SECURITIES AND EXCHANGE COMMISSION

              Washington, D.C. 20549

                     FORM 10-Q

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

        For the quarter ended July 31, 2001

          Commission File Number: 0-5105



                  MILASTAR CORPORATION
(Exact name of registrant as specified in its charter)



            DELAWARE                          13-2636669
(State or other jurisdiction of            (I.R.S. Employer
 incorporation or organization)           Identification No.)


7317 West Lake Street, Minneapolis, MN               55426
(Address of principal executive offices)           (Zip code)


Registrant's telephone number, including area code (952) 929-4774


Not Applicable

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


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


At July 31, 2001, 2,723,264 shares of common stock of the Registrant
were issued and outstanding.



  MILASTAR CORPORATION AND SUBSIDIARIES


                        PART I

Item 1. Financial Statements

   The condensed financial statements included herein have been
prepared by Milastar Corporation (the "Company") without audit,
pursuant to the rules and regulations of the Securities and
Exchange Commission.  Certain information and footnote disclosures
normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States
of America have been condensed or omitted pursuant to such rules
and regulations. However, the Company believes that the
disclosures are adequate to make the information presented not
misleading.  It is suggested that these condensed financial
statements be read in conjunction with the financial statements
and the notes thereto included in the Company's annual report on
Form 10-K for the fiscal year ended April 30, 2001.

   The condensed financial statements included herein, which are
unaudited, include, in the opinion of management, all adjustments
(consisting only of normal recurring accruals) necessary to
present fairly the financial position and results of operations of
the Company for the periods presented.


<TABLE>
<CAPTION>
              MILASTAR CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED BALANCE SHEETS

                              ASSETS
                                                    July 31,       April 30,
                                                      2001           2001
                                                  (unaudited)      (audited)
Current assets:                              <C>             <C>
Cash and cash equivalents. . . . . . . .             62,000         229,000
Accounts receivable:
 Trade, less allowance for doubtful
 accounts of $54,000 (July 31, 2001)
 and $50,000 (April 30, 2001). . . . . .          1,094,000       1,025,000
Inventory. . . . . . . . . . . . . . . .            177,000         120,000
Prepaid expenses and other . . . . . . .            192,000         227,000

    Total current assets . . . . . . . .          1,525,000       1,601,000

Property, plant and equipment:
 Land. . . . . . . . . . . . . . . . . .            420,000         420,000
 Buildings and improvements. . . . . . .          2,946,000       2,851,000
 Equipment . . . . . . . . . . . . . . .          9,109,000       8,962,000
                                                 12,475,000      12,233,000
  Less accumulated depreciation. . . . .         (5,004,000)     (4,781,000)
                                                  7,471,000       7,452,000
Other assets:
Non-compete agreement, net of
  accumulated amortization of
  of $301,000 & $287,000 respectively. .            145,000         159,000

    Total assets . . . . . . . . . . . .          9,141,000       9,212,000
</TABLE>
<TABLE>
<CAPTION>

               LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:                         <C>             <C>
Current maturities of long-term debt . .            543,000         543,000
Notes payable to bank  . . . . . . . . .            250,000
Accounts payable . . . . . . . . . . . .            380,000         457,000
Accrued payroll and benefits . . . . . .            242,000         329,000
Accrued real estate taxes. . . . . . . .             79,000         108,000
Other accrued liabilities. . . . . . . .             85,000         101,000

    Total current liabilities. . . . . .          1,579,000       1,538,000

Long-term debt,
 less current maturities . . . . . . . .          2,664,000       2,800,000

    Total liabilities. . . . . . . . . .          4,243,000       4,338,000

Stockholders' equity:
Preferred stock, $1.00 par value;
 authorized 5,000,000 shares, none
 issued. . . . . . . . . . . . . . . . .
Common stock,  $.05 par value;
 authorized 7,500,000 shares, issued
 and outstanding 2,723,264 shares at
 July 31, 2001 and April 30, 2001. . . .            136,000         136,000
Additional paid-in capital . . . . . . .          1,647,000       1,647,000
Retained earnings. . . . . . . . . . . .          3,115,000       3,091,000

   Total stockholders' equity. . . . . .          4,898,000       4,874,000

   Total liabilities and
    stockholders' equity . . . . . . . .          9,141,000       9,212,000
</TABLE>
<TABLE>
<CAPTION>
                   MILASTAR CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF OPERATIONS
                        Three Months Ended July 31,
                                (Unaudited)

