronics Manufacturing Services (EMS) companies and suppliers
thereto, and government contractors and subcontractors. Most of the Company's
products are used in the manufacture of capital equipment.

         The Company promotes its products through specialized trade shows,
industry trade journal advertisements, a site on the Internet's World Wide Web
and catalog direct mail programs. In fiscal year 2000, the Company started
taking orders, on a limited basis, via its web site. In fiscal year 2004, the
Company increased the list of products available for sale via its web site and
plans to further expand these offerings in the future.

         The Company shipped to approximately 2,000 customers in fiscal years
2005, 2004 and 2003. The top ten customers combined accounted for approximately
29%, 30% and 29% of net sales in fiscal years 2005, 2004 and 2003, respectively.
No customer accounted for more than 10% of the Company's net sales in fiscal
years 2005, 2004 or 2003.

         The Company is a qualified producer of capacitors with the Defense
Logistics Agency of the United States Department of Defense. This qualified
status covers several varieties and types of capacitors. Maintenance of its
qualified producer status is critical in order for the Company to continue to
sell its Hi-Rel military product line. To date, the Company has not encountered
any difficulty in maintaining its status as a qualified producer, and the
Company believes it is presently the only supplier with such qualification for
some of these product types.

         The Company typically sells its products through a combination of
logistics arrangements and a large number of individual purchase orders. Certain
individual purchase orders are subject to pricing agreements. Neither pricing
agreements nor logistics arrangements are firm purchase orders, but each still
requires that the Company commit to produce semi-finished or finished goods
inventory in anticipation of receiving a purchase order for immediate shipment.
See "Item 1. BUSINESS -- SALES BACKLOG" and "Item 7. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."

         Customers are invoiced simultaneously with merchandise shipments. The
Company sells to a majority of its customers on 30-day terms. A small number of
the Company's larger volume customers have terms ranging from 45 days to 120
days. Customers may also charge their purchases through the use of a
credit/debit card. Sales returns are authorized and accepted by the Company in
the normal course of business. An evaluation of the returned product is
performed and typically results in either a credit or a shipment of replacement
product to customers. The Company believes that it has provided an adequate
reserve for returns in the accompanying consolidated financial statements.



                                       6





         In the United States, the Company principally sells its products
through independent sales representatives who are compensated on a commission
basis. In foreign countries, the Company historically has utilized both
resellers, who purchase products from the Company for resale, and sales
representatives. During fiscal year 2002, the Company elected to dissolve its
subsidiary in the United Kingdom and expanded the scope of its subsidiary in
Stockholm, Sweden to serve most of the Company's customers in Europe, thereby
reducing the Company's reliance on resellers in this area. The Company continues
to rely primarily on local, independently-owned resellers and independent sales
representatives in all other foreign markets. See "Item 1. BUSINESS -- FOREIGN
SALES" and Note 9 of Notes to Consolidated Financial Statements.

         During fiscal year 2002, the Company established a wholly-owned
subsidiary in the United States which established a representative office in the
People's Republic of China to service the growing market in China.

         During fiscal year 2005, the Company's wholly-owned subsidiary in
Sweden, through its own wholly-owned subsidiary, established a representative
office within the Russian Federation to service the growing market there.

         At June 30, 2005, the Company utilized approximately 17 sales
representative organizations in the United States and approximately six sales
representative and reseller organizations in foreign countries, principally
Europe, Canada and the Far East. The Company's sales representatives and
resellers generally have substantial engineering expertise, which enables them
to assist the Company in providing a high level of service to assist customers
in generating product specifications and in providing applications assistance
and maintaining contact with key customers. The Company employs regional sales
managers to supervise its sales representatives and resellers and a staff of
sales and applications specialists to provide direct contact with and support to
customers.

          FOREIGN SALES

         In fiscal years 2005, 2004 and 2003, sales to customers located outside
the United States constituted 47%, 47% and 41% of net sales, respectively. The
Company's foreign customers are located primarily in Europe, Canada and the Far
East. See "Item 1. BUSINESS -- CUSTOMERS AND MARKETING" and Note 9 of Notes to
Consolidated Financial Statements. All foreign sales, except sales by the
Company's wholly-owned subsidiary in Stockholm, Sweden, are denominated in
United States dollars. The Company attempts to reduce the risk of doing business
in foreign countries through the use, in certain circumstances, of prepayment or
sight drafts, and by working closely with its foreign representatives and
distributors in assessing business environments.

           SALES BACKLOG

        The Company's sales backlog was $13,958,000, $13,472,000 and $9,129,000
at June 30, 2005, 2004 and 2003, respectively. Backlog generally consists of a
combination of the Company's standard products and custom manufactured parts
that require a longer lead time to produce. The long-term trend in customer
requirements for the Company's standard products has been toward shorter lead
times. See "Item 1. BUSINESS -- CUSTOMERS AND MARKETING."

        The Company offers its Quik-Pick 48 Hour System(R) program pursuant to
which products are shipped within 48 hours from the time the order is placed.
This program has consistently been popular with its customers. In order to offer
this program, the Company has to maintain higher inventory levels of certain
products in proportion to total sales than it would otherwise and higher than
those maintained by some other capacitor manufacturers. The contribution of the
Quik-Pick(R) program to the financial results of the Company depends critically
on the Company's ability to accurately predict customer demand for the various
products offered through the program.



                                       7





             RESEARCH AND DEVELOPMENT

        The technology upon which the Company's products are based is subject to
continued development of materials and processes to meet the demands of new
applications and increased competition. The Company pursues a process-oriented
strategy in which it conducts efforts aimed at developing integrated sets of
materials and associated processes and equipment to provide the capability to
create new or enhanced classes of products. Once a new set of technologies is
established, the Company then seeks to develop and introduce various products
using such technologies. The Company believes its future successes depend upon
its ability to identify the requirements for future products and product
enhancements, and to define, implement and successfully employ the technologies
needed to meet those requirements. Accordingly, the Company believes that its
research and development efforts are critical to its continued success.

        The Company conducts most of its research and development activities at
its facility in Jacksonville, Florida. Activities are focused on the development
of new products and improvement of existing products. Improvements in materials
and process technology, and the development of specialized production equipment,
are directed toward reducing product cost, as well as enhancing performance
requirements that are identified through frequent customer contacts by the
Company's sales and technical personnel. Products are introduced after extensive
in-house testing and evaluations at selected customer sites. See "Item 1.
BUSINESS - MANUFACTURING."

        The Company often pursues programs with individual customers whom it
considers to be leaders in their respective industries to develop special
products to meet their specific requirements. The Company typically conducts
such programs when it believes such products have potential applications
reaching well beyond the initial customer's requirements. The Company's
expansion of the 600 Series product line arose from one such program conducted
in past years.

        The Company's research and development efforts remain focused on the
development of new products and processes related to its core product lines. For
example, during fiscal year 2004, the Company continued its efforts on
developing enhancements to its line of specialty higher frequency capacitors.
The Company also continued development activities on its new resistive product
line by adding thin film resistor manufacturing capability. Typically thin film
resistors offer a higher degree of reliability and are better able to handle
power than their thick film counterparts. The thin film capability also allows
for the development of finer line width and resolution, which is used in the
manufacture of higher frequency terminations and attenuators. See "Item 1.
BUSINESS - PRODUCTS."

        The initial phases of the CCP process were completed during fiscal year
2003, and during fiscal year 2004 the Company started to sell these products. In
fiscal year 2005, the Company sold in excess of $1,500,000 of these products.
The Company continues to believe in the long-term prospects for this technology,
and intends to continue the enhancement of its capabilities along with
additional processes that further expand its offering of products during fiscal
year 2006. In this regard, the Company has entered into an agreement to purchase
from CTS Corporation certain equipment and inventory used by CTS in the
manufacture of LTCC products. It is anticipated that the closing of the
transaction will occur in the second quarter of fiscal year 2006. The Company
intends to transfer the equipment and inventory to its facility in Jacksonville,
Florida, where it will be used, among other things, in the production of LTCC
products and certain of the Company's specialty MLCs.

        Expenditures for research and development were approximately $2,161,000,
$3,067,000 and $2,766,000 in fiscal years 2005, 2004 and 2003, respectively,
representing approximately 3%, 5% and 6% of net sales, respectively. The Company
anticipates that research and development expenditures in fiscal year 2006,
expressed as a percentage of net sales, will be comparable to fiscal year 2005.




                                       8




              RAW MATERIALS

        The principal raw materials used by the Company include silver,
palladium, gold, platinum, titanate, and other powders that are used in ceramic
manufacture. Precious metals are available from many sources, although palladium
is generally available only from a limited number of metal dealers who obtain
their product requirements from the Republic of South Africa or the Russian
Federation. The major consumers of palladium are the automotive and electronics
industries.

        In April 2005, the Company fulfilled a commitment to purchase $4.5
million of precious metals (primarily palladium and silver) through the third
quarter of fiscal year 2005 to protect against shortages and rising prices.
Currently, the Company does not have any open orders to purchase additional
precious metal inventory. As economic conditions improve, the demand for the
precious metals the Company uses in its manufacturing processes is increasing
throughout the electronics industry and other industries. As a result, the
Company has seen a rise in the market prices of certain of these metals. The
Company believes that, based upon its current levels of production, it owns a
sufficient supply of precious metals such that the Company would not have to buy
any additional quantities for the next six months. See "Item 7. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."

          COMPETITION

        Competition in the broad MLC industry continues to be intense and, in
general, is based primarily on price. In the UHF/Microwave market segment, where
price has historically been less important, competition has been based primarily
on high performance product specifications, achieving consistent product
reliability, fast deliveries and high levels of customer service. The Company
believes any competitive advantage it may have results from its ability to
achieve consistent quality and reliability, fast deliveries and high levels of
customer service. Potential growth of some market applications may in the future
increase the competitive importance of price in this market. The Company
believes it competes in the UHF/Microwave capacitor market with several other
manufacturers, both domestically and abroad, including AVX Corporation, Dover
Corporation, Tekelec, Spectrum Control, Inc., Murata Manufacturing Co. Ltd and
Taiyo Yuden, most of which are larger and have broader product lines and greater
financial, marketing and technical resources than the Company. There are other
large commodity-type MLC manufacturers who have attempted to develop products
for the UHF/Microwave market segment. While the Company believes these efforts
have not produced significant results to date, there can be no assurance that
such efforts will not be successful in the future. New product developments may
lead the Company into markets where there are existing competitors that may have
significantly greater financial and technical resources and greater expertise in
mass production techniques than the Company. Competition in the Company's other
product areas is similar in nature to that of the capacitor market. The primary
competition for the Company's thin film products is Reinhardt Microtech AG. The
primary competition for the Company's resistive products are Anaren Inc., EMC
Technologies and Florida RF Labs Inc., the last two of which are both
subsidiaries of Smiths Group PLC.

          ENVIRONMENTAL COMPLIANCE

         The Company produces hazardous waste in limited quantities in the
production of its products. Accordingly, the Company's manufacturing operations
are subject to various federal, state and local laws restricting the discharge
of such waste into the environment. The Company recycles some of its hazardous
wastes and disposes of the remainder through licensed carriers, which are
required to deposit such waste at licensed waste sites.

        The Company is also subject to various federal, state, local and foreign
laws regulating or prohibiting the use of certain materials in the manufacture
of its products. As part of its research and development efforts, the Company
continues to develop and test new materials and products designed to comply with
these laws.



                                       9





        The Company believes that it is in material compliance with all
applicable federal, state and local environment laws and does not currently
anticipate having to make material capital expenditures to remain in material
compliance therewith. However, more stringent requirements may be enacted in the
future and the Company can not predict whether it will be able to comply with
them. Moreover, there can be no assurance that the Company will be able to
develop replacement materials or products for those which may become prohibited
in the future, or that competitors will not develop superior compliant products.
See "Item 1. BUSINESS -- CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING
STATEMENTS."

        During fiscal year 2004, the Company established an Environmental
Management System in accordance with ISO-14001 requirements, and during fiscal
year 2005, the Company's New York facility achieved ISO-14001 certification.

             PATENTS AND PROPRIETARY INFORMATION

        Although the Company has manufacturing and design patents and pending
patent applications, and although the Company will continue to seek the
supplemental protection afforded by patents, the Company generally considers
protection of its products, processes and materials to be more dependent upon
proprietary knowledge and on rapid assimilation of innovations than on patent
protection. The Company's porcelain and ceramic formulations are considered
trade secrets which are protected by internal non-disclosure safeguards and
employee confidentiality agreements. There can be no assurance that the steps
taken by the Company to protect its rights will be adequate to deter
misappropriation, or that an independent third party will not develop
functionally equivalent technology.

             EMPLOYEES

        At June 30, 2005, the Company employed 452 persons at its facilities in
New York, of which 23 were employed on a part-time basis; 284 persons at its
facilities in Florida, of which one was employed on a part-time basis; ten
persons in sales offices in Asia and 14 persons in sales offices in Europe of
which one was employed on a part-time basis. Of the 760 persons employed by the
Company, 638 were involved in manufacturing and testing activities and as
support personnel, 104 were involved in selling, general and administrative
activities, and 18 were involved in research and development activities. None of
the Company's employees are covered by collective bargaining agreements. The
Company considers its relations with its employees to be satisfactory.

             CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

        Statements in this Annual Report on Form 10-K under the captions
"Business" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations", as well as statements made in press releases and oral
statements that may be made by the Company or by officers, directors or
employees of the Company acting on the Company's behalf that are not statements
of historical fact, constitute "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors that
could cause the actual results of the Company to be materially different from
the historical results or from any future results expressed or implied by such
forward-looking statements. The cautionary statements set forth below identify
certain factors that could cause such differences. In addition to statements
which explicitly describe risks and uncertainties, readers are urged to consider
statements labeled with terms such as "believes", "belief", "expects", "plans",
"anticipates", or "intends" to be uncertain and forward-looking. All cautionary
statements made in this Annual Report on Form 10-K should be read as being
applicable to all related forward-looking statements wherever they appear. Any
forward-looking statement represents the Company's expectations or forecasts
only as of the date it was made and should not be relied upon as representing
its expectations or forecasts as of any subsequent date. The Company undertakes
no obligation to correct or update any forward-looking statements, whether as a
result of new information, future events or otherwise, even if its expectations
or forecasts change.




                                       10





        The Company's products are used in the production of a variety of highly
complex electronic products manufactured for the military and for commercial
use. Accordingly, demand for the Company's products is highly dependent upon
demand for the products in which they are used. From time to time, including the
first half of fiscal year 2004, the Company's results have been negatively
impacted by a general decrease in demand for technology and electronic products
in the United States and abroad. There can be no assurance that the demand for
such products will increase or that, even if it does increase, the demand for
the Company's products will increase. In addition, there can be no assurance
that the Company will not receive order cancellations after orders are booked
into backlog. Moreover, a majority of the Company's costs are fixed, and the
Company may not be able to reduce costs if sales volumes were to decline.

        The Company produces and ships product based upon orders received from
its customers. If these orders are cancelled prior to shipment it could affect
the Company's profitability. See "Item 1. BUSINESS -- CUSTOMERS AND MARKETING."

        The Company offers a broad variety of products to its customers. Gross
margins can vary significantly from product to product and across product lines.
Accordingly, a change in the mix of products sold by the Company during a
particular period could lead to distinctly different financial results for that
period as compared to other periods.

        The Company expects that international sales will continue to constitute
a substantial portion of its total sales. These sales expose the Company to
certain risks, including, without limitation, barriers to trade, fluctuations in
foreign currency exchange rates (which may make the Company's products less
price competitive), political and economic instability, changes in monetary
policy, tariff regulations and other United States and foreign laws and
regulations that may apply to the export of the Company's products, as well as
the generally greater difficulties of doing business abroad.

