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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2003

For the transition period from N/A to N/A

Commission File No. 000-25161

MODTECH HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (909) 943-4014

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

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

Common Stock, $.01 par value

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

Yes x No ¨

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

Yes x No ¨

The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2003 was approximately $37,083,672. As of March 10, 2004, 13,726,664 shares of registrant’s common stock were outstanding.

Certain portions of the registrant’s definitive proxy statement for fiscal year ended December 31, 2003 to be filed not later than 120 days after the end of the fiscal year covered hereby are incorporated by reference in Part III of this Form 10-K report.

PART I

BUSINESS OVERVIEW

The Company was founded in 1982 with its initial business consisting of purchasing unfinished and outdated classroom shells and performing installation work. The Company subsequently changed its business to the design, manufacturing, marketing and installation of classroom and other custom modular projects. Since that time the Company has grown organically and through acquisition to become one of the premier modular building manufacturers in the country. In February 1999 the Company merged with SPI Holdings Inc., a Colorado corporation, designed and manufactured commercial and light industrial modular buildings in Arizona, Texas and California. In March 1999 the Company acquired Coastal Modular Buildings, Inc. and in March 2001 acquired Innovative Modular Structures. Both companies were based in central Florida. All of the acquired companies have been fully integrated into Modtech Holdings and are the foundation for our operations outside of California.

The Company is a leading provider of modular classrooms in the State of California and a significant provider of commercial and light industrial modular buildings in California, Nevada, Arizona, New Mexico, Utah, Colorado, Texas, Florida and other neighboring states. The Company is expanding its classroom offerings in all locations in response to increasing demand for new classroom products.

During 2003 the Company significantly expanded its participation in work performed on site. This work includes work historically done by other general contractors. Nearly 25% of the revenue generated during 2003 was a direct result of site-related work.

In October 2003 the Company also changed it primary marketing approach for classrooms and custom projects outside of California by “going direct.” By “going direct” the Company will use its own sales force to market and sell directly to end users for these target projects. The Company continues to use dealers for markets other than classrooms and custom projects.

PUBLIC FUNDING

Virtually all of the Company’s classroom sales are dependant on public funding. There have been a number of funding initiatives passed by the voters of California and these have contributed to the Company’s growth and success. Please refer to the section under Legislation and Funding for further discussion of California’s funding processes and funding history.

In 2002, California Assembly Bill #16 (AB16) was created to provide approximately $25 billion in proposed spending on new classroom and school construction and was signed by Governor Gray Davis in April 2002. The first $13 billion bond measure was overwhelmingly approved in November 2002. California voters also approved the remaining $12 billion on March 2, 2004.

Florida voters approved, in November 2002, a constitutional amendment to address overcrowded public schools. This amendment establishes statewide ceilings to be in place by 2010; 18 students per classroom in kindergarten through third grade, 22 per classroom in fourth through eighth and 25 per classroom in high school. A number of counties have passed sales-tax initiatives to fund these new classrooms.

INDUSTRY OVERVIEW

In recent years, the growth in population in California, both from births and from immigration, has led to increasing school enrollments. As a result, classrooms in many California school districts currently are reported to be among the most crowded in the nation, with an average of 29 students per class compared to a national average class size of 17. The California Department of Finance has estimated that student enrollment in grades kindergarten through 12 will increase by approximately 18% over the period from 1995 through 2005. Additionally, changes in population demographics have left many existing permanent school facilities in older residential areas with excess capacity due to declining enrollments, while many new residential areas are faced with a continuing shortage of available classrooms. Consequently, it has become necessary to add additional classrooms at many existing facilities, and to build a number of new schools.

The construction of new schools and the addition of classrooms at existing schools are tied to the sources and levels of funding available to California school districts. The availability of funding for new school and classroom additions, in turn, is determined in large measure by the amount of tax revenue raised by the State, the level of annual allocations for education from the State’s budget which is determined by educational policies that are subject to political concerns, and the willingness of the California electorate to approve state and local bond issues to raise money for school facilities.

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In 1978, California voters approved Proposition 13, which rolled back local property taxes (a traditional source of funding for school districts) and limited the ability of local school districts to raise taxes to finance the construction of school facilities. The passage of Proposition 13, coupled with growing student populations, has increased the need for local school districts to find ways to reduce the cost of adding classrooms. The California legislature has adopted several statutes designed to alleviate some of the problems associated with the shortage of classrooms and lack of local funding alternatives. For example, in 1976, California adopted legislation that through November 1998 required, with certain exceptions, that at least 30% of all new classroom space added using State funds must be re-locatable structures. This requirement was satisfied through the purchase or lease of the Company’s classrooms. See “Business — Legislation and Funding – Authority for Bond Financing.” Additionally, in 1979 the California legislature adopted legislation that provides for State funding for the purchase of re-locatable classrooms that could be leased to local school districts.

When compared to the construction of a conventionally built classroom, modular classrooms offer a number of advantages, including, among others:

The Company’s commercial and light industrial building revenues in the nonresidential modular market have resulted from the wide-spread acceptance of modular structures as an alternative to traditional site construction and the increasing number of applications for modular buildings across a broad spectrum of industries. Because modular buildings are constructed in a factory using an assembly line process, construction is typically not subject to the delays caused by weather and site conditions. Modular buildings can, therefore, generally be built faster than conventional buildings, at a lower cost and with more consistent quality. Modular buildings can generally be relocated more easily to meet the changing needs of end users and be quickly joined to other modular buildings to meet increased space requirements.

CALIFORNIA MODULAR RELOCATABLE CLASSROOMS

The Company’s California modular re-locatable classrooms are designed, engineered and constructed in accordance with structural and seismic specifications and safety regulations adopted by the California Department of State Architects, standards which are more rigorous than the requirements for other portable buildings. The Department of State Architects, which regulates all school construction on public land, has prescribed extensive regulations regarding the design and construction of school facilities, setting minimum qualifications for the preparation of plans and specifications, and reviews all plans for the construction or material modifications to any school building. Construction authorization is not given unless the school district’s architect certifies that a proposed project satisfies construction cost and allowable area standards. The Company interfaces with each school district’s architect or engineer to process project specifications through the Department of State Architects. The Company believes that the regulated environment in which the Company’s classrooms are manufactured serves as a significant barrier to market entry by prospective competitors. See “Business — Competition.”

