**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**




**FORM
      10-Q**





x
            
            QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
                EXCHANGE ACT OF 1934For
                the quarterly period ended March 31, 2008ORo
            
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES
                EXCHANGE ACT OF 1934For
                the transition period from ________________ to
                ________________





Commission
      file number: 001-13924





**SIMCLAR,
      INC.**


(Exact
      name of registrant as specified in its charter)





**Florida**
            
            **59-1709103**(State
                or other jurisdiction of
            
            (I.R.S.
                Employerincorporation
                or organization)
            
            Identification
                No.)**2230
                West 77****th****Street, Hialeah, FL**
            
            **33016**(Address
                of principal executive offices)
            
            (Zip
                Code)





**(305)
      556-9210**


(Registrant’s
      telephone number, including area code)





**[None]**


(Former
      name, former address and former fiscal year, if changed since last
      report)





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days.


Yes
x No o





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer or smaller reporting company. See
      definition of “large accelerated filer”, “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act.




Large
      accelerated filer o Accelerated
      filer o Non-accelerated
      filer o Smaller
      reporting company x




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes
o  No
x





Indicate
      the number of shares outstanding of each of the issuer's classes of common
      stock, as of the latest practicable date.





Class
            
            Outstanding
                at March 31, 2008Common
                Stock, $.01 par value per share
            
            6,465,345
                shares









SIMCLAR,
      INC.





Form
      10-Q





For
      the
      quarter ended March 31, 2008





TABLE
      OF
      CONTENTS





PART
                I —
                FINANCIAL
                INFORMATIONItem
                1. Condensed Consolidated Financial Statements1)
                Consolidated Balance Sheets as of March 31, 2008 (unaudited) and
                December
                31, 2007
            
            32)
                Consolidated Statements of Operations for the three months ended
                March 31,
                2008 and March 31, 2007 (unaudited)
            
            53)
                Consolidated Statements of Cash Flows for the three months ended
                March 31,
                2008 and March 31, 2007 (unaudited)
            
            64)
                Notes to Consolidated Financial Statements as of March 31, 2008
                (unaudited)
            
            7Item
                2. Management's Discussion and Analysis of Financial Condition and
                Results
                of Operations
            
            11Item
                3. Quantitative and Qualitative Disclosures About Market
                Risk
            
            18Item
                4T. Controls and Procedures
            
            19PART
                II —
                OTHER
                INFORMATIONItem
                6. Exhibits
            
            20Signatures
            
            20









PART
      I -
      FINANCIAL INFORMATION





Item
      1
      Financial Statements





SIMCLAR,
      INC.


AND
      SUBSIDIARIES





CONSOLIDATED
      BALANCE SHEETS


March
                  31,
              
              December
                  31,2008
              
              2007(UNAUDITED)**ASSETS****Current
                  assets:**Cash
                  and cash equivalents
              
              $
              1,563,887
              
              $
              428,538Accounts
                  receivable, less allowances of $165,000and
                  $236,000 at March 31, 2008 and December 31, 2007
                  respectively
              
              
              18,200,009
              
              
              20,804,552Amounts
                  receivable from major stockholder, net
              
              
              675,259
              
              
              904,627Inventories,
                  less allowances for obsolescence of $2,305,000 at March
                  31,2008
                  and $2,364,000 at December 31, 2007
              
              
              20,648,979
              
              
              21,664,442Prepaid
                  expenses and other current assets
              
              
              673,409
              
              
              654,509Prepaid
                  income taxes
              
              
              16,224
              
              
              107,091Deferred
                  income taxes
              
              
              1,214,160
              
              
              1,214,160**Total
                  current assets**
              
              
              42,991,927
              
              
              45,777,919**Property
                  and equipment:**Land
                  and improvements
              
              
              547,511
              
              
              547,512Buildings
                  and building improvements
              
              
              1,235,904
              
              
              1,235,904Machinery,
                  computer and office equipment
              
              
              15,493,762
              
              
              15,342,401Tools
                  and dies
              
              
              366,347
              
              
              366,347Leasehold
                  improvements
              
              
              1,964,881
              
              
              1,957,170Construction
                  in progress
              
              
              83,958
              
              
              259,829**Total
                  property and equipment**
              
              
              19,692,363
              
              
              19,709,163Less
                  accumulated depreciation and amortization
              
              
              10,199,454
              
              
              9,922,589**Net
                  property and equipment**
              
              
              9,492,909
              
              
              9,786,574Deferred
                  expenses and other assets, net
              
              
              286,681
              
              
              366,265Goodwill
              
              
              9,410,704
              
              
              9,410,704Intangible
                  assets, net
              
              
              811,815
              
              
              904,841**Total
                  assets**
              
              $
              62,994,036
              
              $
              66,246,303
  See
        notes
        to consolidated financial statements
  3




SIMCLAR,
      INC.


