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

                                    FORM 10-K

|X|   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
      ACT OF 1934

                  For The Fiscal Year Ended December 31, 2004

                                       OR

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                         Commission File Number: 0-14659

                                  SIMCLAR, INC.
             (Exact name of Registrant as specified in its charter)

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

                               2230 W. 77th Street
                             Hialeah, Florida 33016
                    (Address of principal executive offices,
                               including zip code)

                                 (305) 556-9210
              (Registrant's telephone number, including area code)

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

      Securities registered pursuant to Section 12(g) of the Act: Common Stock,
                                                                  $.01 par value

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

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

      Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes |_| No |X|

      The aggregate market value of the Registrant's common stock held by
non-affiliates of the Registrant was approximately $6,383,435 on June 30, 2004.

      As of March 15, 2005, the Company had issued and outstanding 6,465,345
shares of its common stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

      Portions of our Information Statement for the 2005 Annual Meeting of
Shareholders are incorporated by reference in Part III.

<PAGE>

                                Table of Contents

<TABLE>
<CAPTION>
                                                                                    Page
                                     Part I
<S>        <C>                                                                      <C>
Item 1.    Business...............................................................     1

Item 2.    Properties.............................................................    17

Item 3.    Legal Proceedings......................................................    18

Item 4.    Submission of Matters to a Vote of Security Holders....................    18

                                     Part II

Item 5.    Market for Registrant's Common Equity and Related
           Stockholder Matters....................................................    19

Item 6.    Selected Financial Data................................................    19

Item 7.    Management's Discussion and Analysis of Financial Condition and
           Results of Operations..................................................    20

Item 7A.   Quantitative and Qualitative Disclosure About Market Risk..............    30

Item 8.    Financial Statements and Supplementary Data............................    30

Item 9.    Changes in and Disagreements with Accountants on Accounting and
           Financial Disclosure...................................................    30

Item 9A    Controls and Procedures................................................    30

                                    Part III

Item 10.   Directors and Executive Officers of the Registrant.....................    32

Item 11.   Executive Compensation.................................................    32

Item 12.   Security Ownership of Certain Beneficial Owners and Management
           And Related Stockholder Matters .......................................    32

Item 13.   Certain Relationships and Related Transactions.........................    32

Item 14.   Fees and Services of Independent Registered Public Accounting Firm.....    32

                                     Part IV

Item 15.   Exhibits, Financial Statement Schedules and Reports on Form 8-K........    34

Signatures .......................................................................    37

Independent Registered Public Accounting Firm's Report on Supplemental Schedule...   S-1

Schedule II - Valuation and Qualifying Accounts...................................   S-2
</TABLE>

<PAGE>

                                     Part I

Forward-Looking Statements

This document contains certain forward-looking statements that are based upon
current expectations and involve certain risks and uncertainties within the
meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words or
expressions such as "anticipate," "believe," "plan," "expect," "future,"
"intend," "estimate," "project," or variations of these words as well as similar
words or expressions are intended to identify forward-looking statements.
Readers should not place undue reliance on the forward-looking statements
contained in this document, which apply only as of the date of this report. We
undertake no obligation to update the information contained herein. Our actual
performance and results could differ materially from those anticipated in these
forward-looking statements for many reasons, including, but not limited to
economic changes and changes in the electronics manufacturing services industry
generally. Key Risk Factors that might cause or contribute to such differences
include, but are not limited to, those discussed under the section entitled
"Risk Factors" included herein at Page 10.

Item 1.  Business

Introduction

      Simclar, Inc. ("we," "our," "us," "Simclar" or "the company") is a
contract manufacturer of electronic and electro-mechanical products, providing
advanced electronics manufacturing services (EMS) to original equipment
manufacturers (OEMs). Our products are manufactured to customer specifications
and designed for OEMs in the data processing, telecommunications,
instrumentation and food preparation equipment industries. Our principal
custom-designed products include complex printed circuit boards (PCBs),
conventional and molded cables, wire harnesses and electro-mechanical
assemblies. In addition, we provide OEMs with value-added, turnkey contract
manufacturing services and total systems assembly and integration. We also
deliver manufacturing and test engineering services and materials management,
with flexible and service-oriented manufacturing and assembly services for our
customers' high-tech and rapidly changing products.

      We were incorporated in Florida in 1976, acquired by Medicore, Inc., our
former parent, in 1982, and became a public company in 1985. Effective June 27,
2001, control of our company was acquired by Simclar International Limited,
which then transferred its 71.3% ownership of our company to its parent, Simclar
Group Limited ("Simclar Group") both of which are private United Kingdom
companies. Other companies of the Simclar Group are engaged in the same
electronic and electro-mechanical subcontract manufacturing industry as is our
company. Effective September 2, 2003, we changed our name from Techdyne, Inc. to
Simclar, Inc.

      Our executive offices are located at 2230 West 77th Street, Hialeah,
Florida 33016. Our telephone number is (305) 556-9210. Our common stock is
traded on the Nasdaq SmallCap Market (Ticker: SIMC). We maintain an Internet
website at http://www.simclar.com, along with other members of the Simclar
Group. We make available free of charge on our website links to our annual
reports on Form 10-K, our quarterly reports on Form 10-Q, current reports on
Form 8-K, and any amendments to those reports filed or furnished pursuant to
Section 13(a) of the Securities Exchange Act of 1934
(http://www.simclar.com/investor.htm). Information on our website is not
incorporated by reference into this report. Additionally, individuals can access
our electronically filed reports, proxy statements and other information through
the Internet site maintained by the Securities and Exchange Commission at
http://www.sec.gov. The public may also read and copy any materials we file with
the Securities and Exchange Commission at the SEC's Public Reference Room at 450
Fifth Street, NW, Washington, DC 20549


                                       2
<PAGE>

Electronics Manufacturing Services Industry

      Until 2001, our industry exhibited significant year to year growth, due
both to the growth in the overall electronics industry, and the steadily
increasing number of OEMs deciding to outsource all or a significant portion of
the production of their products. As a result of the general global recession
beginning in 2001, and its magnified effect in the computer and
telecommunications equipment segments, this recent pattern of growth in our
industry was interrupted, and both our company and the industry as a whole
experienced a decline in sales starting in 2001 and continuing through the third
quarter of 2003. Beginning in the fourth quarter of 2003, our company and the
industry began to experience a recovery in sales, which continued through 2004.
We are aggressively seeking new business opportunities with existing and new
customers, but there is no assurance we will be successful in generating
additional sales, particularly in this recessionary segment of the economy.

      We believe that the fundamental factors contributing to the growth of our
industry in past years contributed to the resumption of the pattern of growth in
2004. These factors include increased capital requirements for OEMs to acquire
modern, highly automated manufacturing equipment, and their continuing effort to
reduce inventory costs and the relative cost advantages of contract
manufacturers. Using outsourcing for their production of electronic assemblies
also enables OEMs to focus on product development, reduce working capital
requirements, and improve inventory management and marketability. We believe
OEMs will continue to rely on contract manufacturers, not only for partial
component assemblies, but complete turnkey manufacturing of entire finished
products. We also believe that OEMs will look more to contract manufacturers to
provide a broader scope of value-added services, including manufacturing,
engineering and test services.

      We assist our customers from initial design and engineering through
materials procurement, to manufacturing of the complete product and testing.
Involving contract manufacturers earlier in the manufacturing process through
"concurrent engineering" allows OEMs to realize greater efficiencies and gives
contract manufacturers greater impact in product design, component selection,
production methods and the preparation of assembly drawings and test schematics.
This process also gives the customer the ability to draw upon our manufacturing
expertise at the outset and minimize manufacturing bottlenecks.

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

Business Strategy

      We believe that the cost reductions and restructuring of our operations
that we made in 2001 and 2002 in response to the continued economic downturn put
us in a better position to compete when the economy and our industry recovered.
We also believe that our alliance with Simclar Group will allow us to expand our
customer base, broaden our product lines and provide greater efficiencies in
equipment, supplies, labor and manufacturing processes, both domestically and
internationally.

      In response to industry trends, particularly in view of constantly
changing and improving technology and, therefore, shorter product life cycles,
we focus on product development and marketing in order to become a competitive
provider of electronic contract manufacturing services for OEM customers. We
continue to seek to develop strong, long-term alliances with major-growth OEMs


                                       3
<PAGE>

of complex, market leading products. We believe that creating and maintaining
long-term relationships with customers requires providing high quality,
cost-effective manufacturing services marked by a high degree of customer
responsiveness and flexibility. Therefore, our strategy is to focus on leading
manufacturers of advanced electronic products that generally require
custom-designed, more complex interconnect products and short lead-time
manufacturing services. In 2005, we will also continue to target large contract
manufacturers as potential customers.

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

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

      We believe that we can develop closer and more economically beneficial
relationships with our customers through our geographically diverse
manufacturing and assembly operations, presently located in Florida, Texas,
Massachusetts, Ohio and Mexico. Our diverse locations have multiple advantages
by helping satisfy costs, timely deliveries and local market requirements of our
customers. We will continue to pursue expansion in different markets to better
serve existing customers and to obtain additional new customers. In alliance
with Simclar Group, we anticipate experiencing growth and the ability to
increase our global presence and competitive position.

Products and Services

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

      Printed Circuit Boards

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

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


                                       4
<PAGE>

      In 1997, we acquired Lytton Incorporated ("Lytton"), whose Ohio
operations, with six automated lines, are more focused on PCB manufacturing,
primarily for the food preparation equipment industry. This expansion resulted
in PCB manufacturing yielding approximately 52% and 68% of our sales revenues in
2004 and 2003, respectively. Lytton was merged into Simclar effective August 13,
2003.

      In July, 2003, we acquired all of the outstanding stock of AG
Technologies, Inc. (now Simclar (Mexico), Inc.) which operates a manufacturing
facility in Matamoros, Mexico, and which we currently operate through an
indirect, wholly-owned subsidiary, Simclar de Mexico, S.A. de C.V. This
Matamoros facility provides PCB manufacturing capacity similar to our Ohio
facility, but enables us to compete more effectively on medium and higher volume
PCB orders. Additional contract manufacturing capabilities were added with the
opening of a second Matamoros facility in January 2005. Simclar (Mexico) is an
international value added provider of comprehensive electronic manufacturing
services to OEM's serving the automotive, industrial controls, medical and power
equipment industries. Simclar (Mexico)'s Mexican facilities enable us to be
competitive in the higher volume arena for assembly in North America.

      Cable and Harness Assemblies

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

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

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

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

      Discrete cable assemblies are wires with contacts and connectors.
Harnesses are prefabricated wiring with insulation and terminals ready to be
attached to connectors. Our cable sales comprised approximately 30% and 27% of
total sales revenue for 2004 and 2003, respectively.

      Contract Manufacturing

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

      In January, 2005, we opened a second manufacturing facility in Matamoros,
Mexico, providing additional capability to process soft-tooled sheet metal
fabrication and finishing. Further expansion phases will include hard-tooled
sheet metal fabrication, along with plastic injection molding, and overmolding
for more complex cable and harness manufacturing.


                                       5
<PAGE>

      Reworking and Refurbishing

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

      Contract manufacturing, reworking and refurbishing together amounted to
approximately 19% and 5% of sales for 2004 and 2003 respectively. We believe
that contract manufacturing could provide us with substantial increases in
revenues over the next few years. Our affiliation with Simclar Group gives us
access to a larger customer base and the ability to handle large customers both
in the USA and Europe.

Manufacturing

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

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

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

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

      At our Hialeah, Florida, Round Rock, Texas, and Matamoros, Mexico
facilities, we maintain modern state-of-the-art equipment for crimping,
stripping, terminating, soldering, sonic welding and sonic cleaning which


                                       6
<PAGE>

permits us to produce conventional and complex molded cables. We also maintain a
large assortment of standard tooling. New manufacturing jobs may require new
tooling and dies, but most presses and related equipment are standard.

Supplies and Materials Management

      Materials used in our operations consist of metals, electronic components
such as cable, wire, resistors, capacitors, diodes, memory products, PCBs and
plastic resins.

      The company procures components from a select group of vendors which meet
our standards for timely delivery, high quality and cost effectiveness. In order
to control inventory investment and minimize material obsolescence, components
are generally ordered when we have a purchase order or commitment from our
customer for the completed assembly. We use Enterprise Resource Planning (ERP)
management technologies and manage our material pipelines and vendor base to
allow our customers to increase or decrease volume requirements within
established frameworks. We have Visual Manufacturing, Symix and Made 2 Manage
computerized software systems providing us with material requirements planning,
purchasing, and sales and marketing functions. In mid-2004 we initiated a
program whereby we will consolidate the majority of our electronics material
"spend" with that of the entire Simclar Group, and quote and initiate contracts
to the most competitive suppliers, with the result that we will benefit again by
our affiliation with the larger Simclar Group. To date this program is ongoing,
and the results are not yet quantifiable. See "Business Strategy" above and Item
7, "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

      We have improved our overall efficiency of manufacturing, particularly in
the area of inventory management, including purchasing, which is geared more
closely to current needs resulting in reduced obsolescence problems. We have
recently experienced minor disruptions from shortages of materials or delivery
delays from suppliers, but we believe that our present sources and the
availability of our required materials are adequate. See Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

Quality and Process Control

      All of our manufacturing locations are certified under the ISO 9001/2000
quality assurance designation. These quality assurance designations are only
provided to those manufacturers which exhibit stringent quality and process
control assurances after extensive evaluation and auditing by these independent
quality assurance organizations. Quality control is essential to the company's
operations since customers demand strict compliance with design and product
specifications, and high quality production is a primary competitive standard
vital to our services.

      Product components, assemblies and sub-assemblies manufactured by the
company are thoroughly inspected visually and electronically to ensure all
components are made to strict specifications and are functional and safe. Strict
process controls relating to the entire manufacturing process are part of our
standard operating procedure.

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


                                       7
<PAGE>

Customers

      We serve a wide range of businesses, from emerging growth companies to
multinational OEMs, involved in a variety of markets including computer
networking systems, computer workstations, telecommunications, mass data storage
systems, instrumentation and food preparation equipment industries. A
significant portion of our revenues is distributed over the following industry
segments:

                                      Year Ended December 31,
                             -------------------------------------
                                2004          2003         2002
                             ----------    ----------   ----------
Food preparation equipment           18%         23 %         37 %
Data processing                      26%         24 %         23 %
Telecommunications                   12%         14 %          9 %
Military and government               5%          9 %          8 %
Instrumentation                      15%         11 %          4 %
Power equipment                      15%         13 %        --- %

      We seek to serve a sufficiently large number of customers to avoid
dependence on any one customer or industry. Nevertheless, historically a
substantial percentage of our net sales have been to multiple locations of a
small number of customers. Significant reductions or delays in sales to any of
those major customers would have a material adverse effect on our results of
operations. In the past, certain of our customers have terminated their
manufacturing relationship with us, or significantly reduced their product
orders. We cannot assure you that any of our major customers will not terminate
or significantly reduce or delay manufacturing orders, any of which such
terminations or changes in manufacturing orders could have a material adverse
effect on our results of operations.

      We depend upon the continued growth, viability and financial stability of
our customers, who in turn substantially depend on the growth of the personal
computer, computer peripherals, communications, instrumentation, data processing
and food preparation equipment industries. Most of these industries have been
characterized by rapid technological change, short product life cycles, pricing
and margin pressures. In addition, many of our customers in these industries are
affected by general economic conditions. The factors affecting these industries
in general, and/or our customers in particular, could have a material adverse
effect on our results of operations. In addition, we generate significant
accounts receivable in connection with providing manufacturing services to our
customers. If one or more of our customers were to become insolvent or otherwise
were unable to pay us for manufacturing services we have provided, our operating
results and financial condition would be adversely affected. In 2004, 43% of our
sales were made to numerous locations of five major customers.

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

                               Percentage of Sales

                               2004       2003        2002
                             --------    --------    --------
ITW Food Equipment Group          17%         22%         36%

Marketing and Sales

      We are continually pursuing expansion and diversification of our customer
base. We are seeking to develop long term relationships by working closely with
customers, starting with the initial product design and development stage, and
continuing throughout the manufacturing and distribution process. Our principal
sources of new business are the expansion in the volume and scope of services
provided to existing customers, referrals from customers and suppliers, direct
sales through our sales managers and executive staff, and through independent
sales representatives. Our operations generate sales through five regional sales


                                       8
<PAGE>

managers covering the Northeast, Southeast, West and Southwest regions of the
United States, as well as parts of Mexico. There are 13 in-house sales/marketing
personnel in the United States. In addition to sales through sales
representatives and in-house sales personnel, sales are also generated through
our website at http://www.simclar.com and through catalogues, brochures and
trade shows.

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

      Substantially all of our sales and reorders are effected through
competitive bidding. Most sales are accomplished through purchase orders with
specific quantity, price and delivery terms. Some production, such as for our
Kanban and Pull programs, is accomplished under open purchase orders with
components released against customer request.