                                                     2001            2000
                                             <C>             <C>

Net Sales. . . . . . . . . . . . . . . .          2,064,000       2,489,000
Cost of Sales. . . . . . . . . . . . . .          1,453,000       1,682,000

Gross margin . . . . . . . . . . . . . .            611,000         807,000

Selling general and administrative
 expenses. . . . . . . . . . . . . . . .            487,000         560,000
Amortization of non-compete agreement. .             14,000          24,000

Operating income . . . . . . . . . . . .            110,000         223,000

Other expense:
 Net loss on disposal of property
   and equipment . . . . . . . . . . . .            (21,000)
 Interest expense. . . . . . . . . . . .            (63,000)        (67,000)

  Total other expense. . . . . . . . . .            (84,000)        (67,000)

Income before provision for
 income taxes. . . . . . . . . . . . . .             26,000         156,000
Provision for income taxes . . . . . . .              2,000           2,000


Net income . . . . . . . . . . . . . . .             24,000         154,000

Net income per Class A
 common share - basic. . . . . . . . . .                .01             .06

Net income per Class A
 common share - diluted. . . . . . . . .                .01             .06
</TABLE>
<TABLE>
<CAPTION>
              MILASTAR CORPORATION AND SUBSIDIARIES
               CONSOLIDATED STATEMENT OF CASH FLOWS
                   Three Months Ended July 31,
                           (Unaudited)


                                                     2001            2000
                                             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income. . . . . . . . . . . . . . .             24,000         154,000
  Adjustments to reconcile net income
   to net cash provided by operating
   activities:
   Depreciation and amortization . . . .            239,000         259,000
   Net loss on disposal of property
     and equipment . . . . . . . . . . .             21,000

  Changes in operating assets and
   liabilities:
   Accounts and other receivables. . . .            (70,000)         31,000
   Inventory . . . . . . . . . . . . . .            (57,000)        (16,000)
   Prepaid supplies and other. . . . . .             34,000          13,000
   Accounts payable and accrued
    expenses . . . . . . . . . . . . . .           (209,000)        138,000

 Net cash provided by (used in)
  operating activities . . . . . . . . .            (18,000)        579,000

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchases of property, plant
  and equipment. . . . . . . . . . . . .           (263,000)       (373,000)

 Net cash used in investing
  activities . . . . . . . . . . . . . .           (263,000)       (373,000)

CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from bank line of credit . . .            250,000
 Principal payments on long-term debt. .           (136,000)       (176,000)
  Net cash provided by (used in)
  financing activities . . . . . . . . .            114,000        (176,000)

NET INCREASE (DECREASE) IN CASH AND
 CASH EQUIVALENTS. . . . . . . . . . . .           (167,000)         30,000

CASH AND CASH EQUIVALENTS BALANCE
 AT BEGINNING OF YEAR. . . . . . . . . .            229,000          56,000

CASH AND CASH EQUIVALENTS BALANCE
 AT END OF THE FIRST QUARTER . . . . . .             62,000          86,000


Supplemental disclosures of cash flow information:
 Cash paid during the first quarter for:
  Interest . . . . . . . . . . . . . . . .           63,000          67,000

  Income taxes . . . . . . . . . . . . . .                            1,000
</TABLE>


       MILASTAR CORPORATION AND SUBSIDIARIES

    CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        (Unaudited)


1   CONSOLIDATED FINANCIAL STATEMENTS

    The consolidated financial statements of Milastar
Corporation (the "Company") reflect the financial position and
results of operations of the Company and its wholly owned
subsidiaries, after elimination of all material intercompany
transactions and balances.

    The consolidated financial statements as of July 31,
2001 and for the three month periods ended July 31, 2001 and July
31, 2000, included herein are unaudited and have been prepared by
the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or
omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the
information presented not misleading.  The interim financial
statements reflect all adjustments (consisting of normal recurring
accruals) that are, in the opinion of management, necessary for a
fair statement of the results for the interim periods.  These
consolidated financial statements should be read in conjunction
with the consolidated financial statements and the note thereto
included in the Company's 2001 Annual Report to Shareholders and
incorporated by reference in the Company's annual report on Form
10-K filed with the Securities and Exchange Commission.  The
result of operations for the interim period should not be
considered indicative of the results to be expected for the entire
year.



