##### Table of Contents



FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

(Mark One)

|    |  |                                                                                         
|--- |  | ----------------------------------------------------------------------------------------
|(X) |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|   
|    |  | For the quarterly period ended July 31, 2002                                            

OR

|      |  |                                                                                          
|----- |  | -----------------------------------------------------------------------------------------
|(   ) |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|     
|      |  | For the transition period from  _____________ to  _____________                          

Commission File No.: 09081

CERTRON CORPORATION

---

(Exact name of registrant as specified in its charter)




|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|CALIFORNIA                                                     |  | 95-2461404                          
|                                                              
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)



|                                         |  |           
|---------------------------------------- |  | ----------
|1545 Sawtelle Boulevard, Los Angeles, CA |  | 90025     
|                                        
|(Address of principal executive office)  |  | (Zip Code)

Registrants telephone number, including area code: (310) 914-0300



N/A

---

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




Indicate by a 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    [   ]



APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuers classes of Common Stock as
of the latest practicable date:

3,128,306 shares of Common Stock, without par value, as of August 22, 2002





---

TABLE OF CONTENTS



|                               |                                                                                              |                                            |  |  |  |  |  | 
|------------------------------ | -------------------------------------------------------------------------------------------- | ------------------------------------------ |  |  |  |  |  | 
|PART I.  FINANCIAL INFORMATION
|                               | Item 1. Financial Statements                                                                
|                               |                                                                                              | CONSOLIDATED BALANCE SHEETS               
|                               |                                                                                              | CONSOLIDATED STATEMENTS OF OPERATIONS     
|                               |                                                                                              | CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                               |                                                                                              | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|                               | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operation
|                               | Item 3. Quantitative and Qualitative Disclosures About Market Risk. Not applicable.         
|PART II. OTHER INFORMATION.   
|                               | Item 6. Exhibit and Reports on Form 8-K                                                     
|SIGNATURES                    
|Exhibit Index                 
|CERTRON CORPORATION EXHIBIT 99



---



##### Table of Contents






PART I.  FINANCIAL INFORMATION




Item 1. Financial Statements




CERTRON CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
($ in Thousands)

