SECURITIES AND EXCHANGE COMMISSION
                        Washington D.C.  20549

                             FORM  10-KSB
              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15D
                OF THE SECURITIES EXCHANGE ACT OF 1934

                For the fiscal year ended July 31, 2000

                    Commission file number  0-12195
                         THERMWOOD CORPORATION
            ( Name of small business issuer in its charter)

            INDIANA                                   35-1169185
    (State of incorporation)           (IRS Employer Identification number)

               Old Buffaloville Road
               P.O. Box 436
               Dale, Indiana                           47523
    (Address of principal executive offices)         (Zip Code)

                             (812) 937-4476
                     (Issuer's telephone number)


Securities registered pursuant to Section 12 (b) and 12 (g) of the Act
Shares of Common Stock without par value

Name of each exchange on which registered:
American Stock Exchange
Pacific Stock Exchange


Check  whether the issuer (1)  filed all reports required  to  be filed
by  Section 13 or 15(d) of the Securities Exchange Act  of  1934 during
the  past  12  months  (or for such  shorter  period  that  the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X]    No [   ]

Check if disclosure of delinquent filers pursuant to Item 405  of Regulation
S-K  is not contained in this form, and no disclosure  will be  contained,
to  the best of registrant's knowledge,  in  definitive proxy  or information
statements incorporated by reference in Part  III of this Form 10-KSB or any
amendment to this Form 10-KSB.    [X]

The  issuer's  revenues  for its most  recent  fiscal  year  were $28,615,896.

The  aggregate  market value of the voting  stock  held  by  non-affiliates
of  the issuer at October 24, 2000 based upon  the  closing price  of  the
issuer's Common Stock as reported on the American  Stock Exchange was
approximately $2,322,475.

The number of the Registrant's shares of Common Stock outstanding as of
October 24, 2000 was 985,045 shares.

     Documents Incorporated by Reference:

Exhibits to Registrant's Registration Statement on Form S-1 (No. 2-
87641)  filed under the Securities Act of 1933 and effective April  12,
1984, its Registration Statement on Form 8-A filed under the Securities
Act  of  1934 and Current Reports filed on Form 8-K dated February  and
April, 1987, and its Registration Statement on Form 8-A filed under the
Securities Act of 1934 dated November, 1989, its Registration Statement
on  Form  SB-2  (No. 33-54756) which became effective on  February  22,
1993, and amended as of July 14, 1995, and its Forms 10-K for the years
ended July 31, 1996, July 31, 1997, July 31, 1998 and July 31, 1999.


                               PART   I

Forward-Looking Statements

This  Annual  Report  on  Form  10-K contains  certain  forward-looking
statements  within  the  meaning of the Private  Securities  Litigation
Reform   Act   of  1995,  including,  without  limitation,   statements
containing the words "believes," "anticipates," "expects," and words of
similar  import.   Such forward-looking statements  involve  known  and
unknown  risks,  uncertainties and other factors which  may  cause  the
actual results, financial condition, performance or achievements to  be
materially   different   from  any  future  results,   performance   or
achievements  expressed or implied by such forward-looking  statements.
Certain of these factors are discussed in more detail elsewhere in this
Annual Report on form 10-K, including, without limitation, "Description
of  Business"  and "Management's Discussion and Analysis  of  Financial
Condition  and  Results  of  Operations."  Given  these  uncertainties,
readers  are  cautioned not to place undue reliance  on  such  forward-
looking  statements.  We disclaim any obligation  to  update  any  such
forward-looking statements to reflect future events or developments.

Item   1.   Business

General


We  develop  and  manufacture most of the products  we  market.   Those
products  that  we  market that we do not develop and  manufacture  are
generally purchased from vendors under an OEM arrangement.

We  divide our operations into three operating segments. These are  our
Machining  Products Division, which is responsible  for  marketing  our
machinery,  hardware  and  software products;  our  Technical  Services
Division,  which  is  responsible for marketing our  service,  support,
upgrade  and  catalog products, and Thermwood Europe  Ltd.,  a  British
Company,  which  is a wholly owned subsidiary of Thermwood  Corporation
and reports to the Machining Products Division. See Note K of Notes  to
the Consolidated Financial Statements incorporated by reference in Item
7  of  Part II of this annual report for the financial results  of  our
operating segments.

Our  Vice  President of Production directs the production organization,
which  is  responsible for all manufacturing.  We operate manufacturing
as  a  cost  center  by  allocating costs  to  each  Division  for  the
manufactured products it sells.

Our  Vice  President of Engineering  directs research and  development,
product  and  production engineering. We allocate the costs  for  these
activities to the Machining Products and Technical Services Divisions.

Our Marketing Manager manages the Marketing Group . He reports directly
to  our  President.   This  group provides marketing  services  to  the
Machining  Products and Technical Services Divisions and allocates  its
costs to these Divisions.

Industry Background

Flexible Automation

Prior  to  the  availability of microprocessor-based machinery  control
systems, there were only two manufacturing methods available: a  manual
operation  using  humans  to  manipulate tools;  or  "hard  automation"
employing dedicated automatic machinery.  High initial cost and limited
flexibility  have  made hard automation suitable only for  applications
involving  large  volumes  of  identical  parts.   Using  human   labor
traditionally produced smaller volumes of parts, hand tools or  machine
tools operated manually.

In  today's marketplace, competitive pressures demand a greater variety
of  products.   Due to demographic and economic factors,  neither  hard
automation  nor manual labor appears to be a feasible means of  meeting
this manufacturing requirement.

The  gap  between  hard automation and manual labor is currently  being
filled  by  a variety of flexible automation equipment.  This equipment
is  often  better suited to small and medium volumes of  parts  and  is
usually  designed  to  perform a number of  tasks  utilizing  the  same
computer-controlled machine.

Flexible automation equipment is manufactured in a variety of forms and
addresses  a  number of applications.  Specific markets have  developed
for  certain  classes  of equipment with a number of  vendors  offering
products  in  each  of  these niche markets.  Many  vendors,  including
Thermwood, build products that service several of the markets.

Flexible  automation  equipment is more  economically  feasible  during
times  when  increased production capacity is required or  when  older,
obsolete  or  otherwise less competitive equipment is  being  replaced.
Accordingly, demand for this equipment usually increases during periods
of economic growth and decreases during periods of economic recession.

Machine Control Systems

Flexible  automation  equipment generally uses an  electronic  computer
control  known as Computer Numerical Control, commonly referred  to  as
CNC  control.   This  system  uses sets of  instructions  appearing  in
blocks, each containing information concerning a particular movement of
the  machine.   In  operation, the machine sequentially  executes  each
block of instructions.  For example, blocks can include movements  such
as  straight  lines, arcs and circles, or can be used to  turn  certain
machine functions on or off.

CNC  control  systems are also used to control the movements  of  other
automated industrial equipment.  This type of system differs  from  the
older  Numerical  Controls, referred to as NC, in  that  a  CNC  system
contains  one or more computers within the control mechanism  providing
more  capability than a NC control, which lacks a computer  and  simply
executes instructions developed elsewhere.

Programming  a  CNC system can be accomplished in a  variety  of  ways.
These  include  inputting  the  block of information  directly  into  a
terminal,  generating  programs using a computer and  a  computer-aided
design/computer aided manufacturing system,  referred to as  a  CAD/CAM
system,  and moving the machine to a position and having the  machine's
controller  create  the block of instructions or  using  an  electronic
probe to guide the machine through the desired path.

We  design  and  manufacturers our own CNC control,  called  the  91000
SuperControl.  We believe that we are the only company in  our  markets
that  builds  its  own CNC control.  We also believe that  our  control
offers  features and capabilities that other controls in the market  do
not  offer.  We also believe that these exclusive features offer it  an
advantage  in the marketplace, but there is no assurance that  this  is
true.

Machining Products Division - Products

CNC Router - Systems and Packages

Our  automated  industrial systems are high-speed computer  controlled,
fully  automatic  machining centers commonly called  CNC  routers.   We
design  these  centers to perform a variety of tasks such  as  routing,
drilling, sanding, carving, sawing and shaping wood parts, trimming  of
three  dimensional  plastic  parts, machining  of  aluminum  honeycomb,
drilling  and  high  speed machining of aluminum  both  vertically  and
horizontally, mortising, which means cutting square holes in furniture,
and  sawing  and  squaring, which means cutting inside square  corners.
They  generally  operate over larger table areas and at  higher  speeds
than do conventional metalworking machine tools but cannot machine  the
heavy  materials  and  large cross sections that standard  metalworking
machine tools are capable of machining.

The  CARTESIAN 5 systems utilize our proprietary SuperControl system and
consist of one or more high-speed cutting, drilling or machining  heads
and related tooling which move around a table under computer control to
perform  programmed operations.  There are two basic types of  systems,
one  where the table is fixed and the cutting heads move both left  and
right and back and forth, and the other where the table moves back  and
forth  and  the cutting heads move only left and right.   Both  systems
permit  the  heads  to  reach all points  on  the  table.   Cutting  is
accomplished  by  metal  bits,  drills,  and  blades  and  water  jets.
Additional  motions or axes, which permit the head to  both  pivot  and
rotate   can  be  installed,  thereby  making  three-dimensional   cuts
possible.  Multiple and varying cutting and drilling heads can be added
allowing  a number of different machining operations to be accomplished
in a single cycle or multiple parts to be machined simultaneously.

In  the  past, we focused on selling primarily standard machinery  with
certain  standard  options. We sold this machinery  "unbundled,"  which
meant  that  we  increased the base machine price by the  cost  of  the
options, some necessary, which were added.  In the last fiscal year  we
changed our market approach to promoting packages and systems.  We  now
bundle  our machine packages with the most commonly used options.   The
package  price, while higher than the base machine price, is closer  to
the  actual price paid by customers We believe that the overall  result
of  this change will be positive although there are no assurances  that
this  is  so.Systems are machines, bundled with options,  software  and
other support products intended to produce a specific end product.   In
the   past  the  customer,  and  not  Thermwood,  was  responsible  for
integrating and programming the various components to produce  the  end
product.  Now, when a customer purchases a system, we deliver a product
which is ready to manufacture the customer's final product.  We believe
that  the  reduced  technical risk of a system  will  be  appealing  to
customers despite the significantly higher cost.  We also believe  that
we  are  capable  of  successfully  and  profitably  handling  the  new
responsibility  although there is no assurance that this  new  approach
will generate significant sales and if such sales are generated that we
can  successfully discharge our responsibility for making  the  systems
function in customers' facilities

The  CARTESIAN 5 Thermwood CNC router packages and systems are utilized
principally  in the woodworking, plastics, and to a lesser  extent  the
aerospace   industries.   Current  prices  to  end  users  range   from
approximately  $49,000 to over $250,000 per system.  The average  price
of a standard package is approximately $100,000.Carving Router.

We  have offered one model of our CNC router line specifically intended
for  intricate  carving of three-dimensional wood parts such  as  chair
legs.  This machine is capable of carving six parts simultaneously.  It
is  programmed  using the electronic programming probe which  traces  a
sample  carved part. The CNC control automatically creates the  program
necessary  to  reproduce the sample carving.   This  product  has  been
priced  at  approximately $150,000 and sales of this product have  been
below  expectation.  For this reason, we have suspended  marketing  and
sales of this product and have announced that it will be redesigned and
re-introduced in the future.

We  anticipate that the new carving router will be capable  of  carving
eight parts instead of six, will offer more powerful routing heads  and
will  be priced at approximately $300,000.  Management expects the  new
design will be more successful despite the higher price although  there
is no assurance of that success.

Hardware Options

Our  Machining  Products Division offers a variety of hardware  options
for  use  with its CNC router line.  Some of these options are included
as  a  standard  part  of  packages and systems  while  others  can  be
purchased at the customer's discretion.  These options include products
designed and manufactured by us, such as tooling heads, automatic  tool
changers  and  hand  held  programmers.  We also  offer  a  variety  of
products  manufactured  by  others for use with  our  equipment.  These
products are generally, but not always, obtained through an arrangement
with an original equipment manufacturer, or OEM,.  This type of product
includes,  among  others,  the programming probe,  vacuum  pumps,  dust
collection systems as well as a variety of electronic hardware  devices
that work with our control system.

Software Products

During  fiscal  1999  the Machining Products Division  established  the
Software  Technology Group to market software products that  work  with
its   CNC  routers.   Although  some  of  these  products  consist   of
proprietary  software  developed  by  us,  the  majority  are  software
packages obtained from third party vendors under OEM arrangements.

