**FORM
      10-K/A**


**SECURITIES
      AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549


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





For
                the fiscal year ended
            Commission
                file number:**December
                31, 2004**
            **0-27992**




**ELAMEX,
      S.A. DE C.V.**


(Exact
      name of Registrant as specified in its charter)





**Mexico**
            **Not
                Applicable**(State
                or other jurisdiction of incorporation or organization)
            (I.R.S.
                Employer Identification No.)**1800
                Northwestern Dr.**
            **79912**EL
                PASO, TX
            (zip
                code)(Address
                of principal executive offices)





**(915)
      298-3061**


(Registrant's
      telephone number including area code, in El Paso, TX)





Securities
      registered pursuant to Section 12(b) of the Act:


**None**





Securities
      registered pursuant to Section 12(g) of the Act:





Title
                of each class
            Name
                of exchange on which registered**Class
                I Common Stock, No Par Value**
            **NASDAQ
                National Market**








Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in Rule
      405 of the
      Securities Act. Yes * No T





Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Securities Act.     Yes T No *





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





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





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


The
      aggregate market value of the voting stock (based upon the closing price of
      the
      NASDAQ National Market on July 2, 2004 of $2.25) held by non-affiliates of
      the
      registrant on that date was approximately $7,146,205.





The
      number of shares of Class I Common Stock of the registrant outstanding as of
      March 8, 2005 was: 7,502,561.





**DOCUMENTS
      INCORPORATED BY REFERENCE**


*The
      Proxy Statement for the registrant’s 2005 Annual Meeting of Stockholders is
      incorporated by reference into Part III of this Form 10-K*









**EXPLANATORY
      NOTE**





This
      Annual Report on Form 10-K/A is being filed as an amendment to our Annual
      Report on Form 10-K for the fiscal year ended December
      31 ,
      200 4 to
      revise certain disclosures contained in the original
      Form 10-K.





This
      amendment corrects Part II, Item 8 - Financial Statements and Supplementary
      Data, Note 1, second table and paragraph eight of “Principles of
      Consolidation” .





Elamex
      has a 50.1% investment in Qualcore, S. de R.L. de C.V. (“Qualcore”), a joint
      venture company with GE de Mexico, which is recorded under the equity method.
      In
      its original Form 10-K, the Company did not present Qualcore as a significant
      subsidiary as set forth in Rule 3-09 of Regulation S-X and only included a
      summary of unaudited financial information in a footnote disclosure instead
      of
      including separate financial statements for this significant unconsolidated
      subsidiary as an exhibit. This amended Form 10-K corrects the summary of
      financial information of Qualcore to include audited amounts and to attach
      separate audited financial statements of Qualcore.





Qualcore’s
      operations ceased in the third quarter of 2005, and as of the date of this
      amendment most of the machinery and equipment have been sold, the majority
      of
      the employees have been terminated and the building has been substantially
      vacated. The Company wrote down its investment in Qualcore to zero as of
      December 31, 2004, as such management does not believe that any additional
      adjustments are required in its previously issued financial statements. In
      the
      third quarter of 2005, the Company recognized a $2.0 million liability equal
      to
      50.1% in recognition of its guarantee of a portion of the Qualcore plant lease,
      stated at the estimated fair value of the remaining life of the lease
      agreement.





Except
      as
      otherwise expressly noted herein, this Amendment to Annual Report on Form 10-K/A
      does not reflect events occurring after the March 31, 2005 filing of our
      original annual Report on Form 10-K in any way, except to reflect the changes
      discussed in the amendment. Accordingly, this amendment should be read in
      conjunction with the original filing.





**PART
      II**




**ITEM
      8. FINANCIAL STATEMENTS AND SUPLEMENTARY DATA.**




**ELAMEX,
        S.A. DE C.V. AND SUBSIDIARIES**





NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2004, 2003
      AND 2002


(IN
      THOUSANDS OF U.S. DOLLARS)








1.
      ORGANIZATION AND BASIS OF PRESENTATION





COMPANY
      BACKGROUND - Elamex, S.A. de C.V. and its subsidiaries (“Elamex” or the
“Company”) are a group of Companies in Mexico and the United States that provide
      manufacturing, packaging and distribution services. The Company provides
      customized manufacturing services in the candy and nut industry. The Company's
      manufacturing machinery and equipment are located in facilities in Ciudad
      Juarez, in Mexico, and in El Paso, Texas in the United States.





On
      December 19, 2003 the Metal Stamping segment, a wholly owned subsidiary,
      Precision Tool, Die and Machine Company ("Precision"), voluntarily filed for
      protection under Chapter 11 of the Federal Bankruptcy Code in the U.S.
      Bankruptcy Court to implement a restructuring of its debt. Also, in December
      2003 the Company’s Board of Directors authorized the sale of Precision. As a
      consequence of seeking protection under bankruptcy laws, the Company no longer
      controls Precision’s operations as of December 19, 2003. The Company’s
      investment in Precision was deconsolidated and was recognized in accordance
      with
      the equity method of accounting in 2003. Due to the bankruptcy activity during
      2004, the Company had no significant influence on Precision’s operations and
      changed from the equity method to the cost method with no effect on net
      loss.





In
      July
      2002, the Company acquired the new Food Products segment, which is Mt. Franklin
      Holdings LLC and subsidiaries (“Franklin”). Franklin operates a retail nut and
      foodservice nut packaging and marketing company located in El Paso, Texas,
      and a
      candy manufacturing and packaging facility located in Ciudad Juarez, Mexico
      (see
      Note 3).





The
      Company is a subsidiary of Accel, S.A. de C.V. (Accel), which owns approximately
      57.7% of the Company's issued and outstanding common shares at December 31,
      2004.





BASIS
      OF
      PRESENTATION - These consolidated financial statements and the accompanying
      notes are prepared in U.S. dollars, the functional and reporting currency of
      Elamex.





PRINCIPLES
      OF CONSOLIDATION - The consolidated financial statements are prepared in
      accordance with accounting principles generally accepted in the United States
      of
      America (U.S.) and include the accounts of the Company and its wholly-owned
      and
      majority-owned, controlled subsidiaries. All significant intercompany balances
      and transactions are eliminated in consolidation.





Effective
      December 19, 2003, the results of operations of Precision, (Metal Stamping
      Segment) which was previously consolidated are being reported on the cost
      method. This was due to the voluntary petition for reorganization under Chapter
      11 of the U.S. Bankruptcy code.









Unaudited
      financial information for Precision as of and for the years ended December
      31,
      2004 and 2003 is as follows:





2004
            
            2003(In
                Thousands of U.S. Dollars)Current
                assets
            
            $
            9,052
            
            $
            13,188Non
                current assets
            
            
            15,476
            
            
            17,860Current
                liabilities
            
            
            29,067
            
            
            32,547Net
                sales
            
            
            65,406
            
            
            72,019Gross
                margin
            
            
            1,899
            
            
            (1,861
            )Net
                loss
            
            
            (2,246
            )
            
            (16,709
            )




During
      the fourth quarter of 2003 Precision encountered circumstances that indicated
      that its carrying value may not be recoverable, as such, the Company engaged
      an
      independent company to assist in the valuation of long-lived assets for
      impairment. Based on the analysis of future cash flows of the assets group
      the
      Company reported an impairment of Precision’s long-lived assets of $13.2 million
      in December 2003. This impairment is recorded in the statement of operations
      as
      impairment of long-lived assets.





