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FORM 10-K

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

(Mark One)

x   ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED)

For the fiscal year ended October 31, 2002

OR

o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the transition period from                      to

Commission File No. 0-9081

CERTRON CORPORATION

(Exact name of registrant as specified in its charter)


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

|                                                               |  |           
|-------------------------------------------------------------- |  | ----------
|11845 W. Olympic
Boulevard, Suite 1080
Los Angeles, California |  | 90064     
|                                                               |  |           
|(Address of principal executive offices)                       |  | (Zip Code)

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

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

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

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

Common Stock, no 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 report(s), and (2) has been subject to
such filing requirements for the past 90 days.
Yes x     Noo

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 o.

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).
Yes o     No x;

The aggregate market value of registrants voting stock held by non-affiliates
as of January 27, 2003, based upon the average bid and asked price of such
stock as reported by Reuters Limited for that day, was $193,496.





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As of January 27, 2003, registrant had outstanding 3,128,306 shares of its
common stock, no par value, its only authorized class of common stock.

DOCUMENTS INCORPORATED BY REFERENCE

The information called for by part III is incorporated by reference to
registrants definitive proxy statement which registrant intends to file
pursuant to regulation 14A by a date no later than 120 days after October 31,
2002. If such definitive proxy statement is not filed in the 120-day period,
the information called for by Part III will be filed as an amendment to this
Form 10-K not later than the end of the 120-day period.





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TABLE OF CONTENTS



|                                                                                                  |                                                                                               |  |  |  |  |  |  | 
|------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                                                                           
|                                                                                                  | Item 1. Business                                                                             
|                                                                                                  | Item 2. Properties                                                                           
|                                                                                                  | Item 3. Legal Proceedings                                                                    
|                                                                                                  | Item 4. Submission of Matters to a Vote of Security Holders                                  
|PART II                                                                                          
|                                                                                                  | Item 5. Market for Registrants Common Equity and Related Stockholder Matters                
|                                                                                                  | Item 6. Selected Financial Data                                                              
|                                                                                                  | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                                                                  | Item 7A. Quantitative and Qualitative Disclosures About Market Risk                          
|                                                                                                  | Item 8. Financial Statements and Supplementary Data                                          
|CERTRON CORPORATION AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS                                   
|CERTRON CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
|CERTRON CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY               
|CERTRON CORPORATION AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS                         
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                                       
|PART III                                                                                         
|PART IV                                                                                          
|                                                                                                  | Item 14. Controls and Procedures                                                             
|                                                                                                  | Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K                     
|SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS                                                  
|SIGNATURES                                                                                       
|CERTIFICATIONS                                                                                   
|EXHIBIT INDEX                                                                                    
|EXHIBIT 23                                                                                       
|EXHIBIT 99.1                                                                                     



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PART I




Item 1. Business.

Certron Corporation is referred to herein as the Company or Certron
and such reference includes both the corporation and its subsidiary unless
otherwise indicated. Certron was incorporated under the laws of the State of
California in 1966.

Certrons business presently consists primarily of the distribution of
magnetic media products. On September 7, 2001, the Company closed its
Mexicali, Mexico plant and its contract assembly operations which were
conducted at that facility. This closure was in response to a decline in the
market for micro cassettes which also had been assembled at the Mexicali,
Mexico facility, the loss of an existing contract assembly customer and the
negative outlook for the retention of its then sole remaining contract assembly
customer and additional contract assembly business. In the opinion of
management, all expenses associated with the closing of Mexico operations were
either paid or fully accrued in fiscal 2001.

The following table sets forth, for the years ended October 31, 2002,
2001, and 2000, the amounts of net sales and operating profit before general
corporate expense and interest expense, together with identifiable assets at
October 31, 2002, 2001 and 2000 attributable to each of the Companys industry
segments, its magnetic media products segment and its contract assembly segment
which is shown as discontinued operations.

|                                                   |                         |  |                        |     |      |  |      |       |  |  |   |       | 
|-------------------------------------------------- | ----------------------- |  | ---------------------- | --- | ---- |  | ---- | ----- |  |  | - | ----- | 
|                                                   |                         |  | Year ended October 31,
|                                                   |                         |  |                       
|                                                   |                         |  | 2002                   |     | 2001 |  | 2000
|                                                   |                         |  |                        |     |      |  |     
|                                                   |                         |  | (In Thousands)        
|Net sales to unaffiliated customers:               |                         |  |                        |     |      |  |      |       |  |  |   |      
|                                                   | Magnetic Media products |  | $                      | 750 |      |  | $    | 1,475 |  |  | $ | 2,272 | 
|                                                   | Discontinued operations |  |                        |    |      |  | $    | 603   |  |  | $ | 412   | 
|Operating profit before general
corporate expense: |                         |  |                        |     |      |  |      |       |  |  |   |      
|                                                   | Magnetic Media products |  | $                      | 78  |      |  | $    | 131   |  |  | $ | 448   | 
|                                                   | Discontinued operations |  |                        |    |      |  |      | 158   |  |  |   | 84    | 
|Identifiable assets:                               |                         |  |                        |     |      |  |      |       |  |  |   |      
|                                                   | Magnetic Media products |  | $                      | 346 |      |  | $    | 918   |  |  | $ | 1,183 | 
|                                                   | Discontinued operations |  |                        |    |      |  |      | 11    |  |  |   | 76    | 

Magnetic Media Products

The Companys magnetic media products consist primarily of blank audio and
video cassettes. The Company also distributes magnetic media accessories for
computers. All video tape and most audio tape and related plastics are
presently being procured by the Company primarily from offshore sources.
During the fiscal years ended October 31, 2002, 2001 and 2000, net sales of the
Companys magnetic media products were as follows:

|                             |  |           |     |      |  |      |       |  |  |   |       | 
|---------------------------- |  | --------- | --- | ---- |  | ---- | ----- |  |  | - | ----- | 
|                             |  | Net Sales
|                             |  |          
|Product                      |  | 2002      |     | 2001 |  | 2000
|                             |  |           |     |      |  |     
|Audio magnetic tape products |  | $         | 621 |      |  | $    | 1,160 |  |  | $ | 1,843 | 
|Video cassettes              |  |           | 129 |      |  |      | 315   |  |  |   | 429   | 
|                             |  |           |     |      |  |      |       |  |  |   |       | 
|                             |  | $         | 750 |      |  | $    | 1,475 |  |  | $ | 2,272 | 
|                             |  |           |     |      |  |      |       |  |  |   |       | 

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Certron sells blank audio magnetic tapes in several cassette
configurations of various sizes and playing times, and distributes VHS video
cassettes. The Company purchases substantially all of its products from
sources in the Far East. Although the majority of purchases from the Far East
are from one vendor, all the products produced by this vendor are available
from other sources and the Company does not anticipate that it will be unable
to obtain these products.

Certrons magnetic media products are marketed and sold primarily in the
United States to wholesale distributors, original equipment manufacturers, mail
order companies and major retail outlets. Less than 5% of the Companys net
sales during the last three fiscal years were to foreign customers. The
Companys products are distributed under its own labels and under different
customer labels. Standard sized and miniaturized cassettes for dictation
purposes and cassettes for telephone answering devices are also sold to office
supply outlets and distributors. Digital telephone answering machines have
substantially replaced telephone answering devices using magnetic tape
cassettes which has substantially reduced the Companys sales of micro
cassettes.

For the fiscal year ended October 31, 2002, the Companys ten largest
customers of magnetic media products accounted in the aggregate for
approximately 94% of the Companys total net sales of such magnetic media
products. During fiscal 2002, the two largest single magnetic media customers
accounted for
$463,000 or 62% and $87,000 or 12% of total magnetic media sales, respectively.
The Companys largest customer has informed the Company of its intent to cease
ordering products from the Company. Despite its continued placement of orders,
the Company does not expect that it will receive significant orders from this
customer after January 31, 2003. The loss of this major customer is expected
to have a material negative effect on the Companys earnings and sales. If the
Company were to lose its second largest customer, there would be an adverse
impact on the Companys earnings and sales.

The Company believes that the amount of its backlog on any given date is
not necessarily indicative of trends in its magnetic media business in as much
as orders received for such products are generally completed in less than 60
days.

Most of the Companys magnetic media products are available from multiple
sources.

Competition

In all areas of Certrons magnetic media business, competition is now, and
is expected to continue to be, active and intense. There are many substantial
competitors with larger resources than Certron in each market for its magnetic
media products. The Company believes that it occupies a small portion of the
total market for its magnetic media products. The principal methods of
competition in the magnetic media market involve price, quality and
advertisement, with the promotional priced audio tape products and video
cassettes being the most price sensitive. Since the Company has not spent
substantial amounts in consumer advertising of its high performance blank tape
products, and video cassettes, it has been at a competitive disadvantage in
these areas and has had to charge a lower per unit price than some competitors
selling comparable products having strong brand recognition. The Company has
experienced extensive price competition from Far East manufacturers and
distributors of low-cost audio cassettes and from other manufacturers and
distributors for sales of video cassettes, which has made it difficult for the
Company to maintain prices. See Item 7. Managements Discussion and Analysis
of Financial Condition and Results of Operation  Liquidity and Capital
Resources. The release of the

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digital video disk system and other digital
products is having an adverse impact
on the Companys magnetic media sales and, depending upon price and the
amount of hardware sales, will have a material adverse impact on the Companys
operations in the future as sales of digital products increase. The replacement
of telephone answering devices using magnetic tape by digital telephone
answering devices has substantially reduced the Companys sales of micro
cassettes for telephone answering devices. The foregoing statements concerning
the effect of sales of digital products on the Companys operations are forward
looking statements and actual results could differ materially. Factors which
could cause actual results to differ are the price of competitive digital
products and the price and availability of hardware for the use of such
products.

Employees

At January 1, 2003, Certron employed seven people in its various
operations, consisting of one person at its facility in Corona, California and
six people at its facility in Los Angeles, California.

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Item 2. Properties.

The principal office, assembling and warehousing facilities of the Company are
as follows:

|                                      |  |              |        |               |  |             |             |               |  |   |        |  |  |                        
|------------------------------------- |  | ------------ | ------ | ------------- |  | ----------- | ----------- | ------------- |  | - | ------ |  |  | -----------------------
|                                      |  | Approx. Area |        |               |  |             |             | Approx.       |  |  
|Location                              |  | Sq. ft.      |        | Lease Expires |  | annual rent |             | Principal use
|                                      |  |              |        |               |  |             |             |              
|422 N. Smith Avenue
Corona, CA        |  |              | 17,186 |               |  |             | 8-31-03(1)  |               |  | $ | 87,000 |  |  | Warehouse and
packaging
|11845 W. Olympic Blvd
Los Angeles, CA |  |              | 1,543  |               |  |             | 10-31-04(1) |               |  | $ | 29,000 |  |  | Administration         



---

|(1) |  | 422 N. Smith Avenue is leased from Louart Corporation, a principal
stockholder of Certron. 11845 W. Olympic Boulevard Los Angeles California is
leased from an unrelated party.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | The Company believes that its facilities are maintained in satisfactory
operating conditions and are adequate for its needs.                                                   




Item 3. Legal Proceedings.

