<PAGE>
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                  FORM 10-K/A


(Mark One)
[X]      AMENDMENT NO. 1 TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
         THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended DECEMBER 31, 2001
                          -----------------

                                       OR

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

Commission file number   0-26228
                         -------


                            MARTIN INDUSTRIES, INC.
-------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           DELAWARE                                              63-0133054
---------------------------------                           -------------------
  (State or other jurisdiction                               (I.R.S. Employer
of incorporation or organization)                           Identification No.)

301 EAST TENNESSEE STREET, FLORENCE, ALABAMA                           35630
--------------------------------------------                         ----------
 (Address of principal executive offices)                            (Zip Code)

Registrant's telephone number, including area code   (256) 767-0330
                                                     --------------

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

                                                       Name of each exchange on
Title of each class                                         which registered
     None                                                        None
-------------------                                    ------------------------

Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $0.01 PAR VALUE

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

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

         State the aggregate market value of the voting and non-voting common
equity held by non-affiliates of the registrant. The aggregate market value
shall be computed by reference to the price at which the common equity was
sold, or the average bid and asked prices of such common equity, as of a
specified date within 60 days prior to the date of filing.

AGGREGATE MARKET VALUE OF VOTING STOCK HELD BY NONAFFILIATES AS OF MARCH 28,
2002 $438,285

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

     COMMON STOCK, $0.01 PAR VALUE, AS OF MARCH 28, 2002: 8,577,480 SHARES

                   DOCUMENTS INCORPORATED BY REFERENCE: None.

         This Amendment No. 1 on Form 10-K/A is being filed solely for the
purposes of filing Part III of the Form 10-K. This Amendment No. 1 on Form
10-K/A amends and restates in their entirety Items 10, 11, 12 and 13 of the
Annual Report on Form 10-K for the fiscal year ended December 31, 2001 (the
"Annual Report") filed by Martin Industries, Inc. (the "Company") with the
United States Securities and Exchange Commission ("SEC") on April 1, 2002. The
Company had previously incorporated by reference the contents of its Proxy
Statement for the 2002 Annual Meeting of Stockholders; however, the Company has
delayed the date of the 2002 Annual Meeting of Stockholders, and will not file
its Proxy Statement for the 2002 Annual Meeting of Stockholders prior to April
30, 2002.

       THIS AMENDMENT DOES NOT CHANGE ANY PREVIOUSLY REPORTED FINANCIAL
                            RESULTS OF OPERATIONS.

                          --------------------------


<PAGE>


                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS

<TABLE>
<CAPTION>
      Name                        Age              Principal Occupation             Director Since     Term Expires
      ----                        ---              ---------------------            --------------     ------------

<S>                               <C>     <C>                                       <C>                <C>
William D. Biggs, Sr.             63      Partner, Carillon Beach                        1993              2004

Jim D. Caudle, Sr.                66      Chairman and Chief Executive Officer           1990              2004
                                          United Printed Circuits, Inc.
                                          Chairman and Chief Executive Officer
                                          Advanced Precision Manufacturing, Inc.

John L. Duncan                    68      President and Chief Executive Officer          1999              2002
                                          Martin Industries, Inc.

Charles R. Martin                 61      President and Chief Executive Officer          1974              2003
                                          Amerimark Capital Corporation

William H. Martin, III            71      Private Investor                               1974              2002

James J. Tanous                   54      Partner                                        1998              2003
                                          Jaeckle Fleischmann & Mugel, LLP
</TABLE>

William D. Biggs, Sr. has served as a partner of Carillon Beach, a real estate
development firm, since 1990.

Jim D. Caudle, Sr. is Chairman and Chief Executive Officer of United Printed
Circuits, Inc., a manufacturer of printed circuit boards, and Advanced
Precision Manufacturing, Inc., a sheet metal manufacturing business, positions
he has held since 1989 and 1991, respectively.

John L. Duncan currently serves as the Company's President and Chief Executive
Officer. Mr. Duncan is the former President and Chief Executive Officer of
Murray Ohio Manufacturing Company, a position he held from 1987 until his
retirement at the end of 1994. He has been a consultant to several
manufacturing companies and currently serves on the board of directors of
Wolverine Tube, Inc.

Charles R. Martin serves as President and Chief Executive Officer of Amerimark
Capital Corporation, a financial services firm, a capacity in which he has
served since 1992, and also serves as a General Partner of the CapSource Fund,
a Small Business Investment Company. Charles Martin and William Martin are
cousins.

William H. Martin, III served from March 1998 until November 1998 as Chairman,
President and Chief Executive Officer during the Company's search for a
successor to a former President and Chief Executive Officer, who resigned in
March 1998. Mr. Martin has served as the Chairman of the Board of Directors of
the Company since April 1994. Mr. Martin also serves on the board of Trex
Company, Inc. Mr. Martin has been a private investor since 1993. William Martin
and Charles Martin are cousins.

James J. Tanous is a partner in the law firm of Jaeckle Fleischmann & Mugel,
LLP, a general business law firm having offices in Buffalo and Rochester, New
York, a position he has held since 1976.


<PAGE>


EXECUTIVE OFFICERS

         The names and ages of the executive officers of the Company, other
than Mr. Duncan, and the offices with the Company held by each such executive
officer and the period during which he has served in such office are as
follows:

<TABLE>
<CAPTION>
    Name and Age                                      Office                         Year First Elected to Office
    ------------                                      ------                         ----------------------------

<S>                                      <C>                                         <C>
James W. Truitt, 64                      Vice President, Chief Financial                     1974 & 2000
                                         Officer, Secretary and Treasurer

Richard M. Wilson, 42                    Vice President of Sales                                2001

E. Carl Klebe, 60                        Vice President of Operations                           2001

C. Kenneth Wilson, 60                    Vice President of Engineering                          2001
</TABLE>

James W. Truitt is the Vice President, Chief Financial Officer, Secretary and
Treasurer of the Company. Mr. Truitt has served in these positions since
December 1, 2000. Mr. Truitt served as a Senior Vice President, Chief Financial
Officer, Secretary and Treasurer of the Company prior to his retirement in
1997. Following his retirement, Mr. Truitt served as an independent management
consultant to the Company from June 13, 2000 to November 30, 2000.

Richard M. Wilson is the Company's Vice President of Sales. He has served in
this position since July 27, 2001. Mr. Wilson served as Regional Sales Manager
for the Company from 1998 to July 26, 2001 and as a Sales Representative for
the Company from 1986 to 1998.