Backlog

      At December 31, 2004 and 2003, our backlog of orders amounted to
approximately $13,652,000 and $11,252,000, respectively. Based on past
experience and relationships with our customers and knowledge of our
manufacturing capabilities, we believe that most of our backlog orders are firm
and should be filled within six months. Most of the purchase orders within which
the company performs do not provide for cancellation. Over the last several
years, cancellations have been minimal and management does not believe that any
significant amount of the backlog orders will be cancelled. However, based upon
relationships with our customers, we occasionally allow cancellations and
frequently the rescheduling of deliveries. The variations in the size and
delivery schedules of purchase orders received by the company may result in
substantial fluctuations in backlog from period to period. Since orders and
commitments may be rescheduled or cancelled, and customers' lead times may vary,
backlog does not necessarily reflect the timing or amount of future sales.

Patents and Trademarks

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

Seasonality

      Our business is not seasonal.

Competition

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


                                       9
<PAGE>

      We believe that we are favorably positioned with regard to primary
competitive factors - price, quality of production, manufacturing capability,
prompt customer service, timely delivery, engineering expertise, and technical
support. We also believe that our affiliation with Simclar Group enhances our
competitive position internationally. However, recent consolidation trends in
the electronic manufacturing services industry are resulting in changes in the
competitive landscape. Increased competition could result in lower priced
components and lower profit margins, or loss of customers, which could have a
material adverse effect on our business, financial condition and results of
operations. Compared to manufacturers who have greater direct buying power with
component suppliers or who have lower cost structures, we may be operating at a
cost disadvantage.

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

Research and Development

      We spend limited amounts on research and development efforts. Our products
are generally manufactured to customer specifications.

Governmental Regulation

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

Employees

      We presently have 291 employees located in our U.S. facilities and 258
employees located at our Mexican facilities; 108 of our employees are employed
as part time or temporary help. Approximately 457 of our employees are engaged
in manufacturing, quality assurance, related operations and support activities,
42 are in material handling and procurement, 17 are in sales and marketing, 16
are in engineering, and 17 are in administrative, accounting and support
activities.

      We have no unions in our U. S. facilities, but have two unions in our
Matamoros facilities. We believe that our relationships with our employees, both
union and non-union, are good.

Risk Factors

      This Report contains forward-looking statements that involve risks and
uncertainties. Our actual results may differ significantly from the prospects
discussed in the forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, those listed
below.

The loss of a major customer would adversely affect us

      A substantial percentage, approximately 43% of our sales for the year
ended December 31, 2004, has been to five customers, the loss of any of which
would adversely affect us. A substantial portion of our sales (17%) is with one
major customer, Illinois Tool Works (formerly PMI Foods Equipment Group)
("ITW"). There are no long-term contracts with any customer. Substantially all
of our sales and reorders are subject to competitive bids. Sales are dependent
on the success of our customers, some of which operate in businesses associated


                                       10
<PAGE>

with rapid technological change, vigorous competition, short product life
cycles, and pricing and margin pressures. Additionally, certain of the
industries served by us are subject to economic cycles and have in the past
experienced, and are likely in the future to experience, recessionary periods.
Developments adverse to our major customers or their products could have an
adverse effect on us. A variety of conditions, both specific to each individual
customer and generally affecting each customer's industry, may cause customers
to cancel, reduce or delay purchase orders and commitments without penalty,
except for payment for services rendered, materials purchased and, in certain
circumstances, charges associated with such cancellation, reduction or delay.

      In addition, we generate large accounts receivable in connection with our
providing of electronic contract manufacturing. If one or more of our customers
experiences financial difficulty and is unable to pay for the services provided
by us, our operating results and financial condition would be adversely
affected. We expect to continue to depend on sales to a limited number of major
customers.

Secured loans - existence of liens on certain assets

      All of our assets have been pledged as collateral for two bank loans. In
October 2004, we entered into two amended credit facilities with Bank of
Scotland in Edinburgh, Scotland consisting of a $5,000,000 working capital
facility and a term loan facility in the amount of $5,650,000. Interest on the
working capital facility accrues at an annual rate equal to LIBOR plus 1.5%,
plus an amount, rounded to the nearest eighth of a percent, to cover any
increases in certain regulatory costs incurred by the bank. The company may
elect to pay interest on advances every one, three or six months, with LIBOR
adjusted to correspond to the interest payment period selected by the company.
The company elected the three-month interest period at 3.8% until January 24,
2005, and after this date the rate is 4.17% until April 24, 2005. This facility
had an outstanding balance of $2,980,000 at December 31, 2004, and expires
September 30, 2005. The term loan of $5,650,000 is divided into two tranches.
The principal of Tranche A ($4,250,000) is repayable in quarterly installments
of $250,000 in October, January, April and July of each year from 2004 through
2008, with the final payment due in October 2008. The principal of Tranche B
($1,400,000) is payable in twenty-eight equal quarterly installments of $50,000,
with the first installment payable on January 20, 2005. The term loan bears
interest, and interest is payable, on the same terms as under the working
capital facility. The term loan had an outstanding balance of $5,400,000 at
December 31, 2004.

Our credit facilities impose operational and financial restrictions on us

      Our credit facilities with the Bank of Scotland, which include an Amended
Term Loan Facility Letter, an Amended Working Capital Facility Letter, an
Amended and Restated General Security Agreement, an Amended and Restated Pledge
Agreement, a Mortgage and a Guaranty, in addition to subjecting all our assets
as security for the bank financing, include substantial covenants that impose
significant restrictions on us, including, among others, requirements that:

      o     the facilities take priority over all our other obligations;

      o     we must maintain sufficient and appropriate insurance for our
            business and assets;

      o     we must maintain all necessary licenses and authorizations for the
            conduct of our business;

      o     we indemnify the bank against all costs and expenses incurred by it
            which arise as a result of any actual or threatened (i) breach of
            environmental laws; (ii) release or exposure to a dangerous
            substance at or from our premises; or (iii) claim for an alleged
            breach of environmental law or remedial action or liability under
            such environmental law which could have an adverse material effect;

      o     if environmental harm has occurred to our property securing the
            credit facility, we have to ensure we were not responsible for the
            harm, and we have to be aware of the person responsible and its
            financial condition; and

      o     a variety of pension and benefit plans and ERISA issues, including,
            among others, requiring us to notify the bank of (i) material
            adverse changes in the financial condition of any such plan; (ii)
            increase in benefits; (iii) establishment of any new plan; (iv)
            grounds for termination of any plan; and (v) our affiliation with or


                                       11
<PAGE>
            acquisition of any new ERISA affiliate that has an obligation to
            contribute to a plan that has an accumulated funding deficiency.

      In addition, our credit facilities require us to maintain:

      o     consolidated adjusted net worth greater than $11,000,000;

      o     a ratio of consolidated assets to consolidated net borrowing not
            less than 1.75 to 1;

      o     a ratio of consolidated trade receivables to consolidated net
            borrowing of not less than .75 to 1; and

      o     a ratio of consolidated net income before interest, income taxes and
            extraordinary items to total consolidated interest costs of not less
            than 2 to 1.

      Finally, without the prior written consent of the Bank of Scotland, our
credit facilities prohibit us from:

      o     granting or permitting a security agreement against our consolidated
            assets except for permitted security agreements;

      o     declaring or paying any dividends or making any other payments on
            our capital stock;

      o     consolidating or merging with any other entity or acquiring or
            purchasing any equity interest in any other entity, or assuming any
            obligations of any other entity, except for notes and receivables
            acquired in the ordinary course of business;

      o     incurring, assuming, guaranteeing, or remaining liable with respect
            to any indebtedness, except for certain existing indebtedness
            disclosed in our financial statements;

      o     undertaking any capital expenditures in excess of $1,000,000 in any
            one fiscal year;

      o     effecting any changes in ownership of our company;

      o     making any material change in any of our business objectives,
            purposes, operation or taxes; and

      o     incurring any material adverse event in business conditions as
            defined by the Bank.

      Our ability to comply with these provisions may be affected by changes in
our business condition or results of our operations, or other events beyond our
control. The breach of any of these covenants would result in a default under
our debt. At December 31, 2004, the company was not in compliance with one of
these covenants as a result of having capital expenditures for the year 2004 in
excess of the $1,000,000 limit specified in the covenant. However, we obtained
from the Bank a waiver of the non-compliance, and we believe that we will remain
in compliance with our covenants for the remainder of 2005, but there can be no
assurance that defaults in this or other covenants will not occur in the future,
nor can there be any assurance that our lender will waive future covenant
violations. A default in the covenants would permit our lender to accelerate the
maturity of our credit facilities and to sell the assets securing them, which
could cause us to cease operations or seek bankruptcy protection.

      Our indebtedness requires us to dedicate a substantial portion of our cash
flow from operations to payments on our debt, which could reduce amounts for
working capital and other general corporate purposes. The restrictions in our
credit facility could also limit our flexibility in reacting to changes in our
business and increases our vulnerability to general adverse economic and
industry conditions.

We operate in a highly competitive industry and our business may be harmed by
competitive pressures

      Manufacturing and assembly of electro-mechanical and electronic components
is a highly competitive industry characterized by a diversity and sophistication
of products and components. We compete with major electronics firms that have
substantially greater financial and technical resources and personnel than we
do. We also face competition from many smaller, more specialized companies. We
believe the primary competitive factors are pricing, quality of production,
prompt customer service, timely delivery, engineering expertise, and technical


                                       12
<PAGE>

assistance to customers. Among this mix of competitive standards, we believe we
are competitive with respect to delivery time, quality, price and customer
service. Price sensitivity becomes a paramount competitive issue in recessionary
periods, and we may be at a competitive disadvantage with manufacturers with a
lower cost structure, particularly off-shore manufacturers with lower labor and
related production costs. To compete effectively, we must also provide
technologically advanced manufacturing services, and respond flexibly and
rapidly to customers' design and schedule changes. Our inability to do so could
have adverse effects on us. Customers in our industry are price-sensitive and,
particularly in the recent economic downturn, there is substantial pressure from
customers to reduce our prices. Our ability to remain competitive depends on our
ability to meet these customer and competitive price pressures while protecting
our profit margins. We have been engaged in and will have to continue cost
reductions in overhead, manufacturing processes, and equipment retooling, while
maintaining product flow, inventory control, and just-in-time shipping to our
customers. If we are unable to accomplish these factors, we will not be
competitive, and our business and operating results will be adversely impacted.

Our revenues are contingent on the health of the industries we serve

      We rely on the continued growth and financial stability of our customers
who operate in the following industry segments:

      o     food preparation equipment;

      o     data processing;

      o     telecommunications;

      o     instrumentation; and

      o     military and government.

      These industry segments, to a varying extent, are subject to dynamic
changes in technology, competition, short product life cycles, and economic
recessionary periods. When our customers are adversely affected by these
factors, we may be similarly affected.

Manufacture of electronic and electro-mechanical products, particularly designed
for OEMs and manufactured to custom specifications, is cyclical, and demand for
our products may decline

      Our business depends substantially on both the volume of electronic and
electro-mechanical production by OEMs in the data processing,
telecommunications, instrumentation and food preparation industries, and new
specifications and designs for these OEMs. These industries have been cyclical
over the years, and have experienced oversupply as well as significantly reduced
demand, as we have experienced in recent years. An economic downturn can result
in lower capacity utilization of our manufacturing operations and a shift in
product mix toward lower margin assemblies. Changes in economic conditions and
demand can result in customer rescheduling of orders and shipments, which affect
our results of operations. Moreover, our need to invest in engineering,
marketing, and customer services and support capabilities will limit our ability
to reduce expenses, as we would attempt to do, in response to such downturns.

We do not have long-term contracts with customers, and cancellations, reductions
or delays in orders affect our profitability

      We do not typically obtain firm long-term contracts from our customers.
Instead, we work closely with our customers to develop forecasts for upcoming
orders, which are not binding, in order to properly schedule inventory and
manufacturing. Our customers may alter or cancel their orders or demand delays
in production for a number of reasons beyond our control, which may include:

      o     market demand for products;

      o     change in inventory control and procedures;


                                       13
<PAGE>

      o     acquisitions of or consolidations among competing customers;

      o     electronic design and technological advancements; and

      o     recessionary economic environment.

      Any one of these factors may significantly change the total volume of
sales and affect our operating results, in times of a recessionary environment
and reduced demand for our customers' products and in turn, our products and
services. In addition, since much of our costs and operating expenses are
relatively fixed, a reduction in customer demand would adversely affect our
gross margins and operating income. Although we are always seeking new business
and customers, we cannot be assured that we will be able to replace deferred,
reduced or cancelled orders.

Shortages of components specified by our customers would delay shipments and
adversely affect our profitability

      Substantially all of our sales are derived from electro-mechanical and
subcontract electronic manufacturing in which we purchase components specified
by our customers. Industry-wide shortages of electronic components, particularly
components for PCB assemblies, have occurred. We did not experience any
substantial supply shortages in 2002 or 2003, but experienced some shortages in
2004, which may increase as the world economy continues to recover and demand
for electronic products increases. Should our industry experience a rapid
recovery, shortages of components mostly likely will occur, and we may be forced
to delay shipments, which could have an adverse effect on our profit margins and
customer relations. Because of the continued increase in demand for surface
mount components, we anticipate component shortages and longer lead times for
certain components to occur from time to time. Also, we typically bear the risk
of component price increases that occur, which accordingly could adversely
affect our gross profit margins. At times, we are forced to purchase components
beyond customer demand on items which are in short supply. To the extent there
is less customer demand or cancellations, we could have increased obsolescence.

Technological developments, satisfying customer designs and production
requirements, quality and process controls are factors impacting our operations

      Our existing and future operations are and will be influenced by several
factors, including technological developments, our ability to efficiently meet
the design and production requirements of our customers, our ability to control
costs, our ability to evaluate new orders to target satisfactory profit margins,
and our capacity to develop and manage the introduction of new products. We also
may not be able to adequately identify new product trends or opportunities, or
respond effectively to new technological changes. Quality control is also
essential to our operations, since customers demand strict compliance with
design and product specifications. Any deviation from our quality and process
controls would adversely affect our relationship with customers, and ultimately
our revenues and profitability.

Our operating results are subject to annual and quarterly fluctuation which
could negatively impact our stock prices

      There are a number of factors, beyond our control, that may affect our
annual and quarterly results. These factors include:

      o     the volume and timing of customer orders;

      o     changes in labor and operating prices;

      o     fluctuations in material cost and availability;

      o     changes in domestic and international economies;

      o     timing of our expenditures in anticipation of future orders;

      o     increase in price competition, and competitive pressures on delivery
            time and product reliability;


                                       14
<PAGE>

      o     changes in demand for customer products;

      o     the efficiency and effectiveness of our automated manufacturing
            processes;

      o     market acceptance of new products introduced by our customers; and

      o     uneven seasonal demands by our customers.

Any one or combination of these factors can cause an adverse effect on our
future annual and quarterly financial results. Fluctuations in our operating
results could materially and adversely affect the market price of our common
stock.

Environmental laws may expose us to financial liability and restrictions on
operations

      We are subject to a variety of federal, state and local laws and
regulations relating to environmental, waste management, and health and safety
concerns, including the handling, storage, discharge and disposal of hazardous
materials used in or derived from our manufacturing processes. Proper waste
disposal is a major consideration for printed circuit board manufacturers, which
is a substantial part of our business, since metals and chemicals are used in
our manufacturing process. Environmental controls are also essential in our
other areas of electronic assembly. If we fail to comply with such environmental
laws and regulations, then we could incur liabilities and fines and our
operations could be suspended. This could also trigger indemnification of our
lender under our credit facilities, as well as being deemed a default under such
credit facilities. See "Our credit facilities impose operational and financial
restrictions on us" above. Such laws and regulations could also restrict our
ability to modify or expand our facilities, could require us to acquire costly
equipment, or could impose other significant capital expenditures. In addition,
our operations may give rise to claims of property contamination or human
exposure to hazardous chemicals or conditions. Although we have not incurred any
environmental problems in our operations, there can be no assurance that
violations of environmental laws will not occur in the future due to failure to
obtain permits, human error, equipment failure, or other causes. Furthermore,
environmental laws may become more stringent and impose greater compliance costs
and increase risks and penalties for violations.

Simclar Group controls over 73% of our common stock and the affairs of our
company

      Simclar Group owns 73.4% of our outstanding common stock. Our common stock
does not provide for cumulative voting, and therefore, the remaining
shareholders, other than Simclar Group, will be unable to elect any directors or
have any significant impact in controlling the business or affairs of our
company. The concentration of ownership with Simclar Group may also have the
effect of delaying, deterring or preventing a change in control of our company,
and would make transactions relating to our operations more difficult or
impossible without the support of Simclar Group. Also, since we are a
"controlled company" for purposes of the Nasdaq Stock Market's corporate
governance requirements, we are not required to comply with the provisions
requiring that a majority of listed company directors be independent, the
compensation of our executives to be determined by independent directors or
nominees for election to our board of directors to be selected by independent
directors.

