U. S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

(Mark One)

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2003

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

           For the transition period from ___________ to _____________

                        Commission File Number 000-30291

                           EXCALIBUR INDUSTRIES, INC.
           (Name of small business issuer as specified in its charter)

            DELAWARE                        03-0453686
 (State or other jurisdiction of         (I.R.S. Employer
 incorporation or organization)         Identification No.)

                                  12060 FM 3083
                               CONROE, TEXAS 77301
          (Address of principal executive offices, including zip code)

Registrant's telephone number, including area code:  (936) 441-5100
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, $.001
                                                            PAR VALUE

      Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 during the past 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

      Check if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will 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-KSB
or any amendment to this Form 10-KSB. [ ]

      The issuer's revenues for the most recent fiscal year were $2,421,831.

      The aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant was approximately $353,431 as of March 31,
2004. Shares of common stock held by each officer and director and by each
person or group who owns 10% or more of the outstanding common stock amounting
to 5,251,699 shares have been excluded in that such persons or groups may be
deemed to be affiliates. This determination of affiliate status is not
necessarily a conclusive determination for other purposes.

      As of March 31, 2004, 17,032,728 shares of our common stock were issued
and outstanding.

      Documents Incorporated by Reference: None.

      Transitional Small Business Disclosure Format: No.



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                                    PART I

ITEM 1.   DESCRIPTION OF BUSINESS

GENERAL

      We are a contract machining and manufacturing company focused in the
energy field services market. Through our Shumate Machine Works operating
subsidiary, we manufacture products, parts, components, assemblies and
sub-assemblies for our customers designed to their specifications. Our state of
the art 3-D modeling software, computer numeric controlled ("CNC") machinery and
manufacturing expertise are contracted by our customers' research and
development ("R&D"), engineering and manufacturing departments to ensure
optimization and timely desired results for their products.

      The diverse line of products we manufacture includes the following:

o        Solid Expandable Tubular technology - launchers and liner hangers for
         oil & gas field service applications
o        Blow-out Preventers / spare parts for service
o        Top Drive Assemblies / sub assemblies - spare parts for service
o        Directional Drilling Products
o        Exploration Products - R&D
o        Natural Gas Measurement Equipment - Fittings / Valves
o        Control & Check Valves, and
o        SubSea Control Equipment.

      Our investment in capital equipment and software gives us capabilities to
perform close tolerance highly specialized work for oil field equipment and
tools, process controls, gas measuring valves and exploration products. Our
capabilities include producing large-diameter products and close-tolerance
machined parts that range up to thirty-four feet in length using a myriad of
materials of construction including high grade carbon steel, high grade
stainless steel, nickel and chrome based alloys. Shumate Machine Works uses
state of the art, large part CNC equipment in the production of these parts and
has developed in-house trade secrets with respect to the manufacture of certain
products. Our company produces complex assemblies including expandable tubing
technology products which are used in field service operations under extreme
environmental conditions for oil and gas exploration. The expandable tubing and
drilling equipment for production environments uses one of the hardest alloy
steels and requires close tolerance specifications for manufacturing. We believe
that our ability to meet the difficult manufacturing requirements of the
expandable tubing equipment and our development of certain in-house
manufacturing trade secrets makes us a leading expandable tubing equipment
manufacturer.

      Our customers include Baker Hughes, BJ Services Company, Canrig Drilling
Technology, a Nabors Industries company, Elmar, a Varco International company,
Enventure Global Technology, a Halliburton/Shell joint venture company,
Halliburton Energy Services, National Oil Well, Oceaneering Intervention
Engineering, Oil States Industrial Hydrotech, R&M Energy Systems, Shell
Development, Smith International, Texas Oil Tools, a Varco company, TMCo, Inc.
and Weatherford International.

      We employ about 35 people at a 23,000 square foot plant in Conroe, Texas,
north of Houston. Our executive offices are located at 12060 FM 3083, Conroe,
Texas 77301. Our telephone number is (936) 441-5100 and our Internet address is
www.shumateinc.com.

COMPANY BACKGROUND

      We were founded in August 2001 to build an integrated specialty
manufacturing company by acquiring and founding, integrating, and privately
owned manufacturing and fabrication businesses. We acquired Shumate Machine
Works, our operating entity, in March 2002. In April 2002, Excalibur Holdings
completed a "reverse merger" with a publicly-traded shell corporation, and in
June 2002, we reincorporated under the laws of the State of Delaware and changed
our name to "Excalibur Industries, Inc."


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FISCAL 2003 DEVELOPMENTS -- DISCONTINUED OPERATIONS

      In 2003, we continued to be significantly impacted by the economic
downturn in the U.S. and, in particular, a sharp reduction in demand for civil
flight simulation products and other civil aviation training equipment in the
wake of the World Trade Center and Pentagon attacks of September 11, 2001. We
were also significantly negatively impacted by turmoil in the power generation
industry. These developments resulted in reduced revenues, lower than expected
levels of working capital, and significant net losses.

      As a result of our continuing net losses and lack of working capital, on
September 30, 2003, we discontinued the operations of Excalibur Services,
Excalibur Steel, and Excalibur Aerospace, (collectively, the "Tulsa-based
companies"), which we had acquired in 2001. On December 9, 2003, Stillwater
National Bank and Trust conducted a UCC-1 sale of the equipment, inventory and
other assets of the Tulsa-based companies in Tulsa, Oklahoma via an auctioneer
hired by the bank. The net proceeds of this auction, in the approximate amount
of $690,000, were delivered directly to Stillwater National Bank to pay for the
in costs of the auction of about $60,000, and applied the remaining
approximately $630,000 to the outstanding debt of the Excalibur credit facility.

      On December 31, 2003, Excalibur Steel, Excalibur Services, and Excalibur
Aerospace each filed a voluntary petition for protection under Chapter 7 of the
U.S. Bankruptcy Code in the United States Bankruptcy Court, Southern District of
Texas. The three subsidiaries have an aggregate amount of $6,837,000 in
liabilities on its debtor schedules in the bankruptcy proceedings.

      While we believe our core business at Shumate Machine Works remains
viable, it is our opinion that these developments will continue to adversely
affect our results of operations in the immediate future.

OUR MARKET

      The energy field services market, or upstream hydrocarbon market, is
comprised of several sub-markets including oil & gas field services, pipeline
and transportation, process controls, fluid management and controls, subsea,
refining, and maintenance services for these areas. We currently manufacture
products, spare parts, assemblies and sub-assemblies for oil & gas field
services. We may expand into other areas of the energy field services market and
pursue growth strategies that complement and leverage our current business and
expertise.

      The dollar size of the United States (U.S.) oil & gas field services
market can be measured in dollars by the U.S. drilling and completion activity
spending and the total U.S. well service and workover spending.

      In their March 2004 Drilling and Production Outlook report, Spears and
Associates, a leading energy market research firm, states the following:

o        U.S. drilling and completion spending was $22.6 billion for 2003, up
         12% from the year 2002, and

o        U.S. well service and workover spending was $13.3 billion in 2003, up
         10% from 2002.

OUR STRATEGY

      Strategies to achieve our growth objectives include the following:

      Expand and grow our contract machining and manufacturing business. Our
sales and marketing initiatives resulted in important new customers at our
Shumate Machine Works division during 2003 that we anticipate further developing
and growing in the future. In addition to the goal of acquiring new customers,
we solicit historical existing customers for new product line manufacturing
opportunities and assemblies and extensions of their current individual parts
work. We also perform machining services in support of R&D projects interfacing
directly with customer's engineering managers and product developers.

      Develop strategic supply chain alliances with our customers. We recently
signed two contracts with customers whereby our company dedicates machine hours,
manufacturing and expertise producing their products, and the buyer creates
manufacturing efficiencies through its longer term scheduling and forecasts.
This collaborative process can assist in reducing costs while protecting margins
and can avoid bidding scenarios for new orders. Typically, these contracts
represent six month to three year commitments from customers for their needs.
Several other customers have expressed interest in signing similar strategic
alliances with us that, if signed, could bring additional products and
manufacturing revenues for our company.


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<PAGE>

      Leverage our manufacturing business and develop our own product lines. Our
firm excels at manufacturing products for its customers and strategically we
believe our expertise and knowledge in the marketplace creates an opportunity to
acquire, develop, design and sell our own products in the energy field services
market. Our customer base, channels of distribution and market focus may provide
additional product line opportunities within areas such as fluid management,
process controls, valves and valve components.

SALES AND MARKETING; CUSTOMERS

      Our operating subsidiary, Shumate Machine Works, has developed and
maintained long-term relationships with its existing customers. This sales team
focuses on identifying new prospective customers in the energy field services
industry that we currently serve. We use a variety of methods to identify these
target customers, including the utilization of databases, direct mail and
participation in manufacturers' trade shows. These efforts supplement our
traditional sales and marketing efforts of customer referrals and territory
canvassing.

      Nearly all of our sales are on a negotiated price basis. In some cases,
sales are the result of a competitive process where a customer sends to us and
to several competitors a list of products required, and we submit a bid on each
product. Frequently, the ability to meet customer delivery schedules as well as
plant capacities and capabilities is a significant aspect of winning a bid.

      We have a customer base of more than 40 customers. Two of these customers
represented over forty percent of our revenues for 2003. We continually focus on
developing new customers to reduce customer concentration risk and we believe
that long-term relationships with many of our customers will contribute to our
success.

COMPETITION

      We are engaged in a highly fragmented and competitive industry.
Competition is based primarily on quality, service, price, timeliness and
geographic proximity. We compete with a large number of other machining and
manufacturing operators on a national, regional and local basis, many of which
may have greater financial resources than we do, and several of which are public
companies. We also compete with overseas competitors whose labor costs are
significantly lower than our own.

      We believe that we are able to compete effectively by defining and
understanding customer needs, using our equipment and machinery base to
manufacture products with difficult specifications and tolerances.

GOVERNMENT REGULATION AND ENVIRONMENTAL MATTERS

      Our operations are subject to a number of federal, state and local
regulations relating to the protection of the environment and to workplace
health and safety. In particular, our operations are subject to extensive
federal, state and local laws and regulations governing waste disposal, air and
water emissions, the handling of hazardous substances, environmental protection,
remediation and workplace exposure. Hazardous materials are used in our
operations include lubricants, cleaning solvents and hydrochloric acid.

      We believe that we are in substantial compliance with all such laws and do
not currently anticipate that we will be required to expend any substantial
amounts in the foreseeable future in order to meet current environmental or
workplace health and safety requirements.

      Although no environmental claims have been made against us and we have not
been named as a potentially responsible party by the Environmental Protection
Agency or any other entity, it is possible that we could be identified by the
EPA, a state agency or one or more third parties as a potentially responsible
party under CERCLA or under analogous state laws. If so, we could incur
substantial litigation costs to prove that we were not responsible for the
environmental damage.


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SAFETY

      We are committed to emphasizing and focusing on safety in the workplace.
We currently have a variety of safety programs in place, which include regular
field safety meetings, incentives based on an employee's or a team's safety
record and training sessions to teach proper safety work procedures. We plan to
establish "best practices" throughout all of our operations to ensure that all
employees comply with safety standards that we establish and to ensure full
compliance with federal, state and local laws and regulations. In addition, we
intend to continue to emphasize the need for an accident-free workplace.

RISK MANAGEMENT, INSURANCE AND LITIGATION

      The primary risks in our operations are property damage, workers'
compensation and third-party bodily injury. We maintain insurance above certain
self-insured limits for liability for bodily injury, third-party property damage
and workers' compensation, all of which we consider sufficient to insure against
these risks. We are not currently involved in any material legal proceedings for
property damage, workers' compensation, or third-party property damage.

      We have been named in approximately 15 actions that have been commenced by
former vendors and suppliers. The aggregate amount of these claims is
approximately $350,000, many of which are listed within the Tulsa-based
companies bankruptcy petition filed December 31, 2003. There can be no
assurances, however, that the bankruptcies will conclude in a manner favorable
to our company.

      In addition, on November 7, 2003 Dwayne Lewis, the former Chief Operating
Officer of the Tulsa-based companies, filed suit in District court in Tulsa
County, Oklahoma against Excalibur Holdings, Matthew Flemming, William Stuart,
Earl Swift and Frank Marshik. The suit is a counter claim in response to a civil
suit filed against Dwayne Lewis by Matthew Flemming on September 15, 2003. Mr.
Lewis' action claims tortuous interference, fraudulent inducement/deceit and
constructive fraud whereby he alleges Mr. Flemming and the other named
third-party defendants breached a duty of good faith, misrepresented and was
negligently fraudulent by causing Excalibur Holdings to breach its separation
agreement signed by Excalibur Holdings and Dwayne Lewis on October 3, 2002. Mr.
Lewis' petition claims an amount not less than $10,000. We believe Mr. Lewis'
claims are baseless and without merit.

EMPLOYEES

      We currently employ approximately 35 people in Conroe, Texas. Of the
total, approximately 5 are in administration, 4 are in sales, marketing and
distribution, and 26 are in machining, manufacturing and production. None of our
employees are represented by a labor union, and we have not entered into a
collective bargaining agreement with any union. We have not experienced any work
stoppages and consider the relations with our employees to be good.

BUSINESS DEVELOPMENT OF EXCALIBUR INDUSTRIES, INC. AND EXCALIBUR HOLDINGS, INC.

      Excalibur Holdings Inc., a Texas corporation, was founded on August 17,
2001 to acquire privately held manufacturing companies in the southwest United
States. On April 8, 2002, Excalibur Holdings completed a "reverse merger" with
Global Realty Management Group, Inc. ("GRMG"), a publicly-traded shell
corporation and a fully reporting company registered under the Securities
Exchange Act of 1934. In June 2002, GRMG reincorporated under the laws of the
State of Delaware and changed its name to "Excalibur Industries, Inc."

