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
                  For the fiscal year ended December 31, 2002

                                       OR

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

                           Commission File No: 0-7475
                   ------------------------------------------
                            PHOTO CONTROL CORPORATION
             (Exact name of Registrant as specified in its charter)

Minnesota                                                    41-0831186
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)

                            4800 Quebec Avenue North
                          Minneapolis, Minnesota 55428
                    (Address of principal executive offices)

                                 (763) 537-3601
              (Registrant's telephone number, including area code)

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

           Securities registered pursuant to Section 12(g) of the Act:
                          Common Stock, par value $0.08
     ----------------------------------------------------------------------

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

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-K contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.(X)

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

The aggregate market value of the voting stock held by non-affiliates of the
 Registrant as of March 1, 2003 was approximately $2,114,000 based on the
 closing sale price of the Registrant's Common Stock on such date.

--------------------------------------------------------------------------------
          Number of shares of $0.08 par value Common Stock outstanding
                          at March 1, 2003: 1,604,163
                       DOCUMENTS INCORPORATED BY REFERENCE

1. This annual report on form 10-K consisting of 32 pages including exhibits.
The exhibit index is on page 27.

2. Portions of the Registrant's definitive Proxy Statement for its Annual
Meeting of Shareholders to be held on May 15, 2003 are incorporated by reference
into Part III.


                                       1
<PAGE>


                                      INDEX

                            PHOTO CONTROL CORPORATION


PART I.

   Item 1.   Business.......................................................  3

   Item 2.   Properties.....................................................  5

   Item 3.   Legal Proceedings..............................................  5

   Item 4.   Submission of Matters to a vote of Security Holders............  5

             Executive Officers of Registrant...............................  6


PART II.

   Item 5.   Market for Registrant's Common Equity and Related
               Shareholder Matters.........................................   7

   Item 6.   Selected Financial Data.......................................   7

   Item 7.   Management's Discussion and Analysis of Financial
               Condition and Results of Operations.........................   8

   Item 7A.  Quantitative and Qualitative Disclosure About
               Market Risk.................................................  10

   Item 8.   Financial Statements and Supplementary Data...................  11

   Item 9.   Changes in and Disagreements with Accountants on
               Accounting and Financial Disclosure.........................  21


PART III.

   Item 10.  Directors and Executive Officers of the Registrant...........   21

   Item 11.  Executive Compensation.......................................   21

   Item 12.  Security Ownership of Certain Beneficial Owners
               and Management.............................................   21

   Item 13.  Certain Relationships and Related Transactions...............   21

   Item 14.  Control and Procedures.......................................   21


PART IV.

   Item 15.  Exhibits, Financial Statement Schedules, and Reports
               on Form 8-K................................................   22

             Signatures...................................................   25

INDEX TO EXHIBITS.........................................................   27


                                       2
<PAGE>


                                     PART I
                                     ------

ITEM 1. BUSINESS

(a) General Development of Business.

Photo Control Corporation (the "Registrant" or the "Company") was organized as a
Minnesota corporation in 1959. The Registrant acquired all of the outstanding
stock of Norman Enterprises, Inc. ("Norman"), a California corporation, in 1973.
In June 1983, the Registrant acquired all of the outstanding stock of Nord Photo
Engineering, Inc. ("Nord"), a Minnesota corporation. In October 1997, Norman's
manufacturing operations were moved to Minnesota and the land and building in
California was sold. In October 1998 the remaining sales and service facility
was closed and moved to Minneapolis. Effective January 1, 1998 the Registrant
liquidated both subsidiaries and transferred the assets to Photo Control
Corporation, the parent company.

The Company designs, manufactures, and markets professional Camerz film and
digital cameras, photographic accessories, Norman electronic flash equipment and
Lindahl photographic accessories. In October 2000, the Company acquired a
non-photographic line, the Bookendz docking station for Apple PowerBook, IBook
and IPod. No new Nord photographic package printers have been sold in the last
three years. However, to the extent available, service parts and replacement
lenses are sold.

(b) Financial Information About Segments.

The Registrant is engaged in two industries. It designs, manufactures, and
markets professional photographic equipment and the Bookendz docking station for
the Apple PowerBook, IBook and IPod. See Footnote 11 to Financial Statements for
information about industry segments for the years ended December 31, 2002 and
2001.

(c) Narrative Description of Business.

(c)(l)(i) Principal Products, Services and Markets. The Registrant designs,
manufactures and markets Camerz professional film and digital cameras,
photographic accessories, Norman electronic flash equipment, and the Lindahl
product line which consists of lens shades, light filters and flash brackets.
All products are manufactured in our existing facility and distributed by use of
our employee salesmen and five independent representatives for the Lindahl
dealers. In October 2000 the Company purchased the Bookendz docking station for
Apple PowerBook, IBook and IPod. The Bookendz product line is manufactured in
our existing facility and distributed by use of our employee salesmen to end
users and resellers of Apple products.

The principal market for the Registrant's Camerz film and digital camera
equipment is the sub-segment of the professional photography market requiring
high-volume equipment, such as elementary and secondary school photographers.
The market with respect to the Norman electronic flash equipment and Lindahl
lens shades is broader, extending to all professional photographers and to
experienced amateur photographers. The market for the Bookendz docking station
is the owner of the Apple PowerBook, IBook and IPod. The geographic market in
which the Registrant competes with respect to film and digital camera equipment,
flash equipment and lens shades consists of the entire United States and, to a
lesser extent, some foreign countries. The Bookendz docking station is sold
internationally, although substantially all sales are in the United States.

The Registrant markets most of its Camerz cameras, Norman electronic flash and
lighting equipment, Lindahl lens shades and photographic accessories through its
four employee salesmen and through the part-time use of service employees. In
addition, five independent representatives are used to sell the Lindahl product
line. These products are marketed primarily under the tradenames, "Camerz",
"Norman" and "Lindahl". Bookendz products are marketed by use of the same
employees that are used for the photographic products. It is expected that the
sales force will remain at the current level during 2003.


                                       3
<PAGE>


(c)(1)(ii) New Products and Services. In 2002 the Company introduced a three
mega pixel digital camera. In the Norman product line the Allure DP320 monolight
was introduced which can be used with standard AC power or an optional battery
power supply. Also, a 600 watt second moonlight called the ML600 which is a high
quality, low cost, lightweight power source and lamphead all in one unit was
introduced in December 2002. In addition, lighting products are being sold
direct to end users on a website called Photographers Outlet. In the Lindahl
product line several new revolving camera brackets were released for the Kodak
760, the Nikon D2 and Fuji S1 and S2 cameras. A dock for the Apple IPod was
introduced in May 2002. In 2003, the Company plans to develop two new digital
cameras with five mega pixel and fourteen mega pixel sensors. The Company has
entered into an agreement with a third party for the development of the five
mega pixel camera.

(c)(1)(iii) Sources and Availability of Raw Materials. Materials required for
the Registrant's photographic equipment consist primarily of fabricated parts,
lenses, electronic components, and lights, most of which are readily available
from numerous sources. Material for the Bookendz product consist primarily of
electronic components and fabricated parts which are readily available.

(c)(1)(iv) Patents, Trademarks, Licenses, Franchises and Concessions. When the
Company acquired the Bookendz product line in 2000, it also acquired the
exclusive license right to patent number 5,186,646. Upon payment of the amount
due under the purchase agreement the Company will own the patent. The patent
provides for multiple ports or connections which allows for easy and quick
connection between two devices. Also in 2000, utility patent number 6,024,461
and design patent number 428,661 were issued for a lamphead having a
multi-positional base and removable mountable reflector flashtube assembly. The
patented lamphead is used in the Norman flash equipment product line and allows
for interchange of the flashtube assembly on the lamphead. The Registrant
received U.S. Patents Nos. 5,294,950 on March 15, 1994 and 5,812,895 on
September 22, 1998 for an identification system for automated film and order
processing including machine and human readable code.

The Registrant is the owner of the registered trademarks "Camerz", "Norman" and
"Lindahl", and the logo-type designs used in connection with the sale of
photographic equipment under those names. Upon payment of the amounts due under
the purchase contract, the Company will own the registered trademark "Bookendz"
and now has the exclusive license to the name until the contract is paid.

