<PAGE>

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


                                   FORM 10-K/A


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

For the fiscal year ended March 31, 2001

Or

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

For the Transition Period From ____________________ to _________________________

                        Commission File Number: 001-13657


                         STANDARD AUTOMOTIVE CORPORATION
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


                Delaware                                  52-2018607
        ------------------------            ------------------------------------
        (State of Incorporation)            (I.R.S. Employer Identification No.)


    321 Valley Road, Hillsborough, NJ                     08844-4056
----------------------------------------                  ----------
(Address of principal executive offices)                  (Zip Code)

             (908) 874-7778
     (Registrant's telephone number)

                                 Not applicable
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

Securities registered under Section 12(b) of the Exchange Act:

Title of each class                    Name of each Exchange on which registered
-------------------                    -----------------------------------------
Common Stock                           American Stock Exchange
8 1/2% Senior Convertible              American Stock Exchange
Redeemable Preferred Stock

Securities registered under Section 12(g) of the Exchange Act: None.


The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report on Form 10-K for the
year ended March 31, 2001 filed on July 16, 2001 as set forth in the pages
attached hereto.

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

               Item 8.        Financial Statements and Supplementary Data.


<PAGE>



      The information herein contains forward-looking statements relating to
Standard Automotive Corporation ("we," "Standard" or "the Company") within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such statements are
based upon current expectations that involve risks and uncertainties. Any
statements contained herein that are not statements of historical fact may be
deemed to be forward-looking statements. For example, words such as "may,"
"will," "should," "estimates," "predicts," "potential," "continue," "strategy,"
"believes," "anticipates," "plans," "expects," "intends," and similar
expressions are intended to identify forward-looking statements. Our actual
results and the timing of certain events may differ significantly from the
results discussed in the forward-looking statements.


                                     PART I




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

      The following discussion and analysis of the financial condition and
results of operations of Standard Automotive Corporation should be read together
with the consolidated financial statements and notes thereto included elsewhere
herein. This discussion contains forward-looking statements that involve risks
and uncertainties. Standard Automotive's actual results may differ materially
from those expressed or implied by these forward-looking statements as a result
of various factors, such as those set forth under "Item 7B - Risk Factors That
May Affect Future Results."

Overview

      General

      Standard Automotive manufactures and sells trailer chassis, dump truck
bodies, specialty trailers and related assemblies for use in the North American
transportation industry, as well as precision-machined components for use in the
aerospace, nuclear, defense and industrial markets in North America. Our
business is currently operated through two divisions, the Truck Body/Trailer
Division and the Critical Components Division. The markets we serve,
particularly the U.S. truck trailer industry, are cyclical. During the 2000
calendar year, the U.S. truck trailer industry experienced a significant
decrease in the number of truck trailer units shipped overall.

      We commenced operations in 1998 with the acquisition of the trailer
chassis business of our Ajax Manufacturing Co., Inc. subsidiary and since then
have expanded our operations primarily through acquisitions. Our acquisitions
have been accounted for using the purchase method of accounting and as a result
we have recorded significant intangible assets relating to goodwill totaling $30
million, $16 million and $21 million, respectively, for the fiscal years ending
March 31, 1999, 2000 and 2001. Accordingly our financial results reflect
increasing amortization of intangible assets over the periods disclosed. Our
results reflect the operations of acquired businesses from the respective dates
of their acquisition and therefore may not be directly comparable to our results
for prior periods.

      Our acquisitions have been financed principally through the incurrence of
senior indebtedness and, to a lesser degree, through the issuance of
subordinated indebtedness and preferred stock. As of March 31, 2001, we had an
aggregate of approximately $96 million of debt, $91 million of which had been
incurred under our senior secured credit facility. Accordingly, our results
throughout the periods presented reflect increasing expenses associated with
interest and principal payments on acquisition-related indebtedness.

      During the fiscal year ending March 31, 2001, we incurred net losses of
approximately $10.2 million. In December, 2000 we notified the agent under our
senior secured credit facility that we were not in compliance with certain
financial covenants under the credit facility. In addition, we failed to make
scheduled interest and principal payments totaling approximately $2.8 and $4.2
million under the credit facility on March 31, 2001 and July 2, 2001,
respectively, which constituted additional events of default thereunder. As of
June 30, 2001, we were also in default in interest payments totaling
approximately $548,000 in respect of convertible subordinated notes issued to
finance the acquisition of our Ranor subsidiary. We expect to be unable to pay
additional principal and interest payments totaling approximately $4.1 million
under the senior secured credit facility on the next payment date of September
30, 2001.

      We are currently unable to meet our payment obligations under the credit
facility and will be unable to achieve compliance with the terms of the credit
facility absent additional equity or debt financing, restructuring of the terms
of the credit facility or a combination of such financing and restructuring. We
have engaged an investment banking firm to assist us in obtaining additional
financing, although we can give no assurance that our efforts to obtain
additional financing or restructure our existing indebtedness will be
successful. Due to our current condition of default, our entire long-term debt
has been reclassified to current liabilities.

      We are currently in arrears on payment of certain federal excise taxes of
approximately $6.7 million, on which approximately $1.5 million of interest was
accrued as of June 30, 2001. We expect to attempt to negotiate a payment plan
with the Internal Revenue Service ("IRS") to resolve the arrearage. Although no
formal plan is yet in place, we made a voluntary tax payment in the amount of
$634,135 on March 9, 2001, and intend to make voluntary monthly payments of
$20,000 on July 15, 2001, August 15, 2001 and September 15, 2001. This arrearage
has also resulted in an additional event of default under our credit facility.
Further, the IRS has the statutory authority to impose penalties which could be
material.


                                        1
<PAGE>

      In light of our recent history of losses and the unavailability of
additional acquisition financing, we have shifted our strategic emphasis from
growth through acquisitions to growth and management of our current core
businesses. Notwithstanding our strategic initiatives, we cannot provide any
assurance that the company will achieve or sustain profitability in the future.

      Acquisitions


      In April 2000, we acquired all of the outstanding capital stock of
Airborne and Arell. The consideration paid for Airborne during the quarter ended
June 30, 2000 was approximately $12.6 million, including acquisition-related
expenses of $300,000, of which approximately $12.3 was paid in cash to the
sellers at closing. The consideration paid for Arell during the quarter ended
June 30, 2000 was approximately $8.8 million including acquisition-related
expenses of $200,000, of which approximately $8.6 million was paid in cash to
the sellers at closing. To the extent that Airborne and Arell generate a
cumulative earnings before interest, taxes, depreciation and amortization
("EBITDA") of at least Cdn. $9 million in any of the three years following the
date of acquisition, the former owners are entitled to receive earnout payments
in respect of that year. In the event that all EBITDA targets are achieved in
the three years following the closing, these payments would total an additional
Cdn. $8 million.

      As of March 31, 2001, Airborne and Arell have achieved the cumulative
earnings targets and as a result the purchase price has been adjusted.
Additionally, to the extent that Airborne and Arell generate cumulative EBITDA
of at least Cdn. $31,500,000, in any of the three years following the date of
acquisition, the former owners are entitled to secure 20% of the EBITDA in
excess of Cdn. $31,500,000. We recorded goodwill in connection with the Airborne
and Arell transactions of approximately $8.0 million and $6.5 million,
respectively.


      On July 1, 2000, we entered into a 12 month operating lease agreement with
Wheeler Steel Works, Inc. and Wheeler Truck Equipment, Inc. (collectively
"Wheeler") to utilize their production facility. The lease called for 12 monthly
installments of $15,000 with a purchase option available at its expiration. The
lease was terminable at our sole discretion upon 30 days notice. Upon
termination, we were required to provide Wheeler net assets with a book value of
$144,000. Included in this lease is the obligation for us to fund the monthly
payments of all the outstanding debt of Wheeler. Should we decide to exercise
the purchase option, all loan payments made on behalf of Wheeler were to be
considered as a reduction of the purchase price. As of March 31, 2001, we
determined not to exercise the option to purchase the facility. In connection
with this decision, we recorded a one time charge of $456,000. Finally, we
incurred an additional $693,000 of losses relating to this transaction.

      On August 1, 2000, we acquired substantially all of the assets of Better
Built, a manufacturer of trailers and hoists for the waste transportation
industry. The consideration paid for the assets was approximately $660,000, of
which approximately $110,000 was recorded as goodwill.

      On August 31, 2000, we acquired all of the capital stock of TPG. The
consideration paid for TPG was approximately $3,322,000 consisting of a
$3,000,000 payment to the seller, subject to final adjustment, as well as
acquisition-related expenses of approximately $322,000. As part of the agreement
the seller agreed to deliver $1 million of net book value at the closing. We
decided that such amount was not delivered. The seller settled the matter by
waiving its future rights. The acquisition has been accounted for as a purchase.
During March 2001, we recorded a charge of $966,000 related to the writedown of
certain amounts due from the seller.

      Change in Accounting Policy

      Prior to January 1, 2001, we recognized revenue on sales of truck chassis
manufactured by an operating entity in our Truck Body/Trailer Division using the
"bill and hold" method of accounting. We employed this method because, based on
the customer's request, we manufactured and segregated truck chassis for
delivery based on the customers predetermined needs. We believe these
arrangements met all of the requirements of Staff Accounting Bulletin, Revenue
Recognition Financial Statements ("SAB 101") regarding "bill and hold" sales. In
the fourth quarter of fiscal 2001, we changed our accounting policy for revenue
recognition with respect to these sales to record revenue after receipt of the
chassis by the customer. The administrative effort to maintain the former policy
was too burdensome and not cost effective for us as well as our customers and
accordingly we will recognize revenue on these types of sales when the customer
takes physical possession of the chassis. The effect of the change in fiscal
2001 was to decrease revenue "bill and hold" sales recognized in fiscal 2001
prior to the change and to increase revenues as a cumulative adjustment for
"bill and hold" sales recognized in fiscal 2000. These changes increased fiscal
2001 revenues by $8,511,000, net income by $562,000, and earnings per share by
$0.15. The net effect of the change related to fiscal 2001 beginning retained
earnings of $(711,000) and $(0.19) earnings per share has been reflected as a
cumulative change in the accompanying consolidated statements of operations.

      Recently Issued Accounting Pronouncements

      In June 2001 the FASB approved SFAS Nos. 141 and 142 entitled Business
Combinations and Goodwill and Other Intangible Assets, respectively. The
statement on business combinations, among other things, eliminates the "Pooling


                                        2
<PAGE>

of Interests" method of accounting for business acquisitions entered into after
June 30, 2001. Statement 142 requires companies to use a fair-value approach to
determine whether there is an impairment of existing and future goodwill. These
statements are effective for us beginning April 1, 2002 and have certain
transition rules that require us to obtain independent appraisals of certain of
its operating units, which must be completed within six months from adoption.

      During December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, Revenue Recognition in Financial Statements.
Bulletin No. 101 expresses the views of the SEC staff in applying generally
accepted accounting principles to certain revenue recognition issues.

      Revenue Recognition

      Revenue under long-term contracts in the Critical Components Division is
recognized using the percentage-of-completion method of accounting. Costs
include value-added raw materials, direct engineering and manufacturing costs,
applicable overheads, and special tooling and test equipment. Revenues and
earnings on uncompleted contracts are based on our estimates to complete and are
reviewed periodically, with adjustments recorded in the period in which the
revisions are made. Management evaluates each contract to determine the best
indication of completion. Such indicators could be cost incurred, labor incurred
or units shipped. Provisions for estimated losses on uncompleted contracts are
made in the period in which such losses are determined. Progress billings are
made according to the terms of the contract.

Results of Operations

      The following table sets forth, for the indicated periods, certain
consolidated operating data expressed in dollar amounts and as a percentage of
consolidated net revenues. The fiscal years ended March 31, 2001, March 31, 2000
and March 31, 1999 reflect the consolidated results of Standard including Ajax,
R/S, CPS, Ranor, Airborne, Arell and TPG from their respective dates of
acquisition.


<TABLE>
<CAPTION>
                                                                       Year Ended March 31,
                                            -------------------------------------------------------------------
                                                     2001                    2000                   1999
                                            --------------------   --------------------   --------------------
<S>                                         <C>            <C>     <C>            <C>     <C>            <C>
      Revenues, net .....................   $ 137,351      100.0%  $ 159,476      100.0%  $  75,452      100.0%
      Cost of revenues ..................     111,434       81.1     129,090       80.9      59,954       79.5
      Selling, general and administrative      21,816       15.9      14,273        8.8       6,613        8.9
      Amortization of intangible assets .       2,861        2.1       1,466        0.9       1,044        1.4
                                            ---------      -----   ---------      -----   ---------      -----
      Operating income ..................       1,240        0.9      14,647        9.2       7,841       10.4
      Other income (expense) ............     (12,291)       8.9      (5,295)      (3.3)     (2,093)      (2.8)
                                            ---------      -----   ---------      -----   ---------      -----
      Income (loss) before provision for
        taxes ...........................     (11,051)      (8.0)      9,352        5.9       5,748        7.6
      Provision (benefit) for income
        taxes ...........................      (1,547)      (1.1)      3,955        2.5       2,266        3.0
      Net income (loss) before
        accounting change ...............     (9,504)       (6.9)      5,397        3.4       3,482        4.6
      Accounting change .................       (711)       (0.5)         --         --          --         --
                                            ---------      -----   ---------      -----   ---------      -----
      Net income ........................   $(10,215)       (7.4)% $   5,397        3.4%  $   3,482        4.6%
                                            =========      =====   =========      =====   =========      =====
</TABLE>


      Comparison of Year Ended March 31, 2001 to Year Ended March 31, 2000

      Net Revenues. Net revenues in fiscal 2001 were approximately $137.4
million, a decrease of 13.9% from fiscal 2000 revenues of approximately $159.5
million. Net revenues for our Truck Body/Trailer Division decreased from
approximately $139.8 million to approximately $94.4 million, a decrease of
32.5%. The decrease in net revenues was primarily attributable to the
significant downturn in the truck body and trailer industries, which was in turn
attributable to higher interest rates and increased fuel prices as well as
reduced purchasing activities by our customers. Additionally, sales in the Truck
Body/Trailer Division increased $8.5 million because of our change in accounting
policy relating to "bill and hold" transactions. The decrease in net revenues in
our Truck Body/Trailer Division was partially offset by higher net revenues in
our Critical Components Division due to the inclusion of Airborne, Arell and
TPG, which were acquired during the fiscal year. As a result of acquisitions,
the Critical Components Division contributed 31.2% of revenues in fiscal 2001
versus 13% in fiscal 2000. While our Critical Components Division experienced
overall growth of 115%, net revenues at our Ranor subsidiary decreased from
approximately $20.0 million to $18.8 million, a decrease of 6%, primarily due to
reduced demand for nuclear canisters.