Conventional site built school facilities constructed by school districts using funds from the State Office of Public School Construction typically require two to three years for approval and funding. By contrast, factory-built school buildings like the Company’s standard classrooms may be pre-approved by the State for use in school construction. Once plans and specifications for a given classroom have been pre-approved, school districts can thereafter include in their application to obtain State funds for new facilities a notification that they intend to use pre-approved, standardized factory-built classrooms. This procedure reduces the time required in the State’s approval process to as little as 90 days, thereby providing an additional incentive to use factory-built relocatable classrooms. In all cases, continuous inspection by a licensed third party is required during actual manufacture of the classrooms, with the school district obligated to hire and pay for such inspection costs.

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The Company’s California classrooms are manufactured and installed in accordance with the applicable state building codes and Department of State Architect’s interpretive regulations, which supersedes all local building codes for purposes of school construction. The classrooms must comply with accessibility requirements for the handicapped, structural, and seismic and fire code requirements.

The Company manufactures and installs standard, largely pre-fabricated modular re-locatable classrooms, as well as customized classrooms, which are modular in design, but assembled on-site using components manufactured by the Company together with components purchased from third party suppliers. The Company’s classrooms vary in size from two modular units containing a total of 960 square feet to 20 units that can be joined together to produce a facility comprising 9,600 square feet. Larger configurations are also possible. Typical prices for the Company’s standard classrooms range from $29,000 to $34,000, while prices for a custom classroom generally exceed $50,000, depending upon the extent of customization required.

The two basic structural designs for standard and custom modular classrooms are a rigid frame structure and a shear wall structure. The rigid frame structure uses a steel floor and roof system, supported at each corner with square steel tubing. These buildings have curtain walls to enclose the interior from the outside, and have the advantage of unlimited width and length. Rigid frame structures may be used for multipurpose rooms and physical education buildings as well as standard classrooms. Shear wall classrooms have a maximum width of 48 feet (four 12-foot modules) and a maximum length of 60 feet. These classrooms use the exterior and interior walls to produce the required structural strength and can be built at lower costs than rigid frame structures. The Company’s most popular factory-built classroom is a rigid frame design, with two modules connected side by side to complete a 24 by 40-foot classroom.

Custom built classrooms, libraries and gymnasiums contain design variations and dimensions such as ceiling height, roof pitch, overall size and interior configuration. These units typically are not assembled at the factory but instead are shipped in pieces, including floors, walls and roofs, and assembled on-site. Contracts for custom-built units may include the design, engineering and layout for an entire school or an addition to a school, and involve site preparation, grading, concrete and asphalt work and landscaping. Customized classrooms are generally more expensive and take longer to complete than the Company’s standard classrooms.

Additionally, the Company has developed and manufactured two-story modular classroom buildings. A two-story complex may include cantilevered balconies, soffits, parapets and mansards. They typically include a modular elevator system as well as stairways. The Company’s two-story structures offer a variety of material and design options such as stucco, brick veneer, fiber cement panels or traditional wood siding.

The interior and exterior of all of the Company’s modular classrooms can be customized by employing different materials, design features and floor plans. Most classrooms are open, but the interior of the buildings can be divided into individual rooms by permanent or re-locatable partitions. The floor covering is usually carpet but may be sheet vinyl or ceramic tile depending upon the intended use of the classroom. Interior wall material is usually vinyl covered firtex over gypsum board, while other finishes such as porcelain enamel or painted hardboard may be used in such places as restrooms and laboratories. Electrical wiring, air conditioning, windows, doors, fire sprinklers and plumbing are installed during the manufacturing process. The exterior of the units is typically plywood siding, painted to the customer’s specifications, but other common exterior finishes may also be applied.

CALIFORNIA CLASSROOM CUSTOMERS

The Company markets and sells its modular classrooms primarily to California school districts. The Company also sells its classrooms to the State of California and leasing companies, both of which lease the classrooms principally to California school districts. Sales of classrooms to California school districts, the State of California and leasing companies accounted for 49.0%, 58.1% and 64.6% of the Company’s total net sales for the years ended December 31, 2001, 2002 and 2003. The Company’s customers typically pay cash from general operating funds or the proceeds of local bond issues, or lease classrooms through banks, leasing companies and other private funding sources. See “ Business — Legislation and Funding.”

Sales of classrooms to individual California school districts accounted for approximately 36.9%, 47.2% and 52.4%, respectively, of the Company’s net sales during the years ended December 31, 2001, 2002 and 2003, respectively, with sales of classrooms to third party lessors to California school districts during these periods accounting for approximately 5.7%, 4.5% and 9.8%, respectively, of the Company’s net sales. The mix of school districts to which the Company sells its products varies somewhat from year to year. Sales of classrooms directly to the State of California during 2003 represented approximately 2.5% of the Company’s net sales, compared to approximately 6.4% and 5.7%, respectively, of the Company’s 2002 and 2001 net sales, respectively. One of the lessors to which the Company sells classrooms for lease to California school districts is affiliated with the Company through ownership by one of the Company’s officers. During the years ended December 31, 2001, 2002 and 2003, sales of classrooms to this affiliated leasing company comprised approximately 0.8%, 3.4% and 2.0%, respectively, of the Company’s net sales.

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COMMERCIAL, LIGHT INDUSTRIAL MODULAR BUILDINGS AND RELOCATABLE CLASSROOMS FOR OTHER STATES

The Company is also a designer, manufacturer and wholesaler of commercial and light industrial modular buildings. The Company designs and builds modular buildings to customer specifications for a wide array of uses, including governmental, healthcare, educational, airport and correctional facilities; office and retail space; daycare centers; libraries; churches; construction trailers; golf clubhouses; police stations; convenience stores; fast food restaurants; classrooms and sales offices. The modular buildings serve as temporary, semi-permanent and permanent facilities and can function as free-standing buildings or additions to existing structures. These modular buildings range in size and complexity from a basic single-unit 100-square foot module to a 50,000-square foot building combining several structures and containing multiple stories. The price at which the Company’s modular buildings are sold to dealers ranges from $7,000 to over $25,000 per module.

SALES AND MARKETING

California Classroom Sales Force

At December 31, 2003 the Company’s California classroom sales force was divided into three marketing regions: Northern, Central and Southern California. At December 31, 2003, the Company employed four classroom salespersons. These salespersons maintain contact with the individual school districts in their respective marketing regions on an annual basis. They are also in contact with architects and construction management firms employed by the school districts, as well as school officials who may be in a position to influence purchasing decisions.