Although the Registrant's patents and trademarks are valuable, they are not
considered to be essential to the Company's success. Innovative application of
existing technology along with providing efficient and quality products are of
primary importance.

The Registrant has entered into agreements with employees which agreements grant
the Registrant a exclusive right to use, make and sell inventions conceived by
employees during their employment with the Registrant. The Registrant believes
that the right to use, make and sell such inventions adequately protects the
Registrant against any employee who might claim an exclusive proprietary right
in an invention developed while the employee was employed by the Registrant.

(c)(1)(v) Seasonal Fluctuations. The photographic equipment business is somewhat
seasonal, with a larger volume of sales from March through October.
Historically, the Bookendz product has less sales volume in the summer months.

(c)(1)(vi) Working Capital Practices. The Registrant believes that its working
capital needs are typical to the industry. The nature of the Registrant's
business does not require that it provide extended payment terms to customers.
The Registrant maintains an inventory of raw material and finished products and
permits customers to return only defective merchandise.

(c)(1)(vii) Single Customer. During the years ended December 31, 2002, 2001 and
2000, the Company derived 17.2%, 27.5% and 50.3%, respectively, of its sales
from an unaffiliated customer, Lifetouch Inc. and its affiliates. During the
years ended December 31, 2002, 2001 and 2000, 6.2%, 15.5% and 4.7%,
respectively, of the Company's sales were from another unaffiliated customer,
CPI Corp. During the years ended December 31, 2002, 2001, and 2000, 14.0%, 2.8%
and 0.5%, respectively, of it sales were from a third unaffiliated customer, PCA
National, Inc.

(c)(1)(viii) Backlog. The dollar amount of backlog believed by the Registrant to
be firm at the years ended December 31, 2002, 2001 and 2000, is $360,000,
$965,000 and $2,872,000, respectively. The Registrant anticipates that it will
be able to fill all current backlog orders during the fiscal year ending
December 31, 2003.

(c)(1)(ix) Government Contracts. No material portion of the Registrant's
business is subject to renegotiation of profits or termination of any contract
or subcontract at the election of the Government.


                                       4
<PAGE>


(c)(1)(x) Competition. Primary methods of competition for the Company's products
are product performance, reliability, service, and delivery. Because of varying
product lines, the Registrant is unable to state accurately its competitive
position in relation to such competitors. The Camerz film cameras have no known
competitor, however, the digital cameras compete with the digital professional
cameras sold by Kodak, Fuji and Nikon. In the somewhat broader market in which
the Norman professional studio electronic flash equipment competes, there are
approximately ten significant competitors, several of which are well
established. The Registrant is unable to state accurately Norman's overall
competitive position in relation to such competitors. Norman's dominant
competitors are Broncolor, Dynalite, White Lighting, Photogenic, ProFoto and
Speed-O-Tron. The Lindahl line has one known competitor, Jones Brackets, Inc.
Bookendz docking stations have no known competitors.

(c)(1)(xi) Research and Development. For the years ended December 31, 2002, 2001
and 2000, the Registrant spent $601,000, $713,000 and $551,000, respectively, on
research activities relating to the development of new products, services, and
production engineering. The Company intends to increase its level of spending on
research and development in 2003 primarily to update its digital cameras.

(c)(1)(xii) Environmental Regulation. Federal, state and local laws and
regulations with respect to the environment have had no material effect on the
Registrant's capital expenditures, earnings, or respective competitive
positions.

(c)(1)(xiii) Employees. As of December 31, 2002, the Registrant had 51 full time
employees and 5 part time employees. The Registrant utilizes subcontract
personnel on a temporary basis to supplement its regular work force, which
totaled 3 people as of December 31, 2002.

(d) Financial Information About Foreign and Domestic Operations and Export
Sales. The Registrant has no operations based outside of the United States.
During each of the last three years ended December 31, 2002, slightly less than
5% of the Registrant's sales were derived from export sales.


ITEM 2.  PROPERTIES

The Registrant's principal property is located at 4800 Quebec Avenue North,
Minneapolis, Minnesota. The building at that location consists of 55,000 square
feet and is located on 3 1/2 acres of land. The building was constructed in 1971
and was purchased in 1980. Extensive remodeling has been done to meet the
specific needs of the Company. The Registrant first occupied the building during
the fall of 1980, and uses the building for the manufacturing of all its
products and as corporate offices.

The Registrant believes its present facilities are adequate for its current
level of operation and provide for a reasonable increase in production
activities.


ITEM 3.  LEGAL PROCEEDINGS

The Registrant is not a party to, and none of its property is the subject of,
any material pending legal proceedings.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of the Registrant's shareholders during the
Registrant's quarter ending December 31, 2002.


                                       5
<PAGE>


EXECUTIVE OFFICERS OF THE REGISTRANT

NAME, AGE AND PRESENT
POSITION OF OFFICER          BUSINESS EXPERIENCE
------------------------------------------------

John R. Helmen, 62           Mr. Helmen was appointed Chairman of the Registrant
Chairman                     in June  2001 when he resigned from his positions
                             of President and CEO. He was the President of the
                             Registrant since April 1997. In August 1997, the
                             Board of Directors appointed him CEO and a director
                             of the Registrant. Mr. Helmen was employed by Supra
                             Color Labs, Inc. as Vice President, Director of
                             Sales and Marketing from 1977 through 1979,
                             President from 1979 through 1993, and General
                             Manager after the sale of Supra Color to Burrel
                             Professional Labs in 1993

Curtis R. Jackels, 56        Mr. Jackels was appointed CEO and President of the
Chief Executive Officer      Registrant in June 2001. He had been
President and Director       Vice President-Finance of the Registrant since
                             August 1985 and Treasurer since November 1980. He
                             has been a director since May 2001. Mr. Jackels was
                             controller from June 1978 to November 1980. Prior
                             to June, 1978, Mr. Jackels was employed by two
                             public accounting firms.

Robert A. Leidlein, 53       Mr. Leidlein joined the Registrant in August 2001.
Vice President-Marketing     From May 1995 to July 2001, Mr. Leidlein was the
                             Group Executive International Operations of Photo
                             Marketing Association International. From August
                             1985 to April 1995, Mr. Leidlein had been President
                             of Photoquip.

Mark J. Simonett, 46         Mr. Simonett has served as the Registrant's General
Secretary                    Counsel and Personnel Director since
                             September 1992, as Secretary since May 1993, and as
                             Vice President from May 1998 to June 30, 1999. He
                             also served as a director of the Registrant from
                             April 2000 to May 2001. Beginning July 1, 1999, Mr.
                             Simonett continued to serve part-time as General
                             Counsel and Secretary. Mr. Simonett also works as
                             an attorney on contract with the Law Department of
                             Schwan's Sales Enterprises, Inc.

The term of office for each executive officer is from one annual meeting of
directors until the next annual meeting or until a successor is elected. There
are no arrangements or understandings between any of the executive officers and
any other person (other than arrangements or understandings with directors or
officers acting as such) pursuant to which any of the executive officers were
selected as an officer of the Registrant. There are no family relationships
between any of the Registrant's directors or executive officers.


                                       6
<PAGE>


                                     PART II
                                     -------

ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTER

Selected Common Stock Data

The Company's Common Stock is listed on the National Association of Securities
Dealers Automated Quotation System (NASDAQ) . The Company has never paid any
cash dividends. It intends to retain earnings to finance the development of its
business. Stockholders of record on December 31, 2002 numbered 293. The Company
estimates that an additional 400 stockholders own stock held for their account
at brokerage firms and financial institutions. The following table sets forth
the high and low sales prices for the periods set forth below. The source of the
prices is the NASDAQ Historical Trade Tables.