E. Carl Klebe is the Vice President of Operations for the Company. Mr. Klebe
has served in this position since December 14, 2001. Mr. Klebe served as an
independent management consultant to the Company from June 19, 2001 until
December 13, 2001. Prior to that time, he served as Senior Vice President and
General Manager of OWT Industries, Inc. (formerly Ryobi Motor Products
Corporation).

C. Kenneth Wilson is the Company's Vice President of Engineering. Mr. Wilson
has served in this position since January 1, 2001. Mr. Wilson served as
Director of Engineering - Hearth Products for the Company from 1998 to 2000.
Prior to that time, he owned and operated a fireplace distributorship in
Athens, Alabama and was the former Vice President of R&D for Heatilator, a
division of HON Industries, Inc.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         The Company's executive officers, directors and 10% stockholders are
required under the Exchange Act to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Copies of these reports
must also be furnished to the Company. Based on a review of copies of such
reports furnished to the Company through the date hereof, or written
representations of such officers, directors or stockholders that no reports
were required, the Company believes that, during the fiscal year 2001, all
filing requirements applicable to its officers, directors and stockholders were
complied with in a timely manner.


<PAGE>


ITEM 11.  EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

         The following table summarizes compensation earned by or paid to the
Company's Chief Executive Officer, and the Company's other most highly
compensated executive officers (collectively, the "named executive officers"),
for the years ended December 31, 2001, 2000 and 1999.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                      LONG-TERM
                                                                                     COMPENSATION
                                                                                        AWARDS
                                                 ANNUAL COMPENSATION             ---------------------
                                            -------------------------------      SECURITIES UNDERLYING       ALL OTHER
NAME AND PRINCIPAL POSITION                 YEAR        SALARY        BONUS          OPTIONS/SARS          COMPENSATION
---------------------------                 ----        ------        -----      ---------------------     ------------

<S>                                         <C>        <C>            <C>        <C>                       <C>
John L. Duncan (1)                          2001       $171,900         $0            10,000/-0-           $0
     President and Chief Executive          2000       $130,500         $0             -0-/-0-             $0
     Officer                                1999         $ -0-          $0             -0-/-0-             $0

J. Reid Roney (2)                           2001       $127,133         $0            15,000/-0-           $919(3)
     Former Vice President of Sales         2000       $134,004         $0          12,000/12,000          $6,137(4)(5)
     and  Marketing                         1999       $133,005         $0             -0-/-0-             $9,711(6)

James W. Truitt (7)                         2001       $127,370         $0            20,000/-0-           $40,418(3)(8)(9)
     Vice President and Chief               2000       $ 71,500         $0             -0-/-0-             $48,074(4)(8)
     Financial Officer and                  1999         $ -0-          $0             -0-/-0-             $45,936(6)(8)
     Secretary and Treasurer

Roger Vuillod (10)                          2001       $100,750         $0            20,000/-0-           $4,574(3)
     President of Hunter Technology,        2000       $ 90,467         $0            10,000/-0-           $4,088(4)
     Inc., formerly a wholly-owned          1999       $ 82,083         $0             -0-/-0-             $3,915(6)
     subsidiary
</TABLE>

(1)      Mr. Duncan became President and Chief Executive Officer on May 31,
         2000. Mr. Duncan serves in this position as a contract-basis employee
         and is not eligible for taxable insurance premiums, Company 401(k)
         matching contributions or Company ESOP contributions.

(2)      Mr. Roney's employment with the Company terminated on April 30, 2001.
         Salary reported includes severance and accrued vacation payments made
         in 2001.

(3)      All other compensation for Messrs. Roney, Truitt and Vuillod in 2001
         includes taxable insurance premiums of $472, $2,138 and $3,574,
         respectively, Company 401(k) matching contributions of $1,340, $0 and
         $1,000, respectively, and Company ESOP contributions of $0, $0 and
         $483, respectively.

(4)      All other compensation for Messrs. Roney, Truitt and Vuillod in 2000
         includes taxable insurance premiums of $1,878, $1,069 and $1,212,
         respectively, Company 401(k) matching contributions of $1,340, $0 and
         $905, respectively, and Company ESOP contributions of $2,919, $0 and
         $1,971, respectively.

(5)      All other compensation for Mr. Roney also includes relocation benefits
         of $2,000.

(6)      All other compensation for Messrs. Roney, Truitt and Vuillod in 1999
         includes taxable insurance premiums of $1,899, $0 and $213,
         respectively, Company 401(k) matching contributions of $1,330, $0 and
         $810, respectively, and Company ESOP contributions of $4,482, $0 and
         $2,892, respectively.

(7)      Mr. Truitt became Vice President, Chief Financial Officer and
         Secretary and Treasurer on December 1, 2000. From June 13, 2000 until
         November 30, 2000, Mr. Truitt served as a Management Consultant. The
         salary reported for 2000 also includes compensation received by Mr.
         Truitt during his tenure as a Management Consultant.

(8)      All other compensation for Mr. Truitt also includes Executive
         Supplemental Income Plan ("ESIP") benefits relative to his retirement
         in 1997 of $38,280 in 2001, $45,936 in 2000 and $45,936 in 1999.

(9)      All other compensation for Mr. Truitt in 2001 also includes $611 in
         Company SERP contributions.

(10)     Mr. Vuillod's employment with the Company terminated on February 15,
         2002.


<PAGE>


2001 STOCK OPTION AND SAR GRANTS

         The following table sets forth the specified information with respect
to stock option and SAR grants to each of the named executive officers during
2001.

                     OPTION/SAR GRANTS IN LAST FISCAL YEAR

                               INDIVIDUAL GRANTS

<TABLE>
<CAPTION>
                                             PERCENT OF                                         POTENTIAL REALIZABLE VALUE
                            NUMBER OF           TOTAL                                             AT ASSUMED ANNUAL RATES
                           SECURITIES       OPTIONS/SARS     EXERCISE OR                        OF STOCK PRICE APPRECIATION
                           UNDERLYING        GRANTED TO      BASE PRICE                              FOR OPTION TERM
                         OPTIONS/SARS(1)    EMPLOYEES IN    OF OPTIONS &                        ---------------------------
     NAME                  GRANTED (#)       FISCAL YEAR     SARS ($/SH)    EXPIRATION DATE       5% ($)           10% ($)
     ----                ---------------    ------------    ------------    ---------------     --------         ----------

<S>                      <C>                <C>             <C>             <C>                 <C>              <C>
John L. Duncan (2)         25,000/-0-         16.1%/NA         $0.4700       3-28-2011/NA        7,349/NA         18,662/NA

J. Reid Roney (3)          15,000/-0-          9.7%/NA         $0.4700       3-28-2011/NA        4,409/NA         11,197/NA

James W. Truitt (4)        10,000/-0-         12.9%/NA         $0.4700       3-28-2011/NA        5,879/NA         14,929/NA

Roger Vuillod (5)          10,000/-0-         12.9%/NA         $0.4700       3-28-2011/NA        5,879/NA         14,929/NA
</TABLE>

(1)      No SARs were granted to the named executive officers during fiscal
         year 2001.