Most of the Company’s contracts are awarded on an open bid basis. The marketing process for many of the Company’s contracts begins prior to the time the bid process begins. After the Company selects bids or contracts that it desires to pursue, the Company’s marketing and engineering personnel interface directly with various school boards, superintendents or architects during the process of formulating bid or contract specifications. The Company prepares its bids or proposals using various criteria, including current material prices, historical overhead costs and a targeted profit margin. Substantially all of the Company’s contracts are turnkey, including engineering and design, manufacturing, transportation and installation. Open bid contracts are normally awarded to the lowest responsible bidder.

MANUFACTURING AND ON-SITE INSTALLATION

The Company uses an assembly-line approach in the manufacture of its classrooms. The process begins with the fabrication of the steel floor joists. The floor joists are welded to a perimeter steel frame to form the floor sub-assembly, which is typically covered by plywood flooring. Concurrent with the floor assembly the roof structure is welded in a similar fashion with joists and a perimeter frame. The completed roof is then welded to the completed floor utilizing four tube steel corner posts creating a moment connection. The unit progresses down the production line with value added at each work station with the installation of walls, insulation, suspended grid ceilings, electrical systems, heating and air conditioning, windows, doors, plumbing and chalkboards follow, with painting and finishing crews completing the process. Once construction of a classroom commences, the building can be completed in as little as three days. The construction of custom units on-site, from pre-manufactured components, is similar to factory-built units in its progressively-staged assembly process but may involve more extensive structural connections and finish work depending upon the size and type of building, and typically takes 30 to 60 days to complete.

The Company is vertically-integrated in the manufacture of its modular classrooms, in that the Company fabricates substantially all of its own metal components at its facilities, including structural floor and roof joists, exterior roof panels, gutters, foundation vents, ramps, stairs and railings. The Company believes that the ability to fabricate its own metal components helps it reduce the costs of its products and control their quality and delivery schedules. The Company maintains a quality control system throughout the manufacturing process, under the supervision of its own quality control personnel and independent third party inspectors engaged by its customers. In addition, the Company tracks the status of all classrooms from sale through installation and completion.

Completed classroom units, or components used in customized units, are loaded onto specially designed flatbed trailers for towing by trucks to the school site. Upon arrival at the site, the units are structurally connected, or components are assembled, and the classroom is installed on its foundation. Connection with utilities is completed in the same manner as in conventional on-site construction. Installation of the modular classrooms may be on a separate foundation, or several units may be incorporated on a common foundation, so that upon installation they appear to be an integral part of an existing school facility or function as a larger building, such as a multi-purpose room or cafeteria.

The Company oversees installation of its modular classrooms on-site, using its own employees for project supervision as the general contractor and, whenever possible, for utility hook-ups and other tasks. In many projects, the Company performs or supervises

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subcontracted electrical, plumbing, grading, paving, concrete work, and other site preparation work and services. The Company has general contractor’s licenses in its markets of choice.

In addition to approvals by the Department of State Architects, licensed inspectors representing school district customers are present at each California manufacturing facility of the Company to continuously inspect the construction of classrooms for compliance to the approved plans. On-site inspections after installation are also made by independent third party inspectors for purposes of determining compliance with the approved plans and all applicable codes.

A continuous flow assembly line process also produces the Company’s commercial and light industrial modular buildings. Multiple structures are assembled simultaneously at various stations along the assembly line. Depending upon the complexity of the design for a particular modular building, the average construction time from receipt of the order to shipment ranges from 30 to 45 days. Once construction of a typical modular building commences, the building can be completed in as few as seven to ten days.

At December 31, 2003, the Company had six manufacturing facilities. Two are located in Southern California, in Perris, California, which is approximately 60 miles east of Los Angeles. The Company has another facility in Lathrop, California. Lathrop is located approximately 75 miles east of San Francisco. The fourth manufacturing facility is located in Phoenix, Arizona. The Company has another facility in Glen Rose, Texas. Glen Rose is located approximately 75 miles southwest of Dallas. The Company’s sixth manufacturing facility is located in Plant City, Florida, northeast of Tampa.

The standard contractual warranty for the Company’s modular buildings is one year, although it may be varied by contract specifications. Purchased equipment installed by the Company, such as air conditioning units, carries the manufacturers’ standard warranty. Warranty costs have not been material in the past.

The Company believes that there are multiple sources of supplies available for all raw materials and equipment used in manufacturing its modular buildings, most of which are standard construction items such as steel, plywood and dimensional lumber.

BACKLOG

The Company manufactures classrooms and other buildings to fill existing orders only, and not for inventory. As of December 31, 2003, the backlog of sales orders was approximately $115 million, up from approximately $85 million at December 31, 2002. Backlog that will be converted during the current fiscal year is approximately $97 million. The rate of booking new contracts varies month to month, and customer changes in delivery schedules occur. For these reasons, among others, the Company’s backlog as of any particular date may not be representative of actual sales for any succeeding period.

COMPETITION

The modular re-locatable classroom industry is highly competitive, with the market divided among a number of privately-owned companies whose share of the market is smaller than that of the Company. The Company believes that the nature of the bidding process, the level of performance bonding required, and the industry’s regulated environment serve as barriers to market entry, and that the expertise of its management gives it an advantage over competitors. The Company believes that, based upon 2000 net sales, it is the largest modular re-locatable classroom manufacturer in California. Nevertheless, the Company believes that additional competitors may enter the market in the future, some of whom may have significantly greater capital and other resources than are available to the Company, and that competition may therefore increase.

The Company also believes that its expertise in site preparation and on-site installation gives it a competitive advantage over many manufacturers of higher-priced, customized modular units, while its vertically integrated, assembly-line approach to manufacturing enables the Company to be one of the low cost producers of standardized, modular re-locatable classrooms in California. Unlike many of its competitors, the Company manufactures most of its own metal components which allows the Company to maintain quality control over these components and to produce them at a lower average cost than that at which they could be obtained from outside sources. The Company also believes that the quality and appearance of its buildings, and its reputation for reliability in completion of its contracts, enable it to maintain a favorable position among its competition.

The Company categorizes its current competition based upon the geographic market served (Northern California versus Southern California), as well as upon the relative degree of customization of products sold. Beyond a radius of approximately 300 miles, the Company believes that transportation costs typically will either significantly increase the prices at which it bids for given projects, or will substantially erode the Company’s gross profit margins.