                              2002                    2001
                        --------------------------------------
Quarter Ended           High       Low          High       Low
-------------           ----      ----          ----      ----
March 31                2.54      2.11          3.87      2.12
June 30                 2.20      1.65          3.25      2.56
September 30            1.89      1.40          3.30      2.05
December 31             1.93      1.10          2.51      1.40


ITEM 6: SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                YEAR ENDED DECEMBER 31
                                 --------------------------------------------------------------------------------
                                      2002             2001             2000             1999             1998
                                      ----             ----             ----             ----             ----
<S>                              <C>              <C>              <C>              <C>              <C>
Net Sales ...................    $  7,739,393     $ 10,809,359     $ 12,349,983     $  9,335,077     $ 10,014,685
Net Income (Loss) ...........         170,009          721,741        1,118,805          300,533       (1,017,170)
Net Income (Loss) Per Share .             .11              .45              .70              .19            (0.63)
Return on Sales .............             2.2%             6.7%             9.1%             3.2%           (10.2)%
Return on Beginning Net Worth             2.1%             9.8%            17.9%             5.1%           (14.6)%
Return on Beginning Assets ..             1.6%             7.2%            13.8%             4.0%           (12.4)%
Working Capital .............    $  6,526,574     $  6,013,396     $  4,949,100     $  4,364,249     $  4,364,249
Plant and Equipment .........       1,241,641        1,451,023        1,571,239        1,621,675        1,757,246
Total Assets ................       9,935,089       10,318,997       10,075,619        8,109,810        7,452,931
Long-Term Debt ..............               0                0          504,240                0                0
Stockholders' Equity ........       8,261,750        8,091,741        7,370,000        6,251,195        5,950,662
Book Value Per Share ........            5.15             5.04             4.60             3.90             3.71
Shares Outstanding ..........       1,604,163        1,604,163        1,604,163        1,604,163        1,604,163
</TABLE>


                                       7
<PAGE>


ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

GENERAL
Photo Control Corporation is a manufacturer of professional photographic
equipment and the Bookendz docking stations. There are three photographic
product lines: long-roll film and digital cameras, electronic flash equipment
and lens shades. All three product lines are used primarily for high volume
portrait, commercial and school photography. The Company continues to offer
service parts and support on a fourth line of photographic package printers.
However, because this product is technologically obsolete, no new printers have
been sold in the last three years. The Bookendz products are docking stations
for the Apple Powerbook, Ibook and Ipod.

In recent years there has been a consolidation in the markets served by our
photographic equipment, resulting in excess capacity and sales to fewer
customers. Sales are highly concentrated to several high volume studio and
school photographers. For the years ended December 31, 2002, 2001 and 2000,
three customers comprised 37.4%, 45.8% and 55.5%, respectively of the Company's
sales.

Sales by other companies of consumer digital cameras and products have increased
significantly over the last several years. However, the professional
photographic markets have experienced a slow gradual increase for digital
products with the lower volume individual wedding and studio photographers
purchasing high-end professional cameras from such companies as Kodak, Fuji and
Nikon. This trend has yet to immerge in the high volume professional
photographers, which is the market the Company primarily serves. Beginning in
1998, sales of the Company's new film cameras decreased significantly because
professional photographers would either make new investments in digital products
or buy used film equipment. As a result, the Company's camera sales have
declined in recent years. However, the Company offers several digital camera
products and will continue to develop and sell new digital products.

The Company's electronic flash equipment is of high quality, premium priced, and
targeted at high volume photographers. Lighting considerations are similar for
both digital and film photography. During 2002 the Company began to distribute a
low priced line of lights imported from China. Also, at the end of 2002, a new
high quality, lower priced monolight was brought to market. The Company expects
its new products coupled with its older products will satisfy a broader spectrum
of the lighting market.

The lens shade product line also includes light filters and brackets that are
used to attach the special effect shades and filters to professional medium
format cameras. Both the lens shade line and photographic printer service parts
account for less than eight percent of sales in 2002.

The Bookendz docking stations allow owners of Apple Powerbooks, Ibooks and Ipods
to remove the device from the dock for travel and upon return, dock the device
without having to make a connection for each individual peripheral device. Apple
constantly changes the configuration of their equipment and the docks are
frequently redesigned and retooled to accommodate theses changes.


CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect reported amounts. The more significant
estimates include reserves for obsolete inventory, reserves for warranty and the
carrying value of intangible assets.

In assessing the ultimate realization of inventories, we are required to make
judgments as to future demand requirements and compare them with the inventory
levels. Reserve requirements increase as projected demand decreases due to
market conditions, technological and product life cycle changes. We have
experienced significant changes in reserves in recent periods due to photography
switching from film to digital capture and consolidation of our customers
resulting in excess capacity and declining requirements for equipment. Such
estimates are difficult to make under current volatile economic conditions and
it is possible significant changes in required inventory reserves may continue
to occur in the future.

Warranty reserves are determined by applying historical claim rate experience to
the current installed base of equipment. Historical claim rates are developed
using four years of actual warranty expense to establish the reserve requirement
for any given accounting period.


                                       8
<PAGE>


Currently the only intangible asset is the patent right. This asset is being
amortized over the legal life of the patent, however, if significant changes
would occur to the estimated future cash flow of the product sales under the
patent right, an additional write down would be determined based on the
reduction of such cash flows.

OFF BALANCE SHEET FINANCING ARRANGEMENTS
As of December 31, 2002 there are no off-balance sheet arrangements,
unconsolidated subsidiaries and commitments or guarantees of other parties. At
December 31, 2002 the Company has one employment agreement that expires in
November 2003 with an unpaid balance of $24,444.

RESULTS OF OPERATIONS
The following table presents selected items from the Company's Statements of
Operations expressed as percentages of sales for the year indicated:

                                                  YEAR ENDED DECEMBER 31
                                                  ----------------------
                                           2002            2001           2000
                                           ----            ----           ----
Sales                                     100.0%          100.0%         100.0%
Gross Margin                               23.5            32.2           29.7
Marketing & Administrative                 17.2            15.6           14.7
Research, Development & Engineering         7.8             6.6            4.5
Gain on Sale of Land and Building          (1.2)            0.0            0.0
Income Before Taxes                         0.0            10.0           10.5
Net Income                                  2.2             6.7            9.1

SALES
Total sales in 2002 decreased $3,070,000 or 28.4% as compared to 2001. Camera
sales decreased by $2,334,000 primarily due to the completion of a $6,600,000
contract in 2001, of which $1,706,000 was shipped in 2001. Also, sales of film
cameras decreased by 52.0% in 2002 from 2001. Sales of flash equipment decreased
$875,000 due to one large OEM customer who did not order in 2002 at the same
level as 2001. Sales of the Bookendz product line increased $360,000 in 2002 as
compared to 2001. Two new products, a dock for the Ipod and the Ibook were added
to the line in 2002. The two other products, Lindahl shades and Nord printer
parts which accounted for 7.9% of sales, decreased by $221,000 in 2002 as
compared to 2001.

Total sales in 2001 decreased $1,540,000 compared to 2000. Camera sales
decreased by $3,147,000 in 2001, primarily due to the decreased amount shipped
under a $6,600,000 camera contract of $1,706,000 in 2001 as compared to
$4,563,000 in 2000, a decrease of $2,857,000. Sales of the new Bookendz product
line increased $1,067,000. This product line was purchased in October 2000 and
2001 sales reflect a full year of operation. Sales of the Lindahl product line
increased $487,000. This product line was purchased in November 2000 and 2001
sales reflect a full year of operations. Lighting sales increased by $269,000
primarily reflecting pricing increases. Package printer sales decreased by
$126,000. Sales of the printer product line are under $300,000 annually. No new
optical package printers have been sold in the last several years. The Company
sells printer service parts to the extent that they are available.

GROSS MARGINS
The gross margins were 23.5%, 32.2% and 29.7% for the years ended December 31,
2002, 2001 and 2000, respectively. Because of low sales volume in 2002 there was
an under absorption of manufacturing overhead of $662,000 compared to an under
absorption of $234,000 in 2001. It is expected that gross margins in 2003 will
remain at approximately 24.0% if sales volume does not significantly change.
However, gross margins are expected to fluctuate on a quarterly basis because of
product mix changes and the seasonality of sales.

MARKETING AND ADMINISTRATIVE
Marketing and administrative expenses were $1,330,639, $1,687,717 and $1,821,165
for the years ended December 31, 2002, 2001 and 2000, respectively. As a
percentage of sales, marketing and administrative expenses have increased to
17.2% in 2002 from 15.6% in 2001 and from 14.7% in 2000. Marketing and
administrative expense increased as a percentage of sales from 2002 to 2001 and
2001 to 2000 because the expenses did not decrease proportionally with the sales
decreases. The decrease in dollar amounts reflect decreased staff in 2002 and
2001.