      SHUMATE MACHINE WORKS ACQUISITION. On March 29, 2002, Excalibur Holdings
acquired Shumate Machine Works, Inc., a Texas corporation, pursuant to a merger
of Shumate with and into Excalmergeco, Inc., a Texas corporation and
wholly-owned subsidiary of Excalibur Holdings. The purchase price for Shumate
was $250,000 in cash, the delivery of a series of unsecured notes in the
aggregate original principal amount of $250,000, and 1,150,000 shares of
Excalibur Holdings common stock. In addition, Excalibur Holdings entered into an
earn-out agreement with the former stockholders of Shumate, Larry Shumate and
Russ Clark, pursuant to which Messrs. Shumate and Clark would receive an
additional 250,000 shares of common stock if Shumate achieved certain revenue
and income thresholds in 2002, which Shumate did achieve. Excalibur Holdings
also entered into employment agreements with Mr. Shumate and Mr. Clark.


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      EXCALIBUR AEROSPACE, D.B.A. AERO WELD ACQUISITION. On November 20, 2001,
Excalibur Holdings, through its wholly-owned subsidiary Excalibur Aerospace,
Inc., acquired substantially all of the assets (other than real property) of TW
Consulting, Inc., an Oklahoma corporation formerly known as Aero Weld, Inc., for
$3,500,000 in cash payable in a series of installments, the delivery of a series
of unsecured notes in the aggregate original principal amount of $1,968,388,
1,000,000 shares of Excalibur Holdings common stock, and consulting and
non-competition fees aggregating $2,500,000 payable to the sole stockholder of
TW Consulting, Mr. Tommy Worth. In 2002, we subsequently amended, on multiple
occasions, the terms of the purchase price, the terms of the notes, and the
terms of the consulting agreement. As a result of these amendments, and after
certain payments made by or on behalf of each party, we had outstanding a series
of secured and unsecured notes in the aggregate original principal amount of
$2,932,473. In addition, we also amended our consulting agreement with Mr. Worth
and entered into a written lease agreement with TW Consulting (formerly Aero
Weld, Inc.). The amended consulting agreement provides for monthly payments to
Mr. Worth through March 31, 2012. The amount of the monthly payment was based
upon gross revenues generated in our Aero Weld subsidiary, with a range of up to
$65,000 per month. The maximum aggregate amount payable under this agreement is
$2,500,000. In addition, we agreed to enter into a two-year written lease with
TW Consulting for the rental of the facilities for our Aero Weld subsidiary at a
rate of $8,000 per month. We have breached our obligations under the notes and
the lease listed above. These liabilities are set forth on the schedules of the
Chapter 7 petition filed by Excalibur Aerospace. On or about March 9, 2004,
Stillwater National Bank purchased this debt and the related security
agreements, personal guarantees, and causes of action against the guarantors of
this debt.

      EXCALIBUR SERVICES FORMATION. On November 20, 2001, Excalibur Holdings
formed Excalibur Services, Inc., an Oklahoma corporation, as a wholly-owned
subsidiary to start up AMSE code welding and fabrication operations. On the same
day, Excalibur Services acquired certain selected assets of Redhawk Industries,
L.L.C., an Oklahoma limited liability company, for $50,000 in cash and 400,000
shares of Excalibur Holdings common stock in order to begin operations in our
Excalibur Services subsidiary.

      EXCALIBUR STEEL ACQUISITION. On November 27, 2001, Excalibur Holdings
acquired Excalibur Steel, Inc., an Oklahoma corporation, pursuant to a merger of
Excalibur Steel with and into Excalmerge, Inc., an Oklahoma corporation and
wholly-owned subsidiary of Excalibur Holdings. The purchase price for Excalibur
Steel was the delivery of a series of unsecured notes in the aggregate original
principal amount of $650,000 and 1,500,000 shares of Excalibur Holdings common
stock.

      REVERSE MERGER. On April 8, 2002, GRMG Acquisition Corp., a Texas
corporation and a wholly-owned subsidiary of GRMG, merged with and into
Excalibur Holdings, Inc., a Texas corporation, whereby Excalibur Holdings became
a wholly owned subsidiary of GRMG. Under the terms of an agreement and plan of
merger, each outstanding share of Excalibur Holdings common stock was converted
into one (1) share of GRMG common stock, each outstanding share of Excalibur
Holdings Series A preferred stock was converted into one (1) share of GRMG
Series A preferred stock, each outstanding share of Excalibur Holdings Series B
preferred stock was converted into one (1) share of GRMG Series B preferred
stock, and the outstanding shares of GRMG Acquisition Corp. were converted into
one hundred shares of Excalibur Holdings. In total, GRMG issued 11,633,699
shares of common stock, 1,000,000 shares of Series A preferred stock and 806,000
shares of Series B preferred stock to the Excalibur Holdings stockholders
pursuant to the merger. On May 22, 2002, each share of our Series A and Series B
preferred stock automatically converted into one (1) share of GRMG common stock.

      REINCORPORATION. On June 10, 2002, GRMG reincorporated under the laws of
the State of Delaware from the State of Florida pursuant to a merger with a
newly formed Delaware corporation. Under the terms of this reincorporation
merger, GRMG changed our name from "Global Realty Management Group, Inc." to
"Excalibur Industries, Inc."

      We have no relation to Excalibur Industries, Inc., a natural resource
company incorporated under the laws of the State of Utah which is located in
Duluth, Minnesota.


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ITEM 1A.  RISK  FACTORS AND  CAUTIONARY  STATEMENT  REGARDING  FORWARD-LOOKING
INFORMATION

      An investment in our common stock involves a high degree of risk. You
should carefully consider the following risk factors and the other information
in this annual report before investing in our common stock. Our business and
results of operations could be seriously harmed by any of the following risks.
The trading price of our common stock could decline due to any of these risks.

      WE WILL NEED TO CONTINUE TO FINANCE OUR OPERATIONS THROUGH ADDITIONAL BANK
BORROWINGS UNDER OUR EXISTING LINE OF CREDIT OR OTHER CAPITAL FINANCINGS, AND IF
WE ARE UNABLE TO OBTAIN ADDITIONAL CAPITAL, WE MAY NOT BE ABLE TO CONTINUE AS A
GOING CONCERN. We had a working capital deficit of $11,850,659 as of December
31, 2003. As of the date of this annual report, we do not believe that we will
be able to fund our operations, working capital requirements and debt service
requirements over the fiscal year 2004 through cash flows generated from
operations. We currently have a $1,650,000 secured revolving line of credit
facility, subject to qualifying accounts receivable and inventory, with
Stillwater National Bank, which expires on April 15, 2004. The outstanding
balance on the Stillwater line of credit was $1,650,000 at December 31, 2003.
Interest on the Stillwater line of credit is payable monthly at the higher of
(a) 6.45 percent or (b) Stillwater's prime rate plus two percent. We also have
several other loans with Stillwater National Bank, which, in total, had
outstanding principal balances of $4,142,199 at December 31, 2003, with
maturities ranging from August 2003 to August 2006. Interest rates accruing at
the rate of the higher of (a) six percent or (b) Stillwater's prime rate plus
two percent.

      We will need to continue to finance our operations through additional bank
borrowings under our Stillwater line of credit or other capital financings. Our
collateral may not be sufficient to borrow additional amounts under the
Stillwater line of credit at that time.

      We may also seek equity financing in the form of a private placement, a
public offering, or the exercise of currently outstanding warrants by existing
warrant holders to provide additional equity capital. Such additional financing
may not be available to us, when and if needed, on acceptable terms or at all.
If we are unable to obtain additional financing in sufficient amounts or on
acceptable terms, our operating results and prospects could be adversely
affected. Any debt or equity financings also require the written consent of our
lender Stillwater National Bank.

      WE HAVE SUBSTANTIAL INDEBTEDNESS OUTSTANDING, AND OUR OPERATIONS ARE
SIGNIFICANTLY LEVERAGED. In order to finance our operations, including costs
relating to the acquisitions of our operating subsidiaries, we have incurred
substantial indebtedness, including our debt with Stillwater for a line of
credit and several term loans. As of December 31, 2003, we have approximately
$7,013,136 of notes payable and bank credit lines, including current maturities
of approximately $3,999,493. We are not in compliance with our debt covenants
under the loan agreements with Stillwater National Bank. We have also defaulted
on a significant portion of our loan obligations, which has resulted in
Stillwater foreclosing on the assets of three of our operating subsidiaries. The
proceeds from this foreclosure sale have not satisfied our debt obligations to
Stillwater, and they could foreclose on our remaining assets. Our cash flows
from operations are currently insufficient to service our debt obligations. We
are currently negotiating with Stillwater to reorganize and restructure our debt
obligations, but if we are unable to do so, there is a significant chance that
Stillwater will foreclose on our remaining assets, in which case we would cease
to continue as a going concern.

      THE LIABILITIES OF OUR TULSA-BASED COMPANIES MAY NOT BE DISCHARGED IN
BANKRUPTCY. On December 31, 2003, Excalibur Steel, Excalibur Services, and
Excalibur Aerospace each filed a voluntary petition for protection under Chapter
7 of the U.S. Bankruptcy Code in the United States Bankruptcy Court, Southern
District of Texas. The three subsidiaries identified an aggregate amount of
$6,837,000 in liabilities on its debtor schedules in the bankruptcy proceedings.
It is possible that these liabilities may not be discharged in the bankruptcy
proceedings.

      OUR INDEPENDENT AUDITORS' REPORT RAISES SUBSTANTIAL DOUBT ABOUT OUR
ABILITY TO CONTINUE AS A GOING CONCERN. Our independent auditors have prepared
their report on our 2003 financial statements assuming that we will continue as
a going concern. Their report has an explanatory paragraph which states that our
recurring losses from operations and our working capital deficiency raise
substantial doubt about our ability to continue as a going concern.


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      THE MAJORITY OF OUR REVENUES ARE GENERATED FROM A SMALL NUMBER OF
CUSTOMERS, AND OUR RESULTS OF OPERATIONS CASH FLOWS WILL BE ADVERSELY AFFECTED
IF ANY OF OUR MAJOR CUSTOMERS EITHER FAIL TO PAY ON A TIMELY BASIS OR CEASE TO
PURCHASE OUR PRODUCTS. In 2003, three of our customers accounted for 57% of our
sales. At December 31, 2003, these same three customers accounted for 86% of our
trade accounts receivable balance. These customers do not have any ongoing
commitment to purchase our products and services. We generally do not require
collateral from our customers, although we do perform ongoing credit evaluations
of our customers and maintain allowances for potential credit losses, which when
realized, have been within the range of our expectations If one or more of our
other major customers stops purchasing our products, our results of operations
will be adversely affected. If one of our major customers fails to pay its
account on a timely basis, our cash flows will be adversely affected.
Furthermore, if one of our major customer defaults in its obligation to pay and
we are unable to collect on that account, our operating results will be
materially adversely affected.

      OUR STILLWATER LINE OF CREDIT AND STILLWATER TERM LOAN CONTAIN NUMEROUS
RESTRICTIVE COVENANTS WHICH LIMIT OUR MANAGEMENT'S DISCRETION TO OPERATE OUR
BUSINESS. These covenants place significant restrictions on, among other things,
our ability to incur additional indebtedness, to create liens or other
encumbrances, to make certain payments and investments, and to sell or otherwise
dispose of assets and merge or consolidate with other entities. The Stillwater
line of credit and the Stillwater term loan also require us to meet certain
financial ratios and tests and require us to obtain consent from Stillwater
National Bank in order to change our senior management. We are currently not in
compliance with all of our debt covenants under the loan agreements with
Stillwater National Bank, although we have obtained waivers of compliance with
these covenants from Stillwater. Any additional failures to comply with the
obligations contained in the Stillwater loan agreements could result in an event
of default under either the Stillwater line of credit or the Stillwater term
loan, which could result in acceleration of the related debt and the
acceleration of debt under other instruments evidencing indebtedness that may
contain cross-acceleration or cross-default provisions.

      THE RATE OF INTEREST ON A SIGNIFICANT PORTION OF OUR INDEBTEDNESS VARIES
WITH THE MARKET RATE OF INTEREST. The interest on the Stillwater line of credit
is payable monthly at the higher of (a) six percent or (b) Stillwater's prime
rate plus two percent. Our Stillwater term loan accrues interest at the rate of
the higher of (a) six percent or (b) Stillwater's prime rate plus two percent.
The base rates on the Stillwater line of credit and the Stillwater term loan
will fluctuate over time, and if the base rates significantly increase, our
interest expense will increase, which will have a direct adverse affect on our
profitability. As an example, based on the amounts outstanding under the
Stillwater line of credit and term loan at December 31, 2003, a one percent
increase in Stillwater's prime rate would increase our annual debt service by
more than $60,000.

      WE MAY NOT BE ABLE TO SUCCESSFULLY ACCELERATE INTERNAL SALES GROWTH WHICH
WOULD RESULT IN LOWER REVENUES AND EARNINGS THAN WE CURRENTLY ANTICIPATE. It is
possible that we may be unable to successfully implement any of our strategies
to increase sales, including expanding the range of processes and services which
we offer, developing long-term partnering relationships with customers, adding
new customers, improving our operating margins by increasing operating
efficiencies and centralizing appropriate administrative functions, or otherwise
increase revenues internally. Our ability to increase our net sales will be
affected by many factors which are beyond our control, and there can be no
assurance that our strategies will be successful or that we will be able to
generate cash flow adequate for our operations and to support internal growth.

      WE MAY NOT BE ABLE TO DEVELOP OUR OWN NEW PRODUCT LINES. We are currently
seeking opportunities to develop or acquire energy field services products via
acquisition or license. We believe acquiring our own product lines would
leverage our expertise in manufacturing and marketplace knowledge and complement
our current contract machining business. However, the energy field services
market has numerous companies larger and more financially capable of developing
product lines in this market than we are. However, even if we do acquire or
design our own products, it is possible that we may not have the working capital
or financial capacity to enter into this market, and we may be unable to
successfully sell any products due to inadequate working capital, lack of
capacity, or both.