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The primary competitors of the Company for standardized classrooms are believed to be Aurora Modular Industries in Southern California and American Modular Systems in Northern California. Turn Key Schools in Southern California and Design Mobile Systems in Northern California are the Company’s primary competitors in the market for higher-priced, customized classrooms. Each of these four competitors is a privately-owned company.

With respect to the commercial and light industrial modular buildings, the nonresidential modular building industry is highly competitive. For the Company’s highly customized modular buildings, the main competitive factor is the ability to meet end user requirements in a timely manner, while price is the main competitive factor for less customized structures. Because the cost of transporting completed modular buildings is substantial, most manufacturers limit their distribution to dealers located within a 400-mile radius of their manufacturing facility. As a result, the nonresidential modular building industry is highly fragmented and is composed primarily of small, regionally-based private companies maintaining a single manufacturing facility.

The primary competitors of the Company for commercial and light industrial modular buildings are believed to be Modular Structures International, Walden Structures, Miller Building Systems and Indicom Building Systems.

PERFORMANCE BONDS

A substantial portion of the Company’s sales require that the Company provide bonds to ensure that the contracts will be performed and completed in accordance with contract terms and conditions, and to assure that subcontractors and materialmen will be paid. In determining whether to issue a performance bond on behalf of the Company, bonding companies consider a variety of factors concerning the specific project to be bonded, as well as the Company’s levels of working capital, shareholders’ equity and outstanding indebtedness. From time to time the Company has had, and in the future may again encounter, difficulty in obtaining bonding for a given project. Although it has had no difficulty in obtaining the necessary bonding in the last twelve months, the Company believes that its difficulty in obtaining bonding for certain large projects from time to time in the past has been attributable to the Company’s levels of working capital, shareholders’ equity and indebtedness, and not concerns about the Company’s ability to perform the work required under the contract. To assist the Company in obtaining performance bonds in certain instances, the Company’s executive officers have been required to indemnify the bonding companies against all losses they might suffer as a result of providing performance bonds for the Company.

REGULATION OF CLASSROOM CONSTRUCTION

In 1933, the California Legislature adopted the Field Act, which generally provides that school facilities must be constructed in accordance with more rigorous structural and seismic safety specifications than are applicable to general commercial buildings. Under the Field Act, the Department of General Services, through the Department of State Architects, has prescribed extensive regulations regarding the design and construction of school facilities, and reviews all plans for the construction of material modifications to any school building. Construction authorization is not given unless the school district’s architect certifies that a proposed project satisfies construction cost and allowable area standards. In addition, the Field Act provides for the submittal of complete plans, cost estimates, and filing fees by the school district to the Department of General Services, for the adoption of regulations setting minimum qualifications for the preparation of plans and specifications, and the supervision of school construction by a licensed architect or structural engineer.

Additionally, California legislation provides that certain factory-built school buildings may be pre-approved by the State for use in school construction. Once plans and specifications for a given classroom have been pre-approved by the Department of General Services, school districts can thereafter include in their application to obtain State funds for new facilities a notification that they intend to use pre-approved, standardized factory-built classrooms. This procedure reduces the time required in the State’s approval process thereby providing additional incentive to use factory-built re-locatable classrooms. The Department of General Services provides for the continuous on-site inspection during actual manufacturing of the classrooms, with the school districts obligated to reimburse the Department for the costs of such inspection.

LEGISLATION AND FUNDING

The demand for modular re-locatable classrooms in California is affected by various statutes. These statutes, among other things, prescribe the methods by which the Company’s customers, primarily individual school districts, obtain funding for the construction of new school facilities, and the manner in which available funding is to be spent by the school districts.

In 1978, Proposition 13 was approved, which rolled back property taxes and limited the ability of local school districts to rely upon revenue from such taxes to finance the construction of school facilities. As a result, financing for new school construction and

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rehabilitation of existing schools by California school districts is currently provided, at the state level, by funds derived from general revenue sources or statewide bond issues, and, at the local level, by local bond issues and fees imposed on the developers of residential, commercial and industrial real property (“Developer Fees”). Historically, the primary source of financing for the purchase or lease of re-locatable classrooms has been state funding.

STATE FUNDING: A source of funding at the State level for new school facilities is through the issuance and sale of statewide general obligation bonds which are repaid out of the State’s General Funds. Proposals to issue such bonds are placed on statewide ballots from time-to-time in connection with general or special elections, and require approval by a majority of the votes cast in connection with such proposals.

AUTHORITY FOR BOND FINANCING: Under the School Building Lease - Purchase Law of 1976, the State Allocation Board is empowered to purchase or lease school facilities using funds from the periodic issuance of general obligation bonds of the State of California. These purchased or leased school facilities may be made available by the State Allocation Board to school districts. Certain matching funds, usually derived from Developer Fees, are required to be supplied by the school districts seeking state funded facilities. If the school districts acquire re-locatable structures using Developer Fees, the amount of the required matching funds is reduced by the cost of such facilities. This reduction in matching funds is intended to provide an incentive for school districts to lease re-locatable classrooms. Prior to November 1998, as a condition of funding any project under this program, at least 30% of new classroom space to be added must be comprised of re-locatable structures, unless re-locatable structures are not available or special conditions of terrain, climate or unavailability of space make the use of re-locatable structures impractical. In addition, State funds under this program are not available to school districts which are determined to have an adequate amount of square footage available for their student population.

Senate Bill 50, which was passed in November 1998 by the California Legislature, revised the School Building Lease – Purchase Law of 1976 by eliminating the requirement that at least 30% of all new classroom space being added using California state funds must be re-locatable classrooms. In general, it replaced this provision with a requirement that, in order for school districts to increase the amount of funds to be received from developers in excess of the current statutory level, the school districts must show that 20% of all classroom space in the district, not just new space added, consists of re-locatable classrooms. The bill also placed a $9.2 billion bond issue on the November 1998 ballot, which was approved by the voters. The bill allocated from the bond issue $2.9 billion for growth and new construction, and $2.2 billion for modernization and reconstruction through the year 2001. In addition, it allocated $700 million for class-size reductions to fully implement the program from kindergarten through third grade. The costs to implement the foregoing include land acquisition costs, hiring of new teachers, remodeling of existing structures and construction of new permanent and re-locatable structures. The bill does not designate the specific usage of funds, and the actual amount spent on relocatable classrooms will vary among school districts. Implementation of Senate Bill 50 began the third week of January 1999. The implementation of Senate Bill 50 did not significantly change the Company’s operating results.