|                                        |                                                                                                                          |                      |                                                |        |             |       |             |        |       |       |  
|--------------------------------------- | ------------------------------------------------------------------------------------------------------------------------ | -------------------- | ---------------------------------------------- | ------ | ----------- | ----- | ----------- | ------ | ----- | ----- | -
|                                        |                                                                                                                          |                      |                                                |        | July 31,    |       | October 31,
|                                        |                                                                                                                          |                      |                                                |        | 2002        |       | 2001       
|                                        |                                                                                                                          |                      |                                                |        |             |       |            
|                                        |                                                                                                                          |                      |                                                |        | (Unaudited) |       |             |        |      
|ASSETS                                  |                                                                                                                          |                      |                                                |        |             |       |             |       
|CURRENT ASSETS:                         |                                                                                                                          |                      |                                                |        |             |       |             |       
|                                        | Cash and cash equivalents                                                                                                |                      | $                                              | 837    |             |       | $           | 1,075  |      
|                                        | Notes Receivable                                                                                                         |                      |                                                | 8      |             |       |             | 99     |      
|                                        | Trade accounts receivable, net                                                                                           |                      |                                                | 89     |             |       |             | 129    |      
|                                        | Inventories:                                                                                                             |                      |                                                |        |             |       |             |        |      
|                                        |                                                                                                                          | Finished products    |                                                |        | 523         |       |             |        | 653   |      
|                                        | Other current assets                                                                                                     |                      |                                                | 25     |             |       |             | 81     |      
|                                        |                                                                                                                          |                      |                                                |        |             |       |             |        |      
|                                        |                                                                                                                          | Total current assets |                                                |        | 1,482       |       |             |        | 2,037 |      
|                                        |                                                                                                                          |                      |                                                |        |             |       |             |        |      
|EQUIPMENT AND LEASEHOLD IMPROVEMENTS:   |                                                                                                                          |                      |                                                |        |             |       |             |       
|                                        | Machinery and equipment                                                                                                  |                      |                                                | 132    |             |       |             | 132    |      
|                                        | Dies and molds                                                                                                           |                      |                                                | 317    |             |       |             | 317    |      
|                                        | Furniture, fixtures and
leasehold improvements                                                                           |                      |                                                | 175    |             |       |             | 175    |      
|                                        |                                                                                                                          |                      |                                                |        |             |       |             |        |      
|                                        |                                                                                                                          |                      | 624                                            |        |             |       | 624         |       
|                                        |                                                                                                                          |                      | Less accumulated depreciation
and amortization |        |             | (599  | )           |        |       | (586  | )
|                                        |                                                                                                                          |                      |                                                |        |             |       |             |        |      
|                                        |                                                                                                                          |                      | Net equipment and leasehold
improvements       |        |             | 25    |             |        |       | 38    |  
|                                        |                                                                                                                          |                      |                                                |        |             |       |             |        |      
|MARKETABLE SECURITIES                   |                                                                                                                          |                      | 78                                             |        |             |       | 113         |       
|OTHER ASSETS                            |                                                                                                                          |                      | 20                                             |        |             |       | 20          |       
|NET ASSETS FROM DISCONTINUED OPERATIONS |                                                                                                                          |                      |                                               |        |             |       | 12          |       
|                                        |                                                                                                                          |                      |                                                |        |             |       |             |        |      
|                                        |                                                                                                                          |                      | TOTAL ASSETS                                   |        | $           | 1,605 |             |        | $     | 2,220 |  
|                                        |                                                                                                                          |                      |                                                |        |             |       |             |        |      
|LIABILITIES AND STOCKHOLDERS EQUITY    |                                                                                                                          |                      |                                                |        |             |       |             |       
|CURRENT LIABILITIES:                    |                                                                                                                          |                      |                                                |        |             |       |             |       
|                                        | Accrued advertising                                                                                                      |                      | $                                              | 14     |             |       | $           | 37     |      
|                                        | Accrued professional fees                                                                                                |                      |                                                | 35     |             |       |             | 35     |      
|                                        | Accrued payroll and related items                                                                                        |                      |                                                | 25     |             |       |             | 54     |      
|                                        | Other accrued expenses                                                                                                   |                      |                                                | 73     |             |       |             | 80     |      
|                                        |                                                                                                                          |                      |                                                |        |             |       |             |        |      
|                                        |                                                                                                                          |                      | Total current liabilities                      |        |             | 147   |             |        |       | 206   |  
|                                        |                                                                                                                          |                      |                                                |        |             |       |             |        |      
|STOCKHOLDERS EQUITY:                   |                                                                                                                          |                      |                                                |        |             |       |             |       
|                                        | Preferred Stock, $1.00 par value,
authorized 500,000 shares, no
shares issued and outstanding                            |                      |                                                |        |             |       |             |        |      
|                                        | Common Stock, no par value;
stated value $1.00 per share: authorized 10,000,000 shares;
issued and outstanding 3,128,000 |                      |                                                | 3,128  |             |       |             | 3,128  |      
|                                        | Additional paid-in capital                                                                                               |                      |                                                | 1,824  |             |       |             | 1,824  |      
|                                        | Net unrealized loss on marketable
equity securities                                                                      |                      |                                                | (99    | )           |       |             | (87    | )    
|                                        | Accumulated deficit                                                                                                      |                      |                                                | (3,395 | )           |       |             | (2,851 | )    
|                                        |                                                                                                                          |                      |                                                |        |             |       |             |        |      
|                                        |                                                                                                                          |                      | Total stockholders equity                     |        |             | 1,458 |             |        |       | 2,014 |  
|                                        |                                                                                                                          |                      |                                                |        |             |       |             |        |      
|                                        |                                                                                                                          |                      | TOTAL LIABILITIES AND STOCKHOLDERS EQUITY     |        | $           | 1,605 |             |        | $     | 2,220 |  
|                                        |                                                                                                                          |                      |                                                |        |             |       |             |        |      