(2)      Mr. Duncan's option was granted under the Company's 1994 Nonqualified
         Stock Option Plan (the "1994 Plan") and became exercisable on March
         28, 2002.

(3)      Mr. Roney's options expired without being exercised following the
         termination of his employment with the Company. The options were
         granted to him under the 1994 Plan.

(4)      Mr. Truitt's options were granted to him pursuant to the 1994 Plan and
         became exercisable March 28, 2002.

(5)      Mr. Vuillod's options expired without being exercised following the
         termination of his employment with the Company. The options were
         granted to him under the 1994 Plan.

2001 STOCK OPTION EXERCISES

         The following table sets forth the number of stock options exercised
and the dollar value realized thereon by each of the named executive officers
during 2001, along with the number and dollar value of any options remaining
unexercised and outstanding at December 31, 2001.

                AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                       AND FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
                                                                     NUMBER OF SECURITIES
                                                                     UNDERLYING UNEXERCISED    VALUE OF UNEXERCISED
                                                                        OPTIONS AT FISCAL      IN-THE-MONEY OPTIONS
                                                                          YEAR-END (#)        AT FISCAL YEAR-END ($)
                               SHARES ACQUIRED          VALUE            EXERCISABLE(1)/          EXERCISABLE(1)/
NAME                           ON EXERCISE (#)      REALIZED ($)        UNEXERCISABLE(2)         UNEXERCISABLE(2)
----                           ---------------      ------------     ----------------------   ----------------------

<S>                            <C>                  <C>              <C>                      <C>
John L. Duncan                        --                 --               34,628/25,000                 0/0

J. Reid Roney                         --                 --                   0/0                       0/0

James W. Truitt                       --                 --                    0/20,000                 0/0

Roger Vuillod (3)                     --                 --               6,000/24,000                  0/0
</TABLE>

(1)      The number of securities underlying unexercised options includes
         presently exercisable stock options under the Company's 1994
         Nonqualified Stock Option Plan. The value of unexercised in-the-money
         options represents the difference between the fair market value of the
         shares subject to unexercised options as of December 31, 2001, and the
         cash portion of the option price of the shares. A fair market


<PAGE>


         value of $0.070 per share is used based upon the closing sale price of
         the Company's Common Stock on The Over-the-Counter Bulletin Board on
         December 31, 2001, the final trading day of 2001. The actual value, if
         any, a person may realize as a result of an option will depend on the
         excess of the stock price over the exercise price on the date the
         option is exercised. The ultimate value of an option is dependent on
         the market value of the Common Stock at a future date, which will
         depend to a large degree on the efforts of the executive officers
         named above to bring future success to the Company for the benefit of
         all stockholders.

(2)      Includes presently unexercisable options under the Company's 1994
         Nonqualified Stock Option Plan. For purposes of calculating the value
         of unexercisable in-the-money options at December 31, 2001, a fair
         market value of $0.070 per share is used and is based upon the closing
         sale price of the Company's Common Stock on The Over-the-Counter
         Bulletin Board on December 31, 2001, the final trading day of 2001.
         The actual value, if any, a person may realize as a result of such
         options will depend on the market value of the Common Stock of the
         Company at a future date, which will depend to a large degree on the
         efforts of the executive officers named above to bring future success
         to the Company for the benefit of all stockholders.

(3)      Mr. Vuillod's unexercisable options were cancelled February 15, 2002
         as a result of the termination of his employment with the Company. Mr.
         Vuillod will have until May 15, 2002, ninety days after date of
         termination, to exercise the remaining options.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         William D. Biggs, Sr., Jim D. Caudle, Sr., James J. Tanous and William
H. Martin, III served as members of the Compensation Committee of the Board of
Directors of the Company during all or part of 2001. From 1977 to 1987, William
Martin served as the President and Chief Executive Officer of the Company.
During 1998, William Martin served as the President and Chief Executive Officer
during the Company's search for a successor to the Company's former President
and Chief Executive Officer, who resigned in March 1998. During 2001, no
executive officer of the Company served as a member of the Compensation
Committee or as a director of any other entity, one of whose executive officers
served on the Compensation Committee or was a director of the Company, nor does
any such relationship exist currently.

COMPENSATION PURSUANT TO PLANS

         Profit Sharing Plan. The Company sponsors the Martin Industries, Inc.
Profit Sharing Plan (the "Profit Sharing Plan"), which covers substantially all
employees of the Company. Contributions by the Company to the Profit Sharing
Plan are at the discretion of the Board of Directors. Prior to 1993,
contributions under the Profit Sharing Plan were generally equal to 20% of the
amount by which income before income taxes and the contribution exceeded 15% of
the net worth of the Company at the beginning of the year to which the
contribution applied. As a result of the implementation of the ESOP in 1993,
the Company did not make any contributions to the Profit Sharing Plan in 1993
or in any year since.

         401(k) Plan. The Company also offers a savings and retirement
provision (the "401(k) Plan"), which is designed to be a qualified retirement
plan under Section 401(k) of the Internal Revenue Code of 1986, as amended (the
"Code"). The 401(k) Plan was first approved by the Company in 1989. All
employees of the Company are generally eligible to participate in the 401(k)
Plan after completion of ninety days of employment. Each month, a participant
may defer, on a pre-tax basis, up to 15% of his or her base compensation,
excluding bonuses and extraordinary compensation, through contributions to the
401(k) Plan. The Company may choose to match a participant's salary deferrals
in an amount equal to 25% of such deferrals, but not to exceed 1% of the
participant's base compensation excluding bonuses and extraordinary
compensation. Each participant is fully vested in the 401(k) Plan to the extent
of his or her salary deferrals, but participants generally must have been
employed by the Company for at least five years before they have fully vested
rights in any matching contributions made by the Company, although participants
become partially vested in any matching contributions after one year of
service. Lump sum or periodic distributions may be made from the 401(k) Plan
upon termination of employment or retirement as defined. A participant may also
obtain a loan, subject to limitations, from the 401(k) Plan. Including employee
contributions and the Company matching contributions, the named executive
officers accrued the following benefits under the 401(k) Plan during 2001: Mr.
Duncan - $-0-, Mr. Roney - $2,680, Mr. Truitt - $-0-, Mr. Vuillod - $10,600.
Amounts deferred by these individuals under the elective deferral feature of
the 401(k) Plan and the matching Company contributions applicable to these
individuals are reported in the Summary Compensation Table above.