      WE MAY NOT BE ABLE TO IDENTIFY QUALITY STRATEGIC ACQUISITION CANDIDATES,
AND IF WE DO MAKE STRATEGIC ACQUISITIONS, WE MAY NOT BE ABLE TO SUCCESSFULLY
INTEGRATE THEIR OPERATIONS. We may seek to acquire companies or product lines
within the energy field services market or a related market. For any
acquisition, we will be required to assimilate the operations, products and
personnel of the acquired business and train, retain and motivate its key
personnel. We may be unable to maintain uniform standards, controls, procedures
and policies if we fail in these efforts. Similarly, acquisitions may subject us
to liabilities and risks that are not known or identifiable at the time of the
acquisition or may cause disruptions in our operations and divert management's
attention from day-to-day operations, which could impair our relationships with
our current employees, customers and strategic partners. We may have to incur
debt or issue equity securities to pay for any future acquisitions. The issuance
of equity securities could be substantially dilutive to our stockholders. In
addition, our profitability may suffer because of acquisition related costs. We
currently have no agreements or commitments concerning any such additional
acquisitions, and we may not be able to identify any companies that satisfy our
acquisition criteria.


                                       8
<PAGE>

      WE FACE SIGNIFICANT COMPETITION IN OUR MARKETS. The machining and
manufacturing industry is highly competitive. Competition in the sale of our
products is primarily based on engineering, product design, process capability,
quality, cost, delivery and responsiveness. Many of our competitors are
companies, or divisions or subsidiaries of companies, which are larger and have
greater financial resources than we do. We have competition from foreign
manufacturers that have substantially cheaper labor costs than we do. Our
Company may not be able to successfully compete with the products of these other
companies.

      WE PURCHASE METALS IN THE OPEN MARKET, AND OUR PROFITABILITY MAY VARY IF
PRICES OF METALS FLUCTUATE. The principal raw materials that we use are carbon
steel, aluminum, stainless steel, copper, brass, titanium and various special
alloys and other metals. The metals industry as a whole is cyclical, and at
times pricing and availability of raw materials in the metals industry can be
volatile due to numerous factors beyond our control, including general, domestic
and international economic conditions, labor costs, production levels,
competition, import duties and tariffs and currency exchange rates. This
volatility can significantly affect the availability and cost of raw materials,
and may, therefore, adversely affect our net sales, operating margin and net
income. During periods of rising raw materials pricing, there can be no
assurance that we will be able to pass any portion of such increases on to our
customers. When raw material prices decline, customer demands for lower prices
could result in lower sale prices and, as we use existing inventory, resulting
in lower margins. Changing metal prices could adversely affect our operating
margin and net income.

      THE OIL AND GAS INDUSTRY IS CYCLICAL, WHICH RESULTS IN FLUCTUATIONS IN OUR
RESULTS OF OPERATIONS. Most of our products are sold to oil and gas field
services companies that experience significant fluctuations in demand based on
economic conditions, energy prices, domestic and international drilling rig
counts, consumer demand and other factors beyond our control. In 2003, we were
significantly impacted by the economic downturn in the U.S. and, in particular,
a reduction in demand for oil field drilling products. These developments
resulted in reduced revenues, lower than expected levels of working capital, and
net losses. In turn, our lack of working capital forced us to suspend our growth
objectives and, instead, required us focus on stabilizing our existing
operations. While we believe our core business is fundamentally sound, we
believe that these developments will continue to adversely affect our results of
operations in the immediate future.

      OUR OPERATIONS ARE SUBJECT TO A NUMBER OF FEDERAL, STATE AND LOCAL
REGULATIONS RELATING TO THE PROTECTION OF THE ENVIRONMENT AND TO WORKPLACE
HEALTH AND SAFETY. Our operations are subject to extensive federal, state and
local laws and regulations governing waste disposal, air and water emissions,
the handling of hazardous substances, environment protection, remediation,
workplace exposure and other matters. Hazardous materials that we use in our
operations primarily include lubricants, cleaning solvents and hydrochloric
acid. Some of the properties that we lease are located in industrial areas close
to properties with histories of heavy industrial use. Although no environmental
claims have been made against us and we have not been named as a potentially
responsible party by the Environmental Protection Agency or any other party, it
is possible that we could be identified by the EPA, a state agency or one or
more third parties as a potentially responsible party under CERCLA or under
analogous state laws. If so, we could incur substantial litigation costs to
prove we are not responsible for the environmental damage. We have obtained
limited indemnities from the former founders of each of our operating
subsidiaries. We believe that these indemnities will be adequate to protect us
from a material adverse effect on our financial condition should we be found to
be responsible for a share of the clean-up costs. The limited indemnities are
subject to certain deductible amounts, however, and the limited indemnities may
not fully protect us.

      THERE IS A LIMITED ACTIVE TRADING MARKET FOR OUR SHARES. Our common stock
is traded on the OTC Bulletin board under the symbol "EXCB.OB." Trading activity
in our stock has fluctuated widely and at times has been limited. We consider
our common stock to be "thinly traded" and any last reported sale prices may not
be a true market-based valuation of the common stock. A consistently active
trading market for our stock may not develop at any time in the future.
Shareholders may experience difficulty selling their shares if they choose to do
so because of the illiquid market and limited public float for our stock.


                                       9
<PAGE>

      OUR COMMON STOCK IS CONSIDERED TO BE A "PENNY STOCK" AND, AS SUCH, THE
MARKET FOR OUR COMMON STOCK MAY BE FURTHER LIMITED BY CERTAIN SEC RULES
APPLICABLE TO PENNY STOCKS. As long as the price of our common stock remains
below $5.00 per share or we have net tangible assets of $2,000,000 or less, our
common shares are likely to be subject to certain "penny stock" rules
promulgated by the SEC. Those rules impose certain sales practice requirements
on brokers who sell penny stock to persons other than established customers and
accredited investors (generally institutions with assets in excess of $5,000,000
or individuals with net worth in excess of $1,000,000). For transactions covered
by the penny stock rules, the broker must make a special suitability
determination for the purchaser and receive the purchaser's written consent to
the transaction prior to the sale. Furthermore, the penny stock rules generally
require, among other things, that brokers engaged in secondary trading of penny
stocks provide customers with written disclosure documents, monthly statements
of the market value of penny stocks, disclosure of the bid and asked prices and
disclosure of the compensation to the brokerage firm and disclosure of the sales
person working for the brokerage firm. These rules and regulations adversely
affect the ability of brokers to sell our common shares and limit the liquidity
of our securities.

      THERE ARE OPTIONS AND WARRANTS TO PURCHASE UP TO 1,800,982 SHARES OF OUR
COMMON STOCK CURRENTLY OUTSTANDING. We have granted options and warrants to
purchase an aggregate of 1,800,982 shares of our common stock to various persons
and entities, of which options and warrants to purchase up to 1,751,982 shares
of our common stock are currently exercisable. The exercise prices on these
options and warrants range from $0.60 per share to $2.50 per share. If issued,
the shares underlying options and warrants would significantly increase the
number of shares of our common stock currently outstanding and will dilute the
holdings and voting rights of our then-existing stockholders by up to 9.3%
percent.

      WE HAVE NO IMMEDIATE PLANS TO PAY DIVIDENDS. We have not paid any cash
dividends to date and do not expect to pay dividends for the foreseeable future.
In addition, the terms of our Stillwater line of credit and our Stillwater term
loan prohibit us from declaring or paying dividends or purchasing or redeeming
any of our capital stock without Stillwater National Bank's prior approval. We
intend to retain earnings, if any, as necessary to finance the operation and
expansion of our business.

      OUR OFFICERS AND DIRECTORS COLLECTIVELY OWN A SUBSTANTIAL PORTION OF OUR
OUTSTANDING COMMON STOCK, AND AS LONG AS THEY DO, THEY MAY BE ABLE TO CONTROL
THE OUTCOME OF STOCKHOLDER VOTING. Our officers and directors are collectively
the beneficial owners of approximately 20% of the outstanding shares of our
common stock. As long as our officers and directors collectively own a
significant percentage of our common stock, our other stockholders may generally
be unable to affect or change the management or the direction of our company
without the support of our officers and directors. As a result, some investors
may be unwilling to purchase our common stock. If the demand for our common
stock is reduced because our officers and directors have significant influence
over our company, the price of our common stock could be materially depressed.
The officers and directors will be able to exert significant influence over the
outcome of all corporate actions requiring stockholder approval, including the
election of directors, amendments to our certificate of incorporation and
approval of significant corporate transactions.

      OUR CERTIFICATE OF INCORPORATION AUTHORIZES OUR BOARD OF DIRECTORS TO
DESIGNATE AND ISSUE PREFERRED STOCK WITH RIGHTS, PREFERENCES AND PRIVILEGES THAT
MAY BE ADVERSE TO THE RIGHTS OF THE HOLDERS OF OUR COMMON STOCK. Our board of
directors has the authority to issue up to an additional 10,000,000 shares of
preferred stock and to determine the price, rights, preferences and privileges
of those shares without any further vote or action by our stockholders. To date,
we have not issued any shares of preferred stock. Any preferred stock issued by
our board of directors may contain rights and preferences adverse to the voting
power and other rights of the holders of common stock.


                                       10
<PAGE>

                       CAUTIONARY STATEMENT CONCERNING
                         FORWARD-LOOKING INFORMATION

      This annual report and the documents to which we refer you and incorporate
into this annual report by reference contain forward-looking statements. In
addition, from time to time, we, or our representatives, may make
forward-looking statements orally or in writing. These are statements that
relate to future periods and include statements regarding our future strategic,
operational and financial plans, potential acquisitions, anticipated or
projected revenues, expenses and operational growth, markets and potential
customers for our products and services, plans related to sales strategies and
efforts, the anticipated benefits of our relationships with strategic partners,
growth of our competition, our ability to compete, the adequacy of our current
facilities and our ability to obtain additional space, use of future earnings,
and the feature, benefits and performance of our current and future products and
services.

      You can identify forward-looking statements by those that are not
historical in nature, particularly those that use terminology such as "may,"
"will," "should," "expects," "anticipates," "contemplates," "estimates,"
"believes," "plans," "projected," "predicts," "potential," "seek" or "continue"
or the negative of these or similar terms. In evaluating these forward-looking
statements, you should consider various factors, including those described in
this annual report under the heading "Risk Factors." These and other factors may
cause our actual results to differ materially from any forward-looking
statement. We caution you not to place undue reliance on these forward-looking
statements.

      We base these forward-looking statements on our expectations and
projections about future events, which we derive from the information currently
available to us. Such forward-looking statements relate to future events or our
future performance. Forward-looking statements are only predictions. The
forward-looking events discussed in this annual report, the documents to which
we refer you and other statements made from time to time by us or our
representatives, may not occur, and actual events and results may differ
materially and are subject to risks, uncertainties and assumptions about us. For
these statements, we claim the protection of the "bespeaks caution" doctrine.
The forward-looking statements speak only as of the date hereof, and we
expressly disclaim any obligation to publicly release the results of any
revisions to these forward-looking statements to reflect events or circumstances
after the date of this filing.


                                       11
<PAGE>

ITEM 2.   PROPERTIES

      We lease over 20,000 square feet of manufacturing facilities in Conroe,
Texas. In March 2003, we entered into a five-year lease for the rental of the
facilities for our Shumate subsidiary at a rate of approximately $19,600 per
month. The existing facilities are adequate for our current operations. We
anticipate that additional facilities will be leased or purchased as needed and
that sufficient facilities for our needs are readily available.

ITEM 3.   LEGAL PROCEEDINGS

      On December 31, 2003, Excalibur Steel, Excalibur Services, and Excalibur
Aerospace each filed a voluntary petition for protection under Chapter 7 of the
U.S. Bankruptcy Code in the United States Bankruptcy Court, Southern District of
Texas. The three subsidiaries identified an aggregate amount of $6,837,000 in
liabilities on its debtor schedules in the bankruptcy proceedings.

      We have been named in approximately 15 actions that have been commenced by
former vendors and suppliers. The aggregate amount of these claims is
approximately $350,000, many of which are listed within the Tulsa-based
companies bankruptcy petition filed on December 31, 2003. There can be no
assurances, however, that the bankruptcies will conclude in a manner favorable
to our company.

      On November 7, 2003 Dwayne Lewis, the former Chief Operating Officer of
the Tulsa-based companies, filed suit in District court in Tulsa County,
Oklahoma against Excalibur Holdings, Matthew Flemming, William Stuart, Earl
Swift and Frank Marshik. The suit is a counter claim in response to a civil suit
filed against Dwayne Lewis by Matthew Flemming on September 15, 2003. Mr. Lewis'
action claims tortuous interference, fraudulent inducement/deceit and
constructive fraud whereby he alleges Mr. Flemming and the other named
third-party defendants breached a duty of good faith, misrepresented and was
negligently fraudulent by causing Excalibur to breach the separation agreement
signed by the Company and Dwayne Lewis on October 3, 2002. Mr. Lewis' petition
claims an amount not less than $10,000. We believe that Mr. Lewis' claims are
baseless and without merit.

      On January 13, 2004, TW Consulting, Inc. the seller of Aero Weld to
Excalibur Aerospace, brought suit against William S.H. Stuart and Matthew C.
Flemming, two of our officers, in the District Court of Tulsa County, Oklahoma,
alleging default of one of the seller notes to TW Consulting in the amount of
$1,393,769.90 which Messrs. Stuart and Flemming personally guaranteed.

      On February 17, 2004, Stillwater National Bank and Trust Company brought
suit against Messrs. Stuart and Flemming in the District Court of Oklahoma
County, Oklahoma, alleging default of the notes and revolving credit lines known
as the bank credit facility in the amount of $5,043,156.67 which Messrs. Stuart
and Flemming personally guaranteed.

      On or about March 9, 2004, the Company was notified by Stillwater National
Bank and Trust that it had purchased the notes and related lawsuit claims from
TW Consulting.

      We have been in ongoing negotiations with Stillwater National Bank
regarding a restructuring and reorganization plan for our company, including the
treatment of the bank credit facility debt. Discussions are ongoing and there
can be no assurance that we will ever come to a successful conclusion of a
reorganization and restructure of our debt, including our bank debt.

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

          None.