AND
      SUBSIDIARIES





CONSOLIDATED
      BALANCE SHEETS


(Continued)


March
                  31,
              
              December
                  31,2008
              
              2007(UNAUDITED)**LIABILITIES
                  AND STOCKHOLDERS’ EQUITY****Current
                  liabilities:**Line
                  of credit
              
              $
              8,380,346
              
              $
              8,145,987Accounts
                  payable
              
              
              19,641,483
              
              
              21,447,560Accrued
                  expenses
              
              
              1,928,862
              
              
              1,907,472Current
                  portion of long-term debt
              
              
              3,350,000
              
              
              3,575,148**Total
                  current liabilities**
              
              
              33,300,691
              
              
              35,076,167Long-term
                  debt
              
              
              8,300,000
              
              
              9,600,000Deferred
                  trade accounts payable
              
              
              108,637
              
              
              349,257Deferred
                  income taxes
              
              
              515,283
              
              
              515,283Other
                  long term liabilities
              
              
              400,000
              
              
              400,000**Total
                  liabilities**
              
              
              42,624,611
              
              
              45,940,707**Stockholders'
                  equity:**Common
                  stock, $.01 par value, authorized 10,000,000 shares; issued
                  andoutstanding
                  6,465,345 shares at March 31, 2008 and December 31, 2007
              
              
              64,653
              
              
              64,653Capital
                  in excess of par value
              
              
              11,446,087
              
              
              11,446,087Retained
                  earnings
              
              
              8,788,444
              
              
              8,747,959Accumulated
                  other comprehensive income
              
              
              70,241
              
              
              46,897**Total
                  stockholders' equity**
              
              
              20,369,425
              
              
              20,305,596$
              62,994,036
              
              $
              66,246,303





See
        notes
        to consolidated financial statements
  4


SIMCLAR,
      INC.


AND
      SUBSIDIARIES





CONSOLIDATED
      STATEMENT OF OPERATIONS


(UNAUDITED)


Three
                  Months EndedMarch
                  31,2008
              
              2007Sales
              
              $
              29,922,815
              
              $
              31,407,512Cost
                  of goods sold
              
              
              27,216,025
              
              
              27,581,733Gross
                  Margin
              
              
              2,706,790
              
              
              3,825,779Selling,
                  general and administrative expenses
              
              
              2,393,452
              
              
              2,378,026Income
                  from operations
              
              
              313,338
              
              
              1,447,753Interest
                  expense
              
              
              335,797
              
              
              496,121Interest
                  and other income
              
              
              (81,560
              )
              
              (16,002
              )Income
                  before income taxes
              
              
              59,101
              
              
              967,634Income
                  tax provision
              
              
              18,616
              
              
              328,995Net
                  income
              
              $
              40,485
              
              $
              638,639Earnings
                  per share:
              
              $
              0.01
              
              $
              0.10




See
        notes
        to consolidated financial statements
  5


SIMCLAR,
      INC.


AND
      SUBSIDIARIES





CONSOLIDATED
      STATEMENT OF CASH FLOWS


(UNAUDITED)


Three
                  Months EndedMarch
                  31,2008
              
              2007Operating
                  activities:Net
                  income
              
              $
              40,485
              
              $
              638,639Adjustments
                  to reconcile net income to net cashprovided
                  by operating activities:Depreciation
                  & amortization
              
              
              449,656
              
              
              530,940Loss
                  on disposal of property & equipment
              
              
              4,575
              
              
              -Changes
                  relating to operating activities from:Accounts
                  receivable, net
              
              
              2,604,542
              
              
              1,590,311Amounts
                  receivable / (payable) to major stockholder, net
              
              
              229,368
              
              
              (2,780,442
              )Inventories,
                  net
              
              
              1,015,462
              
              
              (1,382,913
              )Prepaid
                  expenses and other current assets
              
              
              (18,900
              )
              
              (81,518
              )Accounts
                  payable
              
              
              (1,806,077
              )
              
              1,499,796Accrued
                  expenses
              
              
              100,976
              
              
              (196,471
              )Income
                  taxes refundable
              
              
              90,867
              
              
              149,477Net
                  cash provided from (used in) operating activities
              
              
              2,710,954
              
              
              (32,181
              )Investing
                  activities:Additions
                  to property and equipment
              
              
              (74,040
              )
              
              (396,237
              )Proceeds
                  from sale of property and equipment
              
              
              6,500
              
              
              525,000Net
                  cash (used in) provided by investing activities
              
              
              (67,540
              )
              
              128,763Financing
                  activities:Borrowing
                  on bank line of credit
              
              
              1,845,826
              
              
              5,021,682Repayments
                  on bank line of credit
              
              
              (1,611,467
              )
              
              (2,583,246
              )Payments
                  on long-term borrowings
              
              
              (1,765,768
              )
              
              (2,256,011
              )Net
                  cash (used in) provided by financing activities
              
              
              (1,531,409
              )
              
              182,425Effect
                  of exchange rate fluctuations on cash
              
              
              23,344
              
              
              (26,226
              )Net
                  change in cash and cash equivalents
              
              
              1,135,349
              
              
              252,781Cash
                  and cash equivalents at beginning of period
              
              
              428,538
              
              
              82,154Cash
                  and cash equivalents at end of period
              
              $
              1,563,887
              
              $
              334,935Cash
                  paid for interest expense
              
              $
              304,471
              
              $
              487,835





See
      notes
      to consolidated financial statements




6





**NOTE
      1 - Basis of Presentation**





The
      accompanying interim consolidated financial statements include the accounts
      of
      Simclar, Inc. (“Simclar”) and its subsidiaries, including Simclar (Mexico), Inc.
      (“Simclar Mexico”), Simclar de Mexico, S.A. de C.V. (“Simclar de Mexico”),
      Simclar (North America), Inc. (“SNAI”), Simclar Interconnect Technologies, Inc.
      (“SIT”), and Techdyne (Europe) Limited (“Techdyne (Europe)”) collectively
      referred to as the “company.” All material intercompany accounts and
      transactions have been eliminated in consolidation. The company is a 73.2%
      owned
      subsidiary of Simclar Group Limited (“Simclar Group”), a company incorporated in
      the United Kingdom.