                                       9
<PAGE>


RESEARCH, DEVELOPMENT AND ENGINEERING
Research, development and engineering expenses were $601,360, $713,112 and
$551,457 for the years ended December 31, 2002, 2001 and 2000, respectively. In
2002, the Company reduced the engineering staff, however in 2003 it is
anticipated the Company will spend slightly over $800,000. This increase in
spending is to develop several new digital cameras and products. In 2001, the
Company developed three new digital camera products and a docking station for
the Apple IBook Computer that was brought to market in December.

QUARTERLY RESULTS
The three years ended December 31, 2002 reflect the seasonal demand for the
Company's products resulting in relatively higher sales in the second and third
quarters.

INCOME TAXES
In 2001, the Company had fully reserved its deferred income tax assets of
$846,000 with a $846,000 valuation allowance, resulting in a $160,000 deferred
income tax provision for a total income tax provision of $360,000 in 2001.
However, in 2002 the Company carried its tax loss back and received an income
tax benefit of $190,000. At December 31, 2002, the Company's deferred tax asset
of $635,000 is fully reserved. In 2000, the Company used all of its tax loss
carry forwards which resulted in an effective tax rate of 13.8% and a provision
of $180,000 for income taxes.

LIQUIDITY AND CAPITAL RESOURCES
Cash increased to $3,520,622 at December 31, 2002 from $3,019,781 at December
31, 2001. Working capital increased to $6,526,574 at December 31, 2002 from
$6,013,396 at December 31, 2001 as a result of an increase in cash.

Capital expenditures were $20,231 in 2002, $215,354 in 2001 and $243,638 in
2000. The Company also spent $1,655,000 to acquire the Bookendz patent rights in
2000. The Company estimates that additional capital investments for property and
equipment will be approximately $100,000 in 2003.

The Company has an unsecured line of credit for $1,000,000 at the prime rate of
interest. At December 31, 2002, there were no borrowings under the line.

The Company believes that its current cash position, its cash flow from
operations and amounts available from bank borrowing should be adequate to meet
its anticipated cash needs for working capital and capital expenditures during
2003.

GAIN ON SALE OF LAND AND BUILDING
In 2002, the Company sold its 5,000 square foot building and related land in
Hinckley Minnesota that had been under a lease for the last four years which
resulted in a gain of $90,055.

CAUTIONARY STATEMENT
Statements included in this management's discussion and analysis of financial
condition and results of operations, in the letter to stockholders, elsewhere in
the Company's Form 10-K and in future filings by the company with the Securities
and Exchange Commission which are not historical in nature are identified as
"forward looking statements" for the purposes of the safe harbor provided by
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Company cautions readers that
forward looking statements, including without limitations, those relating to the
Company's future business prospects, revenues, gross profit margins, working
capital, liquidity, capital needs, interest costs, and income, are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those indicated in the forward looking statements. The risks and
uncertainties include, but are not limited to, economic conditions, product
demand and industry capacity, competitive products and pricing, manufacturing
efficiencies, new product development and market acceptance, the regulatory and
trade environment, and any other risks indicated.


ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's line of credit described in Footnote 4 to the Financial Statements
carries interest rate risk. Amounts borrowed under this agreement are subject to
interest charges at a rate tied to the lending base rate which is generally
prime rate. There were no borrowings under the line in 2002 or 2001. The
Company's cash and cash equivalents consist of cash and money market funds. All
amounts are placed with creditworthy financial institutions, however the rate of
return will fluctuate with the change in market interest rates.


                                       10
<PAGE>


ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEPENDENT AUDITORS' REPORT

Audit Committee, Board of Directors and Stockholders
Photo Control Corporation

     We have audited the accompanying balance sheets of Photo Control
Corporation as of December 31, 2002 and 2001, and the related statements of
changes in stockholders' equity, operations and cash flows for each of the three
years in the period ended December 31, 2002. These financial statements 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 audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Photo Control Corporation as
of December 31, 2002 and 2001 and the results of operations and cash flows for
each of the three years in the period ended December 31, 2002, in conformity
with accounting principles generally accepted in the United States of America.


Minneapolis, Minnesota                  Virchow, Krause & Company, LLP
January 17, 2003




                                       11
<PAGE>


STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                           YEAR ENDED DECEMBER 31
                                               ------------------------------------------
                                                   2002            2001           2000
                                                   ----            ----           ----
<S>                                            <C>             <C>            <C>
Net Sales .................................    $ 7,739,393     $10,809,359    $12,349,983
Cost of Sales .............................      5,917,440       7,326,789      8,678,556
                                               -----------     -----------    -----------
      Gross Profit ........................      1,821,953       3,482,570      3,671,427
Expenses
      Marketing and Administrative ........      1,330,639       1,687,717      1,821,165
      Research, Development and Engineering        601,360         713,112        551,457
      Gain on Sale of Land and Building ...        (90,055)
                                               -----------     -----------    -----------
                                                 1,841,944       2,400,829      2,372,622

Income(Loss) Before Income Taxes ..........        (19,991)      1,081,741      1,298,805
Income Tax Provision(Benefit) .............       (190,000)        360,000        180,000
                                               -----------     -----------    -----------

Net Income ................................    $   170,009     $   721,741    $ 1,118,805
                                               ===========     ===========    ===========

Net Income Per Common Share-Basic .........    $       .11     $       .45    $       .70
                                               ===========     ===========    ===========


Net Income Per Common Share-Diluted .......    $       .10     $       .43    $       .67
                                               ===========     ===========    ===========
</TABLE>

                 See accompanying Notes to Financial Statements



STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                      COMMON STOCK
                                      ------------
                                  NUMBER                     ADDITIONAL
                                    OF                        PAID-IN      RETAINED
                                  SHARES        AMOUNT        CAPITAL      EARNINGS
                                 ---------------------------------------------------
<S>                              <C>          <C>           <C>           <C>
Balance at December 31, 1999     1,604,163    $  128,333    $1,393,484    $4,729,378
   Net Income ..............                                               1,118,805
                                 ---------    ----------    ----------    ----------
Balance at December 31, 2000     1,604,163       128,333     1,393,484     5,848,183
   Net Income ..............                                                 721,741
                                 ---------    ----------    ----------    ----------
Balance at December 31, 2001     1,604,163       128,333     1,393,484     6,569,924
   Net Income ..............                                                 170,009
                                 ---------    ----------    ----------    ----------
Balance at December 31, 2002     1,604,163    $  128,333    $1,393,484    $6,739,933
                                ==========    ==========    ==========    ==========
</TABLE>


                 See accompanying Notes to Financial Statements


                                       12
<PAGE>


BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                            DECEMBER 31
                                                                  -----------------------------
                                     ASSETS                            2002             2001
-----------------------------------------------------------------------------------------------
<S>                                                               <C>              <C>
Current Assets
   Cash and Cash Equivalents .................................    $  3,520,622     $  3,019,781
   Accounts Receivable, Less Allowance of $40,000 ............         379,045          490,939
   Inventories ...............................................       3,144,766        3,574,479
   Prepaid Expenses ..........................................         110,805          154,977
   Refundable Income Taxes ...................................         171,127           87,780
                                                                  ------------     ------------
         Total Current Assets ................................       7,326,365        7,327,956
                                                                  ------------     ------------
Other Assets
   Patent Right, Net of Amortization .........................       1,270,798        1,448,122
   Cash Value of Life Insurance ..............................          96,285           91,896
                                                                  ------------     ------------
         Total Other Assets ..................................       1,367,083        1,540,018
                                                                  ------------     ------------
Plant and Equipment
   Land and Building .........................................       2,181,120        2,310,823
   Machinery and Equipment ...................................       2,485,818        2,525,536
   Accumulated Depreciation ..................................      (3,425,297)      (3,385,336)
                                                                  ------------     ------------
         Total Plant and Equipment ...........................       1,241,641        1,451,023
                                                                  ------------     ------------
                                                                  $  9,935,089     $ 10,318,997
                                                                  ============     ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY
-----------------------------------------------------------------------------------------------
Current Liabilities
   Current Portion of Purchase Contract ......................    $    184,920     $    507,840
   Accounts Payable ..........................................         156,977          132,181
   Accrued Payroll and Employee Benefits .....................         141,751          336,153
   Accrued Expenses ..........................................         316,143          338,386
                                                                  ------------     ------------
           Total Current Liabilities .........................         799,791        1,314,560
                                                                  ------------     ------------

