SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20459

                                   FORM 10-KSB

                                   (Mark One)

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

                  For the fiscal year ended September 30, 2001
                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934
                         Commission File Number 0-17580

                                 FIRETECTOR INC.
              (Exact name of Small Business Issuer in its charter)

                               Delaware 11-2941299
                (State or other jurisdiction of (I.R.S. Employer
               incorporation or organization) Identification No.)

            209 Lafayette Drive, Syosset, New York 11791 (Address of
                     principal executive offices) (zip code)

         Issuer's telephone number, including area code: (516) 433-4700

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

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

                     Common Stock, $.001 par value per share
                                (Title of Class)

     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 and (2) has been subject to such filing
requirements for the past 90 days. YES X NO

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements by reference in Part III of this Form 10-KSB ( )

     State issuer's revenues for its most recent fiscal year: $19,927,000

     The aggregate market value of the voting stock held by non-affiliates of
the Registrant, based upon the average bid and ask prices for the Registrant's
Common Stock, $.001 par value per share, as of December 14, 2001 was $1,432,543.

      As of December 14, 2001, the Registrant had 1,704,425 shares of Common
Stock outstanding.

Documents Incorporated by Reference: Definitive Proxy Statement to be filed.


<PAGE>





`
                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

The Company

     Firetector Inc.  ("Firetector" or the "Company") is a Delaware  corporation
organized in October 1988 to acquire controlling  interests in companies engaged
in the design,  manufacture,  sale and servicing of fire, life safety  security,
energy  management,  intercom,  audio-video  communication  and  other  systems.
Reference  to  Firetector  or the  Company  include  operations  of  each of its
subsidiaries except where the context otherwise requires.  Firetector's business
is conducted through  subsidiaries in New York City metropolitan area and Dallas
Texas.

Firetector Products

     Firetector  designs,  manufactures,  markets and sells its own  proprietary
life  safety and  communication  systems and also  engineers,  markets and sells
systems and products  manufactured  by other parties.  Firetector's  proprietary
product  line  features  the COMTRAK  1720 and 2000 Life Safety  Systems and the
TELTRAK Communications System.

     In 1973,  New York  City  passed  Local  Law 5  requiring  that all  office
buildings  of 100 feet or more be  outfitted  with smoke  detectors,  manual and
audio  communicating  systems for life safety and fire  reporting  purposes.  In
anticipation of the demand that this legislation  would create for equipment and
systems employing improved technology and design features, Firetector engaged in
extensive  research and development  which led to its  proprietary  COMTRAK 1720
Life Safety  System which has been  installed  in scores of buildings  since the
early 1980's.

     To meet the challenges of more stringent code  requirements  and a sluggish
market for new construction, Firetector developed its new generation proprietary
COMTRAK 2000 Life Safety System which utilizes the latest technology to not only
meet the  current  code  requirements,  and  satisfy  the "wish list" of current
COMTRAK customers,  but many likely future code requirements as well. One of the
improvements  incorporated into the COMTRAK 2000 is a Fire Command Station which
offers a color CRT display  system along with three  sectional  displays.  These
features  provide the operator  with a wide  variety of  pertinent  information,
allowing for quicker response,  which is critical in an emergency.  In addition,
the expanded memory  capability of the new Fire Command Station enables a single
station to control multi-building projects and permits simplified operation.

     COMTRAK 1720 and 2000 Systems are operating in approximately  100 buildings
in New York City.  Firetector  has approvals from Factory Mutual and various New
York City agencies for the COMTRAK 1720 and COMTRAK 2000 System.

     TELTRAK  Communications  Systems.  In the  early  1980s,  Firetector  began
investigating  the  intercom  market  and the  possibilities  of  utilizing  its
computerized multiplex technology for this market.  Significant  construction of
new  high-rise  housing  occurred  in the  1970s and  1980s  and  increased  the
potential demand for  technologically  advanced intercom  systems.  To meet this
demand,  Firetector developed a  micro-processor-based  combination intercom and
security system using Casey's multiplex  technology.  The TELTRAK I intercom and
security  system is capable of a variety of  accessory  functions in addition to
its basic intercom and security function. Firetector added video capabilities to
its TELTRAK I technology and created the TELTRAK II, for  installation in luxury
condominium,  cooperative and apartment buildings.  Over 16,000 TELTRAK I and II
units have been sold.  In 1991,  the  redesigned  TELTRAK III  intercom/security
station  was  introduced,   with  enhanced   features  to  expand  its  use  and
competitiveness  in the face of the  reduced  market  for  these  products.  New
features,  such as public  address,  enable  important  messages  to be given to
building occupants either locally or by groups in case of emergency.