These
      financial statements have been prepared in accordance with accounting principles
      generally accepted in the United States of America for interim financial
      information and with the instructions to Form 10-Q and Article 8 of Regulation
      S-X and have not been audited by an independent registered public accounting
      firm. Accordingly, they do not include all of the information and footnotes
      required by accounting principles generally accepted in the United States of
      America for complete financial statements. In the opinion of management, such
      interim financial statements reflect all normal recurring adjustments considered
      necessary to present fairly the financial position and the results of operations
      and cash flows for the interim periods presented. The results of operations
      for
      the interim periods are not necessarily indicative of the results to be expected
      for the full fiscal year. These financial statements should be read in
      conjunction with the audited consolidated financial statements and footnotes
      included in the company's Annual Report on Form 10-K for the year ended December
      31, 2007.





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States requires management to make estimates
      and assumptions that affect the reported amounts and disclosures in the
      consolidated financial statements. Actual results could differ from those
      estimates.




**NOTE
      2 - Recently Issued Accounting Pronouncements**





In
      May
      2008. the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
      Accounting Principles.” The
      new
      standard is intended to improve financial reporting by identifying a consistent
      framework, or hierarchy, for selecting accounting principles to be used in
      preparing financial statements that are presented in conformity with U.S.
      generally accepted accounting principles.  SFAS No. 162 establishes that
      the GAAP hierarchy should be directed to entities because it is the entity
      (not
      its auditor) that is responsible for selecting accounting principles for
      financial statements that are presented in conformity with GAAP.  Statement
      162 is effective 60 days following the SEC's approval of the Public Company
      Accounting Oversight Board Auditing amendments to AU Section 411, ** “The
      Meaning of Present Fairly in Conformity with Generally Accepted Accounting
      Principles.” The company has not evaluated the potential impact of this
      statement on its financial statements.





In
      March
      2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
      and Hedging Activities - an amendment of FASB Statement No. 133.” SFAS No. 161
      changes disclosure requirements for derivative instruments and hedging
      activities. Entities will be required to provide enhanced disclosures about
      (a)
      how and why an entity uses derivative instruments, (b) how derivative
      instruments and related hedged items are accounted for under SFAS No. 133 and
      its related interpretations, and (c) how derivative instruments and related
      hedged items affect an entity’s financial position, financial performance and
      cash flows. This statement is effective for fiscal years beginning after
      November 15, 2008. The company has not evaluated the potential impact of this
      statement on its financial statements .





In
      December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
      Consolidated Financial Statements,” an amendment of ARB No. 51, which we will
      adopt on January 1, 2009. This standard will significantly change the accounting
      and reporting related to noncontrolling interests in a consolidated subsidiary. The
      company has not evaluated the potential impact of this statement on its
      financial statements .





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities - Including an Amendment of SFAS
      No.
      115.” SFAS No. 159 permits companies to choose to measure certain financial
      instruments and other items at fair value. The company did not choose the fair
      value measurement option permitted by SFAS No. 159 for any of its assets and
      liabilities. Therefore, adoption of SFAS No. 159 did not impact the company’s
      financial statement.





In
      September 2006, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standard (“SFAS”) No. 157, “Fair Value
      Measurements” (“SFAS No. 157”) to clarify the definition of fair value,
      establish a framework for measuring fair value and expand the disclosures on
      fair value measurements. SFAS No. 157 defines fair value as the price that
      would
      be received to sell an asset or paid to transfer a liability in an orderly
      transaction between market participants at the measurement date (an exit price).
      SFAS No. 157 also stipulates that, as a market-based measurement, fair value
      measurement should be determined based on the assumptions that market
      participants would use in pricing the asset or liability, and establishes a
      fair
      value hierarchy that distinguishes between (a) market participant assumptions
      developed based on market data obtained from sources independent of the
      reporting entity (observable inputs) and (b) the reporting entity’s own
      assumptions about market participant assumptions developed based on the best
      information available in the circumstances (unobservable inputs). As of January
      1, 2008, the company adopted SFAS No. 157, however, the adoption of SFAS No.
      157
      did not impact the company’s financial statements.




7





In
      December 2007, the FASB issued SFAS No. 141R, “Business Combinations.” SFAS No.
      141R will replace SFAS No. 141 and provides new rules for accounting for the
      acquisition of a business. This statement is effective for fiscal years
      beginning after December 15, 2008. Generally, the effects of SFAS No. 141R
      will
      depend on future acquisitions.





**NOTE
      3 - Inventories**





Inventories
      are comprised of the following:


March
                  31,
              
              December
                  31,2008
              
              2007Raw
                  materials and supplies
              
              
              18,602,671
              
              $
              19,285,200Work
                  in process
              
              
              2,544,468
              
              
              2,841,656Finished
                  goods
              
              
              1,806,845
              
              
              1,902,052Allowance
                  for obsolescence
              
              
              (2,305,005
              )
              
              (2,364,466
              )$
              20,648,979
              
              $
              21,664,442





**NOTE
      4 - Earnings per share**





Following
      is a reconciliation of amounts used in the computations:


Three
                  Months Ended
                March
                  31,2008
              
              2007Net
                  income - numerator basic computation
              
              $
              40,485
              
              $
              638,639Weighted
                  average shares - denominator basic computation
              
              
              6,465,345
              
              
              6,465,345Earnings
                  per share:
              
              $
              0.01
              
              $
              0.10




Net
      income for the three months ended March 31, 2008, includes costs of
      approximately $797,000 arising from the closure of the company’s North Carolina
      facility, comprising of costs for the facility clearance, the transfer of
      customer programs to Mexico and employee related costs.