         Life and Disability Insurance. The Company provides each officer of
the Company, including the named executive officers, with group term life
insurance with a death benefit of up to a maximum of $100,000. The Company
further provides each named executive officer with individual term life
coverage with a death benefit of $100,000. The Company also provides each named
executive officer and director with group accidental death and dismemberment
insurance with a benefit of up to a maximum of $300,000 (maximum of $2,000,000
for Chairman of the Board). The life insurance benefits and the accidental
death and dismemberment benefits are payable to such officer's or director's
beneficiary and not to the Company. The Company also pays all of the premiums
on certain variable life insurance policies for certain officers of the
Company, the death benefit and cash value of which are for the benefit of and
payable to such officer or his designated beneficiary and not to the Company.
The death benefit and cash surrender value of the variable life insurance
policies of the named executive officers at December 31, 2001 are as follows:
Mr. Duncan - $-0-/$-0-, Mr. Roney - $-0-/$-0-, Mr. Truitt - $-0-/$-0-, and Mr.
Vuillod - $100,000/$-0-. Amounts paid in premiums by the Company for the
benefit of these individuals are reported in the Summary Compensation Table
above. The Company also provides substantially all of its other employees with
certain group life insurance benefits under term life insurance policies for


<PAGE>
which premiums are paid by the Company, and with certain long-term disability
insurance which replaces a percentage of the employees' base salaries in the
event of a qualifying disability.

         1988 Nonqualified Stock Option Plan. Pursuant to authority granted in
the Company's Articles of Incorporation, the Board of Directors adopted the
Company's 1988 Nonqualified Stock Option Plan (as amended, the "1988 Plan") in
July 1988. The 1988 Plan expired in July 1998 in accordance with its terms.
Therefore, no further options may be granted under the 1988 Plan. However, the
expiration of the 1988 Plan does not affect the validity of any options granted
prior to the expiration of the plan. Options that have been granted under the
1988 Plan are generally exercisable at any time between one year and ten years
from the date of grant, except that options become immediately exercisable upon
certain changes in control and except that, in the event of a termination of
employment for any reason other than death, the purchase price for the stock
must be paid within ninety days from the date of such termination (or prior to
the expiration of the option if earlier). In the event of termination of an
optionee's employment on account of death, instead of a ninety-day period as
described in the foregoing sentence, the exercise period is one year. Of the
1,564,500 shares available for grant under the 1988 Plan, options to purchase
an aggregate of 1,550,220 shares of Common Stock have been granted at an
average total purchase price of $1.61 per share, to be satisfied 50% in cash
upon exercise and 50% in previously earned but unpaid compensation accrued. As
of December 31, 2001, of the 1,550,220 options granted, 1,518,580 options had
been exercised and 31,640 shares remained subject to presently exercisable
options.

         1994 Nonqualified Stock Option Plan. The Board of Directors adopted
the Company's 1994 Nonqualified Stock Option Plan (the "1994 Plan") in October
1994. The Company's stockholders approved the 1994 Plan in April 1995. The
purpose of the 1994 Plan is to attract, compensate, motivate and retain those
highly competent officers, directors and key management employees upon whose
judgment, initiative, leadership and continued efforts the success of the
Company in large measure depends. Under the 1994 Plan, eligible persons who are
selected by the Compensation Committee may be granted nonqualified options to
purchase an aggregate of not more than 525,000 shares of Common Stock (subject
to appropriate adjustment for stock splits, stock dividends, reorganizations,
reclassifications, mergers, recapitalizations or otherwise). As of December 31,
2001, options to purchase an aggregate of 377,446 shares of Common Stock had
been granted under the 1994 Plan at exercise prices ranging from $0.470 to
$9.50.

         The 1994 Plan is administered by the Compensation Committee. Within
the limitations set forth in the 1994 Plan, the Compensation Committee has sole
discretion and authority to determine from among the eligible officers,
directors and employees those to whom options may be granted, the number of
options to be granted, the time of the grant of the options, and the exercise
period and price of such options. Directors, officers and other key management
employees of the Company and its subsidiaries are eligible to participate under
the 1994 Plan. The option price per share under the 1994 Plan may not be less
than the greater of the par value of the shares or 85% of their fair market
value (as defined in the 1994 Plan) on the date of grant. Options must be
granted within ten years from the adoption of the 1994 Plan and exercised
within ten years from the date of grant, except that options must be exercised
prior to termination of employment if termination is "for cause" (as defined in
the 1994 Plan) or within ninety days after termination if termination is other
than for cause, or within one year after termination (subject to extension by
the Compensation Committee) if termination is due to death or disability.
Options also generally become exercisable in full upon certain changes in
control of the Company. Otherwise, the period for the exercise of options is
generally at the discretion of the Compensation Committee. The Board of
Directors is authorized from time to time to amend the 1994 Plan, except that
the stockholders of the Company must approve any amendment to increase the
maximum number of shares subject to the plan and to modify materially the
requirements as to those persons who are eligible to participate in the plan.

         1996 Non-Employee Directors' Stock Option and Deferred Compensation
Plan. In May 1996, the Board of Directors adopted the Company's 1996
Non-Employee Directors' Stock Option and Deferred Compensation Plan (the "1996
Plan"). The Company's stockholders approved the 1996 Plan in May 1997. The
purpose of the 1996 Plan is to advance the interests of the Company and the
stockholders by giving non-employee directors an opportunity to acquire or
increase their interest in the Company, thereby aligning the interests of such
directors with the interests of the stockholders. The purpose of the 1996 Plan
is also to enhance the Company's long-term growth and financial performance by
increasing the Company's ability to continue to attract and retain the services
of experienced and knowledgeable directors. Under the 1996 Plan, non-employee
directors are granted options to purchase Company stock and are allowed to
receive options in lieu of fees that otherwise would have been paid in cash to
such directors for their services as directors. The 1996 Plan also provides
that non-employee directors may defer receipt of their director's fees until a
later date. The non-employee directors of the Company, presently consisting of
five persons, are eligible to participate in the 1996 Plan. The 1996 Plan is
administered by a committee appointed by the Board of Directors (the "Plan
Committee").