        During fiscal year 2005, the Company's ten largest customers accounted
for approximately 29% of net sales. The Company expects that sales to a
relatively small number of customers will continue to account for a significant
portion of its net sales for the foreseeable future. A loss of one or more of
such key customers could affect the Company's profitability. See "Item 1.
BUSINESS -- CUSTOMERS AND MARKETING."

        The technology upon which the Company's products are based is subject to
continuous development of materials and processes. The Company's business is in
large part contingent upon the continuous refinement of its technological and
engineering expertise and the development of new or enhanced products and
technologies to meet the rapidly developing demands of new applications and
increased competition. There can be no assurance that the Company will continue
to be successful in its efforts to develop new or refine existing products, that
such new products will meet with anticipated levels of market acceptance or that
the Company will otherwise be able to timely identify and respond to
technological improvements made by its competitors. Significant technological
breakthroughs by others could also have a material adverse effect on the
Company's business.

        The Company's business may be adversely affected by difficulties in
obtaining raw materials and other items needed for the production of its
products, the effects of quality deviations in raw materials and fluctuations in
prices of such materials. Palladium, a precious metal used in the production of
the Company's capacitors, is currently available from a limited number of metal
dealers who obtain product from the Republic of South Africa or the Russian
Federation. A prolonged cessation or reduction of exports of palladium by the
Republic of South Africa or the Russian Federation, or a significant increase in
the price of palladium, could have a material adverse effect on the Company's
business. See "Item 1. BUSINESS -- RAW MATERIALS" and "Item 7. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."



                                       11




        Certain raw materials used by the Company may fluctuate in price. To the
extent that the Company is unable to pass on increases in the costs of such
materials to its customers, this may adversely affect the gross profit margins
of those products using such materials. At times, the Company will enter into
contracts to purchase certain raw materials in the future at agreed upon prices
in order to protect against shortages and rising prices. If the Company were to
do so and prices were to decline, the Company would be required to purchase such
raw materials at or above market prices which would also negatively impact gross
profit margins.

        Competition in the MLC industry is intense and, in general, is based
primarily on price. In the UHF/Microwave market segments, where price has
historically been less important, competition has been based primarily on high
performance product specifications, achieving consistent product reliability,
fast deliveries and high levels of customer service. The Company competes with a
number of large MLC manufacturers who have broader product lines and greater
financial, marketing and technical resources than the Company. Growth of some
commercial market applications has increased, and is expected to continue to
increase the competitive importance of price. There can be no assurance that the
Company will be able to improve the productivity and efficiency of its
manufacturing processes in order to respond to pricing pressures, or to
successfully design new processes and products; and the failure to do so could
have a material adverse effect on the Company's business.

        The Company produces limited quantities of hazardous wastes in the
production of its capacitors. Accordingly, the inherent risks of environmental
liability and remediation costs associated with the Company's manufacturing
operations may result in substantial unforeseen liabilities.

        The Company is also subject to various federal, state, local and foreign
laws regulating or prohibiting the use of certain materials in the manufacture
of its products. As part of its research and development efforts, the Company
continues to develop and test new materials and products designed to comply with
these laws. However, there can be no assurance that the Company will be able to
develop replacement materials or products for those which may become prohibited
in the future, or that competitors will not develop superior compliant products.
See "Item 1. BUSINESS -- ENVIRONMENTAL COMPLIANCE."

        The Company has not received any claims that its products or the
technologies upon which they are based infringe the intellectual property rights
of others. Any such claims in the future may result in the Company being
required to enter into royalty arrangements, cease manufacturing the infringing
products or utilizing the infringing technologies, pay damages or defend
litigation, any of which could have a material adverse effect on the Company's
business.

        The Company's business may also be adversely affected by matters and
events affecting businesses generally, including, without limitation, political
and economic events, labor unrest, acts of God, war, acts of terrorism and other
events outside of the Company's control.



                                       12




ITEM 2.           PROPERTIES

        The Company's primary production facilities are located in Huntington
Station, New York and Jacksonville, Florida. The Company's principal executive
office is located in Huntington Station, New York, and its principal research
and development facility is located in Jacksonville, Florida. The following
table sets forth the address of each facility, its primary function, the square
footage occupied by the Company and whether the facility is leased or owned.




        ADDRESS OF FACILITY                PRIMARY FUNCTION                  SQUARE FOOTAGE OCCUPIED       TYPE OF OCCUPANCY

        10 Stepar Place
        Huntington Station, New York       Production                               11,200                     Owned

        11 - 13 Stepar Place               Production and
        Huntington Station, New York       production support   (1)                 20,000                     Owned

        15 Stepar Place                                                             35,700                     Leased from Principal
        Huntington Station, New York       Production                                                          Stockholder (2)
        One Norden Lane
        Huntington Station, New York       Production                                8,700                     Owned

        17 Stepar Place
        Huntington Station, New York       Sales and administration                 18,000                     Owned

        2201 Corporate Square Blvd.        Production, research                     99,700                     Leased from Principal
        Jacksonville, Florida               and development                                                    Stockholder (2)
        8810 Corporate Square Court
        Jacksonville, Florida              Production   (3)                         10,000                     Owned

        Ellipsvaegen 5
        SE-141 75                          Sales and                                 3,400                     Leased
        Kungens Kurva, Sweden               distribution office
        Rm. 621-623, International
        Culture Building, No. 3039
        Shennan Centre Rd., Futian
        District, Shenzhen, PR China       Sales office                              1,950                     Leased



         (1)      In fiscal year 2001, the Company purchased a 20,000 square
                  foot facility adjacent to its existing New York facilities.
                  This facility was placed into operation during fiscal year
                  2005 and houses production and production support activities.

         (2)      See "Item 13. CERTAIN  RELATIONSHIPS AND RELATED TRANSACTIONS"
                  and Notes 4 and 7 of Notes to Consolidated  Financial
                  Statements.

         (3)      In fiscal year 2004, the Company purchased this 10,000 square
                  foot facility in Jacksonville, Florida that it had been
                  leasing. The Company was utilizing the majority of the
                  building under the lease. As a result of the purchase, the
                  Company added a small amount of additional space which it is
                  reserving for future use.





                                       13




ITEM 3.           LEGAL PROCEEDINGS

        The Company is not currently a party to any material legal proceedings.

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

        No matters were submitted to a vote of security holders during the
quarter ended June 30, 2005.

             EXECUTIVE OFFICERS

        The executive officers of the Company are as follows:

        Victor Insetta, age 65, co-founded the Company in 1966 and has served as
President, Chief Executive Officer and a director of the Company since its
organization.

        Richard Monsorno, age 53, has been employed by the Company in various
capacities since 1983. In August 1996, he was appointed Senior Vice President -
Technology.

        Kathleen M. Kelly, age 51, has been employed by the Company in various
capacities since 1974. She has served as Vice President - Administration and as
corporate Secretary since November 1989.

        David B. Ott, age 63, joined the Company in June 1999 as Vice President
- New York Manufacturing. In December 2000, he was appointed Senior Vice
President, New York Manufacturing. In April 2004, he was appointed Senior Vice
President, New York Operations.

        Judah Wolf, age 59, has been managing the Company's thin film operations
in Jacksonville, Florida since 1993. In 1999, he was appointed Vice President -
Thin Film Operations. In August 2001, he was appointed Senior Vice President,
Thin Film Products.

        Andrew R. Perz, age 46, has been with the Company as Controller since
1998, and was appointed Vice President, Controller in November 2000. In August
2005, he was appointed Vice President, Finance.

        Harrison Tarver, age 59, has been employed by the Company in various
capacities since 1973, principally in positions relating to quality assurance.
He was appointed Vice President, Quality Assurance in December 2000.

        William Johnson, age 53, joined the Company in June 2005, as Vice
President of Sales. From 2003 until his employment by the Company, he served as
Vice President of Sales for Precision Technology USA, Inc., a manufacturer of
linear actuation and power transmission equipment. From 1996 to 2003, he was the
Vice President of Worldwide Sales for Kemet Corporation, a manufacturer of
electronic components.

        The officers serve at the discretion of the Board of Directors and there
are no family relationships among the officers listed and any directors of the
Company.



                                       14




                                     PART II

ITEM  5.                      MARKET FOR COMPANY'S COMMON STOCK,  RELATED
                  STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

           MARKET INFORMATION

        The Company's common stock is traded on the American Stock Exchange
("AMEX") under the symbol "AMK". The table below sets forth the quarterly high
and low sales prices for the common stock on the AMEX for the fiscal years ended
June 30, 2005 and June 30, 2004.

                               FISCAL 2005                   FISCAL 2004
                               -----------                   -----------

Quarter Ended:                 High   Low                   High      Low
--------------                 ----   ---                   ----      ---
September                    $ 9.30  $6.53                $ 7.65    $4.90

December                      12.00   8.90                  7.93     5.97

March                         10.58   7.50                  11.59    7.80

June                          11.09   7.77                  10.24    7.92

           NUMBER OF STOCKHOLDERS

        As of September 12, 2005, there were approximately 315 holders of record
of the Company's common stock. The Company believes numerous shares are held of
record by brokerage and other institutional firms for their customers.

           DIVIDENDS

        The Company has not paid any cash dividends on its common stock during
the past two fiscal years. It is the present policy of the Company's Board of
Directors to retain earnings to finance the expansion of the Company's
operations and not to pay cash dividends on its common stock.

           SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

        The following table details securities authorized for issuance under
equity compensation plans as of June 30, 2005:



                                                                                                             Number of securities
                                                                                                            remaining available for
                                      Number of securities to                                                future issuance under
                                      be issued upon exercise        Weighted-average exercise price       equity compensation plans
                                      of outstanding options,       of outstanding options, warrants         (excluding securities
                                        warrants and rights                    and rights                  reflected in column (a))
         Plan category                          (a)                                (b)                                (c)
---------------------------------    ---------------------------    ----------------------------------    --------------------------

Equity compensation plans
approved by security holders                 990,945                            $ 7.91                             226,550



                                       15



        The Company has no securities authorized for issuance under equity
compensation plans that have not been approved by security holders. In the past,
the Company has issued treasury shares in payment of stock bonuses which were
not granted pursuant to plans approved by stockholders. See "SALES OF
UNREGISTERED SECURITIES" below. It is the Company's current intention that any
future stock awards or bonuses will be made pursuant to the terms of its 2000
Incentive Stock Plan (which was approved by stockholders) or another plan
approved by stockholders.

           SALES OF UNREGISTERED SECURITIES

        In June 2003, the Company issued 1,000 shares of common stock to each of
seven officers as stock bonuses. The bonuses were awarded in August 2002 and
were contingent upon each such officer remaining employed by the Company on June
30, 2003.

        None of the transactions listed above were registered under the
Securities Act of 1933 in reliance on the exemption provided by Section 4(2)
thereunder or because they did not constitute sales requiring registration under
the Securities Act of 1933.

           ISSUER PURCHASES OF EQUITY SECURITIES

        None.

 ITEM 6.                   SELECTED FINANCIAL DATA

        The following information should be read in conjunction with the
Consolidated Financial Statements and Notes thereto and other information set
forth following Item 15 of this report.




                                                                               FISCAL YEARS ENDED JUNE 30,
                                                                               ---------------------------
                                                                         (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                                                         ----------------------------------------
                                                            2005             2004            2003            2002            2001
                                                          --------         --------        --------         ----------     ---------
INCOME STATEMENT DATA:

Net sales                                                 $ 72,965         $ 61,183        $ 49,048        $ 49,585       $  84,585
Gross profit                                              $ 24,582         $ 20,437        $ 14,332        $  9,624       $  36,721
Income/(loss) from operations                             $  6,467         $  2,528        $   (755)       $ (6,596)      $  16,122

Net income/(loss)                                         $  4,268         $  2,176        $   (501)       $  (4,243)     $  10,332
Basic net income/(loss) per common share                  $   0.51         $   0.27        $  (0.06)       $   (0.53)     $    1.30
Diluted net income/(loss) per common share                $   0.49         $   0.25        $  (0.06)       $   (0.53)     $    1.24
Cash dividends paid per common share                      $      -         $      -        $      -        $       -      $       -

BALANCE SHEET DATA:
Property, plant and equipment, net                        $ 29,502         $ 26,141        $ 27,174        $ 29,740       $  32,089
Total assets                                              $ 77,872         $ 69,853        $ 63,548        $ 66,574       $  76,576
Long-term debt, net of current portion                    $  5,276         $  2,896        $  3,290        $  2,368       $   7,211
Working capital                                           $ 39,032         $ 34,900        $ 31,332        $ 28,375       $  33,662





                                       16






QUARTERLY FINANCIAL DATA:
(unaudited) (In thousands, except per share amounts)


                                                                                  BASIC                  DILUTED
                                                           NET (LOSS)     NET INCOME/ (LOSS)        NET INCOME/ (LOSS)
   QUARTER ENDED       NET SALES        GROSS PROFIT        /INCOME           PER SHARE (1)           PER SHARE (1)
   -------------       ---------        ------------        -------           ---------               ----------
Fiscal 2005
-----------


September              $ 16,928          $  5,292            $  600           $ 0.07                   $  0.07

December                 16,229             5,670               766             0.09                      0.09

March                    18,991             6,667             1,380             0.16                      0.16

June                     20,817             6,953             1,522             0.18                      0.17
                     ---------------  -----------------  ---------------  ----------------------  -----------------------
   Fiscal Year        $  72,965          $ 24,582           $ 4,268           $ 0.51                   $  0.49
                     ---------------  -----------------  ---------------  ----------------------  -----------------------

Fiscal 2004
-----------

September            $   12,549          $  2,876           $  (783)          $(0.10)                  $ (0.10)

December                 13,516             3,643              (446)           (0.05)                    (0.05)

March                    16,109             5,313               315             0.04                      0.04

June                     19,009             8,605             3,090             0.38                      0.36
                     ---------------  -----------------  ---------------  ----------------------  -----------------------
   Fiscal Year       $   61,183          $ 20,437           $ 2,176           $ 0.27                   $  0.25
                     ---------------  -----------------  ---------------  ----------------------  -----------------------



(1)  Earnings per share amounts for each quarter are required to be computed
     independently. As a result, the sum may differ from the total year earnings
     per share amounts.

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

        The following information should be read in conjunction with the
Consolidated Financial Statements and Notes thereto and other information set
forth following Item 15 of this Report. See also "CAUTIONARY STATEMENTS
REGARDING FORWARD-LOOKING STATEMENTS" in Part I of this Report.

           GENERAL

        Sales for fiscal year 2005 reached the highest levels since fiscal year
2001, increasing by 19% over the levels recorded in fiscal year 2004. The
Company experienced increased sales to customers in all of the Company's major
markets, particularly the wireless infrastructure and medical equipment markets.
Management believes that these increases resulted from improved market
conditions, increased market share and the growth in sales of new products.

        In response to customers' requirements for shorter lead times and faster
deliveries, the Company has increased its inventories of finished goods of
certain products. The Company believes that this practice has led to increased
orders from certain customers and greater market share.

        Gross margins improved in fiscal year 2005 compared to fiscal year 2004,
as operating at higher volumes enabled the Company to realize efficiencies of
scale. Some of the increased demand was met using available capacity on existing
machinery. However, the Company also expanded capacity to meet some of the
increased demand and to position itself for additional growth. As a result,
fixed overhead increased which offset some of the improvement in gross margin.
Gross margin improvements were also tempered by increased levels of scrap during
fiscal year 2005.



                                       17




        The increase in sales and production efficiencies have resulted in six
straight quarters of profitability. Newer product lines continue to grow and
become more significant contributors to the Company's revenues with several now
operating at or above breakeven. The Company continues to look for ways to grow
all product lines by finding new markets and applications, improving their
performance or reducing the cost to manufacture them.