**NOTE
      5 - 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. Below is a detail of comprehensive income for the three months
      ended March 31, 2008 and 2007:





Three
                Months EndedMarch
                31,2008
            
            2007Net
                Income
            
            $
            40,485
            
            $
            638,639Foreign
                currency translation income / (loss)
            
            
            23,344
            
            
            (26,226
            )Comprehensive
                income
            
            $
            63,829
            
            $
            612,413





8




**NOTE
      6 - Indebtedness**





Effective
      January 26, 2007, we entered into amendments of the two working capital
      facilities with Bank of Scotland (“BoS”). The term of the $1 million working
      capital facility of SIT, originally entered into in December 2005, was extended
      to January 28, 2008. The Simclar, Inc. $5 million working capital facility,
      last
      amended in December 2005, was increased to $7.5 million, and its maturity date
      was extended to January 28, 2008. No other material changes were made to either
      facility by the amendments. Effective March 27, 2008, the facilities were
      further amended to extend the maturity dates of each to March 17, 2009. No
      other
      material changes were made to either facility by the 2008 amendments, except
      that the default interest rate under both facilities was increased from 1.5%
      to
      2.0% and the interest rate under the $7.5 million facility was increased from
      1.5% over LIBOR to 1.75% over LIBOR.





On
      August
      17, 2006, Simclar (Mexico) and Simclar entered into an agreement with Winsson
      Enterprises Co., Ltd. (“Winsson”) and its affiliate, Computronics International
      Corp. This agreement replaced a deferred trade payables agreement that expired
      on July 14, 2006. The agreement is a non-cash refinance of approximately
      $2,495,000 of trade accounts payable to long-term debt to be repaid within
      a
      three year period with an interest rate of 3% per annum. The agreement calls
      for
      quarterly payments of principal and interest of $225,000 commencing August
      15,
      2006, with a final payment of approximately $123,400 payable on May 15, 2009.
      The debt is subordinated to the BoS credit facilities. The balance at March
      31,
      2008 was approximately $1,008,000 and is reflected as subordinated long-term
      debt on the face of the balance sheet, net of $675,000 reflected in current
      portion of long-term debt





**NOTE
      7 - Amounts Due to Major Stockholder and Other Related Party
      Transactions**




The
      company’s parent, Simclar Group, provides certain financial and administrative
      services to the company under a service agreement. The amount of expenses
      incurred under the service agreement totaled $120,000 in the first 3 months
      of
      both 2008 and 2007.





SIT
      pays
      a monthly management fee to Simclar Interconnect Technologies Limited, a related
      party to Simclar Group, based on 2% of sales. The purpose of the fee is to
      support global research and development and sales and marketing management.
      The
      charges for the three months ended March 31, 2008 and March 31 2007 are
      approximately $264,000 and $269,000 respectively.





The
      company had a net receivable due from its parent, Simclar Group, certain of
      its
      subsidiaries and a related party at March 31, 2008 and December 31, 2007 of
      approximately $675,000 and $905,000 respectively. Amounts receivable accrue
      interest at the rate of LIBOR plus 1.5%.





In
      connection with the acquisition of the Litton backplane assembly business in
      February 2006, Simclar Group has provided a guarantee to BoS in respect of
      loans
      advanced to Simclar up to a maximum amount of $10,000,000; likewise, Simclar
      has
      guaranteed certain Simclar Group loans from BoS also up to a maximum amount
      of
      $10,000,000. In both cases this maximum amount reduces, subject to certain
      ratios of borrowing to EBITDA being achieved.





**Note
      8 - Income Taxes**




The
      company adopted the provisions of Financial Accounting Standards Board (“FASB”)
      Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”)
      on January 1, 2007. As required by FIN 48, which clarifies SFAS No. 109
“Accounting for Income Taxes,” the company recognizes the financial statement
      benefit of a tax position only after determining that the relevant tax authority
      would more likely than not sustain the position following an audit. For tax
      positions meeting the more-likely-than-not threshold, the amount recognized
      in
      the financial statements is the largest benefit that has a greater than 50
      percent likelihood of being realized upon ultimate settlement with the relevant
      tax authority. At the adoption date, the company applied FIN 48 to all tax
      positions for which the statute of limitations remained open. As a result of
      the
      implementation of FIN 48, the company was not required to record any liability
      for unrecognized tax benefits as of January 1, 2007. There have been no material
      changes in unrecognized tax benefits since January 1, 2007.





The
      company is subject to income taxes in the U.S. federal jurisdiction, as well
      as
      various other jurisdictions. Tax regulations within each jurisdiction are
      subject to the interpretation of the related tax laws and regulations and
      require significant judgment to apply. With few exceptions, the company is
      no
      longer subject to U.S. federal, state, and local, or non-U.S. income tax
      examinations by tax authorities for years before 2003.




9





The
      company is currently under examination by the Internal Revenue Service for
      the
      year ended December 31, 2005. The company expects this examination to be
      concluded and settled in the next 12 months without material adverse affect
      to
      the consolidated financial statements.





The
      company will recognize, if applicable, interest accrued related to unrecognized
      tax benefits in interest expense and penalties in other expense. At March 31,
      2008, the company had no unrecognized tax benefits.





The
      company files federal and state income tax returns separately from Simclar
      Group, and its income tax liability is therefore reflected on a separate return
      basis.





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.





The
      company provided income tax expense of approximately $19,000 and $329,000 for
      the three months ended March 31, 2008 and 2007.





Net
      income tax receipts amounted to approximately $91,000 and $150,000 for the
      three
      months ended March 31, 2008 and 2007..