During
      2003 the Company loaned Precision $1.5 million in the form of a note receivable,
      to meet working capital needs. At December 31, 2004, the Company had notes
      receivable from Precision of $1.5 million.





The
      Company’s share of undistributed equity net of amounts receivable from Precision
      at December 31, 2004 and 2003 was $0.





Elamex
      also has a 50.1% investment in Qualcore, S. de R.L. de C.V., a joint venture
      company, which manufactures plastics parts and metal parts with GE de Mexico.
      Qualcore is jointly managed with GE de Mexico and the investment in the joint
      venture is recorded under the equity method.





Audited
      financial information for Qualcore as of and for the years ended December 31,
      2004 and 2003 is as follows:





(In
                Thousands of U.S. Dollars)2004
            
            2003Current
                assets
            
            $
            6,050
            
            $
            3,473Non
                current assets
            
            
            3,908
            
            
            9,232Current
                liabilities
            
            
            17,622
            
            
            11,888Net
                sales
            
            
            24,126
            
            
            18,798Gross
                margin
            
            
            (953
            )
            
            (2,067
            )Net
                loss
            
            
            (6,805
            )
            
            (3,958
            )





During
      2004 and 2003 the Company loaned Qualcore $425 thousand and $1.0 million,
      respectively, in the form of a note receivable to meet working capital needs.
      At
      December 31, 2004 and 2003, the Company had notes receivable from Qualcore
      of
      $2.7 million and $2.3 million, respectively.





The
      Company’s share of undistributed equity (deficiency) net of amounts receivable
      from Qualcore at December 31, 2004 and 2003 was $(19) thousand and $864
      thousand, respectively.





MANAGEMENT
      ESTIMATES - The preparation of financial statements in conformity with
      accounting principles generally accepted in the U.S. requires management to
      make
      certain estimates 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. Actual results could differ from these estimates.




******










**PART
      IV**





**ITEM
      15. EXHIBITS, AND FINANCIAL STATEMENT SCHEDULES**




(a)
            1.*Financial
                Statements*





The
      following financial statements are included herein at Item 8.





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





Consolidated
      Statements of Operations and comprehensive loss for the years ended December
      31,
      2004, 2003, and 2002.





Consolidated
      Statements of Stockholders’ Equity for the years ended December 31, 2004, 2003,
      and 2002.





Consolidated
      Statements of Cash Flows for the years ended December 31, 2004, 2003, and 2002.





Notes
      to
      Consolidated Financial Statements.





Independent
      Auditors’ Report.





2.
            *Financial
                Statements Schedules*





The
      financial statement schedules required to be included pursuant to this Item
      are
      not included herein because they are not applicable or the required information
      is shown in the financial statements or notes thereto which are incorporated
      by
      reference at subsection 1 of this Item, above.





3.
            *Exhibits*





Audited
      financial statements of Qualcore, S. de R.L. de C.V. for the years ended
      December 31, 2004, 2003 and 2002.





**SIGNATURES**
 
 Pursuant
        to the requirements Section 13 or 15(d) of the Securities Exchange Act of
        1934,
        the registrant has duly caused this report to be signed on its behalf by
        the
        undersigned, thereunto duly authorized.
 
 
 ELAMEX,
                  S.A. DE C.V.December
                  08, 2005Date
              Richard
                  R. Harshman, President andChief
                  Executive Officer
 
 Pursuant
        to the requirements of the Securities Exchange Act of 1934, this report has
        been
        signed below by the following persons on behalf of the registrant and in
        the
        capacities and on the dates indicated.
 
 December
                  08, 2005Date
              Eloy
                  S. Vallina, Chairman of theBoard
                  of DirectorsDecember
                  08, 2005Date
              Richard
                  R. Harshman, President andChief
                  Executive(Principal
                  Executive Officer)December
                  08, 2005Date
              Sam
                  L. Henry, Senior Vice-Presidentand
                  Chief Financial Officer(Principal
                  Financial Officer)(Principal
                  Accounting Officer)December
                  08, 2005Date
              Eloy
                  Vallina Garza, DirectorDecember
                  08, 2005Date
              Richard
                  P. Spencer, DirectorDecember
                  08, 2005Date
              Martin
                  W. Pitts, DirectorDecember
                  08, 2005Date
              Keith
                  Cannon, DirectorDecember
                  08, 2005Date
              Benito
                  Bucay, DirectorDecember
                  08, 2005Date
              Carlos
                  Hernandez, DirectorDecember
                  08, 2005Date
              Manuel
                  Muñoz, DirectorDecember
                  08, 2005Date
              Fernando
                  Todd, Director
  
 EXHIBIT
  **Qualcore,
            S. de R. L. de C. V. and Subsidiaries**
 **(50.1%
              owned by Elamex, S. A. de C. V., and 49.9% owned by General Electric
              Mexico, S.
              A. de C. V.)**
 
 Consolidated
              Financial Statements
 for
              the
              Years Ended December 31, 2004, 2003 and 2002, and Report of Independent
              Registered Public Accounting Firm Dated May 24, 2005, November 21,
              2005 with
              respect to Note 12
  
  **Qualcore,
          S. de R.L. de C.V. and Subsidiaries**
 
 **Report
          of Independent Registered Public**
 **Accounting
          Firm and Consolidated Financial**
 **Statements
          2004, 2003 and 2002**
  **Table
                    of contents**
                **Page**Independent
                    Auditors’ Report
                1Consolidated
                    Balance Sheets
                3Consolidated
                    Statements of Operations
                4Consolidated
                    Statements of Partners’
                    Deficit
                5Consolidated
                    Statements of Cash Flows
                6Notes
                    to Consolidated Financial
                    Statements
                7
  
  **Reportof
          Independent Registered Public**
 **Accounting
          Firm to the Board of Directors**
 **and
          Partners of Qualcore, S. de R.L. de C.V.**
 
 We
          have
          audited the accompanying consolidated balance sheets of Qualcore, S. de
          R. L. de
          C. V. and subsidiaries (the “Joint Venture”) as of December 31, 2004 and 2003,
          and the related consolidated statements of operations, partners’ deficit, and
          cash flows for each of the three years then in the period ended December
          31,
          2004 (all expressed in thousands of U.S. dollars). These financial statements
          are the responsibility of the Joint Venture’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 of America. 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 consideration of internal
          control over financial reporting as a basis for designing audit procedures
          that
          are appropriate in the circumstances, but not for the purpose of expressing
          an
          opinion on the effectiveness of the Joint Venture’s internal control over
          financial reporting. Accordingly, we express no such opinion. An audit
          also
          includes examining, on a test basis, evidence supporting the amounts and
          disclosures in the financial statements, assessing the accounting principles
          used and significant estimates made by management, as well as evaluating
          the
          overall financial statement presentation. We believe that our audits provide
          a
          reasonable basis for our opinion.
 