The price of our shares is volatile

      The market price of our common stock has substantially fluctuated in the
past. The market price of our common stock has been as high as $6.65 in the
fourth quarter of 2004 to as low as $.52 in the fourth quarter of 2002. Our
common stock has limited trading volume, and it closed at $3.79 on March 15,
2005.

      There are a variety of factors which contribute to the volatility of our
common stock. These factors include domestic and international economic
conditions, stock market volatility, our reported financial results,
fluctuations in annual and quarterly operating results, and general conditions


                                       15
<PAGE>

in the contract manufacturing and technology sectors. Announcements concerning
our company and competitors, our operating results, and any significant amount
of shares eligible for future sale may also have an impact on the market price
of our common stock. As a result of these factors, the volatility of our common
stock prices may continue in the future.

We have not declared dividends, and our credit facilities prohibit us from
paying dividends without written consent from our lender

      Under Florida corporate law, holders of our common stock are entitled to
receive dividends from legally available funds, when and if declared by our
board of directors. We have not paid any cash dividends, and our board of
directors does not intend to declare dividends in the foreseeable future. Our
future earnings, if any, will be used to finance our capital requirements, repay
bank borrowings and fund our operations.

      Our credit facilities prohibit us from paying any dividends without the
written consent of the lender or making any other payments on our capital stock
without the written consent of the lender. There can be no assurance that the
lender will provide such consent.

Possible delisting of our stock

      Our common stock trades on the Nasdaq SmallCap Market. There are certain
qualitative and quantitative criteria for continued listing on the Nasdaq
SmallCap Market, known as continued listing requirements. Failure to satisfy any
one of these continued listing requirements could result in our securities being
delisted from the Nasdaq SmallCap Market. These criteria include at least two
active market makers, maintenance of $2,500,000 of stockholders' equity (or
alternatively, $35,000,000 in market capitalization or $500,000 in net income
from operations in the latest fiscal year or 2 of the last 3 fiscal years), a
minimum bid price for our common stock of $1.00, and at least 500,000 publicly
held shares with a market value of at least $1,000,000, among others. Continued
listing also requires compliance with the Nasdaq Stock Market's corporate
governance listing criteria. Usually, if a deficiency occurs for a period of 30
consecutive trading days (10 consecutive trading days for failure to satisfy the
minimum market capitalization requirement), the particular company is notified
by Nasdaq and has a grace period in which to achieve compliance. If the company
is unable to demonstrate compliance after the expiration of any applicable grace
period, the security is subject to delisting. The security might be able to
trade on the Nasdaq OTC Bulletin Board, a less transparent trading market which
may not provide the same visibility for the company or liquidity for its
securities, as does the Nasdaq SmallCap Market. As a consequence, an investor
may find it more difficult to dispose of or obtain prompt quotations as to the
price of our securities, and may be exposed to a risk of decline in the market
price of our common stock.

      The Nasdaq SmallCap Market requires that we maintain a minimum market
value of public float of $1,000,000 for continued listing. The publicly trading
shares, exclusive of any affiliate ownership, which is the float for our common
stock, is approximately 1,632,725 shares, and as the closing price of our shares
on March 15, 2005 was $3.79, we currently satisfy that maintenance requirement.

      Our common stock has traded as low as $.52 in the fourth quarter of 2002,
and has limited trading volume. There is the risk of being delisted from the
Nasdaq SmallCap Market should our common stock fail to maintain a minimum bid
price of $1.00 per share for 30 consecutive days, or we fail to meet other
continued listing requirements. During 2004 we were notified by Nasdaq of a
failure to meet its qualitative listing requirements due to the failure of our
audit committee to comply with the independence criteria, although the company
was able to correct this deficiency before further action by Nasdaq. Continued
satisfaction of certain of the Nasdaq SmallCap continued listing requirements is
beyond our control. There is no assurance that we will continue to satisfy the
continued listing maintenance criteria, which, without a timely cure, could
cause our securities to be delisted from the Nasdaq SmallCap Market.


                                       16
<PAGE>

Item 2.  Properties

      The following chart summarizes the principal properties leased by the
company:

<TABLE>
<CAPTION>
Space                          Property                      Term
-----                          --------                      ----
<S>                            <C>                           <C>
16,000 sq. ft.                 2230 W 77th St.               10 yrs. to August 31, 2010
(exec. offices, mfg.)          Hialeah, FL

12,000 sq. ft.                 2230 W 77th St.               10 yrs. to August 31, 2010
(mfg., warehouse)              Hialeah, FL

5,500 sq. ft.                  171 Commonwealth Ave.         3 yrs. to March 31, 2008
(mfg., offices)                Attleboro, MA

18,225 sq. ft.                 800 Paloma Dr.                1 yr. to May 31, 2005
(mfg., office, warehouse)      Round Rock (Austin), TX(1)

16,000 sq. ft.                 2685 N. Coria                 Month to month
(office, warehouse)            Brownsville, TX

37,919 sq. ft.                 Parque Industrial CYLSA       5 yrs. to July 15, 2006
(mfg., office, warehouse)      Matamoros, Mexico

55,524 sq. ft.                 Parque Industrial CYLSA       13 yrs. to October 31, 2017
(mfg., office, warehouse)      Matamoros, Mexico
</TABLE>


(1)   3,000 square feet of this location is sub-leased to Champion Temporaries,
      Inc.

      In October, 2004, we exercised an option to purchase for $1,400,000 a
77,800 square foot manufacturing, office and warehouse facility located at 1784
Stanley Avenue in Dayton, Ohio, which we had previously leased. The facility is
encumbered by a mortgage to the Bank of Scotland to secure the acquisition
indebtedness of $1,400,000.

      We maintain state-of-the-art manufacturing, quality control, testing and
packaging equipment at all of our facilities.

      We believe that our equipment and facilities are suitable and adequate for
our current operations and provide us with the productive capacity we need for
our current business levels. We utilize approximately 50% of the capacity of
each of our facilities on a one shift schedule for our business.

      We are subject to a variety of environmental regulations relating to our
manufacturing processes and facilities. See "Government Regulation" and "Risk
Factors" under Item 1, "Business."

Item 3. Legal Proceedings

      We are a party in a pending proceeding entitled Lemelson Medical Education
& Research Foundation, Limited Partnership v. Esco Electronics Corporation, et
al., initiated in April 2000, pending in the United States District Court for
the District of Arizona. Lemelson brought a suit against 91 named defendants,
including our company, for infringement of a variety of patents owned by
Lemelson, primarily relating to Lemelson's machine vision and bar code scanning


                                       17
<PAGE>

patents. Each of the defendants is involved, as is our company, in the
manufacture of electronic or semiconductor products. Lemelson simultaneously
filed similar lawsuits in the same court against approximately another 350
defendants in different categories of electronic manufacturing.

      This matter has been referred to patent counsel, who filed jointly with
the majority of the other named defendants, a motion to stay any further
proceedings pending the resolution of a motion for summary judgment addressing
the issue of the equitable defense of "prosecution laches" in an unrelated
action entitled Lemelson v. Symbol Technologies, Inc. The equitable defense of
prosecution laches is based on the assertion that Lemelson filed initial patent
applications with USPTO in the 1950s and continued the patent prosecution
through the 1990s continually amending his applications to include products and
methods that have become prevalent in the market. In February 2002, the Federal
Court of Appeals in the Symbol Technologies case found that prosecution laches
is a viable defense to patent infringement claims. This determination is
favorable and could minimize or totally negate Lemelson's claim.

      Additionally, on March 29, 2001, the court issued an order to stay this
litigation pending the entry of a final non-appealable judgment in earlier-filed
actions involving the same patents. In January 2004, the court in these
earlier-filed actions ruled that the patents at issue were invalid,
unenforceable and not infringed by bar code scanners and machine vision reading
systems very similar to the bar code scanners and machine vision reading systems
used by us. In September 2004, Lemelson filed an appeal in the Symbol
Technologies case. As of March 15, 2005, the appeal is awaiting a hearing date.

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

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

      No matter was submitted to a vote of security holders through the
solicitation of proxies or otherwise during the fourth quarter of 2004.


                                       18
<PAGE>

                                     Part II

Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters
        and Issuer Repurchases of Equity Securities

Market for Common Stock

      The table below reflects the high and low closing sales prices for our
common stock, which trades under the symbol "SIMC", formerly under the symbol
"TCDN", as reported by the Nasdaq SmallCap Market. The prices shown represent
quotations between dealers, without adjustment for retail markups, markdowns or
commissions and may not represent actual transactions.


         2003
         ----
                              High                 Low
                              ----                 ---
         1st Quarter          $1.32                $1.05
         2nd Quarter          $2.35                $1.25
         3rd Quarter          $3.10                $2.00
         4th Quarter          $3.14                $2.12


         2004
         ----
                              High                 Low
                              ----                 ---
         1st Quarter          $3.10                $2.20
         2nd Quarter          $4.79                $2.30
         3rd Quarter          $6.60                $3.10
         4th Quarter          $6.65                $3.27

      At March 15, 2005, the closing sales price of our common stock was $3.79.

      At March 15, 2005, we had 57 holders of record of our common stock.

Dividends

      We have not paid, nor do we have any present plans to pay cash dividends
on our common stock in the immediate future. In addition, our credit facilities
with the Bank of Scotland prohibit us from declaring or paying dividends on our
common stock without the Bank of Scotland's written consent. See Item 7,
"Management's Discussion and Analysis of Financial Conditions and Results of
Operations - Liquidity and Capital Resources."

Issuer Repurchases

      No purchases of any of our outstanding shares were made by or on behalf of
the company or any affiliated purchaser during the fourth quarter of 2004.

Item 6. Selected Financial Data

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


                                       19
<PAGE>

                   Consolidated Statements of Operations Data
                     (in thousands except per share amounts)

<TABLE>
<CAPTION>
                                                Years Ended December 31,
                             ---------------------------------------------------------------
                                 2004         2003         2002         2001         2000
                                 ----         ----         ----         ----         ----
<S>                          <C>          <C>          <C>          <C>           <C>
Revenues                     $   53,582   $   36,187   $   33,692   $   37,042    $   52,767
Net income (loss)                 2,342        1,106        1,390       (2,806)          565
Earnings (loss) per share:
    Basic                    $      .36   $      .17   $      .21   $     (.43)   $      .09
    Diluted                  $      .36   $      .17   $      .21   $     (.43)   $      .09
</TABLE>


                         Consolidated Balance Sheet Data
                                 (in thousands)

<TABLE>
<CAPTION>
                                                 December 31,
                       --------------------------------------------------------------
                           2004         2003        2002          2001        2000
                           ----         ----        ----          ----        ----
<S>                    <C>          <C>          <C>          <C>          <C>
Working capital        $   12,137   $   11,804   $   10,018   $    8,859   $   12,443
Total assets               32,580       25,674       22,168       21,209       27,876
Long-term debt              6,700        6,500        5,315        6,371        8,582
Total liabilities          18,462       13,913       11,797       12,230       16,295
Stockholders' equity       14,119       11,761       10,371        8,979       11,581
</TABLE>


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

Introduction and Overview

      In 2004, we experienced a strong year-on-year sales increase and improved
earnings significantly from 2003. During this period, we continued to focus on
the following key priorities: (1) expanding our customer base through our
alliance with Simclar Group, (2) seeking to develop strong, long-term alliances
with major growth OEMs, and (3) developing the opportunities arising from our
acquisition of Simclar (Mexico) in July 2003. During 2004, we continued to see
new business awards from existing and new customers.

      As discussed in more detail throughout this Item 7:

      o     our revenues increased by 48.1% during 2004 compared to 2003,
            following 7.4% sales growth in 2003 compared to 2002;

      o     gross margin in 2004 increased by approximately $2,482,000 compared
            to 2003, primarily due to sales growth;

      o     we continued to leverage selling, general and administrative
            expenses and reduced these to 7.0% of sales in 2004 from 8.7% in
            2003;

      o     net income of approximately $2,342,000 in 2004 substantially
            exceeded net income of approximately $1,106,000 in 2003;


                                       20
<PAGE>

      o     cash flows used in investing activities were approximately
            $3,139,000 in 2004, mainly for earn-out consideration in connection
            with the acquisition of Simclar (Mexico), the purchase of the land
            and building occupied by our Dayton, Ohio plant and purchases of
            machinery and equipment for our new manufacturing facility in
            Mexico; and

      o     increased bank borrowing facilities of $3,400,000 were negotiated in
            2004 with Bank of Scotland to fund our investing activities and the
            increased working capital requirements resulting from the increase
            in sales in the year.

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

      The industry segments we serve, and the electronics industry as a whole,
are subject to rapid technological change and product obsolescence.
Discontinuance or modification of products containing components manufactured by
our company could adversely affect our results of operations. The electronics
industry is also subject to economic cycles and has in the past experienced, and
is likely in the future to experience, recessionary periods. A prolonged
worldwide recession in the electronics industry, as we experienced from 2001
through 2003, could have a material adverse effect on our business, financial
condition and results of operations. During periods of recession in the
electronics industry, our competitive advantages in the areas of
quick-turnaround manufacturing and responsive customer service may be of reduced
importance to electronic OEMs, who may become more price sensitive.

      We typically do not obtain long-term volume purchase contracts from our
customers, but rather we work with our customers to anticipate future volumes of
orders. Based upon such anticipated future orders, we will make commitments
regarding the level of business we want and can accomplish given the current
timing of production schedules and the levels of and utilization of facilities
and personnel. Occasionally, we purchase raw materials without a customer order
or commitment. Customers may cancel, delay or reduce orders, usually without
penalty, for a variety of reasons, whether relating to the customer or the
industry in general, which orders are already made or anticipated. Any
significant cancellations, reductions or order delays could adversely affect our
results of operations.

      We use Electronic Data Interchange (EDI) with both our customers and our
suppliers in our efforts to continuously develop accurate forecasts of customer
volume requirements, as well as sharing our future requirements with our
suppliers. We depend on the timely availability of many components. Component
shortages could result in manufacturing and shipping delays or increased
component prices, which could have a material adverse effect on our results of
operations. It is important for us to efficiently manage inventory, proper
timing of expenditures and allocations of physical and personnel resources in
anticipation of future sales, the evaluation of economic conditions in the
electronics industry and the mix of products, whether PCBs, wire harnesses,
cables, or turnkey products, for manufacture. See "Electronic Manufacturing
Industry" and "Supplies and Materials Management" under Item 1, "Business" and
"Results of Operations" below.


                                       21
<PAGE>

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

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

Key Financial Performance Measures

      We manage and assess the performance of our business primarily through the
following measures:

      Orders booked and backlog - the ratio of orders booked to sales is
      reviewed on a monthly basis for each of the company's five manufacturing
      plants.

      Sales - monthly sales for each plant are compared against budget and the
      same month in the previous year.

      Gross margin - the gross margin achieved by each plant each month is
      compared against budget and the same month in the previous year.

      Selling, general and administrative expenses - the ratio of these expenses
      as a percentage of sales for each plant each month is compared against
      budget.

      Working capital - movements in the balance sheet amounts of inventory,
      accounts receivable and accounts payable for each plant are reviewed on a
      monthly basis.

      Bank borrowings - movements in the company's working capital facility with
      the bank are reviewed on a weekly basis.

      In the event that any of the above measures indicate unusual movements or
trends, further review is undertaken by management to ensure that satisfactory
explanations are obtained, and, where necessary, appropriate corrective action
is taken.

Results of Operations

      The following is a discussion of the key factors that have affected our
business over the last three years. This discussion should be read in
conjunction with our consolidated financial statements and the related footnotes
included herein.


                                       22
<PAGE>

2004 Compared to 2003

      Consolidated revenues increased approximately $17,395,000 (48.1%) for the
year ended December 31, 2004, compared to the preceding year. The acquisition of
Simclar (Mexico) in July 2003 generated $9,941,000 of the increase in sales in
2004. Continual improvements in our sales to the computer peripherals,
instrumentation, power equipment, telecommunications and food preparation
equipment industries provided the additional $7,454.000 of increased sales in
2004, compared to the preceding year. Only our sales to the military-government
sector declined in 2004, when compared to 2003. Our best sales improvements in
2004 were in our sales to computer peripherals industry of $5,099,000 and to the
instrumentation industry of $4,260,000. Interest and other income decreased
approximately $68,000 in the year ended December 31, 2004, compared to the
preceding year. The decrease was due to gain on the disposition of a building in
Scotland in the year ending December 31, 2003.

      Approximately 43% of our consolidated sales for 2004 were made to five
customers. Illinois Tool Works ("ITW") (17%) is the only customer that accounts
for more than 10% of our total sales. The loss of or substantial reduction of
sales to any major customer would have an adverse effect on our operations if
such sales were not replaced. See Item 1, "Business-Customers."