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

1



---



##### Table of Contents






CERTRON CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in Thousands except Per Share Information)
(Unaudited)

|                                            |  |                                          |           |                             |       |                            |           |      |       |      |           |   |       |   |           |   |       |  
|------------------------------------------- |  | ---------------------------------------- | --------- | --------------------------- | ----- | -------------------------- | --------- | ---- | ----- | ---- | --------- | - | ----- | - | --------- | - | ----- | -
|                                            |  |                                          |           | Three Months ended July 31, |       | Nine Months ended July 31,
|                                            |  |                                          |           |                             |       |                           
|                                            |  |                                          |           | 2002                        |       | 2001                       |           | 2002 |       | 2001
|                                            |  |                                          |           |                             |       |                            |           |      |       |     
|                                            |  |                                          |           | (Unaudited)                 |       | (Unaudited)               
|NET SALES                                   |  | $                                        | 186       |                             |       | $                          | 348       |      |       | $    | 592       |   |       | $ | 1,153     |  
|                                            |  |                                          |           |                             |       |                            |           |      |       |      |           |   |       |   |           |  
|COST AND EXPENSES                           |  |                                          |           |                             |       |                            |           |      |       |      |           |   |       |   |           |  
|                                            |  | Cost of products
sold                    |           |                             | 187   |                            |           |      | 274   |      |           |   | 553   |   |           |   | 904   |  
|                                            |  | Selling, general
& administrative        |           |                             | 167   |                            |           |      | 236   |      |           |   | 586   |   |           |   | 722   |  
|                                            |  | Depreciation and
amortization            |           |                             | 4     |                            |           |      | 13    |      |           |   | 13    |   |           |   | 41    |  
|                                            |  |                                          |           |                             |       |                            |           |      |       |      |           |   |       |   |           |  
|                                            |  | Total costs and
expenses                 |           |                             | 358   |                            |           |      | 523   |      |           |   | 1,152 |   |           |   | 1,667 |  
|                                            |  |                                          |           |                             |       |                            |           |      |       |      |           |   |       |   |           |  
|Loss before other
income and expenses       |  |                                          | (172      | )                           |       |                            | (175      | )    |       |      | (560      | ) |       |   | (514      | )
|Other income -                              |  |                                          |           |                             |       |                            |           |      |       |      |           |   |       |   |           |  
|                                            |  | Interest (net)                           |           |                             | 4     |                            |           |      | 17    |      |           |   | 16    |   |           |   | 59    |  
|                                            |  | Gain on sales
of stock                   |           |                             |      |                            |           |      |      |      |           |   | 1     |   |           |   | 4     |  
|                                            |  |                                          |           |                             |       |                            |           |      |       |      |           |   |       |   |           |  
|Net loss before
provision                   |  |                                          | ($168     | )                           |       |                            | ($158     | )    |       |      | ($543     | ) |       |   | ($451     | )
|Provision for taxes                         |  |                                          |          |                             |       |                            |          |      |       |      | 1         |   |       |   | 1         |  
|                                            |  |                                          |           |                             |       |                            |           |      |       |      |           |   |       |   |           |  
|Loss from continuing
operations             |  |                                          | ($168     | )                           |       |                            | ($158     | )    |       |      | ($544     | ) |       |   | ($452     | )
|Gain (loss) from
Discontinued operations    |  |                                          |          |                             |       |                            | 22        |      |       |      |          |   |       |   | 10        |  
|                                            |  |                                          |           |                             |       |                            |           |      |       |      |           |   |       |   |           |  
|Net Loss                                    |  |                                          | ($168     | )                           |       |                            | ($136     | )    |       |      | ($544     | ) |       |   | ($442     | )
|OTHER COMPREHENSIVE
INCOME (LOSS):          |  |                                          |           |                             |       |                            |           |      |       |      |           |   |       |   |           |  
|                                            |  | Unrealized Loss
on marketable
securities |           |                             | (12   | )                          |           |      | (54   | )    |           |   | (12   | ) |           |   | (54   | )
|                                            |  |                                          |           |                             |       |                            |           |      |       |      |           |   |       |   |           |  
|                                            |  | Comprehensive loss                       |           |                             | ($180 | )                          |           |      | ($190 | )    |           |   | ($556 | ) |           |   | ($496 | )
|                                            |  |                                          |           |                             |       |                            |           |      |       |      |           |   |       |   |           |  
|PER SHARE INFORMATION:                      |  |                                          |           |                             |       |                            |           |      |       |      |           |   |       |   |           |  
|Basic loss
per share                        |  |                                          | ($0.05    | )                           |       |                            | ($0.04    | )    |       |      | ($0.17    | ) |       |   | ($0.14    | )
|                                            |  |                                          |           |                             |       |                            |           |      |       |      |           |   |       |   |           |  
|Diluted
loss per share                      |  |                                          | ($0.05    | )                           |       |                            | ($0.04    | )    |       |      | ($0.17    | ) |       |   | ($0.14    | )
|                                            |  |                                          |           |                             |       |                            |           |      |       |      |           |   |       |   |           |  
|Average number of
common shares
outstanding |  |                                          | 3,128,000 |                             |       |                            | 3,128,000 |      |       |      | 3,128,000 |   |       |   | 3,128,000 |  
|                                            |  |                                          |           |                             |       |                            |           |      |       |      |           |   |       |   |           |  