 In
          our
          report dated May 24, 2005, we issued a qualified opinion on the 2004
          consolidated financial statements because the Joint Venture had not recorded
          an
          impairment related to its long-lived assets when impairment indicators
          existed.
          As discussed in Note 12 to the accompanying amended consolidated financial
          statements, the Joint Venture subsequently recognized an impairment loss
          on such
          long-lived assets and included the loss in the accompanying amended 2004
          consolidated financial statements. Accordingly, our present opinion on
          the
          amended 2004 consolidated financial statements, as expressed herein, is
          different from the report we previously issued dated May 24, 2005.
  In
          our
          opinion, the consolidated financial statements present fairly, in all material
          respects, the financial position of the Joint Venture as of December 31,
          2004
          and 2003, and the results of their operations and their cash flows for
          each of
          the three years in the period ended December 31, 2004 in conformity with
          accounting principles generally accepted in the United States of
          America.
  **3**
 As
            of
            December 31, 2004 and 2003, the Joint Venture has an accumulated deficit
            in
            excess of 100% of its total paid-in capital. Under Mexican law, this
            condition
            allows the Joint Venture’s partners, creditors or other interested parties to
            force the Joint Venture into dissolution. In addition, the Joint Venture
            i) has
            a working capital deficiency of $11,572 and $8,709 as of December 31,
            2004 and
            2003, respectively, ii) incurred a net loss of $6,805, $3,958 and $2,249
            for the
            years ended December 31, 2004, 2003 and 2002, respectively, iii) has
            a history
            of recurring losses and iv) has a total partners’ deficit of $7,679, and $874 as
            of December 31, 2004 and 2003, respectively. These factors raise substantial
            doubt about the Joint Venture’s ability to continue as a going concern.
            Initially, the Company had decided upon the sale of its stock. However,
            as
            discussed in Note 12 to the accompanying consolidated financial statements,
            as
            of September 2005, the Joint Venture’s operations were suspended, which resulted
            in the termination of a majority of the Joint Venture’s employees and the sale
            of the majority of the Joint Venture’s machinery and equipment. Management is
            deciding upon the future operating plans for the Joint Venture.
  Galaz,
              Yamazaki, Ruiz Urquiza, S. C.
 Member
              of
              Deloitte Touche Tohmatsu
 
  Jorge
              Jaramillo Elías
 
 May
              24,
              2005,
 November
              21, 2005 with respect to Note 12
 
 Celaya,
              Guanajuato, Mexico
  4
  **Qualcore,
              S. de R.L. de C.V. and
              Subsidiaries**
 **(50.1%
              owned by Elamex, S.A. de C.V., and 49.9% owned by General Electric
              Mexico, S.A.
              de C.V.)**
 
 **Consolidated
              Balance Sheets**
 **As
              of December 31, 2004 and 2003**
 **(Thousands
              of U.S. Dollars)**
 
 **Assets****2004**
                  
                  **2003**Current
                      assets:Cash
                      and cash equivalents
                  
                  $
                  1,381
                  
                  $
                  339Accounts
                      receivable - net
                  
                  
                  2,606
                  
                  
                  1,998Inventories
                      - net
                  
                  
                  1,982
                  
                  
                  1,076Prepaid
                      expenses
                  
                  
                  81
                  
                  
                  60Total
                      current assets
                  
                  
                  6,050
                  
                  
                  3,473Plant
                      and equipment - net
                  
                  
                  3,903
                  
                  
                  9,228Deferred
                      income taxes
                  
                  
                  
                  
                  
                  294Other
                      assets
                  
                  
                  5
                  
                  
                  4Total
                  
                  $
                  9,958
                  
                  $
                  12,999**Liabilities
                      and partners’ deficit**Current
                      liabilities:Accounts
                      payable
                  
                  $
                  3,962
                  
                  $
                  5,145Notes
                      payable to joint venture partners
                  
                  
                  7,715
                  
                  
                  4,650Customer
                      advances
                  
                  
                  2,000
                  
                  
                  -Current
                      portion of long-term debt
                  
                  
                  3,460
                  
                  
                  1,680Accrued
                      liabilities
                  
                  
                  485
                  
                  
                  413Deferred
                      income taxes
                  
                  
                  -
                  
                  
                  294Total
                      current liabilities
                  
                  
                  17,622
                  
                  
                  12,182Long-term
                      debt
                  
                  
                  -
                  
                  
                  1,682Labor
                      obligations
                  
                  
                  15
                  
                  
                  9Total
                      liabilities
                  
                  
                  17,637
                  
                  
                  13,873Commitments
                      and contingencies (Note 10)Partners’
                      deficit:******Partnership
                      capital, 44,834 partnership units issued and outstanding at
                      par value of 1
                      Mexican peso
                  
                  
                  5,007
                  
                  
                  5,007Additional
                      paid-in capital
                  
                  
                  24,746
                  
                  
                  24,746Accumulated
                      deficit
                  
                  
                  (37,432
                  )
                  
                  (30,627
                  )Total
                      partners’ deficit
                  
                  
                  (7,679
                  )
                  
                  (874
                  )Total
                  
                  $
                  9,958
                  
                  $
                  12,999
 
 See
            accompanying notes to consolidated financial statements.
  **5**
 **Qualcore,
            S. de R.L. de C.V. and
            Subsidiaries**
 **(** **50.1%
            owned by Elamex, S.A. de C.V., and 49.9% owned by General Electric Mexico,
            S.A.
            de C.V.)**
 
 **Consolidated
            Statements of Operations**
 **For
            the years ended December 31, 2004, 2003 and 2002**
 **(Thousands
            of U.S. Dollars)**
 **2004**
                  
                  **2003**
                  
                  **2002**Revenues:Net
                      sales
                  
                  $
                  21,797
                  
                  $
                  18,798
                  
                  $
                  15,422Other
                  
                  
                  2,329
                  
                  
                  -Total
                      revenues
                  
                  
                  24,126
                  
                  
                  18,798
                  
                  
                  15,422Costs
                      and expenses:Cost
                      of sales
                  
                  
                  25,079
                  
                  
                  20,865
                  
                  
                  16,409Selling,
                      general and administrative expenses
                  
                  
                  1,014
                  
                  
                  902
                  
                  
                  952Impairment
                      of long-lived assets
                  
                  
                  4,155
                  
                  
                  -
                  
                  
                  -Total
                      costs and expenses
                  
                  
                  30,248
                  
                  
                  21,767
                  
                  
                  17,361Operating
                      loss
                  
                  
                  (6,122
                  )
                  
                  (2,969
                  )
                  
                  (1,939
                  )Other
                      expenses:Interest
                      expense
                  
                  
                  512
                  
                  
                  91
                  
                  
                  401Other
                      expense (income) - net
                  
                  
                  47
                  
                  
                  867
                  
                  
                  (91
                  )Total
                      other expenses
                  
                  
                  559
                  
                  
                  958
                  
                  
                  310Loss
                      before income taxes
                  
                  
                  (6,681
                  )
                  
                  (3,927
                  )
                  
                  (2,249
                  )Income
                      tax expense
                  
                  
                  124
                  
                  
                  31Net
                      loss
                  
                  $
                  (6,805
                  )
                  $
                  (3,958
                  )
                  $
                  (2,249
                  )
 
 See
            accompanying notes to consolidated financial statements.
  **6**
 
 **Qualcore,
          S. de R.L. de C.V. and
          Subsidiaries**
 **(** **50.1%
          owned by Elamex, S.A. de C.V., and 49.9% owned by General Electric Mexico,
          S.A.
          de C.V.)**
 
 **Consolidated
          Statements of Partners’ Deficit**
 **For
          the years ended December 31, 2004, 2003 and 2002**
 **(Thousands
          of U.S. Dollars)**
  **Partnership
                    Capital**
                
                **Additional**
                
                
                
                **Total****Units**
                
                **Amount**
                
                **Paid-in**
                  **Capital**
                
                **Accumulated**
                  **Deficit**
                
                **Partners’**
                  **Deficit**Balance,
                    January 1, 2002
                
                
                44,834
                
                $
                5,007
                
                $
                24,746
                
                $
                (24,420
                )
                $
                5,333Net
                    loss
                
                
                
                
                
                
                
                
                
                
                
                (2,249
                )
                
                (2,249
                )Balance,
                    December 31, 2002
                
                
                44,834
                
                
                5,007
                
                
                24,746
                
                
                (26,669
                )
                
                3,084Net
                    loss
                
                
                
                
                
                
                
                
                
                
                
                (3,958
                )
                
                (3,958
                )Balance,
                    December 31, 2003
                
                
                44,834
                
                
                5,007
                
                
                24,746
                
                
                (30,627
                )
                
                (874
                )Net
                    loss
                
                
                
                
                
                
                
                
                
                
                
                (6,805
                )
                
                (6,805
                )Balance,
                    December 31, 2004
                
                
                44,834
                
                $
                5,007
                
                $
                24,746
                
                $
                (37,432
                )
                $
                (7,679
                )
 
 See
          accompanying notes to consolidated financial statements.
 