Other Products

     In the past five years Firetector has sought to diversify its product lines
to establish a greater base to absorb product support,  R & D and other overhead
and to provide product and customer diversification. To that end, Firetector has
augmented its established  position in marketing  engineered life safety systems
(proprietary and third party) by developing a significant business in engineered
sound  systems  for  application  to a  variety  of users  including  hospitals,
educational facilities and transit facilities (e.g. subway stations). Firetector
has developed a focused unit with a high level of  experience to penetrate  this
niche market with significant  success as a substantial  portion of Firetector's
order position derives from this effect. In addition,  Firetector  organized new
marketing  units to focus on marketing,  engineering  and servicing  systems and
products  manufactured by third parties,  particularly  national  manufacturers.
These  units  are   service   oriented   organizations   which  focus  on  close
relationships with customers and key suppliers.

     In 1993,  Firetector  acquired assets of a company which  manufactured  and
marketed  sophisticated  products and  on-board  information  and  communication
systems  with  applications  for  municipal   transit  carriers,   long-distance
passenger  carriers and bus and train  builders.  Firetector has integrated this
operation  into its New  York  division  and has to date  supplied  products  to
customers such as ABB Traction, Sumitomo, Kawasaki,  Morrison-Knudsen,  Siemens,
the New York City Transit Authority and AMTRAK.

Service

     Firetector continues to put an increasing priority on the development of an
integrated  and  efficient  service  organization.  Sales  personnel  have  been
dedicated to securing service  contracts and are intensifying  efforts to market
service to COMTRAK and other Firetector  projects coming out of warranty and the
renewal of such contracts. To improve efficiencies and productivity,  Firetector
organized a division  to perform  cleaning  on life  safety  systems,  which was
previously  subcontracted  to an external entity.  To improve customer  service,
Firetector  maintains  an  office  in New York City  which  houses  its New York
service management.

General Sound (Texas) Company

     Firetector conducts business in Texas through its subsidiary, General Sound
(Texas) Company, which distributes,  services, installs and designs a variety of
sound, fire alarm, intercom and security systems in the Dallas/Ft.  Worth, Texas
area.  General Sound  concentrates its sales effort on the commercial market and
schools. General Sound provides its customers, primarily electrical contractors,
with  engineered  systems,   assistance  in  design,  installation  support  and
post-installation service.

     General Sound has non-exclusive  distribution agreements for the Dallas/Ft.
Worth area with Notifier,  Dukane, and other manufacturers.  The product mix and
dependence  on  individual  suppliers  varies  from  year to year  depending  on
customer requirements and market trends.

Research and Development

     During the fiscal years ended September 30, 2001 and 2000, Firetector spent
approximately $142,000 and $135,000,  respectively, for research and development
of Firetector's life safety and communication systems.

Customers and Suppliers

     For the  fiscal  years  ended  September  30,  2001 and 2000,  no  customer
accounted for more than 10% of Firetector's revenues.

Regulations

     Firetector  believes  that it is in  compliance  with  applicable  building
codes,  zoning ordinances,  occupational,  safety and hazard standards and other
Federal,  state and local  ordinances  and  regulations  governing  its business
activities.

Competition

     Firetector's business is competitive;  some of Firetector's competitors may
have greater  financial  resources and may offer a broader line of fire and life
safety products.  Firetector also faces  competition in the servicing of systems
which it sells. Accordingly,  even though Firetector may sell and install a fire
and life  safety  control  and  communications  system,  it may not  receive the
contract to service  that  system.  Firetector,  however,  believes  that it can
effectively  compete with any entity which  conforms with  applicable  rules and
regulations.

Employees

    Firetector and its subsidiaries have 125 full time employees, including 42
New York hourly employees that are covered by a Collective Bargaining Agreement
expiring June 2002.