**NOTE
      9 - Commitments and Contingencies**





The
      company leases several facilities which expire at various dates through 2010
      with renewal options for periods of up to five years at the then fair market
      rental value. The company sponsors two 401(k) profit sharing plans covering
      substantially all of its employees, excluding Techdyne (Europe) and Simclar
      Mexico.





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





10




**Item
      2. Management’s Discussion and Analysis of Financial Condition and Results of
      Operations**





**Overview**





Simclar,
      Inc. has over the past years demonstrated strong annual revenue growth of
      existing products and customers as well as adding new products and customers.
      Our strategy remains to (1) leverage our relationship with Simclar Group to
      expand our reach globally, (2) depend upon our long-term relationships with
      major OEMs to increase our business with our existing customer base and to
      grow
      our customer base with other OEMs, and (3) seek strategic acquisitions and
      alliances.





We
      strive
      to build on our integrated manufacturing capabilities, final system assemblies
      and testing. The
      combination of our advanced backplane interconnect solutions with our
      capabilities to supply printed circuit board (“PCB”) assemblies, metal
      fabrication, cabling solutions and higher level assemblies provides a valuable
      one-stop-shop for OEM system design and integration needs. In
      addition, vertical integration provides us with greater control over quality,
      delivery and cost. Our
      products are manufactured to customer specifications for OEMs in a variety
      of
      markets including the data processing, telecommunications, instrumentation,
      and
      food preparation equipment industries. The company has five manufacturing plants
      and numerous sales offices and has approximately 820 employees.





Some
      of
      the key highlights to be discussed further through this discussion and analysis
      include:





·
            2008
                first quarter sales were approximately $29.9 million compared to
                approximately $31.4 million in the same period in 2007, reflecting,
                in the
                main, the postponement of a key customer’s new programs until later in the
                year.




·
            Net
                income was approximately $41,000 for the three months ended March
                31, 2008
                compared to $639,000 in the same period in 2007, however the 2008
                results
                includes costs of approximately $797,000 arising from the closure
                of our
                North Carolina plant.




·
            Reported
                EPS for the quarter ended March 31, 2008 is $0.01, compared to $0.10
                in
                the same period in 2007, however, this was after the inclusion of
                the
                above mentioned charges relating to the North Carolina plant closure.




·
            Management
                has implemented a cost-reduction program across each location to
                mitigate
                the effect of lower sales and reduced margins, in order to improve
                profitability in future quarters, while retaining our competitive
                advantage.




·
            Bank
                term loan repayments in the quarter were approximately $1.5 million,
                of
                which $750,000 were voluntary
                payments.




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.





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 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.




11





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.





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
      performance metrics:





*Orders
      booked and backlog* - the
      ratio of orders booked to sales is reviewed on a monthly basis.





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





*Gross
      margin* - the
      gross margin achieved 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 each
      month is compared against budget.





*Working
      capital* -
      movements in the balance sheet amounts of inventory, accounts receivable and
      accounts payable 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.





*Weekly
      business control*  *reviews* -
      conference calls are conducted weekly by the president, CFO, and corporate
      controller to review key performance metrics and general business update with
      the general managers and financial controllers for each facility.





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.


12


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.





Investors
      are cautioned that forward-looking statements involve risks and uncertainties
      that could cause actual results to differ materially from historical or
      anticipated results due to many factors, including, but not limited to, the
      potential effects of a loss of one or more key customers, covenants contained
      in
      our bank loan agreements, competition in the electronics manufacturing services
      industry, the cyclical nature of our business, the lack of long-term agreements
      with our customers, shortages of and price increases in the components of
      devices we manufacture, our ability to keep up with technological changes in
      our
      industry, changes in interest rates, changes in cash flows from operations,
      the
      effectiveness of our internal controls, and other risks, uncertainties and
      factors described in our most recent Annual Report on Form 10-K and other
      filings from time to time with the Securities and Exchange Commission. These
      documents are available free of charge at the Commission’s website at
      http://www.sec.gov. Forward-looking statements speak only as of the date on
      which they are made, and we undertake no obligation to update or revise any
      forward-looking statements to reflect events or circumstances occurring after
      the date of this report.





Results
      of Operations - Three Months Ended March 31, 2008





Net
      Sales
      (dollars in thousands)


Three
                  Months EndedMarch
                  31,2008
              
              2007Net
                  Sales
              
              $
              29,923
              
              $
              31,408Change
                  from prior year
              
              $
              (1,485
              )
              $
              9,585%
                  change from prior year
              
              
              -4.7
              %
              
              43.9
              %




Despite
      forecasting growth within the first quarter, sales were approximately
      $1.5million behind the same period in 2007, mainly due to a key customer
      deferring new product introductions until later this year. The sales shortfall
      was particularly felt within the telecom infrastructure sector, which accounts
      for over 50% of the company’s revenue, and which has experienced the effects of
      the economic slow-down. Despite this, the order backlog grew during this period
      by approximately $1.7 million and forecasts indicate a stronger second
      quarter.





Gross
      Profit (dollars in thousands)


Three
                  Months EndedMarch
                  31,2008
              
              2007Gross
                  profit margin
              
              $
              2,707
              
              $
              3,826Change
                  from prior year
              
              $
              (1,119
              )
              $
              1,035%
                  change from prior year
              
              
              -29.2
              %
              
              37.1
              %%
                  of sales
              
              
              9.0
              %
              
              12.2
              %




The
      main
      factors that influence our gross margin percentage are material costs, product
      mix and plant utilization, however, approximately $548,000 of the gross margin
      reduction in the first quarter of 2008 relates to the closure of the North
      Carolina plant. The reduction also reflects the effect of underutilization
      of
      fixed production costs caused by the sales shortfall. While margins are
      continually under pressure from customer cost reductions programs, the company
      actively seeks to mitigate the effect through production efficiency improvements
      and procurement savings.