We  have  signed OEM agreements with CNC Automation to sell a  Computer
Aided  Design/Computer  Aided Manufacturing package  called  MasterCAM;
with  Graphitech Software Solutions, Inc. to distribute  the  Cimagrafi
artistic  CAD/CAM  software  package; with  Northwood  Design,  Inc  to
distribute a software package under the name "Final Finish";  and  with
CNC  Automation, an existing Thermwood Authorized Dealer, to distribute
their  Panelmetrix, kitchen cabinet door program. In addition, we  have
signed  an agreement with Cabinet Vision, Inc., a supplier of  advanced
cabinet  design software in the US, to market it's "Solid Professional"
kitchen design software as part of an integrated package to design  and
manufacture kitchen cabinets. Our European subsidiary, Thermwood Europe
Ltd. has signed a similar agreement with Planit CV of Ashford Kent, UK,
for  distribution of the same product, under essentially the same terms
in  the  UK  and  Europe.  Planit CV is the parent company  of  Cabinet
Vision.   During  Fiscal 2000, the Software Technology Group  generated
sales of $517,000.

Technical Services Division - Products

Our  Technical Services Division products consist of customer training,
installation assistance, warranty service, field service, spare  parts,
upgrades  and  enhancements, the Advanced Support Program  and  catalog
sales.  Sales and service by this Division in fiscal 2000 accounted for
approximately 21% of our total sales.

The  Technical Services Division earns revenues for customer  training,
product  installation  and  service after  the  warranty  period.   Our
standard limited warranty covers one-year parts and labor; however,  if
a  technician  must  travel to the customer's  site,  the  customer  is
required to pay travel costs.  After the warranty period, both  service
labor and spare parts are sold to customers.

Advanced Support Program

During  fiscal  1999 we created  the Advanced Support Program  for  CNC
router  customers.   The primary purpose of this program  is  to  offer
customers  a  low  cost  method of updating their  Thermwood  machines,
minimizing the possibility of a major service expense and providing  us
with an ongoing revenue stream. In order to join the program a customer
must sign an agreement for an initial 12-month period and then continue
on  a  month by month basis. The cost of the program is currently  $250
per  month for each machine enrolled.  In return, the customer receives
an  annual  control  system software update,  a  35%  discount  on  any
hardware  required for the update, an ongoing labor warranty   but  the
customer pays travel expenses, a full parts and labor warranty  on  the
control  and  various  discounts on spare parts, upgrades  and  catalog
purchases.  There were 110 machines enrolled in the program at the  end
of fiscal 2000.

Thermwood.com

During fiscal 2000, we established a new division called Thermwood.com.
This division is responsible for maintaining the Company's Internet web
site,  for maintaining catalog sales operations and establishing a  web
store for on-line ordering of catalog items, for establishing a tooling
web  site  and  tool  sharpening service, and for  corporate  marketing
activities.

Online/Catalog Sales

We  publish  a CNC Router Supply Catalog that offers for sale  various
tooling, supplies, support equipment and consumables that are  used  in
the  operation of a CNC router. This catalog not only contains products
for  use  with  our  machines  but also  offers  products  specifically
intended  for  use  with competitors' machines.   In  addition  to  the
printed catalog, items can be purchased electronically through our  web
site.   Tooling represented approximately $166,000 of the total catalog
sales for fiscal 2000 of approximately $500,000.

Tooling On The Web

In  addition  to  the catalog items above, we offer CNC router  tooling
through  a  web  site called ToolingOnTheWeb.com.  Various  third-party
vendors supply the tooling offered on this web site.  We offer  to  re-
sharpen   tools   purchased,  subject  to   certain   limitations   and
restrictions, free of charge, in order to entice customers to  purchase
tooling through this site.

We  believe  that  tooling  can  be  sharpened  at  very  low  cost  by
eliminating the machine setup normally required to accommodate  various
tooling  geometries. We have purchased and installed 16  tool  grinding
machines, one for each geometry for which the service is being offered,
in order to allow for sharpening without setup.

We  introduced this new offering to the industry at the end  of  Fiscal
2000  and  which has generated a small, but growing level of sales.  We
believe that this program could result in significant sales and profits
once the industry becomes aware of its existence; however, there is  no
assurance  that significant sales will develop or that the program  can
be operated at a profit.

Marketing

Our   Thermwood.com  division  conducts  our  marketing  programs   for
Thermwood.    Our other divisions pay compensation to the Thermwood.com
division for this service.

The  market for industrial automation equipment can be divided  into  a
large  number of applications in a variety of industries.  We  seek  to
produce   products  that  address  specific  applications  in  specific
industries.   We  also  attempt  to provide  complete,  pre-engineered,
standard  systems that require little or no engineering input from  the
end  user.  We design these systems for easy installation, programming
and use, so that  they may be operated and maintained by existing plant
personnel without extensive training or technical background.

Our  systems  are  currently designed to operate at  high  quality  and
reliability  levels.  In addition, we strive to support  these  systems
with  high  quality  technical services and assistance.   Although  our
marketing  strategy  has  involved emphasis on  small  to  medium-sized
companies, we have also received orders from larger companies.

We  generally  sell  our  products through  the  assistance  of  dealer
networks  established  throughout North America  and  Europe.   Dealers
assist  the Company in making sales and are paid on a commission  basis
for  this service.  Commissions generally range from 10% to 20% of  our
published  retail  prices.  As of July 31, 2000, we had  15  authorized
dealers  marketing  our products.  We usually require  each  dealer  to
execute a non-exclusive written agreement.  We require a dealer to sell
one  machine  within  each six-month period  in  order  to  retain  its
dealership.   Most dealers concentrate their sales efforts in  specific
geographical areas and in particular industries such as woodworking  or
plastics,  and sell only one of the Company's product lines.   However,
some  market and sell products to more than one industry and sell  both
the  CARTESIAN 5 systems and our line of Woodcarving Routers.  Although
some  dealers may handle non-competing products manufactured  by  other
companies, most dealers handle our products exclusively.

One  dealer  accounted for approximately 16% of our  sales  for  fiscal
2000.   See  Item 12. "Certain Relationships and Related  Transactions"
for  information  relating to our agreement with  Automated  Associates
which is owned by our president and his wife who is also an officer and
director.   This dealer sold to 39 different customers, none  of  which
accounted for 10% or more of our sales in fiscal 2000.

No  other  dealer  accounted for 10% or more of our  business  for  the
current  fiscal  year.   The  loss of any large  dealer  could  have  a
materially  adverse  effect  on  our business.   Our  business  is  not
seasonal.

We have a wholly owned subsidiary, Carolina CNC, Inc., a North Carolina
corporation,  which  operates as a dealer and  conducts  sales  in  the
southeastern region of the United States.

We  also have a wholly-owned subsidiary, Thermwood (Europe) Limited,  a
United  Kingdom  company,  which  currently  conducts  sales,  service,
training and demonstrations out of offices located in England targeting
the  European  Community.  During the 2000 fiscal year, the  subsidiary
had  a  net loss of $242,000.  Its machine and service sales in  Fiscal
2000 were approximately $2,028,000 or 8% of consolidated net sales.

Typically, we seek to develop sales leads through advertising in  trade
magazines  and  product exhibitions at selected trade shows.   We  also
maintain  an  extensive site on the Internet that offers  both  product
information and pricing.  We then furnish such leads to dealers in  the
geographic  area where the potential customer is located.  The  website
also  supplies the dealers with promotional materials and  sales  aids,
including  product literature, a dealer's manual, news  letters,  press
releases  and  advertising, technical briefs, sales incentive  programs
and  video  of  product  demonstrations.   We  assist  our  dealers  by
providing training for them and their customers.  We encourage trainees
and potential customers to visit our manufacturing facilities where  we
maintain  areas and machinery to demonstrate the operation and  use  of
our products.

In  addition  to  the above, we also seek to sell our products  through
full  service  dealers in areas of the world where we do not  have  the
ability  to  perform the demonstration, training and service  required.
These  full service dealers are responsible for all aspects of selling,
installing,  training and servicing our products.   Currently  we  have
this  type of arrangement with dealers in Canada, Mexico, Malaysia  and
Israel.

Technical Services

We  believe that providing extensive and ongoing technical services  to
customers  is  essential  for our long-term success.   Accordingly,  we
offer  a  variety of technical services through our Technical  Services
Division.    These   services   include  training,   and   installation
assistance,  as  well as upgrading and enhancement of  older  machines.
The Technical Services Division also has responsibility for the quality
control  of  our  industrial products during  their  manufacture.   The
Technical Services Division also operates the Advanced Support  Program
as well as Catalog Sales.

We  market  technical  services to current  customers  as  well  as  to
companies  that  purchase used Thermwood equipment. The  Division  also
markets products from its supply catalog to customers that operate  CNC
router  products manufactured by competitors.  We maintain a  toll-free
service line for the use of all owners of our equipment.

Other than the Advanced Support Program,  we do not offer our customers
written service contracts.  We have incurred no significant expenses or
problems in servicing our products.

Product Development - R&D

Our  Vice President of Engineering directs our research and development
and  product  development  efforts.   These  efforts  are  intended  to
simultaneously   improve  and  enhance  our  product  performance   and
capabilities while reducing manufacturing costs.  We have directed much
of  our  product  development effort during the last two  years  toward
developing  a variety of cutting and machining heads and automatic tool
changers  for  use  on  our  CNC router  line  of  equipment.   We  are
continuing  this development in an effort to broaden the capability  of
this  equipment and thus increase market size for these  products.   In
addition, we have an ongoing program to reduce the manufacturing  costs
of  our products and pass a portion of these reductions on to customers
in the form of price decreases.

We  also  developed the software interface between the  Cabinet  Vision
Solid   Professional   software  package  and   the   Thermwood   91000
SuperControl.  As  part  of  this development,  a  fixture  method  and
operating  system was developed for producing hardwood face frames  for
kitchen cabinets.

We have continued development efforts on the 91000 SuperControl that is
an  updated  version of the CNC control systems formerly  used  on  our
equipment.   We  have  completed the basic system development  and  are
currently selling and shipping this control on our equipment.

We  are  directing  our  current efforts  toward  adding  certain  more
extensive and expensive features and capabilities. Some  of  the  added
features are a service guide and  manual, Searchmode, maintenance videos
and a service clock for improved guidance  in customer  maintenance.
Another feature is a 50-tool automatic toolchanger and a sanding head for
the turret.  We are developing a 12' Model 53 because of increased
popularity of 12' stock.   We are adding a VHS  player and a close up
camera so that customers can record their set up and operations.

We  plan  to  continue our research and development  efforts  primarily
directed  toward the improvement of existing products,  development  of
new  products  or  product enhancements and reduction in  manufacturing
costs.  We utilize a variety of sources in our research and development
efforts,   including  employees,  vendor-engineering  staffs,  contract
employees  who  are retained solely for specific projects,  consultants
and independent design firms.

For fiscal 2000 and 1999, we spent $685,000 and $570,000, respectively,
for research and development.  There was no customer-sponsored research
and  development during fiscal 2000.  We believe that expenditures need
to  continue  to  allow us to maintain a competitive  position  in  the
immediate future.

Customers

Although  we  have sold our industrial products to large  corporations,
for example, companies with annual sales approximating or exceeding  $1
billion,  our  primary customer base is comprised of small  to  medium-
sized  manufacturers,  for example. companies with annual sales ranging
from  approximately $10 million to approximately $500 million,  located
throughout the United States.  No customer accounted for more than  10%
of our sales in fiscal 2000.

We  generally require a purchaser of industrial products to pay 30%  of
the  sales  price when placing the order, an additional  40%  prior  to
shipment and the balance within 30 days after date of invoice.  Charges
for  technical  services and spare parts are due within 30  days  after
billing.

We  offer our customers a one year limited warranty on parts and labor.
The  customer  is responsible for travel expenses associated  with  the
labor  portion  of  the warranty.  In addition, we  offer  an  optional
Advanced   Support  Program  that  provides,  for  a  monthly  payment,
additional  warranty  protection as well as an annual  system  software
update and miscellaneous discounts.  The limited warranty offered under
this program covers parts and labor on the control system and labor  on
the remainder of the machine.

We  offer  a  five-day training class for two people  as  part  of  the
purchase  price  of  a  new machine. This class  is  conducted  at  our
headquarters in Dale, Indiana.  We also offer formal training  for  our
major software products.