         The 1996 Plan consists of two elements: (i) stock options and (ii)
deferred compensation. Under the 1996 Plan, a maximum of 100,000 shares of the
Company's Common Stock are to be reserved for issuance upon the exercise of
options granted to non-employee directors of the Company (subject to adjustment
for stock splits, stock dividends and other changes in the capital structure of
the Company). The 1996 Plan also provides that each non-employee director may
elect to receive the cash retainer and meeting fees payable to the director for
service on the Board of Directors and any committees thereof in the form of
options to purchase stock in lieu of cash. As of December 31, 2001, 96,148
<PAGE>


options had been granted under the 1996 Plan at exercise prices ranging from
$5.00 to $8.00, and there remained 3,852 options available for grant.

         Pursuant to the 1996 Plan, a non-employee director may elect to defer
all or any portion of the cash retainer and meeting fees payable to such
director for service on the Board of Directors and any committees thereof
(directors electing such deferral are hereinafter sometimes referred to as
"Participating Directors"). The Company will deposit such deferred fees into an
account (a "Deferral Account") established for each Participating Director and
will pay interest on funds in such accounts at the rate paid on five-year U.S.
Treasury notes, or at such other rate as is prescribed by the Plan Committee.
Amounts credited to the Deferral Account of a Participating Director will be
paid to him, at his election, in monthly installments over a period not to
exceed three years from the date elected, or in such other manner as the Plan
Committee may permit. Upon the death of a Participating Director, any amounts
in his Deferral Account will be paid to his designated beneficiary. Further, if
a Participating Director, or his designated beneficiary, if applicable, suffers
certain financial hardships, the Plan Committee may accelerate payment of the
amounts in such Participating Director's Deferral Account to the extent
necessary to eliminate such hardship.

         Executive Supplemental Income Plan. In 1983, the Company implemented
its executive supplemental income plan (the "ESIP") in order to encourage
certain key members of management to continue their employment with the
Company. As of December 31, 2001, fourteen employees, including retired
employees, had entered into supplemental income agreements ("Supplemental
Income Agreements") with the Company under the ESIP. Under the Supplemental
Income Agreement, a participant will receive credits based upon the
participant's age at the time the agreement is entered into and for each prior
year of service with the Company, with the participant becoming vested under
the agreement, and entitled to receive benefits thereunder, upon receiving an
established number of credits. Upon entering into a Supplemental Income
Agreement, the participant will receive the greater of one credit for each year
of the participant's age, or forty credits, plus one credit for each year of
full-time service to the Company rendered up to the date of the agreement.
Thereafter, the participant will receive one credit for each twelve months of
full-time service to the Company. The participant becomes 50% vested upon
receiving 55 credits and continues to vest at a rate of 5% per credit received
thereafter until becoming fully vested upon receiving 65 credits. Beginning at
the later of either the attainment of 65 years of age or termination of
full-time employment or beginning at such time as may be determined in the
discretion of the Compensation Committee, a participant or the designated
beneficiary thereof becomes entitled to receive 120 monthly payments equal to
40% (or 40% times the percentage vested, if only partially vested) of the
highest average monthly compensation (exclusive of bonuses and fringe benefits)
paid to the participant by the Company during a period of three consecutive
years within the five-year period ending immediately prior to the termination
of the participant's full-time employment. The Supplemental Income Agreements
also provide as a condition to payment that the participant shall not enter
into competition with the Company during the term of his employment or for a
period of five years thereafter. As a part of this program, the Company has
purchased, and is the named beneficiary of, life insurance on the participants
which, based on the actuarial assumptions used, is expected to exceed the total
obligation, after taxes, of the Company under the ESIP. As of December 31,
2001, Mr. Truitt is the only named executive officer of the Company eligible
for the ESIP. On October 29, 2001, the Board elected to suspend payments to
ESIP participants that had been accelerated, as per the ESIP. Only those
participants who have attained age 65, participants who have a separation
agreement that included accelerated ESIP payments, or beneficiaries of deceased
participants are receiving payments under the ESIP at this time.


<PAGE>


         The following table shows estimated annual benefits payable upon
retirement under the ESIP.

<TABLE>
<CAPTION>
     Highest 3-Year                               Number of Credits
     Average Annual                  --------------------------------------------
       Base Salary                     55                 60                 65
     --------------                  -------           -------            -------
     <S>                             <C>               <C>                <C>
         $50,000                     $10,000           $15,000            $20,000
          75,000                      15,000            22,500             30,000
         100,000                      20,000            30,000             40,000
         125,000                      25,000            37,500             50,000
         150,000                      30,000            45,000             60,000
         175,000                      35,000            52,500             70,000
         200,000                      40,000            60,000             80,000
         225,000                      45,000            67,500             90,000
         250,000                      50,000            75,000            100,000
</TABLE>

         Employee Stock Ownership Plan. In 1992, the Company established the
ESOP in an effort to promote employee involvement in the success of the Company
by giving eligible employees an ownership interest in the Company. All
participants in the Profit Sharing Plan as of December 31, 1991 became
participants in the ESOP as of January 1, 1992. The Company's Board of
Directors serves as the Administrative Committee of the ESOP and thereby
directs the actions of the trustees of the ESOP, two of whom are executive
officers of the Company and one of whom, Diane S. McGee, is not. Under Section
1042 of the Code, persons who sell shares to an ESOP can defer tax recognition
on the sale if certain requirements are met, including the requirement that
such selling stockholders and other specified persons not participate in the
ESOP. Messrs. Vuillod and Roney participated in the ESOP prior to their
termination of employment with the Company. During 2001, 6,906 shares of Common
Stock with an estimated fair value of $483 were allocated to Mr. Vuillod's
account in the ESOP. Mr. Roney did not receive an allocation to his account in
the ESOP during 2001, as his termination was prior to year-end. Messrs. Duncan
and Truitt are not eligible for participation in the ESOP.

         Supplemental Executive Retirement Plan. Because Section 1042 of the
Code prohibited certain employees from participating in the ESOP, the Company
implemented a supplemental executive retirement plan (the "SERP") in 1993 to
provide benefits that would have been available to those employees under the
ESOP. Under the terms of the SERP, each participant in the SERP is allocated a
number of "phantom shares" equal to the number of shares of Common Stock that
would have been allocated to such participant's account under the ESOP but for
the Section 1042 limitations. Participants vest in the SERP account in
accordance with the vesting provisions of the ESOP. During 2001, Mr. Truitt was
the only named executive officer to receive an allocation under the SERP.
During 2001, 8,732 "phantom shares" of Common Stock with an estimated fair
value of $611 were allocated to Mr. Truitt's account in the SERP.