In 2002, California Assembly Bill #16 (AB16) was created to provide approximately $25 billion in proposed spending on new classroom and school construction and was signed by Governor Gray Davis in April 2002. The first $13 billion bond measure was overwhelmingly approved in November 2002. California voters also approved the remaining $12 billion on March 3, 2004.

In response to the adoption of Proposition 13, the State of California adopted the California Emergency Classroom Law of 1979, pursuant to which the State Allocation Board may spend up to $35 million per year from available funds to purchase re-locatable classrooms to be leased to school districts. Re-locatable classrooms are not available to school districts under this program if the school district has available local bond proceeds that could be used to purchase classroom facilities, unless the district has approved projects pending under the School Building Lease - Purchase Law of 1976. The State has, in the past, funded this program primarily from the proceeds of statewide bond issues approved by voters.

BUDGET ALLOCATIONS: Proposition 98, which was approved in 1988, requires the State of California to allocate annually from the State’s budget, for the support of school districts and community college districts, a minimum amount equal to the same percentage of funds as was appropriated for the support of those institutions in fiscal year 1986-87. While this requirement may be suspended for a given year by emergency legislation, it has the effect of limiting the ability of the California legislature to reduce the level of school funding from that in existence in 1986-87. The State raises the necessary funds through proceeds from the sale of statewide bond issues, income tax revenues and other revenues. Currently, California has incurred a budget deficit estimated to be as much as $35 billion. This may drastically effect allocations to support the California school districts and community college districts.

LOCAL FUNDING: Local school districts in California have the ability to issue local general obligation bonds for the acquisition and improvement of real property for school construction. These bond issues require the approval of 55% of the voters in the district and

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are repaid using the proceeds of increases in local property taxes. A local school district may also levy Developer Fees on new development projects in the district, subject to a maximum rate set by state law. The Developer Fees can only be levied if the project can be shown to contribute to the need for additional school facilities and the fee levied is reasonably related to such need. In addition, California law provides for the issuance of bonds by Community Facilities Districts which can be formed by a variety of local government agencies, including school districts. These districts, known as “Mello-Roos” districts, can have flexible boundaries and the tax imposed to repay the bonds can be based on property use, acreage, population density or other factors.

In November 2002, Florida voters approved a constitutional amendment to address overcrowded public schools. This amendment establishes statewide ceilings to be in place by 2010; 18 students per classroom in kindergarten through third grade, 22 per classroom in fourth through eighth and 25 per classroom in high school. A number of counties have passed sales-tax initiatives to fund these new classrooms.

OTHER LEGISLATION

California has taken steps to encourage local school districts to adopt year-round school programs to help increase the use of existing school facilities and reduce the need for additional school facilities. School districts requesting state funding under the School Building Lease - Purchase Law of 1976 or the Emergency Classroom Law of 1979 discussed above must submit a study examining the feasibility of implementing in the district a year-round educational program that is designed to increase pupil capacity in the district or in overcrowded high school attendance areas. The feasibility study requirement is waived, however, if the district demonstrates that emergency or urgent conditions exist in the district that necessitates the immediate need for re-locatable buildings. The demand for new school facilities, including re-locatable classrooms, would be adversely affected in the event that a significant number of California school districts implemented year-round school programs. In addition, a significant increase in the level of voluntary or mandatory busing of students from overcrowded schools to schools with excess capacity could adversely affect demand for new school facilities.

ENVIRONMENTAL MATTERS

The Company is subject to a variety of federal, state and local governmental regulations related to the storage, use and disposal of any hazardous materials used by the Company in connection with the manufacture of its products. Both the governmental regulations and the costs associated with complying with such regulations are subject to change in the future.

The Phoenix facility leased by the Company is located within a 25-square-mile area listed by the Arizona Department of Environmental Quality on the state priority list for contaminated sites. According to a recent environmental site assessment report pertaining to the Phoenix facility and commissioned by the Company, neither the Company nor the prior operators or owners of the property have been identified as potentially responsible parties at this site. Additionally, the environment site assessment report identifies no historical activity on the property leased by the Company that was likely to have been a source of the contaminants at the site.

EMPLOYEES

At December 31, 2003, the Company had 901 employees. The Company’s employees are not represented by a labor union, and it has experienced no work stoppages. The Company believes that its employee relations are good.

The Company’s principal executive and administrative facilities are located in approximately 17,000 square feet of modular buildings at its primary manufacturing facility located in Perris, California. This manufacturing facility occupies twenty-five acres, with approximately 226,000 square feet of covered production space under roof, pursuant to a lease expiring in 2014. A second facility in Perris occupies approximately thirty acres, with approximately 120,000 square feet of covered production space under roof, pursuant to a lease expiring in 2014. This second facility also includes approximately 80,000 square feet under roof used as a metal working facility. The Company’s third plant consists of a 400,000 square foot manufacturing facility, with approximately 160,000 square feet of covered production space under roof, on a 30-acre site in Lathrop, California that is leased through 2019.

The fourth plant consists of approximately 50,000 square feet of covered production space under roof, on a 10-acre site in Phoenix, Arizona, pursuant to a lease expiring in 2007. The fifth plant consists of approximately 80,000 square feet of manufacturing area on a 20-acre site in Glen Rose, Texas, outside the Dallas-Fort Worth metropolitan area. The Texas lease expires in 2008.

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The Company purchased its sixth facility in January 2003 for approximately $2.5 million. This facility, including office space, consists of 106,000 square feet on a 17-acre site in Plant City, Florida, northeast of Tampa.

During 2003 the Company closed three facilities. The company chose not to renew its lease for a plant in Glendale, Arizona. The operations at this plant were consolidated into the Company’s Phoenix operation. The Company also choose not to renew it lease for a plant in St. Petersburg, Florida. The operations from this plant and from a company-owned facility also in St. Petersburg were consolidated into the newly purchased and expanded operations in Plant City, Florida. The company-owned property is currently listed for sale.

The Company believes that its facilities are well maintained and in good operating condition, and meet the requirements for its immediately foreseeable business needs. Two of the Company’s facilities at December 31, 2003, are leased from an affiliate.

The Company is from time to time involved in various lawsuits related to its ongoing business operations, primarily collection actions or vendor disputes. In the opinion of management, no pending lawsuit will result in any material adverse effect upon the Company or its financial condition.