2   INCOME PER COMMON SHARE

    The following table presents a reconciliation of the
denominators used in the computation of net income per common
share - basic and net income per common share - diluted for the
quarters ended July 31, 2001 and 2000:


                                              Three Months Ended July  31,

                                                    2001         2000
Weighted shares of Class A Stock
 outstanding - basic. . . . . . . . . .          2,723,264    2,738,264

Weighted shares of Class A Stock
 assumed upon exercise of stock
 options. . . . . . . . . . . . . . . .            121,978            0

Weighted shares of Class A Stock
 outstanding - diluted. . . . . . . . .          2,845,242    2,738,264



3   INCOME TAXES

    The low effective tax rate for the three months
ended July 31, 2001 and 2000, compared to the federal statutory
rate, is due to a reduction of the valuation allowance resulting
from the utilization of net operating loss carryforwards. The
income tax expense in the three month periods ended July 31, 2001
and 2000 is due to minimum state income tax fees.


4    REVENUE RECOGNITION

     In fiscal 2001, the Company adopted the provisions
of Emerging Issues Task Force Issue 00-10 (EITF 00-10), Accounting
for Shipping and Handling Fees and Costs.  As required by EITF 00-
10, the Company has historically classified shipping and handling
costs billed to customers as revenue.  Prior to the adoption of
EITF 00-10, the Company accounted for the associated revenues as
a reduction in costs of sales.  Effective with the adoption of
EITF 00-10, $5,000 of shipping and handling fees were reclassified
from cost of sales to revenues for the three months ended July 31,
2000.  The Company included all fees associated with shipping and
handling in revenue for the three months ended July 31, 2001.





Item 2.  Management's Discussion and Analysis of Financial
Condition and Results of Operations

Results of Operations

     Three Months Ended July 31, 2001 as Compared with the
Three Months Ended July 31, 2000.  The Company recorded sales of
$2,064,000 during the first quarter of fiscal year 2002 as
compared with $2,489,000 for the same period last year, a $425,000
(17%) decrease. The decrease was primarily attributable to the
loss of revenue from the sale of New England Metal Treating and a
weaker economy for the heat treating industry in the Midwest.


     Cost of sales of $1,453,000 (70% of net sales) during
the first quarter of fiscal year 2002 decreased $229,000 (14%)
from $1,682,000 (68% of net sales) for the same period a year
earlier. The decrease in total dollars was primarily attributable
to the sale of New England Metal Treating.  The increase in cost
of sales as a percent of net sales from 68% to 70% was primarily
the result of lower sales in the Midwest.  Gross margin decreased
to $611,000 as compared with $807,000 for the prior year first
quarter.

     Selling, general and administrative (SG&A) expenses of
$487,000 (24% of net sales) decreased $73,000 (13%) from $560,000
(23% of net sales) for the same period a year earlier.  The change
in SG&A expenses is primarily due to a decrease in the provision
for incentive compensation.

     The Company recorded operating income of $110,000 in
the first quarter of fiscal 2002 as compared with operating income
of $223,000 recorded in the prior year first quarter.  The
decrease in operating income in the first quarter of fiscal year
2002 is primarily attributable to lower sales and relatively fixed
costs.

     Total other expense amounted to $84,000 in the first
quarter of fiscal 2002 as compared with other expense of $67,000
in the first quarter of last year.  Other expense in both first
quarters relates primarily to interest expense.

     The Company recorded net income of $24,000 in the
first quarter of fiscal 2002 as compared with net income of
$154,000 in the prior year first quarter.


Income Taxes

     The provision for income taxes for the three months
ended July 31, 2001 was $2,000, or an effective tax rate of 7.7%,
compared to a provision for income taxes of $2,000, or an
effective tax rate of 1.3%, for the three months ended July 31,
2000.  The low effective income tax rate, compared to the federal
statutory rate of 34% plus state and local taxes for the three
months ended July 31, 2001 and 2000, is due to a reduction in the
valuation allowance resulting from the utilization of net
operating loss carryforwards in each respective period.


Liquidity and Capital Resources

     At July 31, 2001, the Company had negative working
capital of $54,000 compared with $63,000 of working capital at
April 30, 2001.  Cash and accounts receivables represented 76%
(78% at April 30, 2001) and 13% (14% at April 30, 2001) of total
current assets and total assets, respectively.  During the first
quarter of fiscal 2002, net cash used in operating activities
amounted to $18,000 compared to $579,000 provided by operating
activities in the first quarter of fiscal 2001.  The decrease is
primarily due to lower net income, increased accounts receivable
and decreased accounts payable and accrued expenses.  Working
capital requirements for the first quarter of fiscal 2002 was
funded primarily from available cash, cash generated from
operations and short-term borrowings under the line of credit.
The Company believes anticipated cash flows from operations and
its line of credit will be adequate to satisfy projected operating
requirements through the foreseeable future.