13




Selling,
      General, and Administrative Expenses (dollars in thousands)


Three
                  Months EndedMarch
                  31,2008
              
              2007Selling,
                  general, and administrative expenses
              
              $
              2,393
              
              $
              2,378Change
                  from prior year
              
              $
              15
              
              $
              777%
                  change from prior year
              
              
              0.6
              %
              
              48.5
              %%
                  of sales
              
              
              8.0
              %
              
              7.6
              %





Selling,
      general, and administrative expenses were broadly in line with prior year
      levels, however, the decrease in sales caused the percentage of sales to
      increase slightly.




Interest
      Expense (dollars in thousands)


Three
                  Months EndedMarch
                  31,2008
              
              2007Interest
                  expense
              
              $
              336
              
              $
              496Change
                  from prior year
              
              $
              (160
              )
              $
              209%
                  change from prior year
              
              
              -32.3
              %
              
              72.8
              %%
                  of sales
              
              
              1.1
              %
              
              1.6
              %


The
      reduction in interest expense in 2008 reflects the fall in lending rates and
      the
      reduced level of debt compared to last year in line with the company’s strategy
      to make where possible, advance repayments in order to continually reduce the
      company’s bank’s borrowings. Average debt levels for the three month period
      ended March 31, 2008 and same period for 2007 were approximately $20.5 million
      and $25.7 million, respectively (including interest bearing debt owed to related
      parties), while average interest rates in the quarter ended March 31, 2008
      were
      5.7% compared to 7.8% for the quarter ended March 31, 2007.




Income
      Before Income Taxes


(dollars
      in thousands)


Three
                  Months EndedMarch
                  31,2008
              
              2007Income
                  before taxes
              
              $
              59
              
              $
              968Change
                  from prior year
              
              $
              (909
              )
              $
              76%
                  change from prior year
              
              
              -93.9
              %
              
              8.5
              %%
                  of sales
              
              
              0.2
              %
              
              3.1
              %
 14





The
      decrease in income before tax in the first quarter of 2008 compared to the
      same
      period in 2007 is largely due to the closure costs of the North Carolina plant
      discussed above. These costs were approximately $797,000 and were slightly
      higher than previously forecast. Despite the closure being announced in the
      last
      quarter of 2007, current GAAP prevents, with certain exceptions, the provision
      of future associated closure costs, instead requiring that these are recognized
      in the period incurred. With the closure now complete however, management
      anticipates the company will benefit in the future from both improved
      profits and cash flow.




Income
      Tax Expense


(dollars
      in thousands)


Three
                  Months EndedMarch
                  31,2008
              
              2007Income
                  tax expense
              
              $
              19
              
              $
              329Change
                  from prior year
              
              $
              (310
              )
              $
              (58
              )%
                  change from prior year
              
              
              -94.2
              %
              
              -15.0
              %Effective
                  tax rate
              
              
              32.2
              %
              
              34.0
              %





Income
      tax expense for the three months ended March 31, 2008 was approximately $18,000.
      The lower effective tax rate reflects the lower tax rates borne by our Mexican
      operation.




Liquidity
      and Capital Resources





Cash
      and
      Cash Equivalents


(dollars
      in thousands)


March
                  31,
                2008
              
              December
                  31,
                2007Cash
                  and cash equivalents
              
              $
              1,564
              
              $
              429




Cash
      and
      cash equivalents are approximately $1,135,000 higher as of March 31, 2008
      compared to December 31, 2007. This is mainly due to high customer receipts
      at
      the quarter-end, rather than a sustained level of surplus cash, since as
      previously discussed, any surplus funds are generally used to reduce bank
      borrowings. Excess liquid funds are, however, invested in short-term
      interest-bearing accounts at financial institutions.




Net
      Cash
      Provided from (Used In) Operating Activities


(dollars
      in thousands)


March
                  31,
                2008
              
              March
                  31,
                2007Net
                  cash provided from (used in) operating activities
              
              $
              2,711
              
              $
              (32
              )




Net
      cash
      provided from operating activities for the three months ended March 31, 2008
      was
      approximately $2,711,000 compared to cash used in operating activities of
      approximately $32,000 for the same period last year. The main reason for this
      swing was the inclusion in 2007 of a repayment of approximately $2.8 million
      of
      indebtedness to Simclar Group.




15




Accounts
      Receivable


(dollars
      in thousands)


March
                  31,
                2008
              
              December
                  31,
                2007Accounts
                  receivable
              
              $
              18,200
              
              $
              20,805Average
                  days sales outstanding
              
              
              54.7
              
              
              54.9


Accounts
      receivable as of March 31, 2008 decreased by approximately $2.6 million compared
      to December 31, 2007 due to collections on the higher sales in the fourth
      quarter. The implementation of new collection procedures has resulted in
      improvements in the collection of overdue receivables.




Inventory


(dollars
      in thousands)


March
                  31,
                2008
              
              December
                  31,
                2007Inventory
              
              $
              20,649
              
              $
              21,664Average
                  inventory turnover
              
              
              5.3
              
              
              5.6




Inventory
      as of March 31, 2008 decreased by approximately $1.0 million compared to
      December 31, 2007. Despite this reduction, lower sales in the quarter results
      in
      a reduction in average inventory turns which reflects the inclusion of
      approximately $0.5million of aged inventory due to the postponement of a
      customer project in the first quarter of 2008. The company continues to seek
      improvements in inventory turnover through smaller order quantities and vendor
      managed inventories, and is actively managing the liquidation of its excess
      inventory balances.