Other Accrued Expense - Retirement Benefit ...................         873,548          912,696
                                                                  ------------     ------------

Stockholders' Equity
   Common Stock
      Par Value $.08 Authorized 5,000,000
      Shares Issued 1,604,163 ................................         128,333          128,333
   Additional Paid-In Capital ................................       1,393,484        1,393,484
   Retained Earnings .........................................       6,739,933        6,569,924
                                                                  ------------     ------------
Total Stockholders' Equity ...................................       8,261,750        8,091,741
                                                                  ------------     ------------
                                                                  $  9,935,089     $ 10,318,997
                                                                  ============     ============
</TABLE>

                 See accompanying Notes to Financial Statements

                                       13
<PAGE>


STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                             YEAR ENDED DECEMBER 31
                                                               -------------------------------------------
                                                                    2002            2001            2000
                                                                    ----            ----            ----
<S>                                                            <C>             <C>             <C>
Cash flows from operating activities:
   Net income from operations .............................    $   170,009     $   721,741     $ 1,118,805
     Items not affecting cash-
         Depreciation .....................................        222,999         283,848         230,739
         Amortization .....................................        177,324         177,324          29,554
         Deferred retirement benefit ......................         34,153         151,241         147,626
         (Gain)Loss on sale of land, building and equipment        (88,940)         10,374          54,361
         Provision for inventory obsolescence .............        275,950         157,936         395,487
         Deferred income taxes ............................                        160,000
   Payment of deferred compensation .......................        (73,301)       (216,688)        (69,964)
   Change in operating assets and liabilities:
         Receivables ......................................        111,894         792,916        (636,258)
         Inventories ......................................        153,763          38,848         311,890
         Prepaid expenses .................................         44,172         (77,086)         (3,461)
         Accounts payable .................................         24,796        (244,982)         95,747
         Accrued expenses .................................       (216,645)         36,964        (254,475)
         Accrued and refundable income taxes ..............        (83,347)       (271,610)        183,830
                                                               -----------     -----------     -----------
                Net cash provided by
                 operating activities .....................        752,827       1,720,826       1,603,881
                                                               -----------     -----------     -----------
Cash flows from investing activities:
   Purchase of patent right ...............................                                       (895,000)
   Proceeds from sale of land, building and equipment .....         95,555          41,346           8,975
   Additions to plant and equipment .......................        (20,232)       (215,354)       (243,638)
   Proceeds from life insurance ...........................                        458,591
   Additions to cash value of life insurance ..............         (4,389)         (3,888)        (23,100)
                                                               -----------     -----------     -----------
                Net cash provided (used)
                 in investing activities ..................         70,934         280,695      (1,152,763)
                                                               -----------     -----------     -----------
Cash flows from financing activities:
   Payment on purchase contract ...........................       (322,920)       (236,400)        (15,760)
                                                               -----------     -----------     -----------
Change in cash and cash equivalents .......................        500,841       1,765,121         435,358

Cash and cash equivalents at beginning of year ............      3,019,781       1,254,660         819,302
                                                               -----------     -----------     -----------
Cash and cash equivalents at end of year ..................    $ 3,520,622     $ 3,019,781     $ 1,254,660
                                                               ===========     ===========     ===========
Supplemental disclosure information:
   Income tax payments ....................................    $    14,809     $   471,610     $     7,532
                                                               ===========     ===========     ===========
   Income tax refunds .....................................    $   121,462     $               $
                                                               ===========     ===========     ===========

Non-cash investing and finance activity:
   Purchase of patent right with contract .................    $               $               $   760,000
                                                               ===========     ===========     ===========
</TABLE>


                 See accompanying Notes to Financial Statements


                                       14
<PAGE>


NOTES TO
FINANCIAL STATEMENTS

NOTE 1. BUSINESS DESCRIPTION
Photo Control Corporation (the Company) designs, manufactures and markets
professional cameras, electronic flash equipment, lens shades and related
photographic accessories. A second line of business consists of the Bookendz
docking stations for the Apple PowerBook, IBook and IPod.

The principal market for the Company's long-roll film and digital camera
equipment is the sub-segment of the professional photography market requiring
high-volume equipment, such as elementary and secondary school photographers.
The market with respect to electronic flash equipment and the Lindahl products
is broader, extending to all professional and commercial photographers and to
experienced amateur photographers. The market for Bookendz is all owners of the
Apple PowerBooks, IBooks and IPods. The geographic market in which the Company
competes consists of the entire United States and, to a lesser extent, some
foreign countries.

In 2002, sales of camera equipment and flash equipment were approximately equal
followed by Bookendz and lens shades. In 2001, sales of camera equipment was the
highest followed by flash equipment, Bookendz and lens shade sales. There has
been a consolidation of school photography and studio portrait photography in
recent years which has concentrated the Company's sales to fewer customers. It
is expected that this trend will continue. In 2002, three customers accounted
for 37.4% of the Company's sales, in 2001 45.8% and in 2000 55.5%. Due to the
rapidly changing technology related to many areas of image processing, the
Company has discontinued manufacturing many products and is replacing them with
newer, updated equipment.


NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES - Management uses estimates and assumptions in preparing
financial statements in accordance with accounting principles generally accepted
in the United States of America. Those estimates and assumptions affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities, and the reported revenues and expenses. Actual results could
vary from the estimates that were assumed in preparing the financial statements.

REVENUE RECOGNITION - Sales are recorded when the product is shipped and returns
are permitted only for defective equipment.

ACCOUNTS RECEIVABLE - The Company extends unsecured credit to customers in the
normal course of business and believes all accounts in excess of the allowance
for doubtful accounts to be fully collectible. If accounts receivable in excess
of the provided allowance are determined uncollectible, they are charged to
expense on the year that determination is made.

INVENTORIES - Inventories of raw materials, work in process and finished goods
are valued at the lower of cost (first-in, first-out) or market. Market
represents estimated realizable value in the case of finished goods and
replacement or reproduction cost in the case of other inventories. Because of
changing technology and market demand, inventory is subject to obsolescence. An
annual review is made of all inventory to determine if any obsolete,
discontinued or slow moving items are in inventory. Based on this review,
inventory is disposed of or an allowance for obsolescence established to cover
any future disposals.

PLANT AND EQUIPMENT - Plant and equipment are stated at cost. Depreciation is
computed primarily on the straight-line method over the estimated useful lives
of 35 years for the building and 3 to 7 years for machinery and equipment.
Ordinary maintenance and repairs are charged to operations, and expenditures
which extend the physical or economic life of property and equipment are
capitalized. Gains and losses on disposition of property and equipment are
recognized in operations and the related asset and accumulated depreciation
accounts are adjusted accordingly. The Company assesses long-lived assets for
impairment under FASB Statement 121 using estimates of undiscounted future cash
flows. Under those rules, long-lived assets are included in impairment
evaluations when events or circumstances exist that indicate the carrying amount
of those assets may not be recoverable. To date, there have been no such losses.

FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying amounts for cash and cash
equivalents, receivables, accounts payable, accrued liabilities and purchase
contract approximate fair value because of the short maturity of these
instruments. The Company does not have any derivative financial instruments.


                                       15
<PAGE>


AMORTIZATION OF PATENT RIGHT - Patent cost of $1,655,000 is being amortized over
nine years, which is based on the life of the patent. As of December 31, 2002
and 2001 the unamortized balance is $1,270,798 and $1,448,122.

RESEARCH AND DEVELOPMENT - Expenditures for research and development are charged
against operations as incurred.

INCOME TAXES - Deferred income taxes are provided for expenses recognized in
different time periods for financial reporting and income tax purposes. These
differences consist primarily of deferred retirement benefit that is not
deductible for taxes and inventory which has a higher tax basis than for
financial reporting purposes. Deferred taxes are reduced by a valuation
allowance to the extent that realization of the related deferred tax asset is
not assured.

ADVERTISING - Advertising costs are included in Marketing and Administrative
Expenses and are expensed as incurred. Advertising expense was $96,000, $89,000
and $57,000 for the years ended December 31, 2002, 2001 and 2000 respectively.

CASH EQUIVALENTS - The Company considers all highly liquid debt instruments
purchased with a maturity of three months or less to be a cash equivalent. Cash
and cash equivalents consist of short-term securities and bank balances. The
Company at December 31, 2002 and periodically throughout the year has maintained
balances in various operating and money market accounts in excess of federally
insured limits.