Business Conditions

     Firetector  believes that its labor and material sources are sufficient and
that other than normal competitive factors, and what is discussed above or under
"MANAGEMENT'S  DISCUSSION  OF  FINANCIAL  CONDITION  AND RESULTS OF  OPERATION",
Firetector's  operations  and  industry do not have any special  characteristics
which may have a material impact upon its future financial performance.

Patents and Trademarks

     The  Company  does  not have  any  patents  on its  systems,  but,  it uses
proprietary  technology  which  it  seeks  to  protect  as  trade  secrets.  The
"Firetector",  "Casey Systems" and "COMTRAK"  trademarks are registered with the
United States Patent and Trademark Office.

ITEM 2. DESCRIPTION OF PROPERTY

     The   Company   leases   approximately   15,700   square  feet  of  office,
manufacturing and warehouse space in Syosset,  New York under a seven year lease
expiring  June 2007,  The rental  schedule  provides for monthly rent of $13,966
during  the first and  second  years of the  initial  term and with 3.3%  yearly
increases for the third thru seventh years.

     The Company has a lease for  approximately  4,000 square feet of office and
warehouse  space in New York  City.  The lease  term runs from  October  1, 2000
through October 1, 2003. The lease agreement  provided for annual rental fees of
$115,000,  which includes the cost of certain  services  including  electricity.
This lease can be terminated by either party giving 180 days notice.

     The Company  leases a 7,700  square foot office and  warehouse  facility in
Richardson,  Texas, a suburb of Dallas, pursuant to a lease that was extended in
October,  1997 to expire on April 30,  2003  providing  for annual rent on a net
basis of $51,700 escalating  annually to $61,200 in the final year of the lease.
The  Company  has a 24 month  renewal  option on the lease which would allow for
rent at the prevailing market rate and tenant responsibility for any increase in
common  area  expenses  over the 1997 base year.  Management  believes  there is
sufficient space at this facility for its current and intended business.

ITEM 3. LEGAL PROCEEDINGS

     In the normal course of its operations,  the Company has been or, from time
to time,  may be named in legal  actions  seeking  monetary  damages.  While the
outcome of these matters cannot be estimated with certainty, Management does not
expect,  based  upon  consultation  with  legal  counsel,  that they will have a
material effect on the Company's business or financial condition.

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

    None

                              PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     Firetector's  Common Stock has been traded on the National  Association  of
Securities  Dealer's Inc. Automated  Quotation System ("NASDAQ") since April 11,
1989 under the "FTEC" symbol. The following table shows the high and low bid and
ask quotations for each fiscal quarter from December 31, 1999 through  September
30,  2001 which  quotations  were  obtained  from the  National  Association  of
Securities Dealers Inc.

  Common Stock                      Bid                        Ask
  Quarter Ended              High        Low           High          Low

December 31, 1999            2.000      1.125          2.218        1.219
March 31, 2000               4.000      3.125          4.188        1.625
June 30, 2000                1.938      1.562          1.938        1.438
September 30, 2000           1.875      1.250          1.967        1.313
December 31, 2000            1.438      0.844          4.750        0.938
March 31, 2001               1.719      1.000          1.750        1.094
June 30, 2001                1.469      1.170          1.500        1.250
September 30, 2001           1.780      1.180          1.870        1.250

     The above  quotations  represent  prices  between  dealers,  do not include
retail  markups,   markdowns  or  commissions  and  may  not  represent   actual
transactions.  As of  December  14,  2001,  there  were 431  record  holders  of
Firetector's Common Stock.

     On December  14,  2001 the closing bid and ask prices for the Common  Stock
were $1.620 and $1.710, respectively.

     The Company has not paid any cash dividends on its Common Stock. Payment of
cash dividends in the  foreseeable  future is not  contemplated  by the Company.
Whether dividends are paid in the future will depend on the Company's  earnings,
capital  requirements,  financial  condition  along  with  economic  and  market
conditions,  industry  standard  and other  factors  considered  relevant to the
Company's  Board of  Directors.  Payment of dividends is  restricted  in certain
cases by the Company's credit facilities. Accordingly, no assurance can be given
as to the amount or timing of future dividend payments, if any.