Backlog

As  of July 31, 2000, our backlog was approximately $2,100,000 compared
with a backlog of $5,059,000 as of July 31, 1999.  Substantially all of
this  backlog will be manufactured and delivered prior to  January  31,
2001.

Our   backlog  figures  generally  include  only  written  orders  from
customers,  which  we believe, are firm and will be shipped  within  12
weeks.   Approximately 90% of the backlog is covered by  down  payments
from  customers ranging from 25% to 30%.  On orders where down payments
have  not been required, we have normally obtained irrevocable  letters
of  credit  for  payment upon proof of shipment or lease  documentation
from an approved leasing company.

Because of the possibility of customer changes in delivery schedules or
cancellation of orders, our backlog as of any particular date  may  not
be indicative of actual revenues for any subsequent period.

Manufacturing and Production

Our  manufacturing  facilities  are  located  in  Dale,  Indiana.    We
manufacture essentially standard machines with certain options using  a
batch  rather  than a continuous flow or conventional  production  line
process.    Except  for  demonstration  models,  we  do  not  generally
manufacture  products without a purchase order although,  in  order  to
expedite the manufacturing process, certain basic parts of machines may
be  fabricated  before purchase orders are received.  We  purchase  the
major portion of our inventory to satisfy specific customer orders with
the  balance  acquired from one to four months in advance of  projected
orders.

We   design,  develop  and  engineer  all  of  the  products  that   we
manufacture.   We fabricate the components contained in these  products
or  purchase them from outside suppliers.  We fabricate such components
as computer-based electronic control systems and the steel structure of
the  CARTESIAN 5 systems.  Where possible, we utilize our own  systems.
We  also  use  our  own  91000 Control systems to operate  conventional
metalworking machine tools to fabricate components.

We purchase raw materials from third party sources.  Most raw materials
and  components,  including  those that are  custom  made,  are  either
purchased or available from several sources. One supplier accounted for
approximately  17% of total components purchased for  the  fiscal  year
ended  July  31, 2000.  The materials purchased from this supplier  are
available from several other sources.

Competition

There  are  many manufacturers of CNC routers in the United States  and
abroad,  particularly in Japan and Europe.  Some of these manufacturers
are larger, better financed and have more resources than we do.

Our  primary competitors in the high speed machining CNC router  market
are  a  number of major domestic, Japanese and European firms  such  as
Shoda  Iron  Works, Heian, Shinks Anderson Machinery Works, Accurouter,
Motion  Master and Komo Machine.  There are a large number of companies
offering  routing  equipment, and it is our  opinion  that  the  market
cannot  support all of them.  We believe, however, that our ability  to
offer  products  that perform a variety of functions and  sell  at  low
prices  provides  us  with  a competitive advantage  but  there  is  no
assurance that this is true.

Competition in CNC routers is based upon real and perceived differences
in   equipment  features,  price,  performance,  reliability,  service,
marketing, financial strength and product development capability.

We  seek  to  design  our products for high levels of  performance  and
reliability while offering them at moderate prices.

Patents, Trade Secrets and Trademarks

We  currently hold 28 domestic patents and have applications pending in
the  United  States for 19 additional patents.  There is  no  assurance
that  any  additional patents will be granted.  We do not believe  that
major  reliance  can  be placed on patents for the  protection  of  our
products,  although patent protection for our newly developed  products
is increasing.

We  rely  primarily  upon  trade secret laws,  internal  non-disclosure
safeguards  and  restrictions incorporated into our dealership,  sales,
employment and other agreements to protect our proprietary property and
information.  In addition, we have proprietary rights arrangements with
our  employees  that provide for the disclosure and assignment  by  the
employee  to us of any discovery, invention or improvement relating  to
our  business.   While we are unaware of any breach  of  our  security,
competitors may develop similar products outside the protection of  any
measures  that  we take.  In addition, it may be difficult  for  us  to
police  unauthorized  use  of our technology, particularly  in  foreign
countries.  We have been unsuccessful in prosecuting two claims in  the
United States for what we believed were prospective unauthorized use of
proprietary rights.  We have not been involved in any claims concerning
patent infringement.

We  market  our products under various trademarks, including THERMWOOD,
CARTESIAN  5,  91000 SUPERCONTROL, ROUTER ART and PANEL-CAD.   We  have
three  trademark registrations and one application for registration  in
the  United  States.  We also have two foreign trademark  registrations
and applications for seven foreign registrations.

Employees

As  of October 1, 2000, we had 160 full-time employees, 80 of whom were
engaged in manufacturing, 18 in marketing, 14 in administration, 12  in
engineering,  six  in  research and development, and  30  in  technical
services.  None of our employees is a member of any union or collective
bargaining  organization.   We  consider  our  relationship  with   our
employees to be satisfactory.

Designing   and   manufacturing  our  industrial   equipment   requires
substantial technical capabilities in many varied disciplines,  ranging
from  mechanics  and  computer sciences to  mathematics.   Although  we
believe  that  the  capability and experience of  our  technical  staff
compare  favorably  with  other  similar  manufacturers,  there  is  no
assurance that we can retain existing employees or attract and hire the
type of skilled employees we may need in the future.

Item 2.  Description of Property

Our  manufacturing facilities and executive offices are  located  in  a
100,000 square foot building in Dale, Indiana, which we own. We believe
that these facilities are in good condition and adequately satisfy  our
current requirements.

Item 3.  Legal Proceedings

We  are  aware  of  no  pending  or threatened  litigation,  claims  or
assessments with respect to us as of July 31, 2000 other than Precision
Plastics,  Inc.  vs. Thermwood Corporation, Civil Action No.CVF-98-5841
REC  DLB  in  the  U.S.  District Court for  the  Eastern  District  of
California, alleging breach of contract, breach of the covenant of good
faith  and  fair  dealing, fraud-intentional misrepresentation,  fraud-
negligent misrepresentation, fraud-concealment of a material  fact  and
rescission,  seeking  damages  in an  amount  according  to  proof  and
punitive  and  exemplary  damages in an unspecified  amount;  Virtually
Anything,  Ltd.  Vs. Thermwood (Europe) Ltd. Case No.  LE901549  I  the
Leicester  County  Courat, England, alleging  breach  of  contract  and
seeking damages in the amount of $43,569; and David Valdez and Kathleen
Valdez  vs. Thermwood Corporation, Cause No. 4:99CV 0l935 FRB, alleging
negligence in the installation and programming of a machine and seeking
damages in the amount of $150,000.

The  Precision Plastics litigation has been settled with the conveyance
to  us of a certain machine and other equipment having a total value of
$84,744  and  the payment by us of the amount of $195,000 less  $20,000
recoverable  from a co-defendant for a loss of $90,256.  The  Virtually
Anything  litigation  has been completed with a  judgment  having  been
rendered against us and an award of damages in the stipulated amount of
approximately  $43,569 to be awarded along with an award  of  attorneys
fees  estimated to be approximately between $15,000 and  $21,000  under
current currency exchange rates.  In view of the amount of the judgment
and  the substantial cost of an appeal of the judgment, we have decided
not  to  pursue  an  appeal of such judgment.   In  the  Valdez  et  al
litigation, counsel is of the opinion that the allegations are  without
merit,  we have good defenses and should prevail and that any  unlikely
adverse judgment in such litigation would not have a material effect on
our financial affairs.

Item 4.  Submission of Matters to a Vote of Security Holders

None.


                                   PART  II

Item 5.  Market for Common Equity and Related Stockholder Matters

Our  Common Stock has been traded on the American Stock Exchange  since
1989 and on the Pacific Stock Exchange since 1987.  The following table
sets forth the high and low per share sales prices for our Common Stock
as  reported on the American Stock Exchange for the fiscal years  ended
July 31, 1999 and July 31, 1998, and for the interim periods indicated:
<TABLE>
Common Stock                Low Sales Price         High Sales Price
2000
     <S>                       <C>                     <C>
     Fourth Quarter             $   5.25                $    6.50
     Third Quarter              $   6.50                $    7.25
     Second Quarter             $   5.25                $    6.00
     First Quarter              $   4.625               $    5.875

1999
     Fourth Quarter             $  4.87                 $   7.38
     Third Quarter              $  4.63                 $   6.19
     Second Quarter             $  5.63                 $   8.13
     First Quarter              $  6.06                  $ 10.38

</TABLE>
On  April 27, 1999, we issued $5,062,882 in principal amount of our 12%
subordinated debenture bonds due April 27, 2014 in exchange for 460,264
shares of our Common Stock. The bonds were listed on the American Stock
Exchange starting April 27, 1999.

As  of October 18, 2000, we had approximately 204 holders of record  of
the Common Stock and 985,045 shares outstanding.

We  have  never  paid any dividends on our Common Stock.   The  current
policy  of  the Board of Directors is to retain earnings,  if  any,  to
finance  the  operation  of  our  business.   Accordingly,  we  do  not
anticipate paying any cash dividends to the holders of our Common Stock
in the foreseeable future.

Item  6.   Management's Discussion and Analysis of Financial  Condition
and Results of Operations

In  this  section, we explain our financial condition  and  results  of
operations for the years ended July 31, 2000, 1999 and 1998.

Results of Operations

Net Sales

Our net sales during these periods consisted of:
<TABLE>
                     Net Sales by Industry Segment
                            ($ in Millions)

Segment                 2000             1999              1998

<S>                      <C>      <C>    <C>       <C>     <C>       <C>
Machining Product
 Division - U.S.         $17.6    68%    $14.8      68%    $15.4      71%
Thermwood Europe Ltd.      2.0     8%      1.7       8%      1.8       8%
                         -----           -----             -----
Total  Machining
 Products                 19.6    76%     16.5      76%     17.2      79%


Technical Services
 Division                  6.1    24%      5.2      24%      4.6      21%
                         -----           -----             -----
Net Sales                $25.7   100%    $21.7     100%    $21.8     100%
                         =====           =====             =====
</TABLE>

Our  net  sales  for  fiscal  2000 were  $25,699,875,  an  increase  of
approximately 18% from fiscal 1999 and 1998. Our machine sales for 2000
consisted  of $19,635,778 of total net sales compared with  $16,534,311
and  $17,181,745 for 1999 and 1998, respectively.  Our  European  sales
included   in   this  number  for  fiscal  2000  were   $2,027,573   or
approximately  8% of our total net sales compared with  $1,675,518  for
1999  and  $l,734,716  for 1998. Sales of our technical  services  were
$6,064,097 compared with $5,191,572 and $4,657,784 for 1999  and  1998,
respectively.   Our  increase in sales in both the  United  States  and
Europe  was primarily due to lowering of prices on two machines.   This
move  also provided more income for technical services because we  made
allocations for installation and warranty to that division based on the
number of machines we sold.

Our gross profit in these periods consisted of:

                   Gross Profit by Industry Segment
                            ($ in Millions)
<TABLE>
Segment                        2000              1999              1998
                            ------------    --------------    ------------
Machining Products
 <S>                        <C>     <C>      <C>      <C>     <C>     <C>
 Division - U.S.             $6.1    60%      $5.3     63%     $6.5    74%
Thermwood Europe Ltd.          .7     7%        .6      7%       .7     8%
                             ----             ----             ----
Total Machining Products      6.8    67%       5.9     70%      7.2    82%

Technical Services Division   3.4    33%       2.5     30%      1.6    18%
                            -----             ----             ----
Total Gross Profit          $10.2   100%      $8.4    100%     $8.8   100%
                            =====             ====             ====
</TABLE>


Our  gross  profit for fiscal 2000 was $10,157,921, or  39.52%  of  net
sales.   The percentage of our current year gross profit to  net  sales
has  increased  from last year's 38.94% and decreased from  40.48%  for
1998.   Our  gross profit for the European operations was  $670,981  or
33.09% of our net European sales compared to $653,096, or 38.98% of our
net  European sales for fiscal 1999 and $695,121 or 40.48%  for  Fiscal
1998.   In  our current fiscal year, our slightly higher overall  gross
profit  in  the U.S. was affected by a more experienced workforce.   We
expect  the first quarter of fiscal 2001 to reflect higher margins  due
to better production efficiency, additional experience in the workforce
and  improved  manufacturing processes.  Although  we  anticipate  that
gross profit percentages from operations should improve during 2001, no
assurance to this effect can be given.