Net
      cash
      (used in) provided by investing activities


(dollars
      in thousands)


Three
                  Months Ended March 31,2008
              
              2007Net
                  cash (used in) provided by investing activities
              
              $
              (68
              )
              $
              129




Investing
      activities for the three months ended March 31, 2008 related, in the main,
      to
      the installation in Mexico of equipment transferred from our closed facility
      in
      North Carolina, while investing activities in the first quarter of 2007,
      included sales of surplus production equipment.




Net
      cash
      (used in) provided by financing activities


(dollars
      in thousands)


Three
                  Months Ended
                March
                  31,2008
              
              2007Net
                  cash (used in) provided by financing activities
              
              $
              (1,531
              )
              $
              182




16




Net
      cash
      used in financing activities in the three months ended March 31, 2008 was
      approximately $1,531,000 compared to cash provided from financing activities
      of
      approximately $182,000 in the same period of 2007. This fluctuation is caused
      by
      the 2007 amount including approximately $2.5 million of cash inflow from the
      increase in the company’s working capital line of credit with BoS.




Our
      near-term cash requirements are primarily related to funding our operations,
      investing in acquisitions, and servicing the company’s bank debt obligations.
 We believe that the combination of internally-generated funds, available
      cash reserves, and our existing credit facilities are sufficient to fund our
      operating, investing and financing activities.





In
      December 2005, we entered into two amended and one new credit facilities with
      Bank of Scotland in Edinburgh, Scotland consisting of:





**Borrower**
            
            **Type
                of facility**
            
            **Original****amount**
            
            **Balance
                at**
              **March
                31, 2008**Simclar,
                Inc.
            
            Working
                capital
            
            $
            7,500,000
            
            $
            7,522,993Simclar,
                Inc.
            
            Term
              loan - four tranches (see detail of tranches below)
            
            $
            21,650,000
            
            $
            10,750,000Simclar
                Interconnect Technologies, Inc.
            
            Working
              Capital
            
            $
            1,000,000
            
            $
            857,352





Effective
      March 27, 2008, we entered into amendments of the two working capital
      facilities. The term of the $1 million working capital facility of SIT,
      originally entered into in December 2005, and amended in January 2007, was
      extended to March 17, 2009. The maturity date of the Simclar, Inc. $7.5 million
      working capital facility, last amended in January 2007, was extended to March
      17, 2009. No other material changes were made to either facility by the
      amendments, except that the default interest rate under both facilities was
      increased from 1.5% to 2.0% and the interest rate under the $7.5 million
      facility was increased from 1.5% over LIBOR to 1.75% over LIBOR.





Interest
      on the Simclar, Inc. working capital facility accrues
      at an annual rate equal to LIBOR plus 1.5% (increasing to 1.75% after March
      2008), 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
      interest rate for the working capital facility at March 31, 2008 was 4.9% based
      on the one month election.





Interest
      on the Simclar Interconnect Technologies, Inc. working capital facility will
      is
      a margin over LIBOR determined by a ratio of net borrowings to EBITDA for any
      given test period. The margin percentage can range from 1.75% to 2.5%. The
      interest rate for this working capital facility at March 31, 2008 was
      5.6%.





The
      term
      loan interest is also determined by a margin over LIBOR related to the ratio
      of
      net borrowings to EBITDA for any given test period. The margin percentage varies
      from 1.5% to 3.5%. The term debt interest rate was 4.2% for tranches A and
      B,
      5.2% for tranche C, and 6.3% for tranche D at March 31, 2008 based on the one
      month election. The term loan is divided into four tranches each with its own
      specific purpose and repayment schedule as shown in the following table:




17
 
 Tranche
                
                Principal
                    Amount
                
                Purpose
                
                PaymentsA
                
                $
                4,250,000
                
                Refinance
                  existing facilities
                
                Seventeen
                  quarterly payments of $250,000 beginning October 2004 through October
                  2008B
                
                $
                1,400,000
                
                Dayton
                  property acquisition
                
                Twenty-eight
                  quarterly payments of $50,000 beginning January 2005 through October
                  2011




C
            
            $
            13,000,000
            
            Acquisition
              of certain assets of the Litton Interconnect Technologies assembly
              operations
            
            Thirteen
              quarterly payments of $500,000 beginning December 2006 through December
              2009, four quarterly payments of $250,000 from March 2010 through December
              2010, four quarterly payments of $750,000 from March 2011 through December
              2011 and four quarterly payments of $625,000 from March 2012 through
              December 2012D
            
            $
            3,000,000
            
            Acquisition
              of certain assets of the Litton Interconnect Technologies assembly
              operations
            
            Single
              payment due December 31, 2010





The
      weighted average interest rate for the quarter ended March, 31 2008 was
      5.4%.





Reference
      should be made to the company’s annual report on 10-K report for the year ended
      December 31, 2007 for details of the credit facilities, all of which continue
      to
      be effective.





Due
      to
      the results for the 3 months ended March 31, 2008 being significantly reduced
      by
      the closure costs of the North Carolina plant, the company did not satisfy
      the
      EBIT to total interest coverage covenant for that period. Given these particular
      circumstances, BoS has agreed to waive the interest coverage covenant as at
      March 31, 2008.





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
      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.