      Cost of goods sold as a percentage of sales amounted to 86% for the year
ended December 31, 2004 and 87% for the preceding year. The company experienced
higher material costs as a percentage of sales, at 62% percent of sales for the
products manufactured in 2004, compared to 58% in the preceding year. The higher
material cost was due to price increases from suppliers of electronic components
and higher cost bills of materials for certain products manufactured in the
second half of the year. The labor content of our manufactured products remained
steady at 8% of sales for 2004 and for 2003. The overhead component of cost of
goods sold as a percentage of sales was 17% in 2004, compared to 21% in the
preceding year. This was due mainly to the higher volume production in our four
U.S. manufacturing locations in 2004.

      Selling, general and administrative expenses increased by approximately
$618,000 (20%) for the year ended December 31, 2004, compared to the preceding
year, and amounted to approximately 7% and 9% of sales for 2004 and 2003,
respectively. The acquisition of Simclar (Mexico) in July 2003 contributed
approximately $409,000 of the increase in 2004 compared to 2003. Increased
employee costs were the primary drivers of the remaining expense increase in
2004 compared to 2003.

      Interest expense decreased approximately $5,000 for the year ended
December 31, 2004, compared to the preceding year, reflecting the decreased
borrowings until October 2004 when we restructure our credit facilities to
acquire the land and building of our Dayton, Ohio facility, which we formerly
had leased. The three month LIBOR was 2.30% and 1.13% at December 31, 2004 and
2003, respectively.

2003 Compared to 2002

      Consolidated revenues increased approximately $2,496,000 (7.4%) for the
year ended December 31, 2003, compared to the preceding year. The acquisition of
Simclar (Mexico) in July 2003 generated $5,178,000 of increased sales.
Improvements in the computer peripherals and telecommunication industries
provided an increase in sales of $1,827,000 in 2003 over 2002. Soft demand in
the food preparation industry decreased sales by $3,994,000 for the year ended
December 31, 2003 compared to the year ended December 31, 2002. Interest and
other income increased approximately $86,000 primarily due to the gain on the
disposition of a building in Scotland in the year ended December 31, 2003,
compared to the preceding year.


                                       23
<PAGE>

      Approximately 46% of our consolidated sales for 2003 were made to five
customers. Illinois Tool Works ("ITW") (22%) was the only customer that
accounted for more than 10% of our total sales in 2003.

      Cost of goods sold as a percentage of sales amounted to 87% for the year
ended December 31, 2003, and 86% for the preceding year. The 1% increase in cost
of goods sold as a percentage of sales was attributable to the slightly higher
cost structure of our Matamoros, Mexico facility. At the remaining four
manufacturing locations, cost of goods sold as a percentage of sales remained
the same at 86% for the years ended December 31, 2003 and 2002.

      Selling, general and administrative expenses increased by approximately
$236,000 (9%) for the year ended December 31, 2003, compared to the preceding
year, and amounted to approximately 9% of sales for 2003 and 2002, respectively.
The increase in 2003 was due primarily to the cost added with the acquisition of
Simclar (Mexico) in July 2003.

      We recorded a one time charge of approximately $171,000 in 2003 related to
the write-off of the accumulated foreign currency transaction account due to the
substantial liquidation of our wholly-owned subsidiary, Techdyne (Europe) in the
fourth quarter of 2003.

      Interest expense decreased approximately $71,000 for the year ended
December 31, 2003, compared to the preceding year, reflecting the decreased
borrowings due to our profitable operations, along with declining interest rates
during the year. The three month LIBOR was 1.13% and 1.35% at December 31, 2003
and 2002, respectively.

Liquidity and Capital Resources

      Our cash and cash equivalents balances at December 31, 2004 were
approximately $280,000, compared to approximately $230,000 at December 31, 2003.
Net cash provided by operating activities was approximately $1,543,000 in 2004
compared to approximately $1,010,000 in 2003. The increase in cash provided from
operating activities in 2004 as compared to 2003 was due primarily to an
increase in net income in 2004 compared to 2003 with a slight offset due to
increased working capital to support our 48% increase in sales in 2004 over
2003.

      At December 31, 2004, our average outstanding sales' days was 54 days as
compared to 49 days at December 31, 2003. The increase in our average
outstanding sales' days is primarily the result of the nature of the customer
base that we are servicing from our Mexican facilities. The overall trend we
experienced over the last two years is that the majority of our customers are
stretching out payment terms. Average inventory turnover was 4.1 and 3.4 times
for the years ended December 31, 2004 and 2003, respectively. The increase in
inventory turnover is primarily due to our increased sales in 2004 across all of
the industries that we service, with the exception of the military-government
sector.

      Cash flows used in investing activities were approximately $3,139,000 in
2004 as compared to approximately $1,457,000 in 2003. Cash used in investing
activities was primarily for additional consideration paid as an earn-out in
connection with the acquisition of Simclar (Mexico), the purchase of the land
and building occupied by our manufacturing operation in Dayton, Ohio, and
purchases of machinery and equipment for our new manufacturing facility in
Mexico. We have a capital expenditure budget of $700,000 for 2005.

      Cash flow provided from financing activities was approximately $1,630,000
in 2004 as compared to cash flow used in 2003 of approximately $1,083,000. The
cash flow provided was from the restructuring of our two credit facilities with
the Bank of Scotland as discussed below.


                                       24
<PAGE>

      On October 2, 2001, the company entered into two credit facilities with
Bank of Scotland in Edinburgh, Scotland for an aggregate borrowing of
$10,000,000. The financing included a $3,000,000 line of credit, with an
interest rate at LIBOR plus 1.5% for a one, three or six month period, at the
company's election. The financing also included a seven-year term loan of
$7,000,000 at the same interest rate as the line of credit. The term loan
specified quarterly payments of $250,000 due in January, April, July and October
of each year.

      On October 14, 2004, the company restructured its existing term loan and
working capital facilities with the Bank. The term loan was made pursuant to an
Amended and Restated Facility Letter providing for a term loan of $5,650,000, of
which Tranche A represents outstanding borrowings of $4,250,000, and Tranche B
represents the $1,400,000 loan to acquire the property located at 1784 Stanley
Avenue, Dayton, Ohio. The principal of Tranche A is repayable in quarterly
installments of $250,000 in January, April, July and October of each year from
2004 through 2008, with the final payment due in October 2008. The principal of
Tranche B is payable in twenty-eight equal quarterly installments of $50,000,
with the first installment payable on January 20, 2005. Interest on each advance
accrues at an annual rate equal to LIBOR plus 1.5%, plus an amount, rounded to
the nearest eighth of a percent, to cover any increases in certain regulatory
costs incurred by the Bank. The company may elect to pay interest on advances
every one, three or six months, with LIBOR adjusted to correspond to the
interest payment period selected by the company. The company elected the
three-month interest period at 3.8% until January 24, 2005. After this date the
rate is 4.17% until April 24, 2005. The term loan had an outstanding balance of
$5,400,000 at December 31, 2004.

      The company's existing working capital facility with the Bank was also
amended on October 14, 2004 to increase the amount of the facility from
$3,000,000 to $5,000,000. Advances bear interest, and interest is payable, on
the same terms as under the Amended Term Loan Facility. This line of credit had
an outstanding balance of $2,980,000 at December 31, 2004, and expires on
September 30, 2005. The Company intends to renew this credit facility prior to
its expiration date.

      All of the assets of the company collateralize the credit facilities. The
credit facilities contain affirmative and negative covenants. Certain of the
affirmative covenants require maintenance of a consolidated adjusted net worth
greater than $11,000,000; a ratio of consolidated current assets to consolidated
net borrowing not less than 1.75 to 1; a ratio of consolidated trade receivables
to consolidated net borrowings not less than .75 to 1; and a ratio of
consolidated net income before interest and income taxes to total consolidated
interest costs not less than 2 to 1. Some of the negative covenants, among
others, include (1) granting or permitting a security agreement against the
consolidated assets of the companies other than permitted security agreements,
(2) declaring or paying any dividends or making any other payments on the
company's capital stock, (3) consolidating or merging with any other entity or
acquiring or purchasing any equity interest in any other entity, or assuming any
obligations of any other entity, except for notes and receivables acquired in
the ordinary course of business, (4) incurring, assuming, guarantying, or
remaining liable with respect to any indebtedness, except for certain existing
indebtedness disclosed in these financial statements, or (5) undertaking any
capital expenditure in excess of $1,000,000 in any one fiscal year.

      The agreements also preclude, without the bank's prior written consent,
changes in ownership in the companies, any mergers or acquisitions, any material
change in any of our business objectives, purposes, operations and tax residence
or any other circumstances or events which will have a material adverse effect
as defined by the agreements. The bank consented to the Simclar (Mexico)
acquisition in 2003.

      Our ability to comply with these provisions may be affected by changes in
our business condition or results of our operations, or other events beyond our
control. The breach of any of these covenants would result in a default under
our debt agreements. At December 31, 2004, the company was not in compliance
with one of these covenants as a result of having capital expenditures for the


                                       25
<PAGE>

year 2004 in excess of the $1,000,000 limit specified in the covenant. However,
we obtained from the Bank a waiver of the non-compliance, and we believe that we
will remain in compliance with our covenants for the remainder of 2005, but
there can be no assurance that defaults in any of the covenants will not occur
in the future, nor can there be any assurance that our lender will waive future
covenant violations. A default of the covenants would permit our lender to
accelerate the maturity of our credit facilities and to sell the assets securing
them, which would cause us to cease operations and seek bankruptcy protection.

      On October 11, 2001, Techdyne (Europe) entered into a credit facility with
Bank of Scotland for an amount of (pound)275,000 ($399,025). This facility
comprised an eight-year term loan repayable in quarterly payments of
(pound)8,594 ($13,788) due in January, April, July and October of each year,
with an interest rate of Bank of Scotland base rate plus 1.5% (effectively 5.4%
at December 31, 2002). This term loan in the amount of (pound)214,844($319,999)
was paid off on September 1, 2003.

      We have no off-balance sheet financing arrangements with related or
unrelated parties and no unconsolidated subsidiaries. In the normal course of
business, we enter into various contractual and other commercial commitments
that impact or can impact the liquidity of our operations. The following table
outlines our commitments at December 31, 2004:

<TABLE>
<CAPTION>
                                       Total     Less than       1-3          4-5        Over 5
In thousands                          Amounts      1 Year       Years        Years        Years
                                    --------------------------------------------------------------
<S>                                 <C>          <C>          <C>          <C>          <C>
Long-term debt with interest        $    5,966   $    1,406   $    2,663   $    1,478   $      419
Operating leases (non-cancelable)        5,493          746        1,147        1,020        2,580
Bank line of credit with interest        3,073        3,073           --           --           --
Vendor open line of credit               2,853          353        2,500
                                    --------------------------------------------------------------
Total commitments                   $   17,385   $    5,578   $    6,310   $    2,498   $    2,999
                                    ==============================================================
</TABLE>

Effect of Recently Issued Accounting Pronouncements

      In December 2004, the Financial Accounting Standards Board (FASB) issued
SFAS No. 123(R), Share-Based Payment, which would require all share-based
payments to employees, including grants of employee stock options, to be
recognized in the consolidated statements of operations based on their fair
values, effective for public companies for interim periods beginning after June
15, 2005. SFAS No.123(R) permits public companies to adopt its requirements
using either the modified prospective or retrospective method. The company will
adopt this statement in the third quarter of fiscal year 2005 and currently does
not anticipate that the adoption of this standard will have a material effect on
our consolidated results of operations, financial position, and cash flows.

      In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an
amendment of ARB No. 43, Chapter 4 Inventory Pricing". SFAS No. 151 requires
idle facility costs, abnormal freight, handling costs, and amounts of wasted
materials (spoilage) be treated as current-period costs. Under this concept, if
the costs associated with the actual level of spoilage or production defects are
greater than the costs associated with the range of normal spoilage or defects,
the difference would be charged to current-period expense, not included in
inventory costs. SFAS No. 151 also requires the allocation of fixed production
overheads to the costs of conversion be based on the normal capacity of the


                                       26
<PAGE>

production facilities. SFAS No. 151 is effective for inventory costs incurred
during fiscal years beginning after June 15, 2005. We will adopt this statement
for fiscal year 2006 and currently do not anticipate that the adoption of this
standard will have a material effect on our consolidated results of operations,
financial position, and cash flows.

      In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
Assets, an amendment of APB Opinion No. 29, Accounting for Nonmonetary
Transactions." The amendments made by SFAS No. 153 are based on the principle
that exchanges of nonmonetary assets should be measured based on the fair value
of the assets exchanged. The guidance in APB Opinion No. 29 provided an
exception to this basic measurement principle for exchanges of similar
productive assets. That exception required that some nonmonetary exchanges be
recorded on a carryover basis. SFAS No. 153 eliminates this exception for
nonmonetary exchanges of similar productive assets and replaces it with a
general exception for exchanges of nonmonetary assets that do not have
commercial substance. An exchange would lack commercial substance if our future
cash flows are not expected to change significantly as a result of that
exchange. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in
fiscal periods beginning after June 15, 2005. Earlier application is permitted.
We will adopt this new standard for fiscal year 2006 and do not anticipate that
the adoption of this standard will have a material effect on our consolidated
results of operations, financial position, and cash flows.

Critical Accounting Policies

      We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our consolidated
financial statements.

      Allowance for Doubtful Accounts--We maintain an allowance for doubtful
accounts for estimated losses resulting from the inability of customers to make
required payments. Based on historical information, we believe that our
allowance is adequate. However, changes in general economic, business and market
conditions could affect the ability of customers to make their required
payments; therefore, the allowance for doubtful accounts is reviewed monthly and
changes to the allowance are updated as new information is received.

      Allowance for Inventory Obsolescence--We maintain an allowance for
inventory obsolescence for losses resulting from inventory items becoming
unusable in the manufacturing operations due to loss of a specific customer or a
customer's product changes or discontinuations. Based on historical and
projected sales information and concentration of customers, we believe that the
allowance is adequate. However, changes in general economic, business and market
conditions could cause customers to cancel, reduce or reschedule orders. These
changes could affect the company inventory turnover; therefore, the allowance
for inventory obsolescence is reviewed monthly and changes to the allowance are
updated as new information is received.

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

      Impairment of Long-Lived Assets--In accordance with Statement of Financial
Accounting Standards (SFAS) No. 144, "Accounting for the Impairment or Disposal
of Long-Lived Assets," long-lived assets to be held and used are reviewed for
impairment whenever events or circumstances indicate that the carrying amount
may not be recoverable. When required, impairment losses on assets to be held
and used are recognized based on the fair value of the asset. The fair value of
these assets is determined based upon estimates of future cash flows, market
value of similar assets, if available, or independent appraisals, if required.
In analyzing the fair value and recoverability using future cash flows, we make
projections based on a number of assumptions and estimates of growth rates,
future economic conditions, assignment of discount rates and estimates of
terminal values. An impairment loss is recognized if the carrying amount of the


                                       27
<PAGE>

long-lived asset is not recoverable from its undiscounted cash flows. The
measurement of impairment loss is the difference between the carrying amount and
fair value of the asset. Long-lived assets to be disposed of and/or held for
sale are reported at the lower of carrying amount or fair value less cost to
sell. We determine the fair value of these assets in the same manner as
described for assets held and used. See "Long-Lived Asset Impairment" in Note 1
to our consolidated financial statements included in this report.

      Goodwill and indefinite-lived intangibles are required to be evaluated for
impairment on an annual basis, or more frequently if impairment indicators
arise, using a fair-value-based test that compares the fair value of the asset
to its carrying value. Fair values are typically calculated using discounted
expected future cash flows, using a risk-adjusted discount rate.

      The company performed the annual test for goodwill impairment related to
the Lytton and Simclar (Mexico) acquisitions. These tests were performed at the
reporting unit level. In the test, we determined that the discounted sum of the
expected future cash flows from the assets exceeded the carrying value of those
assets; therefore, no impairment of goodwill was recognized. In performing the
tests for impairment, we made assumptions about future sales and profitability.
In estimating expected future cash flows related to the Lytton and Simclar
(Mexico) assets, we used internal forecasts that were based upon actual results,
assuming an average revenue growth of 5% and 8% per year, respectively, and
minimal increases in gross margin.

      At the time of the impairment test, the carrying value of the net assets
acquired in the Lytton and Simclar (Mexico) transactions was $10.4 and $2.9
million, respectively. If our estimate of expected future cash flows had been
10% lower, the expected future cash flows would still have exceeded the carrying
value of the assets by $0.7 million for Lytton and by $1.5 million for Simclar
(Mexico), including goodwill.

      The most critical estimates, in order of significance, used in the
impairment test include (1) estimated revenue growth, (2) the terminal value
assumed, and (3) the discount rate applied. We cannot predict the occurrence of
future impairment triggering events nor the impact such events might have on
reported asset values. Such events may include strategic decisions made in
response to economic conditions relative to operations and the impact of
technology, economic conditions, and industry trends on our customer base.