 **7**
 
 **Qualcore,
          S. de R.L. de C.V. and
          Subsidiaries**
 **(** **50.1%
          owned by Elamex, S.A. de C.V., and 49.9% owned by General Electric Mexico,
          S.A.
          de C.V.)**
 
 **Consolidated
          Statements of Cash Flows**
 **For
          the years ended December 31, 2004, 2003 and 2002**
 **(Thousands
          of U.S. Dollars)**
 
 **2004**
                
                **2003**
                
                **2002**Cash
                    flows from operating activities:Net
                    loss
                
                $
                (6,805
                )
                $
                (3,958
                )
                $
                (2,249
                )Adjustments
                    to reconcile net loss to net cash provided by (used in) operating
                    activities:Depreciation
                    and amortization
                
                
                1,248
                
                
                1,217
                
                
                1,167Loss
                    on sale of machinery and equipment
                
                
                -
                
                
                5
                
                
                -Loss
                    on disposal of machinery andequipment
                
                
                -
                
                
                169
                
                
                -Labor
                    obligations
                
                
                3
                
                
                5
                
                
                -Impairment
                    loss
                
                
                4,155
                
                
                -
                
                
                -Changes
                    in operating assets and liabilities:Accounts
                    receivable - net
                
                
                (608
                )
                
                2,329
                
                
                670Inventories
                    - net
                
                
                (906
                )
                
                (337
                )
                
                277Due
                    from related parties
                
                
                
                
                
                
                
                
                12Prepaid
                    expenses and other assets
                
                
                (22
                )
                
                (60
                )
                
                332Accounts
                    payable
                
                
                (1,183
                )
                
                1,227
                
                
                (143
                )Customer
                    advances
                
                
                2,000
                
                
                -
                
                
                -Accrued
                    liabilities and labor obligations
                
                
                75
                
                
                275
                
                
                (1,431
                )Due
                    to related parties
                
                
                -
                
                
                (107
                )
                
                107Net
                    cash (used in) provided by operating activities
                
                
                (2,043
                )
                
                765
                
                
                (1,258
                )Cash
                    flows from investing activities:Acquisitions
                    of plant and equipment
                
                
                (78
                )
                
                (347
                )
                
                (472
                )Proceeds
                    from the sale of plant and equipment
                
                
                -
                
                
                10
                
                
                -Net
                    cash used in investing activities
                
                
                (78
                )
                
                (337
                )
                
                (472
                )Cash
                    flows from financing activities:Proceeds
                    from notes payable to Joint Venturepartners
                
                
                3,163
                
                
                2,050
                
                
                3,100Payments
                    of notes payable
                
                
                -
                
                
                (900
                )
                
                -Payments
                    of long-term debt
                
                
                -
                
                
                (1,678
                )
                
                (1,680
                )Net
                    cash provided by (used in) financing activities
                
                
                3,163
                
                
                (528
                )
                
                1,420Cash
                    and cash equivalents:Net
                    increase (decrease) for the year
                
                
                1,042
                
                
                (100
                )
                
                (310
                )Beginning
                    of year
                
                
                339
                
                
                439
                
                
                749End
                    of year
                
                $
                1,381
                
                $
                339
                
                $
                439Supplemental
                    disclosure of cash flow information:Cash
                    paid during the year for:Interest
                
                $
                -
                
                $
                169
                
                $
                401Income
                    taxes
                
                $
                124
                
                $
                31
                
                $
                -
 
 See
          accompanying notes to consolidated financial statements.
 
 1
 
 **Qualcore,
          S. de R.L. de C.V. and
          Subsidiaries**
 **(** **50.1%
          owned by Elamex, S.A. de C.V., and 49.9% owned by General Electric Mexico,
          S.A.
          de C.V.)**
 
 **Notes
          to Consolidated Financial Statements**
 **December
          31, 2004, 2003 and 2002**
 **(Thousands
          of U.S. Dollars)**
 
 
 **1.**
                **Nature
                    of business and basis of presentation**
 
 ***Nature
          of business,*** -
          Qualcore, S. de R.L. de C.V. and subsidiaries (the “Joint Venture”) consists of
          Mexican companies incorporated under the laws of Mexico on August 17, 1998.
          The
          Joint Venture was formed between Elamex, S.A. de C.V. (Elamex), General
          Electric
          International Mexico, S.A. de C.V. and General Electric Mexico, S.A. de
          C.V.
          (jointly referred to as GE Mexico) to produce plastic molding and stamped
          metal
          components primarily for companies located in the United States of America
          (U.S.), except for Elamex, which has operations located in Mexico. Elamex
          contributed its plastic molding and stamped metal operations to the Joint
          Venture in exchange for a 50.1% interest. GE Mexico contributed approximately
          $3,500 in exchange for its 49.9% interest. All manufacturing and administrative
          services, as well as other professional services, are provided by Plásticos y
          Troquelados, S.A. de C.V. (PYTSA), a subsidiary of the Joint Venture. All
          of the
          Joint Venture manufacturing machinery and equipment are located in facilities
          in
          Mexico.
 
 The
          Joint
          Venture is a limited liability company, which combines the aspects of a
          partnership and a corporation. Joint venture partners are liable only to
          the
          extent of their capital contributions, but participatory interests are
          represented by participation units that are not freely negotiable.
 
 ***Basis
          of presentation*** - At
          December 31, 2004 and 2003, the Joint Venture has an accumulated deficit
          in
          excess of 100% of its total paid-in capital. Under Mexican law, this condition
          allows the Joint Venture’s partners, creditors or other interested parties to
          force the Joint Venture into dissolution. In addition, the Joint Venture
          i) has
          a working capital deficiency of $11,572 and $8,709 at December 31, 2004
          and
          2003, respectively, ii) incurred a net loss of $6,805, $3,958 and $2,249
          for the
          years ended December 31, 2004, 2003 and 2002, respectively, iii) has a
          history
          of recurring net losses and iv) has a partners’ deficit of $7,679 and $874 at
          December 31, 2004 and 2003, respectively. These factors raise substantial
          doubt
          about the Joint Venture’s ability to continue as a going concern. Initially,
          management was discussing plans to sell the Joint Venture’s stock. However, as
          of September 2005, the Joint Venture’s operations were suspended, which resulted
          in the termination of a majority of the Joint Venture’s employees and the sale
          of the majority of the Joint Venture’s machinery and equipment. See further
          discussion in Note 12. Management is currently deciding upon the future
          operating plans for the Joint Venture. The financial statements do not
          include
          any adjustments that might result from the outcome of this
          uncertainty.
 