Our  higher gross profit of 56% of net sales for the technical services
division  in fiscal 2000 was due to higher sales, primarily  consisting
of  non-warranty and spare parts.  The cost of sales percentage for the
technical  services division in 2000 was lower than in  1999  and  1998
because of improved manufacturing processes and reduced prices for  in-
house and purchased parts.

Research   and   Development,  Marketing,  General  and  Administrative
Expenses

Our  research  and  development, marketing, general and  administrative
expenses  were  $8,143,047  in fiscal 2000 compared  to  $7,309,305  in
fiscal 1999 and $6,413,160 in fiscal 1998.
<TABLE>
These expenses were composed of the following:

         Expense                 2000        1999        1998

<S>                         <C>          <C>          <C>
European Operations          $ 715,000    $ 832,000    $1,052,000
Research and Development       685,000      570,000       314,000
Marketing                    1,623,000    2,180,000     1,444,000
General and Administrative   5,120,000    3,727,000     3,603,000
</TABLE>

The  major portion of our increased research and development, marketing
and   general  and  administrative  expenses  from  1999  to  2000  was
attributable  to general and administrative expenses.   These  expenses
amounted  to  63%  of  total  expenses  in  Fiscal  2000  compared   to
approximately 50% of total expenses in fiscal 1999.  At the  same  time
that  our  general and administrative expenses increased in the  United
States,  our  European  administrative expenses of  $715,000  decreased
approximately  $117,000 from $832,000 in 1999.  This decrease  resulted
primarily from a continuing different approach to advertising and  show
expenses.   Increased wages and benefits and contributions  contributed
to the higher level of expenses in the United States.

Our  interest  expense for fiscal 2000 was $1,011,872, an  increase  of
$632,185 from 1999 and an increase of $780,125 from 1998.  The increase
from  1999  and 1998 is due to interest on a $5 million line of  credit
from  Old National Bank, which was increased from $3.5 in fiscal  1999.
We  increased borrowings  on the line by approximately $800,000 by  the
end  of  fiscal  2000.  Additionally, approximately  $614,000  was  for
interest  on the 12% debentures issued in 1999 which are due  in  2014.
Bond discount included in interest expense was $164,722 for fiscal 2000
and  $44,981 for fiscal 1999. Our operating income for fiscal 2000  was
$2,014,874 compared to operating income of $1,150,663 and $2,428,463 in
1999  and 1998, respectively.  The increase in our operating income  in
2000  from  1999  resulted primarily from increased sales  even  though
research  and  development, marketing, and general  and  administrative
expenses   increased  from  1999.   In  1999  increased  research   and
development,   marketing,  and  general  and  administrative   expenses
contributed  to  an  operating income lower than  1998.   Our  European
operations had an operating loss of $44,293 for fiscal 2000 compared to
$178,849  and  $356,6440 for 1999 and 1998, respectively.   Our  fiscal
2000  net  earnings were $407,950, compared to net earnings of $637,913
and $1,317,886 in 1999 and 1998, respectively.   Our federal income tax
expense  for fiscal 2000 was $552,522 compared to $206,000 and $848,000
for  fiscal  years 1999 and 1998, respectively.  Our income taxes  were
less than expected in 1999 because of our utilization of remaining  tax
carryforwards.   However,  our income tax expense  in  2000  is  higher
because  we cannot deduct bond discount amortization, which is included
in  interest expense from income for income tax purposes.  This expense
was $165,000 for fiscal 2000 and $44,000 for fiscal 1999.

Liquidity and Capital Resources

At  July  31,  2000,  our  working capital was $3,651,577  compared  to
$3,061,769 at July 31, 1999. We had a negative cash flow from operating
activities  for  the 2000 fiscal year in the amount of $255,483.   Cash
used for increased inventories and a decrease in customer deposits were
the primary reasons for our negative cash flow.

Our  expenditures  for fixed assets in the 2000 and 1999  fiscal  years
were for normal replacements and purchases of laborsaving equipment for
production along with the purchase of new software and hardware for  us
to become Y2K compliant.

Our principal payments on lease obligations during the 2000 fiscal year
were  for  leased  office  equipment.  Our cash  flows  from  financing
activities were primarily from an increase in the bank line of  credit.
Outflows included our repurchase of bonds with a face value of $204,000
at a cost of $160,247.

On  September  4,  1998,  we filed a preliminary  proxy  statement  and
Schedule 13E-3 with the Securities and Exchange Commission relating  to
a  reverse  stock  split and proposed a modified 1-for-37,000  exchange
ratio.   We  also  proceeded  with steps to obtain  financing  for  the
transaction.  We intended to borrow $14,000,000 to finance the  reverse
stock split. On October 16, 1998, we determined that we were unable  to
obtain acceptable financing for the reverse stock split and decided not
to  proceed  with  the transaction.  We expensed all professional  fees
related to this transaction in fiscal 1999.

On  February 4, 1999,  we entered into an option agreement  to purchase
the  Common  Stock held by a director and shareholder  at  a  price  of
$15.00  per  share.   We can exercise this option  at  any  time  after
January  1,  2002  and before January 1, 2004.  We  paid  the  director
$5,000 for this option.

Our  shareholders' equity decreased as a result of our  acquisition  in
April  1999 of an aggregate of 460,264 shares of our Common Stock  from
our  shareholders  in  exchange  for our  12%  subordinated  debentures
payable  in  2014 in the aggregate principal amount of $5,062,882.   We
discounted  the  debentures using an effective  interest  rate  of  22%
resulting  in a net increase in bonds payable and a decrease in  Common
Stock of $2,855,334.

Item 7.  Financial Statements

The  information  called for by this Item 7 is included  following  the
"Index  to Financial Statements and Schedules" appearing at the end  of
this Form 10-KSB.

Item  8.   Changes in and Disagreements with Accountants on  Accounting
and Financial Disclosure

None.

                         PART III

Item  9.  Directors, Executive Officers, Promoters and Control Persons,
Compliance With Section 16(a) of the Exchange Act

Certain  information about our directors and officers is  contained  in
the following table:
<TABLE>
Name                     Age     Position

<S>                      <C>     <C>
Kenneth J. Susnjara (1)   53     Chairman  of the Board, President and Director

Linda S. Susnjara (1)     51     Secretary and Director

Michael P. Hardesty       46     Vice President of Engineering

Rebecca F. Fuller         50     Treasurer

David J. Hildenbrand      43     Vice President of Sales

Richard Kasten            48     Vice President of Technical Services

Clifton Crawford          51     Vice President of Thermwood.com

Donald L. Ubelhor         43     Vice-President of Manufacturing

Peter N. Lalos (2)        66     Director

Edgar Mulzer (2)          82     Director

Lee Ray Olinger (2)       73     Director
</TABLE>
(1)  Mr. and Mrs. Susnjara are husband and wife.

(2)   Member  of  the  Incentive Stock Option Committee,  Non-Qualified
Stock  Option  Committee,  Audit Committee,  Nominating  Committee  and
Compensation Committee of the Board of Directors.

All  of our directors hold office until the next annual meeting of  our
shareholders or until their successors have been elected and qualified.
Officers  serve  at  the discretion of our Board  of  Directors.   Each
director  receives compensation in the amount of $1,000 plus  $100  for
each $100,000 in profit for the previous quarter for attending each  of
the  four  directors'  meetings  and  is  reimbursed  for  all  related
expenses.

Mr. Susnjara co-founded Thermwood in 1969 and has been a director since
inception and our Chairman, President and Chief Executive Officer since
1971.   He  also served as our Treasurer prior to March 1979 and  again
from  October 1983 to June 1985.  He has devoted his full time  to  our
business  except  for  a brief period in 1985  when  he  acted  as  our
distributor.  Mr.  Susnjara  is  the  author  of  books  on   furniture
manufacturing  entitled Furniture Manufacturing in the  New  Millennium
and  Three-Dimensional Trimming and Machining and a book on  industrial
robotics  entitled A Manager's Guide to Industrial Robotics.  See  Item
12. (Certain Relationships and Related Transactions."

Mrs.  Susnjara  has been a director since 1985 and our Secretary  since
1989.   She  is  and  has been since 1985 the President  of  Automation
Associates, Incorporated, a dealer of our industrial products. See Item
12. "Certain Relationships and Related Transactions."  Mrs. Susnjara is
not active in our business.

Mr.  Hardesty  has been our Vice President of Engineering since  August
1988.   He  joined  us  in 1975 and was employed  first  as  a  project
engineer, then project manager and then general manager until July 1980
when  he  was promoted to Vice President of Operations.  He  served  in
that  capacity  until  May 1985 when he became Vice  President  of  the
Machining  Products  Division, a position he held  until  assuming  his
current position in 1988.

Mrs. Fuller joined us in 1981 and was promoted to accounting manager in
1983  and  controller  in 1985.  She assumed her  current  position  as
Treasurer in July 1993.

Mr. Hildenbrand became a Vice President in August 1988.  Previously, we
had  employed  him  in various technician and sales  manager  positions
since 1977.  He has also been a director of Thermwood Europe Ltd.,  one
of our wholly owned subsidiaries, since July 1996.

Mr.  Kasten  became a Vice President in December 1993.  Previously,  we
had employed him as a manager of applications since 1990.

Mr.  Crawford became a Vice President in May 2000.  Previously  he  had
been marketing manager and manager of technical services.

Mr.  Ubelhor  became Vice-President of Manufacturing  in  August  1997.
Previously, he had been our Production Manager since 1993.

Mr. Lalos has been engaged in the private practice of law in Washington
D.C.  since 1961 and is the senior partner in the law firm of  Lalos  &
Keegan.   He served as our Secretary from September 1981 until December
1989  and  as  a  director  from April 1981 until  July  1986.  He  was
reelected  to  the Board of Directors in December 1989.  See  Item  12.
"Certain Relationships and Related Transactions."

Mr.  Mulzer  was  Chairman  of the Board of  the  Dale  State  Bank,  a
commercial  bank  in  Dale, Indiana, from 1970  through  1993.   He  is
currently  retired.  He  became a director in September  1974  and  has
served  continuously  in that capacity to the present.   See  Item  12.
"Certain  Relationships and Related Transactions"  in  relation  to  an
option we have purchased from Mr. Mulzer.

Mr.  Olinger has been a director since December 1989.  He  has  been  a
director since 1949 and Chairman of the Board since 1986 of First  Bank
of Huntingburg, a commercial bank in Huntingburg, Indiana.

Compliance with Section 16 (a) of the Securities Exchange Act of 1934

To  our  knowledge, based solely on a review of such materials  as  are
required  by  the  Securities  and  Exchange  Commission,  no  officer,
director or beneficial holder of more than ten percent of the Company's
issued  and  outstanding shares of Common Stock failed to  timely  file
with the Securities and Exchange Commission any form or report required
to  be  so  filed pursuant to Section 16 (a) of the Securities Exchange
Act of 1934 during the fiscal year ended July 31, 2000.

Item 10. Executive Compensation

The  following table sets forth the annual remuneration paid during the
fiscal  years ended July 31, 2000, 1999 and 1998 to our Chief Executive
Officer  and to each of our executive officers whose total fiscal  2000
remuneration exceeded $100,000 and  to all of our officers as a group.
<TABLE>

Summary Compensation Table
                                       Annual compensation
                                                               Other
Name and principal position    Year    Salary     Bonus        annual
                                                            compensation
                                                                (1)
<S>                           <C>     <C>       <C>           <C>
Kenneth J. Susnjara,           2000    $108,000  $105,423      $  ---
  Chairman of the Board,       1999     108,000   130,814       3,500
  President and director       1998     108,000   146,664       6,400

Michael  Hardesty,             2000      48,000    73,796         ---
  Vice-president Engineering   1999      48,000    91,574         ---
                               1998      48,000   100,565         ---

David Hildenbrand,             2000      45,000    70,659         ---
  Vice-president Sales         1999      45,000    70,518         ---
                               1998      45,000   122,239         ---

Rebecca Fuller,                2000      44,583    63,254         ---
   Treasurer                   1999      40,000    78,491         ---
                               1998      40,000    86,199         ---

Clifton Crawford,              2000      41,250    63,254         ---
Vice-president Thermwood.com
</TABLE>


  (1)  Other annual compensation represents directors' fees paid to Mr.
Susnjara.