      Revenue Recognition and Accounts Receivable-- The company's sales are
primarily derived from product manufacturing including, but not limited to,
finished molded and non-molded cables, wiring harnesses, printed circuit board
assemblies, electro-mechanical and electronic assemblies. Revenue is recognized
upon shipment of the product to the customer, under contractual terms, which are
generally FOB shipping point. Upon shipment, title transfers and the customer
assumes the risks and rewards of ownership of the product. The selling price of
the product is fixed and the ability to collect for the sale to the customer is
reasonably assured when the product is shipped.

      Revenue from contract manufacturing, rework and refurbishing is recognized
upon shipment of the product to the customer, under contractual terms, which are
generally FOB shipping point.

      Business Combinations--We are required to allocate the purchase price of
acquired business to the tangible and intangible assets acquired and liabilities
assumed, based on their estimated fair values. Such valuations require us to
make significant estimates and assumptions, especially related to intangible
assets. We used outside sources of information to complete a valuation to assist
in determining the fair value of assets acquired and liabilities assumed for the
Simclar (Mexico) acquisition completed during 2003. The purchased intangible
assets were recorded by us at the fair value assigned.

      Critical estimates were used in valuing certain intangible assets and
plant and equipment include but are not limited to: future expected cash flows


                                       28
<PAGE>

from acquired customers' continuing sales; and the expected useful life of plant
and equipment. Our estimates are based upon assumptions we believe are
reasonable, but which are inherently uncertain and unpredictable; as a result,
actual results may differ from estimates.

Cautionary Statement Concerning Forward-Looking Statements

      This Report includes certain forward-looking statements with respect to
our company and our business that involve risks and uncertainties. These
statements are influenced by our financial position, business strategy, budgets,
projected costs and the plans and objectives of management for future
operations. They use words such as anticipate, believe, plan, estimate, expect,
intend, project and other similar expressions. Although we believe our
expectations reflected in these forward-looking statements are based on
reasonable assumptions, we cannot assure you that our expectations will prove
correct. Actual results and developments may differ materially from those
conveyed in the forward-looking statements. For these statements, we claim the
protections for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.

      Important factors include changes in general economic, business and market
conditions, as well as changes in such conditions that may affect industries or
the markets in which we operate, including, in particular, the impact of our
nation's current war on terrorism could cause actual results to differ
materially from the expectations reflected in the forward-looking statements
made in this Report. Further, information on other factors that could affect the
financial results of Simclar, Inc. is included in the company's other filings
with the Securities and Exchange Commission. These documents are available free
of charge at the Commission's website at http://www.sec.gov and/or from Simclar,
Inc. The forward-looking statements speak only as of the date on which they are
made, and we undertake no obligation to update any forward-looking statement to
reflect events or circumstances after the date of this Report.


                                       29
<PAGE>

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

      We are exposed to market risks from changes in interest rates and foreign
currency exchange rates.

      Sensitivity of results of operations to interest rate risks on our
investments is managed by conservatively investing liquid funds in short-term
government securities and interest-bearing accounts at financial institutions in
which we had approximately $39,000 invested at December 31, 2004.

      Interest rate risks on debt are managed by negotiation of appropriate
rates on new financing obligations based on current market rates. There is an
interest rate risk associated with our variable rate debt agreements which
totaled approximately $8,380,000 at December 31, 2004.

      We have exposure to both rising and falling interest rates. A 1/2%
decrease in rates on our year-end investments would have an insignificant impact
on our results of operations. A 1% increase in rates on our year-end variable
rate debt would result in a negative impact of approximately $84,000 on our
operations.

      Our exposure to market risks from foreign currency exchange rates is
minimal.

Item 8. Financial Statements and Supplementary Data

      Our financial statements, and the related notes, together with the reports
of Battelle & Battelle, LLP dated March 28, 2005, and PricewaterhouseCoopers,
LLP dated March 27, 2003, are set forth at pages F-4 through F-8 attached
hereto.

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

      PricewaterhouseCoopers, LLP resigned as our independent accountants
effective July 16, 2003. We engaged new independent accountants, Battelle &
Battelle LLP, for our annual audit for our 2003 fiscal year. This matter was
previously reported by us on the Current Report on Form 8-K dated July 17, 2003,
filed with the Securities and Exchange Commission on July 17, 2003.

      During the two fiscal years ended December 31, 2002 and 2001 and the
subsequent interim period to the date of July 17, 2003, we had no disagreements
with PricewaterhouseCoopers, LLP on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope of procedure, nor
any "reportable events" as defined in Item 304(a)(1)(v) of Regulation S-K of the
Securities and Exchange Commission. Additionally, the reports of
PricewaterhouseCoopers, LLP on our financial statements for those same periods
contained no adverse opinion or disclaimers of opinion, nor were they qualified
or modified as to uncertainty, audit scope or accounting principles.

Item 9A.  Controls and Procedures

      Under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, we evaluated
the effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of
1934 (the "Exchange Act")). Based on that evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that, as of the end of the
period covered by this report, our disclosure controls and procedures are
adequately designed to ensure that the information required to be disclosed by
us in the reports we file or submit under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
applicable rules and forms. During the period covered by this Annual Report on
Form 10-K, there was no change in our internal control over financial reporting


                                       30
<PAGE>

(as defined in Rule 13a-15(f) under the Exchange Act) that materially affected,
or is reasonably likely to materially affect, our internal control over
financial reporting. Subsequent to the date of this evaluation, there have been
no significant changes in our internal controls or in other factors that could
significantly affect these controls, and no corrective actions taken with regard
to significant deficiencies or perceived weaknesses in such controls.

Item 9B. Other Information

Not applicable.

                                    Part III

Item 10. Directors and Executive Officers of the Registrant

      The information required by this item is included under the caption,
"Information about Directors and Executive Officers" in our Information
Statement relating to our 2005 annual meeting of shareholders to be held on June
10, 2005, and is incorporated herein by reference.

      We have adopted a code of conduct and ethics that applies to our
directors, officers and all employees. The code of business conduct and ethics
is posted on our website at www.simclar.com.

Item 11. Executive Compensation

      The information required by this item is included under the caption,
"Executive Compensation" in our Information Statement relating to our 2005
annual meeting of shareholders to be held on June 10, 2005, and is incorporated
herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and
         Related Stockholder Matters

      The information required by this item is included under the caption,
"Security Ownership of Certain Beneficial Owners and Management" and "Equity
Compensation Plan Information" in our Information Statement relating to our 2005
annual meeting of shareholders to be held on June 10, 2005, and is incorporated
herein by reference.

Item 13. Certain Relationships and Related Transactions

      The information required by this item is included under the caption,
"Certain Relationships and Related Transactions" in our Information Statement
relating to our 2005 annual meeting of shareholders to be held on June 10, 2005,
and is incorporated herein by reference.

Item 14. Principal Accountant Fees and Services

      Audit Fees. The aggregate fees billed for professional services rendered
by Battelle & Battelle LLP, for the audit of our annual consolidated financial
statements and the reviews of the financial statements included in our Quarterly
Reports on Form 10-Q were $84,025 for 2004 and $83,500 for 2003 (including
direct engagement expenses).

      Audit-Related Fees. The aggregate fees billed by Battelle & Battelle LLP
for audit-related services rendered for us were $6,100 for 2004 and $-0- for
2003. The audit-related fees included fees for accounting consultation on the
company's internal control system and an audit of the company's employees
benefit plan.

      Tax Fees. The aggregate fees billed by Battelle & Battelle LLP for
tax-related services rendered for us were $17,000 for each of 2004 and 2003. The
tax-related services were all in the nature of tax compliance and tax planning.


                                       31
<PAGE>

      All Other Fees. The aggregate fees billed for services rendered to us by
Battelle & Battelle LLP, other than the audit services, audit-related services,
and tax services, were $-0- for 2004 and $-0- for 20023.

      Pre-approval Policy. Our Audit Committee is required to pre-approve all
auditing services and permitted non-audit services (including the fees and terms
thereof) to be performed for us by our independent auditor or other registered
public accounting firm, subject to the de minimis exceptions for non-audit
services described in Section 10A(i)(1)(B) of the Securities Exchange Act of
1934 that are approved by our Audit Committee prior to completion of the audit.

                                     Part IV

Item 15.  Exhibits and Financial Statement Schedules

      (a)   The following documents are filed as part of this Report.

            (1) The following financial statements are filed as part of this
Annual Report on Form 10-K:

            Independent Auditors' Report.

            Consolidated Balance Sheets as of December 31, 2004 and 2003.

            Consolidated Statements of Operations for the Years Ended December
            31, 2004, 2003 and 2002.

            Consolidated Statements of Stockholders' Equity for the Years Ended
            December 31, 2004, 2003 and 2002.

            Consolidated Statements of Cash Flows for the Years Ended December
            31, 2004, 2003 and 2002.

            Notes to the Consolidated Financial Statements.

            (2) The following financial statement schedule is included in this
Annual Report on Form 10-K and should be read in conjunction with the
Consolidated Financial Statements contained in this Report:

            Schedule II - Valuation and Qualifying Accounts

Schedules not listed above are omitted because of the absence of conditions
under which they are required or because the required information is included in
the financial statements or notes thereto.

            (3) Exhibits:

Exhibit
Number                            Exhibit Description
------                            -------------------

3(i)        Amended and Restated Articles of Incorporation (incorporated by
            reference to Exhibit 3.1 to the Company's Quarterly Report on Form
            10-Q filed November 14, 2003).


                                       32
<PAGE>

3(ii)       By-Laws (incorporated by reference to the Company's Form SB-2, Part
            II, Item 27, 3(b)), as amended June 27, 2001 (incorporated by
            reference to the Company's Form S-3 Registration dated January 23,
            2002, Registration No. 333-81270, Part II, Item 16, 99(i)).

4(i)        Form of Common Stock Certificate (incorporated by reference to the
            Company's Annual Report on Form 10-K filed March 30, 2004( "2003
            Form 10-K"), Exhibit 4(i)).

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

10(ii)      Employment Agreement between the Company and Barry Pardon dated
            September 27, 2000 (incorporated by reference to the Company's
            Annual Report on Form 10-K for the year ended December 31, 2000,
            Part IV, Item 14(a), 10(iii)).

10(iii)     Letter Agreement between Barry Pardon and the Company regarding
            amendment to Employment Agreement (incorporated by reference to the
            Company's 2003 Form 10-K, Exhibit 10(iii)).

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

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

10(vi)      Lease between the Company and Stanley Avenue Properties, Ltd., dated
            July 31, 1997 (incorporated by reference to the Company's 2003 Form
            10-K, Exhibit 10(ix)).

10(vii)     Lease Agreement between Simclar de Mexico, SA de CV and Consorcio
            Inmobiliario Del Noreste, S.A. de C.V., dated July 16, 2001
            (incorporated by reference to the Company's 2003 Form 10-K, Exhibit
            10(x)).

10(viii)    Commercial Lease between Simclar (Mexico) and Fleet Management Co.,
            dated October 1, 1999 (incorporated by reference to the Company's
            2003 Form 10-K, Exhibit 10(xi)).

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

10(x)       Amended Consent to Sublease between the Company, United Consulting
            Group, Inc., and United Computing Group, Inc. (incorporated by
            reference to the Company's Annual Report on Form 10-K for the year
            ended December 31, 2000, Part IV, Item 14(a), 10(xxv)).

10(xi)      Facility Letter, dated October 2, 2001, for the Company's financing
            with the Bank of Scotland (incorporated by reference to the
            Company's Quarterly Report on Form 10-Q for the third quarter of
            2001, Item 6(a)10(a)).

10(xii)     Working Capital Facility Letter, dated October 2, 2001, for the
            Company's Financing with the Bank of Scotland (incorporated by
            reference to the Company's Quarterly Report on Form 10-Q for the
            third quarter of 2001, Item 6(a)10(b)).

10(xiii)    Letter Agreement with the Bank of Scotland dated January 17, 2003
            (incorporated by reference to the Company's 2003 Form 10-K, Exhibit
            10(xvii))


                                       33
<PAGE>

10(xiv)     Letter Agreement with the Bank of Scotland dated November 10, 2003
            (incorporated by reference to the Company's 2003 Form 10-K, Exhibit
            10(xviii))

10(xv)      Amendment Letter to Term Loan Facility Letter between the Company
            and Bank of Scotland, dated October 14, 2004 (incorporated by
            reference to incorporated by reference to the Company's Current
            Report on Form 8-K dated October 20, 2004, Exhibit 99.1).

10(xvi)     Amendment Letter to Working Capital Facility Letter between the
            Company and Bank of Scotland dated October 14, 2004(incorporated by
            reference to incorporated by reference to the Company's Current
            Report on Form 8-K dated October 20, 2004, Exhibit 99.2).

10(xvii)    Service Agreement between the Company and Simclar Group Limited,
            effective July 16, 2003 (incorporated by reference to Exhibit 10.2
            to the Company's Quarterly Report on Form 10-Q filed November 14,
            2003).

10(xviii)   * Lease Agreement between Simclar de Mexico, SA de CV and Consorcio
            Inmobiliario Del Noreste, S.A. de C.V., dated as of November 1, 2004

21          * Subsidiaries of the registrant.

24          * Powers of Attorney.

31.1        * Certification of Chief Executive Officer pursuant to Section 302
            of the Sarbanes-Oxley Act of 2002.

31.2        * Certification of Chief Financial Officer pursuant to Section 302
            of the Sarbanes-Oxley Act of 2002.

32.1        * Certification of Chief Executive Officer of Periodic Financial
            Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
            18 U.S.C. Section 1350.

32.2        * Certification of Chief Financial Officer of Periodic Financial
            Reports pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
            18 U.S.C. Section 1350.

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

*     Filed with this Report.

      (b)   Exhibits.

            The exhibits to this report follow the Signature Page.

      (c)   Financial Statement Schedules.

            The financial statement schedule follows the exhibits to this
            report.


                                       34
<PAGE>

                                   SIGNATURES

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

                                   SIMCLAR, INC.


Date:   March 30, 2005             By: /s/ Barry J. Pardon
                                      ---------------------------------------
                                      Barry J. Pardon, President and Director

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

<TABLE>
<CAPTION>
Name                                                 Title                                      Date
----                                                 -----                                      ----
<S>                                           <C>                                         <C>
/s/ Samuel J. Russell*                        Chairman of the Board of Directors
----------------------------------------      and Chief Executive Officer                 March 30, 2005
Samuel J. Russell

/s/ Barry J. Pardon                           President and Director                      March 30, 2005
----------------------------------------      (principal executive officer)
Barry J. Pardon

/s/ John Ian Durie*                           Vice-President (Finance) and                March 30, 2005
----------------------------------------      Director
John Ian Durie

/s/ David L. Watts*                           Chief Financial Officer and                 March 30, 2005
----------------------------------------      Secretary
David L. Watts                                (principal financial and principal
                                              accounting officer)

                                              Director
----------------------------------------
A. Graeme Manson

                                              Director
----------------------------------------
Douglas Smith

                                              Director
----------------------------------------
Kenneth M. MacKay, M. D.

/s/ Christina M. J. Russell*                  Director                                    March 30, 2005
----------------------------------------
Christina M. J. Russell

*By:/s/ Barry J. Pardon
    ------------------------------------
    Barry J. Pardon, Attorney-in-Fact
</TABLE>


                                       35
<PAGE>

                                FORM 10-K--ITEM 8

                          LIST OF FINANCIAL STATEMENTS

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

                                                                            Page

      Consolidated Balance Sheets - December 31, 2004 and 2003.              F-4

      Consolidated Statements of Operations - Years ended December 31, 2004,
        2003 and 2002.                                                       F-6

      Consolidated Statements of Stockholders' Equity - Years ended
        December 31, 2004, 2003 and 2002.                                    F-7

      Consolidated Statements of Cash Flows - Years ended December 31, 2004,
        2003 and 2002.                                                       F-8

      Notes to Consolidated Financial Statements                             F-9

The following financial statement schedule of Simclar, Inc. and subsidiaries is
included

     Schedule II - Valuation and qualifying accounts.                        S-2

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


                                       36
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

                                FORM 10-K--ITEM 8

                          LIST OF FINANCIAL STATEMENTS

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

                                                                            Page

      Consolidated Balance Sheets - December 31, 2004 and 2003.              F-4

      Consolidated Statements of Operations - Years ended December 31,
        2004, 2003 and 2002.                                                 F-6

      Consolidated Statements of Stockholders' Equity - Years ended
        December 31, 2004, 2003, and 2002.                                   F-7

      Consolidated Statements of Cash Flows - Years ended December 31,
        2004, 2003, and 2002.                                                F-8

      Notes to Consolidated Financial Statements                             F-9

The following financial statement schedule of Simclar, Inc. and subsidiaries is
included

      Schedule II - Valuation and qualifying accounts.                       S-2

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


                                      F-1
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders
Simclar, Inc. and Subsidiaries
Hialeah, FL

      We have audited the accompanying consolidated balance sheet of Simclar,
Inc. and subsidiaries as of December 31, 2004 and 2003, and the related
consolidated statements of operations, stockholders' equity, and cash flows, for
the years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

      We conducted our audit in accordance with the standards of the Public
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. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

      In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Simclar, Inc.
and subsidiaries as of December 31, 2004 and 2003, and the consolidated results
of their operations and their cash flows for the years then ended, in conformity
with accounting principles generally accepted in the United States of America.