There are no material pending legal proceedings to which the Company is a
party. The Company was notified by a letter dated June 2, 2000 received June 6,
2000 that the Company may have a potential liability from waste disposal in the
Casmalia Disposal Site at Santa Barbara County, California. The Company was
given a choice of either signing an agreement that would toll the statute of
limitations for eighteen (18) months in order to allow the Company to resolve
any liability with the government without incurring costs associated with being
named a defendant in a lawsuit, or becoming an immediate defendant in a
lawsuit. The Company signed the tolling agreement. On November 20, 2001, the
tolling agreement was extended for an additional 18 months. While the amount
which will be required to settle this matter is not expected to be material,
Certron is unable to estimate the amount that may be required to settle this
matter. The company is waiting for communication from the government
concerning settlement of this claim. The statement that the Company does not
expect the amount to be material is a forward-looking statement which involves
risks and uncertainties that could cause actual results to differ include,
among other things, an increase in the alleged amount of waste disposal by the
Company at the site over that which is alleged in the letter of June 2, 2000 or
a refusal by the government to settle based upon the amount of waste disposal
by the Company.




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

No matter was submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders, through the solicitation
of proxies or otherwise.

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PART II




Item 5. Market for Registrants Common Equity and Related Stockholder Matters.

The common stock of the Company is traded in the NASDAQ Bulletin Board
under the symbol CRTN. The following table shows the high and low bid
quotations for such stock for each fiscal quarter during the fiscal years ended
October 31, 2001 and October 31, 2002 as furnished by Bloomberg. These
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission, and may not necessarily represent actual transactions.

|               |  |      |     |     |  |  |     | 
|-------------- |  | ---- | --- | --- |  |  | --- | 
|Fiscal period  |  | High |     | Low
|               |  |      |     |    
|2001           |  |      |     |     |  |  |     | 
|First quarter  |  |      | .47 |     |  |  | .26 | 
|Second quarter |  |      | .37 |     |  |  | .26 | 
|Third quarter  |  |      | .33 |     |  |  | .22 | 
|Fourth quarter |  |      | .22 |     |  |  | .17 | 
|2002           |  |      |     |     |  |  |     | 
|First quarter  |  |      | .21 |     |  |  | .17 | 
|Second quarter |  |      | .23 |     |  |  | .15 | 
|Third quarter  |  |      | .23 |     |  |  | .15 | 
|Fourth quarter |  |      | .17 |     |  |  | .11 | 

As of January 6, 2002, the approximate number of holders of record of the
Companys Common Stock was 1,342. The Company has never paid a cash dividend
on its Common Stock.

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Item 6. Selected Financial Data

|                                             |  |      |           |      |  |      |           |      |  |      |           |   |  |    |           |   |  |    |           |  
|-------------------------------------------- |  | ---- | --------- | ---- |  | ---- | --------- | ---- |  | ---- | --------- | - |  | -- | --------- | - |  | -- | --------- | -
|                                             |  | 2002 |           | 2001 |  | 2000 |           | 1999 |  | 1998
|                                             |  |      |           |      |  |      |           |      |  |     
|Net Sales                                    |  | $    | 750,000   |      |  | $    | 1,475,000 |      |  | $    | 2,272,000 |   |  | $  | 2,765,000 |   |  | $  | 3,879,000 |  
|Net (loss)
income from
continuing
operations |  | ($   | 945,000   | )    |  | ($   | 451,000   | )    |  | ($   | 329,000   | ) |  | ($ | 339,000   | ) |  | $  | 73,000    |  
|Net loss from
discontinued
operations        |  |      |          |      |  | ($   | 30,000    | )    |  | ($   | 112,000   | ) |  | ($ | 121,000   | ) |  | ($ | 35,000    | )
|Net (loss)
income                            |  | ($   | 945,000   | )    |  | ($   | 481,000   | )    |  | ($   | 441,000   | ) |  | ($ | 460,000   | ) |  | $  | 38,000    |  
|Net (loss)
income per
common share           |  | ($   | 0.30      | )    |  | ($   | 0.15      | )    |  | ($   | 0.14      | ) |  | ($ | 0.15      | ) |  | $  | .01       |  
|Total assets                                 |  | $    | 1,203,000 |      |  | $    | 2,220,000 |      |  | $    | 3,037,000 |   |  | $  | 3,446,000 |   |  | $  | 3,950,000 |  
|Long-term debt                               |  |      |          |      |  |      |          |      |  |      |          |   |  |    |          |   |  |    |          |  
|Working capital                              |  | $    | 911,000   |      |  | $    | 1,831,000 |      |  | $    | 2,196,000 |   |  | $  | 2,744,000 |   |  | $  | 2,932,000 |  
|Stockholders
equity                         |  | $    | 1,065,000 |      |  | $    | 2,014,000 |      |  | $    | 2,550,000 |   |  | $  | 3,017,000 |   |  | $  | 3,445,000 |  

No cash dividends have been paid during the five-year period ended October
31, 2002.




Item 7. Managements Discussion and Analysis of Financial Condition and
Results of Operations.

Liquidity and Capital Resources

As demonstrated by the following chart, the Companys working capital
decreased at October 31, 2002 as compared to that at October 31, 2001, which
was primarily due to a decline in sales. Cash decreased by $433,000; accounts
receivable decreased by $56,000; notes receivable decreased by $99,000;
inventories decreased by $401,000; prepaid expenses decreased by $16,000; and
other current assets increased by $17,000. Current liabilities decreased by
$68,000.

|                        |  |            |         |           |  |           |           |   |  |    |           |  
|----------------------- |  | ---------- | ------- | --------- |  | --------- | --------- | - |  | -- | --------- | -
|                        |  | October 31
|                        |  |           
|                        |  | 2002       |         | 2001      |  | 2000     
|                        |  |            |         |           |  |          
|Working Capital         |  | $          | 911,000 |           |  | $         | 1,831,000 |   |  | $  | 2,196,000 |  
|Current Ratio           |  | 7.60 to 1  |         | 9.89 to 1 |  | 5.51 to 1
|Cash Used in Operations |  | ($         | 423,000 | )         |  | ($        | 516,000   | ) |  | ($ | 276,000   | )

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

The intense competition in the magnetic media field has made it difficult
for the Company to maintain prices on its magnetic media products and has
continually reduced the Companys margins on these products. As a result, the
Company has discontinued sales of certain magnetic media products and refused
to sell magnetic media products at prices not resulting in certain minimum
margin returns. In addition, the release of the digital video disk system and
other digital products is having an adverse impact on the Companys magnetic
media sales and, depending upon price and the amount of hardware sales, will
have a

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material adverse impact on the Companys operations in the future as
sales of
digital products increases. The Company does not believe that price
competition in the magnetic media field or sales of digital products will
lessen in the foreseeable future and, therefore, there may not presently be
meaningful opportunities for it to substantially increase its sales and
operating profit through its traditional outlets.

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

Results of Operations

Fiscal 2002 Compared to Fiscal 2001

During fiscal 2002, the Company had an operating loss of $963,000 and a
net loss from continuing operations of $945,000 on sales of $750,000 as
compared to an operating loss of $528,000 and a net loss from continuing
operations of $451,000 for fiscal 2001 on sales of $1,475,000. Gross profit
decreased by $266,000 between fiscal 2002 and fiscal 2001. Inventory holding
loss increased by $229,000; selling, general and administrative expenses
decreased by $33,000; depreciation and amortization expense decreased by
$27,000; interest income decreased by $54,000 and realized gain on marketable
securities decreased by $5,000.

Sales of magnetic media products were $750,000 in fiscal 2002 as compared
to $1,475,000 in fiscal 2001. The decrease of 49% was primarily the result of
the decrease in sales of micro cassettes of $128,000, decrease in sales of
video cassettes of $186,000, and decrease in sales of audio cassettes and other
office products of $411,000.

Total gross margin as a percentage of net sales was 10% in fiscal 2002 and
23% in fiscal 2001. Margins decreased from $266,000 in fiscal 2001 to $78,000
in fiscal 2002 due primarily to a decrease in the sales of magnetic media.

For the fourth quarter of fiscal 2002, the Company incurred a loss from
continuing operations of $403,000 of which approximately $222,000 was
represented by a write-down of finished goods inventory. Due to the Companys
declining sales and excess inventory, during the fourth quarter of fiscal 2002,
the Company established a reserve reducing the value of its inventory to market
value. Primarily as a result of this reserve, inventory holding loss increased
from $29,000 in fiscal 2001 to $250,000 in fiscal 2002.

Selling, general and administrative expense decreased by $33,000 during
fiscal 2002. The decrease from $799,000 in 2001 to $766,000 in 2002 was due
primarily to a decrease in personnel expenses of $74,000 that was offset by an
increase in other selling, general and administrative expenses of $41,000.

During fiscal 2002, the Company invested cash not needed in operations, in
publicly traded common stocks of other companies and may purchase additional
common stocks in the future. Investments in common stocks are subject to risks

7



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of the market, and market prices may fluctuate and be adversely affected by the
operating results of the issuer, as well as general economic, political
and market conditions. As of October 31, 2002, the Company held common stocks
which had a cost of approximately $210,000 and market value of approximately
$119,000.

In accordance with generally accepted accounting principles, the Company
has recorded the value of its investments in marketable securities on its
balance sheet at market value and the difference of approximately $91,000
between cost and market value is recorded as an unrealized holding loss, a
separate component of equity (see Notes 1 and 3 of Notes to Consolidated
Financial Statements). If the Company sells these securities, the Company will
recognize a loss in its statement of operations equal to the amount of the
decrease. Although the Company presently intends to hold these securities, if,
on account of its capital requirements or for any other reason, the Company
should decide to liquidate these or other investments at a time when their
market value is less than their cost, the Company would recognize a loss which
could adversely affect the results of operations for the period in which the
sale occurs.

In fiscal 2001, the Company was advised that its largest customer would no
longer be using the Company as a primary vendor. Although the customer
continued to place orders with the Company during fiscal 2002, the Company
expects that it will not receive significant orders from this customer after
January 31, 2003. Sales for the first month of the first quarter of fiscal 2003
were down approximately 52% as compared to sales for the first month of the
first quarter of fiscal 2002 primarily due to continued erosion of sales of
magnetic media products. The downward trend is continuing in the second month
of the first quarter of fiscal 2003. The Company expects that net sales for
the first quarter of fiscal 2003 to be substantially less than the comparable
quarter of fiscal 2002. A loss for the first quarter of fiscal 2003 is
anticipated. The Company cannot predict its profit or loss for the balance of
fiscal 2003.

Fiscal 2001 Compared to Fiscal 2000

During fiscal 2001, the Company had an operating loss of $528,000 and a
net loss from continuing operations of $451,000 on sales of $1,475,000 as
compared to an operating loss of $451,000 and a net loss from continuing
operations of $329,000 for fiscal 2000 on sales of $2,272,000. Gross profit
decreased by $322,000 between fiscal 2001 and fiscal 2000. Net loss on
discontinued operations was $30,000 on sales of $603,000 during fiscal 2001 as
compared to a net loss of $112,000 on sales of $412,000 during fiscal 2000.
Selling, general and administrative expenses decreased by $237,000,
depreciation and amortization expense decreased by $1,000, interest income
decreased by $32,000 and realized gain on marketable securities decreased by
$13,000.