        Pricing continues to be an important factor in obtaining orders for
certain products. To the extent the Company can reduce the costs to produce
these products, it can compete more effectively. The Company devotes
considerable effort to research and development designed to effect process
improvements. Research and development expense decreased in fiscal year 2005
compared to fiscal year 2004, due to certain personnel being redesignated as
production support as certain projects entered the production stage.

        Bookings continued to grow during fiscal year 2005, particularly with
respect to our newer product lines. The increases in bookings resulted from
strong demand from the wireless infrastructure, semiconductor equipment,
military and medical markets.

        The Company has funded its expansion with funds from operations and
borrowings against its credit facilities. During fiscal year 2005, the Company
expanded its credit facility with General Electric Capital Corporation ("GECC")
from $4,000,000 to $6,000,000, of which $5,000,000 remains available for the
purchase of equipment, and secured an additional $5,000,000 line of credit with
Commerce Bank N.A. against which $2,000,000 has been borrowed and repaid.

           RESULTS OF OPERATIONS

KEY COMPARATIVE PERFORMANCE INDICATORS


                                                  Fiscal Year Ended
                                     -------------------------------------------
                                       June 30, 2005           June 30, 2004
                                     -------------------    --------------------
          Sales                        $   72,965,000         $   61,183,000
          Bookings                     $   73,419,000         $   65,517,000

          Gross Margin                 $   24,582,000         $   20,437,000
          Gross Margin                       33.7  %                33.4  %

          Operating Expenses           $   18,115,000         $   17,909,000
          Operating Expenses                 24.8  %                29.3  %


SIGNIFICANT HIGHLIGHTS

         Sales and Bookings for the twelve months ended June 30, 2005 increased
19% and 12%, respectively, over the prior fiscal year.





                                       18




              FISCAL YEAR 2005 COMPARED WITH FISCAL YEAR 2004

        Net sales for the fiscal year ended June 30, 2005 were $72,965,000, an
increase of 19% from the $61,183,000 recorded in the fiscal year ended June 30,
2004. Domestic sales increased by 20% to $38,819,000 in fiscal year 2005 from
$32,234,000 in fiscal year 2004. International sales increased by 18% to
$34,146,000 in fiscal year 2005 from $28,949,000 in fiscal year 2004. The
increase in sales is due to the improved business climate in a majority of the
markets the Company serves, increased market penetration and growth in sales of
newer product lines. Sales growth was particularly significant in the wireless
infrastructure and semiconductor equipment markets in the second half of fiscal
year 2005.

        Bookings have improved significantly from the levels experienced in
fiscal year 2004. Total bookings in fiscal year 2005 were $73,419,000, compared
to $65,517,000 in fiscal year 2004, representing an increase of approximately
12%. Growth has come from a majority of the markets the Company serves, but was
particularly strong in the wireless infrastructure and semiconductor equipment
markets.

        Gross margins were 34% of net sales in fiscal year 2005, compared to 33%
in fiscal year 2004. The increase in gross margins is attributable to higher
sales volume and the economics associated with higher production volumes, offset
in part by increased fixed overhead and increased levels of scrap. During fiscal
year 2005, the Company continued to expand its capacity in order to meet the
increased demand for its products and to accommodate expected future growth
resulting in increased fixed costs.

        Operating expenses totaled $18,115,000, or 25% of net sales, in fiscal
year 2005, compared to $17,909,000, or 29% of net sales, in fiscal year 2004.
The increase in operating expenses in absolute terms compared to the prior
fiscal year is attributable to increased sales staff in response to increased
booking and quoting activity and increased commissions, partially offset by
lower research and development expense. The trend toward customers moving
production offshore has continued. Accordingly, a growing portion of the
Company's sales are to customers in Asia and Europe. Consequently, the Company
continues to expand its foreign sales offices in China and Europe to better
service its customers.

        Research and development expenses for the fiscal year ended June 30,
2005 decreased 30% to $2,161,000, compared to $3,067,000 in the prior fiscal
year. The decrease was primarily the result of redesignation of certain research
and development personnel to production support in connection with the
maturation of certain new products from the development stage to commercial
acceptance.

        The effective income tax rate for fiscal year 2005 was approximately
29%, as compared to 2% for fiscal year 2004. In fiscal year 2005, the Company's
effective tax rate was favorably impacted primarily by Extraterritorial Income
Exclusion benefits and benefits from State tax law changes. In fiscal year 2004,
the Company benefited from the reduction of tax reserves due to audit
settlements and updated evaluations and the impact of foreign tax benefits in
relation to the lower level of pre-tax income.

        As a result of the foregoing, the Company reported a net income of
$4,268,000, or $0.51 per common share and $0.49 per common share assuming
dilution, for fiscal year 2005, compared to a net income of $2,176,000, or $0.27
per common share and $0.25 per common share assuming dilution, for fiscal year
2004.

           FISCAL YEAR 2004 COMPARED WITH FISCAL YEAR 2003

        Net sales for the fiscal year ended June 30, 2004 were $61,183,000, an
increase of 25% from the $49,048,000 recorded in the fiscal year ended June 30,
2003. Domestic sales increased by 12% to $32,234,000 in fiscal year 2004 from
$28,697,000 in fiscal year 2003. International sales increased by 42% to
$28,949,000 in fiscal year 2004 from $20,351,000 in fiscal year 2003. The
increase in sales was due to the improved business climate in a majority of the
markets the Company serves. Sales growth was particularly significant in the
wireless infrastructure and semiconductor equipment markets in the second half
of fiscal year 2004.




                                       19




        Bookings improved significantly from the levels experienced in fiscal
year 2003. Total bookings in fiscal year 2004 were $65,517,000, compared to
$48,767,000 in fiscal year 2003, representing an increase of approximately 34%.
Growth came from a majority of the markets the Company serves, but was
particularly strong in the wireless infrastructure and semiconductor equipment
markets.

        Gross margins were 33% of net sales in fiscal year 2004, compared to 29%
in fiscal year 2003. The increase in gross margins was attributable to higher
sales volume and the economics associated with higher production volumes,
partially offset by increased labor and medical expenses and decreased precious
metal recovery. In response to increased booking and quoting activity, the
Company began increasing headcount in production and sales toward the end of
fiscal year 2003 in order to increase capacity. The additions to headcount
accelerated as bookings and quoting activity increased throughout fiscal year
2004. In addition, during fiscal year 2004, the Company incurred unusually high
medical expenses, which reduced gross margins.

        Operating expenses totaled $17,909,000, or 29% of net sales, in fiscal
year 2004, compared to $15,087,000, or 31% of net sales, in fiscal year 2003.
The increase in operating expenses in absolute terms compared to the prior
fiscal year was attributable to increased sales staff in response to increased
booking and quoting activity and increased commissions. The trend toward
customers moving production offshore has continued. Accordingly, a growing
portion of the Company's sales are to customers in Asia and Europe.
Consequently, the Company continues to expand its foreign sales offices in China
and Europe to better service its customers.

        Research and development expenses for the fiscal year ended June 30,
2004 increased 11% to $3,067,000, compared to $2,766,000 in the prior fiscal
year. The Company has put additional emphasis on the development of new products
and processes related to its core product lines.

        The effective income tax rate for fiscal year 2004 was approximately 2%,
as compared to 50% for fiscal year 2003. The decrease in the effective income
tax rate was primarily due to the impact of foreign tax benefits in relation to
the level of pre-tax income and the reduction of tax reserves due to audit
settlements and updated evaluations.

        As a result of the foregoing, the Company reported a net income of
$2,176,000, or $0.27 per common share and $0.25 per common share assuming
dilution, for fiscal year 2004, compared to a net loss of $501,000, or $0.06 per
common (and diluted) share, for fiscal year 2003.

              LIQUIDITY AND CAPITAL RESOURCES

                                          June 30, 2005           June 30, 2004
                                       --------------------    -----------------
Cash and Investments                     $      6,950,000        $    7,042,000
Working Capital                          $     39,032,000        $   34,900,000
Operating Cash Flow                      $      4,741,000        $      (93,000)
Capital Expenditures                     $      8,784,000        $    4,506,000
Depreciation and Amortization            $      5,383,000        $    5,152,000

Current Ratio                                  5.3:1                   5.1:1
Quick Ratio                                    1.9:1                   2.0:1


        The Company's financial position at June 30, 2005 remains strong as
evidenced by working capital of $39,032,000, compared to working capital of
$34,900,000 at June 30, 2004. The Company's current ratio and quick ratio at
June 30, 2005 remain strong although the quick ratio is slightly lower than at
June 30, 2004. The increase in the current ratio is primarily due to an increase
in inventory to support higher sales levels. The decline in the quick ratio is
primarily due to a small decline in accounts receivable combined with a small
increase in current liabilities.



                                       20




        Cash and investments decreased to $6,950,000 at June 30, 2005, compared
to $7,042,000 at June 30, 2004. The decrease in cash and investments is
primarily the result of capital expenditures and cash used for working capital
to support increased levels of business in excess of borrowings. Accounts
receivable decreased by $555,000 to $10,008,000 at June 30 2005, compared to
$10,563,000 at June 30, 2004. The decrease is primarily due to improved
collection efforts. Inventories increased by $5,272,000 to $27,540,000 at June
30, 2005, compared to $22,268,000 at June 30, 2004, primarily as a result of
precious metal purchases during the year and increases to finished goods
inventories to support higher sales levels. The precious metal purchases were
made in anticipation of future production requirements and potential price
increases. The Company continues to maintain high finished goods inventory
levels to keep customer lead times to a minimum and maintain good customer
service.

        Accounts payable increased by $384,000, to $2,449,000 at June 30, 2005
compared to $2,065,000 at June 30, 2004, due in part to increased purchasing
activity to keep pace with higher production levels and in part to capital
expenditures. Accrued expenses increased by $482,000 to $5,589,000 at June 30,
2005, compared to $5,107,000 at June 30, 2004, due to the timing of payments
relating to vacation pay and payroll taxes as well as increased commission
accruals as the result of increased bookings and sales and increased bonus
accruals as a result of improved profits. Income taxes payable decreased
$1,070,000 to $14,000 income tax receivable at June 30, 2005 compared to
$1,049,000 income tax payable at June 30, 2004, primarily due to estimated tax
payments.

        The Company leases its facility in Jacksonville, Florida from a
partnership controlled by the Company's President, Chief Executive Officer and
principal stockholder under a capital lease. The rental payments under this
lease have been adjusted several times, primarily to reflect certain additions
to the facility and market value adjustments as required by the terms of the
lease based upon independent appraisals and for Consumer Price Index
adjustments. See "Item 2. PROPERTIES." The Company is currently obligated to pay
approximately $756,000 per annum under this lease. The payments due over the
remaining six years of this capital lease, including the portion related to
interest, total approximately $3,969,000. See "Item 13. CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS" and Note 4 of Notes to Consolidated Financial
Statements.

        In April 2004, the Company entered into a $4,000,000 credit facility
with General Electric Capital Corporation for the purchase of equipment. In May
2005, the credit facility was increased to $6,000,000. Borrowings under the line
bear interest, at the Company's option, at either a fixed rate of 3.47% above
the five year Treasury Bond yield at the time of election or a floating rate of
3.65% above LIBOR. Borrowings under the line are secured by the equipment
purchased thereunder. Each separate borrowing under the line will be a fully
amortizing term loan with a maturity of five years from the date the funds are
drawn down. The line of credit will expire on March 10, 2006. GECC has the
option to securitize these loans with a third party. Loans securitized with a
third party increase the available line of credit to the Company. As of June 30,
2005, the Company had $3,483,000 of borrowings outstanding under this facility
and, as a result of third party securitizations, $5,000,000 available to borrow.

        In December 2004, the Company entered into a credit facility with
Commerce Bank, N.A. Under the terms of this facility, the Company may request
advances from time to time up to an aggregate of $5,000,000. Any advance made
bears interest at the Prime Rate as reported in the Wall Street Journal.
Borrowings under the facility are secured by a lien on the Company's accounts
receivable and inventory. Each borrowing under the line will expire on November
30, 2005. The facility is subject to certain financial covenants, including
minimum tangible net worth and liability percentage ratios. As of June 30, 2005,
the Company had no outstanding borrowings under this credit facility.

        In September 2005, the Company's wholly-owned subsidiary in Sweden
obtained a series of five term loans aggregating 12,000,000 Swedish Krona
("SEK") (approximately $1,700,000) from Svenska Handelsbanken, AB
("Handelsbanken"). The loans are unsecured and bear interest at fixed rates
ranging from 3.56% to 4.59%. The five loans are each for a principal amount of
2,400,000 SEK and are fully amortizing. The loans mature in one to five years
with the first maturing on September 30, 2006 and one other maturing on each
succeeding September 30th through 2010. In connection with, and as an inducement
to Handelsbanken to make the loans, the Company entered into a Guaranty and
Agreement with the Handelsbanken whereby the Company has agreed to guarantee the
payment of all its Swedish subsidiary's obligations under the loans.



                                       21




        Capital expenditures for the fiscal year ended June 30, 2005, totaled
$8,784,000, including expenditures for buildings, machinery and equipment and
planned leasehold improvements. The Company intends to use cash on hand, cash
generated through operations and available credit to finance budgeted capital
expenditures, primarily for equipment acquisition, of approximately $6,500,000
in fiscal year 2006.

        Aggregate contractual obligations as of June 30, 2005 mature as follows:



                                                                            Payments Due by Period
                                         -------------------------------------------------------------------------------------------
                                                                  Less
                                                                 than 1              1- 3                4- 5              After 5
Contractual Obligations                      Total                year               years               years              years
-------------------------------------    ---------------     ---------------    ----------------    ----------------    ------------

Bank Debt                                $  4,102,000        $     895,000      $   1,791,000        $  1,416,000       $        ---

Capital Lease Obligations                $  3,969,000        $     756,000      $   1,512,000        $  1,512,000       $    189,000

Operating Leases                         $  1,135,000        $     493,000      $     627,000        $     15,000       $        ---

Purchase Obligations                     $  3,365,000        $   3,365,000      $         ---        $        ---       $        ---
                                         ---------------     ---------------    ----------------    ----------------    ------------
Total Contractual Obligations            $ 12,571,000        $   5,509,000      $   3,930,000        $  2,943,000       $    189,000
                                         ===============     ===============    ================    ================    ============


        The Company routinely enters into binding and non-binding purchase
obligations in the ordinary course of business, primarily covering anticipated
purchases of inventory and equipment. The terms of these commitments generally
do not extend beyond six months. None of these obligations are individually
significant. The Company does not expect that these commitments will materially
adversely affect its liquidity in the foreseeable future.

     CRITICAL ACCOUNTING POLICIES

        The Securities and Exchange Commission ("SEC") has issued disclosure
guidance for "critical accounting policies." The SEC defines "critical
accounting policies" as those that require the application of management's most
difficult, subjective or complex judgments, often as a result of the need to
make estimates about the effect of matters that are inherently uncertain and may
change in subsequent periods. The Company's significant accounting policies are
described in Note 1 to its consolidated financial statements contained in "Item
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA" of this report. The Company
believes that the following accounting policies require the application of
management's most difficult, subjective or complex judgments:

           ALLOWANCES FOR DOUBTFUL ACCOUNTS RECEIVABLE

        The Company performs ongoing credit evaluations of its customers and
adjusts credit limits based upon payment history and a customer's current
creditworthiness, as determined by its review of the customer's current credit
information. The Company continuously monitors collections and payments from its
customers and maintains an allowance for estimated credit losses based upon its
historical experience and any specific customer collection issues that the
Company has identified. While such credit losses have historically been within
the Company's expectations and the allowances established, the Company cannot
guarantee that it will continue to experience the same credit loss rates that it
has in the past. Should the financial position of its customers deteriorate
resulting in an impairment of their ability to pay amounts due, the Company's
revised estimate of such losses and any actual losses in excess of previous
estimates may negatively impact its operating results.