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

2



---



##### Table of Contents






CERTRON CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in Thousands)
(Unaudited)

|                                               |                                                                            |   |                                                   |       |                            |     |       |       |   |     |  
|---------------------------------------------- | -------------------------------------------------------------------------- | - | ------------------------------------------------- | ----- | -------------------------- | --- | ----- | ----- | - | --- | -
|                                               |                                                                            |   |                                                   |       | Nine Months Ended July 31,
|                                               |                                                                            |   |                                                   |       |                           
|                                               |                                                                            |   |                                                   |       | 2002                       |     | 2001 
|                                               |                                                                            |   |                                                   |       |                            |     |      
|CASH FLOWS FROM OPERATING ACTIVITIES:          |                                                                            |   |                                                   |       |                            |     |       |      
|                                               | Net loss                                                                   |   |                                                   | ($544 | )                          |     |       | ($404 | )
|                                               |                                                                            |   |                                                   |       |                            |     |       |       |   |    
|                                               | Adjustment to reconcile net loss
to net cash used in
operating activities: |   |                                                   |       |                            |     |       |       |  
|                                               |                                                                            |   | Depreciation and amortization                     |       |                            | 13  |       |       |   | 41  |  
|                                               |                                                                            |   | Changes in operating assets and liabilities:      |       |                            |     |       |       |   |     |  
|                                               |                                                                            |   | Decrease in trade accounts receivable             |       |                            | 131 |       |       |   | 55  |  
|                                               |                                                                            |   | Decrease in inventories                           |       |                            | 130 |       |       |   | 62  |  
|                                               |                                                                            |   | Decrease in other assets                          |       |                            | 56  |       |       |   | 41  |  
|                                               |                                                                            |   | Decrease in accrued expenses                      |       |                            | (59 | )     |       |   | (93 | )
|                                               |                                                                            |   | Decrease in net assets of discontinued
Operations |       |                            | 12  |       |       |   |    |  
|                                               |                                                                            |   |                                                   |       |                            |     |       |       |   |    
|                                               | Net cash used in operating activities                                      |   |                                                   | (261  | )                          |     |       | (298  | )
|                                               |                                                                            |   |                                                   |       |                            |     |       |       |   |    
|CASH FLOWS FROM INVESTING ACTIVITIES:          |                                                                            |   |                                                   |       |                            |     |       |      
|                                               | Proceeds from sale of marketable securities                                |   |                                                   | 85    |                            |     |       | 182   |  
|                                               | Purchase of marketable securities                                          |   |                                                   | (62   | )                          |     |       | (137  | )
|                                               |                                                                            |   |                                                   |       |                            |     |       |       |   |    
|                                               | Net cash provided by (used in)
investing activities                        |   |                                                   | 23    |                            |     |       | 45    |  
|                                               |                                                                            |   |                                                   |       |                            |     |       |       |   |    
|NET DECREASE IN CASH AND CASH
EQUIVALENTS      |                                                                            |   | (238                                              | )     |                            |     | (253  | )    
|CASH AND CASH EQUIVALENTS, beginning of period |                                                                            |   | 1,075                                             |       |                            |     | 1,559 |      
|                                               |                                                                            |   |                                                   |       |                            |     |       |       |   |    
|CASH AND CASH EQUIVALENTS, end of period       |                                                                            | $ | 837                                               |       |                            | $   | 1,306 |      
|                                               |                                                                            |   |                                                   |       |                            |     |       |       |   |    