On September 7, 2001, the Company closed its Mexicali, Mexico plant and
its contract assembly operations which were conducted at that facility. This
closure was in response to a decline in the market for micro cassettes which
also had been assembled at the Mexicali, Mexico facility, the loss of an
existing contract assembly customer and the negative outlook for the retention
of its sole remaining contract assembly customer and additional contract
assembly business. The contract assembly operations are reflected as
discontinued operations in the Companys financial statements. In the opinion
of management, all expenses associated with the closing of Mexico operations
were either paid or fully accrued in fiscal 2001.

The foregoing statement concerning the expenses associated with the
closing of the Mexicali facility and assembly operations is a forward-looking
statement which involves risks and uncertainties that could cause actual
results

8



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to differ materially from the forward-looking statement. Factors which
could cause actual results to differ materially include, among other things,
the Companys reserves for expenses being less than the expenses actually incurred by the Company
in connection with the closing of the assembly operations or the incurring by
the Company of additional unanticipated liabilities, costs or expenses in
connection with the closing of the facility and operations.

Sales of magnetic media products were $1,475,000 in fiscal 2001 as
compared to $2,272,000 in fiscal 2000. The decrease of 35% was primarily the
result of the decrease in sales of micro cassettes by $355,000 and decrease in
sales of video cassettes by $114,000, audio cassettes of $114,000 and office
products of $214,000.

Total gross margin as a percentage of net sales was 23% in fiscal 2001 and
29% in fiscal 2000. Margins decreased from $666,000 in fiscal 2000 to $322,000
in fiscal 2001 due primarily to a decrease in sales of magnetic media.

Selling, general and administrative expense decreased by $237,000 during
fiscal 2001. The decrease from $1,036,000 in 2000 to $799,000 in 2001 was due
primarily to decreases in personnel expense of $18,000, insurance expense of
$24,000, other selling, general, and administrative expenses of $55,000,
severance pay of $178,000 and offset by an increase in advertising expense of
$38,000.

During fiscal 2001, the Company invested cash not needed in operations, in
publicly traded common stocks of other companies and may purchase additional
common stocks in the future. Investments in common stocks are subject to risks
of the market, and market prices may fluctuate and be adversely affected by the
operating results of the issuer, as well as general economic, political and
market conditions. As of October 31, 2001, the Company held common stocks
which had a cost of approximately $200,000 and market value of approximately
$113,000.

In accordance with generally accepted accounting principles, the Company
has recorded the value of its investments in marketable securities on its
balance sheet at market value and the difference of approximately $87,000
between cost and market value is recorded as an unrealized holding loss, a
separate component of equity (see Notes 1 and 3 of Notes to Consolidated
Financial Statements). If the Company sells these securities, the Company will
recognize a loss in its statement of operations equal to the amount of the
decrease. Although the Company presently intends to hold these securities, if,
on account of its capital requirements or for any other reason, the Company
should decide to liquidate these or other investments at a time when their
market value is less than their cost, the Company would recognize a loss which
could adversely affect the results of operations for the period in which the
sale occurs.

Forward-Looking Statements

Certain statements herein, including statements as to the Companys
anticipation that sales will decline and a loss incurred in the first quarter
of the 2003 fiscal year and the Companys uncertainty as to its outlook for
fiscal 2003 are forward-looking statements. These statements involve risks and
uncertainties that could cause actual results to differ materially from these
forward-looking statements. Factors which could cause actual results to differ
materially include economic conditions, the Companys success in maintaining
its current customer base, the Companys ability to obtain additional customers
and business, pricing factors and competition.




Item 7A. Quantitative and
Qualitative Disclosures About Market Risk.

Not
applicable.


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Item 8. Financial Statements and Supplementary Data.

(Letterhead of Beckman Kirkland & Whitney)

Independent Auditors Report

Board of Directors and Shareholders
Certron Corporation
Los Angeles, California

We have audited the accompanying balance sheets of Certron Corporation as of
October 31, 2002 and 2001, and the related statements of operations and
comprehensive income, stockholders equity, and cash flows for the years ended
October 31, 2002, 2001 and 2000. In connection with our audit of the financial
statements, we have also audited the accompanying financial statement schedule.
These financial statements and financial schedule are the responsibility of the
Companys management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audit 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 financial statements referred to above present fairly, in
all material respects, the financial position of Certron Corporation as of
October 31, 2002 and 2001, and the results of its operations and its cash flows
for the years ended October 31, 2002, 2001 and 2000 in conformity with
accounting principles generally accepted in the United States of America.
Also, in our opinion, the related financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.

BECKMAN KIRKLAND & WHITNEY

Agoura Hills, California
January 3, 2003

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CERTRON CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS

|                                               |                                                                                                                                                                                                                                             |                                                                                         |         |             |           |   |         |            |           |  
|---------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------- | ------- | ----------- | --------- | - | ------- | ---------- | --------- | -
|                                               |                                                                                                                                                                                                                                             |                                                                                         |         | October 31,
|                                               |                                                                                                                                                                                                                                             |                                                                                         |         |            
|                                               | ASSETS                                                                                                                                                                                                                                      |                                                                                         | 2002    |             | 2001     
|                                               |                                                                                                                                                                                                                                             |                                                                                         |         |            
|CURRENT ASSETS:                                |                                                                                                                                                                                                                                             |                                                                                         |         |             |           |   |         |           
|                                               | Cash and cash equivalents, Note 1                                                                                                                                                                                                           |                                                                                         | $       | 642,000     |           |   | $       | 1,075,000  |          
|                                               | Accounts receivable, less allowance
for doubtful accounts of $7,000 in 2002
and $25,000 in 2001                                                                                                                                             |                                                                                         |         | 73,000      |           |   |         | 129,000    |          
|                                               | Notes receivable                                                                                                                                                                                                                            |                                                                                         |         |            |           |   |         | 99,000     |          
|                                               | Inventories:                                                                                                                                                                                                                                |                                                                                         |         |             |           |   |         |            |          
|                                               |                                                                                                                                                                                                                                             | Finished products, less allowance for
obsolescence of $8,000 in 2002 and
$5,000 in 2001 |         |             | 252,000   |   |         |            | 653,000   |  
|                                               | Prepaid expenses                                                                                                                                                                                                                            |                                                                                         |         | 49,000      |           |   |         | 65,000     |          
|                                               | Other current assets                                                                                                                                                                                                                        |                                                                                         |         | 33,000      |           |   |         | 16,000     |          
|                                               |                                                                                                                                                                                                                                             |                                                                                         |         |             |           |   |         |           
|                                               |                                                                                                                                                                                                                                             | Total current assets                                                                    |         |             | 1,049,000 |   |         |            | 2,037,000 |  
|                                               |                                                                                                                                                                                                                                             |                                                                                         |         |             |           |   |         |           
|EQUIPMENT AND LEASEHOLD IMPROVEMENTS, AT COST: |                                                                                                                                                                                                                                             |                                                                                         |         |             |           |   |         |           
|                                               | Machinery and equipment                                                                                                                                                                                                                     |                                                                                         |         | 55,000      |           |   |         | 132,000    |          
|                                               | Dies and molds                                                                                                                                                                                                                              |                                                                                         |         | 314,000     |           |   |         | 317,000    |          
|                                               | Furniture, fixtures and leasehold improvements                                                                                                                                                                                              |                                                                                         |         | 152,000     |           |   |         | 175,000    |          
|                                               |                                                                                                                                                                                                                                             |                                                                                         |         |             |           |   |         |           
|                                               |                                                                                                                                                                                                                                             |                                                                                         | 521,000 |             |           |   | 624,000 |           
|                                               |                                                                                                                                                                                                                                             | Less accumulated depreciation
and amortization                                          |         |             | (500,000  | ) |         |            | (586,000  | )
|                                               |                                                                                                                                                                                                                                             |                                                                                         |         |             |           |   |         |           
|                                               |                                                                                                                                                                                                                                             | Net Equipment and Leasehold Improvements                                                |         |             | 21,000    |   |         |            | 38,000    |  
|                                               |                                                                                                                                                                                                                                             |                                                                                         |         |             |           |   |         |           
|MARKETABLE SECURITIES                          |                                                                                                                                                                                                                                             |                                                                                         | 119,000 |             |           |   | 113,000 |           
|OTHER ASSETS                                   |                                                                                                                                                                                                                                             |                                                                                         | 14,000  |             |           |   | 20,000  |           
|NET ASSETS OF DISCONTINUED OPERATION           |                                                                                                                                                                                                                                             |                                                                                         |        |             |           |   | 12,000  |           
|                                               |                                                                                                                                                                                                                                             |                                                                                         |         |             |           |   |         |           
|                                               |                                                                                                                                                                                                                                             | Total Assets                                                                            |         | $           | 1,203,000 |   |         | $          | 2,220,000 |  
|                                               |                                                                                                                                                                                                                                             |                                                                                         |         |             |           |   |         |           
|                                               |                                                                                                                                                                                                                                             | LIABILITIES AND STOCKHOLDERS EQUITY                                                    |         |             |           |   |         |            |           |  
|CURRENT LIABILITIES:                           |                                                                                                                                                                                                                                             |                                                                                         |         |             |           |   |         |           
|                                               | Accrued advertising                                                                                                                                                                                                                         |                                                                                         | $       | 13,000      |           |   | $       | 37,000     |          
|                                               | Accrued professional fees                                                                                                                                                                                                                   |                                                                                         |         | 32,000      |           |   |         | 35,000     |          
|                                               | Accrued payroll and related items                                                                                                                                                                                                           |                                                                                         |         | 26,000      |           |   |         | 54,000     |          
|                                               | Other accrued expenses                                                                                                                                                                                                                      |                                                                                         |         | 67,000      |           |   |         | 80,000     |          
|                                               |                                                                                                                                                                                                                                             |                                                                                         |         |             |           |   |         |           
|                                               |                                                                                                                                                                                                                                             | Total current liabilities                                                               |         |             | 138,000   |   |         |            | 206,000   |  
|                                               |                                                                                                                                                                                                                                             |                                                                                         |         |             |           |   |         |           
|COMMITMENTS AND CONTINGENCIES                  |                                                                                                                                                                                                                                             |                                                                                         |         |             |           |   |         |           
|STOCKHOLDERS EQUITY:                          |                                                                                                                                                                                                                                             |                                                                                         |         |             |           |   |         |           
|                                               | Preferred Stock, $1.00 par value, authorized
500,000 shares, no shares issued and outstanding
Common stock, no par value; stated value $1 per
share; authorized 10,000,000 shares; issued and
outstanding, 3,128,000 shares (2002 and 2001) |                                                                                         |         | 3,128,000   |           |   |         | 3,128,000  |          
|                                               | Additional paid-in capital                                                                                                                                                                                                                  |                                                                                         |         | 1,824,000   |           |   |         | 1,824,000  |          
|                                               | Net unrealized loss on marketable
equity securities                                                                                                                                                                                         |                                                                                         |         | (91,000     | )         |   |         | (87,000    | )        
|                                               | Accumulated deficit                                                                                                                                                                                                                         |                                                                                         |         | (3,796,000  | )         |   |         | (2,851,000 | )        
|                                               |                                                                                                                                                                                                                                             |                                                                                         |         |             |           |   |         |           
|                                               |                                                                                                                                                                                                                                             | Total Stockholders Equity                                                              |         |             | 1,065,000 |   |         |            | 2,014,000 |  
|                                               |                                                                                                                                                                                                                                             |                                                                                         |         |             |           |   |         |           
|                                               |                                                                                                                                                                                                                                             | Total Liabilities and Stockholders Equity                                              |         | $           | 1,203,000 |   |         | $          | 2,220,000 |  
|                                               |                                                                                                                                                                                                                                             |                                                                                         |         |             |           |   |         |           