           SALES RETURNS AND ALLOWANCES

        In the ordinary course of business, the Company accepts returns of
products sold for various reasons and grants sales allowances to customers.
While the Company engages in extensive product quality control programs and
processes, its level of sales returns is affected by, among other things, the
quality of its manufacturing processes. The Company maintains an allowance for
sales returns and allowances based upon historical returns and allowances
granted. While such returns and allowances have historically been within the
Company's expectations, actual return and allowance rates in the future may
differ from current estimates, which could negatively impact its operating
results.



                                       22




           INVENTORY VALUATION

        The Company values inventory at the lower of aggregate cost (first-in,
first-out) or market. When the cost of inventory is determined by management to
be in excess of its market value, such inventory is written down to its
estimated net realizable value. This requires the Company to make estimates and
assumptions about several factors (e.g., future sales quantities and selling
prices, and percentage complete and failure rates for work in process) based
upon historical experience and its projections for future periods. Changes in
factors such as the level of order bookings, the product mix of order bookings
and the Company's manufacturing processes could have a material impact on the
Company's assessment of the net realizable value of inventory in the future.

           VALUATION OF DEFERRED TAX ASSETS

        The Company regularly evaluates its ability to recover the reported
amount of its deferred income taxes considering several factors, including its
estimate of the likelihood of the Company generating sufficient taxable income
in future years during the period over which temporary differences reverse.
Management also considers the expected reversal of deferred tax liabilities, the
Company's historic taxable income and tax planning strategies in making this
assessment. Based upon the level of historical taxable income and the expected
future taxable income over the periods in which the deferred tax assets are
deductible as well as reversals of deferred tax liabilities, management
believes, although there can be no assurance, that it is more likely than not
that the Company will realize the net benefits of these deductible differences.
The Company has available State net operating loss carry forwards in Florida,
which expire in various years through 2025. Due to uncertainties about the
realization of these loss carryforwards, a valuation allowance has been provided
against the associated deferred tax asset. In the event that actual results
differ from its estimates, or the Company adjusts these estimates in future
periods, the Company may need to establish additional valuation allowances
against a portion or all of its deferred tax assets, which could materially
impact its financial position or results of operations in future periods.

           VALUATION OF LONG-LIVED ASSETS

        The Company assesses the recoverability of long-lived assets whenever
the Company determines that events or changes in circumstances indicate that the
carrying amount may not be recoverable. Its assessment is primarily based upon
its estimate of future cash flows associated with these assets. The Company
believes that the carrying amount of its long-lived assets is recoverable.
However, should its operating results deteriorate, or anticipated new product
launches not occur or not attain the commercial acceptance that the Company
anticipates, the Company may determine that some portion of its long-lived
assets are impaired. Such determination could result in non-cash charges to
income that could materially affect the Company's financial position or results
of operations for that period.

           INFLATION

        The Company does not expect the effects of inflation to have a
significant impact on its liquidity or results of operations.




                                       23




           ACCOUNTING STANDARDS ISSUED BUT NOT YET ADOPTED

        In December 2004, the Financial Accounting Standard Board ("FASB")
issued Statement of Financial Accounting Standards No. 123 (revised 2004),
"Share-Based Payment" ("SFAS No. 123 (R)"). This Statement is a revision of FASB
Statement No. 123, "Accounting for Stock-Based Compensation." SFAS No. 123 (R)
supersedes Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" ("APB No. 25"), and its related implementation guidance.
SFAS No. 123 (R) establishes standards for the accounting for transactions in
which an entity exchanges its equity instruments for goods or services. It also
addresses transactions in which an entity incurs liabilities in exchange for
goods or services that are based on the fair value of the entity's equity
instruments, or that may be settled by the issuance of those equity instruments.
The provisions of SFAS No. 123 (R) shall be effective as of the beginning of the
first annual reporting period that begins after June 15, 2005. The Company will
adopt SFAS No. 123 (R) effective July 1, 2005. The adoption of this standard
will increase compensation expense to the extent the requisite service has not
yet been rendered for options granted prior to July 1, 2003 that are accounted
for under the intrinsic value method. Management has not yet determined the
effect SFAS No. 123 (R) will have on the Company's consolidated results of
operations or financial position.

        In November 2004, the FASB issued Statement of Financial Accounting
Standards No. 151 "Inventory Costs - an amendment of ARB No. 43, Chapter 4"
("SFAS No. 151"). SFAS No. 151 amends the guidance in ARB No. 43, Chapter 4,
"Inventory Pricing," to clarify the accounting for abnormal amounts of idle
facility expense, freight, handling costs and wasted material (spoilage). SFAS
No. 151 requires that those items be recognized as current period charges
regardless of whether they meet the criterion of "so abnormal." In addition,
SFAS No. 151 requires that allocation of fixed production overhead to the costs
of conversion be based on the normal capacity of the production facilities. The
provisions of SFAS No. 151 shall be effective for inventory costs incurred
during fiscal years beginning after June 15, 2005. The Company will adopt SFAS
No. 151 effective July 1, 2005. The adoption of this standard is not expected to
have a material impact on the Company's consolidated results of operations or
financial position.

        On December 31, 2004, the FASB issued Staff Position No. FAS 109-2,
"Application of FASB Statement No. 109, Accounting for Income Taxes, to the Tax
Deduction on Qualified Production Activities Provided by the American Jobs
Creation Act of 2004" ("FSP No. 109-1"), and Staff Position No. 109-2,
"Accounting and Disclosure Guidance for the Foreign Earnings Repatriation
Provision within the American Jobs Creation Act of 2004" ("FSP No. 109-2").
These staff positions provide accounting guidance on how companies should
account for the effects for the American Jobs Creation Act of 2004 ("AJCA") that
was signed into law on October 22, 2004. FSP No. 109-1 states that the tax
relief (special tax deduction for domestic manufacturing) from this legislation
should be accounted for as a "special deduction" instead of a tax rate
reduction. FSP No. 109-2 gives a company additional time to evaluate the effects
of the legislation on any plan for reinvestment or repatriation of foreign
earnings for purposes of applying FASB Statement No. 109. The Company is
currently assessing the repatriation provision to determine whether it might
repatriate extraordinary dividends, as defined in the AJCA. The Company expects
to complete this evaluation within a reasonable amount of time after additional
guidance from the United States Treasury is published.



                                       24




ITEM 7A.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        The Company has identified four market risks relative to its business:
foreign currency exchange rate risk, commodity price risk, security price risk
and interest rate risk. The Company has managed its market risk exposures in
order to minimize their potential impact on its consolidated financial condition
and results of operations. Specifically:

     a)  Foreign currency exchange rate risk. With the exception of transactions
         by the Company's wholly-owned subsidiary in Sweden (which are
         denominated in Krona), all transactions are, and are anticipated to be,
         denominated in U.S. Dollars. Fluctuations in exchange rates could
         impact revenues with an offsetting impact on costs and expenses. The
         Company does not believe that the impact on net earnings of a 10% shift
         in exchange rates would be material.

     b)  Commodity price risk. The Company uses certain precious metals in the
         manufacturing of its products (primarily palladium, gold and silver),
         and is therefore subject to certain commodity price risks. The price of
         precious metals have begun to rise due to the higher demand coming from
         the electronics industry and other industries. Consequently, the
         Company has purchased a quantity of these metals to protect against
         rising prices. The Company believes that, based upon its current levels
         of production and inventories of precious metals, it has a sufficient
         supply of precious metals such that the Company would not have to buy
         any additional quantities for the next six months.

     c)  Security price risk. The Company's current portfolio of marketable
         securities consists of U.S. Treasury notes and other government
         securities with maturities of less than one year. The Company believes
         it can effectively manage any exposure resulting from declining prices
         by holding any securities which decline substantially in value until
         maturity.

     d)  Interest rate risk. The Company earns interest income on cash and
         investment balances and pays interest on debt incurred. In light of the
         Company's existing cash, results of operations, the terms of its debt
         obligations and projected capital needs, it does not believe that a 10%
         change in interest rates would have a significant impact on its
         consolidated financial position. See "Item 7. MANAGEMENT'S DISCUSSION
         AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS --
         LIQUIDITY AND CAPITAL RESOURCES."

ITEM 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

        The Company's Consolidated Financial Statements and the Notes thereto
begin on page F-2 of this report.

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

        None.

ITEM 9A.      CONTROLS AND PROCEDURES



                                       25


        Evaluation of Disclosure Controls and Procedures. In response to the
requirements of the Sarbanes-Oxley Act of 2002, within 90 days prior to the date
of this report (the "Evaluation Date"), the Company's President and Chief
Executive Officer and Vice President - Finance carried out an evaluation of the
effectiveness of the Company's "disclosure controls and procedures" (as defined
in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)). Based on
that evaluation, these officers concluded that, as of the Evaluation Date, the
Company's disclosure controls and procedures were adequate and effective to
ensure that material information relating to the Company and the Company's
consolidated subsidiaries was made known to them by others within those
entities, particularly during the period in which this report was being
prepared.

        Changes in Internal Controls. There were no changes in the Company's
internal controls over financial reporting, identified in connection with the
evaluation of such internal controls that occurred during the Company's last
fiscal quarter, that have materially affected, or are reasonably likely to
materially affect, the Company's internal controls over financial reporting.

ITEM 9B.         OTHER INFORMATION

        None.

                                    PART III

ITEM 10.         DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

        The information set forth under the captions "Election of Directors",
"Compliance with Section 16(a) of the "Exchange Act" and "Code of Ethics" in the
Company's Proxy Statement to be furnished in connection with its Annual Meeting
of Stockholders to be held November 15, 2005 is hereby incorporated by
reference.

ITEM 11.         EXECUTIVE COMPENSATION

        The information set forth under the caption "Executive Compensation" in
the Company's Proxy Statement to be furnished in connection with its Annual
Meeting of Stockholders to be held November 15, 2005 is hereby incorporated by
reference.

ITEM 12.         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        The information set forth under the caption "Security Ownership of
Certain Beneficial Owners and Management" and the information relating to
beneficial ownership of the Company's common stock in the table under the
caption "Election of Directors" in the Company's Proxy Statement to be furnished
in connection with its Annual Meeting of Stockholders to be held November 15,
2005 is hereby incorporated by reference. See also "Item 5. MARKET FOR COMPANY'S
COMMON STOCK, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES -- EQUITY COMPENSATION PLAN INFORMATION."

ITEM 13.         CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        The information set forth under the caption "Certain Relationships and
Related Transactions" in the Company's Proxy Statement to be furnished in
connection with its Annual Meeting of Stockholders to be held November 15, 2005
is hereby incorporated by reference.

ITEM 14.         PRINCIPAL ACCOUNTING FEES AND SERVICES

        The information set forth under the caption "Principal Accounting Fees
and Services" in the Company's Proxy Statement to be furnished in connection
with its Annual Meeting of Stockholders to be held November 15, 2005 is hereby
incorporated by reference.



                                       26




                                     PART IV


ITEM 15.          EXHIBITS AND FINANCIAL STATEMENT SCHEDULES




(A)  FINANCIAL STATEMENTS                                                               PAGE NO.
     --------------------                                                               --------

     Index to Consolidated Financial Statements .....................................      F
     Report of Independent Registered Public Accounting Firm   ......................      F-1
     Consolidated Financial Statements
           Balance Sheets as of June 30, 2005 and 2004 ..............................      F-2
           Statements of Operations
              Fiscal Years Ended June 30, 2005, 2004 and 2003 .......................      F-3
           Statements of Stockholders' Equity and Comprehensive Income (Loss)
              Fiscal Years Ended June 30, 2005, 2004 and 2003 .......................      F-4
           Statements of Cash Flows
              Fiscal Years Ended June 30, 2005, 2004 and 2003 .......................      F-5
           Notes to Consolidated Financial Statements ...............................      F-6


 (B) EXHIBITS

        Unless otherwise indicated, the following exhibits were filed as part of
the Company's Registration Statement on Form S-18 (No. 2-96925-NY) and are
incorporated herein by reference to the same exhibit thereto:

EXHIBIT NO.       DESCRIPTION
-----------       -----------

3.1           -   Certificate of Incorporation of the Company.

3.2           -   Amendment to Certificate of Incorporation.  (3)

3.3           -   By-laws of the Company.

9.1           -   Restated Shareholders' Agreement, dated April 15, 1985, among
                  Victor Insetta, Joseph Mezey, Joseph Colandrea and the
                  Company.

10.1          -   Lease, dated September 1, 2002, between Stepar Leasing, LLC
                  and the Company for premises at 15 Stepar Place, Huntington
                  Station, N.Y. (11)

10.2          -   Form of 1985 Employee Stock Sale Agreement between the Company
                  and various employees.

10.3          -   Form of Employee Stock Bonus Agreement, dated as of July 1,
                  1993, between the Company and various employees. (2)

10.4          -   Form of Employee Stock Bonus Agreement, dated as of April 19,
                  1994, between the Company and various employees. (2)

10.5          -   Form of Employee Stock Bonus Agreement, dated as of April 20,
                  1995, between the Company and various employees. (3)

10.6          -   Second Amended and Restated Lease, dated as of May 16, 2000,
                  between V.P.I. Properties Associates, d/b/a V.P.I. Properties
                  Associates, Ltd., and American Technical Ceramics (Florida),
                  Inc. (8)

10.7          -   Profit Bonus Plan, dated April 19, 1995, and effective for the
                  fiscal years beginning July 1, 1994. (3)



                                       27


10.8          -   Employment Agreement, dated April 3, 1985, between Victor
                  Insetta and the Company, and Amendments No. 1 through 4
                  thereto. (1)

10.9          -   Amendment No. 5, dated as of September 11, 1998, to Employment
                  Agreement between Victor Insetta and the Company. (4)

10.10         -   Amendment No. 6, dated as of January 3, 2001, to Employment
                  Agreement between Victor Insetta and the Company. (7)

10.11         -   Employment Agreement, dated October 1, 2003, between the
                  Company and Richard Monsorno. (13)

10.12         -   Managers Profit Bonus Plan, dated December 7, 1999 and
                  effective January 1, 2000. (6)

10.13         -   Officers Profit Bonus Plan, dated October 30, 2003 and
                  effective June 30, 1992. (13)

10.14         -   Consulting Agreement, dated January 1, 2004, between the
                  Company and Stuart P. Litt. (14)

10.15         -   Extension of Consulting Agreement, dated January 1, 2004,
                  between the Company and Stuart P. Litt. (17)

10.16         -   American Technical Ceramics Corp. 1997 Stock Option Plan. (4)

10.17         -   American Technical Ceramics Corp. 2000 Incentive Stock Plan.
                  (6)

10.18         -   Master Loan Agreement, dated April 2, 2004, between the
                  Company and General Electric Capital Corporation. (14)

10.19         -   Letter from General Electric Capital Corporation, dated as of
                  March 14, 2005. (16)

10.20         -   Second Amended and Restated Employment Agreement, dated as of
                  December 31, 2001, between Judah Wolf and the Company. (9)

10.21         -   Employment Agreement, dated January 1, 2004, between the
                  Company and David Ott. (14)

10.22         -   Severance Agreement, dated November 1, 2003, between the
                  Company and Kathleen Kelly. (13)

10.23         -   Severance Agreement, dated November 1, 2003, between the
                  Company and Andrew Perz. (13)

10.24         -   Severance Agreement, dated November 1, 2003, between the
                  Company and Harrison Tarver. (13)

10.25         -   Loan and Security Agreement, dated November 30, 2004, between
                  the Company and Commerce Bank N.A. (15)

10.26         -   Security Agreement, dated November 30, 2004, between American
                  Technical Ceramics (Florida) Inc., and Commerce Bank N.A. (15)

10.27         -   Surety Agreement, dated November 30, 2004, between American
                  Technical Ceramics (Florida) Inc., and Commerce Bank N.A. (15)

10.28         -   Victor Insetta Compensation Arrangement.  (16)



                                       28





10.29         -   Stuart Litt Consulting Arrangement.  (16)

10.30         -   Executive Compensation Arrangement.  (16)

10.31         -   Director Compensation Arrangement.  (16)

10.32         -   William Johnson Compensation Arrangement.  (17)

10.33         -   Financial Obligation, dated as of September 16, 2005, between
                  American Technical Ceramics Europe AB and Svenska
                  Handelsbanken, AB. (17) *

10.34         -   Guaranty and Agreement, dated as of September 9, 2005, between
                  the Company and Svenska Handelsbanken, AB. (17)

21.1          -   Subsidiaries of the Company. (10)

23.1          -   Consent of KPMG LLP. (17)

31.1          -   Section 302 Certification of Chief Executive Officer. (17)

31.2          -   Section 302 Certification of Principal Accounting Officer.
                  (17)

32.1          -   Section 906 Certification of Chief Executive Officer. (17)

32.2          -   Section 906 Certification of Principal Accounting Officer.
                  (17)

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

1.   Incorporated by reference to the Company's Annual Report on Form 10-K for
     the fiscal year ended June 30, 1993.

2.   Incorporated by reference to the Company's Annual Report on Form 10-KSB for
     the fiscal year ended June 30, 1994.