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

3



---



##### Table of Contents






CERTRON CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Nine Months Ended July 31, 2002
(Unaudited)

NOTE A  BASIS OF PRESENTATION

The accompanying financial statements and footnotes have been condensed and
therefore do not contain all disclosures required by generally accepted
accounting principles. The interim financial statements are unaudited;
however, in the opinion of Certron Corporation (the Company), the interim
financial statements include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair statement of the results for the
interim periods. Results for interim periods are not necessarily indicative of
those to be expected for the full year.

NOTE B   MARKETABLE EQUITY SECURITIES

Management determines the appropriate classification of its investments in debt
and equity securities at the time of purchase and reevaluates such
determination at each balance sheet date. Securities available for sale are
carried at fair value, with the unrealized gains and losses, net of tax,
reported as a separate component of stockholders equity. At July 31, 2002 the
Company had no investments that qualified as trading or held to maturity.

Marketable equity securities are valued based on quoted market prices. The
cost of securities sold is determined by the specific identification of cost
method.

NOTE C  NOTES RECEIVABLE

A custom-assembly customer issued a promissory note to the Company for
outstanding accounts in the amount of $109,490 payable in ten equal monthly
installments at 10% interest with the first payment due on October 15, 2001 and
the final payment due on July 1, 2002. The balance is $8,437 as of July 31,
2002, which is past due as of July 31, 2002.

NOTE D  DISCONTINUED OPERATIONS

On September 7, 2001, the Company closed its Mexicali, Mexico plant and its
contract assembly operations which were conducted at that facility. In the
opinion of management, all expenses associated with the closing of Mexico
operation were either paid or fully accrued in fiscal 2001. The assets in the
Mexicali, Mexico facility consists primarily of accounts receivable and fixed
assets.

Disposition of the Mexicali facility, represents disposal of a business segment
under Accounting Principles Board Opinion No.30. Accordingly, results of this
operation have been classified as discontinued, and prior periods have been
restated. Operating results of the Mexicali facility for the quarter and nine
months ending July 31, 2001 are shown separately in the accompanying income
statement. The income statement for the quarter and nine months ending July
31, 2001 has been restated and operating results of the segment are also shown
separately.