None.

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PART II

The Company’s common stock was traded on the NASDAQ National Market System under the symbol “MODT”. The range of high and low sales prices for the common stock as reported by the National Association of Securities Dealers, Inc. for the periods indicated below, are as follows:

On December 31, 2003, the closing sales price on The NASDAQ National Market for a share of the Company’s Common Stock was $8.41. The approximate number of holders of record of the Company’s Common Stock as of December 31, 2003, was 64.

STOCK COMPENSATION PLAN TABLE

The following table sets forth the number of shares to be issued upon exercise of outstanding options, the weighted-average exercise price of such options, and the number of shares remaining available for issuance as of the end of the company’s most recently completed fiscal year.

DIVIDEND POLICY

The Company has not paid cash dividends on its Common Stock since 1990. The Board of Directors currently intends to follow a policy of retaining all earnings, if any, to finance the continued growth and development of the Company’s business and does not anticipate paying cash dividends on its Common Stock in the foreseeable future. Any future determination as to the payment of cash dividends will be dependent upon the Company’s financial condition and results of operations and other factors deemed relevant by the Board of Directors.

11

The selected statement of operations and balance sheet data set forth below should be read in conjunction with those consolidated financial statements (including the notes thereto) and with “Management’s Discussion and Analysis of Results of Operations and Financial Condition” also included elsewhere herein.

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GENERAL

This annual report contains statements which, to the extent that they are not recitations of historical fact, such as our belief that we have sufficient liquidity to meet our near-term operating needs constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. The words “believe,” “estimate,” “anticipate,” “project,” “intend,” “expect,” “plan,” “outlook,” “forecast” “may,” “will,” “should,” “continue,” “predict” and similar expressions are intended to identify forward-looking statements. Such forward-looking statements are intended to be subject to the safe harbor protection within the meaning of that term in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Statements in this annual report, including the Notes to the Consolidated Financial Statements and in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” describe factors, among others, that could contribute to or cause such differences. Although we believe the expectations reflected in our forward-looking statements are based upon reasonable assumptions, there is no assurance that our expectations will be attained.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, the percentages of net sales represented by certain items in the Company’s statements of operations.

PERCENTAGE OF NET SALES

YEAR ENDED DECEMBER 31, 2003 COMPARED TO YEAR ENDED DECEMBER 31, 2002

Net sales for the year ended December 31, 2003, declined by $8.1 million, or approximately 4.8%, when compared to the prior year. The decrease in 2003 is attributable to lower sales of commercial and industrial buildings, reflecting the general business decline in the non-residential building sector and the overall economy. Lower sales were also impacted in the fourth quarter by the shift in marketing approach for non-classroom sales as the Company moved away from a reliance on a dealer network and focused more on direct sales for these products. The Company believes that the decline in sales associated with the shift to greater direct sales is temporary as the Company develops the necessary sales network.

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Gross profit for the year ended December 31, 2003 was $11.9 million, a decrease of $11.3 million, or approximately 48.7%, when compared to the previous year. Gross profit as a percentage of net sales decreased to 7.5% in 2003 from 13.8% in 2002. The decrease in gross profit was due to several factors:

Unplanned costs on certain projects were driven by the transition to more complex, multi-story projects that accelerated during 2003. With these complex projects accounting for more than 50% of the net revenue in 2003, up significantly over the prior year, the Company went through a significant learning curve, particularly for the site portion of the contracts. The Company believes that the experience gained in project management and actual execution on project sites positions the Company well for 2004 and beyond.

Unabsorbed fixed and semi-variable costs associated with the decline in production during the fourth quarter contributed significantly to the decline in gross margin for 2003. Fourth quarter sales of $23.1 million were down $13.1 million from the prior year fourth quarter. The Company believes that increased volumes projected for 2004 and a flattening of the historical sales cycle due to geographic and product offering expansions will minimize these unabsorbed costs going forward.

During 2003 the Company closed three leased facilities, consolidating three facilities into one in Florida and two facilities into one in Arizona. While these plant consolidations did drive incremental costs in 2003, going forward, significant savings are anticipated due to increased efficiencies.

The lower margins of 2003 are not seen as establishing or continuing a trend. The Company expects higher margins associated with the reduced reliance on the dealer network as well as the improvements noted above.

In 2003, selling, general and administrative (SG&A) expenses increased $0.6 million over the prior year with SG&A costs representing 5.1% of sales compared to 4.5% of sales the prior year. This increase was directly attributable to increased sales activities in the Florida classroom market and to the shift to direct sales for non-classroom sales throughout the Company. Although SG&A is expected to decline as a percent of sales from 2003 levels, the Company believes the direct sales model will have higher SG&A costs than the costs associated with using a dealer network. However, direct-sales margins are higher than sales to the dealer network and more than justify the increased SG&A expense.

In 2002, in accordance with SFAS No. 142, the Company took an impairment charge to goodwill of $37,288,488, which was recognized as a cumulative effect of a change in accounting principle in the three month period ended March 31, 2002. Effective January 1, 2002 the Company ceased amortizing its goodwill and continues to amortize its covenants not to compete over their respective useful lives. In 2003, covenant amortization decreased $0.3 million as a result of certain covenants not to compete becoming fully amortized. The remaining covenants not to compete will be fully amortized in 2006.

In 2003, net interest expense continued to decrease, declining from $1.6 million in 2002 to $1.4 million in 2003. The decrease is attributable to repayments on long-term debt. As a percentage of net sales, interest expense, net decreased to 0.8% in 2003 from 0.9% in 2002.

The provision for income taxes was $938 thousand for the year ended December 31, 2003, compared to $5.8 million for 2002. The Company’s effective tax rate decreased from 42.0% for the year ended December 31, 2002 to 39.2% for the year ended December 31, 2003. The decrease in income taxes is attributed to the decrease in income before income taxes and an a decrease in estimated taxes for tax settlements. The effective tax rate is expected to return to approximately 42% for 2004.

YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDED DECEMBER 31, 2001

Net sales for the year ended December 31, 2002 decreased to $168.0 million, a decrease of $33.1 million or approximately 16.5%, from $201.1 million in 2001. The decrease in 2002 is attributable to lower sales of commercial and industrial buildings, reflecting the general business decline in the non-residential building sector and the overall economy.