 The
          Joint
          Venture maintains its books and records in U.S. dollars and prepares financial
          statements in accordance with accounting principles generally accepted
          in the
          United States of America (U.S. GAAP) for the application of the equity
          method by
          the Joint Venture partners.
 
 ***Principles
          of consolidation*** **** -
          The
          accompanying consolidated financial statements are prepared in accordance
          with
          accounting principles generally accepted in the United States. The consolidated
          financial statements include those of Qualcore, S. de R.L. de C.V. and
          its 99%
          owned subsidiary Plasticos y Troquelados de Celaya, S.A. de C.V. All material
          intercompany balances and transactions have been eliminated in
          consolidation.
 
 
 **2.**
                **Significant
                    accounting policies**
 
 A
          summary
          of the significant accounting policies used in the preparation of the
          accompanying financial statements follows:
 
 ***Cash
          equivalents*** - The
          Joint Venture considers all highly-liquid debt instruments purchased with
          a
          maturity of three months or less to be cash equivalents.
 
 2
 
 ***Accounts
          receivable*** - The
          Joint Venture reviews accounts receivable balances and determines whether
          an
          allowance for potential uncollectible accounts is necessary.
 
 ***Foreign
          currency translation*** -
          Transactions denominated in foreign currencies are recorded at the rate
          of
          exchange in effect at the date of the transactions. Monetary assets and
          liabilities denominated in foreign currencies are converted into U.S. dollars,
          the functional currency of the Joint Venture, at the rate of exchange in
          effect
          at the balance sheet date; the effect of changes in exchange rates is recorded
          in the results of operations.
 
 ***Inventories*** -
          Inventories are stated at the lower of cost or market value. Cost is determined
          using the first-in, first-out (FIFO) method.
 
 ***Concentration
          of credit risk -*** For the
          years ended December 31, 2004, 2003 and 2002, the Joint Venture has one
          major
          customer that accounted for 83%, 86% and 76%, respectively of total sales
          and
          50% and 60% of its accounts receivable at December 31, 2004 and 2003,
          respectively. However, the Joint Venture typically receives payment on
          a timely
          basis from this customer. The Joint Venture believes that any other potential
          credit risk is adequately covered by the allowance for doubtful
          accounts.
 
 ***Plant
          and equipment*** - Plant
          and equipment are recorded at acquisition cost, net of accumulated depreciation
          and amortization. Cost includes major expenditures for improvements and
          replacements, which extend useful lives or increase capacity and interest
          costs
          associated with significant capital additions. Routine maintenance costs
          are
          expensed as incurred. Depreciation and amortization are calculated using
          the
          straight-line method, based on the estimated useful lives of the related
          assets,
          as follows:
 
 **Useful**
                    **Life**
                  **(Years)**Leasehold
                    improvements
                
                
                4Machinery
                    and equipment
                
                
                3-10
 
 ***Valuation
          of long-lived assets -*** The
          Joint
          Venture periodically evaluates the carrying value of long-lived assets
          held for
          use when events or circumstances indicate that the carrying amount of the
          asset
          may not be recoverable. The carrying value of a long-lived asset held for
          use is
          considered to not be recoverable when the anticipated separately identified
          undiscounted cash flows from the asset are less than the carrying value
          of the
          asset. In that event, an impairment loss is recognized based on the amount
          by
          which the carrying value exceeds the fair value of the long-lived asset.
 
 During
          the four quarter of 2004, the Joint Venture identified certain conditions
          as
          indicators of asset impairment, including a substantial decline in its
          operations and evidence of a decrease in the market value of such long-lived
          assets, based on the Joint Venture’s consideration of the sale of such
          long-lived assets, which ultimately took place during 2005 at a market
          value
          below the carrying value of the assets at December 31, 2004. Accordingly,
          the
          Joint Venture assessed the recoverability of such assets using undiscounted
          cash
          flow projections, which indicated that such long-lived assets were not
          recoverable. The Joint Venture recorded ****** an
          impairment loss of $4,155 during the fourth quarter of 2004. Management
          determined the asset impairment charges by comparing the actual market
          price of
          the equipment against the carrying values of the long-lived assets.
 
 ***Income
          taxes*** -
          The
          Joint Venture recognizes deferred income tax and statutory employee
          profit-sharing assets and liabilities for the future consequences of temporary
          differences between the financial statement carrying amounts of assets
          and
          liabilities and their respective income tax or employee statutory profit-sharing
          bases, measured using enacted rates. The effects of changes in the statutory
          rates are accounted for in the period that includes the enactment date.
          Deferred
          income tax assets are also recognized for the estimated future effects
          of tax
          loss carryforwards and asset tax credit carryforwards. Deferred income
          tax and
          statutory employee profit-sharing assets are reduced by any benefits that,
          in
          the opinion of the management, more likely than not will not be realized.
 
 ***Labor
          obligations*** - In
          accordance with Mexican Labor Law, the Joint Venture provides seniority
          premium
          benefits to its employees under certain circumstances. These benefits consist
          of
          a one-time payment equivalent to 12 days wages for each year of service
          (at the
          employee’s most recent salary, but not to exceed twice the legal minimum wage),
          payable to all employees with 15 or more years of service, as well as to
          certain
          employees terminated involuntarily prior to the vesting of their seniority
          premium benefit.
 
 3
 
 The
          Joint
          Venture also provides statutorily mandated severance benefits to its employees
          terminated under certain circumstances. Such benefits consist of a one-time
          payment of three months wages plus 20 days wages for each year of service
          payable upon involuntary termination without just cause.
 
 Costs
          associated with these benefits are provided for based on actuarial computations
          using the projected unit credit method.
 
 ***Revenue
          recognition*** -
          Revenues and related costs are recognized upon transfer of ownership, which
          generally coincides with the shipment of products to customers in satisfaction
          of orders.
 
 ***Use
          of estimates*** - The
          preparation of financial statements in conformity with U.S. GAAP 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. Although management believes the
          estimates
          and assumptions used in the preparation of these financial statements were
          appropriate in the circumstances, actual results could differ from those
          estimates and assumptions.
  ***New
          accounting standards*** -In
          December 2004, the Financial Accounting Standards Board (“FASB”) issued
          Statement of Financial Accounting Standards (“SFAS”) No. 153, "Exchanges of
          Nonmonetary Assets - an amendment of APB Opinion No. 29", to eliminate
          the
          exception for nonmonetary exchanges of similar productive assets and replaces
          it
          with a general exception for exchanges of nonmonetary assets that do not
          have
          commercial substance. SFAS No. 153 is effective for nonmonetary assets
          exchanges
          occurring in fiscal periods beginning after June 15, 2005. The Joint Venture
          does not anticipate that the adoption of this statement will have a material
          effect on its consolidated financial position or results of operations.
  In
          May
          2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial
          Instruments with Characteristics of both Liabilities and Equity”. SFAS No. 150
          establishes standards for how an issuer classifies and measures certain
          financial instruments with characteristics of both liabilities and equity.
          SFAS
          No. 150 requires that certain financial instruments be classified as liabilities
          that were previously considered equity. The provisions of SFAS No. 150
          are
          effective for financial instruments entered into or modified after May
          31, 2003,
          and for pre-existing instruments, was effective beginning January 1, 2004,
          except for mandatorily redeemable financial instruments. For mandatorily
          redeemable financial instruments, this statement is effective for new or
          existing contracts for fiscal periods beginning after December 15, 2004.
          The
          adoption of SFAS No. 150 did not have a material impact on the Joint Venture’s
          financial position, results of operations or cash flows, and as the Joint
          Venture does not have any mandatorily redeemable financial instruments,
          it does
          not anticipate that the adoption of that provision of SFAS No. 150 will
          have a
          material impact on the Joint Venture’s financial position, results of operations
          or cash flows.
 