                                       12
<PAGE>

                                   PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      Our common stock has traded on the OTC Bulletin Board under the symbol
"EXCB" since June 10, 2002. Before that date, our common stock is traded on the
OTC Bulletin Board under the symbol "GRMA," and before that, it traded on the
OTC Bulletin Board under the symbol "GRMG." The following table shows the high
and low bid prices for our common stock for each quarter since January 1, 2002
as reported by the OTC Bulletin Board. All share prices have been adjusted to
provide for both the one for 14.758 reverse split which was effected in April,
2002 (i.e. they have been increased 14.758 times to compare them to current
prices). We consider our stock to be "thinly traded" and any reported sale
prices may not be a true market-based valuation of our stock. Some of the bid
quotations from the OTC Bulletin Board set forth below may reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not represent
actual transactions.



2002 (OTC Bulletin Board)               High Bid            Low Bid
-------------------------------------------------------------------
First quarter                         $   3.69          $    1.62
Second quarter                            4.25               1.80
Third quarter                             2.70               1.55
Fourth quarter                            2.60               1.35

2003 (OTC Bulletin Board)               High Bid            Low Bid
-------------------------------------------------------------------
First quarter                         $   1.90          $    0.73
Second quarter                            1.40               0.40
Third quarter                             0.58               0.10
Fourth quarter                            0.14               0.04

      As of March 31, 2004, there were approximately 335 record holders of our
common stock.

      We have not paid any cash dividends since our inception and do not
contemplate paying dividends in the foreseeable future. In addition, the terms
of our Stillwater line of credit and our Stillwater term loan prohibit us from
declaring or paying dividends or purchasing or redeeming any of our capital
stock without Stillwater National Bank's prior approval. It is anticipated that
earnings, if any, will be retained to retire debt and for the operation of our
business.

      Shares eligible for future sale could depress the price of our common
stock, thus lowering the value of your investment. Sales of substantial amounts
of our common stock, or the perception that such sales could occur, could
adversely affect prevailing market prices for shares of our common stock.

      Our revenues and operating results may fluctuate significantly from
quarter to quarter, which can lead to significant volatility in the price and
volume of our stock. In addition, stock markets have experienced extreme price
and volume volatility in recent years. This volatility has had a substantial
effect on the market prices of securities of many smaller public companies for
reasons unrelated or disproportionate to the operating performance of the
specific companies. These broad market fluctuations may adversely affect the
market price of our common stock.


                                       13
<PAGE>

      SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS. The
following provides information concerning compensation plans under which our
equity securities are authorized for issuance as of December 31, 2003:

                                (A)               (B)               (C)
-------------------------  ---------------  ----------------  -----------------
PLAN CATEGORY                NUMBER OF      WEIGHTED-AVERAGE     NUMBER OF
                           SECURITIES TO    EXERCISE PRICE       SECURITIES
                             BE ISSUED      OF OUTSTANDING       REMAINING
                           UPON EXERCISE       OPTIONS,        AVAILABLE FOR
                                 OF          WARRANTS AND     FUTURE ISSUANCE
                            OUTSTANDING         RIGHTS          UNDER EQUITY
                              OPTIONS,                          COMPENSATION
                            WARRANTS AND                           PLANS
                               RIGHTS                            (EXCLUDING
                                                                 SECURITIES
                                                                REFLECTED IN
                                                                COLUMN (A))
-------------------------  ---------------  ----------------  -----------------
Equity compensation             49,000            $0.60         1,951,000
plans approved by
security holders
Equity compensation                 --               --        11,375,556
plans not approved by
security holders (1) (2)
Total                           49,000            $0.60        13,326,556

(1)   STOCK BONUS PLAN.  Our board of directors adopted our 2002 Stock Bonus
      Plan on June 10, 2002.  The purpose of the plan was to strengthen us by
      providing our officers, directors, and employees added incentive for
      high levels of performance and unusual efforts to increase our
      earnings.  The plan provided these individuals with an opportunity to
      acquire, maintain and increase a proprietary interest in our success.
      The plan also encourages those employees to continue their employment
      with us.  We are permitted to issue up to 50,000 shares of common stock
      grant under the plan.  On June 10, 2002, we issued 24,000 shares to our
      employees under the plan as a stock bonus.  The employees were not
      required to pay cash for the shares.  However, the fair market value of
      the shares issued was considered compensation income for tax purposes.

(2)   STOCK GRANT PLAN.  Our board of directors adopted our 2003 Stock Grant
      Plan on June 25, 2003.  The purpose of this plan was to encourage and
      enable our officers, employees, directors, consultants, advisors, and
      other key persons upon whose judgment, initiative and efforts we
      largely depends for the successful conduct of our business to acquire a
      proprietary interest in us.  It is anticipated that providing such
      persons with a direct stake in our welfare will assure a closer
      identification of their interests with those of us, thereby stimulating
      their efforts on our behalf and strengthening their desire to remain
      with us.  We are permitted to issue up to 3,000,000 shares of common
      stock under this plan, and to date, we have issued 1,624,444 shares.


(3)   EMPLOYEE STOCK INCENTIVE PLAN.  Our board of directors adopted our 2003
      Employee Stock Incentive Plan on July 17, 2003.  The purpose of this
      plan was to allow designated officers and employees of us and our
      subsidiaries to receive options to purchase our common stock and to
      receive grants of common stock subject to certain restrictions.  The
      purpose of this plan is to provide the employees with equity-based
      compensation incentives who make significant and extraordinary
      contributions to our long-term growth and performance, and to attract
      and retain these employees.  We are permitted to issue up to 7,500,000
      shares of common stock under this plan, and to date, we have issued no
      shares or options to purchase shares under this plan.

(4)   NON-EMPLOYEE DIRECTORS AND CONSULTANTS RETAINER STOCK PLAN.  Our board
      of directors adopted our 2003 Non-Employee Directors and Consultants
      Retainer Stock Plan on July 17, 2003.  The purposes of this plan are to
      enable us to promote the interests of us and our stockholders by
      attracting and retaining non-employee directors and consultants capable
      of furthering our future success and by aligning their economic
      interests more closely with those of our stockholders, by paying their
      retainer or fees in the form of shares of our common stock.  We are
      permitted to issue up to 2,500,000 shares of common stock under this
      plan, and to date, we have issued no shares under this plan.


                                       14
<PAGE>




<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

GENERAL

      We are a contract machining and manufacturing company focused in the
energy field services market. We manufacture products, parts, components,
assemblies and sub-assemblies for our customers designed to their
specifications. Our state of the art 3-D modeling software, computer numeric
controlled ("CNC") machinery and manufacturing expertise are contracted by
customer's research and development ("R&D"), engineering and manufacturing
departments to ensure optimization and timely desired results for their
products.

      The diverse line of products we manufacture includes the following:

o        Solid Expandable Tubular technology - launchers and liner hangers for
         oil & gas field service applications
o        Blow-out Preventers / spare parts for service
o        Top Drive Assemblies / sub assemblies - spare parts for service
o        Directional Drilling Products
o        Exploration Products - R&D
o        Natural Gas Measurement Equipment - Fittings / Valves
o        Control & Check Valves, and
o        SubSea Control Equipment.

OUR CORPORATE HISTORY

      We incorporated on February 10, 1997 in the State of Florida. On June 10,
2002, we reincorporated under the laws of the State of Delaware from the State
of Florida pursuant to a merger with a newly formed Delaware corporation. Under
the terms of this reincorporation merger, we changed our name from "Global
Realty Management Group, Inc." to "Excalibur Industries, Inc."

      On April 8, 2002, GRMG Acquisition Corp., a Texas corporation and our
wholly-owned subsidiary, merged with and into Excalibur Holdings, Inc., a Texas
corporation. Under the terms of an agreement and plan of merger, each
outstanding share of Excalibur Holdings common stock was converted into one (1)
share of our common stock, each outstanding share of Excalibur Holdings Series A
preferred stock was converted into one (1) share of our Series A preferred
stock, each outstanding share of Excalibur Holdings Series B preferred stock was
converted into one (1) share of our Series B preferred stock, and the
outstanding shares of GRMG Acquisition Corp. were converted into one hundred
shares of Excalibur Holdings, making Excalibur Holdings our wholly-owned
subsidiary. In total, we issued 11,633,699 shares of common stock, 1,000,000
shares of Series A preferred stock and 806,000 shares of Series B preferred
stock to the Excalibur Holdings shareholders pursuant to the merger. In
connection with the merger, we issued 413,869 shares of common stock to an
affiliated party in payment of investment banking services. On May 22, 2002,
each share of our Series A and Series B preferred stock automatically converted
into one (1) share of our common stock.

      In connection with the merger, all of our pre-merger officers and
directors resigned and William S.H. Stuart, Matthew C. Flemming, Dwayne C.
Lewis, W. Donald Parr, A. Earl Swift and Frank X. Marshik were appointed as our
directors. Mr. Stuart was also appointed to serve as the Chairman of our Board,
Chief Executive Officer and President. Mr. Flemming was appointed to serve as
our Executive Vice President, Chief Financial Officer, Treasurer and Secretary.
Mr. Lewis was appointed to serve as our Chief Operating Officer. Effective
October 3, 2002, Mr. Lewis resigned as an officer and director pursuant to a
separation and release agreement. In 2003, Mr. Parr resigned as a director and
Messrs. Rains and Brown resigned as officers.

      Since the stockholders of Excalibur Holdings owned approximately 91% of
our outstanding voting shares after giving effect to the merger, and since we
were a development stage company with limited operations before the merger,
Excalibur Holdings is deemed to be the acquirer for accounting purposes, and the
transaction has been reflected as a recapitalization of Excalibur Holdings. In a
recapitalization, the historical stockholders' equity of Excalibur Holdings
prior to the merger will be retroactively restated for the equivalent number of
shares received in the merger after giving effect to any difference in par value
of our stock and Excalibur Holdings' stock by an offset to capital.


                                       15
<PAGE>

DISCONTINUED OPERATIONS

      On September 30, 2003, we discontinued the operations of Excalibur
Services and Excalibur Steel, and we also discontinued the manufacturing
operations of Excalibur Aerospace, (collectively, the Tulsa-based companies). On
December 9, 2003, Stillwater National Bank and Trust conducted a UCC-1 sale of
the equipment, inventory and other assets of the Tulsa-based companies in Tulsa,
Oklahoma via an auctioneer hired by the bank. The net proceeds of this auction,
in the approximate amount of $690,000, were delivered directly to Stillwater
National Bank to pay for the in costs of the auction of about $60,000, and
applied the remaining approximately $630,000 to the outstanding debt of the
Excalibur credit facility.

      On December 31, 2003, Excalibur Steel, Excalibur Services, and Excalibur
Aerospace each filed a voluntary petition for protection under Chapter 7 of the
U.S. Bankruptcy Code in the United States Bankruptcy Court, Southern District of
Texas. The three subsidiaries identified an aggregate amount of approximately
$6,837,000 in liabilities on its debtor schedules in the bankruptcy proceedings.

      In accordance with the provisions related to discontinued operations
specified within Statement of Financial Accounting Standards No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets," the results of
operations and financial position of the Tulsa-based companies were separately
reported as discontinued operations on our consolidated financial statements and
in the related discussions and comparisons between current and prior fiscal
years.

RESULTS OF OPERATIONS

      RESULTS OF DISCONTINUED OPERATIONS

      Net losses for discontinued operations (Excalibur Services, Steel, and
Aerospace) were $3,692,495 for the twelve months ended December 31, 2003, from
$2,706,063 for the twelve months ended December 31, 2002. As a result of the
decision to discontinue the operations of the above subsidiaries, we have
written off the remaining goodwill obtained in the purchase of these operations
of $2,689,826 for the twelve months ended December 31, 2003. The losses in
discontinued operations resulted from continuing decreased demand for aviation
products resulting from the terrorist attacks of September 11, 2001 and the
resulting adverse impact on the civil aviation industry. In particular, the
United States civil airline sector has substantially reduced its purchases of
aerospace training equipment since the September 11, 2001 terrorist attacks.
Aero Weld's largest historical customer, Flight Safety International, has
decreased its capital budget for new purchases of simulators and training
equipment, which has directly impacted Aero Weld's sales, and the civil
aerospace market in the United States after the terrorist attacks of Sept 11th,
2001 continued to be soft.

      Additionally, further increases in losses in Excalibur Steel was a result
of the turmoil in the power generation industry and the resulting reduction of
sales to, and the ultimate loss of, a major customer and a number of U.S.
utilities and merchant power producers announced the delay or cancellation of
new power plants previously scheduled to be built. These delays and
cancellations resulted in fewer orders and fewer sales for Excalibur Steel's
structural steel products.



                                       16
<PAGE>

<PAGE>

RESULTS OF CONTINUING OPERATIONS

Basis of Presentation

      The results of operations set forth below for the year ended December 31,
2003 are those of the continuing operations of Excalibur Industries, which
include Shumate Machine Works, Excalibur Holdings, and Excalibur Industries, on
a consolidated basis. The results of operations set forth below for the period
commencing March 22, 2002, that date on which we acquired Shumate Machine Works,
and ending December 31, 2002 are those of the continuing operations of Excalibur
Industries on a consolidated basis.

      The following table sets forth, for the periods indicated, certain
selected financial data expressed as a percentage of net sales from continuing
operations:

                                   Year Ended         Year Ended
                                  December 31,       December 31,
                                ------------------ ------------------
                                      2003               2002
                                ------------------ ------------------
Net sales                             100.0%
                                                         100.0%

Cost of sales                         164.5               68.6
                                ------------------ ------------------


Gross profit                         (64.5)               31.4

Selling, general and
administrative                        114.7              117.8
Goodwill Impairment                    31.9
Loss on Sale of Asset                   5.1
                                ------------------ ------------------

Operating income (loss)             (216.3)%            (86.4)%
                                ================== ==================

COMPARISON OF THE YEAR'S ENDED DECEMBER 31, 2003 AND 2002

      NET SALES. Net sales for continued operations of Shumate Machine Works
decreased to $2,421,831, or a decline of 34%, for the year ended December 31,
2003, from $3,559,336 for the nine months ended December 31, 2002. This decrease
in sales results primarily from decreased demand for oil and gas drilling
products and components which Shumate produces. As a result of this decreased
demand, the pricing for Shumate products and components fell in 2003.