Battelle & Battelle LLP
Dayton, Ohio
March 28, 2005


                                      F-2
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

        REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders
Simclar, Inc. and Subsidiaries

In our opinion, the consolidated financial statements listed in the index
appearing under Item 8 on Page F-1 present fairly, in all material respects, the
results of operations and cash flows of Simclar, Inc. and its subsidiaries
(formerly known as Techdyne, Inc.) for the year ended December 31, 2002, in
conformity with accounting principles generally accepted in the United States of
America. In addition, in our opinion, the financial statement schedule listed in
the index appearing under Item 8 on Page F-1 presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements. These financial statements and
financial statement schedule are the responsibility of the company's management.
Our responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits. We conducted our audits of
these statements 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 1, effective January 1, 2002, the company adopted the
provisions of Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets."


/s/ PRICEWATERHOUSE LLP

March 27, 2003
Dayton, Ohio


                                      F-3
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                  December 31,   December 31,
                                                                      2004           2003
                                                                  ---------------------------
<S>                                                               <C>            <C>
ASSETS
Current assets:
  Cash and cash equivalents                                       $    280,015   $    230,183
  Accounts receivable, less allowances of $182,000 and $279,000
    at December 31, 2004 and 2003, respectively                      8,066,978      5,726,814
  Amounts receivable from major stockholder, net                     2,918,037      2,048,921
  Inventories, less allowances for obsolescence of $1,481,000 and
    $1,421,000 at December 31, 2004 and 2003, respectively          11,314,911      9,753,301
  Prepaid expenses and other current assets                            317,183        309,360
  Deferred income taxes                                                795,400        857,600
                                                                  ---------------------------
             Total current assets                                   23,692,524     18,926,179
                                                                  ---------------------------

Property, plant and equipment:
  Land and improvements                                                547,511             --
  Buildings and building improvements                                1,235,904             --
  Machinery, computer and office equipment                           8,171,056      7,268,046
  Tools and dies                                                       290,873        283,828
  Leasehold improvements                                               377,082        677,113
                                                                  ---------------------------
                                                                    10,622,426      8,228,987
  Less accumulated depreciation                                      6,613,775      5,733,519
                                                                  ---------------------------
                                                                     4,008,651      2,495,468

Deferred expenses and other assets, net                                 20,622             --
Goodwill                                                             4,840,545      4,234,113
Intangibles, net                                                        18,000         18,000
                                                                  ---------------------------
                                                                  $ 32,580,342   $ 25,673,760
                                                                  ===========================
</TABLE>

                See notes to consolidated financial statements.


                                      F-4
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                December 31,   December 31,
                                                                    2004           2003
                                                                ---------------------------
<S>                                                             <C>            <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities:
  Line of credit                                                $  2,980,000   $  1,750,000
  Accounts payable                                                 5,414,262      2,960,279
  Accrued expenses                                                 1,124,732        914,916
  Accrued income taxes                                               836,709        496,645
  Current portion of long-term debt                                1,200,000      1,000,000
                                                                ---------------------------
          Total current liabilities                               11,555,703      7,121,840
Long-term debt                                                     4,200,000      4,000,000
Deferred trade accounts payable                                    2,500,000      2,500,000
Deferred income taxes                                                206,000        290,900
                                                                ---------------------------
          Total liabilities                                       18,461,703     13,912,740
                                                                ---------------------------
Commitments and contingencies                                             --             --
Stockholders' equity:
  Common stock, $.01 par value, authorized 10,000,000 shares;
    issued and outstanding  6,465,345 shares at  December 31,
    2004 and  2003                                                    64,653         64,653
  Capital in excess of par value                                  11,446,087     11,446,087
  Retained earnings                                                2,593,238        251,458
  Accumulated other comprehensive income (loss)                       14,661         (1,178)
                                                                ---------------------------
             Total stockholders' equity                           14,118,639     11,761,020
                                                                ---------------------------
                                                                $ 32,580,342   $ 25,673,760
                                                                ===========================
</TABLE>

                 See notes to consolidated financial statements


                                      F-5
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                          Year Ended December 31,
                                               --------------------------------------------
                                                   2004            2003            2002
                                               ------------    ------------    ------------
<S>                                            <C>             <C>             <C>
Sales                                          $ 53,582,487    $ 36,187,105    $ 33,691,582
Cost of goods sold                               46,229,712      31,316,498      29,020,458
                                               --------------------------------------------
  Gross Margin                                    7,352,775       4,870,607       4,671,124

Selling, general and administrative expenses      3,750,984       3,133,170       2,897,101
                                               --------------------------------------------
  Income from operations                          3,601,791       1,737,437       1,774,023

  Interest expense                                  213,284         217,833         288,869
  Interest and other income                         (47,114)       (114,791)        (28,342)
  Foreign currency loss on Scotland shutdown             --         170,867              --
                                               --------------------------------------------

  Income before income taxes                      3,435,621       1,463,528       1,513,496

Income tax provision                              1,093,841         357,207         123,387
                                               --------------------------------------------

            Net income                         $  2,341,780    $  1,106,321    $  1,390,109
                                               ============================================

Earnings per share:
  Basic & diluted                              $       0.36    $       0.17    $       0.21
                                               ============================================
</TABLE>

                 See notes to consolidated financial statements.


                                      F-6
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                                                   Capital in
                                                                      Common       Excess of     Comprehensive
                                                                      Stock        Par Value         Income
                                                                 -------------------------------------------------
<S>                                                               <C>             <C>             <C>
Balance at January 1, 2002                                        $     65,570    $ 11,592,995
Comprehensive income:
   Net income                                                                                        1,390,109
   Other comprehensive income:
     Foreign currency translation adjustments                                                            2,526
                                                                                                  ------------
           Comprehensive income                                                                   $  1,392,635
                                                                                                  ============

                                                                 -----------------------------
Balance at December 31, 2002                                      $     65,570    $ 11,592,995
Comprehensive income:
   Net income                                                                                        1,106,321
   Other comprehensive income:
     Foreign currency translation adjustments                                                          223,171
                                                                                                  ------------
           Comprehensive income                                                                   $  1,329,492
                                                                                                  ============
Cancellation of held stock option shares due to lack of payment         (1,217)       (206,608)
Exercise of stock options                                                  300          59,700
                                                                 -----------------------------
Balance at December 31, 2003                                      $     64,653    $ 11,446,087
Comprehensive income:
   Net income                                                                                        2,341,780
   Other comprehensive income:
     Foreign currency translation adjustments                                                           15,839
                                                                                                  ------------
           Comprehensive income                                                                   $  2,357,619
                                                                                                  ============

                                                                 -----------------------------
Balance at December 31, 2004                                      $     64,653    $ 11,446,087
                                                                 =============================

<CAPTION>
                                                                 Retained       Accumulated       Notes
                                                                  Earnings          Other       Receivable
                                                                (Accumulated)   Comprehensive     Stock
                                                                  (Deficit)     Income (Loss)     Options          Total
                                                                ------------------------------------------------------------
<S>                                                             <C>             <C>             <C>             <C>
Balance at January 1, 2002                                      $ (2,244,972)   $   (226,875)   $   (207,825)   $  8,978,893
Comprehensive income:
   Net income                                                      1,390,109
   Other comprehensive income:
     Foreign currency translation adjustments                                          2,526

           Comprehensive income                                                                                    1,392,635


                                                                ------------------------------------------------------------
Balance at December 31, 2002                                    $   (854,863)   $   (224,349)   $   (207,825)   $ 10,371,528
Comprehensive income:
   Net income                                                      1,106,321
   Other comprehensive income:
     Foreign currency translation adjustments                                        223,171

           Comprehensive income                                                                                    1,329,492

Cancellation of held stock option shares due to lack of payment                                      207,825
Exercise of stock options                                                                                             60,000
                                                                ------------------------------------------------------------
Balance at December 31, 2003                                    $    251,458    $     (1,178)   $         --    $ 11,761,020
Comprehensive income:
   Net income                                                      2,341,780
   Other comprehensive income:
     Foreign currency translation adjustments                                         15,839

           Comprehensive income                                                                                    2,357,619


                                                                ------------------------------------------------------------
Balance at December 31, 2004                                    $  2,593,238    $     14,661    $         --    $ 14,118,639
                                                                ============================================================
</TABLE>

                 See notes to consolidated financial statements.


                                      F-7
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                 Year Ended December 31,
                                                                      ---------------------------------------------
                                                                           2004            2003            2002
                                                                      ---------------------------------------------
<S>                                                                    <C>             <C>             <C>
Operating activities:
  Net income                                                           $  2,341,780    $  1,106,321    $  1,390,109
  Adjustments to reconcile net income to net cash
    provided by  operating activities:
      Depreciation and amortization                                       1,019,609         935,883         941,024
      Gain from disposal of property and equipment                               --         (47,650)             --
      Deferred expenses and other assets                                    (20,622)          9,435          13,217
      Provision for uncollectible accounts                                   35,000              --          24,284
      Provision for inventory obsolescence                                  382,391         245,976         340,088
      Deferred income taxes                                                 (22,700)        (10,300)       (398,600)
      Changes relating to operating activities from:
        Accounts receivable                                              (2,375,164)       (460,553)       (554,611)
        Accounts receivable from majority stockholder, net                 (869,116)       (104,252)       (225,124)
        Inventories                                                      (1,944,001)       (202,241)        470,210
        Prepaid expenses and other current assets                            (7,823)       (180,651)         86,494
        Accounts payable                                                  2,453,983        (210,661)        108,598
        Accrued expenses                                                    209,816         (69,475)         45,324
        Accrued income taxes                                                340,064          (2,182)        519,619
                                                                      ---------------------------------------------
          Net cash provided by operating activities                       1,543,217       1,009,650       2,760,632
                                                                      ---------------------------------------------

Investing activities:
  Acquisition of AG Technologies, Inc and subsidiary                       (606,432)     (1,951,547)             --
  Proceeds from sale of property, plant and equipment                            --         704,433              --
  Additions to property, plant and equipment, net of minor disposals     (2,532,792)       (209,807)       (303,881)
  Note receivable from major stockholder                                         --              --      (1,500,000)
                                                                      ---------------------------------------------
          Net cash used in investing activities                          (3,139,224)     (1,456,921)     (1,803,881)
                                                                      ---------------------------------------------

Financing activities:
  Line of credit payments                                                        --              --        (881,184)
  Line of credit borrowings                                               1,230,000         250,000       1,500,000
  Exercise of stock options                                                      --          60,000              --
  Proceeds from long-term bank borrowings                                 1,400,000              --          21,525
  Payments on long-term bank borrowings                                  (1,000,000)     (1,392,682)     (1,083,765)
                                                                      ---------------------------------------------
          Net  cash  provided by (used in) financing activities           1,630,000      (1,082,682)       (443,424)
Effect of exchange rate fluctuations on cash                                 15,839         223,171           2,526
                                                                      ---------------------------------------------
Net change in cash and cash equivalents                                      49,832      (1,306,782)        515,853
Cash and cash equivalents at beginning of period                            230,183       1,536,965       1,021,112
                                                                      ---------------------------------------------
Cash and cash equivalents at end of period                             $    280,015    $    230,183    $  1,536,965
                                                                      =============================================
</TABLE>

                 See notes to consolidated financial statements.


                                      F-8
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation

      The consolidated financial statements include the accounts of Simclar,
Inc. ("Simclar ") and its subsidiaries, including Simclar (Mexico), Inc.
("Simclar (Mexico)") and Techdyne (Europe) Limited ("Techdyne (Europe)"),
collectively referred to as the "company." During September 2003, the company
changed its name to Simclar, Inc. from Techdyne, Inc. On August 13, 2003 the
company merged its wholly owned subsidiary, Lytton Inc. into Simclar. All
material intercompany accounts and transactions have been eliminated in
consolidation. The company is a 73.4% owned subsidiary of Simclar Group Limited
("Simclar Group").

Business

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

Cash and Cash Equivalents

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

Inventories

      Inventories, which consist primarily of raw materials used in the
production of electronic components, are valued at the lower of cost (first-in,
first-out and/or weighted average cost method) or market value. The cost of
finished goods and work in process consists of direct materials, direct labor
and a portion of fixed and variable-manufacturing overhead. The company reviews
its inventories on an annual basis to identity parts that have not been used in
the manufacturing process during the previous two year period or are not
believed to be required for use in the manufacturing process during the next six
months. The carrying value of these identified parts is adjusted to the
estimated realizable fair market value with a current period charge to an
allowance for obsolescence as reflected in the financial statements.

Property, Plant and Equipment

      Property, plant and equipment is stated on the basis of cost. Depreciation
is computed by the straight-line method over the estimated useful lives of the
assets, which are generally 25 years for buildings and improvements; 3 to 10
years for machinery, computer and office equipment; 3 to 10 years for tools and
dies; and 5 to 15 years for leasehold improvements based on the shorter of the
lease term or estimated useful life of the property. Replacements and
betterments that extend the lives of assets are capitalized. Maintenance and
repairs are expensed as incurred. Upon the sale or retirement of assets, the
related cost and accumulated depreciation are removed and any gain or loss is
recognized. Depreciation expense was approximately $1,020,000, $936,000, and
$941,000 in the years ended December 31, 2004, 2003 and 2002, respectively.

Long-Lived Asset Impairment

      In accordance with Statement of Financial Accounting Standards (SFAS) No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets",
long-lived assets to be held and used are reviewed for impairment whenever
events or circumstances indicate that the carrying amount may not be
recoverable. When required,


                                      F-9
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

impairment losses on assets to be held and used are recognized based on the fair
value of the asset. The fair value of these assets is determined based upon
estimates of future cash flows, market value of similar assets, if available, or
independent appraisals, if required. In analyzing the fair value and
recoverability using future cash flows, the company makes projections based on a
number of assumptions and estimates of growth rates, future economic conditions,
assignment of discount rates and estimates of terminal values. An impairment
loss is recognized if the carrying amount of the long-lived asset is not
recoverable from its undiscounted cash flows. The measurement of impairment loss
is the difference between the carrying amount and fair value of the asset.
Long-lived assets to be disposed of and/or held for sale are reported at the
lower of carrying amount or fair value less cost to sell. The company determines
the fair value of these assets in the same manner as described for assets held
and used.

Deferred Expenses

      Deferred expenses, except for deferred loan costs, are amortized on the
straight-line method, over their estimated benefit period ranging to 60 months.
Deferred loan costs are amortized over the lives of the respective loans. The
amortization expense for the years ended December 31, 2004, 2003 and 2002 was
approximately $10,000, $11,000 and $12,000, respectively.

Goodwill

      The company adopted SFAS No.142, "Goodwill and Other Intangible Assets",
effective January 1, 2002. Under SFAS No. 142, goodwill and certain other
intangible assets are no longer amortized but are tested annually for
impairment. In connection with the adoption of SFAS No. 142, the company
completed the transitional goodwill impairment test, which requires the company
to compare the fair value of its reporting unit to the carrying value of the net
assets of the reporting unit as of December 31, 2004. Based on this analysis,
the company has concluded that no impairment existed since the time of adoption,
and, accordingly, the company has not recognized any transitional impairment
loss.

<TABLE>
<CAPTION>
                                                                    December 31,
                                                        ------------------------------------
                                                           2004         2003         2002
                                                        ------------------------------------
<S>                                                     <C>          <C>          <C>
Goodwill recognized on the acquisition of Lytton Inc.   $2,954,995   $2,954,995   $2,954,995
Goodwill recognized on the acquisition of
  AG Technologies, Inc.                                  1,885,550    1,279,118           --
                                                        ------------------------------------
                                                        $4,840,545   $4,234,113   $2,954,995
                                                        ====================================
</TABLE>

Income Taxes

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


                                      F-10
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Stock-Based Compensation

The company follows Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" (APB 25) and related Interpretations in accounting
for its employee stock options. FASB Statement No. 123, "Accounting for
Stock-Based Compensation" (SFAS 123), as amended by SFAS No, 148, permits a
company to elect to follow the accounting provisions of APB 25 rather than the
alternative fair value accounting provided under SFAS 123 but requires pro forma
net income and earnings per share disclosures as well as various other
disclosures not required under APB 25 for companies following APB 25.