The accompanying notes are an integral part of these financial statement

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CERTRON CORPORATION AND SUBSIDIARYCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

|                                            |  |                                                                |           |   |          |                        |           |      |          |      |           |   |           |   |  | 
|------------------------------------------- |  | -------------------------------------------------------------- | --------- | - | -------- | ---------------------- | --------- | ---- | -------- | ---- | --------- | - | --------- | - |  | 
|                                            |  |                                                                |           |   |          | Year Ended October 31,
|                                            |  |                                                                |           |   |          |                       
|                                            |  |                                                                |           |   |          | 2002                   |           | 2001 |          | 2000
|                                            |  |                                                                |           |   |          |                        |           |      |          |     
|NET SALES                                   |  | $                                                              | 750,000   |   |          | $                      | 1,475,000 |      |          | $    | 2,272,000 |  
|COST OF PRODUCTS SOLD                       |  |                                                                | 672,000   |   |          |                        | 1,131,000 |      |          |      | 1,606,000 |  
|                                            |  |                                                                |           |   |          |                        |           |      |          |      |           |  
|GROSS PROFIT                                |  |                                                                | 78,000    |   |          |                        | 344,000   |      |          |      | 666,000   |  
|                                            |  |                                                                |           |   |          |                        |           |      |          |      |           |  
|COSTS AND EXPENSES:                         |  |                                                                |           |   |          |                        |           |      |          |      |           |  
|                                            |  | Inventory holding loss                                         |           |   | 258,000  |                        |           |      | 29,000   |      |           |   | 36,000    |  
|                                            |  | Selling, general and
administrative                            |           |   | 766,000  |                        |           |      | 799,000  |      |           |   | 1,036,000 |  
|                                            |  | Depreciation and amortization                                  |           |   | 17,000   |                        |           |      | 44,000   |      |           |   | 45,000    |  
|                                            |  |                                                                |           |   |          |                        |           |      |          |      |           |  
|                                            |  |                                                                | 1,713,000 |   |          |                        | 2,003,000 |      |          |      | 2,723,000 |  
|                                            |  |                                                                |           |   |          |                        |           |      |          |      |           |  
|OPERATING LOSS                              |  | $                                                              | (963,000  | ) |          | $                      | (528,000  | )    |          | $    | (451,000  | )
|OTHER INCOME                                |  |                                                                |           |   |          |                        |           |      |          |      |           |  
|                                            |  | Realized gain on marketable
equity securities
and other assets |           |   |         |                        |           |      | 5,000    |      |           |   | 18,000    |  
|                                            |  | Interest Income (net)                                          |           |   | 19,000   |                        |           |      | 73,000   |      |           |   | 105,000   |  
|                                            |  |                                                                |           |   |          |                        |           |      |          |      |           |  
|LOSS FROM CONTINUING OPERATIONS,
BEFORE TAX |  |                                                                | (944,000  | ) |          |                        | (450,000  | )    |          |      | (328,000  | )
|PROVISIONS FOR TAXES                        |  |                                                                | 1,000     |   |          |                        | 1,000     |      |          |      | 1,000     |  
|                                            |  |                                                                |           |   |          |                        |           |      |          |      |           |  
|LOSS FROM CONTINUING OPERATIONS             |  | $                                                              | (945,000  | ) |          | $                      | (451,000  | )    |          | $    | (329,000  | )
|DISCONTINUED OPERATIONS                     |  |                                                                |           |   |          |                        |           |      |          |      |           |  
|                                            |  | Loss from discontinued
operations, net of tax                  |           |   |         |                        |           |      | (10,000  | )    |           |   | (112,000  | )
|                                            |  | Loss on disposal of discontinued
operations, net of tax        |           |   |         |                        |           |      | (20,000  | )    |           |   |           |  
|                                            |  |                                                                |           |   |          |                        |           |      |          |      |           |  
|NET LOSS                                    |  | $                                                              | (945,000  | ) |          | $                      | (481,000  | )    |          | $    | (441,000  | )
|                                            |  |                                                                |           |   |          |                        |           |      |          |      |           |  
|NET LOSS PER SHARE                          |  |                                                                |           |   |          |                        |           |      |          |      |           |  
|                                            |  | Continuing operations                                          |           | $ | (0.30    | )                      |           | $    | (0.14    | )    |           | $ | (0.11     | )
|                                            |  | Discontinued operations                                        |           |   |         |                        |           |      | (0.01    | )    |           | $ | (0.03     | )
|                                            |  |                                                                |           |   |          |                        |           |      |          |      |           |  
|                                            |  | Net loss per share                                             |           | $ | (0.30    | )                      |           | $    | (0.15    | )    |           | $ | (0.14     | )
|                                            |  |                                                                |           |   |          |                        |           |      |          |      |           |  
|Weighted average common shares
outstanding  |  |                                                                | 3,128,000 |   |          |                        | 3,128,000 |      |          |      | 3,128,000 |  
|                                            |  |                                                                |           |   |          |                        |           |      |          |      |           |  
|COMPREHENSIVE LOSS                          |  |                                                                |           |   |          |                        |           |      |          |      |           |  
|                                            |  | Unrealized loss on
marketable equity securities                |           | $ | (4,000   | )                      |           | $    | (55,000  | )    |           | $ | (26,000   | )
|                                            |  |                                                                |           |   |          |                        |           |      |          |      |           |  
|                                            |  | Net loss                                                       |           | $ | (945,000 | )                      |           | $    | (481,000 | )    |           | $ | (441,000  | )
|                                            |  |                                                                |           |   |          |                        |           |      |          |      |           |  
|                                            |  | Comprehensive loss                                             |           | $ | (949,000 | )                      |           | $    | (536,000 | )    |           | $ | (467,000  | )
|                                            |  |                                                                |           |   |          |                        |           |      |          |      |           |  

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

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CERTRON CORPORATION AND SUBSIDIARYCONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

|        |                                            |  |              |           |         |  |         |           |             |  |            |           |            |  |            |         |   |  |   |            |   |  |   |           |  
|------- | ------------------------------------------ |  | ------------ | --------- | ------- |  | ------- | --------- | ----------- |  | ---------- | --------- | ---------- |  | ---------- | ------- | - |  | - | ---------- | - |  | - | --------- | -
|        |                                            |  |              |           |         |  |         |           |             |  |            |           |            |  | Net        |         |   |  |   |            |   |  |  
|        |                                            |  |              |           |         |  |         |           |             |  |            |           |            |  | Unrealized |         |   |  |   |            |   |  |  
|        |                                            |  |              |           |         |  |         |           |             |  |            |           |            |  | (Loss)     |         |   |  |   |            |   |  |  
|        |                                            |  |              |           |         |  |         |           |             |  |            |           |            |  | Gain on    |         |   |  |   |            |   |  |  
|        |                                            |  |              |           |         |  |         |           |             |  | Additional |           | Marketable |  |            |         |   |  |   |            |  
|        |                                            |  | Common Stock |           | paid-in |  | Equity  |           | Accumulated |  |            |           |           
|        |                                            |  | Shares       |           | Amount  |  | capital |           | Securities  |  | deficit    |           | Total     
|        |                                            |  |              |           |         |  |         |           |             |  |            |           |           
|BALANCE |                                            |  |              |           |         |  |         |           |             |  |            |           |            |  |            |         |   |  |   |            |   |  |   |          
|        | October 31, 1999                           |  |              | 3,128,000 |         |  | $       | 3,128,000 |             |  | $          | 1,824,000 |            |  | $          | (6,000  | ) |  | $ | (1,929,000 | ) |  | $ | 3,017,000 |  
|        | Unrealized Loss on Marketable Securities   |  |              |           |         |  |         |           |             |  |            |           |            |  |            | (26,000 | ) |  |   |            |   |  |   | (26,000   | )
|        | Net Loss                                   |  |              |           |         |  |         |           |             |  |            |           |            |  |            |         |   |  |   | (441,000   | ) |  |   | (441,000  | )
|        |                                            |  |              |           |         |  |         |           |             |  |            |           |            |  |            |         |   |  |   |            |   |  |   |           |  
|BALANCE |                                            |  |              |           |         |  |         |           |             |  |            |           |            |  |            |         |   |  |   |            |   |  |   |          
|        | October 31, 2000                           |  |              | 3,128,000 |         |  | $       | 3,128,000 |             |  | $          | 1,824,000 |            |  | $          | (32,000 | ) |  | $ | (2,370,000 | ) |  | $ | 2,550,000 |  
|        | Unrealized  Loss on
 Marketable Securities |  |              |           |         |  |         |           |             |  |            |           |            |  |            | (55,000 | ) |  |   |            |   |  |   | (55,000   | )
|        | Net Loss                                   |  |              |           |         |  |         |           |             |  |            |           |            |  |            |         |   |  |   | (481,000   | ) |  |   | (481,000  | )
|        |                                            |  |              |           |         |  |         |           |             |  |            |           |            |  |            |         |   |  |   |            |   |  |   |           |  
|BALANCE |                                            |  |              |           |         |  |         |           |             |  |            |           |            |  |            |         |   |  |   |            |   |  |   |          
|        | October 31, 2001                           |  |              | 3,128,000 |         |  | $       | 3,128,000 |             |  | $          | 1,824,000 |            |  | $          | (87,000 | ) |  | $ | (2,851,000 | ) |  | $ | 2,014,000 |  
|        | Unrealized
Loss on Marketable  Securities  |  |              |           |         |  |         |           |             |  |            |           |            |  |            | (4,000  | ) |  |   |            |   |  |   | (4,000    | )
|        | Net Loss                                   |  |              |           |         |  |         |           |             |  |            |           |            |  |            |         |   |  |   | (945,000   | ) |  |   | (945,000  | )
|        |                                            |  |              |           |         |  |         |           |             |  |            |           |            |  |            |         |   |  |   |            |   |  |   |           |  
|BALANCE |                                            |  |              |           |         |  |         |           |             |  |            |           |            |  |            |         |   |  |   |            |   |  |   |          
|        | October 31, 2002                           |  |              | 3,128,000 |         |  | $       | 3,128,000 |             |  | $          | 1,824,000 |            |  | $          | (91,000 | ) |  | $ | (3,796,000 | ) |  | $ | 1,065,000 |  