Stock options for an additional 4,000 shares were issued to an officer
under  the  Qualified Stock Option Plan in fiscal  1998  at  prices  in
excess  of then current market prices.  At July 31, 2000,  the exercise
prices  of  some of the unexercised options were less than  the  market
price  of  our  Common  Stock.   On  September  6,  1994,  registration
statements  on  Form  S-8 were filed with the Securities  and  Exchange
Commission  under  the Securities Act of 1933 in  connection  with  the
registration of shares of our Common Stock under our Employee Incentive
Stock Option Plan and Non-Qualified Stock Option Plan.

In  1985  the Board of Directors appointed Mr. Susnjara to the position
of  President and Chief Executive Officer.  In this position, he is  to
receive a bonus based on our pre-tax profits as set forth below.    See
"-Profit Sharing Plan" below.

Certain  other  officers may be entitled to participate in  our  profit
sharing plan.  See "-Profit Sharing Plan" below.

Profit Sharing Plan.

In 1985, we instituted a management profit sharing plan.  This plan was
continued in an amended form for fiscal 2000.  Covered under  the  plan
are  the  Chairman, the President, Vice President of Engineering,  Vice
President  of  Sales,  Vice  President  of  Technical  Services,   Vice
President  of  Manufacturing,  Vice  President  of  Thermwood.com,  the
Treasurer and various departmental managers.

Under  the  plan, the Chairman is entitled to 5% of corporate operating
income.   The  Vice  President of Sales, Vice  President  of  Technical
Services and Vice President of Marketing each are entitled to 5% of the
divisional  operating income.  The Vice President of Manufacturing  and
the Treasurer are each entitled to receive 2% and 3%, respectively,  of
the  Corporate  operating  income.  Any divisional  losses  are  to  be
subtracted  from these amounts so that the total bonus  paid  does  not
exceed 25% of operating income.

Department  managers  are  entitled  to  various  bonuses  based   upon
productivity of their departments.  Payments due under the plan  accrue
for  each  six-month  period and are thereafter  paid  in  six  monthly
installments.   Vesting  of  rights under the  plan  requires  eligible
participants  to  be  continually employed through the  payment  dates.
Divisional  losses of a fiscal year must be recouped in the  succeeding
year, or years, in order to be eligible for profit sharing earnings  in
the succeeding year(s).

Incentive Stock Option Plan.

Under  our Employee Incentive Stock Option Qualified Plan , options  to
purchase a maximum of 80,000 shares of our Common Stock may be  granted
to  officers  and  other  key  employees.  Options  granted  under  the
Qualified  Plan are intended to qualify as incentive stock  options  as
defined in Section 422A of the Internal Revenue Code.

The  Qualified  Plan is administered by the Board of  Directors  and  a
Committee  currently consisting of three members  of  the  Board  which
determines which persons are to receive options, the number  of  shares
that  may  be purchased under each option and the exercise prices.   In
the event an optionee voluntarily terminates his employment with us, he
has the right to exercise his accrued options within five days prior to
such  termination.  However, we may redeem any accrued options held  by
each optionee by paying him the difference between the option price and
the   then   fair  market  value.   If  an  optionee's  employment   is
involuntarily terminated, other than because of death, he also has  the
right  to  exercise his accrued options within 30 days of  termination.
Upon  death, his estate or heirs have one year to exercise his  accrued
options.   The maximum term of any option is ten years and  the  option
price  per  share  may not be less than the fair market  value  of  our
shares on the date the option is granted.  However, options granted  to
persons owning more than 10% of our voting shares may not have  a  term
in  excess of five years and the option price per share may not be less
than 110% of fair market value at the date the option is granted.

The  aggregate  fair  market  value of  the  shares  of  Common  Stock,
determined at the time the options are granted, with respect  to  which
incentive  stock  options are exercisable for the first  time  by  such
optionee  during  any calendar year, under all such  plans,  shall  not
exceed  $100,000.  Options must be granted within ten  years  from  the
effective date of this Qualified Plan.

Options  granted  under the Qualified Plan are not  transferable  other
than  by will or the laws of descent and distribution.  Options granted
under  the  Qualified  Plan  are protected by anti-dilution  provisions
increasing  the number of shares issuable thereunder and  reducing  the
exercise  price  of such options, under certain conditions.   The  life
term  of  the Qualified Plan extends to December 3, 2000,  or  on  such
earlier  date  as  the  Board of Directors may determine.   Any  option
outstanding  at  the  termination date will remain outstanding  at  the
termination  date until it expires or is exercised in  full,  whichever
occurs first.

Between  December 1991 and July 2000, we granted ten  year  options  to
acquire  71,600  shares of our Common Stock at exercise prices  ranging
from  $5.00  to $10.66 under the Qualified Plan to 21 of our employees.
All of these options are exercisable as of the date hereof.

Non-qualified Stock Option Plan.

Under  our  Non-qualified  Stock Option Plan,  options  to  purchase  a
maximum  of  70,000  shares  of our Common  Stock  may  be  granted  to
officers, directors, and other key employees.

The  Non-qualified Stock Option Plan is administered by  the  Board  of
Directors  and  a  committee  of  three  members  of  the  Board  which
determines  which persons are to receive such options,  the  number  of
shares  that  may be purchased under the options, the exercise  prices,
the time and manner of exercise and other related matters.

In  the  event  an  optionee voluntarily terminates his  employment  or
tenure with our consent or his employment or tenure is terminated by us
without  cause,  he  generally has the right to  exercise  his  accrued
options  within  30  days after such termination unless  the  Committee
elects  other time periods.  In all other cases of termination  of  the
optionee's  employment or tenure other than death, said  options  shall
cease  immediately.  Upon death, his estate or heirs have one  year  to
exercise his accrued options.

The  Committee may grant an optionee the right to surrender  all  or  a
portion of his accrued options to us and receive from it the difference
between  the  option  price and the then fair  market  value.   Options
become  exercisable  in  25% installments each year  beginning  in  the
second  year  through  the  fifth  year.   Options  are  generally  not
transferable  and  are conditioned upon the optionee remaining  in  our
employ  for at least one year from the date of their grant.  Under  the
Non-qualified Plan, no option may be granted after January 1, 2005  and
the  exercise price of such options may not be less than the then  fair
market  value.  It is within the Committee's discretion to grant  anti-
dilution provisions to each optionee.  Under current federal income tax
law, an employee, officer or director who is granted an option will not
have any income upon the grant of an option and we will not be entitled
to  any deduction at that time.  When an optionee exercises his option,
ordinary income will be realized by him, measured by the excess of  the
fair market value of the shares over the price paid for the shares.  We
will  be entitled to a deduction equal to the amount of income realized
by the holder of the option.  If the optionee surrenders all or part of
his option for a cash or Common Stock payment, he will realize ordinary
income  in  the amount of cash or fair market value of stock  received.
We  will  be  entitled  to a deduction equal to the  amount  of  income
realized by the optionee.

As  of  July  31, 2000, options to acquire 40,000 shares of our  Common
Stock  at  an  average exercisable price of $6.72 per  share  had  been
granted  under  the  Non-qualified Plan to four of  our  directors  and
officers.  Currently all of these options are exercisable.

Other options.

There are options to purchase an additional 120,000 shares held by  our
President.   These options extend through October 18, 2005  and  permit
the purchase of 60,000 shares at $15.00 per share and 60,000 shares  at
$30.00 per share.

Section 401(k) Plan

We adopted a tax-qualified cash savings plan called the "401(k) Plan,"
which became effective in October 1989.  This Plan covers all employees
who have completed 12 months of continuous service prior to a plan
entry date.  Pursuant to the 401(k) Plan, eligible employees may make
salary deferral, before tax, contributions of up to 15% of their total
compensation per plan year up to a specified maximum contribution as
determined by the Internal Revenue Service. We also make a matching
contribution of 25% of employees' contributions up to 5% of their
annual salaries and an additional match of 10% of their contributions
between 6% and 8% of employees' salaries.

The  401(k)  Plan also includes provisions which authorize us  to  make
discretionary  contributions.   Such  contributions,   if   made,   are
allocated  among all eligible employees as determined under the  401(k)
Plan.   The  trustee  under  the  401(k)  Plan  is  Merrill  Lynch   of
Evansville,  Indiana.   It  invests the assets  of  each  participant's
account in funds at the direction of such participant.


Item   11.   Security  Ownership  of  Certain  Beneficial  Owners   and
Management:

The following table sets forth certain information regarding our Common
Stock   ownership,  including  shares  issuable  upon   conversion   of
outstanding  debentures and upon exercise of options owned as  of  July
31, 2000 by

(a)  each  person known by us to own beneficially more than 5%  of  our
outstanding Common Stock,

(b) each director, and

(c)all officers and directors as a group:
<TABLE>

                                                 Shares Owned
                                                  Including
                                                    Those
                                     Percentage   Underlying    Percentage of
Names and Addresses   Shares          of Total   Exercisable        Total
of Beneficial Owners  Owned at       Outstanding  Options and     Outstanding
                      July 31,2000     Shares     Convertible    Shares Owned
                                        Owned     Securities

<S>                    <C>             <C>         <C>               <C>
Kenneth J. Susnjara(1)  261,420(2)      26.54       411,420           34.29
And Linda Susnjara

Edgar Mulzer
401 10th Street
Tell  City, Indiana     208,052(3)      21.12       218,052           18.18
47586

Peter N. Lalos
14312 Darnstown Road      8,000          0.81       22,000            1.83
Gaithersburg,
Maryland 20878

Lee Ray Olinger
c/o First Bank of
Huntingburg
4th and Main Street
Huntingburg, IN           ---         ---           ---             ---
47542

All Officers and
Directors               481,002        48.83       676,002           56.35
as a Group(9 persons)
</TABLE>

(1)   The  address  of  these shareholders is care  of  Thermwood,  Old
Buffaloville Road, P.O. Box 436, Dale, Indiana 47523.

(2)  These  shares are owned jointly by Mr. and Mrs. Susnjara  who  are
husband  and wife.  Accordingly, each may be deemed to be a  beneficial
owner of the securities owned by the other.

(3)   Mr. Mulzer has given us an option to purchase all of these shares
during the two-year period commencing on January 1, 2002.  Please  read
the  information under the heading "Certain Relationships  and  Related
Transactions" for an illustration of how exercise of that option  would
affect ownership and control of Thermwood.

Item 12. Certain Relationships and Related Transactions:

Transactions With Edgar Mulzer

On February 4, 1999, Edgar Mulzer, a director and major shareholder who
is  not  active  in our management, gave us an option to  purchase  his
shares at a price of $15.00 per share.  We can exercise this option  at
any time after January 1, 2002 and before January 1, 2004.  We paid Mr.
Mulzer  $5,000 for this option.  We have secured this option to further
our  plans to assure that control of Thermwood remains with Kenneth and
Linda Susnjara.

Transactions with Mr. & Mrs.  Susnjara

Mr.   and  Mrs.  Susnjara  are  the  owners  of  Automation  Associates
Incorporated, a dealer of our machine products.  The agreement  between
Automation Associates and us contains the same terms and conditions  as
with  our  other dealers.  We sold no products to Automation Associates
during  fiscal  2000,  but  paid  Automation  Associates  $697,901   in
commissions  during   the  year for assisting  in  effecting  sales  of
approximately $3,500,000.  This amount represents approximately 16%  of
our  gross  sales for fiscal 2000.  Automation Associates  also  leases
space  from  us  at  what  we believe is a fair  market  rate.   Rental
payments were $2,400 during fiscal years 2000 and 1999.

Transactions with Peter Lalos

Lalos  &  Keegan, a law firm in which Mr. Lalos is the senior  partner,
accrued  fees of $204,000, $183,000, and $95,000, for the fiscal  years
2000, 1999, and 1998, respectively.  All outstanding balances have been
paid subsequently.

We  believe  that the terms of the transactions between our  affiliated
parties  and us as described in this section are as fair as those  that
we  would  have  obtained if these transactions had been effected  with
independent third parties.  Each transaction was approved by a majority
of  the  disinterested directors.  In the future, all such transactions
will  continue  to  be  approved  by a majority  of  the  disinterested
directors.

Recent Stock Transactions by Affiliates

Mr. and Mrs. Susnjara converted debentures into 10,000 shares of Common
Stock on September 2, 1998.  This is the only transaction in our shares
effected by affiliates in fiscal 1999 and 2000.

To  our  knowledge, neither we nor any of our affiliates, directors  or
executive officers have purchased or sold any Common Stock in the  last
sixty days.