      Cost of Revenues. Cost of revenues for fiscal 2001 decreased to
approximately $111.4 million, or 81.1% of net revenues, from $129.1 million, or
81% of net revenues, in fiscal 2000, principally because of lower demand for our
Truck/Trailer Division products. The consolidated cost of revenue ratio remained


                                        3
<PAGE>

relatively constant, with increased Critical Components Division product sales,
principally at our Canadian subsidiaries, which generally carry lower costs,
relative to selling prices, offsetting the higher cost products at our
Truck/Trailer Division, where volume declined year to year.

      Selling, General and Administrative Expenses. Selling, general and
administrative expenses were approximately $21.8 million during fiscal 2001, an
increase of 54% from the $14.2 million incurred during fiscal 2000. Selling
general and administrative expense as a percentage of net revenue increased to
15.9%, up from 8.8% for the comparable period in 2000. The increase resulted
from our expansion into product lines with higher selling and administrative
expenses and also higher corporate oversight expense. Additionally, we
experienced a time lag between the decreases in revenues attributable to
cost-reduction programs in our Truck Body/Trailer Division and the anticipated
favorable effects from those programs. Selling, general and administrative
expense also increased by a $966,000 change relating to the write-down of an
asset acquired in The Providence Group acquisition. Finally, during the year we
incurred approximately $1.0 million relating to banking and business development
activities.

      Interest Expense. Interest expense increased to $11.9 million in fiscal
2001 from $5.0 million during fiscal 2000. This increase reflects a combination
of higher debt incurred to finance the acquisitions of Airborne and Arell, the
effect of increased interest rates and the inclusion of approximately $1.3
million of interest expense relating to federal excise taxes.



      Comparison of Year Ended March 31, 2000 to Year Ended March 31, 1999

      Net Revenues. Net revenues in fiscal 2000 were $159,476,000, an increase
of 111% from Fiscal 1999 revenues of $75,452,000. The increase reflects sales
from our chassis manufacturing facility in Sonora, Mexico, which commenced
operations in April 1999, nine months of ownership of Ranor and a general
improvement in the trailer industry. The Mexican facility represented 27% of
total Fiscal 2000 revenue while R/S, CPS and Ranor contributed 20%, 14% and 13%,
respectively.

      Cost of Revenues. Cost of revenues for fiscal 2000 increased to
approximately $129.1 million, or 81% of net revenues, from approximately $60.0
million, or 79% of net revenues, in fiscal 1999. Cost of revenues as a
percentage of net revenues increased slightly during fiscal 2000, as a more
favorable cost mix associated with the products of R/S, CPS and Ranor was offset
by the start-up expenses resulting in lower margins at our Mexican facility.

      Selling General and Administrative Expenses. Selling, general and
administrative expenses were approximately $14.3 million during fiscal 2000, an
increase of 116% from the $6.6 million incurred during fiscal 1999. Selling,
general and administrative expenses were 9% of sales for each of the periods.
During fiscal 2000, we experienced higher corporate oversight expenses which
were offset by generally more favorable sales-to-expense ratios at our
manufacturing locations.

      Interest Expense. Interest Expense increased to $5.0 million in fiscal
2000 from $1.8 million during fiscal 1999, reflecting debt incurred in pursuing
our acquisition and internal growth strategies.



Liquidity and Capital Resources

      We have historically funded our operations and capital expenditures
through cash flow generated by operations, from borrowings under our senior
credit facility and, to a lesser extent, through the incurrence of subordinated
indebtedness, capital lease transactions and the issuance of common and
preferred stock.

      Our cash position as of March 31, 2001 was $857,000 a decrease of
approximately $2.3 million from our cash and cash equivalents at March 31, 2000
of approximately $3.1 million. This decrease was due to cash provided by
operating and financing activities of approximately $3.7 million and $24.9,
respectively, offset by cash used in investing activities of approximately $30.8
million.

      We generated approximately $3.7 million of cash in operating activities
during fiscal 2001 compared to $3.8 million during fiscal 2000. The cash
generated in operating activities during fiscal 2001 primarily reflects the net
loss of approximately $10.2 million, offset by approximately $13.9 million of
depreciation and amortization, collection of receivables and other operating
activities.


                                        4
<PAGE>

      Net cash used in investing activities was $30.8 million during fiscal 2001
as compared with $31.1 million during the prior year. The cash used in investing
activities during fiscal 2001 was primarily for the acquisitions of Airborne,
Arell and TPG, while the prior year principally reflected the acquisition of
Ranor. The cash generated by financing activities during 2001 principally
reflects the financing for the acquisitions of Airborne and Arell. The cash
generated by financing activities for the twelve months ended March 31, 2000 was
primarily from the increase in our credit facility used to finance the
acquisition of Ranor. In April 2000, we acquired Airborne and Arell. The funding
to complete the acquisitions was obtained through an increase in our credit
facility. In addition to financing the acquisitions of Arell and Airborne, the
credit facility was used to finance capital expenditures, and to provide
additional working capital.

      Our cash position as of June 29, 2001 was approximately $1.1 million.
Excluding payment obligations in respect of indebtedness, preferred stock,
Internal Revenue Service payments and potential penalties, and earn-out payments
relating to acquired businesses, as discussed below, we believe that cash on
hand, together with cash provided from operations, would be sufficient to fund
our operations through March 31, 2002. Our existing cash, together with cash
generated from our operations will not be sufficient to fund our current
obligations in respect of our senior indebtedness, subordinated indebtedness,
preferred stock dividends and payment obligations under earn-out arrangements
relating to acquired businesses. We are currently in default under our credit
facility and are unable to borrow thereunder to fund our operations and other
obligations.

      At March 31, 2001, we had $95.6 million in total debt outstanding,
consisting of an outstanding revolving loan of $20.0 million, term loans of
$71.0 million and subordinated notes to the prior owners of Ranor of $4.6
million. At March 31, 2001, we also had other debt of $79,000. Due to continuing
conditions of default described below, the entire $95.6 million of outstanding
debt has been reclassified, for reporting purposes, from long-term debt to
current liabilities.

      Our senior secured credit facility, as amended on April 25, 2000, provides
for term loans in principal amounts of up to $75.0 million and revolving loans
in principal amounts of up to $25.0 million. The principal of the term loans is
payable quarterly commencing in June 2000 in specified amounts ranging from
approximately $1.3 million quarterly commencing in June 2000 and increasing
annually thereafter to approximately $1.6 million in June 2001, $1.9 million in
June 2002, $2.3 million in June 2003, $2.6 million in June 2004, and $3.2
million in June 2005. Amounts outstanding under the revolving loans are payable
in full in April, 2005. All remaining principal then outstanding is due in April
2007. In addition, the amounts outstanding under the credit facility are subject
to mandatory prepayments in certain circumstances. Subject to our request,
together with the approval of the lenders, the maturity of the revolving loans
may be extended for one year with a maximum extension of two one-year periods.
We made scheduled principal payments of approximately $4.0 million during the
nine months ended December 31, 2001. However, we did not make the March 2001
principal payment of $1.3 million or the June 2001 principal payment of $1.6
million.

      All amounts outstanding under the credit facility are secured by a lien on
substantially all of our assets. In addition, the credit facility imposes
significant operating and financial restrictions on us, including certain
limitations on our ability to incur additional debt, make payments on
subordinated indebtedness, pay dividends, redeem capital stock, sell assets,
engage in mergers and acquisitions or make investments, make loans, transact
business with affiliates, enter into sale and leaseback transactions, and place
liens on our assets. In addition, our credit facility contains covenants
regarding the maintenance of certain financial ratios.

      We are currently in default of certain financial covenants under our
credit facility. In addition, we failed to make scheduled interest and principal
payments totaling approximately $2.8 million and $4.2 million under the credit
facility on March 31, 2001 and July 2, 2001, respectively, which constituted
additional events of default thereunder. Absent significant additional financing
or a restructuring, we expect to be unable to pay additional principal and
interest payments totaling approximately $4.1 million on the next payment date
of September 30, 2001. We have engaged an investment banking firm to assist us
in obtaining additional financing, although we can give no assurance that our
efforts to obtain additional financing or restructure our existing indebtedness
will be successful. We are currently operating under the terms of a forbearance
agreement pursuant to which the lenders under our credit facility have agreed to
forbear enforcing their rights under the credit facility for a period ending on
July 17, 2001. Under the terms of the forbearance agreement, we have agreed with
our lenders, among other things, that, in exchange for their forbearance, we
will not request any additional loans under the credit facility, pay any
dividends on our preferred stock, pay any principal or interest on our
subordinated debt or make any payments in respect of earn-out obligations
relating to acquisitions. As a result of our defaults under the credit facility,


                                        5
<PAGE>

interest on the entire unpaid principal and interest of $92.5 million, as of
March 31, 2001, is accruing interest at default rates having a weighted average
of 10.75% per annum.

      While we believe that we are currently in compliance with the terms of the
forbearance agreement, failure to observe or perform one or more covenants under
our credit facility not covered by the forbearance agreement, or failure to
observe or perform the covenants of the forbearance agreement itself, at any
given time will require us to obtain a waiver or consent from the lenders, or
refinance our credit facility. In addition, the forbearance agreement only
prohibits the lenders from exercising their rights in respect of specified
defaults for a period ending on July 17, 2001. If we are unable after the term
of the forbearance agreement to comply with the covenants of the credit
facility, including bringing our payment obligations thereunder current, our
failure to so comply could constitute an event of default under the credit
facility and we would be required to obtain a waiver or consent from the
lenders, or refinance the credit facility. Such a waiver, consent or refinancing
may not be available to us on reasonable terms. Upon the occurrence of an event
of default under our credit facility, the lenders could elect to declare all
amounts outstanding under our credit facility, together with our accrued
interest and certain expenses, to be immediately due and payable and could begin
to foreclose on our assets. Our failure to comply with any of these covenants or
restrictions could also limit our ability to obtain future financings.

      The terms on which we sell our products vary by operating company, but
generally provide for payment within 30 days.

      Capital expenditures were $3.8 million in fiscal 2001 compared to
approximately $4.0 million in fiscal 2000. Capital expenditures incurred during
fiscal 2001 were primarily for the purchase of production equipment and computer
software to maintain our current plant capacity. We expect that capital
expenditures during the fiscal year ending March 31, 2002 will not exceed those
of the preceding year.

      The annual dividend requirement on our preferred stock at March 31, 2001
is $1,155,000. We suspended payment of the quarterly dividend of $289,000 during
the quarter ended December 31, 2000. Unpaid dividends on the preferred stock are
cumulative. Our future earnings, if any, may not be adequate to pay the
cumulative dividend or future dividends on the preferred stock. Although we
intend to pay the cumulative dividend and to resume payment of regular quarterly
dividends out of available surplus, there can be no assurance that we will
maintain sufficient surplus or that future earnings, if any, will be adequate to
pay the cumulative dividend or future dividends on our preferred stock. Further,
we will need the approval of the lenders under our credit facility to resume
payment of preferred dividends.

      As of March 31, 2001, we had working capital of approximately $6.5 million
prior to the reclassification of $86.5 million of long-term debt to current
liabilities. Excluding payment obligations in respect of indebtedness, preferred
stock, Internal Revenue Service payments and potential penalties, and earn-out
payments relating to acquired businesses, management believes that our current
working capital position, along with anticipated results of operations, will be
sufficient to allow us to fund our working capital requirements for at least the
next twelve months. This assessment is dependent upon the successful outcome of
the negotiations with the lenders under our credit facility and with the
Internal Revenue Service with respect to our outstanding excise tax liabilities.

      In April 2000 we acquired all of the outstanding capital stock of Airborne
and Arell. Under the terms of those acquisition agreements, we agreed to pay
approximately $5.1 million in the event that certain earnings targets were
achieved during the three years following the acquisition. Accordingly, we
accrued a liability of approximately $2 million for the fiscal year ended March
31, 2001, representing the portion of the earnout attributable to that year.
Airborne and Arell met their earnings targets for the fiscal year ended March
31, 2001. However, we are prohibited from paying this amount under the terms of
the forbearance agreement with our senior lenders. Additionally, we have also
agreed to pay a certain percentage of the earnings of both companies to the
extent that their cumulative earnings for the fiscal years ending March 31,
2001, 2002 and 2003 exceed a certain level.



                                        6
<PAGE>



Item 8. Financial Statements and Supplementary Data


      Financial statements required by this Item 8 are set forth starting on
page F-1.