NET INCOME PER SHARE - Net income per common share was based on the weighted
average number of common shares outstanding during the period when computing the
basic net income per share. When dilutive, stock options are included as
equivalents using the treasury stock market method when computing the diluted
net income per share. The weighted average number of common shares outstanding
for the three years ended December 2002 was 1,604,163. The basic earnings per
share was $.11, $.45 and $.70 for the years ended December 31, 2002, 2001 and
2000 respectively. The dilutive net income per share was $.10 and $.43 and $.67
for the years ended December 31, 2002, 2001 and 2000 respectively which was
computed using an additional 43,000, 63,000 and 71,000 shares for the dilutive
effect of stock options.

IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS - In June 2001, the FASB issued SFAS
No. 143 "Accounting for Asset Retirement Obligations." SFAS No. 143 is effective
for fiscal years beginning after June 15, 2002. The Company believes the
adoption of SFAS No. 143 will not have a material impact on the Company's
financial statements.

In August 2001, the FASB issued SFAS No. 144 "Accounting for the Impairment or
Disposal of Long-Lived Assets." SFAS No. 144 supercedes SFAS No. 121 and is
effective for financial statements issued for fiscal years beginning after
December 15, 2001. The provisions of SFAS No. 144 generally are to be applied
prospectively. The Company believes the adoption of SFAS No. 144 will not have a
material impact on the Company's financial statements.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Cost Associated with
Exit or Disposal Activities." This standard nullifies Emerging Issues Task Force
No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." This standard requires that a liability for a cost associated
with an exit or disposal activity be recognized when the liability is incurred
rather than the date of the entity's commitment to an exit plan. SFAS No. 146 is
effective after December 31, 2002. The Company believes the adoption of SFAS No.
146 will not have a material impact on the Company's financial position or
results of operations.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure." SFAS No. 148 is an amendment to SFAS
No. 123 providing alternative methods of transition for a voluntary change to
the fair value based method of accounting for stock-based employee compensation
and also provides additional disclosures about the method of accounting for
stock-based employee compensation. Amendments are effective for financial
statements for fiscal years ending after December 15, 2002. The Company has
currently chosen to not adopt the voluntary change to the fair value based
method of accounting for stock-based employee compensation, pursuant to SFAS No.
148. The Company believes the adoption of SFAS No. 148 will not have a material
impact on the Company's financial position or results of operations.


                                       16
<PAGE>


NOTE 3. INVENTORIES
The following inventories were on hand at December 31:

                                2002            2001            2000
                            -----------     -----------     -----------
Raw Materials ..........    $ 1,904,392     $ 2,752,418     $ 3,337,770
Work in Process ........        103,993          39,182         436,780
Finished Goods .........      1,536,381       1,732,879       1,596,713
Reserve for Obsolescence       (400,000)       (950,000)     (1,600,000)
                            -----------     -----------     -----------
                            $ 3,144,766     $ 3,574,479     $ 3,771,263
                            ===========     ===========     ===========


NOTE 4. ACCRUED EXPENSES AND WARRANTY COSTS
Accrued expenses at December 31 are as follows:

                              2002         2001
                            --------    --------
Product Warranty Reserve    $200,000    $200,000
Real Estate Taxes ......      86,000      90,000
Other ..................      30,143      48,386
                            --------    --------
                            $316,143    $338,386
                            ========    ========

The Company warrants its products for one or two years. The reserve for warranty
is computed by averaging the last four years warranty costs incurred and
multiplying by two which provides a full two year warranty on all products. The
Company has reserved an additional $50,000 to cover any unanticipated or unusual
product warranty problems. The following summarizes the warranty transactions:

                                   2002          2001          2000
                                ---------     ---------     ---------
Balance at Beginning of Year    $ 200,000     $ 200,000     $ 108,000
Claims Paid ................      (61,840)      (79,900)      (74,260)
Expense Provision ..........       61,840        79,900       166,260
                                ---------     ---------     ---------
Balance at End of Year .....    $ 200,000     $ 200,000     $ 200,000
                                =========     =========     =========


NOTE 5. SHORT-TERM LINE OF CREDIT
The Company has a $1,000,000 unsecured line of credit agreement at the prime
rate of interest. There were no borrowings under the line of credit during the
years ended December 31, 2002 and 2001.


NOTE 6. COMMITMENTS
The Company has retirement benefit agreements with key management personnel,
which are funded by life insurance. Under the agreements, covered individuals
become vested immediately upon death or if employed at age 65. Benefit costs are
recognized over the period of service and recorded as accrued retirement
benefit.

Under the purchase contract for Bookendz, the Company is required to pay a fee
for each Bookendz unit sold until a total of $760,000 is paid. At December 31,
2002 and 2001 there were unpaid balances of $184,920 and $507,840 respectively.

The Company has an employment agreement with the President of Lindahl
Specialties, Inc. that expires in 2003 with an unpaid balance of $24,444 as of
December 31, 2002.


NOTE 7. INCOME TAXES
The income tax provision shown in the statements of operations is detailed below
for each year ended December 31:

                   2002          2001         2000
                 ---------     ---------    ---------
Current
  Federal ...    $(190,000)    $ 168,000    $ 167,000
  State .....                     32,000       13,000
Deferred ....                    160,000
                 ---------     ---------    ---------
                 $(190,000)    $ 360,000    $ 180,000
                 =========     =========    =========


                                       17
<PAGE>


The income tax provision varied from the federal statutory tax rate as follows
for each year ended December 31:

                                                        2002     2001     2000
                                                       ------   ------   ------
U.S. Statutory Rate .................................  (34.0%)   34.0%    34.0%
State Income Taxes, Net of Federal Income Tax Benefit             2.0      2.5
Inventory Disposal .................................. (916.4)   (20.0)
Utilization of Loss Carry Forward ...................                    (22.7)
Valuation Allowance .................................            14.8
Other, net ..........................................             2.5
                                                       ------   ------   ------
                                                      (950.4%)   33.3%    13.8%
                                                       ======   ======   ======

The following summarizes the tax effects of the significant temporary
differences which comprise the deferred tax asset at year ended December 31:

                                              2002          2001
                                           ---------     ---------
Inventory Costs .......................    $ 144,000     $ 374,000
Deferred Retirement Benefit ...........      314,000       330,000
Bad Debt Reserves .....................       14,000        14,000
Accrued Benefits ......................       39,000        28,000
Accrued Costs .........................       72,000        72,000
Financial Amortization in Excess of Tax       52,000        28,000
                                           ---------     ---------
Net Deferred Tax Asset ................      635,000       846,000
Valuation Allowance ...................     (635,000)     (846,000)
                                           ---------     ---------
Net Deferred Income Tax ...............
                                           =========     =========


NOTE 8. PROFIT SHARING PLAN
The Company has a 401K plan, which covers qualified full-time employees. The
Company matches the employees contributions to 8% of the employees salary at a
rate of 25%. An additional 10% match is contributed if certain profit goals are
achieved. The Company contributed $56,159, $59,979 and $61,040 for the years
ended December 31, 2002, 2001 and 2000, respectively.


NOTE 9. STOCK OPTIONS
Non-qualified stock options to purchase shares of the Company's common stock
have been granted to certain officers, directors, and key employees. Option
prices of all the grants were not less than the fair market value of the
Company's common stock at dates of grants. At December 31, 2002, there were
49,573 shares of common stock available under the plan for future grants.

The Company has elected to account for non-qualified stock options under
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees," and related interpretations. Accordingly, no compensation expense
has been recognized for stock options.