4



---



##### Table of Contents



Net sales and income from the discontinued operations are as follows:

|                                                  |  |                     |   |      |  |  |         | 
|------------------------------------------------- |  | ------------------- | - | ---- |  |  | ------- | 
|                                                  |  | For the Nine Months
|                                                  |  | Ended July 31,     
|                                                  |  |                    
|                                                  |  | 2002                |   | 2001
|                                                  |  |                     |   |      |  | 
|Net sales                                         |  |                     |  |      |  |  | 535,000 | 
|Gain from discontinued operations                 |  |                     |  |      |  |  | 10,000  | 
|Gain (loss)on disposal of discontinued operations |  |                     |  |      |  |  |        | 
|Income tax expense                                |  |                     |  |      |  |  |        | 
|Net gain from discontinued operations             |  |                     |  |      |  |  | 10,000  | 

NOTE E  LEGAL PROCEEDINGS

The Company was notified by a letter dated June 2, 2000 received June 6, 2000
that the Company may have a potential liability from waste disposal in the
Casmalia Disposal Site at Santa Barbara County, California. The Company was
given a choice of either signing an agreement that would toll the statute of
limitations for eighteen (18) months in order to allow the Company to resolve
any liability with the government without incurring costs associated with being
named a defendant in a lawsuit, or becoming an immediate defendant in a
lawsuit. The Company signed the tolling agreement. On November 20, 2001, the
tolling agreement was extended for an additional 18 months. While the amount
which will be required to settle this matter is not expected to be material,
Certron is unable to estimate the amount that may be required to settle this
matter. The Company is waiting for communication from the government
concerning settlement of this claim. The statement that the Company does not
expect the amount to be material is a forward-looking statement which involves
risks and uncertainties that could cause actual results to differ include,
among other things, an increase in the alleged amount of waste disposal by the
Company at the site over that which is alleged in the letter of June 2, 2000 or
a refusal by the government to settle based upon the amount of waste disposal
by the Company.

NOTE F  MAJOR CUSTOMER

During the nine months ended July 31, 2002 the Company had two major customers
which accounted for approximately $344,000 or 58% and $65,000 or 10% of sales.
The loss of these customers would have a negative effect on the Companys
financial position. Although the customer has continued to place orders with
the Company, the Company has been advised that their largest customer will no
longer be using Certron as a prime source. The loss of the major customer will
have a material negative effect on earnings and sales.

5



---



##### Table of Contents






Item 2. Managements Discussion and Analysis of Financial Condition and
Results
of Operation

LIQUIDITY AND CAPITAL RESOURCES

As set forth in the following chart, the Companys current ratio was 10.08
to 1 at July 31, 2002.

|                |  |            |           |           |  |   |           | 
|--------------- |  | ---------- | --------- | --------- |  | - | --------- | 
|                |  | 07/31/02   |           | 10/31/01 
|                |  |            |           |          
|Working capital |  | $          | 1,335,000 |           |  | $ | 1,831,000 | 
|Current ratio   |  | 10.08 to 1 |           | 9.89 to 1

The Companys liquidity has been supplied from internally generated funds.
The Company believes it will be able to fund its existing business out of
current cash flow without the necessity of bank borrowing. At July 31, 2002,
the Company had no material commitments for capital expenditures.

The intense competition in the magnetic media field has made it difficult
for the Company to maintain prices on its magnetic media products and has
continually reduced the Companys margins on these products. As a result, the
Company has discontinued sales of certain magnetic media products and refused
to sell magnetic media products at prices not resulting in certain minimum
margin returns. The Company does not believe that price competition in the
magnetic media field will lessen in the foreseeable future and, therefore,
there may not presently be meaningful opportunities for it to substantially
increase its sales and operating profit through its traditional outlets.

Although it has continued to place orders with the Company during this
quarter, the Company was advised by their largest customer which accounted for
approximately $344,000 of sales during the nine month period ended July 31,
2002, that the customer would no longer be using the Company as a prime source.
The loss of this customer will have a material adverse effect on sales and
earnings.

Over the past several years, in an attempt to increase its sales and
operating profits the Company has investigated companies for possible purchase.
None of these companies were found to be satisfactory for acquisition by the
Company. The Company is continuing its search for an acquisition of a product
line or lines or business and investigating other opportunities for increasing
shareholder value, including strategic alliances and the sale of its business.
There can be no assurance, however that the Company will be successful in any
of these endeavors.