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

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

      For purposes of pro forma disclosures, the estimated fair value of options
is amortized to expense over the options' vesting period. Since the company's
stock was trading in a range of value below the strike price of the outstanding
options until 2003, the amount of expense to amortize was zero. The company's
pro forma information for options issued is as follows:

<TABLE>
<CAPTION>
                                                           Year Ended December 31,
                                              ------------------------------------------------
                                                   2004             2003             2002
                                              ------------------------------------------------
<S>                                           <C>              <C>              <C>
Pro forma and reported net income             $    2,341,780   $    1,106,321   $    1,390,109
                                              ================================================
Pro forma and reported earnings  per share:
  Basic                                       $         0.36   $         0.17   $         0.21
                                              ================================================
  Diluted                                     $         0.36   $         0.17   $         0.21
                                              ================================================
</TABLE>

Earnings per Share

      Diluted earnings per share gives effect to potential common shares that
were dilutive and outstanding during the period, such as stock options and
warrants using the treasury stock method and average market price, the company
has various stock options; however, only those options which were dilutive
during the periods being reported on have been included in the earnings per
share computations.


                                      F-11
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

      Following is a reconciliation of amounts used in the basic and diluted
computations:

<TABLE>
<CAPTION>
                                                               Year Ended December 31,
                                                     ------------------------------------------
                                                          2004           2003           2002
                                                     ------------------------------------------
<S>                                                  <C>            <C>            <C>
Net income - numerator basic computation             $  2,341,780   $  1,106,321   $  1,390,109
                                                     ==========================================

Weighted average shares - denominator basic
  computation                                           6,465,345      6,460,086      6,556,990
Effect of dilutive securities:
  Stock options                                                --             --         60,000
                                                     ------------------------------------------
Weighted average shares, as adjusted - denominator      6,465,345      6,460,086      6,616,990
                                                     ==========================================

Earnings per share:
  Basic                                              $       0.36   $       0.17   $       0.21
                                                     ==========================================
  Diluted                                            $       0.36   $       0.17   $       0.21
                                                     ==========================================
</TABLE>

Estimated Fair Value of Financial Instruments

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

Use of Estimates

      The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts reported in
the consolidated financial statements and accompanying notes. The accounting
estimates and assumptions that place the most significant demands on
management's judgment include, but are not limited to, doubtful accounts
receivable, income taxes, impairment of long-lived assets, business
combinations, and inventory obsolescence. These estimates and assumptions are
based on information presently available and actual results could differ from
those estimates.

Revenue Recognition and Accounts Receivable

      The company's sales are primarily derived from product manufacturing
including, but not limited to, finished molded and non-molded cables, wiring
harnesses, printed circuit board assemblies, electro-mechanical and electronic
assemblies. Revenue is recognized upon shipment of the product to the customer,
under contractual terms, which are generally FOB shipping point. Upon shipment,
title transfers and the customer assumes the risks and rewards of ownership of
the product. The selling price of the product is fixed and the ability to
collect for the sale to the customer is reasonably assured when the product is
shipped.

      Revenue from contract manufacturing, rework and refurbishing is recognized
upon shipment of the product to the customer, under contractual terms, which are
generally FOB shipping point.


                                      F-12
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

      Trade receivables are uncollateralized customer obligations due under
normal trade terms requiring payment generally within 30 days from the invoice
date.

      The company's estimate of the allowance for doubtful accounts for trade
receivables is primarily determined based upon the length of time that the
receivables are past due. In addition, management estimates are used to
determine probable losses based upon an analysis of prior collection experience,
specific account risks, and economic conditions.

      The company has a series of actions that occur based upon the aging of
past due trade receivables, including letters and direct customer contact.
Accounts are deemed uncollectible based on their past payment account
experiences and their current financial condition.

Shipping Costs

      Shipping costs related to the transportation of products sold to customers
are charged to cost of goods sold.

Warranty Costs

      The company warrants that products used in its manufacturing process are
free from defects in material and workmanship for a period of one year from time
of shipment to the customer. If the manufactured product fails in this one year
period due to a defect, the company will rework the product until it functions
per the customer's specifications. The costs associated with the rework of any
return of defective products are treated as a period expense when the products
are reshipped to the customer. The company estimates the cost or reworking
defective products to be less than 1% of its annual sales volume and thus has
not recorded any liability for rework costs on its financial statements.

Foreign Operations

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

Comprehensive Income

      The company follows SFAS No. 130, "Reporting Comprehensive Income" which
contains rules for the reporting of comprehensive income and its components.
Comprehensive income consists of net income and foreign currency translation
adjustments and is presented in the Consolidated Statement of Stockholders'
Equity.


                                      F-13
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

New Pronouncements

      In December 2004, the Financial Accounting Standards Board (FASB) issued
SFAS No. 123(R), Share-Based Payment, which would require all share-based
payments to employees, including grants of employee stock options, to be
recognized in the consolidated statements of operations based on their fair
values, effective for public companies for interim periods beginning after June
15, 2005. SFAS No.123(R) permits public companies to adopt its requirements
using either the modified prospective or retrospective method. The company will
adopt this statement in the third quarter of fiscal year 2005 and currently does
not anticipate that the adoption of this standard will have a material effect on
its consolidated results of operations, financial position, and cash flows.

      In November 2004, the FASB issued SFAS No. 151, "Inventory Costs, an
amendment of ARB No. 43, Chapter 4 Inventory Pricing". SFAS No. 151 requires
idle facility costs, abnormal freight, handling costs, and amounts of wasted
materials (spoilage) be treated as current-period costs. Under this concept, if
the costs associated with the actual level of spoilage or production defects are
greater than the costs associated with the range of normal spoilage or defects,
the difference would be charged to current-period expense, not included in
inventory costs. SFAS No. 151 also requires the allocation of fixed production
overheads to the costs of conversion be based on the normal capacity of the
production facilities. SFAS No. 151 is effective for inventory costs incurred
during fiscal years beginning after June 15, 2005. The company will adopt this
statement for fiscal year 2006 and currently does not anticipate that the
adoption of this standard will have a material effect on its consolidated
results of operations, financial position, and cash flows.

      In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
Assets, an amendment of APB Opinion No. 29, Accounting for Nonmonetary
Transactions." The amendments made by SFAS No. 153 are based on the principle
that exchanges of nonmonetary assets should be measured based on the fair value
of the assets exchanged. The guidance in APB Opinion No. 29 provided an
exception to this basic measurement principle for exchanges of similar
productive assets. That exception required that some nonmonetary exchanges be
recorded on a carryover basis. SFAS No. 153 eliminates this exception for
nonmonetary exchanges of similar productive assets and replaces it with a
general exception for exchanges of nonmonetary assets that do not have
commercial substance. An exchange would lack commercial substance if the
company's future cash flows are not expected to change significantly as a result
of that exchange. SFAS No. 153 is effective for nonmonetary asset exchanges
occurring in fiscal periods beginning after June 15, 2005. Earlier application
is permitted. The company will adopt this new standard for fiscal year 2006 and
does not anticipate that the adoption of this standard will have a material
effect on its consolidated results of operations, financial position, and cash
flows.

NOTE 2--INVENTORIES

Inventories are comprised of the following:

                                     December 31,
                             ---------------------------
                                  2004           2003
                             ---------------------------

Raw materials and supplies   $  8,863,347   $  7,315,075
Work in process                 1,584,258      1,776,538
Finished goods                    867,306        661,688
                             ---------------------------
                             $ 11,314,911   $  9,753,301
                             ===========================


                                      F-14
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3--ACCRUED EXPENSES

Accrued expenses are comprised of the following:

                                December 31,
                         ---------------------------
                              2004           2003
                         ---------------------------

Accrued compensation     $    523,430   $    319,813
Accrued property taxes        223,230        222,319
Accrued commissions           203,895        148,170
Other                         174,177        224,614
                         ---------------------------
                         $  1,124,732   $    914,916
                         ===========================

NOTE 4--LONG-TERM DEBT

      On October 24, 2001, the company entered into two credit facilities with
Bank of Scotland in Edinburgh, Scotland for an aggregate borrowing of
$10,000,000. The financing included a $3,000,000 line of credit, with an
interest rate at LIBOR plus 1.5% for a one, three or six month period, at the
company's election, and expires on September 30, 2005. The company intends to
renew this credit facility with the Bank prior to its expiration date.. The
financing also included a seven-year term loan of $7,000,000 at the same
interest rate as the line of credit. The term loan specifies quarterly payments
of $250,000 due in January, April, July and October of each year, plus interest.

      On October 14, 2004, the company restructured its existing term loan and
working capital facilities with the Bank. The term loan was made pursuant to an
Amended and Restated Facility Letter providing for a term loan of $5,650,000, of
which Tranche A represents outstanding borrowings of $4,250,000, and Tranche B
represents the $1,400,000 loan to acquire the property located at 1784 Stanley
Avenue, Dayton, Ohio. The principal of Tranche A is repayable in quarterly
installments of $250,000 in January, April, July and October of each year from
2004 through 2008, with the final payment due in October 2008. The principal of
Tranche B is payable in twenty-eight equal quarterly installments of $50,000,
with the first installment payable on January 20, 2005. Interest on each advance
accrues at an annual rate equal to LIBOR plus 1.5%, plus an amount, rounded to
the nearest eighth of a percent, to cover any increases in certain regulatory
costs incurred by the Bank. The company may elect to pay interest on advances
every one, three or six months, with LIBOR adjusted to correspond to the
interest payment period selected by the company. The company elected the
three-month interest period at 3.8% until January 24, 2005. After this date the
rate is 4.17% until April 24, 2005. The term loan had an outstanding balance of
$5,400,000 at December 31, 2004.

      The company's existing working capital facility with the Bank was also
amended on October 14, 2004 to increase the amount of the facility from
$3,000,000 to $5,000,000. Advances bear interest, and interest is payable, on
the same terms as under the Amended Term Loan Facility. This line of credit had
an outstanding balance of $2,980,000 at December 31, 2004.

      All of the assets of the company collateralize the credit facilities. The
credit facilities contain affirmative and negative covenants. Certain of the
affirmative covenants require maintenance of a consolidated adjusted net worth
greater than $11,000,000; a ratio of consolidated current assets to consolidated
net borrowing not less than 1.75 to 1; a ratio of consolidated trade receivables
to consolidated net borrowings not less than .75 to 1; and a ratio of
consolidated net income before interest and income taxes to total consolidated
interest costs not less than 2 to 1. Some of the negative covenants, among
others, include (1) granting or permitting a security agreement


                                      F-15
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4--LONG-TERM DEBT--Continued

against the consolidated assets of the company other than permitted security
agreements, (2) declaring or paying any dividends or making any other payments
on the company's capital stock, (3) consolidating or merging with any other
entity or acquiring or purchasing any equity interest in any other entity, or
assuming any obligations of any other entity, except for notes and receivables
acquired in the ordinary course of business, (4) incurring, assuming,
guarantying, or remaining liable with respect to any indebtedness, except for
certain existing indebtedness disclosed in these financial statements, or (5)
undertaking any capital expenditure in excess of $1,000,000 in any one fiscal
year.

      The agreements also preclude, without the Bank's prior written consent,
changes in ownership in the company, any mergers or acquisitions, any material
change in any of the company's business objectives, purposes, operations and tax
residence or any other circumstances or events which will have a material
adverse effect as defined by the agreements. The Bank gave its written consent
for the company to acquire all the outstanding shares of AG Technologies, Inc.
on July 15, 2003. At December 31, 2004, the company was not in compliance with
respect to the terms of the credit facilities as a result of having capital
expenditures for the year 2004 in excess of the $1,000,000 limit as specified by
the covenants. However, the company obtained a waiver from the Bank in respect
of the non-compliance.

      On October 11, 2001, Techdyne (Europe) entered into a credit facility with
Bank of Scotland for an amount of (pound)275,000 ($399,025). This facility
comprised an eight-year term loan repayable in quarterly payments of
(pound)8,594 ($13,788) due in January, April, July and October of each year,
with an interest rate of Bank of Scotland base rate plus 1.5% (effectively 5.4%
at December 31, 2002). The proceeds from the credit facility were used to repay
the 15-year mortgage loan of $371,000 as of September 30, 2001. This term loan
in the amount of (pound)214,844 ($319,999) was paid off on September 1, 2003.

Long-term debt is as follows:                   December 31,
                                       ---------------------------
                                           2004           2003
                                       ---------------------------

Term loan                              $  5,400,000   $  5,000,000
Less current portion                      1,200,000      1,000,000
                                       ---------------------------
                                       $  4,200,000   $  4,000,000
                                       ===========================

      Scheduled maturities of long-term debt outstanding at December 31, 2004
are approximately: 2005---$1,200,000; 2006---$1,200,000; 2007---$1,200,000;
2008---$1,200,000; 2009---$200,000; thereafter $400,000. Interest payments on
all of the above debt amounted to approximately $189,000, $231,000 and $294,000
in 2004, 2003 and 2002, respectively.

      On July 15, 2003, Simclar (Mexico) and Simclar entered into an agreement
with Winsson Enterprises Co., Ltd ("Winsson"). This agreement calls for Winsson
to provide to Simclar (Mexico) a 3-year $2,750,000 open line of credit for
purchased services and materials. The 3-year open line of credit required a
reduction of $250,000 as of July 14, 2004. The 3-year open line of credit may be
renewed at the end this agreement, if both parties agree. The total amount due
to Winsson is approximately $2,853,000 at December 31, 2004. Included in
accounts payable is approximately $353,000 of this amount with the remaining
balance shown in deferred trade accounts payable.


                                      F-16
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5--INCOME TAXES

      Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.

      Significant components of the company's deferred tax assets and
liabilities are as follows:

                                                            December 31,
                                                     ---------------------------
                                                         2004           2003
                                                     ---------------------------
Deferred tax assets:
  Inventory obsolescence                             $    578,100   $    554,400
  Cost capitalized in ending inventory                     84,900        141,400
  Accrued expenses                                         61,300         52,800
  Other                                                    71,100        109,000
                                                     ---------------------------
             Total deferred tax assets                    795,400        857,600
                                                     ---------------------------
Deferred tax liabilities:
  Depreciation and amortization                      $    206,000   $    290,900
                                                     ---------------------------
             Total deferred tax liabilities               206,000        290,900
                                                     ---------------------------
   Net deferred tax asset                            $    589,400   $    566,700
                                                     ===========================

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

                                                 Year Ended December 31,
                                    -------------------------------------------
                                        2004           2003            2002
                                    -------------------------------------------
United States income                $  3,269,909   $  1,603,477    $  1,538,928
Foreign income (loss)                    165,712       (139,949)        (25,432)
                                    -------------------------------------------
                                    $  3,435,621   $  1,463,528    $  1,513,496
                                    ===========================================

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

                                               Year Ended December 31,
                                    -------------------------------------------
                                        2004           2003            2002
                                    -------------------------------------------
Current:
  Federal                           $  1,011,150   $    332,701    $    398,600
  State                                   59,991         14,176         123,387
                                    -------------------------------------------
                                       1,071,141        346,877         521,987
                                    -------------------------------------------
Deferred
  Federal                                 19,791          9,006        (347,500)
  State                                    2,909          1,324         (51,100)
                                    -------------------------------------------
                                          22,700         10,330        (398,600)
                                    -------------------------------------------
                                    $  1,093,841   $    357,207    $    123,387
                                    ===========================================

      Techdyne (Europe) and Simclar de Mexico, S.A. de C.V. file separate income
tax returns in the United Kingdom and Mexico, respectively.


                                      F-17
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5--INCOME TAXES--Continued

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

<TABLE>
<CAPTION>
                                                                        Year Ended December 31,
                                                             --------------------------------------------
                                                                  2004           2003            2002
                                                             --------------------------------------------
<S>                                                          <C>             <C>             <C>
Statutory tax rate (34%) applied to income before
  income taxes                                               $  1,168,111    $    497,600    $    514,589
Increases (reduction) in taxes resulting from:
  State income taxes expense net of federal
    income tax effect                                              42,870          10,230          81,444
  Tax rate differential relating to tax benefit of foreign
    operating income                                                2,287          70,290           8,647
  Non deductible items                                             15,343           7,756           7,132
  Change in deferred tax valuation allowance                           --              --        (587,000)
  Refund of prior U.S. income taxes                               (38,000)        (85,000)             --
  Settlement of U.S. income taxes                                (132,000)       (200,000)             --
  Other                                                            35,230          56,331          98,575
                                                             --------------------------------------------
                                                             $  1,093,841    $    357,207    $    123,387
                                                             ============================================
</TABLE>

      Undistributed earnings of the company's foreign subsidiaries amounted to
approximately $287,000 at December 31, 2004 and 2003, respectively. Those
earnings are considered to be indefinitely reinvested and, accordingly, no
provision for U.S. federal and state income taxes has been provided thereon.
Upon distribution of those earnings in the form of dividends or otherwise, the
company would be subject to both U.S. income taxes (subject to an adjustment for
foreign tax credits) and withholding taxes payable to the various foreign
countries. Determination of the amount of unrecognized deferred U.S. income tax
liability is not practicable because of the complexities associated with its
hypothetical calculation; however, foreign tax credits may be available to
reduce some portion of the U.S. liability. Withholding taxes of approximately
$14,000 would be payable upon remittance of all previously unremitted earnings
at December 31, 2004 and 2003, respectively.