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

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CERTRON CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                                   |  |   |           |   |  |                        |           |      |  |      |           |   |  |  |  | 
|-------------------------------------------------------------------------------------------------- |  | - | --------- | - |  | ---------------------- | --------- | ---- |  | ---- | --------- | - |  |  |  | 
|                                                                                                   |  |   |           |   |  | YEAR ENDED OCTOBER 31,
|                                                                                                   |  |   |           |   |  |                       
|                                                                                                   |  |   |           |   |  | 2002                   |           | 2001 |  | 2000
|                                                                                                   |  |   |           |   |  |                        |           |      |  |     
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                              |  |   |           |   |  |                        |           |      |  |      |           |  
|Net loss                                                                                           |  | $ | (945,000  | ) |  | $                      | (481,000  | )    |  | $    | (441,000  | )
|Adjustments to reconcile net (loss)
income to net cash (used in)
provided by operating activities: |  |   |           |   |  |                        |           |      |  |      |           |  
|Depreciation and amortization                                                                      |  |   | 17,000    |   |  |                        | 64,000    |      |  |      | 65,000    |  
|Loss from discontinued
operations, net                                                             |  |   |          |   |  |                        | 10,000    |      |  |      | 112,000   |  
|Loss on disposal of discontinued
operations, net                                                   |  |   |          |   |  |                        | 20,000    |      |  |      |          |  
|Decrease (Increase) in net assets
of discontinued operations                                       |  |   | 12,000    |   |  |                        | (17,000   | )    |  |      | 6,000     |  
|Changes in operating assets and
liabilities:                                                       |  |   |           |   |  |                        |           |      |  |      |           |  
|Decrease
(Increase) in
notes receivable                                                            |  |   | 99,000    |   |  |                        | (99,000   | )    |  |      |          |  
|Decrease (Increase) in trade
accounts receivable                                                   |  |   | 56,000    |   |  |                        | 175,000   |      |  |      | (35,000   | )
|Decrease in inventories                                                                            |  |   | 401,000   |   |  |                        | 138,000   |      |  |      | 15,000    |  
|Decrease (Increase) in
prepaid expenses                                                            |  |   | 16,000    |   |  |                        | (30,000   | )    |  |      | 19,000    |  
|Decrease (Increase) in
other assets                                                                |  |   | (11,000   | ) |  |                        | 45,000    |      |  |      | (4,000    | )
|(Decrease) Increase
in current liabilities                                                         |  |   | (68,000   | ) |  |                        | (328,000  | )    |  |      | 105,000   |  
|                                                                                                   |  |   |           |   |  |                        |           |      |  |      |           |  
|Net cash used in continuing
operations                                                             |  |   | (423,000  | ) |  |                        | (503,000  | )    |  |      | (158,000  | )
|Net cash used in
discontinued operations                                                           |  |   |          |   |  |                        | (13,000   | )    |  |      | (118,000  | )
|                                                                                                   |  |   |           |   |  |                        |           |      |  |      |           |  
|Net cash used in
operating activities                                                              |  |   | (423,000  | ) |  |                        | (516,000  | )    |  |      | (276,000  | )
|                                                                                                   |  |   |           |   |  |                        |           |      |  |      |           |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                              |  |   |           |   |  |                        |           |      |  |      |           |  
|Expenditures for equipment and
Leasehold improvements                                              |  |   |          |   |  |                        |          |      |  |      | (11,000   | )
|Proceeds from sale of marketable
securities                                                        |  |   | 85,000    |   |  |                        | 224,000   |      |  |      | 326,000   |  
|Purchase of marketable securities                                                                  |  |   | (95,000   | ) |  |                        | (192,000  | )    |  |      | (492,000  | )
|                                                                                                   |  |   |           |   |  |                        |           |      |  |      |           |  
|Net cash (used in) provided by
investing activities                                                |  |   | (10,000   | ) |  |                        | 32,000    |      |  |      | (177,000  | )
|                                                                                                   |  |   |           |   |  |                        |           |      |  |      |           |  
|NET DECREASE IN CASH
AND CASH EQUIVALENTS                                                          |  |   | (433,000  | ) |  |                        | (484,000  | )    |  |      | (453,000  | )
|CASH AND CASH EQUIVALENTS,
beginning of year                                                       |  |   | 1,075,000 |   |  |                        | 1,559,000 |      |  |      | 2,012,000 |  
|                                                                                                   |  |   |           |   |  |                        |           |      |  |      |           |  
|CASH AND CASH EQUIVALENTS,
end of year                                                             |  | $ | 642,000   |   |  | $                      | 1,075,000 |      |  | $    | 1,559,000 |  
|                                                                                                   |  |   |           |   |  |                        |           |      |  |      |           |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION                                                  |  |   |           |   |  |                        |           |      |  |      |           |  
|Cash paid during the year for:                                                                     |  |   |           |   |  |                        |           |      |  |      |           |  
|Interest                                                                                           |  | $ |          |   |  | $                      |          |      |  | $    |          |  
|Income Taxes                                                                                       |  | $ | 1,000     |   |  | $                      | 1,000     |      |  | $    | 1,000     |  

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

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CERTRON CORPORATION AND SUBSIDIARY




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED OCTOBER 31, 2002, 2001 AND 2000

Note 1  Summary of Significant Accounting Policies



| |  | Nature of Operations                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Companys business consists primarily of the distribution of magnetic
media products.                                                                                                                                                                                                                                                                                                                              
|
| |  | Principles of Consolidation                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | The consolidated financial statements include the accounts of Certron
Corporation and its wholly owned subsidiary, Certron Audio, S.A.
(collectively the Company). Certron Audio ceased operating on September 7,
2001. All material intercompany profits, transactions and balances have been
eliminated.                                                                                                           
|
| |  | Translation of Foreign Currencies                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | All balance sheet accounts of foreign operations are translated into US
dollars at the year-end rate of exchange, and statement of operations items
are translated at the weighted average exchange rates for the year. Since
foreign activities are considered to be an extension of the U.S. operations,
the gain or loss resulting from remeasuring these transactions into U.S.
dollars are included in operations.
|
| |  | The Company has not used the hyperinflationary accounting standards in SFAS
52 for accounting for its subsidiary in Mexico. The operation of Certron
Audio, located in Mexicali, Mexico was closed on September 7, 2001.                                                                                                                                                                                               
|
| |  | Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | The Company considers all cash on hand and on deposit, and securities with
original purchased maturities of less than three months to be cash and cash
equivalents.                                                                                                                                                                                                                                                    
|
| |  | Notes Receivable                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | Notes receivable are stated at their outstanding balance, excluding accrued
interest. Interest that is earned on notes receivable is included in
interest income when it is paid.                                                                                                                                                                                                                                      
|
| |  | Inventories                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Inventories are stated at the lower of cost (first-in, first-out method) or
market.                                                                                                                                                                                                                                                                                                                                    
|
| |  | Equipment and Leasehold Improvements                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Equipment and leasehold improvements are stated at cost and are depreciated
or amortized using the straight-line method over the lesser of the estimated
useful lives of the assets (generally five years) or the applicable lease
terms.                                                                                                                                                                              

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| |  | Marketable Equity Securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Management determines the appropriate classification of its investments in
debt and equity securities at the time of purchase and reevaluates such
determination at each balance sheet date. Securities available for sale are
carried at market value, with the unrealized gains and losses, net of tax,
reported in a separate component of stockholders equity. At October 31,
2002, the Company had no investments that qualified as trading or held to
maturity.                                                                            
|
| |  | Marketable equity securities are valued based on quoted market prices. The
cost of securities sold is determined by the specific identification of cost
method.                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Taxes on Income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | The Company files tax returns excluding its subsidiary for United States
federal tax purposes and combined returns with its subsidiary for state
purposes.                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the year in which those
temporary differences are expected to be recovered or settled. Reserves for
deferred tax assets are recorded when ultimate recovery of such assets is
deemed uncertain.
|
| |  | Income (Loss) Per Common Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Income (loss) per common share is based on the weighted average number of
common shares outstanding during the year and the effect of common stock
equivalents, if dilutive.                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | In preparing consolidated financial statements in conformity with generally
accepted accounting principles, management makes estimates and assumptions
that affect the amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the consolidated financial
statements, as well as the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.                                                                                       
|
| |  | Comprehensive Income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | The Company utilizes SFAS No. 130, Reporting Comprehensive Income. This
statement establishes standards for reporting comprehensive income and its
components in a financial statement. Comprehensive income as defined
includes all changes in equity (net assets) during a period from non-owner
sources. Examples of items to be included in comprehensive income, which are
excluded from net income, include foreign currency translation adjustments
and unrealized gains and losses on available-for-sale securities.                    
|
| |  | Segment Reporting                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | The Company accounts for segments in accordance with SFAS No. 131,
Disclosures about Segments of an Enterprise and Related
Information which requires that companies disclose operating segments based on the way                                                                                                                                                                                                                                                                                                                             

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| |  | management desegregates the Company for internal operating decisions. See
Note 7 for further information about the Companys segments. The Companys
Mexicali operation and the contract assembly segment of its business was
closed September 2001.                                                                                                                                                                                                                                                                                                                                     
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Recently Issued Accounting Pronouncement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | In June, 1999, the FASB issued SFAS No. 136, Transfer of Assets to a
Not-for-Profit Organization or Charitable Trust that Raises or Holds
Contributions for Others. This statement is effective for fiscal periods
beginning after December 15, 1999. This statement is not applicable to the
Company.                                                                                                                                                                                                                                                                                 
|
| |  | In June 1999, the FASB issued SFAS No. 137, Accounting for Derivative
Instruments and Hedging Activities. This statement is effective as of June
1999. The Company does not expect adoption of SFAS No. 137 to have a
material impact, if any, on its financial position or results of operations.                                                                                                                                                                                                                                                                                     
|
| |  | In June 2000, the FASB issued SFAS No. 138, Accounting for Certain
Derivative Instruments and Certain Hedging Activities. The statement is
effective for all fiscal quarters and fiscal years beginning after June 15,
2000. The Company does not expect adoption of SFAS No. 138 to have a material
impact, if any, on its financial position or results of operations.                                                                                                                                                                                                               
|
| |  | In June 2000, the FASB issued SFAS No. 139, which rescinded SFAS No. 53 and
amended various other SFAS statements. The statement is effective for
financial statements with fiscal years beginning after December 15, 2000.
This SFAS pertains to producers and distributors of motion picture films and
is not applicable to the Company.                                                                                                                                                                                                                                               
|
| |  | In June 2000, the FASB issued SFAS No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities. This
statement is effective for financial statements that have transfers and
servicing of financial assets and extinguishments of liabilities occuring
after March 31, 2001 and for disclosures relating to securitization
transactions and collateral for fiscal years after December 15, 2000. The
Company does not expect adoption of SFAS No. 140 to have a material impact,
if any, on its financial position or results of operations.
|
| |  | In June 2001, the FASB issued SFAS No. 141, Business Combinations. This
statement is effective for all business combinations initiated after June 30,
2001. The Company does not expect adoption of SFAS No. 141 to have a material
impact, if any, on its financial position or results of operations.                                                                                                                                                                                                                                                                                
|
| |  | In June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets. This statement is effective for fiscal years beginning after
December 31, 2001. The Company does not expect adoption of SFAS No. 142 to
have a material impact, if any, on its financial position or results of
operations.                                                                                                                                                                                                                                                                          
|
| |  | In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations. This statement is effective for fiscal years beginning after
June 15, 2002. The Company does not expect adoption of SFAS No. 143 to have a
material impact, if any, on its financial position or results of operations.                                                                                                                                                                                                                                                                       
|
| |  | In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. This statement is effective for fiscal
years beginning after December 15, 2001 and interim periods within those
fiscal years. The Company does not expect adoption of SFAS
No. 144 to have a material impact, if any, on its financial
position or results of operations.                                                                                                                                                                                                