For the year ended December 31, 2002, gross profit was $23.2 million, a decrease of $12.9 million, or approximately 35.7%, from gross profit of $36.0 million. Gross profit as a percentage of net sales decreased to 13.8% in 2002 from 17.9% in 2001. The percentage decrease in gross profit was due principally to a decrease in production. The Company was unable to recover a portion of its fixed production facility costs through billings to customers.

In 2002, selling, general and administrative expenses decreased to $7.5 million from $8.1 million in 2001. As a percentage of net sales, selling, general and administrative expenses increased to 4.5% in 2002 from 4.0% in 2001. The percentage increase in selling, general and administrative expenses was due principally to a decrease in net sales. The Company was unable to recover a portion of its fixed selling, general and administrative costs through billings to customers.

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Goodwill was recorded for acquisitions in 1999 and 2001 and was amortized from the respective dates of acquisition through December 31, 2001. SFAS No. 142 requires that goodwill no longer be amortized, but instead tested for impairment at least annually in accordance with the provisions of SFAS No. 142. Accordingly, no goodwill amortization was recorded for the year ended December 31, 2002. In accordance with SFAS No. 142, the Company took a one-time impairment charge to goodwill of $37,288,488, which was recognized as a cumulative effect of a change in accounting principle in the three month period ended March 31, 2002. The Company continues to amortize its covenants not to compete over their respective useful lives.

In 2002, interest expense, net, decreased to $1.6 million from $3.1 million in 2001. The decrease is attributable to decreased line of credit borrowings, decreased long-term debt due to repayments and decreased interest rates for the year ended December 31, 2002. As a percentage of net sales, interest expense, net, decreased to 0.9% in 2002 from 1.5% in 2001.

Income before income taxes and the cumulative effect of a change in accounting principle for the year ended December 31, 2002 decreased by $7.5 million, or 35.2%, when compared to 2001. As a percentage of net sales, income before income taxes and the cumulative effect of a change in accounting principle decreased from 10.5% in 2001, to 8.2% in 2002.

The provision for income taxes was $5.8 million for the year ended December 31, 2002, compared to $9.6 million for 2001. The Company’s effective tax rate decreased to 42.0% for the year ended December 31, 2002 from 45.3% for the year ended December 31, 2001. The decrease in income taxes is attributed to the decrease in income before income taxes and cumulative effect of a change in an accounting principle, which is primarily the result of the decrease in net sales.

Income before the cumulative effect of a change in accounting principle for 2002 decreased by $3.6 million, or 31.4%, when compared to 2001. As a percentage of net sales, income before the cumulative effect of a change in accounting principle decreased from 5.8% in 2001 to 4.8% in 2002.

LIQUIDITY AND CAPITAL RESOURCES

To date, the Company has funded its operations and capital expenditures with cash generated internally by operations, supplemented by borrowings under various credit facilities and public offerings. During the years ended December 31, 2001, 2002 and 2003, the Company’s operations provided cash in the amounts of approximately $8.1 million, $8.2 million and $14.1 million, respectively. At December 31, 2003, the Company had $1.1 million in cash and cash equivalents and working capital of $21.5 million.

The financial performance during the fourth quarter of 2003 resulted in the violation of certain bank covenants. The Company secured waivers for those covenant violations and amended its credit facility in March 2004. Reflecting the reduction in long-term debt and lower revolving fund requirements, the company now has a $47 million bank credit facility which provides for a $35 million revolving credit line. The credit facility is secured by all the Company’s assets. At December 31, 2003, $7.4 million was outstanding under the revolving credit line. The credit facility expires in December 2006 at which time the long-term debt will be fully paid.

The Company had working capital of $25.3 million, $28.0 million and $21.5 million at December 31, 2001, 2002 and 2003, respectively. In 2003, current assets decreased by $11.6 million, with a decrease of $8.4 million in costs and estimated earnings in excess of billings on contracts, a decrease in contracts receivable of $5.0 million, and a decrease in inventories of $1.5 million offset by an increase of $0.5 million in due from affiliates, an increase of $1.0 million in prepaid assets, an increase of $0.9 million in cash, an increase of $0.6 million in other current assets, and an increase of $0.2 million in deferred tax assets. Current liabilities decreased by $5.1 million, attributable to an increase of $1.6 million in billings in excess of earnings offset by a decrease of $2.6 million in current portion of long-term debt and revolving line of credit and a decrease of $4.1 million in accounts payable and accrued liabilities.

Capital expenditures amounted to $1.2 million, $1.1 million and $4.7 million during the years ended December 31, 2001, 2002 and 2003, respectively. In all three years, the majority of expenditures were a result of expanding production capacity at the Company’s various facilities. The Company expects to expend approximately $4.5 million in capital projects in 2004.

Management believes that the Company’s existing product lines and manufacturing capacity will enable the Company to generate sufficient cash through operations, supplemented by the Company’s bank line of credit, to finance the Company’s business over the next twelve months. However, additional cash resources may be required if the Company’s rate of growth exceeds currently anticipated levels. Moreover, it may prove necessary for the Company to construct or acquire additional manufacturing facilities in order for the Company to compete effectively in new market areas or states which are beyond a 300 mile radius from one of its production facilities. The construction or acquisition of new facilities could require significant additional capital. For these reasons, among others, the Company may need additional debt or equity financing in the future. There can be, however, no assurance that the Company will be successful in obtaining such additional financing, or that any such financing will be available on terms acceptable to it.

15

COMMITMENTS AND CONTINGENCIES

The following table represents a list of the Company’s contractual obligations and commitments as of December 31, 2003:

USE OF ESTIMATES AND CRITICAL ACCOUNTING POLICIES

In December 2001, the Securities and Exchange Commission (SEC) requested that all registrants list their most “critical accounting policies” in Management’s Discussion and Analysis of Financial Condition and Results of Operations. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of the Company’s financial condition and results of operations and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Management continually evaluates its estimates and assumptions including those related the Company’s most critical accounting policies. Management bases its estimates and assumptions on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. Changes in economic conditions could have an impact on these estimates and the Company’s actual results. Management believes that the following may involve a higher degree of judgment or complexity:

Allowances for Contract Adjustments

The Company maintains allowances for contract adjustments that result from the inability of its customers to make their required payments. Management bases its allowances on analysis of the aging of accounts receivable, by account, at the date of the financial statements, assessments of historical collection trends, and an evaluation of the impact of current economic conditions. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Revenue Recognition on Construction Contracts

Contracts are recognized using the percentage-of-completion method of accounting and, therefore, take into account the costs, estimated earnings and revenue to date on contracts not yet completed. Revenue recognized is that percentage of the total contract price that cost expended to date bears to anticipated final total cost, based on current estimates of costs to complete. The percentage-of-completion methodology generally results in the recognition of reasonably consistent profit margins over the life of a contract. Cumulative revenues recognized may be less or greater than cumulative costs and profits billed at any point in time during a contract’s term. The resulting difference is recognized as unbilled or deferred revenue.