                                        7
<PAGE>



                                    SIGNATURE

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, on July
27, 2001.


                                     STANDARD AUTOMOTIVE CORPORATION



                                     By:         /s/ Joseph Spinella
                                          -------------------------------------
                                                   Joseph Spinella
                                          Chief Financial Officer and Secretary





                                        8
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

Board of Directors and Stockholders of
Standard Automotive Corporation:

We have audited the accompanying consolidated balance sheets of Standard
Automotive Corporation (a Delaware Corporation) as of March 31, 2001 and 2000,
and the related consolidated statements of operations, stockholders' equity and
cash flows for each of the three years ended March 31, 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide 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 Standard Automotive Corporation
as of March 31, 2001 and 2000, and the results of their operations and their
cash flows for each of the three years ended March 31, 2001 in conformity with
accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered net losses and is in
default of certain financial covenants under its credit facility. In addition,
the Company has failed to make scheduled interest and principal payments on the
credit facility and is currently in arrears on the payment of certain federal
excise taxes and preferred dividends. These issues raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plan in regards to these matters are also described in Note 1. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

As explained in Note 3 to the financial statements, effective January 1, 2001,
the Company changed its method of accounting for certain sales transactions.

New York, New York
July 12, 2001


                                                     Arthur Andersen LLP


                                      F-1
<PAGE>
                         STANDARD AUTOMOTIVE CORPORATION

                           Consolidated Balance Sheets
                                 (in thousands)


<TABLE>
<CAPTION>

                                                                             March 31,
                                                                      -------------------------
                                                                        2001            2000
                                                                      ---------       ---------
<S>                                                                   <C>             <C>
Assets

Cash and cash equivalents ......................................      $     857       $   3,136

Marketable securities ..........................................            102             102
Accounts receivable, net of allowance for doubtful accounts
   of $424 and $136 respectively ...............................         10,620          25,217
Other receivables ..............................................            279              --
Inventory, net .................................................         32,052          20,602
Prepaid expenses ...............................................          1,502           1,269
Federal tax receivable .........................................          7,041              --
Deferred taxes .................................................            827             768
                                                                      ---------       ---------
     Total current assets ......................................         53,280          51,094

Property and equipment, net ....................................         44,891          38,724
Intangible assets, net of accumulated amortization of $5,408 and
   $2,522, respectively ........................................         60,538          44,151
Deferred financing costs .......................................          4,175           2,234
Other assets ...................................................            121           1,062
                                                                      ---------       ---------
     Total assets ..............................................      $ 163,005       $ 137,265
                                                                      =========       =========

Liabilities and Stockholders' Equity
Accounts payable ...............................................      $  12,721       $  19,037
Accrued expenses ...............................................          7,726           2,451
Liabilities due to banks .......................................         95,641           4,000
Income taxes payable ...........................................            800             219
Federal excise taxes payable ...................................          6,747           8,292
Cumulated preferred stock dividend .............................            578              --
Other current liabilities ......................................          7,944           2,087
                                                                      ---------       ---------
     Total current liabilities .................................        132,157          36,086
                                                                      ---------       ---------
Long term debt .................................................             --          64,157
Other long term liabilities ....................................             99             104
Deferred taxes .................................................          4,298              --
                                                                      ---------       ---------
     Total long term liabilities ...............................          4,397          64,261
                                                                      ---------       ---------
         Total liabilities .....................................        136,554         100,347
                                                                      =========       =========
Commitments and contingencies

Stockholders' equity:
Convertible Redeemable Preferred stock, $ .001 par value
   3,000,000 shares authorized, 1,132,600 issued and outstanding              1               1
Common stock, $ .001 par value 10,000,000 shares authorized,
   3,822,400and 3,602,400 issued and outstanding, respectively .              4               4
Additional paid-in capital .....................................         31,308          30,208
Deferred compensation ..........................................            (90)             --
Retained earnings (deficit) ....................................         (4,665)          6,705
Accumulated other comprehensive income (loss) ..................           (107)             --
                                                                      ---------       ---------
                Total stockholder's equity .....................         26,451          36,918
                                                                      ---------       ---------
Total liabilities & stockholder's equity .......................      $ 163,005       $ 137,265
                                                                      =========       =========
</TABLE>


              The accompanying notes are an integral part of these
                          consolidated balance sheets.


                                      F-2
<PAGE>


                         STANDARD AUTOMOTIVE CORPORATION

                      Consolidated Statements of Operations
                (in thousands, except net income per share data)

<TABLE>
<CAPTION>
                                                                       For the Years Ended March 31,
                                                                 ----------------------------------------
                                                                    2001            2000           1999
                                                                 ---------       ---------      ---------
<S>                                                              <C>             <C>            <C>
Revenues, net .............................................      $ 137,351       $ 159,476      $  75,452
Operating costs and expenses:
     Cost of revenues .....................................        111,434         129,090         59,954
     Selling, general and administrative expenses .........         21,816          14,273          6,613
     Amortization of intangible assets ....................          2,861           1,466          1,044
                                                                 ---------       ---------      ---------
     Total operating costs and expenses ...................        136,111         144,829         67,611
                                                                 ---------       ---------      ---------
Operating income ..........................................          1,240          14,647          7,841
Interest expense ..........................................         11,927           5,045          1,813
Other expense (income), net ...............................            364             250            280
                                                                 ---------       ---------      ---------
Income (loss) before income taxes .........................        (11,051)          9,352          5,748
Provision (benefit) for income taxes ......................         (1,547)          3,955          2,266
                                                                 ---------       ---------      ---------
Net income (loss)  before cumulative effect of change in
   accounting principle ...................................         (9,504)          5,397          3,482
Cumulative effect on prior years of changing to a different
   method of recognizing revenue ..........................           (711)             --             --
                                                                 ---------       ---------      ---------
Net income (loss) .........................................        (10,215)          5,397          3,482
                                                                 ---------       ---------      ---------
Preferred dividend ........................................          1,155           1,160          1,173
                                                                 ---------       ---------      ---------
Net income (loss) available to common stockholders ........      $ (11,370)      $   4,237      $   2,309
                                                                 =========       =========      =========

Per  share amounts -- Basic net income (loss) per share:
         Basic income (loss) per share attributable to
            common stockholders  before cumulative effect
            of change in accounting principle .............      $   (2.87)      $    1.17      $    0.69
         Cumulative effect on prior years of changing
            to a different method of recognizing revenue ..          (0.19)             --             --
                                                                 ---------       ---------      ---------
                                                                 $   (3.06)      $    1.17      $    0.69
                                                                 =========       =========      =========

     Diluted net income (loss) per share:
         Diluted income (loss) per share attributable to
            common stockholders  before cumulative effect
            of change in accounting principle .............      $   (2.87)      $    1.11      $    0.69
         Cumulative effect on prior years of changing to
            a different method of recognizing revenue .....          (0.19)             --             --
                                                                 ---------       ---------      ---------
                                                                 $   (3.06)      $    1.11      $    0.69
                                                                 =========       =========      =========

Basic weighted average number of shares outstanding .......          3,716           3,623          3,356
                                                                 =========       =========      =========
Diluted weighted average number of shares outstanding .....          3,716           4,867          3,356
                                                                 =========       =========      =========
Pro forma amounts assuming the different method of
   recognizing revenue is applied retroactively
     Net income (loss) ....................................      $  (9,504)      $   4,920      $   3,248
                                                                 =========       =========      =========
     Basic net income (loss) per share ....................      $   (2.87)      $    1.04      $    0.62
                                                                 =========       =========      =========
     Diluted net income (loss) per share ..................      $   (2.87)      $    1.01      $    0.62
                                                                 =========       =========      =========
</TABLE>

              The accompanying notes are an integral part of these
                            consolidated statements.


                                      F-3
<PAGE>

                         Standard Automotive Corporation

         Consolidated Statements of Stockholders' Equity (in thousands)


<TABLE>
<CAPTION>

                                       Preferred                     Common                   Common Stock
                                         Shares      Preferred       Shares                   Subscription
                                      Outstanding      Stock      Outstanding   Common Stock   Receivable
                                      -----------    --------     -----------   ------------    --------
<S>                                      <C>         <C>              <C>         <C>           <C>
Balance - March 31, 1998 .......         1,150       $      1         3,095       $      3      $     (2)
Payment of Common Stock
   Subscription Receivable .....            --             --            --             --             2
Shares Issued for Acquisitions .            --             --           405              1            --
Warrants and Options Issued ....            --             --            --             --            --
Preferred Stock Dividend .......            --             --            --             --            --
Net Income .....................            --             --            --             --            --
                                      --------       --------       -------       --------      --------
Balance - March 31, 1999 .......         1,150              1         3,500              4            --
Shares Issued for Acquisitions .            --             --           180             --            --
Warrants and Options Issued ....            --             --            --             --            --
Preferred Stock Dividend .......            --             --            --             --            --
Conversion of Preferred Stock to
   Common Stock ................           (17)            --            17             --            --
Purchase of Treasury Stock .....            --             --           (95)            --            --
Net Income .....................
                                      --------       --------       -------       --------      --------
Balance - March 31, 2000 .......         1,133       $      1         3,602       $      4      $     --
                                      ========       ========       =======       ========      ========
Currency Translation Adjustment
Shares Issued for Acquisitions .            --             --           120             --            --
Shares Issued to Employees .....                                        100
Warrants and Options Issued ....            --             --            --             --            --
Preferred Stock Dividend .......            --             --            --             --            --
Net Income .....................            --             --            --             --            --
                                      --------       --------       -------       --------      --------
Balance - March 31, 2001 .......         1,133       $      1         3,822       $      4      $     --
                                      ========       ========       =======       ========      ========

<CAPTION>


                                      Additional                              Other Accumulated      Total
                                       Paid In       Deferred       Retained    Comprehensive    Stockholders'
                                       Capital     Compensation     Earnings    Income (Loss)       Equity
                                      --------       --------       --------       ---------       --------
<S>                                   <C>            <C>            <C>            <C>             <C>
Balance - March 31, 1998 .......      $ 24,548       $     --       $    159                       $ 24,709

Payment of Common Stock
   Subscription Receivable .....            --             --             --                              2
Shares Issued for Acquisitions .         3,559             --             --                          3,560
Warrants and Options Issued ....           336             --             --                            336
Preferred Stock Dividend .......            --             --         (1,173)                        (1,173)
Net Income .....................            --                         3,482                          3,482
                                      --------       --------       --------       ---------       --------
Balance - March 31, 1999 .......        28,443             --          2,468              --         30,916
Shares Issued for Acquisitions .         2,565             --             --                          2,565
Warrants and Options Issued ....           200             --             --                            200
Preferred Stock Dividend .......            --             --         (1,160)                        (1,160)
Conversion of Preferred Stock to
   Common Stock ................            --                            --                             --
Purchase of Treasury Stock .....        (1,000)            --             --                         (1,000)
Net Income .....................                                       5,397                          5,397
                                      --------       --------       --------       ---------       --------
Balance - March 31, 2000 .......      $ 30,208       $     --       $  6,705       $      --       $ 36,918
                                      ========       ========       ========       =========       ========
Currency Translation Adjustment                                                         (107)          (107)
Shares Issued for Acquisitions .           780                            --              --            780
Shares Issued to Employees .....           120            (90)                                           30
Warrants and Options Issued ....           200                            --                            200
Preferred Stock Dividend .......            --             --         (1,155)             --         (1,155)
Net Income .....................            --             --        (10,215)             --        (10,215)
                                      --------       --------       --------       ---------       --------
Balance - March 31, 2001 .......      $ 31,308       $    (90)      $ (4,665)      $    (107)      $ 26,451
                                      ========       ========       ========       =========       ========

</TABLE>



              The accompanying notes are an integral part of these
                            consolidated statements.


                                      F-4
<PAGE>


                         STANDARD AUTOMOTIVE CORPORATION

                      Consolidated Statements of Cash Flows
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                                       For the Years Ended March 31,
                                                                                  -------------------------------------
                                                                                     2001         2000           1999
                                                                                  ----------  ----------     ----------
<S>                                                                               <C>         <C>            <C>
Cash flows from operating activities:
Net income (loss) ............................................................    $   (9,504) $    5,397     $    3,482
Adjustments to reconcile net income to net cash
   provided by operating activities:
     Change in accounting method .............................................          (711)         --             --
     Foreign currency translation adjustment .................................          (107)         --             --
     Non-cash purchase price adjustment ......................................          (636)         --             --
     Depreciation and amortization ...........................................         7,494       4,516          1,926
     Non-cash interest and compensation ......................................         1,149         240            337
     Deferred taxes ..........................................................         1,176          --           (350)
   Change in assets and liabilities:
     Accounts receivable .....................................................        17,720     (15,722)          (331)
     Inventory ...............................................................        (6,646)     (1,849)        (2,948)
     Income taxes receivable .................................................        (7,042)         --             --
     Prepaid expenses and other ..............................................         2,921         420           (656)
     Accounts payable and accrued expenses ...................................        (2,018)     10,770          6,665
     Income taxes payable ....................................................          (520)         48           (737)
     Federal excise taxes payable ............................................        (1,545)         --             --
     Other liabilities .......................................................         1,955          --          1,707
                                                                                  ----------  ----------     ----------
Net cash provided by operating activities ....................................         3,686       3,820          9,095
                                                                                  ----------  ----------     ----------
Cash flows from investing activities:
   Acquisition of businesses, net of cash acquired ...........................       (27,034)    (26,387)       (21,470)
   Deferred acquisition costs ................................................            --        (801)            --
   Purchase of marketable securities .........................................                        --             --
   Acquisition of property and equipment .....................................        (3,781)     (3,959)        (6,110)
                                                                                  ----------  ----------     ----------
Net cash used in investing activities ........................................       (30,815)    (31,147)       (27,580)
                                                                                  ----------  ----------     ----------
Cash flows from financing activities:
   Proceeds from bank loan ...................................................        32,255      33,744         26,710
   Repayment bank loan .......................................................        (4,008)     (3,625)        (1,875)
   Deferred financing costs ..................................................        (2,820)     (1,182)          (667)
   Preferred dividend payment ................................................          (577)     (1,160)        (1,173)
   Purchase of treasury stock ................................................            --      (1,000)            --
   Repayment of acquisition note .............................................            --          --         (4,000)
   Other .....................................................................            --          --            (79)
                                                                                  ----------  ----------     ----------
Net cash provided by financing activities ....................................        24,850      26,777         18,916
                                                                                  ----------  ----------     ----------
Net increase (decrease) in cash and cash equivalents .........................        (2,279)       (550)           431
Cash and cash equivalents, beginning of period ...............................         3,136       3,686          3,255
                                                                                  ----------  ----------     ----------
Cash and cash equivalents, end of period .....................................    $      857  $    3,136     $    3,686
                                                                                  ==========  ==========     ==========

Supplemental disclosures of cash flow information:
   Cash paid during the period for:
     Interest ................................................................    $    8,510  $    4,934     $    1,886
     Income taxes ............................................................         3,071       3,914          2,822
</TABLE>

              The accompanying notes are an integral part of these
                            consolidated statements.