17



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##### Table of Contents





| |  | In April 2002, the FASB issued SFAS No. 145, which amends and supersedes
various other SFAS statements. This statement is effective for financial
statements issued on or after May 15, 2002. The Company does not expect
adoption of SFAS No. 145 to have a material impact, if any, on its financial
position or results of operations.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Note 2  Discontinued Operation



| |  | On September 7, 2001, the Company closed its Mexicali, Mexico plant and
its
contract assembly operations that were conducted at that facility. This
closure was in response to a decline in market for micro cassettes which
also
had a been assembled at the Mexicali, Mexico facility, the loss of an
existing
customer and the negative outlook for the retention of its then sole
remaining
contract assembly customer and additional contract assembly business. In
the
opinion of management, all expenses associated with the closing of Mexico
operations were either paid or fully accrued in fiscal 2001. The assets
in the
Mexicali, Mexico facility consists primarily of accounts receivable and
fixed
assets.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The estimated loss on the disposal of the discontinued operation of
$30,000 (net of income tax benefit of $0), represents the estimated loss on
the disposal of the assets of the segment and a provision for expected
operating losses during the phase-out period from September 7, 2001 through
October 31, 2001.                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | Disposition of the Mexicali facility, represents the disposal of a
business segment under Accounting Principles Board (APB) Opinion No.30.
Accordingly, results of this operation have been classified as discontinued,
and prior periods have been restated. Operating results of the Mexicali
facility for the period of November 1, 1999 through September 7, 2001 are
shown separately in the accompanying income statement. The statement of
operations for fiscal 2000 has been restated and operating results of the
segment are also shown separately.                                                                                                                                                           
|
| |  | Net sales and income from the discontinued operation are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|                                           |  |      |   |      |  |      |         |  |  |   |         | 
|------------------------------------------ |  | ---- | - | ---- |  | ---- | ------- |  |  | - | ------- | 
|                                           |  | 2002 |   | 2001 |  | 2000
|                                           |  |      |   |      |  |     
|Net Sales                                  |  |      |  |      |  | $    | 603,000 |  |  | $ | 412,000 | 
|Loss from discontinued operation           |  |      |  |      |  |      | 10,000  |  |  |   | 112,000 | 
|Loss on disposal of
discontinued operation |  |      |  |      |  |      | 20,000  |  |  |   |        | 
|Income tax benefit (expense)               |  |      |  |      |  |      |        |  |  |   |        | 
|Net loss from
discontinued operation       |  |      |  |      |  |      | 30,000  |  |  |   | 112,000 | 

Note 3  Marketable Securities



| |  | The Company has investments in marketable equity securities, which have been
classified as non-current, available-for-sale, at October 31, 2002, 2001 and
2000. The market value of these securities is shown as a non-current asset
while the change in market value since the acquisition of these securities
is shown as an unrealized holding loss in the shareholders equity section
of the balance sheet. The investments in equity securities at October 31,
2002 have an original cost of $210,000 and a fair value of $119,000,
resulting in gross unrealized loss of $110,000 and gross unrealized gain of
$17,000, respectively. The investments in equity securities at October
31,
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |  | 2001 had an original cost of $200,000
and a fair value of $113,000, resulting in gross unrealized loss of $91,000
and gross unrealized gain of $4,000 respectively.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

Note 4  Inventory



| |  | Due to the apparent loss of the Companys largest customer, as described in
Note 10, declining sales, and excess inventory, the Company has taken
charges in each of the past three years and has also established a reserve
to reduce the value of its inventory to market value.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Note 5  Options



| |  | The Companys Executive Stock Option Plan (the Executive Plan) was
approved by shareholders in March 1989. In January 1995, the Board of
Directors adopted an amendment to the Executive Plan changing its name to
the Executive Stock Option Plan, increasing the number of shares of Common
Stock covered thereby from 150,000 to 300,000 and extending the expiration
date of the Executive Plan from January 1999 to January 2005. The increase
in the number of shares and the extension of the expiration date of the plan
were approved by shareholders in March 1995. In January 2001, the Board of
Directors adopted a further amendment to the Executive Plan increasing the
number of shares of Common Stock covered thereby to 600,000 shares and
extending the expiration date of the Executive Plan to January 24, 2011.
This amendment was approved by shareholders in March 2001. Options under the
plan have been reserved for issuance to officers, directors and key
employees.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Options under the Plan may be exercised in various installments, may not be
exercised beyond ten years and the option price may not be less than the
market value of the common stock on the date the option is granted.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

|                          |  |           |         |             |  |             |         |   |  |   |       | 
|------------------------- |  | --------- | ------- | ----------- |  | ----------- | ------- | - |  | - | ----- | 
|                          |  | Options   |         |             |  |             |         |   |  |  
|                          |  | available |         | Options     |  |             |         |  
|Executive Stock           |  | for       |         | granted and |  |             |         |  
|Option Plan               |  | grant     |         | outstanding |  | Price Range
|                          |  |           |         |             |  |            
|Balance, October 31, 1999 |  |           | 181,500 |             |  |             | 118,500 |   |  | $ | 1.000 | 
|Granted                   |  |           | (62,000 | )           |  |             | 62,000  |   |  | $ | 1.000 | 
|                          |  |           |         |             |  |             |         |   |  |   |       | 
|Balance, October 31, 2000 |  |           | 119,500 |             |  |             | 180,500 |   |  | $ | 1.000 | 
|Increase                  |  |           | 300,000 |             |  |             |         |   |  | $ | 1.000 | 
|Canceled                  |  |           | 75,500  |             |  |             | (75,500 | ) |  | $ | 1.000 | 
|                          |  |           |         |             |  |             |         |   |  |   |       | 
|Balance October 31, 2001  |  |           | 495,000 |             |  |             | 105,000 |   |  | $ | 1.000 | 
|                          |  |           |         |             |  |             |         |   |  |   |       | 
|Canceled                  |  |           | 67,000  |             |  |             | (67,000 | ) |  | $ | 1.000 | 
|                          |  |           |         |             |  |             |         |   |  |   |       | 
|Balance October 31, 2002  |  |           | 562,000 |             |  |             | 38,000  |   |  |   |       | 
|                          |  |           |         |             |  |             |         |   |  |   |       | 

The Company has adopted only the disclosure provisions of SFAS No. 123,
Accounting for Stock-Based Compensation. It applies Accounting Principles
Bulletin (APB) Opinion No. 25, Accounting for Stock Issued to Employees,
and related interpretations in accounting for its plans and does not recognize
compensation expense for its stock-based compensation plans other
than for restricted stock and options/warrants issued to outside
third parties. If the

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Company had elected to recognize compensation expense based upon the fair value
at the grant date for awards under these plans consistent with the methodology
prescribed by SFAS 123, the Companys net income and earnings per share
prescribed by SFAS 123, the Companys net income and earnings per share would
be reduced to the pro forma amounts indicated below:

|                           |  |             |           |  
|-------------------------- |  | ----------- | --------- | -
|                           |  | October 31,
|                           |  | 2002       
|                           |  |            
|Net Loss as reported       |  |             | $(945,000 | )
|Loss, pro forma            |  |             | (945,000  | )
|Loss per share as reported |  |             | (.30      | )
|Loss per share, pro forma  |  |             | (.30      | )



| |  | These pro forma amounts may not be representative of future disclosures
because they do not take into effect pro forma compensation expense related
to grants made before 1997.           
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The fair value of each option grant is estimated on the date of the grant
using the Black-Scholes option-pricing model with the following weighted
average assumptions used for grants in:

|                        |  |      |      |  
|----------------------- |  | ---- | ---- | -
|                        |  | 1997
|                        |  |     
|Risk free interest rate |  |      | 5.8  | %
|Expected lives (years)  |  |      | 5    |  
|Expected volatility     |  |      | 26.0 | %
|Expected dividends      |  | $    | 0    |  



|                         |  | The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input
of highly subjective assumptions including the expected stock price
volatility. Because the Companys employee stock options have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect the
fair value estimate, in managements opinion, the existing models do not
necessarily provide a single measure of the fair value of its employee stock
options.
|------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                        
|                         |  | At October 31, 2002, there were 38,000 options granted and outstanding, of
which 38,000 were exercisable. These options had a weighted average remaining
contractual life of three years. The weighted average exercise price of the
options outstanding and exercisable was $1.00.                                                                                                                                                                                                                                                                                                                                                                                                         
|                        
|Note 6  Taxes on Income
|                        
|                         |  | The provision for taxes on income is comprised of the minimum state income
taxes of $800.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                        
|                         |  | A reconciliation of the federal statutory rates to the effective rates is
summarized as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

|                                             |  |                        |     |      |  |      |       |    |  |  |       |   
|-------------------------------------------- |  | ---------------------- | --- | ---- |  | ---- | ----- | -- |  |  | ----- | --
|                                             |  | Year Ended October 31,
|                                             |  |                       
|                                             |  | 2002                   |     | 2001 |  | 2000
|                                             |  |                        |     |      |  |     
|Statutory rate                               |  |                        | 34  | %    |  |      | 34.0  | %  |  |  | 34.0  | % 
|State taxes, net of federal
benefit          |  |                        | 0   | %    |  |      | 0     | %  |  |  | 0.2   | % 
|Unrecognized benefit of
net operating losses |  |                        | (34 | )%   |  |      | (34.0 | )% |  |  | (34.0 | )%
|                                             |  |                        |     |      |  |      |       |    |  |  |       |   
|Effective tax rate                           |  |                        | 0   | %    |  |      | 0     | %  |  |  | 0.2   | % 
|                                             |  |                        |     |      |  |      |       |    |  |  |       |   

20



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| |  | For federal income tax return purposes, net operating losses of approximately
$5,136,000 expire beginning October 31, 2005. For state income tax purposes,
net operating losses of approximately $1,895,000 expire beginning October 31,
2002.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Significant components of the Companys deferred tax asset consist of the
following:                                                                                                                                                          

|                                            |                           |   |             |           |             |   |            |           | 
|------------------------------------------- | ------------------------- | - | ----------- | --------- | ----------- | - | ---------- | --------- | 
|                                            |                           |   | October 31, |           | October 31,
|                                            |                           |   | 2002        |           | 2001       
|                                            |                           |   |             |           |            
|Net operating loss carry forward            |                           | $ | 1,913,900   |           |             | $ | 1,071,000  |          
|State Taxes                                 |                           |   | 71,900      |           |             |   | 30,000     |          
|Vacation and severance accruals             |                           |   | 8,600       |           |             |   | 16,000     |          
|Allowance for bad debts                     |                           |   | 6,500       |           |             |   | 10,000     |          
|Inventory                                   |                           |   | 3,400       |           |             |   | 103,000    |          
|Depreciation                                |                           |   | 25,700      |           |             |   | 21,000     |          
|Close Out Reserves                          |                           |   | 21,500      |           |             |   | 29,000     |          
|Loss on marketable equity securities        |                           |   | 146,300     |           |             |   | 141,000    |          
|                                            |                           |   |             |           |             |   |            |          
|                                            | Total deferred tax assets |   |             | 2,197,800 |             |   |            | 1,421,000 | 
|Valuation allowance for deferred
tax assets |                           |   | (2,197,800  | )         |             |   | (1,421,000 | )        
|                                            |                           |   |             |           |             |   |            |          
|                                            |                           | $ |            |           |             | $ |           |          
|                                            |                           |   |             |           |             |   |            |          



| |  | The deferred tax assets have been offset in their entirety by a valuation
allowance due to the uncertainty of their realization.                                                     
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Note 7  Commitments and Contingencies                                                                                                                                               
|
| |  | Operating Leases -                                                                                                                                                                   
|
| |  | The Company leases office, production and warehouse facilities under
long-term operating leases. The minimum net lease payments under
non-cancelable operating leases are as follows:

|                       |  |   |           | 
|---------------------- |  | - | --------- | 
|Year Ending October 31 |  |   |           | 
|                       |  |   |           | 
|2003                   |  | $ | 97,918.3  | 
|2004                   |  | $ | 28,636.32 | 
|Thereafter             |  |   | 0         | 



| |  | Total rental expense charged to operations amounted to $129,000, $197,000,
and $204,000, for the years ended October 31, 2002, 2001, and 2000
respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Some leases contain renewal options, inflation escalation clauses and under
some leasing arrangements, the Company pays maintenance, insurance, taxes and
other expenses in addition to the above minimum annual rentals.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | Employment Contract -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | On November 1, 1993, the Company entered into an employment agreement with
its Chairman/Chief Executive Officer under which the Company is committed to
annual salary payments to the officer in the amount of $200,000 through
fiscal 1998. During the fiscal year ended October 31, 1999, the Chairman and
CEO voluntarily reduced his compensation to $153,000, in fiscal year ended
October 31, 2000 to $139,000, in fiscal year ended October 31, 2001 to
$117,000 and in fiscal year ended October 31, 2002 to $113,000. In 1998 the
Employment Agreement was amended to extend the term thereof through October 31, 2001 and
in November 2001 the Agreement was amended to extend the term thereof through
October 31, 2003.