      COST OF SALES. Cost of sales for continued operations increased to
$3,985,162 or 62% for the year ended December 31, 2003, from $2,441,767 for the
nine months ended December 31, 2002. As a percentage of net sales, cost of sales
increased to 164.5% of net sales for the year ended December 31, 2003 versus
68.6% of sales for the nine months ended December 31, 2002. On an absolute
basis, our cost of sales increased due to several factors. First, the cost of
sales for 2003 reflects 12 months of operations, whereas the cost of sales for
2002 reflects only 9 months of operations. Additionally, our rent for the Conroe
facility is significantly larger than our previous facility for Shumate's
operations, resulting in an increase in rent of approximately $185,000. Further,
we incurred an increase in employee benefits of about $145,000 due to a change
in benefit plans. We have also incurred increases in wages and payroll taxes,
which were offset by a reduction in outside services. On an overall basis, we
did not generate enough sales to support our fixed costs of sales such as labor
and rent, and this drop in sales resulted in the increase in our cost of sales
on a percentage basis. We are seeking to implement better cost-controls with
production wages on jobs and create greater efficiencies in production. We are
also seeking to increase revenues by generating more sales with higher pricing
for Shumate products and components from new sales efforts.

      SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses decreased to $2,777,813 or 33% for the year ended December 31, 2003,
from $4,193,348 for the nine months ended December 31, 2002. As a percentage of
net sales, selling, general and administrative expenses were 115% for the year
ended December 31, 2003, as compared to 118% for the comparable period in 2002.
On an absolute basis, we have lowered our selling, general, and administrative
expenses by reducing administrative payroll, reducing rent payments by
consolidating physical locations onto one premise, and cutting other costs. On a
percentage basis, our selling, general and administrative expenses remained flat
primarily because of the reduction in revenues during 2003.


                                       17
<PAGE>

      GOODWILL IMPAIRMENT. For the year ended December 31, 2003, in addition to
expenses recorded as part of the selling, general and administrative expenses,
we incurred a goodwill impairment charge of $773,589 as a result of our periodic
review of goodwill for impairment under SFAS No. 142. This impairment was a
result of the write off of certain intangible assets at Shumate Machine Works.

      OPERATING LOSS. We incurred an operating loss of $5,237,590 for the year
ended December 31, 2003, compared to an operating loss of $3,075,779 for the
nine months ended December 31, 2002. We had higher operating losses in the year
2003 as compared to 2002 primarily because we generated significantly less
revenues due to decreased demand for drilling products and components
manufactured by Shumate. In addition, we incurred higher costs of sales,
interest expenses, a $773,589 charge for goodwill impairment, and a loss on sale
of assets of $122,857. We have not reduced our fixed costs drastically enough to
bring them below the revenues we generated in the period.

      INTEREST EXPENSE. Interest expense decreased to $418,015 for the year
ended December 31, 2003, from $476,808 for the nine months ended December 31,
2002. Our interest expense results primarily from notes issued to sellers as
part of the purchase price in our acquisitions, capital leases, a line of credit
and term loans from our primary lender, and notes issued to officers and
directors for working capital loans.

      PROVISION FOR INCOME TAXES. We incurred operating losses for the year
ended December 31, 2003 and for the year ended December 31, 2002. Excalibur
Holdings incurred an operating loss for 2001. Accordingly, we have made no
provision for income taxes.

LIQUIDITY AND CAPITAL RESOURCES

      We have financed our operations, acquisitions, debt service and capital
requirements through cash flows generated from operations, debt financing,
capital leases, and issuance of equity securities. Our working capital deficit
at December 31, 2003 was $11,850,659. We had cash of $10,276 and a bank
overdraft of $429,384, as of December 31, 2003, as compared to having no cash
and a cash overdraft of $96,335 at December 31, 2002. This difference resulted
primarily from additional borrowings at the end of the period.

      We used $5,517,042 of net cash from operating activities for the year
ended December 31, 2003 compared to using $5,243,787 in the year ended December
31, 2002. Cash generated by operating activities for the year ended December 31,
2003 was mainly due to non-cash charges of $773,589 for impairment and
abandonment of assets from continuing operations, $4,610,511 for impairment and
abandonment of assets from discontinued operations, $122,857 for loss on sale of
property, $156,496 from bank fees added to debt balance, $446,760 for
depreciation and amortization of intangible assets, $687,340 in common stock
issued for services rendered, $200,169 for decreases in accounts receivable,
$19,977 for decreases in inventories, $122,516 decrease in other current assets,
$392,295 for increases in accounts payable, and $909,059 increase in accrued
expenses. These cash flows were offset by a net loss of $13,958,611.

      Net cash flows used in investing activities was $36,754 for the year ended
December 31, 2003, compared to using $280,000 in the year ended December 31,
2002. Cash used by investing activities for the year ended December 31, 2003 was
used for the purchase of fixed assets partially offset by the sale of property.

      Net cash flows provided by financing activities were $1,470,189 for the
year ended December 31, 2003, compared to net cash provided by financing
activities of $5,243,787 in the year ended December 31, 2002. This decrease in
net cash provided by financing activities is primarily due to lower borrowings
from our credit facilities with Stillwater National Bank, less borrowings from
related parties, and a decrease in proceeds from the sale of stock during 2003.
Proceeds from exercise of options and warrants, collections of subscriptions
receivable, proceeds from bank overdrafts, and lower payments on notes payable
partially offset these decreases.

BANK CREDIT FACILITY

      On May 8, 2002, we entered into a credit agreement with Stillwater
National Bank, which provided us with a $2,000,000 revolving line of credit
facility. The line of credit has a term of one year, is secured by a first
priority security interest in our accounts receivables and inventory and a
second priority security interest in our equipment. The line of credit replaced
approximately $600,000 of prior existing revolving credit facilities and
approximately $150,000 in short-term debt. We paid an up front fee of $5,000 to
Stillwater National Bank in connection with the line of credit.


                                       18
<PAGE>

      The line of credit may be utilized for general corporate purposes,
including working capital and acquisition financing. Under the line of credit,
we borrow at a rate of interest equal to the higher of (a) nine percent (6%) or
(b) Stillwater's prime rate plus one percent. The line of credit provides for an
advance rate of 80% of qualified receivables and 50% of qualified inventory. The
line of credit is subject to customary financial and other covenants including,
but not limited to, limitations on payment of dividends, limitations on
consolidations, mergers and sales of assets and bank approval on acquisitions.

      On September 27, 2002, we amended the credit agreement with Stillwater
National Bank by increasing the line of credit facility to $2,500,000. We also
entered into an additional loan agreement with Stillwater National Bank, which
provides us with a $2,500,000 term loan. The term loan has a term of four years,
is secured, along with the line of credit, by a first priority security interest
in our accounts receivables, inventory and equipment. The term loan is repayable
in 48 monthly installments, and it bears interest at a rate equal to the higher
of (a) nine percent (6%) or (b) Stillwater's prime rate plus one percent.

      Effective as of April 15, 2003, we amended the credit agreement with
Stillwater National Bank by decreasing the line of credit facility to
$1,000,000, increasing the principal amount of the term loan to $3,500,000, and
obtaining a second term loan in the principal amount of $500,000. The line of
credit has a term of one year, is secured by a first priority security interest
in our accounts receivables, inventory, and equipment. It bears interest at a
rate equal to the prime rate plus two percent.

      The first term loan has a term of four years, and is secured, along with
the line of credit and the second term loan, by a first priority security
interest in our accounts receivables, inventory and equipment. We have to pay
interest only until August 15, 2003, and thereafter, we will make 31 equal
monthly payments in an amount sufficient to fully amortize principal and
interest over 72 months. The first term loan is then repayable in full on April
15, 2006. The first term loan bears interest at a rate equal to the prime rate
plus two percent.

      The second term loan has a term of one year, and is secured, along with
the line of credit and the first term loan, by a first priority security
interest in our accounts receivables, inventory and equipment. We have to pay
interest only until maturity. The second term loan matures on the earlier of our
receipt of proceeds from any private equity offering in an amount equal to or
greater than $1,000,000 or April 15, 2004. The second term loan bears interest
at a rate equal to the prime rate plus two percent.

      On October 30, 2003, we entered into a supplemental loan agreement with
Stillwater National Bank, which provided the Company and its Shumate subsidiary
with a $550,000 revolving line of credit facility and a $550,000 term note. The
line of credit has a term of one year, is secured by a first priority security
interest in our accounts receivables, inventory, and equipment. It bears
interest at a rate equal to the prime rate plus two percent. The term loan is
due December 15, 2003, and is secured, along with the line of credit and our
other indebtedness to Stillwater, by a first priority security interest in our
accounts receivables, inventory and equipment. The term loan also bears interest
at a rate equal to the prime rate plus two percent.

      On September 30, 2003, we discontinued the operations of Excalibur
Services and Excalibur Steel, and we also discontinued the manufacturing
operations of Excalibur Aerospace, (collectively, the Tulsa-based companies). On
December 9, 2003, Stillwater National Bank and Trust conducted a UCC-1 sale of
the equipment, inventory and other assets of the Tulsa-based companies in Tulsa,
Oklahoma via an auctioneer hired by the bank. The net proceeds of this auction,
in the approximate amount of $690,000, were delivered directly to Stillwater
National Bank to pay for the in costs of the auction of about $60,000, and
applied the remaining approximately $630,000 to the outstanding debt of the
Excalibur credit facility.

      On December 31, 2003, Excalibur Steel, Excalibur Services, and Excalibur
Aerospace each filed a voluntary petition for protection under Chapter 7 of the
U.S. Bankruptcy Code in the United States Bankruptcy Court, Southern District of
Texas. The three subsidiaries identified an aggregate amount of $6,837,000 in
liabilities on its debtor schedules in the bankruptcy proceedings.

      On March 30, 2004, Shumate Machine Works, our operating subsidiary,
entered into an equipment term loan agreement for $500,000 with Stillwater
National Bank. The term loan is due June 30, 2006, and is secured, along with
the line of credit and our other indebtedness to Stillwater, by a first priority
security interest in our accounts receivables, inventory and equipment. The term
loan bears interest at a rate equal to the prime rate plus two percent. The note
requires interest only payments until July 2004. Starting July 2004, principal
and interest payments are due monthly using a sixty month amortizing schedule.


                                       19
<PAGE>

TW CONSULTING DEBT

      On September 27, 2002, in connection with our acquisition of the assets of
Aero Weld, we entered into an restructuring agreement, which resulted in us
having the following notes outstanding in connection with that acquisition: (i)
an unsecured note in the principal amount of $1,238,500 bearing interest at the
rate of 2% per annum over the prime interest rate as published in the Wall
Street Journal with monthly principal payments of $10,321 plus accrued interest
commencing March 18, 2002 and continuing each month until March 18, 2007, when
all unpaid principal and interest are due; (ii) a secured note in the principal
amount of $1,250,000 bearing interest at the rate of 7.5% per annum with monthly
principal payments of $21,748 plus accrued interest commencing February 28, 2002
and continuing each month until January 28, 2008, when all unpaid principal and
interest are due; and (iii) a secured note in the principal amount of $443,973
bearing interest at the rate of 7.5% per annum with monthly principal and
interest payments of $6,392 plus accrued interest commencing July 1, 2003 and
continuing each month until September 1, 2008, when all unpaid principal and
interest are due. The two secured notes are secured by a second, junior lien on
certain of our assets, such security interest being subordinate to the security
interest granted to Stillwater National Bank in connection with our Stillwater
line of credit and Stillwater term loan.

      We breached our obligations under the first two notes listed and under our
lease with the holder of the notes, TW Consulting. On February 28, 2003, we
entered into a forbearance agreement with TW Consulting, pursuant to which we
did the following: (a) paid $29,478 to TW Consulting, (b) agreed to vacate the
premises that are the subject of the lease by March 31, 2003, (c) executed and
delivered a second amended and restated consulting agreement with TW Consulting,
and (d) agreed to pay $175,504 to TW Consulting on or before August 15, 2003. In
consideration of these covenants, TW Consulting agreed to forbear pursuing any
remedies it may have against us under the two notes in default or under the
lease. The forbearance agreement is now expired and the Company is in default of
all its obligations with TW Consulting.

      The TW Consulting debt is listed within Excalibur Aerospace's Chapter 7
bankruptcy filing to be discharged upon court approval, however, there can be no
assurance that the bankruptcy court will approve our bankruptcy petition and
discharge this debt.

      On or about March 9, 2004, Stillwater National Bank purchased the TW
Consulting debt and the related security agreements, personal guarantees, and
causes of action against the guarantors of this debt.

INSIDER AND AFFILIATE LOANS

      In 2003, we financed our operations by issuing various unsecured demand
and term notes with an aggregate principal of approximately $841,959 to various
officers and directors, with both variable and fixed interest rates, and with
maturities ranging from demand notes to June 12, 2004, as follows:

Name                        Principal Amount    Interest       Maturity Date
                                                Rate
--------------------------  ------------------  -------------  -----------------
WSHS, Inc.                  $100,000            Prime + 1.5%   Demand
WSHS, Inc.                  $75,000             Prime + 1.5%   May 2, 2003
A. Earl Swift               $100,000            10%            March 5, 2003
A. Earl Swift               $105,000            10%            March 7, 2003
A. Earl Swift               $10,321             10%            March 18, 2003
A. Earl Swift               $200,000            10%            March 24, 2003
A. Earl Swift               $53,000             6%             Demand
A. Earl Swift               $80,000             6%             Demand
A. Earl Swift               $39,638             8%             February 2,
                                                               2004
A. Earl Swift               $79,000             8%             June 12, 2004

      The proceeds from these notes were used for working capital. WSHS, Inc. is
controlled by William S.H. Stuart, our Chairman and Chief Executive Officer.
Under the terms of Mr. Swift's notes (other than the demand notes), the maturity
date of such notes shall be automatically extended for successive one-month
periods, unless Mr. Swift gives written notice demanding repayment of the unpaid
principal balance of these notes.