ITEM 6. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

LIQUIDITY AND CAPITAL RESOURCES

     The Company has a $3 million dollar credit facility with Citizens  Business
Credit of Boston (the "Credit  Facility")  that expires in December,  2004.  The
Credit Facility had an interest rate of prime plus 3/4% on outstanding balances.
Effective  October  1,2001,  the  interest  rate was reduced to prime plus 1/4%.
Advances  under the  Credit  Facility  are  measured  against a  borrowing  base
calculated on eligible receivables and inventory. The Credit Facility is secured
by all assets of the Company and all of its operating subsidiaries.

     The Credit Facility includes various  covenants,  which among other things,
impose  limitations on declaring or paying  dividends,  acquisitions and capital
expenditures. The Company is also required to maintain certain financial ratios.
At September 30, 2001,  the Company was not in default with any of its financial
covenants and at such time owed $1,310,000 under the Credit Facility.

Net cash provided by operations  for the twelve months ended  September 30, 2001
amounted to $630,000 as compared to $810,000 for the  comparable  prior  period.
The primary reason for the lower amount of cash being provided by operations was
due to a decrease of $102,000 in operating  profit  before  taxes.  The $630,000
cash  from  operations  was  primarily  used to pay off  borrowing  under a Note
Payable to Mirtronics by $243,000 and to reduce  borrowings  under the Company's
Credit Facility to a level of $1,310,000.  The Company anticipates  continuation
of the negotiation of certain terms with its customers prior to the beginning of
a project,  the monitoring of its terms during a project and completing projects
in timely fashion,  resulting in faster final  payments.  It is the intention of
the Company to closely monitor this program throughout fiscal 2002.

     The ratio of the Company's current assets to current  liabilities  declined
to  approximately  2.45 to 1 at September 30, 2001 compared to 2.55 at September
30,  2000.  This  decrease is  primarily  due to the increase in 2001 of certain
costs due to subcontractors and a corresponding increase in customer receivables
related to their projects.

     Firetector's terms of sale are net 30 days. However,  the normal receivable
collection  period is 60-120  days,  exclusive  of  retainage,  because  certain
governmental  regulations  and the Company's  frequent status as a subcontractor
(entitled to pro rata payments as the general project is completed)  extends the
normal  collection  period.  Firetector  believes  this is a  standard  industry
practice.  Firetector's receivable experience is consistent with the industry as
a whole and will likely  continue.  This could be considered an area of risk and
concern.  However, due to the proprietary nature of Firetector's  systems,  many
projects require  Firetector's  cooperation to secure a certificate of occupancy
and/or to  activate/operate  a life safety system,  thus assisting  Firetector's
collection  of  a  significant   portion  or  even  total  payment,   even  when
Firetector's  immediate  account debtor's  (contractor)  creditors have seized a
project.

RESULTS OF OPERATIONS

Revenues

     Total  revenues in 2001 were $19.9  million,  an increase of 4% compared to
revenues of $19.1  million in 2000.  This  increase  was  primarily  due to a 4%
increase in both product and service revenues in 2001.

     The increase in product revenue is the result of the Company's  intensified
and broadened  marketing  program,  which maintained  product revenues at record
levels.  During 2001, the Company  continued to experience  strong  shipments on
commercial  audio/visual  projects that included a New York City auction  house,
several  professional  organizations,  a securities firm and the continuation of
the second phase of a major  airport  facility.  The Company  also  continued to
experience a higher level of revenues in 2001 from its fire alarm  product line;
due in part from expansion into the Long Island, NY market area.

     Service  revenues  increased  4% in 2001 to  $4,349,000.  The  increase  in
service  revenues is a result of higher service  contract revenue on life safety
systems.

Gross Profit

     Gross  profit  dollars  from  product  revenues  increased  1% in  2001  to
$5,069,000 as a result of the 4% increase in product sales.  Gross profit margin
as a percentage of product  revenues was only 33.0% in 2001 compared to 34.0% in
2000.  This decrease in gross profit  percentage  was due to a change in product
mix. This product mix change reflects a decline in tenant renovations in 2001 as
leasing  activity  in New York City had slowed  significantly  following  a very
active  2000.  In  contrast,  2000  benefited  from an  engineering  and product
management  contract  (professional  service  with no  material  content)  which
carried a higher gross margin.