The following summarizes the changes in the options for the years ended December
31:

<TABLE>
<CAPTION>
                                          2002                    2001                      2000
                                 ----------------------------------------------------------------------
                                  NUMBER      EXERCISE     NUMBER     EXERCISE      NUMBER      EXERCISE
                                OF OPTIONS     PRICE     OF OPTIONS    PRICE      OF OPTIONS     PRICE
                                 -------     --------     -------     --------     -------     --------
<S>                              <C>         <C>          <C>         <C>          <C>         <C>
Balance at Beginning of Year     359,000     $   2.66     227,000     $   2.31     277,000     $   2.31
Granted ....................                              200,000     $   3.20      15,000     $   3.19
Expired ....................     (28,000)    $   3.42     (68,000)    $   3.11     (65,000)    $   3.00
                                 -------                  -------                  -------
Balance at End of Year .....     331,000     $   2.60     359,000     $   2.66     227,000     $   2.31
                                 =======                  =======                  =======
</TABLE>

The following summarizes the outstanding and exercisable options as of December
31, 2002 and the potential realizable value assuming annual rates of stock price
appreciation for the option term:

                    OPTIONS OUTSTANDING                    EXERCISABLE OPTIONS
--------------------------------------------------------------------------------
RANGE            NUMBER OF     REMAINING      EXERCISE      NUMBER      EXERCISE
OF PRICE          OPTIONS     LIFE (YEARS)      PRICE     OF OPTIONS     PRICE
--------------------------------------------------------------------------------
$2.80              20,000          0.1          $2.80        20,000      $2.80
$1.19              96,000          1.1          $1.19        96,000      $1.19
$3.19              15,000          2.6          $3.19         5,000      $3.19
$2.20 to 3.44     200,000          3.2          $3.11
                  -------                                   -------
                  331,000                                   121,000
                 ========                                   =======


                                       18
<PAGE>


In determining the compensation cost of the options granted during the three
years ended December 31, as specified by SFAS No. 123, the fair value of each
option grant has been estimated on the date of grant using the Black-Scholes
option pricing model and the weighted average assumptions used in these
calculations are summarized as follows for the years ended December 31, 2002,
2001 and 2000. The risk free interest rates: 6.5%; the expected life options: 5
years; the expected volatility ranges: 50.0%; the expected dividend yields:
0.0%.

Had compensation cost for the Company's stock options been determined based on
fair value at the grant dates consistent with the method as defined under SFAS
No. 123, the Company's net income would have changed to the pro forma amounts
indicated below:
                                           2002          2001           2000
                                           ----          ----           ----
Net income:
   As reported                         $  170,009    $  721,741     $1,118,805
   Pro forma                           $   41,009    $  579,741     $1,073,805

Net income per common share-basic:
   As reported                         $     0.11    $     0.45     $     0.70
   Pro forma                           $     0.03    $     0.36     $     0.67


Net income per common share-diluted:
   As reported                         $     0.10    $     0.43     $     0.67
   Pro forma                           $     0.02    $     0.34     $     0.64


NOTE 10. MAJOR CUSTOMERS
During the years ended December 31, 2002, 2001, and 2000, three unaffiliated
customers accounted for the following percentages of sales:

                      CUSTOMER             2002          2001           2000
                      --------             ----          ----           ----
                         A                 17.2%         27.5%          50.3%
                         B                 14.0           2.8             .5
                         C                  6.2          15.5            4.7
                                           ----          ----           ----
                                           37.4%         45.8%          55.5%
                                           ====          ====           ====


NOTE 11. SEGMENT REPORTING
In October 2000 the Company purchased the Bookendz product line which is a
docking station for the Apple PowerBook, IBook and IPod. All of its operations
(sales and marketing, engineering, manufacturing and administration) were merged
into Photo Control's existing structure. Accordingly, the only activity for
Bookendz that is separately maintained is sales, cost of sales and the cost of
its related assets. The following summarizes the Bookendz operation:

                                                          ASSETS
                                               --------------------------
Bookendz                                         12-31-02       12-31-01
                                               -----------    -----------
Unamortized Patent Right ..................    $ 1,270,798    $ 1,448,122
Inventory .................................        246,113        172,096
Tooling ...................................         36,347         78,999
                                               -----------    -----------
    Total Bookendz ........................    $ 1,553,258    $ 1,699,217
                                               ===========    ===========
Total Company .............................    $ 9,935,089    $10,318,997
                                               ===========    ===========

                                                          SALES
                                               --------------------------
                                                 12-31-02       12-31-01
                                               -----------    -----------
Bookendz ..................................    $ 1,499,947    $ 1,140,005
                                               ===========    ===========
Total Company .............................    $ 7,739,393    $10,809,359
                                               ===========    ===========


                                       19
<PAGE>


NOTE 12. QUARTERLY INFORMATION (UNAUDITED)
The following is a summary of the unaudited quarterly financial information for
the years ended December 31, 2002, 2001 and
2000:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 2002        1ST QTR.        2ND QTR.       3RD QTR.       4TH QTR.        TOTAL
                                  -----------     -----------    -----------    -----------    -----------
<S>                               <C>             <C>            <C>            <C>            <C>
   Sales .....................    $ 1,703,475     $ 2,027,180    $ 2,497,561    $ 1,511,177    $ 7,739,393
   Gross Profit ..............        371,667         509,333        573,964        366,988      1,821,953
   Net Income(Loss) ..........       (123,242)         24,976        119,503        148,772        170,009
   Net Income(Loss) Per Share            (.08)            .02            .07            .10            .11

YEAR ENDED DECEMBER 31, 2001        1ST QTR.        2ND QTR.       3RD QTR.       4TH QTR.        TOTAL
                                  -----------     -----------    -----------    -----------    -----------
   Sales .....................    $ 3,093,996     $ 3,159,355    $ 2,953,330    $ 1,602,678    $10,809,359
   Gross Profit ..............      1,142,860         944,532        893,883        501,295      3,482,570
   Net Income ................        271,641         183,322        194,564         72,214        721,741
   Net Income Per Share ......            .17             .11            .12            .05            .45

YEAR ENDED DECEMBER 31, 2000        1ST QTR.        2ND QTR.       3RD QTR.       4TH QTR.        TOTAL
                                  -----------     -----------    -----------    -----------    -----------
   Sales .....................    $ 2,108,592     $ 3,718,870    $ 3,720,897    $ 2,801,624    $12,349,983
   Gross Profit ..............        525,212       1,127,110      1,169,943        849,162      3,671,427
   Net Income (Loss) .........        (83,732)        505,493        599,354         97,690      1,118,805
   Net Income (Loss) Per Share           (.05)            .31            .38            .06            .70
</TABLE>







                                       20
<PAGE>


ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None


                                    PART III
                                    --------

Items 10, 11, 12 and 13 of Part III, except for certain information relating to
Executive Officers included in Part I, are omitted inasmuch as the Company
intends to file with the Securities and Exchange Commission within 120 days of
the close of the year ended December 31, 2002, a definitive proxy statement
containing information pursuant to Regulation l4A of the Securities Exchange Act
of 1934 and such information shall be deemed to be incorporated herein by
reference from the date of filing such document.


ITEM 14. CONTROLS AND PROCEDURES

(a)Evaluation of disclosure controls and procedures. Based on their evaluation
as of a date within 90 days of the filing date of this Annual Report on Form
10-K, the Company's principal officer and principal financial officer have
concluded that the Company's disclosure controls and procedures (as defined in
Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934 (the
"Exchange Act")) are effective to ensure that the information required to be
disclosed by the Company in reports that it files or submits under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in Securities and Exchange Commission rules and forms.

(b)Changes in internal controls. There were no significant changes in the
Company's internal controls or in other factors that could significantly affect
these controls subsequent to the date of their evaluation. There were no
significant deficiencies or material weaknesses, and therefore there were no
corrective actions taken.





                                       21
<PAGE>


PART IV
-------


ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K


(a) Financial Statements. The following documents are filed as part of this
report under Item 8:

Independent Auditors' Report

Statements of Operations for the years ended December 31, 2002, 2001 and 2000

Statements of Changes in Stockholders' Equity for the years ended December 31,
2002, 2001 and 2000

Balance Sheets at December 31, 2002 and 2001

Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000

Notes to Financial Statements


(a)(1) Financial Statement Schedule.

Auditors' Consent and Report on Schedules - filed as part of this report on page
23

Schedule IX Valuation and Qualifying Accounts for the years ended December 31,
2002, 2001 and 2000 - filed as part of this report on page 24

All other schedules have been omitted because they are not applicable or are not
required, or because the required information has been given in the Consolidated
Financial Statements or notes thereto.


(a)(3) Exhibits. See "Exhibit Index" on page following signatures.

(b) Reports on Form 8-K. No reports on Form 8-K were filed during the last
fiscal quarter of the Registrant's 2002 fiscal year.