                                       20
<PAGE>

CAPITAL REQUIREMENTS

      As of the date of this report, due to our discontinuing the Tulsa-based
companies and the amount of debt that our continuing operations have to service,
we do not believe that we will be able to fund our operations, working capital
requirements and debt service requirements for at least the next twelve months
through cash flows generated from operations. Since we have no additional
borrowings available under our existing line of credit, we will need to continue
to finance our operations through other capital financings. We have sought, and
continue to seek, equity financing and/or debt financing in the form of a
revised credit facility, private placement, a public offering, or the exercise
of currently outstanding options or warrants to provide additional capital.
However, such additional financing has not been available to us, and it may
continue to be unavailable to us, when and if needed, on acceptable terms or at
all.

      In addition to our discontinuing the Tulsa-based companies and the bank
liquidation, we are continuing to seek other restructuring measures to reduce
our debt load, including converting some of our outstanding indebtedness,
accrued expenses and accounts payable into equity. To date, we have received no
commitments from any of our creditors that they would agree to any such
conversions or settlements.

      We may incur additional losses if the weak conditions in the United States
manufacturing sector or the energy field services market continue, or if they
deteriorate further. Such losses could require us to renegotiate our affirmative
covenants with our lender, including the liquidity ratio and debt service
ratios. Our ability to comply with these covenants in the future will depend on
whether we can obtain additional capital financing or increase our cash flows
from operations.

      We intend to adopt a formal plan of reorganization that we anticipate will
include a restructuring of our bank debt, seller notes, and stockholder debt so
that our remaining operating entity, Shumate Machine Works, can support the
ongoing debt service that remains after the proposed restructuring.
Additionally, we anticipate substantial reduced overhead costs from the closed
Tulsa-based companies and further reductions in our holding company expenses.
Further, we anticipate that, due in part to increasing energy prices, demand for
our energy related field service products will increase in the coming fiscal
year. The proposed reorganization, debt restructuring, operating expense
reductions, and our intent to capitalize on anticipated increase in demand are
the steps that we are taking to try to return to profitability. However, there
can be no assurances that these steps will be completed or that we will ever
return to profitability.

      We intend to retain any future earnings to retire debt, finance the
expansion of our business and any necessary capital expenditures, and for
general corporate purposes. All our bank debt contains restrictions as to the
payment of dividends.


                                       21
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

      Our financial statements and related notes are contained on pages F-1 to
F-15 of this report.

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

      See our Current Report on Form 8-K filed on February 4, 2004 and our
Annual Report on Form 10-KSB filed on April 15, 2003 with respect to changes in
accountants.

ITEM 8A. CONTROLS AND PROCEDURES.

      We carried out an evaluation, under the supervision and with the
participation of our Chief Executive Officer and Chief Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures, as defined in Exchange Act Rule 13a-14(c) as of the end of the
period covered by this Annual Report on Form 10-KSB. Based on that evaluation,
they concluded that our disclosure controls and procedures are effective to
ensure that information required to be disclosed in our Exchange Act reports is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms, and that such
information is accumulated and communicated to them to allow timely decisions
regarding required disclosure.

      There has been no change in our internal control over financial reporting
that occurred during our last fiscal quarter that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.

PART III

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

      The information under the caption "Election of Directors" and "Management
- Executive Officers and Directors" in our 2004 Proxy Statement is incorporated
herein by reference.

      The information under the caption "Section 16(a) Beneficial Ownership
Reporting Compliance" in our 2004 Proxy Statement is incorporated herein by
reference.

ITEM 10. EXECUTIVE COMPENSATION

      The information under the caption "Executive Compensation" in our 2004
Proxy Statement is incorporated herein by reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The information under the captions "Common Stock Ownership of Certain
Beneficial Owners and Management" in our 2004 Proxy Statement is incorporated
herein by reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      The information under the caption "Related Party Transactions" in our 2004
Proxy Statement is incorporated herein by reference.


                                       22
<PAGE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

(a)   Exhibits

Exhibit No.       Description

2.1*         Agreement and Plan of Merger by and among Global Realty
             Management Group, Inc., GRMG Acquisition Corporation, Excalibur
             Holdings, Inc., and Michael D. Farkas

2.2*         Agreement and Plan of Merger by and among Excalibur Steel, Inc.,
             Dwayne Lewis, Debra Lewis, Excalibur Holdings, Inc., William
             S.H. Stuart, and Matthew C. Flemming

2.3*         Asset Purchase Agreement by and between Excalibur Aerospace,
             Inc. and Aero Weld, Inc.

2.4*         First Amendment to Asset Purchase Agreement by and between
             Excalibur Aerospace, Inc. and Aero Weld, Inc.

2.5*         Master Agreement by and among TW Consulting, Inc., Excalibur
             Aerospace, Inc., Tommy Worth, William Stuart and Matthew Flemming

2.6*         Agreement and Plan of Merger by and among Shumate Machine Works,
             Inc., Larry C. Shumate, Russ Clark, Excalibur Holdings, Inc.,
             and Excalmergeco, Inc.

2.7*         Asset Purchase Agreement by and between Excalibur Services, Inc.
             and Redhawk Industries, LLC.

3.1*         Certificate of Incorporation of Excalibur Industries, Inc.

3.2*         Bylaws of Excalibur Industries, Inc.

4.1*         Specimen Certificate of Excalibur Industries, Inc.'s common stock

4.2*         Form of common stock purchase warrant

10.1*        Series A Preferred Stock and Warrant Purchase Agreement by and
             among Excalibur Holdings, Inc., Seneca Capital, L.P, and Seneca
             Capital International, Ltd.

10.2*        Registration Rights Agreement by and among Excalibur Holdings,
             Inc., Seneca Capital, L.P, and Seneca Capital International, Ltd.

10.3*        Series B Preferred Stock and Warrant Purchase Agreement by and
             among Excalibur Holdings, Inc., Seneca Capital, L.P, Seneca
             Capital International, Ltd., and other Investors

10.4*        Registration Rights Agreement by and among Excalibur Holdings,
             Inc., Seneca Capital, L.P, Seneca Capital International, Ltd.,
             and other Investors

10.5*        Amended and Restated Investment Banking/Advisory Agreement
             between Atlas Capital Services, LLC and Global Realty Management
             Group, Inc.

10.6*        Loan Agreement between Stillwater National Bank and Trust
             Company of Stillwater and Excalibur Holdings, Inc. (Line of
             Credit)

10.7*        Amendment to Loan Agreement between Stillwater National Bank and
             Trust Company of Stillwater and Excalibur Holdings, Inc.


                                       23
<PAGE>

10.8*        Loan Agreement between Stillwater National Bank and Trust
             Company of Stillwater and Excalibur Holdings, Inc. (Term Loan)

10.9*        Employment Agreement between Excalibur Holdings, Inc. and
             William S.H. Stuart

10.10*       Employment Agreement between Excalibur Holdings, Inc. and
             Matthew C. Flemming

10.11*       Employment Agreement between Excalibur Holdings, Inc. and Dwayne
             Lewis

10.12*       Employment Agreement between Excalibur Holdings, Inc. and David
             Rains

10.13*       Employment Agreement between Excalibur Holdings, Inc. and G.
             Ross Brown

10.14*       Amended and Restated Consulting Agreement by and between Tommy
             Worth and Excalibur Aerospace, Inc.

10.15*       2001 Stock Option Plan of Excalibur Holdings, Inc.

10.16*       Bonus Stock Issuance and Option Agreement by and between Global
             Realty Management Group, Inc. and Joseph Spitzer

10.17*       Bonus Stock Issuance and Option Agreement by and between Global
             Realty Management Group, Inc. and Michael Farkas

10.18*       Real Estate Lease and Option Agreement by and between Redhawk
             Industries, LLC and Excalibur Services, Inc.

10.19*       Real Estate Lease and Option Agreement by and between Larry C.
             Shumate and ExcalMergeCo., Inc.

10.20**      Strategic Alliance Agreement by and between Born, Inc. and
             Excalibur Industries, Inc.

10.21**      $100,000 Promissory Note issued in favor of Aubrey Earl Swift

10.22**      $100,000 Promissory Note issued in favor of IRA FBO Frank X.
             Marshik Donaldson, Lufkin & Jenrette, Custodian

10.23**      $15,000 Promissory Note issued in favor of William S.H. Stuart

10.24**      $15,000 Promissory Note issued in favor of Matthew C. Flemming

10.25**      $50,000 Promissory Note issued in favor of David Rains

10.26**      Security Agreement by and among David Rains, Excalibur
             Aerospace, Excalibur Steel, Excalibur Services, and Shumate
             Machine Works

10.27        Form of Promissory Note issued in favor of WSHS, Inc.

10.28        Form of Rolling Promissory Note issued in favor of Aubrey Earl
             Swift.

10.29        $55,000 Promissory Note issued in favor of Virgil Swift.

10.30        Amended and Restated Loan Agreement by and between Stillwater
             National Bank and Trust Company, Excalibur Industries, Inc., and
             its subsidiaries, dated as of April 15, 2003.


                                       24
<PAGE>

10.31        Supplemental Loan Agreement by and between Stillwater National
             Bank and Trust Company, Excalibur Industries, Inc., and its
             subsidiaries, dated as of October 30, 2003.

10.32        Loan Agreement by and between Stillwater National Bank and Trust
             Company and Excalibur Industries, Inc., and its subsidiaries,
             dated as of March 23, 2004.

16.1***      Letter on change in certifying accountant

16.2****     Letter on change in certifying accountant

21.1*        Subsidiaries of Excalibur Industries, Inc.

23.1         Consent of Independent Public Accountants, Malone & Bailey, PLLC

23.2         Consent of Independent Public Accountants, Cross and Robinson

31.1         Certification of William S.H. Stuart pursuant to Rule 13a-14(a)

31.2         Certification of Matthew C. Flemming pursuant to Rule 13a-14(a)

32.1         Certification of William S.H. Stuart pursuant to 18 U.S.C Section
             1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
             Act of 2002

32.2         Certification of Matthew C. Flemming pursuant to 18 U.S.C Section
             1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
             Act of 2002
------------------

*     Filed as an  exhibit  to  Amendment  No. 1 to  Excalibur's  Registration
      Statement   on  Form  SB-2,   filed  on  September  5,  2002  (File  No.
      333-88974), incorporated herein by reference.

**    Filed as an  exhibit  to  Amendment  No. 1 to  Excalibur's  Registration
      Statement   on  Form  SB-2,   filed  on  December  19,  2002  (File  No.
      333-88974), incorporated herein by reference.

***   Filed as an  exhibit to a Current  Report on Form 8-K filed on  November
      12, 2002, incorporated herein by reference.

****  Filed as an  exhibit to a Current  Report on Form 8-K filed on  February
      4, 2004, incorporated herein by reference.

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

(b)   Reports on Form 8-K

      None.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

      The information under the caption "Accountant Fees and Services" in our
2004 Proxy Statement is incorporated herein by reference.


                                       25
<PAGE>







<PAGE>



                                  SIGNATURES

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


                                          EXCALIBUR INDUSTRIES, INC.


                                          By:   /s/ William S.H. Stuart
                                              ----------------------------------
                                                William S.H. Stuart,
                                                Chairman, President and Chief
                                                Executive Officer

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


Signatures                 Title                          Date


/s/ William S.H. Stuart    Chairman of the Board, President,
-----------------------    Chief Executive Officer               April 14, 2004
William S.H. Stuart



/s/ Matthew C. Flemming    Executive Vice President, Chief       April 14, 2004
-----------------------    Financial Officer, Treasurer,
Matthew C. Flemming        Secretary, and Director

/s/ A. Earl Swift          Director                              April 14, 2004
----------------------
A. Earl Swift



/s/ Frank X. Marshik       Director                              April 14, 2004
----------------------
Frank X. Marshik


                                       26
<PAGE>

                         INDEPENDENT AUDITORS' REPORT


To the Board of Directors
  Excalibur Industries, Inc.
  Conroe, Texas

We have audited the accompanying consolidated balance sheet of Excalibur
Industries, Inc. as of December 31, 2003 and the related statements of
operations, stockholders' deficit and cash flows for the year then ended.
These financial statements are the responsibility of Excalibur's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.

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

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

The accompanying financial statements have been prepared assuming that
Excalibur will continue as a going concern.  As discussed in Note 2 to the
financial statements, Excalibur has suffered recurring losses from operations
and has a working capital deficiency, which raises substantial doubt about
its ability to continue as a going concern.  Management's plans regarding
those matters also are described in Note 2.  The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.

MALONE & BAILEY, PLLC
www.malone-bailey.com
Houston, Texas

March 10, 2004



                                      F-1
<PAGE>


                         INDEPENDENT AUDITORS' REPORT


To the Board of Directors
  Excalibur Industries, Inc.
  Conroe, Texas

We have audited the accompanying consolidated statements of operations,
stockholders' equity and cash flows for the year ended December 31, 2002 for
Excalibur Industries, Inc.  These consolidated financial statements are the
responsibility of Excalibur's management.  Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audit in accordance with auditing standards generally
accepted in the United States of America.  Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement.  An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the consolidated 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 results of operations and cash flows of Excalibur
Industries, Inc. for the year then ended in conformity with accounting
principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that
Excalibur will continue as a going concern.  As discussed in Note 2 to the
financial statements, Excalibur has suffered recurring losses from operations
and has a net capital deficiency, which raises substantial doubt about its
ability to continue as a going concern.  Management's plans regarding those
matters also are described in Note 2.  The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.