                                      F-5
<PAGE>

                         STANDARD AUTOMOTIVE CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

1.       Organization

         Standard Automotive Corporation ("we," the "Company" or "SAC") was
incorporated in Delaware in January 1997. The Company conducted no operations
during the fiscal year ended March 31,1997. The Company has two operating
divisions: the Truck Body/Trailer Division and the Critical Components Division.

         Truck Body/Trailer Division

         The Truck Body/Trailer Division's principal activity is the manufacture
of trailer chassis, dump truck bodies, dump trailers, truck suspensions and
other related assemblies for domestic customers in the inter-modal industry,
construction and agricultural industries, through the following wholly owned
subsidiaries:

         Ajax designs, manufactures and sells container chassis, refurbishes (or
         "re-manufactures") used chassis, and manufactures specialty
         transportation equipment. Container chassis are used to transport
         maritime shipping containers from container ships to inland
         destinations. Container chassis are sold to leasing companies, large
         steamship lines, railroads and trucking companies to transport overland
         20-, 40-, 45- and 48-foot shipping containers. Ajax operates facilities
         in Hillsborough, New Jersey and Sonora, Mexico.

         R/S Truck Body Co., Inc. ("R/S"), located in Ivel, Kentucky, designs,
         manufactures and sells customized, high end, steel and aluminum dump
         truck bodies, platform bodies, custom large dump trailers, specialized
         truck suspension systems and related products and parts. R/S recently
         introduced several new products to the market, including the aluminum
         platform trailer and the aluminum elliptical body.

         CPS Trailer Co. ("CPS"), located in Oran, Missouri, designs,
         manufactures and sells bottom dump trailers, half-round end dump
         trailers, light-weight end dump trailers, grain hopper trailers and
         walking floor van trailers, used for hauling bulk commodities such as
         gravel and grain, and for the construction, agriculture and waste
         hauling industries.

         Critical Components Division

         The Critical Components Division designs, manufactures and sells
precision-machined components to original equipment manufacturers ("OEMs") in
the aerospace, nuclear, defense and industrial markets through the following
wholly-owned subsidiaries:

         Ranor, Inc. ("Ranor"), located in Westminster, Massachusetts,
         specializes in the fabrication and precision machining of large metal
         components that exceed one hundred tons for the aerospace, nuclear,
         military, shipbuilding and power generation markets as well as national
         laboratories. Ranor manufactures domes, machined in one piece, for
         Boeing's Delta rocket program. Additionally, Ranor manufactures and
         supplies steam accumulator tanks for U.S. Navy nuclear-powered aircraft
         carriers, as well as large precision vacuum chambers for the National
         Ignition Laboratories at Lawrence Livermore. Ranor also manufactures
         and supplies large machined casings for ground-based, gas turbine power
         generation engines, and nuclear spent fuel canisters.

         Airborne Machine & Gear, Ltd. ("Airborne"), located in St. Leonard,
         Quebec, Canada, is principally engaged in the manufacture and sale of
         hot section engine components in exotic materials including Inconel (a
         nickel alloy), titanium and beryllium copper. Airborne operates under
         long-term agreements with, and is considered a preferred vendor by, its
         significant customers. We acquired Airborne in April 2000.


                                      F-6
<PAGE>

         Arell Machining, Ltd. ("Arell"), located in Anjou, Quebec, Canada,
         manufactures hot and cold section engine components, airframe
         structural components and landing gear kits and assemblies for the
         aerospace market. Arell operates under long term agreements with, and
         is considered a preferred supplier by, its significant customers. We
         acquired Arell in April 2000.

         The Providence Group, Inc. ("TPG"), located in Knoxville, Tennessee, is
         a specialized engineering services company that provides engineering
         services predominately in the environmental and nuclear industries. TPG
         designs, manufactures and operates a line of remote robotic retrieval
         systems used in the cleaning and transferring of stored nuclear waste.
         We acquired TPG in September 2000.

         Basis of Presentation

         We are currently in default of certain financial covenants under our
credit facility. In addition, we failed to make scheduled interest and principal
payments totaling approximately $2.8 million and $4.2 million under the credit
facility on March 31, 2001 and July 2, 2001, respectively, which constituted
additional events of default thereunder. Absent significant additional financing
or a restructuring, we expect to be unable to pay additional principal and
interest payments totaling approximately $4.1 million on the next payment date
of September 30, 2001. We are currently operating under the terms of a
forbearance agreement pursuant to which the lenders under our credit facility
have agreed to forbear enforcing their rights under the credit facility for a
period ending on July 17, 2001. Under the terms of the forbearance agreement, we
have agreed with our lenders, among other things, that, in exchange for their
forbearance, we will not request any additional loans under the credit facility,
pay any dividends on our preferred stock, pay any principal or interest on our
subordinated debt or make any payments in respect of earn-out obligations
relating to acquisitions. As a result of our defaults under the credit facility,
interest on the entire unpaid principal and interest of $95.1 million as of June
30, 2001 is accruing at default rates having a weighted average of 10.75% per
annum. We are currently in arrears on payment of certain federal excise taxes of
approximately $6.7 million, on which approximately $1.5 million of interest was
accrued as of June 30, 2001. We expect to attempt to negotiate a payment plan
with the Internal Revenue Service ("IRS") to resolve the arrearage. Although no
formal plan is yet in place, we made a tax payment in the amount of $634,135 on
March 9, 2001, and intend to make monthly payments of $20,000 on July 15, 2001,
August 15, 2001 and September 15, 2001. Further, the IRS has the statutory
authority to impose penalties which could be material.

         The above factors raise substantial doubt regarding the Company's
ability to continue as a going concern. These financial statements do not
include any adjustments that might result from the outcome of these
uncertainties.

         We are currently developing a business plan that will offer a basis for
a restructuring proposal that we intend to provide to our creditors that we
expect will include additional, new equity or equity-linked financing. We have
engaged an investment banking firm to assist us in obtaining additional
financing, although we can give no assurance that our efforts to obtain
additional financing or restructure our existing indebtedness will be
successful. Events of default under our existing indebtedness and our recent
history of losses increase the difficulty of obtaining such additional
financing. Any additional financing will require the consent of our senior
lenders and, to the extent it contemplates the issuance of shares of preferred
stock senior to our existing preferred stock, holders of a majority of the
shares of our preferred stock. We may be unable to effectuate a restructuring
proposal if we are unable to reach agreement with our creditors or existing
preferred stockholders or because we are unable to obtain additional financing.
In the event that we obtain additional financing and/or a restructuring of our
existing indebtedness, such events could cause a change of control of the
company.

         If we are unable to accomplish an out-of-court restructuring, we may
seek protection from our creditors. Moreover, it is possible that our creditors
may seek to initiate involuntary proceedings against us or against one or more
of our subsidiaries in the United States and/or in Canada or Mexico, which would
force us to make defensive voluntary filing(s) of our own. Should we be forced
to take action with respect to one or more of our foreign subsidiaries, such
filings raise substantial additional risk to us and to the success of our
proposed restructuring transaction due to both the uncertainty created by
foreign creditors' rights laws and the additional complexity that would be
caused by such additional filings. We can provide no assurance that we would be
able to successfully restructure our foreign subsidiaries should such filings be


                                      F-7
<PAGE>

required. In addition, if we restructure our debt or file for protection from
our creditors, it is very likely that our common stock and preferred stock will
be severely diluted if not eliminated entirely.

2.       Acquisitions and Pro Forma Information

         In January 1998, we executed an agreement to purchase all the
outstanding shares of Ajax for a total purchase price of approximately
$23,819,000 (including assumed liabilities of approximately $5,772,000),
comprised of a cash payment of approximately $19,618,000 and incurred a debt
obligation of approximately $4,000,000 to the Ajax shareholder and other
consideration valued at approximately $201,000. In connection with the
acquisition, we paid advisory fees of $160,000 to certain directors and officers
of the Company. The acquisition was accounted for as a purchase and,
accordingly, our 1998 financial statements include the results and activity of
Ajax for only the period of January 27, 1998 through March 31, 1998. The excess
of the purchase price over the fair value of Ajax's net assets at the date of
acquisition totaled approximately $15,257,000. This amount is being amortized on
a straight-line basis over a 20-year period. The final allocation of the Ajax
purchase price was subject to a post closing balance sheet adjustment which
increased the purchase price by $453,000. The total amount due of $4,453,000 has
been paid to the Ajax shareholder.

         In July 1998, we purchased all the outstanding shares of Barclay
Investments, Inc. ("Barclay"), a non-operating entity, and R/S. In September
1998, we purchased all the outstanding shares of CPS. In connection with these
acquisitions, we paid advisory fees of $813,000 to certain directors and
officers of the Company. These acquisitions were accounted for using the
purchase-method of accounting. The aggregate purchase price of approximately
$24,000,000 (including assumed liabilities of approximately $9,982,000) has been
allocated to the assets acquired and liabilities assumed based on respective
fair values at the dates of acquisition. The excess of the purchase price over
the fair value of net assets of R/S and CPS at the dates of acquisition totaled
approximately $14,492,000. This amount is being amortized on a straight-line
basis over a period not to exceed forty years. The Company had independent
appraisals performed in order to properly value and amortize the useful lives of
the assets acquired.

         In June 1999, we acquired all of the outstanding capital stock of
Critical Components Corporation ("CCC"), a non-operating company, and through
CCC, acquired substantially all of the assets of Ranor, a fabricator of large
precision assemblies for the aerospace, nuclear, industrial and defense markets.
In connection with the acquisition, we paid advisory fees consisting of 180,000
shares of common stock and $952,000 in cash to Redstone Advisors, a related
party. The consideration paid to Ranor was $28,800,000 (including assumed
liabilities of approximately $1,398,000), subject to final adjustment, of which
$23,500,000 was paid in cash and $5,300,000 was paid in the form of convertible
subordinated notes, issued by the Company and convertible into common stock of
Critical Components Corporation. The acquisition was accounted for as a
purchase. The excess of the purchase price over the fair value of the net assets
acquired was approximately $16,200,000.

         In April 2000, we acquired all of the outstanding capital stock of
Airborne and Arell. In connection with the acquisition, we paid advisory fees
consisting of 120,000 shares of common stock and $785,000 in cash to Redstone
Advisors, a related party. The consideration paid for Airborne was approximately
$13,910,000, of which $12,342,000 was paid in cash to the seller and $1,568,000
was incurred in fees. The consideration for Arell was approximately $9,694,000,
of which $8,556,000 was paid in cash to the seller and $1,138,000 was incurred
in fees. The acquisiton was accounted for as a purchase.

         We obtained independent appraisals to value and determine the useful
lives of the assets of both Airborne and Arell. The excess of the purchase
prices over the net assets acquired from Airborne and Arell was approximately
$8,001,000 and $6,468,000, respectively. Such amounts are recorded among the
intangible assets and are being amortized over 20 years.

         To the extent that Airborne and Arell generate a cumulative earnings
before interest, taxes, depreciation and amortization ("EBITDA") of at least
$5.7 million in any of the three years following the date of acquisition the
former owners are entitled to receive earn out payments in respect of that year.
In the event that all EBITDA targets are achieved in the three years following
the closing, these payments would total an additional $5.1 million.

         On August 31, 2000, we acquired all of the capital stock of TPG. In
connection with the acquisition, we paid advisory fees of $409,000 to Mayfair


                                      F-8
<PAGE>

Associates, a related party owned by William Merker, the brother of Steven
Merker, former Chairman. The consideration paid for TPG was approximately
$3,322,000 consisting of a $3,000,000 payment to the seller, as well as
acquisition-related expenses of approximately $322,000. As part of the agreement
the seller agreed to deliver $1 million of net book value at the closing. The
Company determined that such amount was not delivered. The seller settled the
matter by waving its future earn out rights. The acquisition has been accounted
for as a purchase. During March 2001, we recorded a charge of $966,000 against
gooodwill related to the writedown of certain amounts due from the seller.