Forward-Looking Statements

     Certain statements contained in Management's
Discussion and Analysis and elsewhere in the 10-Q are forward-
looking statements.  These statements may discuss, among other
things, expected growth, future revenues and future performance.
The forward-looking statements are subject to risks and
uncertainties, including, but not limited to, competitive
pressures, inflation, consumer debt levels, currency exchange
fluctuations, trade restrictions, changes in tariff and freight
rates, capital market conditions and other risks indicated in
the Company's filings with the Securities and Exchange
Commission.  Actual results may materially differ from
anticipated results described in these statements.


Impact of Recently issued Accounting Standards

     In July 2001, the FASB issued Statement No. 141,
Business Combinations, and Statement No. 142, Goodwill and Other
Intangible Assets.  Statement 141 requires that the purchase
method of accounting be used for all business combinations
initiated after June 30, 2001 as well as all purchase method
business combinations completed after June 30, 2001.  Statement
141 also specifies criteria intangible assets acquired in a
purchase method business combination must meet to be recognized
and reported apart from goodwill, noting that any purchase price
allocable to an assembled workforce may not be accounted for
separately.  Statement 142 will require that goodwill and
intangible assets with indefinite useful lives no longer be
amortized, but instead tested for impairment at least annually
in accordance with the provisions of Statement 142.  Statement
142 will also require that intangible assets with definite
useful lives be amortized over their respective estimated useful
lives to their estimated residual values, and reviewed for
impairment in accordance with SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of.

     The Company is required to adopt the provisions of
Statement 141 immediately, except with regard to business
combinations initiated prior to July 1, 2001, and Statement 142
effective May 1, 2002.  Furthermore, any goodwill and any
intangible asset determined to have an indefinite useful life
that are acquired in a purchase business combination completed
after June 30, 2001 will not be amortized, but will continue to
be evaluated for impairment in accordance with the appropriate
pre-Statement 142 accounting literature.  Goodwill and
intangible assets acquired in business combinations completed
before July 1, 2001 will continue to be amortized prior to the
adoption of Statement 142.

Statement 141 will require  upon adoption of Statement 142, that
the Company  evaluate its existing intangible assets and
goodwill that were acquired in a prior purchase business
combination, and to make any necessary reclassifications in
order to conform with the new criteria in Statement 141 for
recognition apart from goodwill.  Upon adoption of Statement
142, the Company will be required to reassess the useful lives
and residual values of all intangible assets acquired in
purchase business combinations, and make any necessary
amortization period adjustments by the end of the first interim
period after adoption.  In addition, to the extent an intangible
asset is identified as having an indefinite useful life, the
Company will be required to test the intangible asset for
impairment in accordance with the provisions of Statement 142
within the first interim period.  Any impairment loss will be
measured as of the date of adoption and recognized as the
cumulative effect of a change in accounting principle in the
first interim period.

     As of July 31, 2001, the Company has  unamortized identifiable
intangible assets in the amount of $145,000 which will be
subject to the transition provisions of Statements 141 and 142.
Amortization expense related to goodwill was $96,000 and $14,000
for the year ended April 30, 2001 and the three months ended
July 31, 2001, respectively.  The Company has determined that
the impact of the statements will not be significant to the
financial statements.



Item 3.  Qualitative and Quantitative Disclosures About Market
Risk.


Market Risks

     The Company is exposed to certain market risks with
its $500,000 line of credit of which $250,000 is outstanding at
July 31, 2001.  The line bears interest at the bank's reference
rate.




                       PART II

Items 1 thru 5

No response to these items is furnished, since in
each case the appropriate response would be either
not applicable or none.

Item 6.  Exhibits and Reports on Form 8-K

   (a)  Exhibits:  None

   (b)  Reports on Form 8-K:  None



       MILASTAR CORPORATION AND SUBSIDIARIES


                     S I G N A T U R E


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


        MILASTAR CORPORATION



        /s/ J. RUSSELL DUNCAN                  /s/ DENNIS J. STEVERMER
          J. Russell Duncan                      Dennis J. Stevermer
Chairman of the Board, Chief Executive   Vice President Treasurer, Principal
        Officer and Director               Financial and Accounting Officer


      Dated: September 14, 2001