                                                            CROSS AND ROBINSON

                                                  Certified Public Accountants

Tulsa, Oklahoma
April 9, 2003


                                      F-2
<PAGE>


                          EXCALIBUR INDUSTRIES, INC.
                          CONSOLIDATED BALANCE SHEET
                               December 31, 2003


            ASSETS

Current Assets
  Cash                                                           $  10,276
  Accounts receivable, net of allowance
      for doubtful accounts of $10,000                             506,266
  Inventory                                                         48,209
  Other current assets                                              71,666
                                                              ------------
      Total Current Assets                                         636,417

Property and equipment, net of accumulated
  depreciation of $715,892                                       1,668,502
Rent deposit                                                        19,600
                                                              ------------
      Total Assets                                            $  2,324,519
                                                              ============

      LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
  Bank overdraft                                              $    429,384
  Bank credit lines                                              1,650,000
  Accounts payable                                               1,176,137
  Accrued expenses                                               1,278,179
  Notes payable                                                  1,070,694
  Notes payable - related party                                    895,799
  Net liabilities of discontinued operations                     5,218,883
                                                              ------------
      Total Current Liabilities                                 12,487,076

Long Term portion of notes payable                               3,013,643
                                                              ------------
      Total Liabilities                                         15,500,719
                                                              ------------

Commitments & Contingencies

Stockholders' Deficit
  Convertible preferred stock, $.001 par value,
    10,000,000 shares authorized, no shares issued
    or outstanding
  Common stock, $.001 par value, 50,000,000 shares
    authorized, 16,932,732 shares issued and outstanding            16,933
  Additional paid in capital                                     8,537,232
  Accumulated deficit                                          (21,730,365)
                                                              ------------
      Total Stockholders' Deficit                              (13,176,200)
                                                              ------------
            Total Liabilities and Stockholders' Deficit       $  2,324,519
                                                              ============




                                      F-3
<PAGE>


                          EXCALIBUR INDUSTRIES, INC.
                           STATEMENTS OF OPERATIONS
                    Years Ended December 31, 2003 and 2002


                                                      2003          2002
                                                 -------------   ------------

Revenue                                          $  2,421,831    $ 3,559,336

Cost of sales                                       3,985,162      2,441,767
Selling, general & administrative                   2,777,813      4,193,348
Impairment                                            773,589
Loss on sale of assets                                122,857
                                                 -------------   ------------
      Total operating expenses                      7,659,421      6,635,115
                                                 -------------   ------------
      Net operating loss                           (5,237,590)    (3,075,779)

Other income and expense
  Interest expense                                    418,015        476,808
                                                 -------------   ------------
      Net Loss from Continuing Operations         ( 5,655,605)    (3,552,587)
                                                 -------------   ------------
Discontinued operations
  Loss on sale and abandonment                    ( 4,610,511)
  Loss from discontinued operations               ( 3,692,495)    (2,706,063)
                                                 -------------   ------------
      NET LOSS                                   $(13,958,611)   $(6,258,650)
                                                 =============   ============


Basic and diluted net loss per share                    $(.89)         $(.47)
Weighted average shares outstanding                15,747,993     13,366,814








                                      F-4
<PAGE>


                          EXCALIBUR INDUSTRIES, INC.
                      STATEMENT OF STOCKHOLDERS' DEFICIT
                    Years Ended December 31, 2002 and 2003



                                   Preferred Stock             Common Stock
                                 Shares       Amount       Shares       Amount
                             ----------   ----------   ----------   ----------

Balances, December 31, 2001                            10,045,000   $   10,045

Series A preferred shares
  Issued for cash             1,000,000      $ 1,000
  Exchanged for common stock (1,000,000)      (1,000)   1,000,000        1,000

Series B preferred shares
  Issued for cash               806,000          806
  Exchanged for common stock   (806,000)      (  806)     806,000          806

Common stock issued
  - for cash, net of
      fundraising costs                                   383,334          383
  - for services                                          542,369          543
  - to acquire Shumate                                  1,150,000        1,150
  - to acquire public shell                               714,868          715
  - for debt                                               68,365           68
  - subscription receivable

Net loss
                               ========       ======   ----------   ----------
Balances, December 31, 2002                            14,709,936       14,710

Collection of subscription

Stock issued for:
  - services                                            1,917,796        1,918
  - notes payable                                         250,000          250
  - cash exercise of warrants
    and options                                            55,000           55

Fair value of options and
  warrants issued for services

Net Loss
                                                       ----------   ----------
Balances, December 31, 2003                            16,932,732   $   16,933
                                                       ==========   ==========





                                      F-5
<PAGE>


                          EXCALIBUR INDUSTRIES, INC.
                      STATEMENT OF STOCKHOLDERS' DEFICIT
                    Years Ended December 31, 2002 and 2003


                          Subscription    Paid In      Retained
                            Receivable    Capital       Deficit      Totals
                           ------------  ----------  -----------   -----------

Balances, December 31, 2001              $3,031,795  $(1,513,104)  $ 1,528,736

Series A preferred shares
  Issued for cash                           749,000                    750,000
  Exchanged for common stock

Series B preferred shares
  Issued for cash                         1,006,694                  1,007,500
  Exchanged for common stock

Common stock issued
  - for cash, net of
      fundraising costs                     191,944                    192,327
  - for services                            712,026                    712,569
  - to acquire Shumate                    1,723,850                  1,725,000
  - to acquire public shell                 (19,399)                (   18,684)
  - for debt                                 51,205                     51,273
  - subscription receivable    $(20,084)                            (   20,084)

Net loss                                              (6,258,650)   (6,258,650)
                               --------   --------- ------------   -----------
Balances, December 31, 2002     (20,084)  7,447,115   (7,771,754)   (  330,013)

Collection of subscription       20,084                                 20,084

Stock issued for:
  - services                                685,222                    687,140
  - notes payable                           349,750                    350,000
  - cash exercise of warrants
      and options                            55,145                     55,200

Fair value of options and
  warrants issued for services

Net loss                                             (13,958,611)  (13,958,611)
                               ========  ---------- ------------   -----------
Balances, December 31, 2003              $8,537,232 $(21,730,365) $(13,176,200)
                                         ========== ============   ===========





                                      F-6
<PAGE>


                          EXCALIBUR INDUSTRIES, INC.
                            STATEMENTS OF CASH FLOW
                    Years Ended December 31, 2003 and 2002

                                                     2003            2002
                                                   ----------- -----------
Cash Flows From Operating Activities
  Net loss                                         $(13,958,611)   $(6,258,650)
  Adjustments to reconcile net loss to net cash
    used in operating activities:
    Stock issued for services                           687,340        643,985
    Common stock bonuses                                                48,500
    Stock issued as interest on promissory note                          2,774
    Depreciation & amortization                         446,760        356,051
    Impairment and abandonment of assets
      - continuing operations                           773,589
      - discontinued operations                       4,610,511
    Loss on sale of property                            122,857
    Bank fees added to debt balance                     156,496
    Changes in:
      Accounts receivable                           (     5,577)         3,514
      Accounts receivable - related party               205,746     (   35,528)
      Inventory                                          19,977     (   12,603)
      Other current assets                              122,516     (  172,101)
      Accounts payable                                  392,295         31,309
      Accrued expenses                                  909,059
                                                   -----------     -----------
  Net Cash Used In Operating Activities             ( 5,517,042)   (5,392,749)
                                                   -----------     -----------
Cash Flows From Investing Activities
  Purchase of property and equipment                (   157,154)     (  60,103)
  Acquisition of subsidiary, net of cash acquired                     (219,897)
  Proceeds from sale of property                        140,000
  Decrease in deposits                              (    19,600)
                                                   -----------     -----------
  Net Cash Used In Investing Activities             (    36,754)    (  280,000)
                                                    -----------    -----------
Cash Flows From Financing Activities
  Proceeds from exercise of options & warrants           55,000
  Collection of subscription receivable                  20,084            - -
  Proceeds from notes payable to related parties        522,740        469,090
  Proceeds from bank overdraft                          429,384
  Proceeds from bank credit line, net                   597,151      2,500,000
  Proceeds from notes payable                           772,091      3,785,837
  Sale of Stock                                                      1,307,500
  Payments on note payable                          (   925,261)    (2,710,967)
  Costs of equity fundraising                                       (  107,673)
                                                   -----------     -----------
  Net Cash Provided By Financing Activities           1,470,189      5,243,787
                                                   -----------     -----------
Net cash provided (used) by discontinued operations   4,093,883        428,962
                                                    -----------    -----------
Net change in cash                                       10,276              0
Cash at beginning of year                                     0              0
                                                   ----------- -----------
Cash at end of year                                 $    10,276    $         0
                                                   =========== ===========
Cash paid during the year for:
  Interest                                          $   334,447    $   337,064



                                      F-7
<PAGE>

                          EXCALIBUR INDUSTRIES, INC.
                         NOTES TO FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF ACCOUNTING POLICIES

Business.  Excalibur Holdings, Inc. ("Holdings") was incorporated in Texas on
August 17, 2001.  Holdings purchased 3 steel fabrication companies in the
Oklahoma area later in 2001 known as (the "Tulsa-based Operations") which it
renamed Excalibur Steel, Inc., Excalibur Aerospace, Inc., which does business
as AeroWeld, Inc., and Excalibur Services, Inc.  Holding's operations
included: (i) the fabrication, design and manufacture of structural steel
components on a high volume basis; (ii) the design and manufacture of
aircraft training devices used for civil and military sectors, and (iii) the
fabrication and production of pressure vessels and heat exchangers.

In March 2002, Holdings purchased Shumate Machine Works, Inc. of Magnolia,
Texas for 1,150,000 common shares and $250,000 cash, with a contingent
250,000 shares based on revenue and earnings performance that was accrued
later in 2002.  Shumate is a close-tolerance machining and manufacturing
company serving mostly oil-field equipment suppliers.

In April 2002, Holdings merged with GRMG Acquisition Corp., a Texas
corporation and a wholly owned subsidiary of Global Realty Management Group,
Inc., a Florida corporation ("GRMG").  As a result of the merger, each
outstanding share of Holdings' common stock was converted into one share of
GRMG common stock, each outstanding share of the Company's Series A Preferred
Stock was converted into one share of GRMG Series A Preferred Stock, each
outstanding share of the Company's Series B Preferred Stock was converted
into one share of GRMG Series B Preferred Stock, and the outstanding shares
of GRMG Acquisition Corp. were converted into one hundred shares of Holdings,
making Holdings a wholly owned subsidiary of GRMG.  In total, GRMG issued
11,633,699 shares of common stock, 1,000,000 shares of Series A preferred
stock, and 806,000 shares of Series B preferred stock to the Company's
shareholders pursuant to the merger. The shareholders of Holdings received
approximately 91% of the total outstanding shares of Global Realty Management
Group, Inc. Each share of Series A and Series B preferred stock are
convertible into one share of GRMG common stock.

Excalibur Industries, Inc. ("Excalibur") was incorporated in Delaware on May
3, 2002.  On June 10, 2002, GRMG merged with Excalibur whereby Excalibur
became the surviving parent company for all operating subsidiaries.

In September 2003, all Tulsa-based Operations were closed and on December 31,
2003, a petition was filed for Chapter 7 bankruptcy protection and
liquidation for these 3 subsidiaries.  The 2003 and 2002 financial statements
show the results of the Tulsa-based Operations as discontinued, with Shumate
Machine Works being the only remaining operating business.

Reclassifications.  Certain amounts in financial statements of the prior year
have been reclassified to conform to the presentation of the current year for
comparative purposes.

Management 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
reported amounts of assets, liabilities, revenues and expenses, as well as
certain financial statement disclosures.  While management believes that the
estimates and assumptions used in the preparation of the financial statements
are appropriate, actual results could differ from these estimates.



                                      F-8
<PAGE>

Cash Equivalents.  Highly liquid investments with original maturities of
three months or less are considered cash equivalents.

Revenue Recognition.  All revenue is recognized when persuasive evidence of
an arrangement exists, the service or sale is complete, the price is fixed or
determinable and collectibility is reasonably assured.  Revenue is derived
primarily from the fabrication and delivery of steel valve components.

Allowance for Doubtful Accounts.  Bad debt expense is recognized based on
management's estimate of likely losses per year, based on past experience and
an estimate of current year uncollectible amounts.  The allowance was $10,000
as of December 31, 2003.

Inventory is stated at the lower of cost (first-in, first-out for raw
materials and specific job cost for work-in-process and finished goods) or
market.  Slow-moving inventories are periodically reviewed for impairment in
value.  Work-in-process and finished goods include labor, materials and
production overhead.

Property and equipment is valued at cost.  Additions are capitalized and
maintenance and repairs are charged to expense as incurred.  Gains and losses
on dispositions of equipment are reflected in operations.  Depreciation is
provided using the straight-line method over the estimated useful lives of
the assets, which are three to seven years.

Impairment of Long-Lived Assets.  Excalibur reviews the carrying value of its
long-lived assets annually or whenever events or changes in circumstances
indicate that the historical cost-carrying value of an asset may no longer be
appropriate.  Excalibur assesses recoverability of the carrying value of the
asset by estimating the future net cash flows expected to result from the
asset, including eventual disposition.  If the future net cash flows are less
than the carrying value of the asset, an impairment loss is recorded equal to
the difference between the asset's carrying value and fair value.

Stock options and warrants.  Excalibur accounts for non-cash stock-based
compensation issued to non-employees in accordance with the provisions of
SFAS No. 123 and EITF No. 96-18, Accounting for Equity Investments That Are
Issued to Non-Employees for Acquiring, or in Conjunction with Selling Goods
or Services.  Common stock issued to non-employees and consultants is based
upon the value of the services received or the quoted market price, whichever
value is more readily determinable.  Excalibur accounts for stock options and
warrants issued to employees under the intrinsic value method.  Under this
method, Excalibur recognizes no compensation expense for stock options or
warrants granted when the number of underlying shares is known and the
exercise price of the option or warrant is greater than or equal to the fair
market value of the stock on the date of grant.  The following table
illustrates the effect on net loss and net loss per share if Excalibur had
applied the fair value provisions of FASB Statement No. 123, Accounting for
Stock-Based Compensation, to stock-based employee compensation.



                                      F-9
<PAGE>


                                              2003           2002
                                          ------------    -----------
      Net loss as reported                $(13,958,611)   $(6,258,650)
      Less: stock based compensation
            determined under fair value-
            based method                             -     (  104,933)
                                          ------------    -----------
         Pro forma net loss               $(13,958,611)   $(6,363,583)
                                          ============    ===========
      Basic and diluted net loss
         per common share:
         As reported                             $(.89)         $(.47)
         Pro forma                                (.89)          (.47)

The weighted average fair value of the stock options granted during 2003 and
2002 was $.00 and $.28, respectively.  Variables used in the Black-Scholes
option-pricing model include (1) 1.5% and 3.4% risk-free interest rates,
respectively, (2) expected option life is the actual remaining life of the
options as of each year end, (3) expected volatility is the actual historical
stock price fluctuation volatility, and (4) zero expected dividends.