                              PART   IV

Item 13.  Exhibits and Reports on Form 8-K:
<TABLE>
(a)  The following documents are filed as a part of this report:
     1.  Financial Statements:

     <S>                                                    <C>
     Index  to  Financial Statements:                        Page Reference
     Independent Auditors' Report                                23

     Financial Statements:
      Consolidated Balance Sheets - July 31, 2000 and 1999       24

      Consolidated Statements of Operations  - Years ended
      July 31, 2000, 1999 and 1998                               26

      Consolidated Statements of Shareholders' Equity - Years
      Ended July 31, 2000, 1999 and 1998                         27

      Consolidated Statements of Cash Flows - Years ended
      July 31, 2000, 1999 and 1998                               28

      Notes to Consolidated Financial Statements                 29
</TABLE>

All  other schedules are omitted because they are not required, or  are
inapplicable  or  the information is otherwise shown in  the  financial
statements or notes thereto.

(b)  Reports on Form 8-K:

        None.




                    SIGNATURES


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

Date:
October 25, 2000             /s/ Kenneth J. Susnjara
                              Kenneth  J.  Susnjara,  Chairman  of  the
                              Board  and President (Principle Executive
                              Officer)

      Pursuant  to the requirements of the Securities Exchange  Act  of
1934, this report has been signed by the following persons on behalf of
Thermwood Corporation and in the capacities and on the dates indicated:

Date:
October 25, 2000              /s/ Kenneth J. Susnjara
                              Kenneth  J.  Susnjara,  Chairman  of  the
                              Board  and President (Principal Executive
                              Officer)

Date:
October 25, 2000              /s/ Rebecca F. Fuller
                              Rebecca  F.  Fuller, Treasurer (Principal
                              Financial and Accounting Officer)

Date:
October 25 2000               /s/ Linda S. Susnjara
                              Linda S. Susnjara, Secretary

Date:
October 25, 2000              /s/ Peter N. Lalos
                              Peter N. Lalos, Director

Date:
October 25, 2000              /s/ Edgar Mulzer
                              Edgar Mulzer, Director

Date: October 25, 2000
                              /s/ Lee Ray Olinger
                              Lee Ray Olinger, Director



                     INDEPENDENT AUDITORS' REPORT

To the Shareholders and Board of Directors
Thermwood Corporation:

We  have  audited  the  accompanying  consolidated  balance  sheets  of
Thermwood  Corporation and subsidiaries as of July 31, 2000  and  1999,
and  the  related consolidated statements of operations,  shareholders'
equity  and  cash flows for each of the years in the three-year  period
ended  July 31, 2000.  These consolidated financial statements are  the
responsibility of the Company's management.  Our responsibility  is  to
express an opinion on these consolidated financial statements based  on
our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America.  Those standards require that
we  plan  and  perform the audit to obtain reasonable  assurance  about
whether the financial statements are free of material misstatement.  An
audit  includes  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
Thermwood  Corporation and subsidiaries as of July 31, 2000  and  1999,
and  the  results of their operations and their cash flows for each  of
the  years  in the three-year period ended July 31, 2000, in conformity
with  accounting principles generally accepted in the United States  of
America.



KPMG LLP
Indianapolis, Indiana
September 15, 2000






<TABLE>
                          THERMWOOD CORPORATION
                       CONSOLIDATED BALANCE SHEETS

                                                      July 31
                                               2000              1999
                                         ----------------------------------
                Assets

Current assets

    <S>                                    <C>              <C>
    Cash                                    $        ---     $     80,941
    Accounts receivable, less
      allowance for doubtful accounts
      of $41,000 for 2000 and $68,000
      for 1999                                 2,128,826        1,902,865
    Income taxes recoverable                         ---          135,457
    Inventories                                6,592,461        5,266,765
    Deferred income taxes                        542,000          655,000
    Prepaid expenses                             458,506          422,536
                                             -----------       ----------
         Total current assets                  9,721,793        8,463,564
                                             -----------       ----------
Property and Equipment

   Land                                           73,260           73,260
   Buildings and improvements                  2,106,668        2,051,882
   Furniture and equipment                     3,852,367        3,503,586
   Construction in progress                       51,782              ---
     Less accumulated depreciation           (3,312,777)      (2,861,869)
                                            ------------     ------------
         Net property and equipment            2,771,300        2,766,859
                                            ------------     ------------
Other assets

   Patents, trademarks and other                 152,191          145,608
   Bond issuance costs less
     accumulated amortization                    429,080          481,179
   Deferred income taxes                         274,000          325,000
                                           -------------     ------------
         Total other assets                      855,271          951,787
                                           -------------     ------------
Total assets                                $ 13,348,364     $ 12,182,210
                                           =============     ============

See accompanying notes to consolidated
financial statements.
</TABLE>




<TABLE>
                         THERMWOOD CORPORATION
                      CONSOLIDATED BALANCE SHEETS

                                                          July 31
                                                    2000             1999
                                            ---------------------------------
 Liabilities and Shareholders' Equity

 Current liabilities

   <S>                                          <C>              <C>
   Accounts payable                             $  1,232,491     $  1,144,634
   Checks issued in excess of bank balance           104,752              ---
   Accrued compensation and payroll taxes            371,696          286,907
   Customer deposits                                 580,978        1,080,337
   Other accrued liabilities                         755,787          656,849
   Current portion of capital lease obligations       36,858           36,748
   Note payable to bank                            2,987,654        2,196,320
                                               -------------     ------------
       Total current liabilities                   6,070,216        5,401,795


 Long-term liabilities, less current portion

   Capital lease obligations                         33,618           70,777
   Debentures payable, net of unamortized
     discount of $1,885,120 for 2000 and
     $2,107,345 for 1999                          2,936,362        2,913,184
                                              -------------      -----------
       Total long-term liabilities                2,969,980        2,983,961
                                              -------------      -----------
 Shareholders' equity
   Common stock, no par value,
     4,000,000 shares authorized,
     985,045 shares issued and outstanding
     for 2000 and 1999                           7,953,077        7,953,077
   Accumulated deficit                          (3,713,048)      (4,120,998)
      Foreign currency translation                  68,139              ---
                                              ------------     ------------
                                                 4,308,168        3,832,079
   Less subscriptions receivable                       ---           35,625
                                              ------------     ------------
      Total shareholders' equity                 4,308,168        3,796,454
                                              ------------     ------------
 Total liabilities and shareholders' equity   $ 13,348,364     $ 12,182,210
                                              ============     ============
 See accompanying notes to
 consolidated financial statements.
</TABLE>

<TABLE>

                         THERMWOOD CORPORATION
                 CONSOLIDATED STATEMENTS OF OPERATIONS

                                                   Years Ended July 31
                                             2000          1999        1998
                                        ------------- ------------- -----------
 Sales
     <S>                                  <C>         <C>         <C>
     Machine sales                        $22,551,799 $19,430,750 $20,199,191
     Technical services                     6,064,097   5,191,572   4,657,784
                                         ------------  ----------- -----------
                                           28,615,896  24,622,322  24,856,975
    Less commissions                        2,916,021   2,896,439   3,017,446
                                         ------------ ----------- -----------
 Net sales                                 25,699,875  21,725,883  21,839,529

 Cost of sales
     Machines                              12,877,040  10,563,563   9,981,401
     Technical services                     2,664,914   2,702,352   3,016,505
                                          -----------  ----------- -----------
 Total cost of sales                       15,541,954  13,265,915  12,997,906
                                          -----------  ----------- ----------
         Gross profit                      10,157,921   8,459,968   8,841,623

 Research and development, marketing,
  administrative and general expenses       8,142,569   7,309,305   6,413,160
                                           ----------  ---------- -----------
         Operating income                   2,015,352   1,150,663   2,428,463
                                           ----------  ---------- -----------
 Other income (expense):
    Interest expense                       (1,011,872)   (379,687)   (231,747)
    Other                                      (3,390)    107,098     (30,830)
                                           ----------  ---------- -----------
    Other expense, net                     (1,015,262)   (272,589)   (262,577)
                                           ----------  ---------- -----------
Earnings before income
  taxes and extraordinary loss              1,000,090     878,074   2,165,886

 Income tax expense                          (553,000)   (206,000)   (848,000)
                                           ----------  ----------  ----------
 Earnings before extraordinary loss           447,090     672,074   1,317,886

 Extraordinary loss on repurchase of
  bonds, net of income tax benefit of
  $23,000 and $11,000
  for fiscal 2000 and 1999, respectively     (39,140)     (34,161)       ---
                                          ----------  ------------ ----------
        Net earnings                      $  407,950  $   637,913  $1,317,886
                                          ==========  =========== ===========
Earnings per share:
  Basic                                       $0.41         $0.49      $0.89
  Diluted                                     $0.41         $0.49      $0.86
                                          ==========  =========== ==========

  See accompanying notes to
  consolidated financial statements
</TABLE>
<TABLE>
                            THERMWOOD CORPORATION
              CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                                                               Accumu-
                                                                lated
             Preferred Stock      Common Stock                  Other    Accumu-
             ----------------- ---------------------Subscrip-  Compre-   lated
              Shares Amount     Shares     Amount      tions    hensive  Deficit
                                                    Receivable  Income
             ------ ---------- --------- ----------- --------- ------- --------
Balances at
July 31,
<S>         <C>     <C>        <C>       <C>         <C>       <C>  <C>
1997        738,000 $2,546,320 1,400,109 $10,599,285 ($24,750)  --- ($6,033,542)

Subscriptions
received        ---        ---       ---        ---    19,125   ---         ---

Preferred
dividends paid  ---         ---      ---        ---      ---    ---     (43,255)

Redemption of
preferred
stock      (738,000) (2,546,320)    ---         ---      ---     ---        ---

Conversion of
12% debentures,
net of related
bond issuance
costs and unamortized
discount        ---      ---     24,000     108,351      ---     ---        ---

Exercise of
qualified stock
options         ---      ---      1,000       5,000      ---     ---        ---

Exercise of
other stock
options         ---      ---      6,000      30,000  (30,000)    ---        ---

Net earnings    ---      ---       ---          ---       ---    ---  1,317,886
            ------- -------- ---------- ----------- --------- ------ -----------
Balances at
July 31,
1998            ---      ---  1,431,109 $10,742,636 ($35,625)    ---($4,758,911)

Conversion of
12% debentures,
net of related
bond issuance
costs and
unamortized
discount        ---     ---     14,200       65,775    ---       ---        ---

Conversion of
common stock to
12% bonds due
2014            ---     ---   (460,264) (2,855,334)    ---       ---        ---

Net earnings    ---     ---      ---        ---        ---       ---    637,913
             ------ ------- -------- ---------- ----------  -------- ----------
Balances at
July 31
1999            ---     ---  985,045 $7,953,077  ($35,625)       ---($4,120,998)

Forgiveness of
subscriptions
receivable      ---     ---     ---        ---     35,625      ---          ---

Currency
translation
adjustment      ---     ---     ---        ---       ---    68,139          ---

Net earnings    ---     ---     ---        ---       ---       ---      407,950
             ------ ------- ------- ----------  -------- --------- -------------
Balances at
July 31,
2000            --- $   --- 985,045 $7,953,077  $    ---   $68,139  ($3,713,048)
             ====== ======= ======= ==========  ======== ========= =============
 See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
                           THERMWOOD CORPORATION
                   CONSOLIDATED STATEMENTS OF CASH FLOWS

                                            Years Ended July 31
                                      2000          1999         1998
                                   ----------- ------------ -------------
 Cash Flows From Operating
 Activities:

 <S>                                <C>          <C>          <C>
 Net earnings                       $  407,950   $  637,913   $1,317,886
 Adjustments to reconcile net
 earnings to net cash
 provided by operating activities:
    Extraordinary loss on
      repurchase of bonds               39,140       34,161          ---
    Depreciation and amortization      653,945      489,854      368,261
    Provision for inventories              ---      165,000       68,000
    Loss on disposal of equipment      100,802          ---       48,936
    Deferred income taxes              164,000     (87,000)    1,109,000
    Forgiveness of subscriptions
      receivable                        35,625          ---          ---
    Changes in operating assets
    and liabilities:
      Accounts receivable            (225,961)    (229,039)      128,743
      Income taxes recoverable         135,457    (135,457)          ---
      Inventories                   (1,325,696)    (72,583)     (809,181)
      Prepaid expenses and other
        assets                         (35,970)    (66,784)     (118,922)
      Accounts payable and other
        accrued expenses               294,584     (87,797)     (798,976)
      Customer deposits               (499,359)    264,022       (90,795)
                                     ----------  ----------  ------------
 Net cash provided by (used for)
  operating activities                (255,483)  1,047,747     1,222,952