3.   Incorporated by reference to the Company's Annual Report on Form 10-KSB for
     the fiscal year ended June 30, 1995.

4.   Incorporated by reference to the Company's Annual Report on Form 10-K for
     the fiscal year ended June 30, 1997.

5.   Incorporated by reference to the Company's Annual Report on Form 10-K for
     the fiscal year ended June 30, 1998.

6.   Incorporated by reference to the Company's Annual Report on Form 10-K/A for
     the fiscal year ended June 30, 2000.

7.   Incorporated by reference to the Company's Annual Report on Form 10-Q for
     the quarterly period ended December 31, 2000.

8.   Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarterly period ended September 30, 2000.

9.   Incorporated by reference to the Company's Quarterly Report on Form 10-Q/A
     for the quarterly period ended March 31, 2002.



                                       29




10.  Incorporated by reference to the Company's Annual Report on Form 10-K for
     the fiscal year ended June 30, 2002.

11.  Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarterly period ended September 30, 2002.

12.  Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarterly period ended March 31, 2003.

13.  Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarterly period ended December 31, 2003.

14.  Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarterly period ended March 31, 2004.

15.  Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarterly period ended December 31, 2004.

16.  Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the quarterly period ended March 31, 2005.

17.  Filed herewith.

* Summary of document written in Swedish.


(C)  FINANCIAL STATEMENT SCHEDULES

         Schedules have been omitted since they either are not applicable, not
     required or the information is included elsewhere herein.



                                       30





                                   SIGNATURES

         PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE COMPANY HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.

                        AMERICAN TECHNICAL CERAMICS CORP.

                                              BY: /S/ VICTOR INSETTA
                                                  -------------------
                                                    VICTOR INSETTA
                                                       President


Dated:        October 4, 2005

         PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934,
THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
COMPANY IN THE CAPACITIES AND ON THE DATES INDICATED:




     NAME                                  TITLE                            DATE
     ----                                  -----                            ----


/S/ VICTOR INSETTA                  President and Director             October 4, 2005
---------------------------     (Principal Executive Officer)
 Victor Insetta


/S/ ANDREW R. PERZ                 Vice President - Finance            October 4, 2005
-------------------             (Principal Accounting Officer)
 Andrew R. Perz


/S/ STUART P. LITT                          Director                   October 4, 2005
------------------
 Stuart P. Litt


/S/ O. JULIAN GARRARD III                   Director                   October 4, 2005
-------------------------
 O. Julian Garrard III


/S/ CHESTER E. SPENCE                       Director                   October 4, 2005
---------------------
 Chester E. Spence


/S/ THOMAS J. VOLPE                         Director                   October 4, 2005
-------------------
 Thomas J. Volpe


/S/ DOV S. BACHARACH                        Director                   October 4, 2005
--------------------
 Dov S. Bacharach






                                       31





ITEM 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



               AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



                                                                                       Page Number
                                                                                       -----------


              Report of Independent Registered Public Accounting Firm   .................   F-1

              Consolidated Balance Sheets as of June 30, 2005 and 2004 .................    F-2

              Consolidated Statements of Operations
                 Fiscal Years Ended June 30, 2005, 2004 and 2003 .........................  F-3

              Consolidated Statements of Stockholders' Equity and
                 Comprehensive Income (Loss)
                 Fiscal Years Ended June 30, 2005, 2004 and 2003 .........................  F-4

              Consolidated Statements of Cash Flows
                 Fiscal Years Ended June 30, 2005, 2004 and 2003 .........................  F-5

              Notes to Consolidated Financial Statements .................................  F-6



                                        F



             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM






The Board of Directors and Stockholders
American Technical Ceramics Corp.:


We have audited the accompanying consolidated balance sheets of American
Technical Ceramics Corp. and subsidiaries (the Company) as of June 30, 2005 and
2004, and the related consolidated statements of operations, stockholders'
equity and comprehensive income (loss) and cash flows for each of the years in
the three-year period ended June 30, 2005. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (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 audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of American Technical
Ceramics Corp. and subsidiaries as of June 30, 2005 and 2004, and the results of
their operations and their cash flows for each of the years in the three-year
period ended June 30, 2005, in conformity with accounting principles generally
accepted in the United States of America.




                                  /S/ KPMG, LLP



Melville, New York
October 4, 2005





                                      F-1


               AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS



                                        ASSETS                                              JUNE 30, 2005         JUNE 30, 2004

                                                                                        ------------------    ------------------
CURRENT ASSETS
   Cash (including cash equivalents of $4,000 and
      $502,000, respectively)                                                           $      4,927,000      $      4,534,000
   Investments                                                                                 2,023,000             2,508,000
   Accounts receivable, (net of allowance for doubtful accounts
      of $300,000 and $470,000, respectively)                                                 10,008,000            10,563,000
   Inventories                                                                                27,540,000            22,268,000
   Deferred income taxes, net                                                                  2,668,000             2,777,000

   Prepaid and other current assets                                                            1,007,000               865,000
                                                                                        ------------------    ------------------
                                           TOTAL CURRENT ASSETS                               48,173,000            43,515,000
                                                                                        ------------------    ------------------

PROPERTY, PLANT AND EQUIPMENT

   Land                                                                                          738,000               738,000
   Buildings and leasehold improvements                                                       18,426,000            16,085,000
   Machinery and equipment                                                                    47,038,000            43,350,000
   Computer equipment and software                                                             7,187,000             6,309,000
   Furniture, fixtures and other                                                               3,256,000             1,751,000
                                                                                        ------------------    ------------------
                                                                                              76,645,000            68,233,000
   Less:   Accumulated depreciation and amortization                                          47,143,000            42,092,000
                                                                                        ------------------    ------------------
                                                                                              29,502,000            26,141,000
                                                                                        ------------------    ------------------
OTHER ASSETS
                                                                                                 197,000               197,000
                                                                                        ------------------    ------------------
                                           TOTAL ASSETS                                 $     77,872,000       $    69,853,000
                                                                                        ==================    ==================

                         LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
   Current portion of long-term debt
      (including related party debt of $437,000 and $394,000, respectively)             $      1,103,000       $       394,000
   Accounts payable                                                                            2,449,000             2,065,000
   Accrued expenses                                                                            5,589,000             5,107,000
   Income taxes payable                                                                              ---             1,049,000
                                                                                        ------------------    ------------------
                                           TOTAL CURRENT LIABILITIES                           9,141,000             8,615,000

LONG-TERM DEBT, NET OF CURRENT PORTION
     (including related party debt of $2,459,000 and $2,896,000, respectively)                 5,276,000             2,896,000
DEFERRED INCOME TAXES                                                                          3,308,000             3,515,000
                                                                                        ------------------    ------------------
                                           TOTAL LIABILITIES                                  17,725,000            15,026,000
                                                                                        ------------------    ------------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
   Common Stock -- $0.01 par value; authorized 20,000,000 shares; issued
      8,917,463 and 8,644,058 shares,
      outstanding 8,503,323 and 8,229,918  shares, respectively                                   89,000                86,000
   Capital in excess of par value                                                             13,466,000            12,051,000
   Retained earnings                                                                          48,114,000            43,846,000
   Accumulated  other comprehensive income:

      Unrealized loss on investments available-for-sale, net                                         ---                (5,000)
      Cumulative foreign currency translation adjustment                                         145,000               282,000
                                                                                        ------------------    ------------------
                                                                                                 145,000               277,000
                                                                                        ------------------    ------------------
    Less:   Treasury stock, at cost (414,140 and 414,140 shares, respectively)                 1,396,000             1,396,000
                                                                                        ------------------    ------------------

    Deferred compensation                                                                        271,000                37,000
                                                                                        ------------------    ------------------
                                           TOTAL STOCKHOLDERS' EQUITY                         60,147,000            54,827,000
                                                                                        ------------------    ------------------

                                                                                        $     77,872,000         $  69,853,000
                                                                                        ==================    ==================



See accompanying notes to consolidated financial statements.




                                      F-2



               AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FISCAL YEARS ENDED JUNE 30, 2005, 2004 AND 2003



                                                                           2005                     2004                   2003
                                                                           ----                     ----                   ----


Net sales                                                           $  72,965,000             $  61,183,000          $  49,048,000
Cost of sales                                                          48,383,000                40,746,000             34,716,000
                                                                    -------------------       -----------------      ---------------


     Gross profit                                                      24,582,000                20,437,000             14,332,000
                                                                    -------------------       -----------------      ---------------

Selling, general and administrative expenses                           15,935,000                14,815,000             11,972,000
Research and development expenses                                       2,161,000                 3,067,000              2,766,000
Other                                                                      19,000                    27,000                349,000
                                                                    -------------------       -----------------      ---------------
     Operating expenses                                                18,115,000                17,909,000             15,087,000
                                                                    -------------------       -----------------      ---------------


     Income/(loss) from operations                                      6,467,000                 2,528,000               (755,000)
                                                                    -------------------       -----------------      ---------------

Other expense (income)
     Interest expense                                                     475,000                   365,000                359,000
     Interest income                                                      (57,000)                  (68,000)              (109,000)
     Other                                                                  8,000                     2,000                    ---
                                                                    -------------------       -----------------      ---------------
                                                                          426,000                   299,000                250,000
                                                                    -------------------       -----------------      ---------------

     Income/(loss) before provision for income taxes                    6,041,000                 2,229,000             (1,005,000)


Provision for income taxes                                              1,773,000                    53,000               (504,000)
                                                                    -------------------       -----------------      ---------------
     Net Income/(loss)                                              $   4,268,000             $   2,176,000          $    (501,000)
                                                                    ===================       =================      ===============



Basic net income/(loss) per common share                            $        0.51              $       0.27          $       (0.06)


Diluted net income/(loss) per common share                          $        0.49              $       0.25          $       (0.06)
                                                                    -------------------       -----------------      ---------------
Basic weighted average common shares outstanding                        8,402,000                 8,132,000               8,074,000
                                                                    ===================       =================      ===============

                                                                    -------------------       -----------------      ---------------
Diluted weighted average common shares outstanding                      8,738,000                 8,583,000               8,074,000
                                                                    ===================       =================      ===============



See accompanying notes to consolidated financial statements.



                                      F-3


                                                                                                                 Accumulated
                                                                                 Capital in                         Other
                                         Comprehensive      Common   Stock        Excess of        Retained      Comprehensive
                                         Income/(Loss)    Shares       Amount     Par Value        Earnings      Income/(Loss)
                                         ---------------------------------------------------------------------------------------

BALANCE AT JUNE 30, 2002                                8,492,258    $ 85,000    $11,380,000     $42,171,000      $ (41,000)

Net loss                                 $ (501,000)        ---          ---         ---            (501,000)         ---

Tax benefit of stock options exercised        ---           ---          ---           2,000          ---             ---

Stock award compensation expense              ---           ---          ---          10,000          ---             ---

Exercise of stock options                     ---          10,500        ---          26,000          ---             ---
Other comprehensive income, net of tax:
   Unrealized losses on investments
     available-for-sale, net of
     reclassification adjustment             (5,000)
   Foreign currency translation
     adjustment                             222,000
                                         -----------
Other comprehensive income, net of tax      217,000         ---          ---         ---              ---           217,000
                                         -----------
Comprehensive loss                       $ (284,000)
                                         ===========----------------------------------------------------------------------------
BALANCE AT JUNE 30, 2003                                8,502,758    $ 85,000    $11,418,000     $41,670,000      $ 176,000

Net income                               $2,176,000         ---          ---         ---           2,176,000          ---

Tax benefit of stock options exercised        ---           ---          ---          55,000          ---             ---

Stock awards                                  ---          21,350        ---         190,000          ---             ---

Stock option compensation expense             ---           ---          ---          47,000          ---             ---

Exercise of stock options                     ---         119,950       1,000        341,000          ---             ---
Other comprehensive income, net of tax:
   Unrealized losses on investments
     available-for-sale, net of
     reclassification adjustment             (5,000)
   Foreign currency translation
     adjustment                             106,000
                                        -----------
Other comprehensive income, net of tax      101,000         ---          ---         ---              ---           101,000
                                        -----------

Comprehensive income                    $ 2,277,000
                                        ============----------------------------------------------------------------------------
BALANCE AT JUNE 30, 2004                                8,644,058    $ 86,000   $ 12,051,000     $43,846,000       $ 277,00

Net income                              $ 4,268,000         ---          ---         ---           4,268,000          ---

Tax benefit of stock options exercised        ---           ---          ---         215,000          ---             ---

Stock awards                                  ---          22,000        ---         120,000          ---             ---

Stock option compensation expense             ---           ---          ---         278,000          ---             ---

Exercise of stock options                     ---         251,405       3,000        802,000          ---             ---
Other comprehensive income, net of tax:
   Unrealized gain on investments
     available-for-sale, net of
     reclassification adjustment              5,000
   Foreign currency translation
     adjustment                            (137,000)
                                        -----------
Other comprehensive income, net of tax     (132,000)        ---          ---         ---             ---           (132,000)
                                        -----------
Comprehensive income                    $ 4,136,000
                                        ===========-----------------------------------------------------------------------------
BALANCE AT JUNE 30, 2005                                 8,917,463    $ 89,000    $13,466,000  $  48,114,000        $ 145,000
                                        ========================================================================================



                                                             Deferred
                                         Treasury Stock     Compensation    Total
                                        ---------------------------------------------------

BALANCE AT JUNE 30, 2002                  $ (1,403,000)        ---        $52,192,000

Net loss                                        ---            ---           (501,000)

Tax benefit of stock options exercised          ---            ---              2,000

Stock award compensation expense                 7,000         ---             17,000

Exercise of stock options                       ---            ---             26,000
Other comprehensive income, net of tax:
   Unrealized losses on investments
     available-for-sale, net of
     reclassification adjustment
   Foreign currency translation adjustment

Other comprehensive income, net of tax          ---            ---            217,000

Comprehensive loss
                                        -----------------------------------------------
BALANCE AT JUNE 30, 2003                  $ (1,396,000)     $  ---       $ 51,953,000

Net income                                      ---            ---          2,176,000

Tax benefit of stock options exercised          ---            ---             55,000

Stock awards                                    ---            ---            190,000

Stock option compensation expense               ---          (37,000)          10,000

Exercise of stock options                       ---            ---            342,000
Other comprehensive income, net of tax:
   Unrealized losses on investments
     available-for-sale, net of
     reclassification adjustment
   Foreign currency translation adjustment

Other comprehensive income, net of tax          ---           ---             101,000


Comprehensive income
                                        -----------------------------------------------
BALANCE AT JUNE 30, 2004                  $ (1,396,000)    $ (37,000)    $ 54,827,000

Net income                                      ---            ---          4,268,000

Tax benefit of stock options exercised          ---            ---            215,000

Stock awards                                    ---            ---            120,000

Stock option compensation expense               ---          (234,000)         44,000

Exercise of stock options                       ---            ---            805,000
Other comprehensive income, net of tax:
   Unrealized gain on investments
     available-for-sale, net of
     reclassification adjustment
   Foreign currency translation
     adjustment

Other comprehensive income, net of tax          ---            ---           (132,000)

Comprehensive income
                                        ----------------------------------------------
BALANCE AT JUNE 30, 2005                 $ (1,396,000)     $ (271,000)   $ 60,147,000
                                        ==============================================



See accompanying notes to consolidated financial statements.