Income Taxes.  Income tax expense is based on reported earnings before income
taxes.  Deferred income taxes reflect the impact of temporary differences
between assets and liabilities recognized for financial reporting purposes
and such amounts recognized for tax purposes, and are measured by applying
tax rates in effect in years in which the differences are expected to reverse.

Basic and diluted earnings per share.  Basic earnings per share equals net
earnings divided by weighted average shares outstanding during the year.
Diluted earnings per share include the impact of common stock equivalents
using the treasury stock method when the effect is dilutive.

Recently issued accounting pronouncements.  Excalibur does not expect the
adoption of recently issued accounting pronouncements to have a significant
impact on their results of operations, financial position or cash flow.


NOTE 2 - GOING CONCERN

As shown in the accompanying financial statements, Excalibur has incurred
recurring net losses from continuing operations of $5,655,605 and $3,493,425
in 2003 and 2002, respectively, and an accumulated deficit of $21,730,366 as
of December 31, 2003.  These conditions create an uncertainty as to
Excalibur's ability to continue as a going concern.  Management is trying to
negotiate swaps of stock for existing debt and raise additional capital
through sales of common stock and/or debt.  The financial statements do not
include any adjustments that might be necessary if Excalibur is unable to
continue as a going concern.


NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at December 31, 2003:

      Description                        Life              Amount
      -----------------------            -------          --------
      Shop equipment                     5 - 7 years    $2,325,236
      Other equipment and furniture      3 - 7 years        59,158
                                                          --------
                                                         2,384,394
      Less: accumulated depreciation                      (715,892)
                                                        ----------
                                                         1,668,502
                                                        ==========



                                      F-10
<PAGE>

Depreciation expense in continuing operations totaled $446,760 and $356,051
in 2003 and 2002, respectively.


NOTE 4 - ACCRUED LIABILITIES

Accrued expenses as of December 31, 2003 includes the following:

      Unpaid salaries                                   $  651,839
      Payroll taxes and estimated penalties                582,171
      Interest                                             311,135
      Sales and property taxes                              60,362
      Other                                                 57,672
                                                        ----------
                                                        $1,663,179
                                                        ==========


NOTE 5 - BANK OVERDRAFT

Excalibur has checking account privileges at Stillwater National Bank and
Trust Company of Tulsa, Oklahoma ("Stillwater").  In connection with this
account, Stillwater has allowed informal overdrafts as of December 31, 2003
of $429,384.  An additional $94,873 in checks written on this account in
December but not clearing until January 2004 are included in accounts
payable.  Stillwater charges overdraft fees but no interest.


NOTE 6 - BANK CREDIT LINE

Excalibur and its subsidiary Shumate have two revolving lines of credit with
Stillwater National Bank and Trust Company of Tulsa, Oklahoma for $1,100,000
and $550,000, respectively.  Outstanding balances earn interest at the
national prime rate average + 2% which is due monthly, and are secured by
substantially all assets of Excalibur and its subsidiaries.  The Shumate
outstanding balance may not exceed 80% of eligible trade receivables.  The
agreements expire on April 15, 2004.


NOTE 7 - INSTALLMENT NOTES PAYABLE

     Installment note payable to Stillwater National Bank,
     secured by substantially all assets, payable in
     monthly installments of $61,255 beginning May 2003
     including interest at prime + 2%, with a balloon
     payment of remaining amounts on April 15, 2006.  No
     principal payments were made during 2003.                  $3,500,000

     Term note payable to Stillwater National Bank,
     due on December 30, 2003.                                     212,815

     Notes due to various parties.  No collateral.
     Interest at up to 12%.  Notes are overdue.                    237,327

     Two notes payable to officers of Shumate, no collateral,
     10% interest, and due on January 29, 2003.  Notes are
     overdue.                                                      200,000

     Capitalized Leases due to Wells Fargo Leasing Corp.,
     collateralized by equipment, due in monthly installments
     of $6,742, with interest at 10%.                              117,347

     Note payable to an insurance company, in 22 bi-weekly
     installments of $1,040, including interest at 6%               21,038

     Note payable to an insurance company, in 8 monthly
     installments of $610, including interest at 7%                  4,810

     Less:  current portion                                     (1,278,694)
                                                               -----------
     Net long-term portion                                     $ 3,013,643
                                                               ===========

$610,531 is due in 2005 and $2,403,112 is due in 2006.


                                      F-11
<PAGE>

NOTE 8 - RELATED PARTY NOTES PAYABLE

Four notes payable to officers and directors totaling $1,070,798, no
collateral, all amounts overdue, interest ranging from prime +1.5% to 10%.


NOTE 9 - INCOME TAXES

Excalibur uses the liability method, where deferred tax assets and
liabilities are determined based on the expected future tax consequences of
temporary differences between the carrying amounts of assets and liabilities
for financial and income tax reporting purposes.   Since inception, Excalibur
has incurred net losses and, therefore, has no tax liability.  The net
deferred tax asset generated by the loss carry-forward has been fully
reserved.  The cumulative net operating loss carry-forward is approximately
$21,500,000 at December 31, 2003, and will expire in the years 2021 through
2023.

At December 31, 2003, deferred tax assets consisted of the following:

            Deferred tax assets
              Net operating losses                     $ 7,310,000
              Less:  valuation allowance                (7,310,000)
                                                      -----------
            Net deferred tax asset                     $         0
                                                      ===========


NOTE 10 - PREFERRED STOCK

In 2002, 1,000,000 shares of Series A and 806,000 shares of Series B
convertible preferred stock were issued for net cash proceeds of $950,000
and $1,007,500, respectively.  Later in 2002, all preferred shares were
exchanged for common shares on a one-for-one basis.  No other preferred
shares have been issued.


                                      F-12
<PAGE>

NOTE 11 - COMMON STOCK

During 2002, 383,334 shares were sold for net proceeds of $192,327, 542,369
shares were issued for services valued at the prevailing average share market
trading price on the dates the services were performed, or $712,569,
1,725,000 shares were issued as part of the Shumate purchase, 714,868 shares
were issued to acquire the public shell, and 68,365 shares were issued to
retire debt.

During 2003, 1,917,796 shares were issued for services valued at the
prevailing average share market trading price on the dates the services were
performed, or $687,140, 250,000 shares were issued in connection with the
2002 Shumate acquisition (recorded as an account payable in 2002), and 55,200
in connection with the exercise of options and warrants.


NOTE 12 - STOCK OPTIONS AND WARRANTS

Excalibur currently has 5 stock and option plans:  (a) the 2001 Stock Option
Plan reserved 2,000,000 shares, and 1,497,734 shares have been issued through
December 31, 2003 ("date"), (b) the 2002 Stock Bonus Plan reserved 50,000
shares and 24,000 have been issued to date, (c) the 2003 Stock Grant Plan
reserved 3,000,000 shares and 1,624,444 shares have been issued to date, (d)
the 2003 Employee Stock Incentive Plan reserved 7,500,000 shares and none
have been issued to date, and (e) the 2003 Non-Employee Directors and
Consultants Retainer Stock Plan reserved 2,500,000 shares and none have been
issued to date.

Options
-------
Under Excalibur's 2001 Stock Option Plan, options to purchase common stock
may be granted to employees and outside consultants.  During 2002, 815,000
shares were granted under this Plan at prices ranging from $.90 to $2.50 per
share, expiring 10 years after grant date.  An additional 1,100,000 options
were granted outside this Plan at prices ranging from $1 to $1.92 per share,
expiring in 5 to 10 years.

During 2003, 49,000 options were granted at a price of $.60 per share.

Warrants
--------
During 2002, Excalibur granted warrants to purchase 1,947,109 shares of its
Series B Convertible Preferred stock at prices ranging from $1 to $1.50 per
share, expiring 5 years after grant date.

During 2003, 405,000 existing warrants held by third parties with a $1
exercise price were canceled and re-issued to Excalibur directors and
officers.  These are treated as being both forfeited and granted during 2003.

Summary information regarding options and warrants is as follows:

                                         Weighted               Weighted
                                         average               average
                           Options      Share Price  Warrants   Share Price
                            ----------  ---------- ----------   -----------
Outstanding at
  December 31, 2001          1,240,000    $ .91       720,000      $ .98

Year ended December 31, 2002:
  Granted                    1,915,000     1.43     1,947,109       1.39
  Forfeited                 (  815,000)     .92    (1,100,127)      1.50
                            ----------    -----    ----------      -----


                                      F-13
<PAGE>

Outstanding at
  December 31, 2002          2,340,000     1.33     1,566,982       1.12

Year ended December 31, 2003:
  Granted                       49,000      .60       405,000       1.00
  Exercised                 (   50,000)    1.00    (    5,000)      1.00
  Forfeited                 (1,950,000)    1.06    (  555,000)      1.00
                            ----------    -----    ----------      -----
Outstanding at
  December 31, 2003            389,000    $1.26     1,411,982      $1.13
                            ==========    =====    ==========      =====

Options outstanding and exercisable as of December 31, 2003:

                               - - Outstanding - -     Exercisable
                            Number        Remaining     Number
         Exercise Price      of Shares       life       of Shares
         --------------    -----------    ---------    -----------
            $ .60               49,000      3 years              0
             1.00              100,000      4 years        100,000
             1.50              240,000      4 years        240,000
                           -----------                 -----------
                               389,000                     340,000
                           ===========                 ===========

Warrants outstanding and exercisable as of December 31, 2003:

                              - - Outstanding - -      Exercisable
                            Number        Remaining    Number
         Exercise Price      of Shares   life            of Shares
         --------------    -----------    ---------    -----------
         $ .90 - $1.00         915,934      4 years        915,934
         $1.20 - $1.50         496,048      4 years        496,048
                           -----------                 -----------
                             1,411,982                   1,411,982
                           ===========                 ===========


NOTE 13 - DISCONTINUED OPERATIONS

In September 2003, all Tulsa-based Operations were closed and on December 31,
2003, a petition was filed for Chapter 7 bankruptcy protection and
liquidation for these 3 subsidiaries.  The 2003 and 2002 financial statements
show the results of the Tulsa-based Operations as discontinued, with Shumate
Machine Works being the only remaining operating business.


NOTE 14 - CONCENTRATIONS

Three customers accounted for 56% of total revenues in 2003 and one customer
accounted for 23% of total revenues in 2002.  One vendor accounted for 87% of
purchases in 2002.


                                      F-14
<PAGE>

NOTE 15 - COMMITMENTS

Excalibur has three-year employment agreements with its CEO and CFO that expire
December 1, 2004. Excalibur also signed three-year employment agreements with
the two principals of Shumate when Shumate was acquired in March 2002. Total
minimum payments required under these employment agreements is $668,750 in 2004,
$270,000 in 2005 and $67,500 in 2006.

Excalibur's current office is in Conroe, Texas.  The lease expires January
31, 2008 and is payable at $19,600 per month.  Future minimum lease payments
under the lease as of December 31, 2003 are $235,200 in each of 2004, 2005,
2006 and 2007.  Rent expense was $229,198 and $83,305 in 2003 and 2002,
respectively.


NOTE 16 - LITIGATION

On December 31, 2003, all Tulsa-based subsidiaries filed for protection under
Chapter 7 of the U.S. Bankruptcy Code in the United States Bankruptcy Court,
Southern District of Texas.  All related assets have been sold or abandoned.

We have been named in approximately 15 actions that have been commenced by
former vendors and suppliers.  The aggregate amount of these claims is
approximately $350,000, many of which are listed within the Tulsa-based
companies bankruptcy petition filed on December 31, 2003.  There can be no
assurances, however, that the bankruptcies will conclude in a manner
favorable to our company.

On November 7, 2003 Dwayne Lewis, the former Chief Operating Officer of the
Tulsa-based companies, filed suit in District court in Tulsa County, Oklahoma
against Excalibur Holdings, Matthew Flemming, William Stuart, Earl Swift and
Frank Marshik.  The suit is a counter claim in response to a civil suit filed
against Dwayne Lewis by Matthew Flemming on September 15, 2003.  Mr. Lewis'
action claims tortuous interference, fraudulent inducement/deceit and
constructive fraud whereby he alleges Mr. Flemming and the other named
third-party defendants breached a duty of good faith, misrepresented and was
negligently fraudulent by causing Excalibur to breach the separation
agreement signed by the Company and Dwayne Lewis on October 3, 2002.  Mr.
Lewis' petition claims an amount not less than $10,000.  We believe that Mr.
Lewis' claims are baseless and without merit.


NOTE 17 - NON-CASH TRANSACTIONS ON CASH FLOW STATEMENT

                                                        2003          2002
                                                    -----------    -----------
Non-cash transactions:
   Debt reclassify from credit line to term note    $ 1,777,647
   Notes payable converted to common stock              350,000         48,500
   Net Tulsa assets transferred to Stillwater
      for reduction of debt                             259,068
   Stillwater loan fees added to note balance           156,496
   Preferred stock converted to common stock                         1,757,500
   Common stock issued for Shumate acquisition                       1,725,000
   Debt issued for Shumate acquisition                                 250,000


NOTE 18 - SUBSEQUENT EVENTS

On January 13, 2004, William Stuart and Matthew Flemming, two Excalibur
officers, were sued by TW Consulting, Inc., the seller of Aero Weld to
Excalibur Aerospace, in the District Court of Tulsa County, Oklahoma in
connection with their personal guarantees of Excalibur debt.

On February 17, 2004, Stuart and Flemming, were also sued by Stillwater
National Bank in the District Court of Oklahoma County, Oklahoma in
connection with their personal guarantees of Excalibur debt.

On February 18, 2004, Stillwater National Bank loaned Excalibur $202,000 to
purchase another computer controlled lathe.


                                      F-15