21



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

Note 8  Industry Segment Information



| |  | In fiscal 2002, the Company operated solely in the segment of distributing
magnetic media products.                                                                                                                                                                                                                                                                                                                                                            
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | In fiscal 2001, the Company operated principally in two segments: magnetic
media products and contract assembly. Operations in magnetic media products
primarily involve the sale of blank magnetic media and related products. On
September 7, 2001, the contract assembly segment was closed and as set forth
in the financial information by industry segment as discontinued operations.
See Note 2 for further information on this discontinued operation.
|
| |  | Identifiable assets by industry segment are those that are used in the
Companys operation in each industry. Corporate assets are principally cash
and other assets.                                                                                                                                                                                                                                                                                           

22



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##### Table of Contents





| |  | Financial information for 2002, 2001 and 2000 by industry segment, is
summarized as follows:
| |  | --------------------------------------------------------------------------------------------

|                                                               |                         |                                     |            |         |           |      |           |           |           |   |            |           |           | 
|-------------------------------------------------------------- | ----------------------- | ----------------------------------- | ---------- | ------- | --------- | ---- | --------- | --------- | --------- | - | ---------- | --------- | --------- | 
|                                                               |                         |                                     |            | 2002    |           | 2001 |           | 2000     
|                                                               |                         |                                     |            |         |           |      |           |          
|Net sales to unaffiliated customers:                           |                         |                                     |            |         |           |      |           |           |           |   |            |          
|                                                               | Magnetic media products |                                     | $          | 750,000 |           |      | $         | 1,475,000 |           |   | $          | 2,272,000 |          
|                                                               | Discontinued operations |                                     |            |        |           |      |           | 603,000   |           |   |            | 412,000   |          
|                                                               |                         |                                     |            |         |           |      |           |           |           |   |            |           |          
|                                                               | Consolidated            |                                     | $          | 750,000 |           |      | $         | 2,078,000 |           |   | $          | 2,684,000 |          
|                                                               |                         |                                     |            |         |           |      |           |           |           |   |            |           |          
|Operating profit:                                              |                         |                                     |            |         |           |      |           |           |           |   |            |          
|                                                               | Magnetic media products |                                     | $          | 78,000  |           |      | $         | 131,000   |           |   | $          | 448,000   |          
|                                                               | Discontinued operations |                                     |            |         |           |      |           | 158,000   |           |   |            | 84,000    |          
|                                                               |                         |                                     |            |         |           |      |           |           |           |   |            |           |          
|                                                               |                         | $                                   | 78,000     |         |           |      | 289,000   |           |           |   | 532,000    |          
|General corporate expenses                                     |                         |                                     | (1,041,000 | )       |           |      | (847,000  | )         |           |   | (1,095,000 | )        
|Realized gain & loss on
marketable securities                  |                         |                                     |           |         |           |      | 5,000     |           |           |   | 18,000     |          
|Interest expense                                               |                         |                                     |           |         |           |      |          |           |           |   |           |          
|Other income-interest                                          |                         |                                     | 19,000     |         |           |      | 73,000    |           |           |   | 105,000    |          
|                                                               |                         |                                     |            |         |           |      |           |           |           |   |            |           |          
|Loss before taxes on
income (benefit) and
extraordinary credit |                         | $                                   | (944,000   | )       |           | $    | (480,000  | )         |           | $ | (440,000   | )        
|                                                               |                         |                                     |            |         |           |      |           |           |           |   |            |           |          
|Identifiable assets:                                           |                         |                                     |            |         |           |      |           |           |           |   |            |          
|                                                               | Magnetic media products |                                     | $          | 428,000 |           |      | $         | 918,000   |           |   | $          | 1,183,000 |          
|                                                               | Discontinued operations |                                     |            |         |           |      |           | 11,000    |           |   |            | 76,000    |          
|                                                               |                         |                                     |            |         |           |      |           |           |           |   |            |           |          
|                                                               |                         | Total identifiable asset            |            |         | 428,000   |      |           |           | 929,000   |   |            |           | 1,259,000 | 
|General corporate assets                                       |                         |                                     | 775,000    |         |           |      | 1,291,000 |           |           |   | 1,778,000  |          
|                                                               |                         |                                     |            |         |           |      |           |           |           |   |            |           |          
|                                                               |                         | Total assets                        |            | $       | 1,203,000 |      |           | $         | 2,220,000 |   |            | $         | 3,037,000 | 
|                                                               |                         |                                     |            |         |           |      |           |           |           |   |            |           |          
|Depreciation and amortization:                                 |                         |                                     |            |         |           |      |           |           |           |   |            |          
|                                                               | Magnetic media products |                                     | $          | 17,000  |           |      | $         | 64,000    |           |   | $          | 65,000    |          
|                                                               | Discontinued operations |                                     |            |        |           |      |           |          |           |   |            |          |          
|                                                               |                         |                                     |            |         |           |      |           |           |           |   |            |           |          
|                                                               |                         | Total depreciation and
amortization |            | $       | 17,000    |      |           | $         | 64,000    |   |            | $         | 65,000    | 
|                                                               |                         |                                     |            |         |           |      |           |           |           |   |            |           |          
|Capital expenditures:                                          |                         |                                     |            |         |           |      |           |           |           |   |            |          
|                                                               | Magnetic media products |                                     | $          |        |           |      |           |          |           |   | $          | 11,000    |          
|                                                               | Discontinued operations |                                     |            |        |           |      |           |          |           |   |            |          |          
|                                                               |                         |                                     |            |         |           |      |           |           |           |   |            |           |          
|                                                               |                         | Total capital expenditures          |            | $       |          |      |           | $         |          |   |            | $         | 11,000    | 
|                                                               |                         |                                     |            |         |           |      |           |           |           |   |            |           |          

23



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| |  | Note 9  Related Party Transactions                                                                                                                                                                                                                                 
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Company made payments to Louart, a stockholder of the Company, for rent
of warehouse and office space, secretarial and administrative services,
consulting services, and an automobile. These fees are included in selling,
general and administrative expenses.
|
| |  | The payments made to Louart for these items for the years ended October 31
are as follows:                                                                                                                                                                          

|     |  |   |         | 
|---- |  | - | ------- | 
|2002 |  | $ | 190,000 | 
|2001 |  | $ | 192,000 | 
|2000 |  | $ | 250,000 | 



| |  | Note 10  Concentrations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | For fiscal year ended October 31, 2002, the Companys ten largest customers
of magnetic media products accounted in the aggregate for approximately 94%
of the Companys total net sales of magnetic media products. During fiscal
2002, the two largest single magnetic media customers accounted for $463,000
or 62% and $87,000 or 12% of the Companys total magnetic media sales,
respectively. The Companys largest customer has informed the Company of
their intent to cease ordering from the Company, despite their continued
placement of orders. The loss of the Companys largest customer will have a
material negative effect on the Companys earnings and sales. If the Company
were to lose its second largest customer, the result would have an adverse
impact on the Companys earnings and sales.
|
| |  | The Company maintains cash deposits at several banks located in California.
Deposits at each bank are insured by the Federal Deposit Insurance
Corporation up to $100,000. As of October 31, 2002, uninsured portions of
balances held at those banks aggregated to $502,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Accounts receivable from the Companys largest customer accounted for
$43,000 or 66% of accounts receivable as of October 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

24



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| |  | Note 11  QUARTERLY FINANCIAL DATA (unaudited)                                                                                                                                                                                             
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Summarized quarterly financial data for fiscal 2002 and fiscal 2001 are as follows:                                                                                                                                                        
| |  | QUARTERLY RESULTS OF OPERATIONS
(UNAUDITED)
(in thousands, except per share data)                                                                                                                                                          
|
| |  | The following table sets forth the Results of Operations by Quarter for
Fiscal 2002 and 2001 after classifying the operations of the Companys
Mexicali, Mexico facility as discontinued (See Note 2 to Consolidated
Financial Statements):

|                                        |  |   |       |         |  |         |       |         |  |         |       |        |  |   |       |   |  |   |       |   |  | 
|--------------------------------------- |  | - | ----- | ------- |  | ------- | ----- | ------- |  | ------- | ----- | ------ |  | - | ----- | - |  | - | ----- | - |  | 
|                                        |  |   |       | First   |  | Second  |       | Third   |  | Fourth  |       | Fiscal
|                                        |  |   |       | Quarter |  | Quarter |       | Quarter |  | Quarter |       | Year  
|                                        |  |   |       |         |  |         |       |         |  |         |       |       
|Fiscal 2002                             |  |   |       |         |  |         |       |         |  |         |       |        |  |   |       |   |  |   |       |  
|Net sales from continuing
operations    |  | $ | 205   |         |  | $       | 201   |         |  | $       | 186   |        |  | $ | 158   |   |  | $ | 750   |  
|Gross profit from continuing
operations |  |   | 15    |         |  |         | 25    |         |  |         | (1    | )      |  |   | 39    |   |  |   | 78    |  
|Loss from continuing operations         |  |   | ($199 | )       |  |         | ($189 | )       |  |         | ($172 | )      |  |   | ($403 | ) |  |   | ($963 | )
|Net loss                                |  |   | ($193 | )       |  |         | ($183 | )       |  |         | ($168 | )      |  |   | ($401 | ) |  |   | ($945 | )
|Basic loss per share                    |  |   | ($.06 | )       |  |         | ($.05 | )       |  |         | ($.04 | )      |  |   | ($.15 | ) |  |   | ($.30 | )
|Diluted loss per share                  |  |   | ($.06 | )       |  |         | ($.05 | )       |  |         | ($.04 | )      |  |   | ($.15 | ) |  |   | ($.30 | )
|Fiscal 2001                            
|Net sales from continuing
operations    |  | $ | 424   |         |  | $       | 381   |         |  | $       | 348   |        |  | $ | 322   |   |  | $ | 1,475 |  
|Gross profit from continuing
operations |  |   | 98    |         |  |         | 77    |         |  |         | 74    |        |  |   | 66    |   |  |   | 315   |  
|Loss from continuing operations         |  |   | ($122 | )       |  |         | ($148 | )       |  |         | ($145 | )      |  |   | (36   | ) |  |   | ($451 | )
|Loss from discontinued operations       |  |   |      |         |  |         | (10   | )       |  |         | 21    |        |  |   | (41   | ) |  |   | (30   | )
|Net loss                                |  |   | ($122 | )       |  |         | ($158 | )       |  |         | ($124 | )      |  |   | ($77  | ) |  |   | ($481 | )
|Basic loss per share                    |  |   | ($.04 | )       |  |         | ($.05 | )       |  |         | ($.04 | )      |  |   | ($.02 | ) |  |   | ($.15 | )
|Diluted loss per share                  |  |   | ($.04 | )       |  |         | ($.05 | )       |  |         | ($.04 | )      |  |   | ($.02 | ) |  |   | ($.15 | )

25



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PART III

The information called for by Part III (items 10, 11, 12 and 13) is
incorporated by reference from Certrons definitive proxy statement to be filed
pursuant to Regulation 14A which involves the election of directors and which
Certron intends to file with the Securities and Exchange Commission not later
than 120 days after October 31, 2002, the end of the fiscal year covered by
this Form 10-K. If such definitive proxy statement is not filed with the
Securities and Exchange Commission in the 120-day period, the items comprising
the Part III information will be filed as an amendment to this Form 10-K, under
cover of Form 10-KA, not later than the end of the 120-day period.