RESULTS OF OPERATIONS

Third Quarter Fiscal 2002 compared to Third Quarter Fiscal 2001

During the third quarter of fiscal 2002 the Company had a loss from
continuing operations of $168,000 on sales from continuing operations of
$186,000 as compared to a loss from continuing operations of $158,000 on sales
from continuing operations of $348,000 during the third quarter of fiscal 2001.

On September 7, 2001, the Company closed its Mexicali, Mexico plant and
its contract assembly operations which were conducted at that facility. This
closure was in response to a decline in the market for micro cassettes which
also had been assembled at the Mexicali, Mexico facility, the loss of an
existing contract assembly customer and the negative outlook for the retention
of its then sole remaining contract assembly customer and additional contract
assembly business. The contract assembly operations are reflected as
discontinued

6



---



##### Table of Contents



operations in the Companys financial statements. In the opinion of
management, all expenses associated with the closing of Mexico operations were
either paid or fully accrued in fiscal 2001.

Net sales from continuing operations were $186,000 for the third quarter
of 2002 as compared to net sales from continuing operations of $348,000 in the
third quarter of 2001. The decrease of $162,000 or 47% was the result of a
decrease in magnetic media product sales.

Gross margin decreased by $75,000 for the third quarter of fiscal 2002
from $74,000 for the third quarter of fiscal 2001 to ($1,000) for the third
quarter of fiscal 2002. The primary cause of the decrease is the diminishing
market for the magnetic media products. Due to this industry decline, the
Company wrote down certain inventory items during the third quarter, resulting
in a negative gross margin.

Due to the decrease in net sales, cost of sales decreased by $87,000
during the third quarter of fiscal 2002, from $274,000 in the third quarter of
fiscal 2001 to $187,000 in the third quarter of 2002. Selling, general and
administrative and depreciation expenses decreased by $78,000 due to the
decrease in net sales during the third quarter of fiscal 2002 from $249,000 in
the third quarter of fiscal 2001 to $177,000 in the third quarter of fiscal
2002.

The Company has not recorded a provision for federal income tax for the
third quarter of 2001 or 2002 due to losses incurred during those periods. Any
future tax benefits from those losses have been offset by a valuation reserve.
The $1,000 represents the minimum state tax.

The Company has invested cash in commercial paper and in publicly traded
common stocks of other companies, and may purchase additional common stocks in
the future. Investments in common stocks are subject to risks of the market,
and market prices may fluctuate and be adversely affected by the operating
results of the issuer, as well as general economic, political and market
conditions. As of July 31, 2002, the Company held common stocks that had a
cost of approximately $177,000 and market value of approximately $78,000.

The Company has recorded the value of its investments in marketable
securities on its Balance Sheet at market value and the decrease of
approximately $99,000 is reflected in stockholders equity as an unrealized
holding loss. If the Company sells these securities at a loss, the Company will
recognize a loss in its statement of operations equal to the amount of the
decrease. Although the Company presently intends to hold these securities, if,
on account of its capital requirements or for any other reason, the Company
should decide to liquidate these or other investments at a time when their
market value is less than their cost, the Company would recognize a loss which
could adversely affect the results of operations for the period in which the
sale occurs.

Nine Months Fiscal 2002 compared to Nine Months Fiscal 2001

For the first nine months of fiscal 2002, the Company had a loss from
continuing operations of $544,000 on sales from continuing operations of
$592,000 as compared to a loss from continuing operations of $452,000 on sales
from continuing operations of $1,153,000 during the first nine months of fiscal
2001. The increase in net loss for the first nine months of fiscal 2002 as
compared to the first nine months of fiscal 2001 of $92,000 is due primarily to
the decrease in gross profit of $210,000, decrease in gain on sales of stock
investment of $3,000, decrease in interest income of $43,000 and offset by
decrease in selling and general expenses and depreciation of $164,000 over the
first nine months of fiscal 2002.