 Cash Flows From Investing
 Activities:

 Proceeds from the sale of equipment    33,193          ---          ---
 Purchases of patents, property
   and equipment                      (625,580)    (459,043)  (1,242,887)
                                    ----------   ----------   -----------
 Net cash used by investing
   activities                         (592,387)    (459,043)   (1,242,887)
                                    ----------   -----------  ------------
 Cash Flows From Financing
 Activities:

 Principal payments on lease
   obligations                         (37,049)      (8,915)      (7,478)
 Redemption of debentures             (160,247)    (112,761)          ---
 Bond issuance costs                       ---     (502,024)          ---
 Redemption of preferred stock             ---          ---    (2,546,320)
 Payment of dividends on preferred stock   ---          ---       (43,255)
 Net borrowings on note payable to bank 791,334         ---     2,196,320
 Checks issued in excess of bank
  balance                               104,752          ---          ---
 Proceeds from subscriptions
  receivable                                ---          ---       19,125
 Proceeds from exercise of stock options    ---          ---        5,000
                                     ----------   ----------  -----------
 Net cash used by financing
  activities                            698,790     (623,700)    (376,608)
                                     ----------   ----------- ------------
 Effect of exchange rates on cash        68,139          ---          ---
                                     ----------   ----------- ------------
 Decrease in cash                       (80,941)     (34,996)    (396,543)

 Cash at beginning of year               80,941      115,937      512,480
                                       --------    --------- ------------
 Cash at end of year                   $    ---    $  80,941     $115,937
                                       ========  =========== ============

 See accompanying notes to consolidated
 financial statements.
</TABLE>

                   THERMWOOD CORPORATION AND SUBSIDIARY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES :

General:

The  consolidated  financial statements include the accounts  of  Thermwood
Corporation and its wholly-owned subsidiaries, Thermwood Europe Limited,  a
United Kingdom company, CNC Carolina, Inc., a dealer in North Carolina, and
Thermwood  Capital Corporation, a leasing company (together, the  "Company"
or  "Thermwood").  There was no revenue generated  in  2000  or  1999  from
Thermwood Capital Corporation, a leasing company.

Thermwood  operates  within a single industry called industrial  automation
equipment and manufactures high technology machining systems.  The  Company
sells  its  products  primarily through the assistance of  dealer  networks
established throughout the United States and Europe.  One dealer  accounted
for approximately 16% of the Company's business in fiscal 2000; however, no
customer accounted for more than 10% of sales in fiscal 2000, 1999 or 1998.
The  loss of any large dealer could have a material adverse effect  on  the
Company's business.

Thermwood  also  offers  a variety of technical services.   These  services
include  training,  installation  assistance,  preventive  maintenance  and
upgrading  and  enhancement of installed products as  technology  advances.
The  Technical  Services Division also has responsibility for  the  quality
control  of   the  Company's  machine products  during  their  manufacture.
Technical  services  are  marketed  to current  customers  as  well  as  to
companies that purchase Thermwood equipment in the used market.

Thermwood's  machining systems are utilized principally in the woodworking,
plastics  and  boating  industries.  The Company is not  dependent  upon  a
single supplier or only a few suppliers.

Principles of Consolidation:

All significant intercompany transactions and accounts have been eliminated
in consolidation.

Use of Estimates and Assumptions:

The  preparation  of  financial  statements in  conformity  with  generally
accepted  accounting principles requires the Company to make estimates  and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities,  and the reported  amounts
of   revenues  and  expenses.   Actual  results  could  differ  from  those
estimates.

Reclassifications:

Certain  amounts presented in prior years' financial statements  have  been
reclassified to conform to the current year presentation.

Revenues and Warranties:

The  manufacturing process may extend over several months and advance  cash
deposits  are  normally required from customers.  Sales are  recorded  when
machines are shipped.  Technical services revenues are recognized when  the
services  are  performed.   Revenues  on  long-term  upgrade  and  warranty
agreements  are recognized ratably over the life of the related  agreement.
Estimated costs of product warranties are charged to cost of sales  at  the
time of sale.

Inventories:

Inventories are stated at the lower of cost (first-in, first-out method) or
market.

Property and Equipment:

Property and equipment are recorded at cost for assets purchased and at the
present  value of minimum lease payments for assets acquired under  capital
leases.   The  carrying value of property and equipment  is  assessed  when
factors indicating an impairment are present.  If an impairment is present,
the  assets  are  reported at the lower of carrying value  or  fair  value.
Depreciation and amortization are computed by the straight-line method over
the estimated useful lives of the assets, as shown below:

               Buildings and improvements         10 to 30 years
               Equipment                           3 to 10 years

Depreciation  expense  for 2000, 1999 and 1998 was $458,236,  $414,746  and
$345,890, respectively.

Research and Development:

Research and development costs are expensed as incurred.  Expenditures  for
research and development were approximately $685,000, $570,000 and $314,000
during 2000, 1999 and 1998, respectively.

Customer Deposits:

Customer  deposits  are  recorded as a current  liability  with  no  offset
against  costs incurred on work-in-process.  As of July 31,2000  and  1999,
substantially all of the deposits had no incurred work-in-process cost.

Earnings Per Share:
Earnings  per  share  for  each  of the three  years  ended  July  31  were
determined as follows:
<TABLE>
                2000                   1999                     1998
           -----------------      ------------------     ----------------------
            Basic    Diluted        Basic  Diluted          Basic     Diluted
          ---------  -------      --------- --------     ----------- ----------
Earnings:

Earnings
before
extra-
ordinary
<S>      <C>         <C>          <C>        <C>         <C>        <C>
loss     $447,090    $447,090     $672,074   $672,074    $1,317,886 $1,317,886

Less
preferred
stock
dividend      ---         ---          ---       ---       (43,255)    (43,255)

Add interest
expense on
convertible
debentures    ---       13,200         ---     13,830         ---       47,180

Add amorti-
zation of
discount
on deben-
tures and
issuance
costs          ---      2,476          ---    2,490           ---        4,701

Income tax
effects of
earnings
adjustments    ---     (6,270)         ---   (6,528)          ---      (19,196)

Earnings
available
to common
share-     --------  ---------  ----------- --------  ------------ -------------
holders    447,090    456,496      672,074   681,866     1,274,631   1,307,316

Extra-
ordinary
loss, net
of tax
benefit    (39,140)   (39,140)    (34,161)  (34,161)          ---          ---
          --------- ---------- ----------- ---------  -----------  -------------
Net ear-
nings
available
to common
share-
holders   $407,950   $417,356    $637,913   $647,705   $1,274,631   $1,307,316
         ========== ==========  ========== =========  =========== =============
Weighted-average
shares:

Outstan-
ding       985,045    985,045   1,290,521  1,290,521    1,424,676    1,424,676

Incremental
shares
related to
dilutive
stock
options        ---      1,082        ---       9,300         ---        55,872

Incremental
shares
related to
convertible
bonds          ---     22,000        ---      22,000        ---         36,200
          --------- ----------  ---------  ----------  ---------  ------------
Total
weighted-
average
shares      985,045  1,008,127  1,290,521   1,321,821  1,424,676     1,516,748
          ========= ==========  =========  ==========  =========  ============
Earnings per
share:

Income before
extraor-
dinary
earnings      $0.45      $0.45      $0.52      $0.52       $0.89         $0.86

Extraordinary
loss, net of
income taxes   (.04)      (.04)      (.03)      (.03)        ---           ---
            --------  ---------  ---------  ---------  ---------  ------------
Net earnings   $0.41      $0.41      $0.49      $0.49      $0.89         $0.86
            ========  =========  =========  =========  =========  ============
</TABLE>

Income Taxes:

Deferred  tax  assets and liabilities are recognized  for  the  future  tax
consequences  attributable to differences between the  financial  statement
amounts  for  assets  and  liabilities  and  their  respective  tax  bases.
Deferred  tax assets and liabilities are measured using enacted  tax  rates
which  apply  to  taxable  income in the years  in  which  those  temporary
differences are expected to reverse.  The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the period the change
is  enacted.  A valuation allowance is provided when it is more likely than
not  that  some  portion  or all of net deferred tax  assets  will  not  be
realized.

NOTE B -- INVENTORIES:
<TABLE>
Inventories at July 31 consist of:

                                   2000              1999
                                -------------  --------------
       <S>                     <C>             <C>
       Finished goods           $     713,197    $    937,662
       Work-in-process                892,375       1,112,684
       Raw materials                4,986,889       3,216,418
                                -------------  --------------
                                 $  6,592,461    $  5,266,765
                                =============  ==============
</TABLE>

NOTE C -- LEASES:

Amounts  included  in  property and equipment at July  31,  2000  and  1999
relating to capital leases are as follows:
<TABLE>
                                       2000              1999
                                    ----------     -----------
      <S>                           <C>             <C>
      Furniture and equipment       $  110,245      $  110,245
      Less accumulated amortization    (39,811)         (3,062)
                                    ----------      ----------
                                     $  70,434      $  107,183
                                    ==========      ==========

Future minimum lease payments as of July 31, 2000  are as follows:

                                     Capital        Operating
      Years ending July 31:           Leases          Leases
                                    ----------      ----------
               2001                 $   41,460      $ 127,100
               2002                     37,994        127,100
               2003                        ---        127,100
               2004                        ---        127,100
               2005                        ---        127,100
                                     ---------      ---------
      Total minimum lease payments   $  79,454      $ 635,500
      Less amounts representing
      interest at an interest
      rate of 8%                        (5,529)
                                     ---------
                                     $  70,476
                                     =========
</TABLE>
Total  operating  lease  expense for 2000,  1999  and  1998  was  $127,000,
$127,000 and $119,000 respectively.

NOTE D -- NOTES PAYABLE TO BANK:

During 2000, the Company's $3,500,000 line of credit  with a bank was
increased to $5,000,000.  At July 31, 2000, $2,987,654 was outstanding
under the line of credit.  The line of credit bears interest payable
monthly at the bank's money market prime rate plus .5% (10% at July 31,
2000).  The line is secured by the tangible assets of the Company and
expires in January 2001.  Management expects to renew the line under terms
similar to the existing agreement.

NOTE E -- DEBENTURES PAYABLE:

In  1993,  the Company completed a public offering of 2,070 units  totaling
$2,070,000.   Each  unit  consisted of one  Convertible  Debenture  in  the
principal  amount  of  $1,000 bearing interest at  12%  per  year  and  500
Redeemable  Warrants.   The bonds were issued at a  discount  of  $254,573,
which is being amortized using the interest method.

The  debentures,  which  mature in February 2003, are  convertible,  unless
previously  redeemed, into shares of Common Stock at a price of  $5.00  per
share,   subject  to  anti-dilutive  adjustments.   Interest   is   payable
quarterly.  Thermwood may, on 30 days written notice redeem the debentures,
in  whole  or  in part, if the closing price of the Common  Stock  for  the
immediately preceding 30 consecutive trading days equals or exceeds  $12.50
per share.  The redemption price will be 105% plus accrued interest through
the date of redemption.

During  fiscal years ended July 31, 1999 and 1998, holders tendered $71,000
and  $120,000  of  the debentures for conversion into  14,200  and  24,000,
common  shares,  respectively.   During fiscal  2000,  no  debentures  were
tendered for conversion. At July 31, 2000, there were $110,000 in principal
of these debentures outstanding.

In  April 1999, the Company acquired an aggregate of 460,264 shares of  its
Common  Stock  from Company shareholders in exchange for  12%  subordinated
debentures payable in 2014 in the aggregate principal amount of $5,062,882.
The  subordinated  debentures were discounted using an  effective  interest
rate of 22% resulting in a net increase in bonds payable of $2,855,334.  In
July 1999, the Company repurchased debentures with a face value of $147,400
at  a cost of $112,761.  This transaction resulted in an extraordinary loss
of  $34,161, net of the related tax benefit of $11,000.  In fiscal 2000 the
Company  repurchased debentures with a face value of $204,000 at a cost  of
$160,247.  These transactions resulted in an extraordinary loss of $39,140,
net of the related tax benefit of $23,000.