         The following unaudited pro forma consolidated statements of operations
data for the years ended March 31, 2001 and 2000 give effect of the acquisitions
of Airborne, Arell and TPG as if each of these acquisitions had occurred on
April 1, 2000 and 1999.

                                              Year Ended          Year Ended
                                            March 31, 2001      March 31, 2000
                                            --------------      --------------
Pro Forma:

Revenues, net..........................  $       143,001      $       183,068
Operating income.......................              893               19,911
Net income.............................          (10,409)               8,032
                                         =================    =================
Preferred dividend.....................            1,155                1,160
Basic net income (loss) per share......  $         (3.11)     $          1.90
                                         =================    =================
Diluted net income (loss) per share....  $         (3.11)     $          1.65
                                         =================    =================


         The pro forma operating results reflect estimated adjustments for
amortization expense on intangibles arising from the acquisitions and interest
expense on the acquisition debt and also the related tax effects thereon.

         Pro forma results of operations information is not necessarily
indicative of either the results of operations that would have occurred had the
acquisitions been consummated as of April 1, 2000 or future results of the
combined companies.

3.       Change in Accounting Policy

         Prior to January 1, 2001, we recognized revenue on sales of truck
chassis manufactured by an operating entity in our Truck Body/Trailer Division
using the "bill and hold" method of accounting. We employed this method because,
based on the customer's request, we manufactured and segregated truck chassis
for delivery based on the customers predetermined needs. We believe these
arrangements met all of the requirements of Staff Accounting Bulletin, Revenue
Recognition in Financial Statements ("SAB 101") regarding "bill and hold" sales.
In the fourth quarter of fiscal 2001, we changed our accounting policy for
revenue recognition with respect to these sales to record revenue after receipt
of the chassis by the customer. The administrative effort to maintain the former
policy was too burdensome and not cost effective for us as well as our customers
and accordingly we will recognize revenue on these types of sales when the
customer takes physical possession of the chassis. The effect of the change in
fiscal 2001 was to decrease revenue for "bill and hold" sales recognized in
fiscal 2001 prior to the change and to increase revenue as a cumulative
adjustment for "bill and hold" sales recognized in fiscal 2000. These changes
increased fiscal 2001 revenues by $8,511,000, net income by $562,000, and
earnings per share by $0.15. The net effect of the change related to fiscal 2001
beginning retained earnings of $(711,000) and $(0.19) earnings per share has
been reflected as a cumulative change in the accompanying Consolidated
Statements of Operations.

4.       Summary of Significant Accounting Policies

         Principles of Consolidation

         The consolidated financial statements include the accounts of the
Company and our subsidiaries. All inter-company accounts and transactions are
eliminated in consolidation.


                                      F-9
<PAGE>

         Revenue Recognition

         Truck Body/Trailer Division

         Revenue is recognized in all operating entities included in the Truck
Body/Trailer Division when there is pervasive evidence of an arrangement,
delivery has occurred, no future obligations exist, and payment is reasonably
assured. (See Note 3 for discussion of a change in accounting policy).

         Critical Components Division

         Revenue is recognized in all operating entities included in the
Critical Components Division when there is pervasive evidence of an arrangement,
delivery has occurred, no future obligations exist, and payment is reasonably
assured. In the case of long-term contracts revenue is recognized using the
percentage-of-completion method of accounting. Costs include value-added raw
materials, direct engineering and manufacturing costs, applicable overheads, and
special tooling and test equipment. Revenues and earnings on uncompleted
contracts are based on the Company's estimates to complete and are reviewed
periodically, with adjustments recorded in the period in which the revisions are
made. Management evaluates each contract to determine the best indication of
completion. Such indicators could be cost incurred, labor incurred or units
shipped. Provisions for estimated losses on uncompleted contracts are made in
the period in which such losses are determined. Progress billings are made
according to the terms of the contract.

         Warranties

         The Company accrues for its obligation to warrant that its products are
free from defects in design, materials and workmanship generally for one year
from the date of purchase.

         Cash and Cash Equivalents

         The Company considers all highly liquid investments with a maturity of
less than three months when purchased to be cash equivalents.

         Marketable Securities

         When applicable, the Company applies Financial Accounting Standards
Board ("FASB") Statement of Financial Accounting Standard ("SFAS") No. 115,
Accounting for Certain Investments in Debt and Equity Securities. Under SFAS No.
115, marketable debt and equity securities are reported at fair value, with
unrealized gains and losses from those securities reported as separate component
of stockholders' equity.

         Income Taxes

         The Company follows SFAS No. 109, Accounting for Income Taxes, which
requires recognition of deferred tax liabilities and assets for the expected
future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax liabilities and
assets are determined on the difference between the financial statement and tax
basis of assets and liabilities using expected tax rates in effect for the year
in which the differences are expected to reverse.

         Inventory

         Inventory is stated at the lower of cost, determined on a first-in,
first-out basis, or market. Acquired inventory from the acquisitions was
adjusted to its then fair market value. Costs of revenues include charges of
$309,000, $295,000 and $531,000 in the fiscal years ended March 31, 2001, 2000
and 1999, respectively, representing the effects of this adjustment as the
inventory was sold.


                                      F-10
<PAGE>

         Property and Equipment

         Property and equipment related to acquisitions are stated at their fair
values at the acquisition dates. Property and equipment purchased by the Company
are stated at cost. Depreciation is computed using the straight-line method for
financial reporting purposes. The estimated lives used in depreciating the
assets are:

                                                          Years
                                                          -----
Transportation equipment                                  3 - 5
Furniture, fixtures and office equipment                  5 - 10
Machinery and equipment                                   5 - 15
Buildings                                                30 - 40
Leasehold improvements                      Shorter of lease term or useful life

         Expenditures for major renewals and improvements that extend the useful
lives of property and equipment are capitalized. Expenditures for routine
maintenance and repairs are charged to expense as incurred.

         Long-Lived Assets

         We account for long-lived assets in accordance with the provisions of
Statement of Financial Accounting Standards ("SFAS No. 121"), Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of.
This statement establishes financial accounting and reporting standards for the
impairment of long-lived assets, certain identifiable intangibles, and goodwill
related to those assets to be held and used, and for long-lived assets and
certain identifiable intangibles to be disposed of. We review the recoverability
of the carrying values of long-lived assets, primarily property, plant and
equipment and related goodwill and other intangible assets for impairment
whenever events or changes in circumstances indicated that the carrying amount
of an asset may not be fully recoverable. Under the standard, impairment losses
are recognized when expected future cash flows are less than the asset's
carrying value. When indicators of the impairment are present, the carrying
values of the assets are evaluated in relation to the operating performance and
future discounted cash flows of the underlying business. The net book value of
the underlying assets is adjusted to fair value if the sum of the expected
future undiscounted cash flows is less than book value. Fair values are based on
quoted market prices and assumptions concerning the amount and timing of the
estimated cash flows and assumed discounted rates, reflecting varying degrees of
perceived risk. Management has performed a review of all long-lived assets and
determined that no impairment of the respective carrying values have occurred as
of March 31, 2001, 2000 and 1999.

         Deferred Financing Costs

         At March 31, 2001 and 2000 costs of approximately $4,175,000 and
$2,234,000, respectively, were capitalized in connection with financing
acquisitions. The deferred financing costs are amortized over the life of the
financing.

         Net Income (Loss) per Common Share

         We compute net income (loss) per common share in accordance with SFAS
No. 128, "Earnings Per Share". Under the provisions of SFAS No. 128, basic net
income (loss) per common share ("Basic EPS") is computed by dividing net income
(loss) by the weighted average number of common shares outstanding. Diluted net
income (loss) per common share ("Diluted EPS") is computed by dividing net
income (loss) by the weighted average number of common shares and dilutive
common share equivalents then outstanding. SFAS No. 128 requires the
presentation of both Basic EPS and Diluted EPS on the face of the consolidated
statements of operations.


                                      F-11
<PAGE>

         Foreign Currency

         All assets and liabilities of foreign subsidiaries are translated into
U.S. Dollars at fiscal year-end exchange rates. Income and expense items are
translated at average exchange rates during the fiscal year. The resulting
translation adjustments are recorded as a component of Stockholders' Equity in
accompanying Consolidated Financial Statement. Gains or losses resulting from
foreign currency transactions are included in the accompanying Consolidated
Statements of Operations.

         Derivative Instruments and Hedging Activities

         In June 1999, the FASB issued SFAS No. 137, Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133. The Statement defers for one year the effective date of SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities, which was
issued in June 1998 and establishes accounting and reporting standards requiring
that every derivative instrument, including certain derivative instruments
embedded in other contracts, be recorded in the balance sheet as either as asset
or liability measured at its fair value. SFAS No. 133 also requires that changes
in the derivative's fair value be recognized currently in earnings unless
specific hedge accounting criteria are met. SFAS No. 133 is effective for the
Company beginning April 1, 2001. We believe that the implementation of SFAS No.
133 will not have a material impact on our financial position or results of
operations.

         Recently Issued Accounting Pronouncements

         In June 2001, the FASB approved SFAS Nos. 141 and 142 entitled Business
Combinations and Goodwill and Other Intangible Assets, respectively. The
statement on business combinations, among other things, eliminates the "Pooling
of Interests" method of accounting for business acquisitions entered into after
June 30, 2001. SFAS No. 142 requires companies to use a fair-value approach to
determine whether there is an impairment of existing and future goodwill. These
statements are effective for the Company beginning April 1, 2002 and have
certain transition rules that require the Company to obtain independent
appraisals of certain of its operating units, which must be completed within six
months from adoption.

         Use of Estimates

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. The costs we will ultimately incur and the value of assets
ultimately realized could differ in the near term from the related amounts
reflected in the accompanying financial statements.

         Significant accounting estimates include valuation of inventory, useful
lives of property, equipment and intangible assets, the allocation of purchase
prices, the measurement of contingencies and percentage of completion on
long-term contracts.

         Fair Value of Financial Instruments

         Generally accepted accounting principles require disclosing fair value
to the extent practicable for financial instruments which are recognized or
unrecognized in the balance sheet. The fair value of the financial instruments
disclosed herein is not necessarily representative of the amount that could be
realized or settled, nor does the fair value amount consider the tax
consequences of realization or settlement. For cash equivalents, marketable
securities, accounts receivable, accounts payable, and debt instruments, it is
estimated that the carrying amounts at March 31, 2001 and 2000 approximated fair
values for these instruments because of their short-term maturity, their
interest rates or their payment terms.


                                      F-12
<PAGE>

         Stock-Based Compensation

         The Company accounts for its employee stock option plan in accordance
with the provisions of Accounting Principles Bulletin No. 25, Accounting for
Stock Issued to Employees ("APB 25") and related interpretations. Compensation
expense related to employee stock options is recorded only if, on the date of
grant, the fair value of the underlying stock exceeds the exercise price. The
Company adopted the disclosure-only requirements of SFAS No. 123, Accounting for
Stock-Based Compensation, which allows entities to continue to apply the
provisions of APB Opinion No. 25 for transactions with employees and provide pro
forma net income and pro forma earnings per share disclosures for employee stock
options as if the fair value based method of accounting in SFAS No. 123 had been
applied to these transactions.

         The Company accounts for non-employee stock-based awards in which goods
or services are the consideration received for the equity instruments issued
based on the fair value of the consideration received or the fair value of the
equity instrument issued, whichever is more readily determinable.

         During March 2000, the FASB issued Interpretation No. 44, Accounting
for Certain Transactions Involving Stock Compensation, which clarifies the
application of APB Opinion No. 25, regarding (a) the definition of an employee
for purposes of applying APB Opinion No. 25, (b) the criteria for determining
whether a plan qualifies as a non-compensatory plan, (c) the accounting
consequences of various modifications to the terms of a previously fixed stock
option or award, and (d) the accounting for an exchange of stock compensation
awards in a business combination. Interpretation No. 44 was effective on July 1,
2000.

5.       Inventory

         Inventory is comprised of the following:

                                                        March 31
                                              --------------------------------
                                                   2001               2000
                                              -------------      -------------
                    Raw materials...........  $  10,762,000      $   9,977,000
                    Work in progress........      8,057,000          2,545,000
                    Finished goods..........     13,233,000          8,080,000
                                              -------------      -------------
                                              $  32,052,000      $  20,602,000
                                              =============      =============

6.       Property and Equipment, net

         Property and equipment are summarized by major classifications as
follows:

                                                               March 31,
                                                       -------------------------
                                                          2001           2000
                                                       -----------   -----------
Transportation equipment ...........................   $   798,000   $   765,000
Leasehold improvements .............................     4,120,000     3,713,000
Furniture, fixtures and office equipment ...........     3,602,000     1,860,000
Machinery and equipment ............................    26,718,000    20,142,000
Building ...........................................    14,536,000    12,546,000
Land ...............................................     3,595,000     3,139,000
                                                       -----------   -----------
         Total .....................................    53,369,000    42,165,000
Less:  Accumulated depreciation and amortization ...     8,478,000     3,441,000
                                                       -----------   -----------
                                                       $44,891,000   $38,724,000
                                                       ===========   ===========


                                      F-13
<PAGE>

         Depreciation and amortization expense for the years ended March 31,
2001, 2000 and 1999 was $4,633,000, $2,625,000 and $581,000, respectively.

7.       Long Term Debt and Credit Agreements

         Classification

      Due to the effects of the default events described below, all long term
debt has been classified as a current liability on the accompanying consolidated
balance sheet.