7



---



##### Table of Contents



Net sales from continuing operations were $592,000 for the first nine
months of 2002 as compared to net sales from continuing operations of
$1,153,000 for the first nine months of 2001. The decrease of $561,000 or 49%
was primarily the result of a decrease in sales of audio cassettes of $24,000,
mini and micro cassettes of $93,000, video cassettes of $69,000 and other
magnetic products of $375,000.

Gross margins decreased by $210,000 for the first nine months of fiscal
2002, from $249,000 for the first nine months of fiscal 2001 to $39,000 for the
first nine months of fiscal 2002. The primary cause of the decrease is the
diminishing market for the magnetic media products.

Due to the decrease in net sales, selling, general and administrative and
depreciation expenses decreased by $164,000 during the first nine months of
fiscal 2002 from $763,000 for the first nine months of fiscal 2001 compared to
$599,000 for the first nine months of fiscal 2002.

As discussed under Third Quarter Fiscal 2002 Compared to Third Quarter
Fiscal 2001, on September 7, 2001, the Company closed its Mexicali, Mexico
facility and its contract assembly operations.

The Company has not recorded a provision for federal income tax for the
first nine months of 2002 or 2001 due to losses incurred during those periods.
Any future tax benefits from those losses have been offset by a valuation
reserve. The $1,000 represents the minimum state tax.

The Company has invested cash in commercial paper and in publicly traded
common stocks of other companies, and may purchase additional common stocks in
the future. Investments in common stocks are subject to risks of the market,
and market prices may fluctuate and be adversely affected by the operating
results of the issuer, as well as general economic, political and market
conditions. As of July 31, 2002, the Company held common stocks which had a
cost of approximately $177,000 and market value of approximately $78,000.

In accordance with Generally Accepted Accounting Principles, the Company
has recorded the value of its investments in marketable securities on its
Balance Sheet at market value and this decrease of approximately $99,000 is
reflected in stockholders equity as an unrealized holding loss. If the
Company sells these securities at a loss, the Company will recognize a loss in
its statement of operations equal to the amount of the decrease. Although the
Company presently intends to hold these securities, if, on account of its
capital requirements or for any other reason, the Company should decide to
liquidate these or other investments at a time when their market value is less
than their cost, the Company would recognize a loss which could adversely
affect the results of operations for the period in which the sale occurs.

Forward-Looking Statements

The Companys statements herein which are not historical facts, are
forward-looking statements. These statements involve risks and uncertainties
that could cause actual results to differ materially from these forward-looking
statements. Factors which could cause actual results to differ materially
include economic conditions, the Companys success in maintaining its current
customer base, whether and for how long the Company can retain its major
customer who has notified the Company that it will no longer be using the
Company as a prime source, the obtaining of increased orders from existing
customers, the Companys ability to obtain additional customers and business,
pricing factors and competition.

8



---



##### Table of Contents






Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.




PART II. OTHER INFORMATION.




Item 6. Exhibit and Reports on Form 8-K

(a)  Exhibits: 99 Certification under Section 906 of the
the Sarbanes-Oxley Act of 2002.

(b)  Reports on Form 8-K:

During the quarter ended July 31, 2002, no reports on Form 8-K were
filed.

9



---



##### Table of Contents






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.





| | CERTRON CORPORATION
| | -------------------





|      |  |                 |  |                                                                                                
|----- |  | --------------- |  | -----------------------------------------------------------------------------------------------
|Date: |  | August 27, 2002 |  | /s/ Marshall I. Kass                                                                           
|      |  |                 |  |                                                                                                
|      |  |                 |  | Marshall I. Kass
Chairman of the Board,
Chief Executive Officer and
Principal Financial Officer

10



---



##### Table of Contents






Exhibit Index



|            |  |                                                                  
|----------- |  | -----------------------------------------------------------------
|Exhibit No. |  | Description                                                      
|            |  |                                                                  
|99          |  | Certification under Section 906 of the Sarbanes-Oxley
Act of 2002

11