         Post-retirement and Post-employment Benefits. The Company currently
maintains a plan whereby the Company pays a supplemental Medicare insurance
premium for certain former officers, directors and their spouses. At December
31, 2001, the Company had a liability of $417,622 for benefits payable under
this plan. The Company also maintains a plan whereby the Company provides
medical insurance coverage through its self-insured medical/dental plan to
certain former employees of the Company who were directors and/or officers and
stockholders and who have terminated their employment but have not reached
retirement age and the members of the immediate families of such persons. To be
eligible to participate in this plan, the former employee must have been a
stockholder, an officer and/or director of the Company and have been employed
by the Company for fifteen years or, if the employee did not serve as a
director, twenty years. The plan also provides medical/dental coverage until
age 65 for certain former employees who terminated their employment in 2001
under the terms of a Voluntary Early Retirement Incentive Plan. At December 31,
2001, the Company had a liability of $264,631 for benefits payable under this
plan. During 2001, no named executive officer participated in either of these
plans.

SEVERANCE, RETENTION AND CHANGE IN CONTROL AGREEMENTS

         The current executive officers of the Company are subject to the
Company's severance plan for salaried employees which provides an executive
officer six months of severance pay if terminated for any reason other than
death, permanent disability, voluntary termination or the Company's termination
of the executive for cause.

         Retention and Change in Control Agreements. On March 28, 2000, the
Compensation Committee recommended, and the Board approved, the adoption of an
agreement with each of the Company's executive officers that would provide the
officers with a lump sum retention bonus of 50% of their base salary if they
remain employed with the Company through a "change in control" (as defined in
the agreement), if such change in control were to occur within one year after
the date of the agreement.


<PAGE>


         In addition, in the event there is a change in control of the Company
during that period and the officer's employment is terminated within one year
after the change in control for any reason other than death, disability,
voluntary termination or cause, the officer will be entitled to a lump sum
severance benefit of 50% of his base salary in lieu of any other severance
payments. The Company retains the right to terminate any officer prior to a
change in control, in which case the officer would be entitled to severance
benefits per the Company's severance plan for salaried employees. The Board of
Directors on March 27, 2001 approved the renewal, or extension, of this
agreement for all executive officers, excluding the President and Chief
Executive Officer and the Vice President and Chief Financial Officer. The Board
of Directors also approved, on March 27, 2001, an extension of this agreement
to eight key management employees with terms to include a lump sum retention
bonus of 25% of their base salary and a lump sum severance benefit of 25% of
their base salary (or as per the Company's severance plan for salaried
employees, whichever is greater). All other provisions of the key management
employee agreements are the same as described above. The agreements approved on
March 27, 2001 were issued effective May 18, 2001.

DIRECTOR COMPENSATION

         Effective April 1, 2000, the Board of Directors suspended payment of
the $1,000 monthly retainer that had been previously paid to non-employee
directors until such time as the Company's operating results improve. The
Chairman of the Board receives an annual retainer of $25,000. Directors who are
not employees of the Company receive a $700 fee per meeting of the Board of
Directors, and any committee thereof, with the Chairman of the Board receiving
a fee of $1,000 per meeting of the Board of Directors and the chairman of each
committee receiving $900 per meeting of the committee of the Board of Directors
for which he serves as chairman. Directors are also eligible to receive an
amount equal to their meeting fees for each day, other than regular meeting or
travel days, for authorized work and travel dedicated to the business of the
Company. These "work day" travel fees totaled $700 in 2001. Directors are
reimbursed for their out-of-pocket expenses for each meeting of the Board of
Directors attended and may be eligible to receive a $500 travel fee if meeting
schedules require an extra day of travel and no meeting fee is paid for that
day. Directors who are also employees of the Company receive no fees or
retainers for attending meetings of the Board of Directors. On October 29,
2001, the Board elected to defer payments of the Chairman of the Board's annual
retainer and all meeting fees until such time as the Company's cash position
improved. Total deferred payments in 2001 included annual retainer of $4,167,
regular meeting fees of $9,100 and "work day" fees of $7,700.

         Directors are also entitled to receive grants of stock options under
the 1994 Nonqualified Stock Option Plan of the Company and non-employee
directors are entitled to receive grants of stock options and to defer fees or
receive options in lieu of fees under the 1996 Non-Employee Directors' Stock
Option and Deferred Compensation Plan. In addition, each director is provided
with $300,000 of coverage, and the Chairman of the Board is provided with
$2,000,000 of coverage, under the Company's group accidental death and
dismemberment policy and directors who are or have been stockholders and
officers of the Company may become entitled to benefits under the Company's
post-retirement and post-employment benefits plans. See "Compensation Pursuant
to Plans - Life and Disability Insurance and Post-retirement and
Post-employment Benefits", above.



COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

RESPONSIBILITIES OF THE COMMITTEE

         The Compensation Committee of the Company's Board of Directors is
responsible for establishing a compensation program designed to create a direct
relationship between the levels of compensation paid to executives and the
Company's annual and long-term level of performance. The Compensation
Committee, which is composed of non-employee directors, believes that this
relationship can generally be best established by providing a compensation
package consisting of separate components, all of which are designed to enhance
the Company's overall performance resulting in increased stockholder value.

COMPENSATION PHILOSOPHY AND OBJECTIVES

         The Compensation Committee believes that generally the total
compensation program should be based on the Company's overall performance
compared to corporate objectives, while also recognizing individual
contributions that have helped create value for the Company's stockholders. In
prior years the Committee focused the program on variable compensation so that
a significant portion of the officers' total compensation was at risk, with its
value based on the Company's annual and long-term financial results and
improvement in stockholder value. That program was designed to align the
financial interests of the executives with those of the stockholders so that
the executives' personal net worth was heavily dependent on a long-term
appreciation in the value of the Company's stock.
<PAGE>

COMPENSATION COMPONENTS

         The Company's current compensation program for executive officers has
two components: base salary and long-term incentive awards. The Compensation
Committee determines executive compensation levels for each component based
upon the Committee's judgment, taking into account an objectives-based
evaluation by the President and Chief Executive Officer of the executive
officers who report to him. The Compensation Committee reviews the President
and Chief Executive Officer's recommendations for these executive officers, but
ultimately makes compensation awards based upon the judgment of the Committee's
members.

         The Chairmen of the Board of Directors and the Compensation Committee
prepare an appraisal of the President and Chief Executive Officer based on his
performance and the Company's results during the previous fiscal year, and the
Compensation Committee considers this evaluation in determining any change in
the base salary and the amount of any annual or long-term incentive awards for
the President and Chief Executive Officer.