         Term and Revolver Loans

         In July 1998 the Company and certain of its subsidiaries (acting as
Guarantors) entered into, with PNC Bank, N.A. ("PNC"), both individually and as
agent for other financial institutions a $40,000,000 Term Loan and Revolving
Credit Facility ("Credit Facility"). The Credit Facility provided for a term
loan in the amount of $25,000,000 and a revolving loan in the principal amount
of $15,000,000 (collectively, the "Loans"). Portions of the term loan were used
to fund the acquisitions of R/S and CPS and to retire certain indebtedness of
R/S, CPS and the Company.

         In June 1999, the Company obtained an increase in its existing Credit
Facility arrangement from $40,000,000 to $68,125,000 through PNC and PNC Capital
Markets to consummate the acquisition of Ranor. The Company's Credit Facility,
as amended, provided for Term Loans in the principal amount of $48,125,000 and a
Revolving Loan in the principal amount of $20,000,000 (the "Loans"). The
principal of the Term Loans was payable in two installments: $23,125,000 due
June 2004 and $25,000,000 due June 2005. Amounts outstanding under the Revolving
Loan were payable in full in July 2002, subject to the Company's request, with
the approval of the lenders, to extend the due date for one year, with a maximum
extension of two one year periods.

         In April 2000, we acquired Airborne and Arell. The funding to complete
the acquisitions was obtained through increasing our existing Credit Facility of
$68,125,000 to $100,000,000.

         Our Credit Facility, as amended on April 25, 2000, provides for term
loans in principal amounts of up to $75.0 million and revolving loans in
principal amounts of up to $25.0 million. The principal of the term loans is
payable quarterly commencing in June 2000 in specified amounts ranging from
approximately $1.3 million quarterly commencing in June 2000 and increasing
annually thereafter to approximately $1.6 million in June 2001, $1.9 million in
June 2002, $2.3 million in June 2003, $2.6 million in June 2004, and $3.2
million in June 2005. Amounts outstanding under the revolving loans are payable
in full in April, 2005. All remaining principal then outstanding is due in April
2007. In addition, the amounts outstanding under the Credit Facility are subject
to mandatory prepayments in certain circumstances. Subject to our request,
together with the approval of the lenders, the maturity of the revolving loans
may be extended for one year with a maximum extension of two one-year periods.
We made scheduled principal payments of approximately $4.0 million during the
nine months ended December 31, 2000. However, we did not make the March 2001
principal payment of $1.3 million or the June 2001 principal payment of $1.6
million.

         All amounts outstanding under the Credit Facility are secured by a lien
on substantially all of our assets. In addition, the Credit Facility imposes
significant operating and financial restrictions on us, including certain
limitations on our ability to incur additional debt, make payments on
subordinated indebtedness, pay loans, transact business with affiliates, enter
into sale and leaseback transactions, and place liens on our assets. In
addition, our Credit Facility contains covenants regarding the maintenance of
certain financial ratios.

         In December 2000, we informed the agent under the Credit Facility that
we were then in default of certain financial covenants under the Credit
Facility. In addition, we failed to make scheduled interest and principal
payments totaling approximately $2.7 million and $4.2 million under the Credit
Facility on March 31, 2001 and July 2, 2001, respectively, which constituted
additional events of default thereunder. Absent significant additional financing
or a restructuring, we expect to be unable to pay additional principal and
interest payments totaling approximately $4.1 million on the next payment date
of September 30, 2001. We have engaged an investment banking firm to assist us
in obtaining additional financing, although we can give no assurance that our
efforts to obtain additional financing or restructure our existing indebtedness
will be successful. We are currently operating under the terms of a forbearance
agreement pursuant to which the lenders under the Credit Facility have agreed to
forbear enforcing their rights under the Credit Facility for a period ending on
July 17, 2001. Under the terms of the forbearance agreement, we have agreed with
our lenders, among other things, that, in exchange for their forbearance, we
will not request any additional loans under the Credit Facility, pay any
dividends on our preferred stock, pay any principal or interest on our
subordinated debt or make any payments in respect of earn-out obligations
relating to acquisitions.


                                      F-14
<PAGE>

         While we believe that we are currently in compliance with the terms of
the forbearance agreement, failure to observe or perform one or more covenants
under the Credit Agreement not covered by the forbearance agreement, or failure
to observe or perform the covenants of the forbearance agreement itself, at any
given time will require us to obtain a waiver or consent from the lenders, or
refinance the Credit Facility. In addition, the forbearance agreement only
prohibits the lenders from exercising their rights in respect of specified
defaults for a period ending on July 17, 2001. If we are unable after the term
of the forbearance agreement to comply with the covenants of the Credit
Facility, including bringing our payment obligations thereunder current, our
failure to so comply could constitute an event of default under the Credit
Facility, and we would be required to obtain a waiver or consent from the
lenders, or refinance the Credit Facility. Such a waiver, consent or refinancing
may not be available to us on reasonable terms. Upon the occurrence of an event
of default under our Credit Facility, the lenders could elect to declare all
amounts outstanding under the Credit Facility, together with our accrued
interest and certain expenses, to be immediately due and payable and could begin
to foreclose on our assets. Our failure to comply with any of these covenants or
restrictions could also limit our ability to obtain future financings.

         Interest on the amounts outstanding under the Loans is payable monthly
and generally accrues at a variable rate based upon LIBOR or the Base Rate of
PNC, plus a percentage which adjusts from time to time based upon the ratio of
the Company's indebtedness to EBITDA, as such terms are defined in the Credit
Facility. As of March 31, 2001 the rate of interest for the Loans is 10.75%,
which is the default rate. All amounts outstanding under the Credit Facility are
secured by a lien on substantially all of the Company's assets. The Credit
Facility requires the Company to maintain compliance with certain financial and
non-financial covenants.

         At March 31, 2001 the total amount outstanding under the Credit
Facility was $91,000,000, excluding $1,500,000 of accrued interest.

         The following are the future net minimum principal payments under the
terms of the original Credit Agreement which do not include payments in default:

                    Year Ending March 31,                     Amount
              -------------------------------      ----------------------------
              2002                                       $     6,250,000
              2003                                             7,750,000
              2004                                             9,250,000
              2005                                            10,250,000
              2006 and thereafter                             56,250,000
                                                   ----------------------------
                                                         $    89,750,000
         Seller Financing

      As part of the acquisition of Ranor in June 1999 the sellers of Ranor were
issued $5,300,000 of three-year, 6% interest only, convertible subordinated
notes, convertible into common stock of Critical Components Corporation. The
balance outstanding for the convertible subordinated notes at March 31, 2001 was
$4,550,000 as a result of the settlement from an arbitration entered into by the
parties. Interest is payable quarterly in arrears. As of March 31, 2001, we were
in default in respect of $411,300 in interest payments under the convertible
subordinated notes.

         In connection with the acquisition of Ajax, the Company incurred an
obligation of approximately $4,000,000 to the Ajax shareholder. The note was
secured by the assets of the Company and accrued interest at a rate of 10% per
annum. The outstanding principal was paid in full in July 1999.



                                      F-15
<PAGE>

8.       Stockholders' Equity

         Initial Public Offering

         In January 1998, the Company completed an Initial Public Offering (the
"IPO") of its securities consisting of 1,150,000 shares of convertible preferred
stock and 1,495,000 shares of common stock, including the exercise of the
Underwriters' over-allotment option, from which it derived net proceeds of
approximately $23,988,000.

         Common Stock Reserved for Issuance

         At March 31, 2001 and 2000, the Company had reserved 2,604,000 shares
for issuance upon the exercise of stock options, warrants and the conversion of
preferred stock.

         Convertible Redeemable Preferred Stock ("Preferred Stock")

         Dividends on the Company's Preferred Stock are payable at a rate of
$1.02 per year on a quarterly basis and are convertible into common stock on a
one to one basis after July 21, 1998. The Preferred Stock's conversion rate is
subject to adjustment under certain circumstances, which include the failure to
pay the dividend in a timely manner.

         The Preferred Stock is redeemable by the Company, with advance notice,
on or after July 22, 2000 at a price of $12 per share (plus unpaid dividends) at
certain stock market price levels for the Common Stock. The Preferred Stock
holders have the authority, voting as a class, to approve or disapprove issuance
of any security which is senior to or comparable to the rights of the Preferred
Stock, and also has preference with respect to distribution of assets. In the
event that dividends are in arrears for four fiscal quarters, the Preferred
Stock holders will be entitled to elect two directors to the Company's Board of
Directors.

         The Company's Board of Directors may not declare dividends on the
common stock if there are any dividend arrearages on its preferred stock.

         The annual dividend requirement on our Preferred Stock is $1,155,000.
During the quarter ending December 31, 2000 and the quarter ending March 31,
2001, we suspended dividend payments amounting to $578,000 on the Preferred
Stock. Unpaid dividends on the Preferred Stock are cumulative. Our future
earnings, if any, may not be adequate to pay the cumulative dividend or future
dividends on the Preferred Stock. Although we intend to pay the cumulative
dividend and to resume payment of regular quarterly dividends out of available
surplus, if any, there can be no assurance that we will maintain sufficient
surplus or that future earnings, if any, will be adequate to pay the cumulative
dividends or future dividends on the Preferred Stock. Further, we will need
approval from our Senior Lenders to resume payment of the Preferred Dividend.

         Stock Options and Warrants

         Under the 1997 Stock Option Plan, as amended, the Company may grant
non-qualified and incentive stock options to certain officers, employees and
directors. The options expire one to ten years from the grant date or five years
for grants to shareholders who own more than 10% of the Company's stock. The
options may be exercised subject to continued service and certain other
conditions. Accelerated vesting occurs following a change in control of the
Company and under certain other conditions. The Company may grant an aggregate
of 1,000,000 shares under the plan. To date the Company has granted a total of
937,815 shares.

         The per share exercise price for options granted under the Plan is
determined by the Board of Directors, provided that the exercise price of an
incentive stock options ("ISO") will not be less than 100% of the fair market
value of a share of the common stock on the date the option is granted (110% of
fair market value on the date of grant of an ISO if the grantee owns more than
10% of the common stock of the Company). Upon exercise of an option, the grantee
may pay the purchase price with previously acquired shares of common stock of
the Company or, at the discretion of the Board of Directors, the Company may
loan some or the entire purchase price to the grantee.


                                      F-16
<PAGE>

         Both William Merker, a former director, holding 225,000 warrants and a
former employee holding 25,000 options have the right to cashless exercise of
these instruments without approval of the Board. As a result, these options are
accounted for on a variable basis. Because the market value of the underlying
stock has been less than the exercise price of the options, there has been no
impact to the Company's results of operations or financial position to date.

         Under SFAS No. 123, the Company estimates the fair value of each stock
option and warrant at the grant date by using the Black-Scholes option-pricing
model with the following weighted average assumptions used for 1999 grants: (1)
expected lives of one to seven years; (2) dividend yield of 0%; (3) expected
volatility of 62.9%; and (4) risk-free interest rate of 4.89%. If compensation
cost for the Company's stock option grants had been determined in accordance
with SFAS No. 123, net income available to common stockholders and earnings per
share would have been reduced by approximately $221,000 and $0.07, respectively,
for the year ended March 31, 1999.

         For the year ended March 31, 2000 the stock option and warrant grants
were valued with the following weighted average assumptions: (1) expected lives
of one to ten years; (2) dividend yield of 0%; (3) expected volatility of 54.4%;
and (4) risk-free interest rate of 6.36%. If compensation cost for the Company's
stock option grants had been determined in accordance with SFAS No. 123, net
income available to common stockholders and basic and diluted earnings per share
would have been reduced by approximately $399,984 and $0.11 and $0.08
respectively, for the year ended March 31, 2000.

         For the year ended March 31, 2001 the stock option and warrant grants
were valued with the following weighted average assumptions: (1) expected lives
of five years; (2) dividend yield of 0%; (3) expected volatility of 73%; and (4)
risk-free interest rate of 6.66%. If compensation cost for the Company's stock
option grants had been determined in accordance with SFAS No. 123, net income
available to common stockholders and earnings per share would have been reduced
by approximately $570,613 and $0.15, respectively, for the year ended March 31,
2001.

         The following table summarizes information about stock options and
warrants outstanding at March 31, 2001:

<TABLE>
<CAPTION>
                                      Options/Warrants Outstanding                     Options/Warrants Exercisable
                                      ----------------------------                     ----------------------------
                                                    Weighted
                                                     Average       Weighted                                   Weighted
                                                    Remaining       Average                                    Average
 Range of Exercise        Number of Options/       Contractual     Exercise          Number of Options/       Exercise
      Prices             Warrants Outstanding          Life         Price           Warrants Exercisable        Price
 -----------------       --------------------      -----------     --------         --------------------      --------
<S>                            <C>                     <C>        <C>                       <C>               <C>
   $5.94 - 8.56                  516,265               4.15       $   7.21                  223,066           $   7.01
   $9.04 - 11.50                 565,000               3.84       $  10.64                  485,666           $  10.73
  $15.88 - 19.80                 152,000               6.13       $  16.58                   93,999           $  16.78
                          ------------------                                         ------------------
                               1,233,265               4.25       $   9.94                  802,731           $  10.40
                          ==================                                         ==================

<CAPTION>

                                                1999                         2000                          2001
                                               Weighted                     Weighted                      Weighted
                                               Average                      Average                      Average
                                               Exercise                     Exercise                      Exercise
                                    Shares      Price            Shares      Price            Shares       Price
                                    -------    --------        ---------    --------        ---------     --------
<S>                                 <C>        <C>             <C>          <C>             <C>           <C>
Shares under Option/
   Warrant beginning of
   period..................         352,000    $  10.89          785,880    $   9.38        1,111,265     $  10.24
Granted....................         436,500    $   8.12          329,315    $  12.29          122,000     $   7.18
Canceled...................          (2,620)   $   5.94           (3,930)   $   8.47               --     $     --
Exercised..................              --    $     --               --    $     --               --     $     --
                                    -------    --------        ---------    --------        ---------     --------
Shares under Option/
   Warrant end of period...         785,880    $   9.38        1,111,265    $  10.24        1,233,265     $   9.94
                                    =======    ========        =========    ========        =========     ========
</TABLE>


                                      F-17
<PAGE>

         Options available for grant total 62,185. The weighted average fair
value of options and warrants granted during the years ended March 31, 1999,
2000 and 2001 was $7.28, $6.77 and $4.68, respectively.