 In
          December 2003, the FASB revised SFAS No. 132(R), “Employers’ Disclosures about
          Pensions and Other Postretirement Benefits”. SFAS No. 132(R) retain the
          disclosure requirements contained in the original standard but requires
          additional disclosures describing the types of plan assets, investment
          strategy,
          measurement dates, plan obligations, cash flows and net periodic benefit
          cost of
          defined benefit pension plans and other defined benefit postretirement
          plans.
          The additional disclosure requirements were applicable for these 2004 financial
          statements. The adoption of this statement did not materially affect the
          disclosures in the accompanying consolidated financial statements.
 
 In
          January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable
          Interest Entities” (“FIN 46”). In December 2003, FIN 46 was replaced by FASB
          Interpretation No. 46 (revised December 2003), “Consolidation of Variable
          Interest Entities” or FIN 46(R). FIN 46(R) clarifies the application of
          Accounting Research Bulletin No. 51, “Consolidated Financial Statements”, to
          certain entities in which equity investors do not have the characteristics
          of a
          controlling financial interest or do not have sufficient equity at risk
          for the
          entity to finance its activities without additional subordinated financial
          support from other parties. FIN46(R) requires an enterprise to consolidate
          a
          variable interest entity if that enterprise will absorb a majority of the
          entity’s expected losses, is entitled to receive a majority of the entity’s
          expected residual returns or both. The Joint Venture has immediately applied
          the
          provisions of FIN 46(R) to all variable interest entities created after
          December
          31, 2003. For all other entities, the Joint Venture will begin to apply
          the
          provisions of FIN 46(R) as of January 1, 2005. The Joint Venture did not
          have
          any variable interest entities created after December 31, 2003 and does
          not
          anticipate that the adoption of FIN 46(R) will have a material impact on
          its
          financial position, results or operations or cash flows.
 
 4
 
 In
          March
          2004, the Emerging Issues Task Force (“EITF”) confirmed as a consensus EITF
          Issue No. 03-1, “The Meaning of Other-Than-Temporary Impairment and Its
          Application to Certain Investments” (“EITF 03-1”). The objective of this Issue
          is to provide guidance on determining when an investment is considered
          impaired,
          whether that impairment is other-than-temporary, and the measurement of
          an
          impairment loss. The guidance also includes accounting considerations subsequent
          to the recognition of another-than-temporary impairment and requires certain
          disclosures about unrealized losses that have not been recognized as
          other-than-temporary impairments. In September 2004, the FASB issued FASB
          Staff
          Position (“FSP”) EITF Issue 03-1-1 that delays the effective date for the
          measurement and recognition guidance included in EITF 03-1. The disclosures
          required by EITF 03-1 have not been deferred and were effective as of December
          31, 2004.
 
 In
          November 2003, the EITF confirmed as a consensus EITF Issue No. 03-10,
          “Application of EITF Issue No. 02-16 by Resellers to Sales Incentives Offered
          to
          Consumers by Manufacturers” (“EITF 03-10”). EITF 03-10 addresses the accounting
          for manufacturer sales incentives offered directly to consumers, including
          manufacturer coupons. The Joint Venture’s accounting policies related to vendor
          coupons and reimbursements are in accordance with the requirements of EITF
          03-10. The adoption of this pronouncement had no material impact on the
          Joint
          Venture’s results of operations, financial position or cash flows in the
          reported periods.
 
 In
          November 2004, the FASB issued SFAS No. 151, “Inventory Costs - an amendment of
          ARB No. 43, Chapter 4”, or SFAS No. 151. SFAS No. 151 amends the guidance in ARB
          No. 43, Chapter 4, “Inventory Pricing” to clarify the accounting for abnormal
          amounts of idle facility expense, freight, handling costs, and wasted material
          (spoilage). Among other provisions, the new rule requires that items such
          as
          idle facility expense, excessive spoilage, double freight, and re-handling
          costs
          be recognized as current-period charges regardless of whether they meet
          the
          criterion of "so abnormal" as stated in ARB No. 43. Additionally, SFAS
          151
          requires that the allocation of fixed production overhead to the costs
          of
          conversion be based on the normal capacity of the production facilities.
          The
          Joint Venture does not believe that the adoption of this pronouncement
          will have
          a material impact on the Joint Venture’s results of operations, financial
          position or cash flows.
 
 
 **3.**
                **Accounts
                    receivable**
 
 **2004**
                
                **2003**Trade
                
                $
                1,857
                
                $
                1,680Recoverable
                    value-added taxes
                
                
                764
                
                
                3362,621
                
                
                2,016Less
                    - allowance for doubtful accounts
                
                
                (15
                )
                
                (18
                )$
                2,606
                
                $
                1,998
 
 
 5
  An
          analysis of the activity in the allowance for doubtful accounts for the
          years
          ended December 31, 2004, 2003 and 2002 is as follows:
 
 **2004**
                
                **2003**
                
                **2002**Beginning
                    balance
                
                $
                18
                
                $
                30
                
                $
                -Additions
                    charged to expense
                
                
                -
                
                
                -
                
                
                30Write-off
                    of unrecoverable accounts
                
                
                (3
                )
                
                (12
                )Ending
                    balance
                
                $
                15
                
                $
                18
                
                $
                30
 
 
 **4.**
                **Inventories**
 
 **2004**
                
                **2003**Finished
                    goods
                
                $
                409
                
                $
                231Raw
                    materials
                
                
                1,585
                
                
                9291,994
                
                
                1,160Less
                    - reserve for obsolescence
                
                
                (12
                )
                
                (84
                )$
                1,982
                
                $
                1,076
 
 The
          provision for excess and obsolete inventory is charged against cost of
          sales. An
          analysis of the changes to the reserve for obsolescence on inventory for
          the
          years ended December 31, 2004, 2003 and 2002 is as follows:
 
 **2004**
                
                **2003**
                
                **2002**Beginning
                    balance
                
                $
                84
                
                $
                84
                
                $
                238Additions
                    charged to expense
                
                
                -
                
                
                -
                
                
                -Inventory
                    disposed of during the year
                
                
                (72
                )
                
                -
                
                
                (154
                )Ending
                    balance
                
                $
                12
                
                $
                84
                
                $
                84
 
 
 **5.**
                **Plant
                    and equipment**
 
 **2004**
                
                **2003**Leasehold
                    improvements
                
                $
                136
                
                $
                136Machinery
                    and equipment
                
                
                8,379
                
                
                12,4578,515
                
                
                12,593Less
                    - accumulated depreciation and amortization
                
                
                (4,612
                )
                
                (3,365
                )$
                3,903
                
                $
                9,228
 
 Depreciation
          expense was $1,248, $1,217 and $1,167 for the years ended December 31,
          2004,
          2003 and 2002, respectively.
 