      Income tax payments were approximately $754,000, $333,000 and $28,000 in
2004, 2003 and 2002, respectively.

NOTE 6--TRANSACTIONS WITH SIMCLAR GROUP

      The company's parent, Simclar Group, provides certain financial and
administrative services to the company under a service agreement. The amount of
expenses covered under the service agreement totaled $360,000, $347,000 and
$336,000 in 2004, 2003 and 2002, respectively. In 2004, the company purchased
steel components with a combined value of approximately $431,000 from other
members of the Simclar Group.

      In May 2001, Techdyne (Europe) entered into a management agreement with
Simclar Group pursuant to which Simclar Group manufactured products for Techdyne
(Europe) and assisted in management coordination. These expenses were
approximately $241,000 in 2002. This agreement was terminated on February 28,
2002.

      The company has a net receivable due from its parent, Simclar Group, of
approximately $2,918,000 and $2,049,000 at December 31, 2004 and 2003,
respectively. These amounts included a $1,500,000 demand note


                                      F-18
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6--TRANSACTIONS WITH SIMCLAR GROUP--Continued

payable by Simclar Group, bearing an annual interest rate of LIBOR plus 2.0% and
accumulated interest on this demand note of approximately $123,000 and $71,000
at December 31, 2004 and 2003, respectively. During the year 2004, the company
advanced funds to two companies owned by Simclar Group or its sole owners for
operating capital. As of December 31, 2004 the company had a net received due
from these two companies of approximately $1,295,000.

NOTE 7--RELATED PARTY TRANSACTIONS

      On October 20, 2004, the company purchased for $1,400,000 the 77,800
square foot office, manufacturing and warehouse facility located at 1784 Stanley
Avenue, Dayton, Ohio that it had been leasing for a term ending July 31, 2007.
The purchase resulted from the company's exercise of an option to purchase
contained in the lease. The premises were purchased from the lessor, Stanley
Avenue Properties, Ltd., an Ohio limited liability company controlled by Lytton
F. Crossley, a former director of the company. The purchase price was determined
by negotiation, based upon independent appraisals obtained by the company and
the seller.

NOTE 8--COMMITMENTS AND CONTINGENCIES

Commitments

      The company leases several facilities which expire at various dates
through 2017 with renewal options for a period of five years at the then fair
market rental value. The company's aggregate lease commitments at December 31,
2004, are approximately: 2005---$746,000, 2006---$621,000, 2007---$526,000,
2008---$510,000, and 2009---510,000. Total rent expense was approximately
$753,000, $635,000 and $556,000 for the years ended December 31, 2004, 2003 and
2002, respectively.

Retirement Plan

      The company sponsors a 401(k) Profit Sharing Plan covering substantially
all of its employees, excluding Techdyne (Europe) and Simclar (Mexico). The
company contributes a 50% match based on the first 4% of each employee's annual
earnings contributed to the plan. The discretionary profit sharing and matching
expense amounted to approximately $73,000, $59,000 and $57,000 for the years
ended December 31, 2004, 2003 and 2002, respectively.

Contingencies

      The company is involved in various legal actions arising in the ordinary
course of business. In the opinion of management, the ultimate liability, if
any, resulting from these matters will not have a material effect on the
company's financial position.

NOTE 9--STOCK OPTIONS

      On February 27, 1995 the company granted non-qualified stock options, to
directors of Simclar and its subsidiary for 142,500 shares exercisable at $1.75
per share for five years. In April 1995, the company granted a non-qualified
stock option for 10,000 shares which vested immediately, to its general counsel
at the same price and terms as the directors' options. On February 25, 2000,
145,000 of these options were exercised. The company received cash payment of
the par value and the balance in three-year promissory notes totaling $207,825
presented in the stockholders' equity section of the balance sheet, with
interest at 6.19%. The notes, which were


                                      F-19
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 9--STOCK OPTIONS--Continued

due in February 2003, were not repaid and, as a result, the related interest
receivable was written off in 2002. The related shares were cancelled in 2003.

      In June 1997, the company adopted a stock option plan for up to 500,000
options, and pursuant to this plan the board granted 375,000 options exercisable
for five years through June 22, 2002 at $3.25 per share, with 320,000 of these
options outstanding at December 31, 2001. On June 30, 1999, the company granted
52,000 options exercisable for three years through September 29, 2002 at $4.00
per share with 10,000 options outstanding at December 31, 2001. On August 25,
1999, the company granted 16,000 options exercisable for three years through
August 24, 2002 at $4.00 per share with 13,000 options outstanding at December
31, 2001. On December 15, 1999, the company granted 19,000 options exercisable
for three years through December 14, 2002 at $4.00 per share with 8,000 options
outstanding at December 31, 2001. On May 24, 2000, the company granted 3,000
options exercisable for three years through May 23, 2003 at $4.00 per share, the
options terminated when the employee terminated his employment with the company.
On October 16, 2000, the company granted 90,000 three year stock options
exercisable at $2.00 per share through October 15, 2002, with one-third of the
options vesting immediately, one-third vesting on October 16, 2001 and one-third
vesting on October 16, 2002, but based on the change in control of the company,
all options vested on June 27, 2001, and 30,000 options were redeemed for
$4,200, 60,000 of these options remained outstanding at December 31, 2002.

      A summary of the company's stock option activity, for the years ended
December 31, follows:

<TABLE>
<CAPTION>
                                             2004                             2003                         2002
                                 --------------------------------------------------------------------------------------------
                                                  Weighted-                       Weighted-                     Weighted-
                                                   Average                         Average                        Average
                                      Options   Exercise Price       Options    Exercise Price      Options    Exercise Price
                                 --------------------------------------------------------------------------------------------
<S>                                 <C>            <C>             <C>            <C>            <C>            <C>
Outstanding-beginning of year                                            60,000   $       2.00        411,000   $       3.12
Granted                                        0                              0                             0
Exercised                                                                30,000                             0
Expired                                                                  30,000                      (351,000)
                                    ------------                   ------------                  ------------
Outstanding-end of year                        0                              0                        60,000
                                    ============                   ============                  ============
Outstanding and exercisable
  at end of year
October 2000 options                           0   $         --               0   $         --         60,000   $       2.00
                                    ------------                   ------------                  ------------
                                               0                              0                        60,000
                                    ============                   ============                  ============
Weighted-average fair value of
  options granted during the year   $         --                   $         --                  $         --
                                    ============                   ============                  ============
</TABLE>

      In June 2001, in connection with the sale to Simclar Group, the company
forgave stock option notes and related accrued interest totaling $207,825 from
certain current and former officers and directors of the company. The balances
of these notes, which were due in February 2003, were not repaid and, as a
result, the related interest receivable was written off as of December 31, 2002.
The related shares were cancelled in 2003.


                                      F-20
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10--QUARTERLY FINANCIAL INFORMATION (Unaudited)

      The following summarizes certain quarterly operating data:

<TABLE>
<CAPTION>
                                           2004                                                  2003
                     -------------------------------------------------    -------------------------------------------------
                       March 31     June 30      Sept 30       Dec 31      March 31      June 30     Sept 30      Dec 31
                      -------------------------------------------------   -------------------------------------------------
                                                    (In thousands except per share data)
<S>                   <C>          <C>          <C>          <C>          <C>          <C>          <C>          <C>
Net Sales             $   11,997   $   15,002   $   13,233   $   13,350   $    7,376   $    7,719   $    9,601   $   11,491
Gross Profit               1,726        2,450        1,721        1,456        1,059        1,130        1,123        1,559
Net Income                   481          879          486          496          196          241          211          458
Earnings per share:
  Basic & diluted     $     0.07   $     0.14   $     0.08   $     0.07   $     0.03   $     0.04   $     0.03   $     0.07
</TABLE>

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

NOTE 11--GEOGRAPHIC AREA DATA AND MAJOR CUSTOMER

Summarized financial information for the company's one reportable segment is
shown in the following table:

                                                Year Ended December 31,
                                     ------------------------------------------
Geographic Area Sales                    2004           2003           2002
                                     ------------   ------------   ------------

United States                        $ 53,551,613   $ 36,187,105   $ 33,458,570
Mexico                                     30,874             --             --
Europe(1)                                      --             --        233,012
                                     ------------   ------------   ------------
                                     $ 53,582,487   $ 36,187,105   $ 33,691,582
                                     ============   ============   ============

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

                                                Year Ended December 31,
                                    -------------------------------------------
Geographic Area                          2004           2003            2002
Operating Income (loss)             -------------------------------------------

United States                       $  3,436,079   $  1,738,623    $  1,781,856
Mexico                                   165,712         28,658              --
Europe                                        --        (29,844)         (7,833)
                                    -------------------------------------------
                                    $  3,601,791   $  1,737,437    $  1,774,023
                                    ===========================================


                                      F-21
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 11--GEOGRAPHIC AREA DATA AND MAJOR CUSTOMER--Continued

Geographic Area Property,                           December 31,
Plant and Equipment (Net)            ------------------------------------------
                                         2004           2003           2002
                                     ------------------------------------------

United States                        $  3,992,247   $  2,479,191   $  2,361,984
Mexico                                     16,404         16,277             --
Europe                                         --             --        653,521
                                     ------------------------------------------
                                     $  4,008,651   $  2,495,468   $  3,015,505
                                     ==========================================

Sales to major customer are as follows:

                                                 Year Ended December 31,
                                     ------------------------------------------
                                         2004           2003           2002
                                     ------------------------------------------
Major Customer
ITW                                  $  9,023,000   $  8,084,000   $ 12,078,000
                                     ==========================================

      The loss of or substantially reduced sales to this customer would have an
adverse effect on the company's operations if such sales were not replaced. A
significant customer would be any customer who annual sales volume from the
company is 10% or more.

NOTE 12--CESSATION OF SCOTLAND MANUFACTURING OPERATIONS

      As a result of continuing operating losses, in April 2001 the company
decided to discontinue the manufacturing operations of its European subsidiary,
Techdyne (Europe).

      As of February 28, 2002, all remaining net assets and the remaining
employee, except the building and land, were transferred to Simclar Group at net
book value on that date. These net assets consisted principally of cash,
receivables, payables and equipment. The management agreement with Simclar Group
was also cancelled. Included in property, plant and equipment at December 31,
2002 were assets held for sale, net of accumulated depreciation, in Scotland
totaling approximately $654,000.

      On April 2, 2003, a fire started by vandals destroyed the Techdyne
(Europe) building located in Livingston, Scotland. The claims with the insurance
companies were settled during the third quarter in the amount of (pound)364,900
($588,185), less demolition expenses. The company realized a net gain on this
disposition of (pound)34,500 ($55,621).

      On October 17, 2003, the company received the net proceeds from the sale
of land located in Livingston, Scotland in the amount of (pound)114,868
($192,163). The company realized a net loss on this disposition of (pound)5,132
($8,585).

      In 2003, the company recognized approximately $171,000 charge for the
write-off of accumulated foreign currency translation loss resulting from the
substantial liquidation of Techdyne (Europe).


                                      F-22
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13--ACQUISITION OF AG TECHNOLOGIES, INC.

      On July 15, 2003, the company acquired for cash, all of the outstanding
stock of AG Technologies, Inc., a privately owned company based in Schaumburg,
Illinois. The company name was changed to Simclar (Mexico), Inc. on August 29,
2003. Additional consideration of up to $1,300,000 is payable based on Simclar
(Mexico)'s net sales in each of the three years ending July 14, 2004, 2005 and
2006. Simclar (Mexico) is an international value added provider of comprehensive
electronic manufacturing services to OEM's serving the automotive, industrial
controls, medical and power equipment industries. Simclar (Mexico)'s Mexican
facility enables the company to be competitive in the higher volume arena for
assembly in North America.

      The acquisition was accounted for by the purchase method of accounting
under SFAS No. 141, "Business Combinations". The purchase price for the
acquisition, including loan repayment and net of cash received, totaled
$1,951,547 and was allocated to assets acquired and liabilities assumed based on
estimated fair values at the date of acquisition. The company recorded
$1,279,118 of goodwill and $18,000 of intangibles based on the opening balance
sheet. Additional consideration payable based on Simclar (Mexico)'s sales
through July 14, 2006 could increase the amount of this goodwill to $2,579,118.
The additional earn-out for the period July 15, 2003 to July 14, 2004 of
$606,432 was paid on September 15, 2004. This additional earn-out payment
increased the company's goodwill to $1,885,550.

The purchase allocation, as adjusted for the earn-out payment, is as follows:

Current assets            $3,414,149
Equipment                    867,322
Goodwill                   1,885,550
Intangibles                   18,000
Other assets                     743
                          ----------
  Total assets acquired   $6,185,764
                          ----------

Current liabilities       $1,556,485
Long-term debt                 9,000
Long-term liabilities      2,062,300
                          ----------
  Total liabilities       $3,627,785
                          ----------
  Net assets acquired     $2,557,979
                          ==========

      Results of operations have been included in the company's consolidated
financial statements prospectively from the date of acquisition. The following
table summarizes selected unaudited pro forma financial information for the
years ended December 31, 2003 and 2002, respectively, as if Simclar (Mexico) had
been acquired at the beginning of 2003 and 2002. The unaudited pro forma
financial information includes adjustments for income taxes, prepaid expenses,
accrued expenses, depreciation and amortization.

      The pro forma financial information does not necessarily reflect the
results that would have occurred if the acquisition had been in effect for the
periods presented. In addition, it is not intended to be a projection of future
results and does not reflect any synergies that might be achieved from combining
the operations.


                                      F-23
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13--ACQUISITION OF AG TECHNOLOGIES, INC.--Continued

                                December 31,
                      -------------------------------
                            2003              2002
                      -------------------------------
Net Sales             $   41,210,031   $   44,625,040

Net Income                 1,000,302        1,168,813
                      ===============================
Earnings per share:
  Basic               $         0.15   $         0.18
                      ===============================
  Diluted             $         0.15   $         0.18
                      ===============================


                                      F-24
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

             INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM'S REPORT
                            ON SUPPLEMENTAL SCHEDULE

Board of Directors and Shareholders
Simclar, Inc. and Subsidiaries
Hialeah, FL

Our audit was made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The consolidated
supplemental schedule II is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not a part of the basic
consolidated financial statements. This schedule has been subjected to the
auditing procedures applied in our audit of the basic consolidated financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic consolidated financial statements taken as a whole.


Battelle & Battelle LLP
Dayton, Ohio
March 28, 2005


                                      S-1
<PAGE>

                         SIMCLAR, INC. AND SUBSIDIARIES

   A. Schedule II - Valuation and Qualifying Accounts
Simclar, Inc. and Subsidiaries
December 31, 2004

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
              COL. A                           COL. B          COL. C            COL. D              COL. E               COL. F
-----------------------------------------------------------------------------------------------------------------------------------
                                                                               Additions
                                             Balance at    Accquisition       (Deductions)       Other Changes           Balance
                                              Beginning        (3)        Charged (Credited) to   Add (Deduct)          at End of
         Classsification                      of Period                    Costs and Expenses      Describe              Period
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>             <C>             <C>                   <C>            <C>    <C>
YEAR ENDED DECEMBER 31, 2004:
Reserves and allowances deducted
From asset accounts:
Allowance for uncollectible accounts        $    279,000                      $     35,000       $   (132,000)   (1)   $    182,000
Reserve for inventory obsolescence             1,421,000                           382,000           (322,000)   (2)      1,481,000
                                            ---------------------------------------------------------------------------------------
                                            $  1,700,000   $         --       $    417,000       $   (454,000)         $  1,663,000
                                            =======================================================================================
YEAR ENDED DECEMBER 31, 2003:
Reserves and allowances deducted
From asset accounts:
Allowance for uncollectible accounts        $    244,000   $     35,000       $         --                 --    (1)   $    279,000
Reserve for inventory obsolescence             1,115,000        332,000            107,000           (133,000)   (2)      1,421,000
                                            ---------------------------------------------------------------------------------------
                                            $  1,359,000   $    367,000       $    107,000       $   (133,000)         $  1,700,000
                                            =======================================================================================
YEAR ENDED DECEMBER 31, 2002:
Reserves and allowances deducted
From asset accounts:
Allowance for uncollectible accounts        $    220,000   $         --       $     24,000                 --    (1)   $    244,000
Reserve for inventory obsolescence               959,000             --            380,000           (224,000)   (2)      1,115,000
Valuation allowance for defered tax asset             --             --           (587,000)           587,000                     0
                                            ---------------------------------------------------------------------------------------
                                            $  1,179,000   $         --       $   (183,000)      $    363,000          $  1,359,000
                                            =======================================================================================
</TABLE>

(1)   Uncollectible accounts written off, net of recoveries

(2)   Net write-offs against inventory reserves

(3)   Acquisition of AG Technologies, Inc.


                                      S-2