26



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PART IV




Item 14. Controls and Procedures. Within the ninety-day period prior to the
filing of this report, an evaluation was carried out by the Companys chief
executive officer and chief financial officer of the effectiveness of the
design and operation of the Companys disclosure controls and procedures (as
defined in Rule 13a-14c of the Securities Exchange Act of 1934). Based upon
that evaluation, the chief executive officer and the chief financial officer
concluded that the design and operation of these disclosure controls and
procedures were effective. No significant changes were made in the Companys
internal controls or other factors that could significantly effect these
controls subsequent to the date of their evaluation.




Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K.



|(a)1. | FINANCIAL STATEMENTS                                                                                                       |   
|----- | -------------------------------------------------------------------------------------------------------------------------- | --
|      | The following consolidated financial statements of Certron Corporation
and its subsidiary are included in Part II, Item 8:
|      | Report of Independent Certified Public Accountants -
Beckman Kirkland & Whitney                                            | 10
|      | Consolidated balance sheets 
October 31, 2002 and 2001                                                                    | 11
|      | Consolidated statements of operations and comprehensive
income  years ended October 31, 2002, 2001 and 2000               | 12
|      | Consolidated statements of stockholders equity  years
ended October 31, 2002, 2001 and 2000                              | 13
|      | Consolidated statements of cash flows  years ended
October 31, 2002, 2001 and 2000                                        | 14
|      | Notes to consolidated financial
statements                                                                                 | 15
|2.    | FINANCIAL STATEMENT SCHEDULES                                                                                              |   
|      | Schedule II  Valuation and qualifying accounts                                                                            | 29
|



| | All other schedules are omitted because they are not applicable or not
required, or because the required information is included in the
consolidated financial statements or notes thereto.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



---



##### Table of Contents



3. EXHIBITS

3.1      Articles of Incorporation of Registrant, as amended (incorporated by
reference to Exhibit 3.1 to Registrants Annual Report of from 10-K for the
year ended October 31, 1981 and Exhibit A and Exhibit B to Registrants
Proxy Statement dated February 17, 1988).

3.2      By-Laws of Registrant, as amended (incorporated by reference to
Exhibit 3.2 to Registrants Quarterly Report on form 10-Q for the quarter ended
April 30, 1989).

*10.1      Registrants Executive Stock Option Plan (incorporated by reference
to Exhibit B to Registrants Proxy Statement dated February 21, 1989).

*10.2      Amendment to Registrants 1989 Stock Option Plan (incorporated by
reference to Exhibit 10.5 to Registrants Annual Report on Form 10-K for the
year ended October 31, 1995).

*10.3      Amendment to Registrants Executive Stock Option Plan (incorporated
by reference to Exhibit 10.1 to Registrants Quarterly Report on Form 10Q for
the quarter ended April 30, 2001).

*10.4      Form of Indemnification Agreement between Registrant and its
Directors and selected officers and agents (incorporated by reference to
Exhibit C to Registrants Proxy Statement dated February 17, 1988).

*10.5      Employment Agreement effective as of November 1, 1993 between
Registrant and Marshall I. Kass (incorporated by reference to Exhibit 10.1 to
Registrants Quarterly Report on Form 10-Q for quarter ended January 31, 1994).

*10.6      Amendment to Employment Agreement between Registrant and Marshall I.
Kass dated November 1, 1998 (incorporated by reference to Exhibit 10.8 to
Registrants Annual Report on Form 10-K for the year ended October 31, 1998).

21.     Subsidiaries of Registrant (incorporated by reference to Exhibit 22 to
Registrants Annual report on form 10-K for the year ended October 31, 1981).

23.     Beckman Kirkland & Whitney consent.

99.1  Certification of Chief Executive Officer and Chief Financial Officer
under Section 906 of the Sarbanes-Oxley Act of 2002.

*     Indicates management contract or compensation plan or arrangement required to
be filed as an Exhibit to this Form 10-K

(b)  During the fourth quarter of Registrants fiscal year ended October 31,
2002 no reports on Form 8K were filed.

28



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##### Table of Contents






CERTRON CORPORATION AND SUBSIDIARY

SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS

|                                                            |  |            |        |               |  |             |          |            |  |   |          |   |  |   |        | 
|----------------------------------------------------------- |  | ---------- | ------ | ------------- |  | ----------- | -------- | ---------- |  | - | -------- | - |  | - | ------ | 
|                                                            |  |            |        |               |  | Additions   |          |            |  |   |          |   |  |  
|                                                            |  |            |        |               |  | charged to  |          |            |  |   |          |   |  |  
|                                                            |  |            |        |               |  | expense/    |          |            |  |   |          |   |  |  
|                                                            |  | Balance at |        | (subtractions |  | Balance of  |          | Balance at
|                                                            |  | beginning  |        | charged to    |  | accounts    |          | end of    
|Classifications                                             |  | of period  |        | income)       |  | written off |          | period    
|                                                            |  |            |        |               |  |             |          |           
|YEAR ENDED OCTOBER 31, 2002
Allowance for doubtful
accounts |  | $          | 25,000 |               |  |             | ($18,000 | )          |  | $ | 0        |   |  | $ | 7,000  | 
|                                                            |  |            |        |               |  |             |          |           
|YEAR ENDED OCTOBER 31, 2001
Allowance for doubtful
accounts |  | $          | 44,000 |               |  | $           | 0        |            |  |   | ($19,000 | ) |  | $ | 25,000 | 
|                                                            |  |            |        |               |  |             |          |           
|YEAR ENDED OCTOBER 31, 2000
Allowance for doubtful
accounts |  | $          | 46,000 |               |  | $           | 0        |            |  |   | ($2,000  | ) |  | $ | 44,000 | 
|                                                            |  |            |        |               |  |             |          |           

29



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##### Table of Contents






SIGNATURES

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

|                       |  |                                                                                 
|---------------------- |  | --------------------------------------------------------------------------------
|Date: January 29, 2003 |  |                                                                                 
|                       |  | CERTRON CORPORATION                                                             
|                      
|                       |  | By /s/ MARSHALL I. KASS                                                         
|                       |  |                                                                                 
|                       |  | Marshall I. Kass
Chairman of the Board and
Chief Executive and
Operating Officer

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

|                                     |  |                                                                                                                                                  |  |                 
|------------------------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------
|Signature                            |  | Title                                                                                                                                            |  | Date            
|                                     |  |                                                                                                                                                  |  |                 
|/s/ MARSHALL I. KASSMarshall I. Kass |  | Chairman of the Board
Chief Executive Officer
Chief Financial Officer and Director
(Principal Executive Officer and
Principal Financial Officer) |  | January 29, 2003
|                                    
|/s/ MICHAEL S. KASSMichael S. Kass   |  | Executive Vice President and
Director                                                                                                            |  | January 29, 2003
|                                    
|/s/ SUSAN E. KASSSusan E. Kass       |  | Secretary-Treasurer and
Director                                                                                                                 |  | January 29, 2003
|                                    
|/s/ JESSE A. LOPEZJesse A. Lopez     |  | Director                                                                                                                                         |  | January 29, 2003



---



##### Table of Contents






CERTIFICATIONS

I, Marshall I. Kass, certify that:

1.     I have reviewed this annual report on Form 10-K of Certron Corporation;

2.     Based on my knowledge, this annual report does not contain any untrue
statement of material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

b) Evaluated the effectiveness of the registrants disclosure
controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the Evaluation Date); and

c) Presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date:

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent functions):

a) All significant deficiencies in the design or operations of
internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and

b) Any fraud, whether or not material, that involves management
or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

|      |  |                  |  |                                                                                                
|----- |  | ---------------- |  | -----------------------------------------------------------------------------------------------
|Date: |  | January 29, 2003 |  |                                                                                                
|      |  |                  |  | /s/ MARSHALL I. KASS                                                                           
|      |  |                  |  |                                                                                                
|      |  |                  |  | Marshall I. Kass
Chairman of the Board,
Chief Executive Officer and
Principal Financial Officer



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##### Table of Contents






EXHIBIT INDEX

|           
|-----------
|Exhibit No.
|           

3.1 Articles of Incorporation of Registrant, as amended (incorporated by
reference to Exhibit 3.1 to Registrants Annual Report of from 10-K for the
year ended October 31, 1981 and Exhibit A and Exhibit B to Registrants
Proxy Statement dated February 17, 1988).

3.2
By-Laws of Registrant, as amended (incorporated by reference to Exhibit 3.2
to Registrants Quarterly Report on form 10-Q for the quarter ended April 30,
1989).

*10.1
Registrants Exective Stock Option Plan (incorporated by reference to
Exhibit B to Registrants Proxy Statement dated February 21, 1989).

*10.2
Amendment to Registrants Executive Stock Option Plan (incorporated by
reference to Exhibit 10.5 to Registrants Annual Report on form 10-K for the
year ended October 31, 1995).

*10.3
Amendment to Registrants Executive Stock Option Plan (incorporated by
reference to Exhibit 10.1 to Registrants Quarterly Report on Form 10Q for the
quarter ended April 30, 2001).

*10.4
Form of Indemnification Agreement between Registrant and its Directors
and selected officers and agents (incorporated by reference to Exhibit C to
Registrants Proxy Statement dated February 17, 1988).

*10.5
Employment Agreement effective as of November 1, 1993 between Registrant
and Marshall I. Kass (incorporated by reference to Exhibit 10.1 to Registrants
Quarterly Report on Form 10-Q for quarter ended January 31, 1994).

*10.6
Amendment to Employment Agreement between Registrant and Marshall I.
Kass dated November 1, 1998 (incorporated by reference to Exhibit 10.8 to
Registrants Annual Report on Form 10K for the fiscal year ended October 31,
1998).

21.
Subsidiaries of Registrant (incorporated by reference to Exhibit 22 to
Registrants Annual report on Form 10-K for the year ended October 31, 1981).

23.
Beckman Kirkland & Whitney consent.

99.1
Certification of Chief Executive Officer

*
Indicates management contract or compensation plan or arrangement required to
be filed as an Exhibit to this Form 10-K