 **6.**
                  **Notes
                      payable and long-term
                      debt**
 
 At
          December 31, 2004 and 2003, the Joint Venture had the following bank loans
          to
          third parties and U.S. dollar denominated notes payable to Joint Venture
          partners:
 
 6
  **2004**
                
                **2003**Bank
                    loans, bearing interest at 1.625% over six-month LIBOR (4.4%
                    and 1.4% at
                    December 31, 2004 and 2003, respectively), principal and interest
                    payable
                    in semiannual payments of $840, guaranteed by the Joint Venture
                    partners
                
                $
                3,460
                
                $
                3,362Notes
                    payable to Joint Venture partners
                
                
                7,715
                
                
                4,650Total
                    debt
                
                
                11,175
                
                
                8,012Less
                    - Current portion of long-term debt
                
                
                (3,362
                )
                
                (1,680
                )Interest
                    payable to bank loans
                
                
                (98
                )
                
                -Notes
                    payable to Joint Venture partners due on demand
                
                
                (7,550
                )
                
                (4,650
                )Interest
                    payable to Joint Venture partners
                
                
                (165
                )
                
                -Long-term
                    debt
                
                $
                -
                
                $
                1,680
 
 The
          bank
          loans referred to above contain restrictive covenants, which require the
          Joint
          Venture to maintain certain financial ratios and restricts the payment
          of
          dividends, granting of loans and obtaining additional financings. As of
          December
          31, 2004 the Joint Venture was not in compliance with these covenants and
          was in
          default under the loan agreement.
 
 On
          January 1, 2005 Wells Fargo HSBC Trade Bank, N.A. (“Wells Fargo”) executed a
          forbearance agreement with the Joint Venture. The forbearance agreement
          provides
          the Joint Venture with a period of 120 days in which Wells Fargo will not
          issue
          a demand for payment of any or all of the outstanding debt. However, Wells
          Fargo
          did not waive the existing default. Should the Joint Venture not be able
          to make
          the payments within the forbearance period, Wells Fargo will require the
          guarantors to pay the debt. Accordingly, the debt has been classified as
          current
          in the accompanying 2004 consolidated balance sheet.
 
 
 **7.**
                **Labor
                    obligations**
 
 Net
          periodic expenses associated with labor obligations was $3 in 2004 and
          $5 in
          2003. The associated accrued liability was $15 at December 31, 2004 and
          $9 at
          December 31, 2003.
 
 
 **8.**
                **Partners’
                    deficit**
 
 Under
          the
          bylaws of the Joint Venture and Mexican law, the partners’ capital of the Joint
          Venture must consist of fixed capital and may have, in addition thereto,
          variable capital. Partners holding shares representing variable capital
          may
          require the Joint Venture, with a notice of at least three months prior
          to
          December 31 of the prior year, to redeem those shares at a price equal
          to the
          lesser of either (i) 95% of the market price, based on the average of trading
          prices in the stock exchange where it is listed during the thirty trading
          days
          preceding the end of the fiscal year in which the redemption is to become
          effective or (ii) the book value of the Joint Venture’s shares as approved by
          the board of directors for the latest fiscal year prior to the redemption
          date.
          At December 31, 2004 and 2003, the Joint Venture has not issued any of
          its
          authorized variable capital. Although the variable capital is redeemable
          by the
          terms described above, such shares would be classified as a component of
          partners’ equity in the consolidated balance sheet.
 
 Management
          believes the variable capital represents permanent capital because the
          timing
          and pricing mechanisms through which a partner would exercise the option
          to
          redeem are such that a partner, from an economic standpoint, would not
          exercise
          this option. At the time a partner is required to give notice of redemption,
          the
          partner will not be able to know at what price the shares would be redeemed
          and
          would not expect the present value of the future redemption payment to
          equal or
          exceed the amount which would be received by the partner in an immediate
          public
          sale.
 
 7
  Mexican
          law requires that at least 5% of the Joint Venture’s net income each year (after
          profit sharing and other deductions required by law) be allocated to a
          legal
          reserve fund, which is not thereafter available for distribution, except
          as a
          capital dividend, until the amount of such fund equals 20% of the Joint
          Venture’s historical capital. No legal reserve fund allocation is required due
          to the net losses incurred by the Joint Venture.
 
 
 **9.**
                **Balances
                    and transactions with related
                    parties**
 
 Transactions
          with related parties for the years ended December 31, 2004, 2003 and 2002
          are as
          follows:
 
 **2004**
                
                **2003**
                
                **2002**Interest
                    expense
                
                $
                165
                
                $
                20
                
                $
                90Notes
                    payable
                
                
                2,900
                
                
                2,050
                
                
                2,600Due
                    to Joint Venture partners
                
                
                -
                
                
                111
                
                
                90
 
 At
          December 31, 2004 and 2003, the Joint Venture had U.S. dollar denominated
          notes
          payable to its Joint Venture partners, as discussed in Note 6.
 
 
 **10.**
                **Commitments
                    and contingencies**
 
 ***Leases*** - The
          Joint Venture leases a building under an operating lease that expires in
          2012.
          Minimum rentals due under the lease are adjusted annually based on the
          Mexican
          inflation rate and are as follows:
 
 Year
                    ending December 31:2005
                
                $
                1,1352006
                
                
                1,1352007
                
                
                1,1352008
                
                
                1,1352009
                
                
                1,135Thereafter
                
                
                3,410Total
                    minimum lease payments required
                
                $
                9,085
 
 Rent
          expense for the years ended December 31, 2004, 2003 and 2002 was $1,135
          for each
          year.
 
 The
          monthly lease payments are guaranteed by both of the Joint Venture partners.
 
 ***Litigation*** - The
          Ministry of Finance and Public Credit, in exercise of its rights, carried
          out a
          review of the Joint Venture to verify its compliance with foreign trade
          tax
          obligations. As a result of this review, on September 9, 2004 the tax
          authorities assessed taxes of Ps. $22,457 against the Joint Venture. However,
          the Joint Venture filed a motion for reversal of such resolution. On February
          14, 2005, the Local Legal Office of Celaya issued a resolution annulling
          the
          above tax assessment and ordering the Local Tax Audit Office of Celaya
          to issue
          a properly supported resolution. As of May 24, 2005, this resolution had
          not yet
          been issued by the Local Tax Audit Office.
 
 **11.**
                **Income
                    and asset taxes**
 
 Current
          income tax expense for the year ended December 31, 2004 was $37, and deferred
          income tax expense, represented by the change in the valuation allowance
          for
          recoverable tax on assets paid, for the years ended December 31, 2004 and
          2003,
          was $87 and $31, respectively. The Joint Venture generated a net tax loss
          carryforward for the year ended December 31, 2002, and recorded a full
          valuation
          allowance for the value of the net deferred tax asset, resulting in no
          current
          or deferred income tax expense for the Joint Venture.
 