                                      F-4


               AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FISCAL YEARS ENDED JUNE 30, 2005, 2004 AND 2003




CASH FLOWS FROM OPERATING ACTIVITIES:                                   2005                  2004                  2003
                                                                  -----------------    -------------------    ------------------

  Net income/(loss)                                               $    4,268,000        $   2,176,000          $   (501,000)
  Adjustments to reconcile net income/(loss) to net cash
   provided by/(used in)  operating activities:

       Depreciation and amortization                                   5,383,000            5,152,000             5,391,000

       (Gain)/loss on disposal of fixed assets                           (12,000)             373,000               459,000

       Stock based compensation expense                                  164,000              200,000                17,000

       Deferred income taxes                                             (99,000)            (570,000)              (45,000)

       Investment interest accretion, net                                (17,000)             (21,000)               (8,000)

       Realized loss on sale of investments                                7,000                2,000                  ---
  Changes in operating assets and liabilities:

       Accounts receivable, net                                          481,000           (3,749,000)             (393,000)

       Inventories                                                    (5,348,000)          (7,038,000)              273,000

       Other assets                                                     (147,000)            (224,000)            1,843,000
       Accounts payable, accrued expenses and
         income taxes payable                                             61,000            3,606,000               556,000
                                                                  -----------------    -------------------    ------------------
  Net cash provided by/(used in) operating activities                  4,741,000              (93,000)            7,592,000
                                                                  -----------------    -------------------    ------------------

CASH FLOWS FROM INVESTING ACTIVITIES:

       Capital expenditures                                           (8,784,000)          (4,506,000)           (1,861,000)

       Purchase of investments                                        (3,508,000)          (3,482,000)           (5,001,000)

       Proceeds from sale of investments                               4,010,000            3,997,000             5,000,000

       Proceeds from sale of fixed assets                                 49,000               22,000                18,000
                                                                  -----------------    -------------------    ------------------
  Net cash used in investing activities                               (8,233,000)          (3,969,000)           (1,844,000)
                                                                  -----------------    -------------------    ------------------

CASH FLOWS FROM FINANCING ACTIVITIES:

       Repayment of long-term debt                                    (2,661,000)            (355,000)           (4,436,000)

       Proceeds from exercise of stock options                           805,000              342,000                26,000

       Proceeds from issuance of debt                                  5,750,000                  ---                   ---
                                                                  -----------------    -------------------    ------------------
  Net cash provided by/(used in) financing activities
                                                                       3,894,000              (13,000)           (4,410,000)
                                                                  -----------------    -------------------    ------------------

       Effect of exchange rate changes on cash                            (9,000)             (76,000)              218,000
                                                                  -----------------    -------------------    ------------------


       Net increase/(decrease) in cash and cash equivalents              393,000           (4,151,000)            1,556,000


CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                           4,534,000            8,685,000             7,129,000
                                                                  -----------------    -------------------    ------------------
CASH AND CASH EQUIVALENTS, END OF YEAR
                                                                  $    4,927,000       $    4,534,000         $   8,685,000
                                                                  =================    ===================    ==================
Supplemental cash flow information:

        Interest paid                                             $      468,000        $     364,000         $     397,000
        Income taxes paid                                         $    2,764,000        $     237,000         $         ---




See accompanying notes to consolidated financial statements.



                                      F-5


               AMERICAN TECHNICAL CERAMICS CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

           DESCRIPTION OF BUSINESS AND NATURE OF OPERATIONS

        American Technical Ceramics Corp. and its wholly-owned subsidiaries (the
"Company") are engaged in the design, development, manufacture and sale of
electronic components, including ceramic multilayer capacitors and custom thin
film circuits. These products are primarily used for commercial and military
purposes in the United States and for export, primarily to Western Europe,
Canada and the Far East. In fiscal years 2005, 2004 and 2003, no one customer
accounted for more than 10% of consolidated net sales. The Company operates in
one industry segment - the electronic components industry.

           BASIS OF PRESENTATION

        The accompanying consolidated financial statements include the accounts
of American Technical Ceramics Corp. and its wholly-owned subsidiaries. All
intercompany balances and transactions have been eliminated in consolidation.
Certain insignificant reclassifications have been made to prior period financial
information or disclosure to conform to the current year presentation.

           REVENUE RECOGNITION

        The Company generates revenue from product sales to original equipment
manufacturers and resellers. The Company recognizes revenue when persuasive
evidence of an arrangement exists (which is evidenced by written purchase
arrangements), delivery has occurred and title has passed to the customer, the
selling price is fixed or determinable and collectibility of the resulting
receivable is reasonably assured. The Company does not perform any installation
services and does not have any post-shipment obligations. The Company typically
warranties that its products will be free from defects in material and
workmanship for 90 days. However, defective product may be accepted beyond this
period. The Company provides for estimated sales returns when the underlying
sale is made, based upon historical experience and known events or trends, in
accordance with Statement of Financial Accounting Standards No. 48, "Revenue
Recognition when Right of Return Exists". Historically, product returns and
associated warranty costs have not been significant. The Company generally does
not grant price protection. Shipping and handling fees charged to customers are
included in net sales, and related costs are included in cost of sales.

           CASH EQUIVALENTS

        The Company considers all highly liquid debt instruments with a maturity
of three months or less when purchased to be cash equivalents, including money
market accounts and certificates of deposit.

           INVESTMENTS

        The Company classifies its investments in debt and equity securities as
available-for-sale. Accordingly, these investments are reported at fair value
with unrealized holding gains and losses excluded from earnings and reported as
a component of accumulated other comprehensive income/loss within stockholders'
equity, net of tax. Classification of investments is determined at acquisition
and reassessed at each reporting date. Realized gains and losses are included in
the determination of net earnings at the time of sale and are derived using the
specific identification method for determining cost of securities sold.



                                      F-6


           INVENTORIES

        Inventories are stated at the lower of aggregate cost (first-in,
first-out) or market.

           COMPREHENSIVE INCOME

        The following table sets forth the components of the change in net
unrealized gains/(losses) on investments available-for-sale for the fiscal years
ended June 30, 2005, 2004 and 2003:



                                                                               2005                 2004               2003
                                                                          ----------------     ---------------    ----------------

          Unrealized holding losses
                     arising during the period, net of tax                $          ---          $ (7,000)         $  (5,000)

          Less: reclassification adjustment for
                     losses included in net income, net of tax                      5,000            2,000                ---
                                                                          ----------------     ---------------    ----------------

          Change in net unrealized gains/(losses) on
          investments available-for-sale                                  $        5,000       $    (5,000)          $ (5,000)
                                                                          ================     ===============    ================


        The deferred tax (benefit)/liability associated with unrealized holding
gains/(losses) arising during the fiscal years 2005, 2004 and 2003 was nil,
($3,000) and ($2,000), respectively. The tax benefit of the reclassification
adjustments for gains on sales of investments included in net income during
fiscal year 2005 was $3,000 and was nil for fiscal years 2004 and 2003.

           LONG-LIVED ASSETS

        Property, plant and equipment are stated at cost. Repairs and
maintenance costs are expensed as incurred. Depreciation and amortization are
provided primarily using the straight-line method over the estimated useful
lives of the related assets as follows:

Buildings                                                               30 years
Leasehold improvements             Lesser of the remaining lease term or 5 years
Machinery and equipment                                                 10 years
Computer equipment and software                                     2 to 5 years
Furniture, fixtures and other                                       3 to 8 years

        The Company reviews its long-lived assets for impairment whenever events
or circumstances indicate that the carrying amount of an asset may not be
recoverable. If the sum of the expected cash flows, undiscounted and without
interest, is less than the carrying amount of the asset, an impairment loss is
recognized as the amount by which the carrying amount of the asset exceeds its
fair value.



                                      F-7


           INCOME TAXES

        Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be realized or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.

           FOREIGN CURRENCY TRANSLATION

        The Company translates the financial statements of its foreign
subsidiaries (located in Sweden and China) by applying the current exchange rate
as of the balance sheet date to the assets and liabilities of the subsidiary and
a weighted average rate to such subsidiary's results of operations. The
resulting translation adjustment is recorded as a component of stockholders'
equity.

           STOCK-BASED COMPENSATION

        On July 1, 2003, the Company adopted Statement of Financial Accounting
Standards No. 123, "Accounting for Stock Based Compensation" ("SFAS No. 123"),
using the prospective method for the transition as permitted by Statement of
Financial Accounting Standards No. 148, "Accounting for Stock-Based Compensation
- Transition and Disclosure" ("SFAS No. 148"). Under the prospective method,
stock compensation expense will be recognized for any option grant or stock
award granted on or after July 1, 2003 based upon the award's fair value.
Outstanding stock options granted prior to July 1, 2003 will continue to be
accounted for under the intrinsic value method. Stock compensation expense for
new awards will be calculated using the Black-Scholes option pricing model to
estimate fair value.

        The average per-share fair value of stock options granted during fiscal
years 2005, 2004 and 2003 was $5.68, $5.85 and $2.50, respectively, as
determined by the Black-Scholes option pricing model (assuming a risk-free
interest rate of 3.79%, 3.30% and 3.23%, respectively, expected life of five
years, expected volatility of 69.3%, 71.5% and 71.5%, respectively, and no
dividends). The weighted average remaining contractual life of options
outstanding as of June 30, 2005 was 5.0 years.



                                      F-8


        Had compensation expense with respect to options and awards been
determined based on the fair value method on the date of grant consistent with
the methodology prescribed under SFAS No. 123 prior to July 1, 2003, the
Company's net income/(loss) and earnings/(loss) per share would have
approximated the pro forma amounts indicated below:



                                                                                      Year Ended June 30,
                                                              ----------------------------------------------------------------------
                                                                        2005                      2004                    2003
                                                              ----------------------     --------------------    -------------------

Net income/(loss), as reported                                    $     4,268,000          $     2,176,000        $       (501,000)
Add: Stock-based employee compensation expense
  included in reported net income, net of related tax effects             117,000                  154,000                  19,000
Deduct: Total stock-based employee compensation
  expense determined under fair value based method for all
  awards, net of related tax effects                                     (424,000)              (1,410,000)             (1,112,000)
                                                               ---------------------    --------------------     -------------------
Pro forma net income/(loss)                                       $     3,961,000          $       920,000        $     (1,594,000)
                                                               =====================    ====================     ===================
Income/(loss) per share:

    Basic - as reported                                           $          0.51          $          0.27        $          (0.06)

    Basic - pro forma                                             $          0.47          $          0.11        $          (0.20)

    Diluted - as reported                                         $          0.49          $          0.25        $          (0.06)

    Diluted - pro forma                                           $          0.45          $          0.11        $          (0.20)



        The weighted-average fair value of each stock option included in the
preceding pro forma amounts is estimated using the Black-Scholes option pricing
model and is amortized ratably over the vesting period of the options which is
typically four years.

              EARNINGS PER SHARE

        Basic earnings per share ("EPS") is computed by dividing income
available to common stockholders (which for the Company equals its net income)
by the weighted average number of common shares outstanding, and dilutive EPS
adds the dilutive effect of stock options and other common stock equivalents.
Antidilutive shares aggregating 372,000, 520,000 and 1,381,000, respectively,
have been omitted from the calculation of dilutive EPS for the fiscal years
ended June 30, 2005, 2004 and 2003, respectively. A reconciliation between
numerators and denominators of the basic and diluted earnings per share is as
follows:




                     YEAR ENDED JUNE 30, 2005             YEAR ENDED JUNE 30, 2004              YEAR ENDED JUNE 30, 2003
                     ------------------------             ------------------------              ------------------------
                   INCOME       SHARES     PER-SHARE    INCOME        SHARES     PER-SHARE    INCOME       SHARES     PER-SHARE
                (NUMERATOR)   (DENOMINATOR) AMOUNT    (NUMERATOR)   (DENOMINATOR) AMOUNT    (NUMERATOR)  (DENOMINATOR)  AMOUNT
                -----------   --------------------    -----------   --------------------    -----------   -------------------

Basic EPS         $4,268,000   8,402,000    $ 0.51     $2,176,000    8,132,000    $ 0.27     $(501,000)   8,074,000    $(0.06)

Effect of Dilutive
Securities:
Stock Options        --          328,000     (0.02)         --         444,000     (0.02)       --            --         --

 Stock Awards        --            8,000      --            --           7,000       --         --            --         --
                ------------- ------------ --------- -------------- ------------ --------- -------------- ----------- ---------

Diluted EPS       $4,268,000   8,738,000    $ 0.49    $2,176,000     8,583,000    $ 0.25     $(501,000)    8,074,000   $(0.06)
                ============= ============ ========= ============== ============ ========= ============== =========== =========





                                      F-9


           IMPACT OF NEW ACCOUNTING STANDARDS

        In December 2004, the Financial Accounting Standard Board ("FASB")
issued Statement of Financial Accounting Standards No. 123 (revised 2004),
"Share-Based Payment" ("SFAS No. 123 (R)"). This Statement is a revision of FASB
Statement No. 123, "Accounting for Stock-Based Compensation." SFAS No. 123 (R)
supersedes Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees" ("APB No. 25"), and its related implementation guidance.
SFAS No. 123 (R) establishes standards for the accounting for transactions in
which an entity exchanges its equity instruments for goods or services. It also
addresses transactions in which an entity incurs liabilities in exchange for
goods or services that are based on the fair value of the entity's equity
instruments, or that may be settled by the issuance of those equity instruments.
The provisions of SFAS No. 123 (R) shall be effective as of the beginning of the
first annual reporting period that begins after June 15, 2005. The Company will
adopt SFAS No. 123 (R) effective July 1, 2005. The adoption of this standard
will increase compensation expense to the extent the requisite service has not
yet been rendered for options granted prior to July 1, 2003 that are accounted
for under the intrinsic value method. Management has not yet determined the
effect SFAS No. 123 (R) will have on the Company's consolidated results of
operations or financial position.

        In November 2004, the FASB issued Statement of Financial Accounting
Standards No. 151 "Inventory Costs - an amendment of ARB No. 43, Chapter 4"
("SFAS No. 151"). SFAS No. 151 amends the guidance in ARB No. 43, Chapter 4,
"Inventory Pricing," to clarify the accounting for abnormal amounts of idle
facility expense, freight, handling costs and wasted material (spoilage). SFAS
No. 151 requires that those items be recognized as current period charges
regardless of whether they meet the criterion of "so abnormal." In addition,
SFAS No. 151 requires that allocation of fixed production overhead to the costs
of conversion be based on the normal capacity of the production facilities. The
provisions of SFAS No. 151 shall be effective for inventory costs incurred
during fiscal years beginning after June 15, 2005. The Company will adopt SFAS
No. 151 effective July 1, 2005. The adoption of this standard is not expected to
have a material impact on the Company's consolidated results of operations or
financial position.