Base Salaries

         The Compensation Committee annually reviews and approves the base pay
levels for the executive officers. The Committee's goal is to establish the
salaries for the officers at levels considered appropriate in light of the
scope of the duties and responsibilities attendant to the executive's position,
taking into account competitive practices and the Company's financial
condition.

         No base salary increases or bonuses were granted to any of the
executive officers in 2001 as a result of the Company's operating losses in
2001, rather than as a result of any officer's individual performance.

Long-Term Compensation

         The Company's long-term incentive compensation plan, which is the
second component of the Company's current compensation program, is intended to
promote ownership of the Company's Common Stock by the executive officers in an
effort to align their long-term financial interests with those of the Company's
stockholders. The Compensation Committee uses the grant of stock options under
the 1994 Nonqualified Stock Option Plan and stock appreciation rights ("SARs")
to facilitate that alignment. Within the limitations set forth in the 1994
Nonqualified Stock Option Plan, the Compensation Committee has sole discretion
and authority to determine from among the eligible officers, directors, and
employees those to whom options may be granted, the number of options to be
granted, the vesting period, the exercise period and the exercise price.

         No SARs were recommended or granted in 2001. A total of 130,000 stock
options were granted on March 28, 2001 and July 27, 2001 (110,000 and 20,000,
respectively) at an exercise price equal to the market value of the Company's
stock at March 28, 2001 ($0.470 per share). These do not include options
granted to the President and Chief Executive Officer that are referred to
below. Stock options granted to the named executive officers during 2001 are
reflected in the table set forth above under "2001 Stock Option and SAR
Grants."

CHIEF EXECUTIVE OFFICER'S COMPENSATION

         Mr. Duncan, President and Chief Executive Officer, receives
compensation at the rate of $900 per day, for actual days worked. He does not
receive a base salary and he is not eligible for Company sponsored benefits
(i.e., vacation accrual, holiday pay, profit sharing contributions, 401(k)
contributions, ESOP contributions, medical insurance coverage or group life
insurance coverage). The Company pays out-of-pocket expenses incurred by Mr.
Duncan in the course of performing his duties. The Compensation Committee
awarded Mr. Duncan a stock option grant of 25,000 shares on March 28, 2001 at
an exercise price equal to the market value of the Company's stock on that date
($0.470 per share). The salary and grant of stock options during 2001 for Mr.
Duncan followed the policies and procedures set forth above.

POLICY ON DEDUCTIBILITY OF COMPENSATION

         Section 162(m) of the Internal Revenue Code limits to $1 million the
tax deduction for compensation paid to each named executive officer, unless
certain requirements are met, one of which is that compensation over $1 million
must be based on the Company's attainment of performance goals approved by the
stockholders. The Compensation Committee's policy is to comply with Section
162(m), and the 1994 Nonqualified Stock Option Plan approved by the
stockholders in 1995 was designed to comply with Section 162(m). Based on
currently available information, all compensation paid to executives in 2001 is
deductible. The Compensation Committee will continue to monitor this subject.

         The Compensation Committee's philosophy and objectives and its
compensation program are designed to enhance stockholder value, and such
philosophy, objectives and programs are subject to review and change whenever
the Compensation Committee perceives that this purpose is not being met.


<PAGE>


                                 Submitted by:

                        William D. Biggs, Sr., Chairman
                               Jim D. Caudle, Sr.
                                James J. Tanous

                            STOCK PERFORMANCE GRAPH

         The following indexed graph compares the Company's annual percentage
change in cumulative total stockholder return against The Nasdaq Stock Market -
U.S. Index and the S&P Industrials Index. The graph assumes that the index
value of the investment in the Company's Common Stock and each index was
$100.00 on December 31, 1996, and that all dividends have been reinvested. On
October 29, 1999, the Company announced that the Board of Directors had
discontinued the payment of regular quarterly cash dividends.


                                    [GRAPH]


<TABLE>
<CAPTION>
                           12/96             12/97             12/98             12/99             12/00             12/01
                           -----             -----             -----             -----             -----             -----
<S>                        <C>               <C>               <C>               <C>               <C>               <C>
Martin Industries, Inc.    $100              $ 74              $ 40              $ 25              $  9              $  1
S & P Industrials          $100              $131              $175              $220              $184              $163
NASDAQ                     $100              $122              $141              $185              $ 60              $ 79
</TABLE>

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain information as of March 29,
2002 (except as noted otherwise), regarding the beneficial ownership of the
Company's Common Stock by (i) each person (including each "group" as that term
is used in Section 13(d)(3) of the Securities Exchange


<PAGE>


Act of 1934, as amended (the "Exchange Act")) who is known by the Company to be
the beneficial owner of more than five percent (5%) of the Company's
outstanding Common Stock, (ii) each director of the Company who is a
stockholder, (iii) each of the Company's executive officers named in the
Summary Compensation Table and (iv) all directors and executive officers of the
Company as a group. Unless otherwise indicated, each of the stockholders listed
below has sole voting and investment power with respect to the shares shown as
beneficially owned by them.

<TABLE>
<CAPTION>
                                                               NUMBER OF SHARES                PERCENTAGE OF BENEFICIAL
          NAME                                               BENEFICIALLY OWNED(1)             OWNERSHIP OF SHARES(1)
          ----                                               ----------------------            ------------------------

<S>                                                          <C>                               <C>
Martin Industries, Inc.                                          2,678,420(2)                           31.2%
  Employee Stock Ownership Plan and
  Related Trust
  P.O. Box 128
  Florence, Alabama 35630

William D. Biggs, Sr.                                              857,456(3)(4)                        10.0%
Jim D. Caudle, Sr.                                                  68,439(3)(5)                           *
John L. Duncan                                                     125,288(3)(6)                         1.5%
Charles R. Martin                                                  160,756(3)(7)                         1.9%
William H. Martin, III                                             259,400(3)(8)                         3.0%
James J. Tanous                                                     25,976(3)(9)                           *
J. Reid Roney                                                            0(10)                             *
James W. Truitt                                                     75,466(11)                             *
Roger Vuillod                                                       11,591(12)                             *
All directors and executive officers as a
     Group (11 persons)                                          1,611,172(3)                           18.1%
</TABLE>

*        Represents less than 1%.

(1)      For purposes of this table, a person or group of persons is deemed to
         have "beneficial ownership" of any shares as of March 29, 2002, that
         the person or group has the right to acquire within sixty days after
         such date, or with respect to which such person otherwise has or
         shares voting or investment power. For purposes of computing
         beneficial ownership and the percentages of outstanding shares held by
         each person or group of persons on a given date, shares which such
         person or group has the right to acquire within sixty days after such
         date are shares for which such person or group has beneficial
         ownership and are deemed to be outstanding for purposes of computing
         the percentage for such person or group but are not deemed to be
         outstanding for the purpose of computing the percentage of any other
         person.