(c) Exhibits. Reference made to item 14(A)(3)

(d) Schedules. Reference made to item 14(A)(2)


                                       22
<PAGE>


                    AUDITORS' CONSENT AND REPORT ON SCHEDULES
                    -----------------------------------------




Audit Committee, Board of Directors and
Stockholders
Photo Control Corporation



We hereby consent to the incorporation by reference in this Annual Report on
Form 10-K of Photo Control Corporation for the year ended December 31, 2002 of
our report, dated January 17, 2003, appearing in the Company's 2002 Annual
Report to Shareholders. We also consent to the incorporation by reference of
such report in the registration statements on Form S-8 for the Photo Control
Stock Option Plan.

In the course of our audit of the financial statements referred to in our
report, dated January 17, 2003, included in the Company's 2002 Annual Report to
Shareholders, we also audited the supporting schedule listed in Item 14(a)(2) of
this Annual Report on Form 10-K. In our opinion, the 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.



Minneapolis, Minnesota                            Virchow, Krause & Company, LLP
January 17, 2003


                                       23
<PAGE>


          SCHEDULE IX - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
          ------------------------------------------------------------

<TABLE>
<CAPTION>
COLUMN A                           COLUMN B                 COLUMN C                 COLUMN D           COLUMN E
--------                           --------                ---------                 --------           --------

                                                   ADDITIONS
                                                    CHARGED        ADDITIONS
                                    BALANCE       (CREDITED)        CHARGED
                                      AT           TO COSTS         TO OTHER                             BALANCE
                                   BEGINNING         AND            ACCOUNTS        DEDUCTIONS           AT END
DESCRIPTION                         OF YEAR        EXPENSES         DESCRIBE         DESCRIBE            OF YEAR
-----------                       ----------      ----------       ----------       ----------          ----------
YEAR ENDED DECEMBER 31, 2002
<S>                               <C>             <C>              <C>              <C>                 <C>
    Allowance for Doubtful
    Accounts                      $   40,000      $   (4,408)      $        5(a)    $    4,403(b)       $   40,000
                                  ==========      ==========       ==========       ==========          ==========

    Allowance  for Inventory
    Obsolescence                  $  950,000      $  275,950                        $ (825,950)(c)      $  400,000
                                  ==========      ==========       ==========       ==========          ==========

    Allowance for Warranty        $  200,000      $   61,840                        $  (61,840)(d)      $  200,000
                                  ==========      ==========       ==========       ==========          ==========


YEAR ENDED DECEMBER 31, 2001

    Allowance for Doubtful
    Accounts                      $   40,000      $   (3,937)      $      359(a)    $   (3,570)(b)      $   40,000
                                  ==========      ==========       ==========       ==========          ==========

    Allowance  for Inventory
    Obsolescence                  $1,600,000      $  157,936                        $ (807,936)(c)      $  950,000
                                  ==========      ==========       ==========       ==========          ==========

    Allowance for Warranty        $  200,000      $   79,900                        $  (79,900)(d)      $  200,000
                                  ==========      ==========       ==========       ==========          ==========


YEAR ENDED DECEMBER 31, 2000

    Allowance for Doubtful
    Accounts                      $   40,000      $    2,952       $      618(a)    $   (3,570)(b)      $   40,000
                                  ==========      ==========       ==========       ==========          ==========

    Allowance  for Inventory
    Obsolescence                  $1,642,000      $  395,487                        $ (437,487)(c)      $1,600,000
                                  ==========      ==========       ==========       ==========          ==========

    Allowance for Warranty        $  108,000      $  166,260                        $  (74,260)(d)      $  200,000
                                  ==========      ==========       ==========       ==========          ==========
</TABLE>

(a)  Recoveries of amounts written off in prior years.

(b)  Uncollectible accounts written off. In 2002 and 2001 write off of credits
     exceeded write off of uncollectible accounts.

(c)  Inventory Disposed

(d)  Claims Paid


                                       24
<PAGE>


                                   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.


                                               PHOTO CONTROL CORPORATION

Date: March 7, 2003                            By /s/Curtis R. Jackels
                                               Curtis R. Jackels
                                               Chief Executive Officer,
                                               President and Director


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


Date: March 7, 2003                            /s/ Curtis R. Jackels
                                               Curtis R. Jackels,
                                               Chief Executive Officer,
                                               President and Director
                                               (principal executive, financial
                                               and accounting officer)


Date: March 7, 2003                            /s/ John R. Helmen
                                               John R. Helmen, Chairman


Date: March 7, 2003                            /s/ James R.  Loomis
                                               James R.  Loomis, Director


Date: March 7, 2003                            /s/ Richard P. Kiphart
                                               Richard P. Kiphart, Director

Date: March 7, 2003                            /s/ Scott S. Meyers
                                               Scott S. Meyers, Director


Date: March 7, 2003                            /s/ John McMillan
                                               John McMillan, Director


                                       25
<PAGE>


                                 CERTIFICATIONS


I, Curtis R. Jackels, certify that:
1.   I have reviewed this annual report on Form 10-K of Photo Control
     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 procedure (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
     a)   designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          controlled 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 function):
     a)   all significant deficiencies in the design or operation 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 or not 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.


                                                       PHOTO CONTROL CORPORATION

Date: March 7, 2003                                    By/s/Curtis R. Jackels
                                                       Curtis R. Jackels
                                                       Chief Executive Officer,
                                                       President and Director
                                                       (principal executive and
                                                       financial officer)




                                       26
<PAGE>


                            PHOTO CONTROL CORPORATION

                                  EXHIBIT INDEX

                                                                    Page Number
                                                                   in Sequential
                                                                      Numbering
                                                                       of all
                                                                   Form 10-K and
                                                                   Exhibit Pages
Exhibit                                                            -------------
-------

  3.1     Registrant's Restated Articles of Incorporation, as
          amended-incorporated by reference to Exhibit 3.1 to
          the Registrant's Annual Report on Form 10-K for the
          fiscal year ended June 30, 1988                                 *

  3.2     Registrant's bylaws as amended-incorporated by reference
          to Exhibit 3.2 to the Registrant's Annual Report on Form
          10-K for the fiscal year ended June 30, 1989                    *


  10.1    Executive Salary Continuation Plan adopted August 9, 1985
          together with Exhibits - incorporated by reference to
          Exhibit 10.4 to the Registrant's Annual Report on               *
          Form 10-K for the year ended June 30, 1986                     **

  10.2    The Registrant's 1983 Stock Option Plan - incorporated
          by reference to Exhibit 10.4 to the Registrant's
          Annual Report on Form 10-K for the fiscal year                  *
          ended June 30, 1989                                            **


  10.3    Form of Stock Option Agreement under the Registrant's
          1983 Stock Option Plan - incorporated by reference to
          Exhibit 5 to the Registrant's Registration Statement on         *
          Form S-8, Reg. No. 2-85849                                     **

  10.4    Cash bonus plan for officers and key employees
          incorporated by reference to the Registrant's Annual            *
          Report on Form 10-K for the fiscal year ended
          December 31, 1999                                              **


  10.5    Amendment to Stock Option Plan August 29, 1994 -
          incorporated by reference to Exhibit 10.5 to the
          Registrant's Annual Report on Form 10-K for the fiscal          *
          year ended December 31, 1994                                   **

  10.6    Amendment to Stock Option Plan, February 23, 1996 -
          incorporated by reference to Exhibit 10.6 to the
          Registrant's annual report on Form 10-K for the                 *
          fiscal year ended December 31, 1995                            **


                                       27
<PAGE>


  10.7    Amendment to Stock Option Plan, November 7, 1997 -
          incorporated by reference to Exhibit 10.7 to the
          Registrant's annual report on Form 10-K for the
          fiscal year ended December 31, 1997                            **

  10.8    Purchase and license agreement of Bookendz product line -
          incorporated by reference to Exhibit 10.1 to the
          Registrants report on Form 8-K dated October 19, 2000           *

  11      Statement of computation of per share earnings                 29

  23      Consent of Independent Auditors                                30

  25      Power of Attorney from Messrs. Helmen, Jackels,                31
          Loomis, McMillan, Kiphart and Meyers

  99      Certification pursuant to 18 U.S.C.ss.135 as adopted
          pursuant to section 906 of the Sarbanes-Oxley Act of 2002      32

*    Incorporated by reference

**   Indicates management contracts or compensation plans or arrangements
     required to be filed as exhibits.





                                       28