Critical
      Accounting Policies





In
      preparing its financial statements and accounting for the underlying
      transactions and balances, the company has applied the accounting policies
      as
      disclosed in the Notes to the Consolidated Financial Statements contained in
      the
      company's annual report on Form 10-K for the year ended December 31, 2007.
      Preparation of the company's financial statements requires company management
      to
      make estimates and assumptions that affect the reported amount of assets and
      liabilities, disclosure of contingent assets and liabilities at the date of
      the
      financial statements and the reported amounts of revenue and expenses during
      the
      reporting period. Actual results may differ from those estimates, and the
      differences may be material. For a detailed discussion of the application of
      these and other accounting policies, see "Summary of Significant Accounting
      Policies" in the Notes to the Consolidated Financial Statements and
      "Management's Discussion and Analysis of Financial Condition and Results of
      Operations - Critical Accounting Policies" contained in the company's annual
      report on Form 10-K for the year ended December 31, 2007. There have been no
      material changes to these accounting policies during the three months ended
      March 31, 2008.





**Item
      3. Quantitative and Qualitative Disclosures About Market
      Risk**





Not
      applicable




18





**Item
      4T. Controls and Procedures**





Overview




The
      company maintains disclosure controls and procedures designed to ensure that
      information required to be disclosed in reports filed under the Securities
      Exchange Act of 1934 is recorded, processed, summarized, and reported within
      the
      specified time periods. As a part of these controls, our
      management is responsible for establishing and maintaining adequate internal
      control over financial reporting, as such term is defined in Rule 13a-15(f)
      under the Exchange Act. The company’s internal control over financial reporting
      is a process designed to provide reasonable assurance regarding the reliability
      of financial reporting and the preparation of financial statements for external
      purposes in accordance with generally accepted accounting principles, and
      includes those policies and procedures that:





·
            pertain
                to the maintenance of records that, in reasonable detail accurately
                reflect the transactions and dispositions of the assets of the
                company;





·
            provide
                reasonable assurance that transactions are recorded as necessary
                to permit
                preparation of financial statements in accordance with generally
                accepted
                accounting principles and, that receipts and expenditures of the
                company
                are being made only in accordance with authorization of management
                and
                directors of the company; and





·
            provide
                reasonable assurance regarding prevention or timely detection of
                unauthorized acquisition, use or disposition of the company's assets
                that
                could have a material effect on the financial
                statements.




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 of March
      31, 2008. Disclosure controls and procedures include, without limitation,
      controls and procedures designed to ensure that information required to be
      disclosed by us in the reports that we file or submit under the Act is
      accumulated and communicated to our management, including our principal
      executive and principal financial officers, as appropriate to allow timely
      decisions regarding required disclosure. Based on that evaluation, our Chief
      Executive Officer and Chief Financial Officer have concluded that, as of March
      31, 2008, our disclosure controls and procedures were effective to provide
      reasonable assurance 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 **.**





Our
      management, including our Chief Executive Officer and Chief Financial Officer,
      does not expect that our disclosure controls and procedures will prevent all
      errors and all improper conduct. A control system, no matter how well conceived
      and operated, can provide only reasonable, not absolute assurance that the
      objectives of the control systems are met. Further, a design of a control system
      must reflect the fact that there are resource constraints, and the benefit
      of
      controls must be considered relative to their costs. Because of the inherent
      limitations in all control systems, no evaluation of controls can provide
      absolute assurance that all control issues and instances of improper conduct,
      if
      any, have been detected. These inherent limitations include the realities that
      judgments and decision-making can be faulty, and that breakdowns can occur
      because of a simple error or mistake. Additionally, controls can be circumvented
      by the individual acts of some persons, by collusion of two or more persons,
      or
      by management override of the control. Further, the design of any system of
      controls is also based in part upon assumptions about the likelihood of future
      events, and there can be no assurance that any design will succeed in achieving
      its stated goals under all potential future conditions. Over time, controls
      may
      become inadequate because of changes in conditions, or the degree of compliance
      with the policies or procedures may deteriorate. Because of the inherent
      limitations and a cost-effective control system, misstatements due to error
      or
      fraud may occur and may not be detected.





Changes
      in Control Over Financial Reporting




During
      the quarter ended March 31, 2008, there were no changes in our internal controls
      over financial reporting that materially affected, or are reasonably likely
      to
      materially affect, our internal control over financial reporting.




19


**PART
      II - OTHER INFORMATION**





**Item
      1. Legal Proceedings**





We
      are,
      from time to time, a party to litigation which arises in the normal course
      of
      our business. When a loss is deemed probable and reasonably estimable, an amount
      is recorded in our financial statements. Although the ultimate resolution of
      pending proceedings cannot be determined, in the opinion of management, the
      unfavorable resolution of these proceedings in the aggregate will not have
      a
      material adverse effect on our business, financial position, results of
      operations, or liquidity.





**Items
      1A has no material changes from the corresponding item reported in the Company’s
      Form 10-K for the fiscal year ended December 31, 2007 and has been omitted.
      Items 2, 3, 4 and 5 are not applicable and have been omitted.**





**Item
      6. Exhibits**


*Exhibit
                  No.*
              
              *Description*31.1
              
              Certification
                  of Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley
                  Act of 200231.2
              
              Certification
                  of Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley
                  Act of 200232.1
              
              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
                  135032.2
              
              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




**SIGNATURES**





Pursuant
      to the requirements 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: May 15, 2008
            By
            /s/ Barry J. PardonBARRY
              J. PARDON,
              President


Date: May 15, 2008
            By
            /s/ Stephen P. DonnellySTEPHEN
              P. DONNELLY, Chief Financial
              Officer




20