         The Company granted 120,000 warrants in 1999 to a non-related third
party in connection with services rendered to the Company. Such warrants vest
over a period of five years. The expense related to the grants approximates
$200,000 in 1999, 2000 and 2001.

         The Company granted 55,000 options to non-related third party in
connection with the acquisition of Ranor during the fiscal year ended March 31,
2000.

         Underwriters' Warrants

         In connection with the IPO, the Underwriters received 130,000 common
stock warrants and 100,000 preferred stock warrants with exercise prices of
$16.50 and $19.80, respectively. Such warrants expire on January 21, 2003.

         During fiscal year 2000, the underwriter received an additional 2,080
common stock warrants and 1,601 preferred stock warrants with exercise prices of
$16.50 and $19.80, respectively. Such warrants expire on January 21, 2003.

9.       Basic and Diluted Net Income Per Common Share

         The Company accounts for net income per common share in accordance with
the provisions of SFAS No. 128, Earnings per Share. In accordance with SFAS No.
128, basic net income per share is calculated by dividing income available to
common shareholders by the weighted average number of common shares outstanding
during the period. Diluted net income per share is calculated by dividing income
available to common shareholders by the weighted average number of common and
dilutive common equivalent shares outstanding during the period. Common
equivalent shares consist of the incremental common shares issuable upon the
conversion of convertible preferred stock and exercise of stock options and
warrants (using the "Treasury Stock" method); common equivalent shares are
excluded from the calculation if their effect is anti-dilutive.


<TABLE>
<CAPTION>
                                                  (in thousands, except net income per share data)
                                                          For the Fiscal Year Ended March 31,
                                                          ----------------------------------
                                                            2001        2000       1999
                                                          --------    --------   --------
<S>                                                       <C>         <C>        <C>
NUMERATOR:
Net income (loss)  before cumulative effect of change
   in accounting principle ............................   $ (9,504)   $  5,397   $  3,482
Cumulative effect on prior years of changing to a
   different method of recognizing revenue ............   $   (711)         --         --
Convertible preferred dividends on dilutive convertible
   preferred stock ....................................   $  1,155       1,160      1,173
                                                          --------    --------   --------
Income (loss) available to common stockholders used in
   computing dilutive net income or net loss per share    $(11,370)   $  4,237   $  2,309
                                                          ========    ========   ========

DENOMINATOR:
Weighted average number of common shares outstanding
   used in computing basic net income or net loss per
   share ..............................................      3,716       3,623      3,356
Common equivalent shares:
     Convertible preferred stock ......................         --       1,139         --
     Options ..........................................         --          88         --
     Warrants .........................................         --          17         --
                                                          --------    --------   --------
</TABLE>



                                      F-18
<PAGE>

<TABLE>
<CAPTION>
                                                  (in thousands, except net income per share data)
                                                          For the Fiscal Year Ended March 31,
                                                          ----------------------------------
                                                            2001        2000       1999
                                                          --------    --------   --------
<S>                                                       <C>         <C>        <C>
Weighted average number of common shares and common
   equivalent shares used in computing dilutive net
   income or net loss per share .......................      3,715       4,867      3,356
                                                          ========    ========   ========
Basic net income (loss) per share .....................   $  (3.06)   $   1.17   $   0.69
                                                          ========    ========   ========
Diluted net income (loss) per share ...................   $  (3.06)   $   1.11   $   0.69
                                                          ========    ========   ========
</TABLE>

10.       Income Taxes

         The provision (benefit) for income taxes for the years ended March 31,
2001, 2000 and 1999 consists of the following components:


<TABLE>
<CAPTION>
                                                            March 31,
                                         ------------------------------------------------
                                             2001              2000              1999
                                         -----------       -----------       -----------
         <S>                             <C>               <C>               <C>
         Current:
              Federal .............      $(6,417,000)      $ 3,065,000       $ 2,141,000
              State ...............         (175,000)          817,000           312,000
                                         -----------       -----------       -----------
                                          (6,592,000)        3,882,000         2,453,000
                                         -----------       -----------       -----------
         Deferred:
              Federal .............        1,406,000            63,000           199,000
              State ...............          671,000            10,000          (386,000)
                                         -----------       -----------       -----------
                                           2,077,000            73,000          (187,000)
                                         -----------       -----------       -----------

              Foreign .............        2,968,000                --                --

         Total provision ..........      $(1,547,000)      $ 3,955,000       $ 2,266,000
                                         ===========       ===========       ===========
</TABLE>


         Deferred tax assets and liabilities consist of the following items:


<TABLE>
<CAPTION>
                                                                    March 31,
                                                          -------------------------------
                                                              2001               2000
                                                          -----------        -----------
         <S>                                              <C>                <C>
         Deferred tax asset (liability):
         KREDA ....................................       $   168,000        $   124,000
         Accounts receivable ......................           144,000             84,000
         Inventory ................................           146,000            180,000
         Accrued liabilities ......................           368,000             45,000
         Start-up costs ...........................                --            341,000
         Net operating loss carry foward ..........         1,275,000                 --
         Depreciation .............................        (3,460,000)                --
         Other ....................................            95,000             (6,000)
                                                          -----------        -----------
         Total deferred tax assets, gross .........        (1,264,000)           768,000
              Less valuation allowance ............        (2,207,000)                --
                                                          -----------        -----------
         Total deferred tax assets ................       $(3,471,000)       $   768,000
                                                          ===========        ===========
</TABLE>


         During 1996, R/S applied for and was granted status under the Kentucky
Rural Economic Development Act ("KREDA"). KREDA allows the Company to receive a
tax credit on income earned as a result of the Company increasing its plant size
and conducting operations in a rural county. Under KREDA, the Company is allowed
to use this tax credit as debt repayment.


                                      F-19
<PAGE>

         Reconciliation between the Company's effective tax rate and the U.S.
statutory rate for the years ended March 31, 2001, 2000 and 1999 are as follows:


<TABLE>
<CAPTION>
                                                                          March 31,
                                                             -------------------------------
                                                              2001         2000         1999
                                                              ----         ----         ----
<S>                                                          <C>           <C>          <C>
U.S. statutory rate .................................        (34.0)%       34.0%        34.0%
State tax ...........................................         (8.5)         6.3          7.8
Non deductible acquisition costs ....................         --           --           (1.7)
Amortization of goodwill ............................          5.9          4.9          6.2
KREDA ...............................................         --           --           (2.1)
Valuation ...........................................         12.9         (3.4)        (5.5)
Foreign .............................................          6.1         --           --
Other ...............................................          3.6          0.5          0.7
                                                              ----         ----         ----
Total effective tax rate ............................        (14.0)%        42.3%        39.4%
                                                              ====         ====         ====
</TABLE>



11.      Related Party Transactions

         In January 1998, we, together with Carl Massaro, the former owner of
Ajax, entered into a "triple net" lease of the former Ajax factory and office
facility owned by Carl Massaro and presently occupied by us. The lease provides
for annual rent of $600,000, which is payable monthly, and approximately $63,000
annually in triple net expenses for the first year. During the initial five-year
term of the lease, we have the option to purchase the leased facility and land
for a cash purchase price of $6.5 million, provided we are not in default under
the lease. The terms of the lease, including the purchase option, were
determined through arms' length negotiation.

         In December 2000, we entered into an 18-month agreement with William
Merker, paying him $20,000 per month for operational consulting services. On May
16, 2001, that consulting services agreement, under which Mr. Merker had
received $100,000, was superseded by a separation and general release agreement
providing for a final payment of $20,000. Additionally, Mr. Merker is to receive
$500 per month and health insurance benefits through May 31, 2002. The release
also contains restrictive covenants prohibiting Mr. Merker from directly or
indirectly competing with us for an 18-month period or from soliciting or
servicing any of our suppliers or customers for any competitive purpose for a
24-month period.

         On May 16, 2001, we entered into an agreement with William Merker, then
a director, to settle a dispute regarding the propriety of William Merker's
relationship with the agent associated with the purchase of Arell, Airborne and
TPG. Pursuant to the terms of this agreement, Mr. William Merker agreed to
transfer to us 200,000 shares of common stock held by him. In addition, Mr.
William Merker agreed to provide us with a promissory note, payable in three
months, in an aggregate principal amount equal to the amount by which $800,000
exceeds the fair market value of the transferred shares as determined by an
independent appraiser.

         William Merker, a director of the Company from August 1997 until May of
2001 and a 5% stockholder, is the sole director and stockholder of Industrial
Precision Corp. ("IPC"), a privately held precision machining company. During
April 2001, we entered into an agreement with IPC pursuant to which we assigned
to IPC our rights under letters of intent or otherwise with respect to
acquisition transactions for nine machining companies in exchange for 5% of the
founder's stock of IPC and the right to receive a fee of $225,000 in cash for
each acquisition that is consummated before May 2003 by IPC with the companies
subject to the agreement. Additionally, IPC is obligated to give us a right of
first refusal to manufacture any of its requirements for which we have the
capability (i.e., if IPC has a bona fide third-party offer to manufacture any
requirements, IPC must offer us ten days to commit to the requirement on the
same price, terms and conditions).

         William Merker, a director of the Company from August 1997 until May
2001 and a 5% stockholder, and Steven J. Merker, a director, member of our
Compensation Committee and 5% stockholder, are directors of Invatech Corporation
("Invatech"), a privately held environmental services and products company.
Joseph Spinella, a director, a member of our Compensation Committee, our
Secretary, and our Chief Financial Officer since August 1999, and Paul Provost,
a director, were directors of Invatech in the last fiscal year. Beginning in the
last fiscal year, we have provided Invatech with office space and related
office-support services in our New York City offices. We do not have a formal
written agreement with, nor do we receive any payments from, Invatech. We
estimate the value of the office space and services provided in the last fiscal
year to be approximately $88,000.


                                      F-20
<PAGE>

         The Company and certain officers and consultants have executed
employment agreements which provide for, in certain circumstances, minimum
annual salaries to be paid over specified terms. Future commitments for such
payments are as follows:

                     Year Ending March 31,           Amount
                     ---------------------           ------
                2002........................         975,000
                2003........................         576,000
                                                  ----------
                                                  $1,551,000
                                                  ==========


12.      Major Customers and Concentrations

         Major Customers

         Three customers individually accounted for 14%, 13% and 12% of net
sales for the fiscal year ended March 31, 2001. Three customers individually
accounted for 33%, 15% and 5% of net sales for the fiscal year ended March 31,
2000. Three customers individually accounted for 21%, 19% and 14% of net sales
for the fiscal year ended March 31, 1999.

         Historically, the Company has relied on a limited number of customers
for a substantial portion of its total revenues. The Company expects that a
significant portion of its future revenues will continue to be generated by a
limited number of customers. The loss of any of these customers or any
substantial reduction in orders by any of these customers could have a material
adverse effect on operating results.

         Concentrations

         The Company maintains cash balances at several financial institutions.
Accounts at each institution are insured by the Federal Deposit Insurance
Corporation up to $100,000. At March 31, 2001, approximately $44,000 were
invested in a domestic money market fund. At March 31, 2000 approximately
$1,018,000 and $25,000 were invested in two domestic money market funds. At
March 31, 1999 approximately $506,000 and $526,000 were invested in two domestic
money market funds.

         Credit Risk

         Accounts receivable are primarily composed of unsecured balances. The
Company does not require collateral as a condition of sale.

         At March 31, 2001, the Company had one customer with an individual
balance in excess of [10%] of consolidated accounts receivable. In the
aggregate, this customer comprised approximately [30%] of the net accounts
receivable balance. At March 31, 2000, the Company had two customers with
individual balances in excess of 10% of consolidated accounts receivable. In the
aggregate, these two customers comprise approximately 48% of the net accounts
receivable balance.


                                      F-21
<PAGE>

13.      Commitments and Contingencies

         Environmental Matters

         The Company is subject to various federal, state and local laws and
regulations including those governing the use, discharge and disposal of
hazardous materials. Except as noted below, management believes that the Company
is in substantial compliance with current laws and regulations. Accordingly, no
reserve has been established for such exposures. Compliance with current laws
and regulations has not had, and is not expected to have, a material adverse
effect on the Company's financial condition. However, it is possible that
additional health related or environmental issues may arise in the future, which
the Company cannot predict at present.

Violation of Federal and State Air Quality Regulation

         On March 16, 1999 the Company and the New Jersey Department of
Environmental Protection (NJDEP) entered into a Stipulation of Settlement by
which the Company, without admission of liability, agreed to withdraw legal
challenges against NJDEP and pay NJDEP $234,000 over a three-year period
commencing December 31, 1999. The initial installment of $95,000 was paid
December 31,1999. The Company plans to pay the second installment of $95,000 in
September 2001 which was due in April 2001. As part of the settlement, NJDEP (1)
has withdrawn and settled all alleged Company emission violations of air
volatile compounds ("VOCs") dating from the initiation of the Company's
predecessor business in 1992 through February 28, 1999; and (2) has granted the
Company a new VOC permit that roughly doubles allowable VOC emissions to 51.5
tons per year. As required under the new VOC permit, the Company has installed a
computer system to calculate VOC emission data. Such data are periodically
reconciled with purchasing and production data. At current rates of production,
all VOC emissions are within permit limits. The remaining balance as of March
31, 2001 has been accrued.