NOTE F -- COMMON STOCK OPTIONS:

Thermwood  has both a qualified and a nonqualified stock option plan.   The
Company  applies  APB  Opinion  No. 25, "Accounting  for  Stock  Issued  to
Employees" and related Interpretations in accounting for these plans.   Had
compensation cost been determined based on the fair value at the grant date
for  awards  under those plans consistent with the method of  Statement  of
Financial  Accounting  Standards  No. 123  (FAS  123),   net  earnings  and
earnings  per  share  would  have been reduced to  the  pro  forma  amounts
indicated below:
<TABLE>
                                         2000         1999         1998
                                        --------     --------    ---------
   Net Earnings
      <S>                               <C>          <C>        <C>
      As Reported                       $407,950     $637,913   $1,317,886
      Pro Forma                          324,975      637,913    1,308,962

   Basic Earnings Per Share
      As Reported                          $0.41        $0.49        $0.89
      Pro Forma                             0.33         0.49         0.89

   Diluted Earnings Per Share
      As Reported                           0.41         0.49         0.86
      Pro Forma                             0.33         0.49         0.86
</TABLE>
The  effects  of  applying  FAS 123 in this pro forma  disclosure  are  not
indicative  of future amounts.  The fair value of each option is  estimated
on  the date of grant using the Black-Scholes option pricing model with the
following  assumptions  for grants in fiscal 2000 and  1998:   no  dividend
yield; expected volatility of 37 percent and 35 percent, respectively; risk-
free interest rate of 6 percent and 4.7 percent, respectively; and expected
lives of ten years for all options. No options were granted in fiscal  year
1999.

The  Company reserved 80,000 shares of Common Stock for issuance under  the
qualified  plan.   Options  to purchase 71,600  of  the  shares  have  been
granted, including options for 21,000 shares granted in fiscal 2000.   None
of  these options were exercised during fiscal 2000.  As of July 31,  2000,
options  for  71,600  shares  were  exercisable.   These  options  must  be
exercised within ten years of the grant date.

The  nonqualified plan provides for the issuance of options to purchase  up
to 70,000 shares of Common Stock of which options to purchase 40,000 shares
were outstanding and exercisable as of July 31, 2000.

Options  to purchase an additional 120,000 shares are held by the Company's
president.   These options extend through October 18, 2005 and  permit  the
purchase  of 60,000 shares at $15.00 per share and 60,000 shares at  $30.00
per share.
<TABLE>
       A summary of Common Stock options for the years ended July 31 follows:

                                  2000               1999              1998
                                Weighted          Weighted          Weighted
                                 Average           Average           Average
                        Shares  Exercise   Shares Exercise  Shares  Exercise
                                  Price             Price             Price
                       -------- ---------  ------- ------- -------- --------
 Outstanding at
  beginning
  <S>                   <C>        <C>     <C>        <C>   <C>      <C>
  of year               210,600    $16.10  214,600    9.15  226,600  $ 15.90

 Granted                 21,000      6.50      ---     ---    4,000    10.63

 Canceled/expired           ---       ---    4,000    8.44   10,000     9.38

 Exercised                  ---       ---      ---     ---    6,000     5.00
                       -------- ---------  ------- -------- -------- -------
 Outstanding at
 end of year            231,600    $15.23  210,600  $16.10  214,600  $  9.15
                       ======== =========  ======= ======== ======== =======
 Exercisable at
 end of year            231,600            210,600          214,600
                       ========            =======          =======
 Weighted average
 fair value of
 options granted
 during the year                    $3.95           $  ---           $  3.66
                                =========          ========          ========
</TABLE>
NOTE G -- RELATED PARTY TRANSACTIONS:

Director and shareholder - A director and shareholder is a partner  in  the
law  firm  retained as the Company's outside counsel.  Total  expenses  for
legal  services from the firm were $204,000, $183,000 and $95,000 for 2000,
1999  and 1998, respectively.  The Company had accounts payable of $32,619,
and $31,515 at July 31, 2000, and 1999 respectively, relating to such legal
services.

President  and secretary - The president and secretary of the Company,  who
are  husband and wife and are also directors of the Company, are the owners
of  a dealership which leases office space from and sells equipment for the
Company.   The  Company  primarily  sells  its  machines  directly  to  the
purchaser  within  this dealer's region; however, sales may  also  be  made
directly  to  the dealer who in turn sells the machines to  the  purchaser.
The  agreement  between the Company and the dealer is a standard  agreement
similar to other dealer agreements entered into by the Company.

Rent  income from the dealership was $2,400 for 2000, 1999 and 1998.  Sales
commissions of $697,901, $669,125 and $627,816 were paid to the  dealership
during 2000, 1999 and 1998, respectively, for assisting in effecting sales.

NOTE H -- INCOME TAXES:
<TABLE>
 Income taxes for the years ended July 31 were allocated as follows:

                                   2000            1999           1998
                                 ----------      ----------     -----------
  Earnings before
  <S>                            <C>             <C>            <C>
  extraordinary loss             $ (553,000)     $ (206,000)    $ (848,000)
  Extraordinary loss                 23,000          11,000            ---
                                 -----------     -----------    ------------
  Total income tax expense       $ (530,000)     $ (195,000)     $ (848,000)
                                 ===========     ===========    ============
</TABLE>
<TABLE>
Income taxes for the years ended July 31 consist of:

                                    2000            1999           1998
                                 -----------     -----------    -----------
  Federal:
    <S>                          <C>            <C>             <C>
    Current (expense) benefit     $(308,000)     $(240,000)      $ 308,000
    Deferred (expense) benefit     (151,000)        80,000      (1,019,000)
                                 -----------     ----------     -----------
                                   (459,000)      (160,000)       (711,000)
                                 -----------     ----------     -----------
  State:
       Current expense              (58,000)       (42,000)        (47,000)
       Deferred expense             (13,000)         7,000         (90,000)
                                 -----------     ----------     -----------
                                    (71,000)       (35,000)       (137,000)
                                 -----------     ----------     -----------
  Total income tax expense        $(530,000)      (195,000)       (848,000)
                                 ===========     ==========     ===========
</TABLE>

  A reconciliation of expected income taxes using an effective combined
  state and federal income tax rate of 37% and actual income taxes for
  the years ended July 31 follows:
<TABLE>

                                          2000           1999          1998
                                      -----------    ----------    ----------
  <S>                                <C>            <C>           <C>
  Earnings before income taxes        $   999,612    $ 878,074     $2,165,886
                                      ===========    ==========    ==========
  Expected income tax expense         $  (370,000)   $(325,000)    $ (801,000)
  Bond discount amortization              (83,000)      (12,000)           ---
  Losses of foreign subsidiary            (90,000)      (83,000)           ---
  Effect of other permanent
    differences                           (24,000)      (17,000)      (19,000)
  Extraordinary loss                       23,000        11,000            ---
  Utilization of loss carryforwards           ---       170,000            ---
  Other                                    14,000        61,000       (28,000)
                                     -------------  ------------  ------------
    Total actual income tax expense  $   (530,000)  $  (195,000)   $ (848,000)
                                     =============  ============  ============
</TABLE>
The tax effects of significant temporary differences represented by deferred tax
assets and deferred tax liabilities at July 31 are as follows:
<TABLE>
                                    2000           1999          1998
                                -------------   -----------   ------------
  Deferred tax assets
  attributable to:

  <S>                            <C>           <C>            <C>
  Property and equipment         $   253,000    $  318,000     $  185,000
  Accounts receivable                 41,000        25,000          7,000
  Inventory valuation                284,000       300,000        245,000
  Warranty reserves                  125,000       122,000         79,000
  Net operating loss carryforwards       ---           ---        196,000
  Other tax carryforwards                ---       174,000        155,000
  Contributions                       34,000           ---            ---
  Other                               79,000        41,000         26,000
                                 -----------    ----------    -----------
     Net deferred tax assets     $   816,000    $  980,000     $  893,000
                                 ===========    ==========    ===========
</TABLE>
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that all or some portion of the deferred
tax  assets will not be realized. The ultimate realization of deferred  tax
assets is dependent upon the generation of future taxable income during the
periods  in which those temporary differences become deductible. Management
considers  the  scheduled reversal of deferred tax  liabilities,  projected
future  taxable  income,  and  tax  planning  strategies  in  making   this
assessment.  Based  upon  the  level  of  historical  taxable  income   and
projections  for future taxable income over the periods in which  temporary
differences are expected to reverse, management believes it is more  likely
than  not  the  Company  will  realize the  benefits  of  these  deductible
differences at July 31, 2000.

NOTE I -- ADDITIONAL INFORMATION:
<TABLE>
Other accrued liabilities at July 31 consist of:

                                                   2000            1999
                                                ----------     ----------
  <S>                                          <C>            <C>
  Property taxes                                $   89,071     $   87,013
  Accrued warranties                               300,463        329,735
  Other                                            451,042        240,101
                                                ----------     ----------
                                                 $ 840,576      $ 656,849
                                                ==========     ==========
</TABLE>
Cash Flow Information:

The  Company  paid cash for interest in the amount of $787,781,  $320,913
and  $200,319 during 2000, 1999 and 1998, respectively.  The Company paid
cash  for  income taxes in the amount of $195,000, $371,675  and  $77,024
during 2000, 1999 and 1998, respectively.

Non-cash Investing and Financing Activities:

During  fiscal  1999, bonds with face value of $71,000 were  converted  to
14,200 shares of Common Stock.  A capital lease obligation of $110,000 was
incurred  in  fiscal 1999 when the Company entered into a  lease  for  new
computer software.

NOTE J -- PENSION AND PROFIT SHARING PLAN:

Thermwood has a deferred income 40l(k) savings plan for its employees.  The
Company makes a matching contribution of 25% of employees' contributions up
to  5%  of  their annual salaries and an additional match of 10%  of  their
contributions between 6% and 8%of employees' salaries.

Pension  expense for fiscal years 2000, 1999 and 1998 amounted to  $60,695,
$54,844  and  $48,759,  respectively.  The Company also  has  a  management
profit  sharing  plan.   Profit  sharing expense  amounted  to  $1,215,681,
$739,354 and $603,978 for fiscal 2000, 1999 and 1998, respectively.

NOTE K - SEGMENTS

The  Company's  operations are divided into the following  three  operating
segments:   the  Machining  Products Division,  which  is  responsible  for
marketing machinery, hardware and software products; the Technical Services
Division, which is responsible for marketing service, support, upgrade  and
catalog products; and Thermwood Europe Ltd., a British Company, which is  a
wholly-owned subsidiary of Thermwood Corporation responsible for  marketing
and servicing machines throughout Europe.

The accounting policies of the segments are the same as those described in
the summary of significant accounting policies.
<TABLE>

                                             2000
                         ---------------------------------------------------
                           Machining    Technical    Thermwood
  ($'s in Millions)        Products     Services      Europe        Total
                           Division     Division       Ltd.
                         ------------ ----------- ------------- -----------
  <S>                        <C>          <C>         <C>           <C>
  Net sales                   $  17.6      $ 6.1       $    2.0      $ 25.7
  Operating income                 .5         1.7           (.2)        2.0
  Interest expense                 .7          .2            .1         1.0
  Depreciation and
   amortization                    .5          .2             0          .7
  Income tax expense               .4          .2             0          .6

  Total assets                    9.8         2.5           1.0        13.3
</TABLE>
<TABLE>
                                                1999
                         --------------------------------------------------
                           Machining    Technical    Thermwood
  ($'s in Millions)        Products     Services      Europe       Total
                           Division     Division       Ltd.
                         ------------ ----------- ------------- ----------
  <S>                        <C>         <C>           <C>        <C>
  Net sales                   $  14.8     $   5.2       $  1.7     $  21.7
  Operating income                 .8          .5          (.2)        1.1
  Interest expense                 .2          .1            .1         .4
  Depreciation and
    amortization                   .4          .1             0         .5
  Income tax expense               .2           0             0         .2

  Total assets                    8.1         2.9           1.0       12.0
</TABLE>
<TABLE>
                                               1998
                         ------------ ----------- -------------- ----------
                           Machining    Technical    Thermwood
  ($'s in Millions)        Products     Services      Europe       Total
                           Division     Division       Ltd.
                         ------------ ----------- -------------- -----------
 <S>                          <C>         <C>          <C>         <C>
  Net sales                    $ 15.4      $  4.6       $  1.8      $ 21.8
  Operating income                2.7          .1          (.4)        2.4
  Interest expense                 .1           0            .1         .2
  Depreciation and
    amortization                   .3          .1             0         .4
  Income tax expense               .6          .2             0         .8

  Total assets                    7.9         2.4           1.0       11.3
</TABLE>