 8
 
 At
          December 31, 2004 and 2003, the components of deferred income tax assets
          and
          liabilities were as follows:
 
 **2004**
                
                **2003**Current
                    deferred tax assets:Accrued
                    liabilities
                
                $
                613
                
                $
                61Valuation
                    allowance
                
                
                (19
                )
                
                -Total
                    current deferred tax assets
                
                
                594
                
                
                61Current
                    deferred tax liabilities:Inventories
                
                
                (594
                )
                
                (355
                )Total
                    current deferred tax liabilities
                
                
                (594
                )
                
                (355
                )Net
                    current deferred tax liability
                
                $
                -
                
                $
                (294
                )Noncurrent
                    deferred tax assets:Net
                    operating loss carryforwards
                
                $
                7,535
                
                $
                8,329Asset
                    tax
                
                
                128
                
                
                -Plant
                    and equipment
                
                
                45Valuation
                    allowance
                
                
                (7,708
                )
                
                (7,599
                )Total
                    noncurrent deferred tax assets
                
                
                -
                
                
                730Noncurrent
                    deferred tax liabilities:Plant
                    and equipment
                
                
                -
                
                
                (436
                )Net
                    deferred tax liabilities
                
                
                -
                
                
                (436
                )Net
                    noncurrent deferred tax asset
                
                $
                -
                
                $
                294
 
 A
          valuation allowance is provided when it is more likely than not that some
          portion or all of the deferred tax assets will not be realized in the future.
          The valuation allowance as of December 31, 2004, 2003 and 2002 was $7,727,
          $7,599 and $7,268, respectively, and relates primarily to the lack of evidence
          regarding the future utilization of net operating losses and recoverable
          tax on
          assets paid.
 
 An
          analysis of the activity of the valuation allowance for the years ended
          December
          31, 2004, 2003 and 2002 is as follows:
 
 **2004**
                
                **2003**
                
                **2002**Beginning
                    balance
                
                $
                7,599
                
                $
                7,268
                
                $
                8,160Additions
                    charged to income tax expense
                
                
                128
                
                
                331Decreases
                    charged against income tax expense
                
                
                
                
                
                
                
                
                (892
                )Ending
                    balance
                
                $
                7,727
                
                $
                7,599
                
                $
                7,268
 
 The
          effective rate for the years ended December 31, 2004, 2003, and 2002 differs
          from the Mexican statutory income tax rate as follows:
 
 **2004**
                
                **2003**
                
                **2002**Statutory
                    rate
                
                
                33.0
                %
                
                34.0
                %
                
                35.0
                %Effect
                    of permanent differences, mainlynon-deductible
                    expenses
                
                
                -0.7
                %
                
                -4.8
                %
                
                0.0
                %Impairment
                    of long-lived assets
                
                
                -20.5
                %
                
                0.0
                %
                
                0.0
                %Inflationary
                    effects
                
                
                -3.1
                %
                
                -6.4
                %
                
                -1.6
                %Change
                    in valuation allowance
                
                
                -7.7
                %
                
                -15.5
                %
                
                -33.4
                %Other
                
                
                -2.9
                %
                
                -8.1
                %
                
                0.0
                %-1.9
                %
                
                -0.8
                %
                
                0.0
                %
  9
  ***Dividend
          tax*** -
          Partners’ equity, except restated paid-in capital and tax retained earnings,
          will be subject to a dividend tax, payable by the Joint Venture, in the
          event of
          distribution. In 2004, 2003 and 2002, the rate was 33%, 34% and 35%,
          respectively; it will decrease to 30% in 2005 and subsequently one percentage
          point each year until reaching 28% in 2007. Any income tax paid on such
          distribution may be credited against future income tax payable by the Joint
          Venture in the year in which the dividend tax is paid and in the following
          two
          years.
 
 ***Statutory
          income tax rate*** - On
          December 1, 2004, certain amendments to the ISR and IMPAC Laws were enacted
          and
          are effective as of 2005. The most significant amendments are as follows:
          (a)
          the ISR rate will be reduced to 30% in 2005, 29% in 2006, and 28% in 2007
          and
          thereafter; (b) for ISR purposes, cost
          of
          sales will be deducted instead of inventory purchases in the period and,
          if
          applicable, related conversion costs ;
          (c)
          companies may elect in 2005 to ratably increase
          taxable income over a
          period from four to 12 years by
          the
          tax value of inventories on hand as of December 31, 2004 determined in conformity with the respective tax rules, which include deducting
          any previous tax basis of inventories and any unamortized tax loss
          carryforwards, and the
          tax basis of such inventories may be deducted as sold ;
          (d) as
          of 2006, paid employee statutory profit sharing will be fully deductible
          for ISR
          purposes; (e) bank liabilities and liabilities with foreign entities are
          now
          included in the determination of the IMPAC taxable base.
 
 ***Asset
          tax*** - The
          Joint Venture is also subject to an asset tax, which is similar to an
          alternative minimum tax, under Mexican tax law. The asset tax is calculated
          by
          applying 1.8% to the Joint Venture asset position, as defined in the law,
          and is
          payable to the extent it exceeds income taxes payable for the same period.
          Asset
          taxes paid may be used to offset future income taxes payable in the following
          10
          years if certain conditions in the tax law are met.
 
 ***Carryforwards*** - At
          December 31, 2004, the Joint Venture has net operating loss carryforwards,
          which
          are available to offset future taxable income, and asset tax credits, which
          are
          available to offset future income taxes payable, as follows:
 
 **Year**
                
                **Net**
                  **Operating**
                  **Loss**
                  **Carryforwards**
                
                **Asset**
                  **Tax**
                  **Credits**
                
                **Year
                    of**
                  **Expiration**1998
                
                $
                1,512
                
                $
                -
                
                
                20081999
                
                
                373
                
                
                -
                
                
                20092000
                
                
                6,021
                
                
                -
                
                
                20102001
                
                
                13,838
                
                
                -
                
                
                20112002
                
                
                1,685
                
                
                -
                
                
                20122003
                
                
                3,482
                
                
                41
                
                
                20132004
                
                
                -
                
                
                87
                
                
                2014$
                26,911
                
                $
                128
 
 The
          amounts presented above have been adjusted for Mexican inflation as permitted
          by
          Mexican tax law.
 
 ***Statutory
          employee profit sharing*** -
          Statutory employee profit sharing was determined by applying the statutory
          rate
          of 10% to the profit sharing base determined in accordance with the applicable
          law.
 
 **12.**
                **Subsequent
                    events**
 
 a.
                As
                    of September 2005, the Joint Venture’s management approved the decision to
                    cease the Joint Venture’s operations. In October 2005, most of its
                    employees were terminated, except for three individuals that
                    will complete
                    the final administrative activities of the Joint Venture. The
                    Company is
                    still quantifying the termination expenses. The Joint Venture
                    also sold
                    most of its machinery and equipment, except for certain low-value
                    assets.
                    Management is discussing the future operations of the Joint
                    Venture.
 
 b.
                In
                    September 2005, the tax authorities, in full exercise of their
                    rights,
                    reassessed the tax mentioned in Note 10 for the amount of Ps.
                    $23,227.
                    Management and legal counsel believes that the Joint Venture
                    has
                    meritorious defenses against the assertion of the
                    claim.
 
 10
 
 c.
                As
                    of June 15, 2005, GE Mexico purchased the outstanding debt of
                    the Joint
                    Venture with Wells Fargo, on which the Joint Venture had defaulted,
                    as
                    discussed in Note 6. The debt was purchased at a discounted price
                    of
                    approximately $2.5 million. The Joint Venture will pay GE with
                    the
                    proceeds of the sale of long-lived assets as discussed in 12.a
                    above.
 
 d.
                On
                    May 24, 2005, the Joint Venture previously issued consolidated
                    financial
                    statements as of and for the year ended December 31, 2004, which
                    did not
                    include the recognition of impairment losses on its long-lived
                    assets for
                    which impairment indicators existed. The accompanying consolidated
                    financial statements represent the reissuance of the previous
                    consolidated
                    financial statements in order to recognize such impairment, which
                    amounted
                    to $4,155 and is included in the results for the year ended December
                    31,
                    2004.
  *
          * * *
          *
  11