(2)      In accordance with the terms of the ESOP, the ESOP Committee directs
         the voting of the shares held by the ESOP which have not been
         allocated to the accounts of participating employees and allocated
         shares for which no voting instructions have been received by the
         trustee of the ESOP. The employee participants in the ESOP are
         entitled to direct the voting of shares allocated to their ESOP
         accounts.

(3)      Does not include 2,678,420 shares which are owned of record by the
         ESOP as of March 29, 2002, and with respect to which the individual,
         as a member of the ESOP Committee (or, in the case of Mr. Duncan, as
         both a member of the ESOP Committee and as a trustee), shares in the
         voting and investment power. In accordance with the terms of the ESOP,
         the ESOP Committee directs the actions of the trustees of the ESOP,
         including the voting of any shares held by the ESOP which have not
         been allocated to participating employee accounts, or which have been
         allocated but no voting instructions have been received. As of March
         29, 2002, all of the shares held by the ESOP had been allocated to
         participants' accounts. Except for Diane S. McGee, a trustee of the
         ESOP, no members of the ESOP Committee or trustees currently
         participate in the ESOP.

(4)      Includes 48,456 shares which are not currently outstanding, but which
         Mr. Biggs is entitled to acquire upon the exercise of outstanding
         stock options.

(5)      Includes 56,046 shares which are not currently outstanding, but which
         Mr. Caudle is entitled to acquire upon the exercise of outstanding
         stock options, and 7,000 shares held by a corporation controlled by
         Mr. Caudle, with respect to which Mr. Caudle disclaims beneficial
         ownership.

(6)      Includes 59,628 shares which are not currently outstanding, but which
         Mr. Duncan is entitled to acquire upon the exercise of outstanding
         stock options, and 44,500 shares owned by Mr. Duncan's wife, with
         respect to which shares Mr. Duncan disclaims beneficial ownership.

(7)      Includes 33,393 shares which are not currently outstanding, but which
         Mr. Martin is entitled to acquire upon exercise of outstanding stock
         options.

(8)      Includes 58,385 shares which are not currently outstanding, but which
         Mr. Martin is entitled to acquire upon exercise of outstanding stock
         options, and 85,907 shares held by Mr. Martin's wife, with respect to
         which shares Mr. Martin disclaims beneficial ownership.

(9)      Includes 20,226 shares which are not currently outstanding, but which
         Mr. Tanous is entitled to acquire upon exercise of outstanding stock
         options.

(10)     Does not include the shares which Mr. Roney was entitled to acquire
         upon exercise of outstanding stock options. All of Mr. Roney's options
         expired on July 30, 2001 as a result of the termination of his
         employment with the Company.


<PAGE>


(11)     Includes 20,000 shares which are not currently outstanding, but which
         Mr. Truitt is entitled to acquire upon exercise of outstanding stock
         options.

(12)     Includes 6,000 shares which are not currently outstanding, but which
         Mr. Vuillod is entitled to acquire upon exercise of outstanding stock
         options, within ninety days of his date of termination. Options held
         but not yet vested were cancelled as of Mr. Vuillod's date of
         termination.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         On April 5, 2002, the Company entered into an agreement with an entity
controlled by three of its directors, John L. Duncan, William D. Biggs, Sr. and
Jim D. Caudle, Sr., to provide a $1.5 million term loan to the Company. The
loan is for a six-month term, subject to renewal for an additional six months
at the option of the Company. The loan bears interest at an annual rate of 12%
and is subject to a placement fee of 5% due at the funding of the loan and an
additional 3% fee at repayment. The loan is secured by an unencumbered first
mortgage in all of the real property of the Company. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations".

         On February 20, 2002, the Company transferred the shares of its
wholly-owned subsidiary, 1166081 Ontario Inc., to Roger Vuillod. 1166081
Ontario Inc. holds all of the shares in Hunter Technologies, Inc., the
Company's Canadian subsidiary. Mr. Vuillod was the manager and sole director of
Hunter at the time of the transfer, but he is no longer affiliated with the
Company. In connection with this transfer, the Company assigned $4.3 million in
intercompany debt, which Hunter owed to the Company, to Mr. Vuillod. According
to the terms of the assignment, as Mr. Vuillod collects payment on the debt, he
is required to pay a percentage of the collection to the Company. In connection
with the transaction with Mr. Vuillod, the Company assigned to Hunter the
assets used in the manufacture and distribution of NuWay do-it-yourself
trailers, which have been manufactured by Hunter since the fourth quarter of
2000. Under the terms of the share transfer, Mr. Vuillod has assumed all
obligations and liabilities associated with the ownership of the shares of the
Canadian subsidiaries. On April 23, 2002, Hunter filed an application with the
Canadian courts for protection from its creditors.


<PAGE>


                                   SIGNATURES

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


                                              MARTIN INDUSTRIES, INC.

                                    By:         /s/ JOHN L. DUNCAN
                                       ----------------------------------------
                                                   John L. Duncan
                                        President and Chief Executive Officer

Date: April 30, 2002

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

<TABLE>
<CAPTION>
           Signature                                     Title                             Date
-----------------------------------        ---------------------------------           --------------

<S>                                        <C>                                         <C>
       /s/ JOHN L. DUNCAN                      President, Chief Executive              April 30, 2002
-----------------------------------               Officer and Director
         John L. Duncan                       (Principal Executive Officer)

    /s/ JAMES W. TRUITT                    Vice President and Chief Financial          April 30, 2002
-----------------------------------               Officer and Secretary
      James W. Truitt                       (Principal Financial Officer and
                                              Principal Accounting Officer)

  /s/ WILLIAM H. MARTIN, III*                           Director                       April 30, 2002
-----------------------------------
   William H. Martin, III

  /s/ WILLIAM D. BIGGS, SR.*                            Director                       April 30, 2002
-----------------------------------
    William D. Biggs, Sr.

     /s/ JIM D. CAUDLE, SR.*                            Director                       April 30, 2002
-----------------------------------
       Jim D. Caudle, Sr.

      /s/ CHARLES R. MARTIN*                            Director                       April 30, 2002
-----------------------------------
       Charles R. Martin

       /s/ JAMES J. TANOUS*                             Director                       April 30, 2002
-----------------------------------
         James J. Tanous

    *By /s/ JAMES W. TRUITT                                                            April 30, 2002
-----------------------------------
       James W. Truitt
       Attorney-In-Fact
</TABLE>