Any estimation process, including that used in preparing contract accounting models, involves inherent risk. We reduce the inherent risk relating to revenue and cost estimates in percentage-of-completion models through corporate policy, approval and monitoring processes. Risks relating to project delivery, productivity and other factors are considered in the estimation process. Our estimates of revenues and costs on construction contracts change periodically in the normal course of business due to factors such as productivity and modifications of contractual arrangements. Such changes are reflected in the results of operations as a change in accounting estimate in the period the revisions are determined. Provisions for estimated losses are made in the period in which the loss first becomes apparent.

16

SEASONALITY

Historically, the Company’s quarterly revenues have been highest in the second and third quarters of each calendar year because a large number of orders for modular classrooms placed by school districts require that classrooms be constructed, delivered and installed in time for the upcoming new school year which generally commences in September. The Company has typically been able to add employees as needed to respond to the corresponding increases in manufacturing output required by such seasonality to meet currently foreseeable increases in this seasonal demand.

The Company’s first and fourth quarter revenues are typically lower due to greater number of holidays and days of inclement weather during such periods. In addition, the Company’s operating margins may vary on a quarterly basis depending upon the mix of revenues between standardized classrooms and higher margin customized classrooms and the timing of the completion of large, higher margin customized contracts.

The Company anticipates a smoothing of this seasonality due to the growing impact of multi-year contracts and increased sales outside the traditional classroom market. However, these factors will not fully offset the impact of inclement weather and concentrations of holidays. So although the impact of seasonality is expected to be diminished, revenue and margins in the first and fourth quarters will likely be lower than in the second and third quarters.

INFLATION

During the past three years, the Company has not been adversely affected by inflation, because it has been generally able to pass along increases in the costs of labor and materials to its customers. However, there can be no assurance that the Company’s business will not be affected by inflation in the future. Although the company is aggressively pursuing means of offsetting the impact, recent steel prices have increased significantly and 2004 gross margin may see some impact from these increases.

Market risk refers to the risk that a change in the level of one or more market factors such as interest rates, foreign currency exchange rates, or equity prices will result in losses for a certain financial instrument or group of instruments. We are principally exposed to interest rate and credit risks. We are not exposed to foreign currency exchange rate risk.

INTEREST RATE RISK

We are exposed to market risks related to fluctuation in interest rates on our $66 million credit facility. During 2003, we did not use interest rate swaps or other types of derivative financial instruments. The carrying value of the credit facility approximates fair value as the interest rate is variable and resets frequently. Indebtedness under the credit facility bears interest at LIBOR plus additional interest of between 1.25% and 3.50%, or the Federal funds rate plus additional interest of between 0.0% to 0.5%. The additional interest charge is based upon certain financial ratios. We estimate that the average amount of debt outstanding under the credit facility for 2004 will be $24 million. Therefore, a one-percentage point increase in interest rates would result in an increase in interest expense of $240,000 for the year.

CREDIT RISK

We are currently exposed to credit risk on credit extended to customers. We actively monitor this risk through a variety of control procedures involving senior management. Historically, credit losses have been small and within our expectations.

17

The consolidated financial statements of the Company, along with the notes thereto and the independent auditors’ report thereon, required to be filed in response to this Item 8 are attached hereto as exhibits under Item 15.

Not applicable.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-14 under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, our disclosure controls and procedures are effective in timely alerting them to material information relating to us that is required to be included in our SEC filings. No changes occurred during the quarter ended December 31, 2003 in our internal controls over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

18

PART III

Information required by this Item will be set forth in the Proxy Statement and is incorporated herein by reference.

Information required by this Item will be set forth in the Proxy Statement and is incorporated herein by reference.

Information required by this Item will be set forth in the Proxy Statement and is incorporated herein by reference.

Information required by this Item will be set forth in the Proxy Statement and is incorporated herein by reference.

Information required by this Item will be set forth in the Proxy Statement and is incorporated herein by reference.

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PART IV

(a) Exhibits and Financial Statement Schedules

1 & 2. Index to Financial Statements

The following financial statements and financial statement schedule of the Company, along with the notes thereto and the Independent Auditors’ Reports, are filed herewith, as required by Part II, Item 8 hereof.

Financial Statements

All other financial statement schedules have been omitted because the required information is shown in the consolidated financial statements or notes thereto, the amounts involved are not significant, or the schedules are not applicable.

3. Exhibits

(b) Reports on Form 8-K

     Form 8-K filed November 5, 2003

20

21

SIGNATURES

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

22

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

S-1

MODTECH HOLDINGS, INC. AND SUBSIDIARIES

Annual Report – Form 10-K

Consolidated Financial Statements and Schedule

December 31, 2001, 2002 and 2003

(With Independent Auditors’ Report Thereon)

F-1

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders

Modtech Holdings, Inc.:

We have audited the accompanying consolidated balance sheets of Modtech Holdings, Inc. and subsidiaries as of December 31, 2002 and 2003, and the related consolidated statements of operations, shareholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2003. In connection with our audits of the consolidated financial statements, we have also audited the accompanying financial statement schedule for each of the years in the three-year period ended December 31, 2003. These consolidated financial statements and the financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and the financial statement schedule 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 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Modtech Holdings, Inc. and subsidiaries as of December 31, 2002 and 2003, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As discussed in Notes 1 and 7 to the consolidated financial statements, the Company changed its method of accounting for goodwill and intangible assets in 2002.

/s/ KPMG LLP

Costa Mesa, California

March 4, 2004

F-2

MODTECH HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2002 and 2003

See accompanying notes to consolidated financial statements.

F-3

MODTECH HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2002 and 2003

See accompanying notes to consolidated financial statements.

F-4

MODTECH HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

Years ended December 31, 2001, 2002 and 2003

See accompanying notes to consolidated financial statements.

F-5

MODTECH HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Shareholders’ Equity

Years ended December 31, 2001, 2002 and 2003