Other Environmental and Regulatory Compliance

         Truck trailer length, height, width, gross vehicle weight and other
specifications are regulated by the National Highway Traffic Safety
Administration and individual states. Changes and anticipated changes in these
regulations may impact demand for new trailers, thereby contributing to industry
cyclicality. We are also governed by a variety of regulations established by
various federal, state and local agencies governing such matters including
employee safety and working conditions, environmental protection and other
activities.

         We are subject to Federal, state and local laws and regulations
relating to our operations, including building and occupancy codes, occupational
safety and environmental laws including laws governing the use, discharge and
disposal of hazardous materials. Except as otherwise described above with regard
to air quality regulations, the Company is not aware of any material
non-compliance with any such laws and regulations. The Company is a manufacturer
of truck trailer chassis and is covered by Standard Industrial Code (SIC) #3715.
Companies covered by SIC Code #3715 are among those companies subject to the New
Jersey Industrial Site Recovery Act ("ISRA"). Pursuant to ISRA, the Company is
conducting an investigation into any environmental "Areas of Concern" ("AOCs")
that may be present at the facility. The Company has entered into a Remediation
Agreement with NJDEP by which the Company will fulfill its obligations under
ISRA. AOCs could require remediation, which could have a material adverse effect
on the Company.

         In March 1998, as part of the ISRA Remediation Agreement with NJDEP,
the Company performed soil and sediment sampling at various locations at the
facility. The sampling results were within NJDEP compliance limits with the
exception of results for certain metals detected in soil around roof downspouts
at the facility. The Company has engaged a contractor to perform additional
sampling at these locations, the results of which have been forwarded to NJDEP.
NJDEP and the Company are presently reviewing results generated January 31,
2001. If these results indicate, additional investigations may be necessary or
remedial action including removal and replacement of affected soil may be
needed. The cost of such additional investigation or action, if necessary, is
not expected to be material to the Company's financial position.


                                      F-22
<PAGE>

         Legal Proceedings

         From time to time, we are named as a defendant in various lawsuits,
none of which is expected to have a material adverse effect on our business,
financial position or results of operations, except as described below.

         In connection with the Ranor acquisition, we arbitrated a dispute
arising from Ranor's misrepresentation, in the asset purchase agreement, in
connection with its financial statements. As a result of the arbitration, the
asset purchase price was reduced by $750,000.

         We are subject to the New Jersey Industrial Site Recovery Act, pursuant
to which we have agreed to investigate and possibly remediate environmental
contamination that may be present at our New Jersey facility. The cost of any
required remediation determined to be necessary is not expected to be material
but could prove to be substantial and, in such case, could have a material
adverse affect on our business, financial position or results of operations.

         We are currently in arrears on payment of certain federal excise taxes
of approximately $6.7 million. We expect to attempt to negotiate a payment plan
with the Internal Revenue Service ("IRS") to resolve the arrearage. Although no
formal plan is yet in place, we made a tax payment in the amount of $634,135 on
March 9, 2001, and intend to make monthly payments of $20,000 on July 15, 2001,
August 15, 2001 and September 15, 2001. This arrearage has also resulted in an
additional event of default under our Credit Facility. Our financial statements
include approximately $1.3 million for interest on the federal excise tax
currently in arrears. Further, the IRS has the statutory authority to impose
penalties which could be material. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Risk Factors."

         On March 1, 2001, in the United States Court of Appeals for the Sixth
Circuit, we filed a Petition for Review of an order of the National Labor
Relations Board ("NLRB") ruling that 18 employees at our facility in Ivel,
Kentucky are to be represented under a collective bargaining agreement. The
matter is currently pending before the Sixth Circuit Court of Appeals in
Cincinnati, Ohio. If the Sixth Circuit rules in favor of the NLRB, the employees
will be reinstated with back pay.

         On June 22, 2001, the United States District Court for the Eastern
District of Wisconsin entered a judgment of $570,000 against our subsidiary R/S
in a suit brought by a former distributor with whom R/S terminated its
relationship in September 1999. On July 3, 2001, we filed a motion with the
court seeking judgment in our favor as a matter of law notwithstanding the
verdict and filed a motion for a new trial, arguing that the evidence adduced at
trial does not support the jury's verdict. In our motion for a new trial, we
requested that the court, in the alternative, reduce the amount of the jury's
verdict to a figure reasonably supported by the evidence. The court has yet to
rule on our motions. We believe that our position is meritorious and intend to
vigorously defend our interests in this matter. The Company set up an accrual
for $570,000.

         Operating Leases

         The Company leases facilities and equipment under operating leases
expiring through 2004. Some of the leases have renewal options and most contain
provision for passing though certain incremental cost. Future net minimum annual
rental payments under non-cancelable leases are as follows:

                    Year Ending March 31,                Amount
                    ---------------------                ------
               2002........................             2,364,426
               2003........................             2,032,473
               2004........................             1,018,207
               2005........................               116,856
               2006........................                13,904
                                                    -------------
                                                    $   5,545,866
                                                    =============


         Rent expense for the year ended March 31, 2001, 2000 and 1999 totaled
$1,525,000, $1,273,000 and $610,000, respectively.


                                      F-23
<PAGE>

         On July 1, 2000, CPS entered into a 12 month operating lease agreement
(the "Lease") with an unrelated party (the "Lessor") to utilize the Lessor's
production facility. The Lease called for 12 monthly installments of $15,000
with a purchase option available at its expiration. The Lease was terminable at
the Company's sole discretion upon 30 days notice. Upon termination, CPS was
required to provide the Lessor net assets with a book value of $144,000.
Included in this Lease is the obligation of CPS to fund the monthly payments of
all the outstanding debt of the Lessor.

         As of March 31, 2001, management decided that at the end of the 12
months the option to purchase would not be exercised. In connection with this
decision, the Company recorded a one time charge of $456,000. Finally, the
Company incurred an additional $693,000 of losses relating to this activity.

         Defined Contribution Plan

         In Fiscal 1999 the Company adopted a defined contribution 401(k) plan.
All eligible U.S. employees of the Company may participate in the plan.
Participants may contribute up to 15% of their eligible compensation, as
defined. The Company may make discretionary profit sharing contributions to the
plan. For the fiscal years ended March 31, 2001, 2000 and 1999 the Company's
expense related to the plan was $347,000, $338,846 and $33,036, respectively.
Approximately $190,000 of the contribution for 2001 has not been funded.

         In February 2001, the Company paid $145,000 relating to the amounts due
under this plan for the months ended November and December 2000. Effective
January 1,2001, the Company has suspended its discretionary contribution
requirements under further notice.

14.      Quarterly Information (Unaudited)

         Below is selected quarterly information (in thousands, except for per
share data) for the year ended March 31, 2001.

<TABLE>
<CAPTION>
                                                     Fiscal Year 2001, Quarters ended
                                          -------------------------------------------------------
                                            March 31     December 31   September 30     June 30
                                          -----------    -----------   ------------   -----------
<S>                                       <C>            <C>            <C>           <C>
Revenue ............................      $    19,511    $    32,329    $    41,342   $    44,169
Operating income ...................           (8,583)           972          3,944         4,907
Income Taxes .......................           (1,795)        (1,335)           506         1,077
Net Income (loss) ..................          (10,166)        (1,876)           577         1,250
Net income (loss) available to
   common stockholders .............      $   (10,454)   $    (2,165)   $       288   $       961
                                          ===========    ===========    ===========   ===========
Basic net income (loss) per share ..      $     (2.81)   $     (0.58)   $      0.07   $      0.26
                                          ===========    ===========    ===========   ===========
Diluted net income (loss) per share       $     (2.81)   $     (0.58)   $      0.07   $      0.26
                                          ===========    ===========    ===========   ===========
</TABLE>


         We made an adjustment to the first, second, and third quarter of fiscal
         year ended March 31, 2001, for accrued interest expense on the
         arrearage of our federal excise tax which was not previously reflected
         in the quarterly statements in the amount of $175, $152, and $197,
         respectively.

         The revenue for the three months ended June 30, 2000 and September 30,
         2000 have been restated to reflect the change in accounting policy
         described in Footnote 3 in the amounts of $7,365 and $3,082,
         respectively.

         During the fourth quarter of fiscal 2001 the Company determined that
         first quarter sales related to one of its business units included in
         the Truck Body Division were overstated by $2,330. The second and third
         quarter ended September 30, 2000, and December 31, 2000 were
         understated by $280 and $223, respectively.

         The impact of the above items on earnings per share for the June,
         September, and December quarters was $ (0.01), $0.02, and $(0.04),
         respectively.


                                      F-24
<PAGE>

         Below is selected quarterly information (in thousands, except for per
share data) for the year ended March 31, 2000.

<TABLE>
<CAPTION>
                                            Fiscal Year 2000, Quarters ended
                                    --------------------------------------------------
                                      March 31   December 31  September 30   June 30
                                    -----------  -----------  ------------ -----------
<S>                                 <C>          <C>          <C>          <C>
Revenue ......................      $    38,374  $    41,238  $    44,820  $    35,044
Operating income .............            3,696        3,808        3,773        3,370
Income Taxes .................              863          983        1,003        1,106
Net Income ...................            1,533        1,167        1,222        1,475
Net income available to common
   stockholders ..............      $     1,244  $       878  $       933  $     1,182
                                    ===========  ===========  ===========  ===========
Basic net income per share ...      $      0.21  $      0.24  $      0.28  $      0.33
                                    ===========  ===========  ===========  ===========
Diluted net income per share .      $      0.19  $      0.24  $      0.26  $      0.33
                                    ===========  ===========  ===========  ===========
</TABLE>

         We made an adjustment to the first, second, and third quarter of fiscal
         year ended March 31, 2000, for accrued interest expense on the
         arrearage of our federal excise tax which was not previously reflected
         in the quarterly statements in the amount of $65 and $0.02 per share;
         $104 and $0.03 per share; and $144 and $0.04 per share, respectively.

15.      Segment Information

         SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information establishes standards for the way that public companies report
information about operating segments in annual financial statements and requires
reporting of selected information about operating segments in interim financial
statements issued to the public. It also establishes standards for disclosures
regarding products and services, geographic areas and major customers. SFAS No.
131 defines operating segments as components of a company about which separate
financial information is available that is evaluated regularly by management in
deciding how to allocate resources and in assessing performance.

         Below are the selected financial segment data for the years ended March
31, 2001 and 2000:


<TABLE>
<CAPTION>

                               Truck Body/Trailer  Critical Components
       March 31, 2001               Division             Division           Total
------------------------------ ------------------  -------------------  ------------
                                                      (in thousands)
<S>                               <C>                 <C>               <C>
Revenue ......................    $     94,375        $     42,977      $    137,351
Operating Income .............           3,035               6,528             9,562
Identifiable Assets ..........          51,444              41,386            92,830
Capital Expenditures .........           1,973               2,004             3,977

       March 31, 2000
Revenue ......................    $    139,803        $     19,993      $    159,796
Operating Income .............          16,161               3,945            20,106
Identifiable Assets ..........          33,474              39,646            73,120
Capital Expenditures .........           2,276               1,683             3,959
</TABLE>


         The following is a reconciliation of reportable segment revenues,
operating income, assets and other significant items to the Company's
consolidated totals for March 31, 2001:

Revenue
-------
Total revenues for reporting segments ..........................      $ 137,351
Elimination of intersegment revenues ...........................
                                                                      ---------
Total consolidated revenues ....................................      $ 137,351
                                                                      =========


                                      F-25
<PAGE>

Operating income
----------------
Total operating profit or loss for reporting segments ..........      $   9,563
Other corporate expenses .......................................         (8,323)
                                                                      ---------
Income before income taxes and extraordinary items .............      $  (1,240)
                                                                      =========


Assets
------
Total assets for reporting segments ............................         92,830
Goodwill not allocated to segments .............................         61,100
Other unallocated amounts ......................................          9,075
                                                                      ---------
Consolidated total .............................................      $ 163,005
                                                                      =========

                                                                  Consolidated
                                    Segment Totals   Adjustments     Totals
                                    --------------   -----------  -------------
Other Significant Items
Interest expense ................        $1,516       $10,411       $11,927
Goodwill amortization ...........            --         2,861         2,806


         The following is a reconciliation of reportable segment revenues,
operating income, assets and other significant items to the Company's
consolidated totals for March 31, 2000:

Revenue
Total revenues for reporting segments ........................        $ 159,796
Elimination of intersegment revenues .........................             (320)
                                                                      ---------
Total consolidated revenues ..................................        $ 159,476
                                                                      =========

Operating income
Total operating profit or loss for reporting segments ........        $  20,106
Other corporate expenses .....................................           (5,459)
                                                                      ---------
Operating income .............................................        $  14,647
                                                                      =========

Assets
Total assets for reporting segments ..........................           73,120
Goodwill not allocated to segments ...........................           44,151
Other unallocated amounts ....................................           19,994
                                                                      ---------
Consolidated total ...........................................        $ 137,265
                                                                      =========

                                                                    Consolidated
                                     Segment Totals   Adjustments      Totals
                                     --------------   -----------      ------
Other Significant Items
Interest expense ..................      $  270         $4,775         $5,045
Goodwill amortization .............          --          1,466          1,466


                                      F-26