        On December 31, 2004, the FASB issued Staff Position No. FAS 109-2,
"Application of FASB Statement No. 109, Accounting for Income Taxes, to the Tax
Deduction on Qualified Production Activities Provided by the American Jobs
Creation Act of 2004" ("FSP No. 109-1"), and Staff Position No. 109-2,
"Accounting and Disclosure Guidance for the Foreign Earnings Repatriation
Provision within the American Jobs Creation Act of 2004" ("FSP No. 109-2").
These staff positions provide accounting guidance on how companies should
account for the effects for the American Jobs Creation Act of 2004 ("AJCA") that
was signed into law on October 22, 2004. FSP No. 109-1 states that the tax
relief (special tax deduction for domestic manufacturing) from this legislation
should be accounted for as a "special deduction" instead of a tax rate
reduction. FSP No. 109-2 gives a company additional time to evaluate the effects
of the legislation on any plan for reinvestment or repatriation of foreign
earnings for purposes of applying FASB Statement No. 109. The Company is
currently assessing the repatriation provision to determine whether it might
repatriate extraordinary dividends, as defined in the AJCA. The Company expects
to complete this evaluation within a reasonable amount of time after additional
guidance from the United States Treasury is published.

              ACCOUNTING ESTIMATES

        The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Such estimates include, but are not limited to, provisions
for doubtful accounts receivable and sales returns, net realizable value of
inventory, and assessments of the recoverability of the Company's long lived
assets (including deferred taxes). Actual results could differ from those
estimates.



                                      F-10



              SUPPLEMENTAL CASH FLOW INFORMATION

        During fiscal year 2005, significant non-cash activities included (i) a
tax benefit of $215,000 resulting from stock options exercised, (ii)
compensation expense of $120,000 in connection with awards of an aggregate of
15,000 shares of common stock, and (iii) compensation expense of $44,000
recognized in connection with 38,000 stock options which will also result in
compensation expense of $122,000 to be recognized ratably over the next three
years.

        During fiscal year 2004, significant non-cash activities included (i) a
tax benefit of $55,000 resulting from stock options exercised, (ii) compensation
expense of $190,000 in connection with awards of an aggregate of 28,350 shares
of common stock, and (iii) compensation expense of $10,000 recognized in
connection with 13,000 stock options which will also result in compensation
expense of $37,000 to be recognized ratably over the next four years.

         During fiscal year 2003, significant non-cash activities included (i) a
tax benefit of $2,000 resulting from stock options exercised, (ii) compensation
expense of $17,000 in connection with awards of an aggregate of 7,000 shares of
common stock, (iii) amortization of interest income of $8,000 related to net
premiums on purchases of securities available for sale, and (iv) the adjustment
of a capital lease relating to the Company's Jacksonville, Florida facility to
reflect certain additions to the facility. The adjustment increased both fixed
assets and the related long-term debt by $1,437,000.

NOTE 2.       INVESTMENTS

        Investments consist of the following:



                                                          Gross Unrealized       Gross Unrealized
June 30, 2005                               Cost               Gains                  Losses               Fair Value
-------------                         -----------------  -------------------   ---------------------  ---------------------

U.S. Government obligations           $   1,024,000      $           ---        $          1,000       $   1,023,000
N.J. Municipal bonds                      1,000,000                  ---                     ---           1,000,000
                                      -----------------  -------------------   ---------------------  ---------------------
                                      $   2,024,000      $           ---        $          1,000       $   2,023,000
                                      =================  ===================   =====================  =====================


                                                          Gross Unrealized       Gross Unrealized
June 30, 2004                               Cost               Gains                  Losses               Fair Value
-------------                         -----------------  -------------------   ---------------------  ---------------------

U.S. Government obligations           $   2,016,000      $          ---        $           8,000         $  2,008,000
Bank Time Deposits                          500,000                 ---                      ---              500,000
                                      -----------------  -------------------   ---------------------  ---------------------
                                      $   2,516,000      $          ---        $           8,000         $  2,508,000
                                      =================  ===================   =====================  =====================


        All of the Company's investments at June 30, 2005 contractually mature
within one year.

NOTE 3.       INVENTORIES

        Inventories consist of the following:
                                          June 30, 2005          June 30, 2004
                                          -------------          -------------

Raw materials                           $  14,122,000          $  11,772,000
Work in process                             7,382,000              6,722,000
Finished goods                              6,036,000              3,774,000
                                      ------------------     ------------------
                                        $  27,540,000          $  22,268,000
                                      ==================     ==================



                                      F-11


      NOTE 4.     LONG-TERM DEBT

        Long-term debt consists of the following:


                                         June 30, 2005           June 30, 2004
                                         -------------           -------------

Notes payable to banks               $     3,483,000          $          ---
Obligations under capital leases           2,896,000               3,290,000
                                     ------------------      ------------------
                                           6,379,000               3,290,000
Less: Current portion                      1,103,000                 394,000
                                     ------------------      ------------------
     Long-term debt                  $     5,276,000          $    2,896,000
                                     ==================      ==================

              NOTES  PAYABLE TO BANKS

        In April 2004, the Company entered into a $4,000,000 credit facility
with General Electric Capital Corporation for the purchase of equipment. In May
2005, the credit facility was increased to $6,000,000. Borrowings under the line
bear interest, at the Company's option, at either a fixed rate of 3.47% above
the five year Treasury Bond yield at the time of election or a floating rate of
3.65% above LIBOR. Borrowings under the line are secured by the equipment
purchased thereunder. Each separate borrowing under the line will be a fully
amortizing term loan with a maturity of five years from the date the funds are
drawn down. The line of credit will expire on March 10, 2006. GECC has the
option to securitize these loans with a third party. Loans securitized with a
third party increase the available line of credit to the Company. As of June 30,
2005, the Company had $3,483,000 of borrowings outstanding under this facility
at fixed interest rates ranging from 7.15% and 7.31%. At June 30, 2005, the
Company has $5,000,000 available to borrow under this credit facility.

        In December 2004, the Company entered into a credit facility with
Commerce Bank, N.A. Under the terms of this facility, the Company may request
advances from time to time up to an aggregate of $5,000,000. Any advance made
bears interest at the Prime Rate as reported in the Wall Street Journal.
Borrowings under the facility are secured by a lien on the Company's accounts
receivable and inventory. Borrowings under the line expire on November 30, 2005.
The facility is subject to certain financial covenants, including minimum
tangible net worth and liability percentage ratios. As of June 30, 2005, the
Company had no outstanding borrowings under this credit facility.

The following table sets forth the contractual maturity of notes payable to
banks as of June 30, 2005:

                                                  2006         $      666,000
                                                  2007                716,000
                                                  2008                769,000
                                                  2009                826,000
                                                  2010                506,000
                                                               -----------------
                 Total minimum debt payments                        3,483,000
                 Less: Current portion                                666,000
                                                               -----------------
                                                               $    2,817,000
                                                               =================



                                      F-12


         In September 2005, the Company's wholly-owned subsidiary in Sweden
obtained a series of five term loans aggregating 12,000,000 Swedish Krona
("SEK") (approximately $1,700,000) from Svenska Handelsbanken, AB
("Handelsbanken"). The loans are unsecured and bear interest at fixed rates
ranging from 3.56% to 4.59%. The five loans are each for a principal amount of
2,400,000 SEK and are fully amortizing. The loans mature in one to five years
with the first maturing on September 30, 2006 and one other maturing on each
succeeding September 30th through 2010. In connection with, and as an inducement
to Handelsbanken to make the loans, the Company entered into a Guaranty and
Agreement with Handelsbanken whereby the Company has agreed to guarantee the
payment of all its Swedish subsidiary's obligations under the loans.

     OBLIGATIONS UNDER CAPITAL LEASES

         The Company leases an administrative office, manufacturing and research
and development complex located in Jacksonville, Florida (the "Jacksonville
Facility") from a partnership controlled by the Company's President, Chief
Executive Officer and principal stockholder under a capital lease. At June 30,
2005, the Jacksonville Facility has an aggregate cost of $5,104,000 and a net
book value of $1,959,000. The lease is for a period of 30 years, was capitalized
using an interest rate of 10.5% and expires on September 30, 2010. The lease
currently provides for base rent of approximately $756,000 per annum. The lease
further provides for annual increases in base rent for years beginning after May
1, 1999, based on the increase in the Consumer Price Index since May 1, 1998
applied to base rent. The lease also provides for increases to the base rent in
connection with any new construction at the Jacksonville Facility. Under the
lease, upon any new construction being placed into use, the base rental is
subject to increase to the fair market rental of the Jacksonville Facility,
including the new construction. In August 2002, the base monthly rental was
increased to approximately $60,000 for fiscal year 2003, effective September 1,
2002, to reflect the addition of a new manufacturing facility at the
Jacksonville Facility. In fiscal year 2002, the base rental was approximately
$43,000 per month.

         The following table sets forth the future minimum lease payments
(excluding contingent rental adjustments) under this capital lease by fiscal
year and the present value of the minimum lease payments as of June 30, 2005:

2006                                                    $         719,000
2007                                                              719,000
2008                                                              719,000
2009                                                              719,000
2010                                                              719,000
2011 and thereafter                                               180,000
                                                        --------------------
Total minimum lease payments                                    3,775,000
Less: Amount representing interest                                879,000
                                                        --------------------
Present value at June 30, 2005                                  2,896,000
Less: Current portion                                             437,000
                                                        --------------------
                                                        $       2,459,000
                                                        ====================

Contingent rentals of $32,000, $11,000 and nil were expensed during fiscal years
2005, 2004 and 2003, respectively.

NOTE 5.       INCOME TAXES

         The components of income/(loss) before income taxes are as follows:




                                                             Fiscal Years Ended June 30,
                                                --------------------------------------------------------
                                                     2005                2004                2003
                                                ---------------     ---------------     ----------------

                     Domestic                   $    5,577,000      $    1,940,000      $       (931,000)
                     Foreign                           464,000             289,000               (74,000)
                                                ---------------     ---------------     ----------------
                                                $    6,041,000      $    2,229,000      $     (1,005,000)
                                                ===============     ===============     ================




                                      F-13



              The provision for income taxes consists of the following:



                                                                  Years Ended June 30,
                                                  ------------------------------------------------------
                                                       2005               2004                2003
                                                  ---------------    ---------------     ---------------
CURRENT:

    Federal                                       $  1,737,000       $   951,000         $  (464,000)

    State                                               13,000          (110,000)              5,000

    Foreign                                            122,000          (218,000)              ---
                                                  ---------------    ---------------     ---------------
       Total current                                 1,872,000           623,000            (459,000)
                                                  ---------------    ---------------     ---------------

DEFERRED:

    Federal                                            (95,000)         (561,000)             (5,000)

    State                                              (38,000)             ---              (40,000)

    Foreign                                             34,000            (9,000)               ---
                                                  ---------------    ---------------     ---------------

       Total deferred                                  (99,000)         (570,000)            (45,000)
                                                  ---------------    ---------------     ---------------
                                                  $  1,773,000       $    53,000         $  (504,000)
                                                  ===============    ===============     ===============


         The following table reconciles the Federal statutory rate to the
Company's effective tax rate:


                                                                          Years Ended June 30,
                                                           ---------------------------------------------------
                                                               2005               2004               2003
                                                           --------------     -------------      -------------


Tax provision computed at statutory rate                          34.0%              34.0%           34.0%
State tax and State tax credit, net of Federal tax effect          0.9                1.1             2.3

FSC/EIE benefit                                                   (4.0)              (7.5)           12.4

Foreign tax                                                       (0.7)              (4.9)            ---
Changes in tax contingency estimates
  and audit settlements  (1)                                      (0.5)             (19.9)            ---

Deferred tax benefit from State tax law change                    (1.9)               ---             ---

Tax credits and other, net                                         1.5               (0.4)            1.4
                                                           --------------     -------------      -------------
                                                                  29.3%               2.4%           50.1%
                                                           ==============     =============      =============



         (1) The Company has undergone tax audits in various jurisdictions which
are substantially complete. In fiscal years 2005 and 2004, the Company
recognized benefits as a result of audit settlements and the reevaluation of
certain tax contingency estimates relating to these jurisdictions.




                                      F-14


        The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at June 30,
2005 and 2004, are presented below.



                                                                                            June 30,
                                                                             --------------------------------------
                                                                                    2005                2004
                                                                             -----------------     ----------------

Deferred tax assets:
   Allowance for doubtful accounts receivable
       and sales returns                                                     $      106,000        $      169,000
   Inventories                                                                    1,715,000             1,755,000
   Accrued expenses                                                                 737,000               606,000

    Unrealized loss on investments available for sale                                   ---                 3,000
   Net operating loss
       and tax credit carry forwards                                              1,457,000             1,553,000

    Other                                                                               ---                 6,000
                                                                             ------------------    -----------------
    Total deferred tax assets                                                     4,015,000             4,092,000
                                                                             ------------------    -----------------
    Valuation allowance                                                          (1,347,000)           (1,309,000)
                                                                             ------------------    -----------------
      Net deferred tax assets                                                     2,668,000             2,783,000
                                                                             ------------------    -----------------

Deferred tax liabilities:
   Plant and equipment, principally due to differences
       in depreciation and capital leases                                        (3,308,000)           (3,521,000)
                                                                             ------------------    -----------------
        Total deferred tax liabilities                                           (3,308,000)           (3,521,000)
                                                                             ------------------    -----------------
             Net deferred tax liability                                      $     (640,000)        $    (738,000)
                                                                             ==================    =================


        In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The ultimate realization of deferred
tax assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible. Management
considers the expected reversal of deferred tax liabilities, expected future
taxable income and tax planning strategies in making this assessment. Based upon
the level of historical taxable income, expected future taxable income over the
periods in which the deferred tax assets are deductible, and reversals of
deferred tax liabilities, management believes (although there can be no
assurance) that it is more likely than not that the Company will realize the
benefits of these deductible differences in the United States. The Company has
available state net operating loss carryforwards which expire in various years
through 2025. However, due to the uncertainties of realizing certain tax loss
carryforwards, a valuation allowance of $1,347,000 has been provided against the
associated deferred tax asset.

        At June 30, 2003, the Company had a valuation allowance of $159,000
relating to net operating losses at its Swedish subsidiary. Fiscal year 2004
earnings at this subsidiary have entirely utilized the net operating losses. As
such, the valuation allowance as it relates to the net operating losses, have
been reversed in fiscal year 2004.

        The Company had $780,000 of undistributed earnings of foreign
subsidiaries as of June 30, 2005. No accrual of U.S. income taxes on the
earnings of these subsidiaries has been recorded because at June 30, 2005,
management's intention is to reinvest such earnings in the operations of such
subsidiaries. Management is currently evaluating the potential benefits of
repatriating foreign earnings under the repatriations provisions of the American
Jobs Creation Act of 2004. Determination of the amount of unrecognized deferred
U.S. income tax liabilities is not practicable to calculate because of the
complexity of this hypothetical calculation.



                                      F-15



NOTE 6.       STOCK-BASED COMPENSATION

           STOCK OPTIONS

        On April 1, 1997, the Board of Directors approved the American Technical
Ceramics Corp. 1997 Stock Option Plan (the "1997 Option Plan") pursuant to which
the Company may grant options to purchase up to 800,000 shares of the Company's
common stock. On April 11, 2000, the Board of Directors approved the American
Technical Ceramics Corp. 2000 Incentive Stock Plan (the "2000 Plan", and
collectively with the 1997 Option Plan, the "Plans") pursuant to which the
Company may grant options or stock awards covering up to 1,200,000 shares of the
Company's common stock. Options granted under the Plans may be either incentive
or non-qualified stock options. The term of each incentive stock option shall
not exceed ten years from the date of grant (five years for grants to employees
who own 10% or more of the voting power of the Company's common stock), and
options may vest in accordance with a vesting schedule established by the plan
administrator (typically 25% per year during the first four years of their
term). Unless terminated earlier by the Board, the 1997 Option Plan will
terminate on March 31, 2007. Unless terminated earlier by the Board, the 2000
Plan will terminate on April 10, 2010.

        Disposition of shares acquired pursuant to the exercise of incentive
stock options under both Plans may not be made by the optionees within two years
following the date that the option is granted, nor within one year after the
exercise of the option, without the written consent of the Company.

        Prior to fiscal year 2004, the Company did not recognize compensation
cost for these options upon grant as the exercise price was equal to or greater
than the fair market value of the underlying stock at the date of grant. In July
2003, the Company adopted Statement of Financial Accounting Standard No. 123
("SFAS No. 123"), using the prospective method as prescribed in Statement of
Financial Accounting Standard No. 148 ("SFAS No. 148"). The Company applies SFAS
No. 123 in accounting for employee stock-based compensation awarded or granted
after June 30, 2003, and applies Accounting Principals Board Opinion No. 25,
Accounting for Stock Issued to Employees ("Opinion No. 25"), in accounting for
employee stock-based compensation awarded or granted prior to July 1, 2003, and
makes pro-forma disclosures of net income and net income per share as if the
fair value method under SFAS No. 123, as amended by SFAS No. 148, had been
applied. The Company has recognized $44,000 and $10,000 in compensation expense
for the fiscal years ended June 30, 2005 and 2004, respectively, for options
granted after June 30, 2003.

        On January 16, 2002, the Company filed a Schedule TO with the Securities
and Exchange Commission and commenced an offer to exchange outstanding options
under the Plans having an exercise price per share of $19.50 or more for new
options. The offer expired on February 13, 2002. The Company accepted for
exchange options to purchase an aggregate of 432,000 shares of common stock. On
August 15, 2002, the Company issued 407,000 new options in exchange for the
options tendered and accepted for exchange. The new options were issued at the
closing price of the Company's common stock on August 15, 2002, which was $2.35
per share. No compensation expense was recognized as a result of these
exchanges.



                                      F-16



     Stock option activity for fiscal years 2005, 2004 and 2003 is as follows:



                                               2005                          2004                            2003
                                   ------------------------------------------------------------ -------------------------------
                                                    Weighted                      Weighted                         Weighted
                                      Shares        Average         Shares         Average                         Average
                                    Subject to      Exercise      Subject to       Exercise     Shares Subject     Exercise
                                      Options         Price        Options          Price         to Options        Price
                                   -------------- ----------------------------- --------------- -------------------------------

Outstanding, beginning of year       1,257,400     $   6.97      1,380,200       $   6.63         918,800         $  8.98
Granted                                 50,000         9.45         13,000           5.85         504,000            2.50
Canceled                               (32,250)        8.08         (6,250)          9.11         (19,850)           8.34
Expired                                (32,800)        9.95         (9,600)          7.35         (12,250)          12.35
Exercised                             (251,405)        3.20       (119,950)          2.84         (10,500)           2.60
                                   --------------               ---------------                 ----------------
Outstanding, end of year               990,945     $   7.91      1,257,400       $   6.97       1,380,200         $  6.63
                                   ==============               ===============                 ================


     The following table summarizes significant ranges of outstanding and
exercisable options at June 30, 2005:





                                               Options Outstanding                                     Options Exercisable
                           ---------------------------------------------------------------     -------------------------------------
   Actual Range of                              Weighted-Average
 Exercise Prices 150%         Number               Remaining             Weighted-Average           Number          Weighted-Average
      Increment             Outstanding         Contractual Life          Exercise Price          Exercisable       Exercise Price
-----------------------    ---------------    ----------------------     -----------------     ------------------   ----------------

$   2.35  -    2.35            176,950                 5.0                  $   2.35                 167,950         $  2.35
    4.00  -    5.85            284,245                 3.7                  $   4.42                 255,745         $  4.30
    6.44  -    9.09            182,750                 6.5                  $   8.56                 125,000         $  8.41
   10.10  -   11.40            269,000                 5.8                  $  11.28                 243,250         $ 11.40
   15.75  -   19.50             70,000                 5.1                  $  17.36                  70,000         $ 17.36
   44.00  -   44.00              8,000                 4.9                  $  44.00                   8,000         $ 44.00
-----------------------    ---------------    ----------------------     -----------------     ------------------   ----------------
$   2.35  -   44.00            990,945                 5.1                  $   7.91                 869,945         $  7.92
                           ===============                                                     ==================


        At June 30, 2005, an aggregate of 226,550 shares were available for
option grants or awards under the Plans.

            OTHER STOCK-BASED COMPENSATION

        In fiscal years 2005, 2004 and 2003, the Company awarded an aggregate of
15,000, 28,350 and 7,000 shares of common stock, respectively, to officers and
certain other employees. These awards resulted in compensation expense of
$197,000, $317,000 and $38,000, respectively (including $77,000, $127,000 and
$21,000 of payments made to offset tax liabilities associated with these
awards), measured by the market value of the shares on their respective grant
dates.

        Treasury shares with an aggregate cost basis of $7,000 were issued in
connection with the awards granted in fiscal year 2003. Accordingly, treasury
stock was reduced for the cost of the shares on a specific identification,
first-in first-out, basis.



                                      F-17



     NOTE 7.        COMMITMENTS AND CONTINGENCIES

           OPERATING LEASES

        The Company had a related party operating lease with the Company's
President, Chief Executive Officer and principal stockholder, for a rented
facility which expired December 31, 2001. The Company and the related party
agreed to continue the lease on a month-to-month basis under the existing terms
until a new agreement was finalized. In September 2002, the Company and an
entity owned by the related party to which the related party had transferred the
facility reached a new agreement on a long-term lease pursuant to which the
Company pays $410,000 per annum, subject to annual increases based upon
increases in the Consumer Price Index. The lease expires in September 2007,
subject to two five-year renewal options. Rent expense under this related party
operating lease was approximately $424,000, $413,000 and $429,000 for the fiscal
years ended June 30, 2005, 2004 and 2003, respectively.

        Rent expense to unrelated parties, primarily for office space, was
approximately $180,000, $157,000 and $181,000 for the fiscal years ended June
30, 2005, 2004 and 2003, respectively. Minimum rent payments under existing
lease commitments with unrelated parties extending through the year ending June
30, 2006 are approximately $5,000 per month.

           CONTINGENCIES

        The Company is party to certain legal proceedings that arose in the
normal course of its business. The Company does not believe that the resolution
of such matters will have a significant effect on the Company's financial
position or results of operations.

           EMPLOYMENT AGREEMENTS

        The Company has an employment agreement with its President and Chief
Executive Officer which provides for annual base compensation of $390,000 as
well as additional annual compensation equal to 2.5% of net income before such
additional compensation and income taxes. The Company, at its option, may pay
the additional annual compensation in stock, cash or a combination thereof,
subject to certain limitations.

        The agreement expires March 1st of each year but is renewed
automatically for an additional one year in the absence of written notice to the
contrary by either party at least 120 days prior to the March 1st renewal date.
In addition, if there is a change in control of the Company or the employee's
employment is terminated by the Company before the expiration of the agreement
other than for cause (as defined in the agreement), the employee is entitled to
the greater of (a) all compensation due under the remaining term of the
agreement, or (b) a payment equal to three times his average annual compensation
(including any incentives) over the last five years.

        In December 2001, the Company renewed a four year employment agreement
with an executive officer. The agreement provides for annual base compensation
of $125,000, with annual increases of 8% over the rate in effect during the
immediately preceding year, plus additional compensation based upon specific
performance measures. The agreement includes termination provisions providing
for conditional payments depending on the nature of the termination.

        In April 2003, the Company entered into a three year agreement with
another executive officer. The agreement provides for annual base compensation
of $160,000, plus additional compensation based upon specific performance
measures. If the officer is terminated by the Company during the term of the
agreement other than for cause (as defined in the agreement), the officer will
be entitled to receive his base salary for one year from the date of
termination. In September 2004, the officer was terminated and, as per the terms
of the agreement, is receiving severance payments.



                                      F-18



        In October 2003, the Company entered into a three year employment
agreement with an executive officer. The agreement provides initially for annual
base compensation of $208,428 and participation in the Company's Officers' Bonus
Plan. If the officer is terminated by the Company during the term of the
agreement other than for cause (as defined in the agreement), (i) the officer
will be entitled to receive his base salary for a period of 15 months, (ii) the
Company shall continue to provide family medical coverage for a period of 18
months, and (iii) all exercisable options may be exercised for a period of one
year after termination.

        In November 2003, the Company entered into three severance agreements
with three executive officers. If the officer is terminated by the Company
during the term of the agreement other than for cause (as defined in the
agreement), (i) the officer will be entitled to receive his or her base salary
for a period of months equal to the number of years the employee has been an
executive officer plus three months up to a maximum of 15 months, (ii) the
Company shall continue to provide family medical coverage for the severance
period, and (iii) all exercisable options may be exercised for the lesser of the
severance period or the expiration of the options.

        In January 2004, the Company entered into a two year agreement with
another executive officer. The agreement provides for annual base compensation
of $165,500 and participation in the Company's Officers' Bonus Plan. In April
2004, the annual compensation was increased to $200,000 in connection with a
promotion. If the officer is terminated by the Company during the term of the
agreement other than for cause (as defined in the agreement), the officer will
be entitled to receive his base salary for one year.

        In June 2005, the Company entered into an employment arrangement with an
executive officer. The arrangement provides for annual base compensation of
$175,000 plus additional compensation based upon specific performance measures.

NOTE 8.           OTHER DATA

           ACCRUED EXPENSES

        Accrued expenses consist of the following:


                                     June 30, 2005           June 30, 2004
                                     -------------           -------------

Accrued commissions                      $ 784,000                $ 851,000
Accrued salaries                           392,000                  659,000
Accrued bonus                              928,000                  550,000
Accrued vacation                           977,000                  914,000
Accrued medical expenses                 1,219,000                  883,000
Other                                    1,289,000                1,250,000
                                  -----------------       ------------------
                                       $ 5,589,000              $ 5,107,000
                                  =================       ==================



                                      F-19


           VALUATION AND QUALIFYING ACCOUNTS

        Valuation and qualifying accounts included in the accompanying
consolidated financial statements consist of the following:




                                                                    Balance -         Additions      Deductions /       Balance -
                                                                    Beginning        Charged to          Other           End of
                        Classification                              of Period          Expense         Additions         Period
----------------------------------------------------------------   -------------    --------------   --------------    ------------

For the year ended June 30, 2005:                                   $  470,000            968,000      1,138,000        $ 300,000
 Allowance for doubtful accounts receivable and sales returns
For the year ended June 30, 2004:
 Allowance for doubtful accounts receivable and sales returns       $  438,000         1,192,000       1,160,000        $ 470,000
For the year ended June 30, 2003:
 Allowance for doubtful accounts receivable and sales returns       $  665,000         1,597,000       1,824,000        $ 438,000



              EMPLOYEE BENEFIT DEFINED CONTRIBUTION PLAN

        Effective November 1, 1985, the Company established a voluntary savings
and defined contribution plan under Section 401(k) of the Internal Revenue Code.
This Plan covers all U.S. employees meeting certain eligibility requirements and
allows participants to contribute a portion of their annual compensation. For
the fiscal years ended June 30, 2005, 2004 and 2003, the Company provided a
matching contribution of $602,000, $575,000 and $542,000, respectively, which
was equal to 50% of each participant's contribution up to a maximum of 6% of
annual compensation. Employees are 100% vested in their own contributions and
become fully vested in the employer contributions over five years.

              PROFIT BONUS PLAN

        Effective commencing in fiscal year 1995, the Company adopted a Profit
Bonus Plan for the benefit of eligible employees, as defined. The plan provides
that, for each fiscal year, the Board of Directors, in its discretion, may
establish a bonus pool not to exceed 10% of pretax income of the Company for the
subject fiscal year. The bonus pool is then allocated among eligible employees
in accordance with the terms of the plan. As of June 30, 2005 and 2004, $610,000
and $224,000, respectively, was accrued pursuant to this plan. No compensation
expense was recognized in respect of this plan for fiscal year 2003.

        Effective January 1, 2000, the Company adopted a Managers' Profit Bonus
Plan for the benefit of eligible employees, as defined. The plan provides that,
for each fiscal year, the Board of Directors, in its discretion, may allocate a
percentage of the Company's pre-tax profits (not to exceed 2.5% of such profits)
for equal distribution among participants in the plan. Participants in the
Managers' Profit Bonus Plan are no longer eligible to participate in the Profit
Bonus Plan described above. For fiscal years 2005, 2004 and 2003, the Company
recognized compensation expense of $152,000, $56,000 and $12,000, respectively,
in respect of this plan.

        The Company has a bonus plan for executive officers. This plan provides
for a majority of the eligible employees to receive a cash bonus equal to at
least 0.5% of the Company's pre tax income. In addition, two of the employees
have different plans that provide for bonus calculations based upon other
factors, including product line profitability and achievement of bookings
quotas. For fiscal years 2005, 2004 and 2003, the Company recognized
compensation expense of $381,000, $294,000 and $67,000, respectively, in respect
of this plan.



                                      F-20


NOTE 9.           FOREIGN OPERATIONS

        The Company markets and distributes a portion of its products sold
abroad through its wholly-owned subsidiary, American Technical Ceramics Europe
AB, located in Sweden. During fiscal year 2002, the Company established a
wholly-owned subsidiary in the United States which established a representative
office in the People's Republic of China to service the Asian market. The
following table summarizes certain financial information covering the Company's
operations by geographic area for fiscal years 2005, 2004 and 2003. Net sales
information is based upon country of origin.



                                   2005                  2004                  2003
                             ------------------    ------------------    ------------------

Net sales
    United States                 $ 60,739,000          $ 51,831,000          $ 42,204,000
    Sweden                          12,226,000             9,352,000             6,844,000
                             ------------------    ------------------    ------------------
 Total                            $ 72,965,000          $ 61,183,000          $ 49,048,000
                             ==================    ==================    ==================


Long-lived assets
    United States                 $ 29,593,000          $ 26,209,000          $ 27,127,000
    Sweden                              70,000                90,000                67,000
    China                               36,000                39,000                17,000
                             ------------------    ------------------    ------------------
 Total                            $ 29,699,000          $ 26,338,000          $ 27,211,000
                             ==================    ==================    ==================


        U.S. sales include $21,920,000, $19,597,000 and $13,507,000 for export
in fiscal years 2005, 2004 and 2003, respectively. Export sales were primarily
to customers in Western Europe, Canada and the Far East.

 NOTE 10.     DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS

           CASH AND CASH EQUIVALENTS, ACCOUNTS RECEIVABLE, ACCOUNTS PAYABLE AND
           ACCRUED EXPENSES

        The carrying amount approximates fair value due to the short maturity of
these instruments.

           INVESTMENTS

        Cost and fair value of the Company's investments is presented in Note 2.
Fair value is based upon quoted market prices.

           LONG-TERM DEBT

        At June 30, 2005, the fair value of (i) the Company's debt obligation at
June 30, 2005 was $3,576,000, and (ii) the Company's capital lease obligation
with respect to its Jacksonville, Florida facility was $3,395,000 based on the
present value of future cash flows and the Company's estimated incremental
borrowing rate of 6.25%.

        Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial instrument.
These estimates are subjective in nature and involve uncertainties and matters
of significant judgment and, therefore, cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.




                                      F-21`