     Gross  profit  margin on service  revenues  decreased in 2001 to 27.9% from
29.7% in 2000.  This decrease  reflects the effect of certain wage  increases to
service technicians in both New York and Dallas.  These wage increases could not
be fully passed on to customers by increases in service contract revenue.

Selling, General and Administrative Expenses

     Selling,  General and Administrative  Expenses (S G & A) increased by 5% in
2001  over  2000  primarily  as a result  of the  Company's  expanded  marketing
program.  This expansion in marketing effort has resulted in higher revenues and
related  profitability  during 2001 and 2000.  The  increase in S G & A reflects
increased  commission  expense related to higher product revenues and additional
staffing  related to the Company's  railcar  transit  communication  group as it
addresses  a  marketing  opportunity  for future  business  over the next 3 to 5
years.  However,  selling,  general and administrative  expenses as a percent of
sales remained at 26.3% of revenues during both years.

Income Before Tax

     Operating  income  decreased  in 2001 to  $733,000  compared to $834,000 in
fiscal 2000. While there was a slight  improvement in gross profit in 2001 there
was a decline in operating  income due to the 5% increase in selling general and
administrative expenses in 2001 as noted above. Offsetting the increase in S G &
A was a $103,000  reduction in interest costs due to the payoff of notes payable
and a reduction  in bank debt coupled with lower  interest  rates in 2001.  Also
favorably  affecting operating income was lower depreciation and amortization in
2001 as certain assets became fully depreciated.

Tax Provisions

     The Company's current income tax provision  represents  Federal,  state and
local income taxes.  During 2000,  the Company fully utilized the balance of its
net operating loss carry forwards.  Deferred taxes represent the net increase in
deferred tax assets as it relates to certain book  provisions  to be deducted in
future tax returns.

Order Position

     Firetector's order position, excluding service, remained at $7.8 million at
September 30, 2001 compared to the $7.8 million level at September 30, 2000. The
Company  expects to fulfill the  majority  of its  backlog  over the next twelve
months.  However,  the  backlog  includes  $2.2  million  of recent  orders  for
communication and announcement  systems from several transit car  manufacturers,
that will be shippable over the next 24 month period.  While quotation  activity
is brisk,  there is no  assurance  when orders will be received  and whether the
order  position will increase.  Due to the fact that the Company's  products are
sold and  installed as part of larger  construction  or mass  transit  projects,
there is  typically a delay  between the booking of the contract and its revenue
realization.  The order  position  includes and the Company  continues to bid on
projects that might include significant  subcontractor  labor, and expects to be
active in seeking orders where the Company would act as a prime contractor.

Plan of Operations

     During  fiscal  2002,  Management  intends  to  continue  to  focus  on its
intensified  marketing programs that began in 1998 and to continue to contain or
monitor fixed  overhead as well as to reduce  variable  costs  through  improved
efficiency and productivity.  Management  anticipates reduced demand in 2002 and
likely reduced  profitability  due to the overall decline in economic  activity,
layoffs and real estate vacancies.  The events of September 11th resulted in the
loss of a limited  amount of direct  revenue from  service  contracts in certain
affected buildings.  Since most affected tenants relocated to existing built out
space elsewhere in New York City,  moved out of New York City or downsized,  the
catastrophe has not resulted in immediate business to offset the overall decline
in demand.  In addition,  various  large  projects with or related to government
agencies  including  airport  terminal  expansion  which were likely to generate
significant  revenue in 2002 have been  deferred  until  2003 or beyond.  Longer
term,  Management  expects  increased  demand from the  Company's  audio-visual,
public address and other communication products. Enhancements in recent years to
Firetector's  management  information  systems  and  methods  of  approving  and
monitoring  project costs have improved  Management's  ability to pinpoint waste
and/or third party (supplier or customer) cost responsibility.

 INFLATION

     The impact of inflation on the Company's  business  operations has not been
material in the past.  Casey's  labor  costs are  normally  controlled  by union
contracts  covering a period of two years and its material  costs have  remained
relatively  stable.  However  in July of  1999,  after  a  brief  work  stoppage
(strike),  the Company and its union  agreed to a new three year  contract  that
provides for wage/benefits  increases of 5% in each year.  During 2001,  certain
union  members,  upon passing  certain test  requirements,  will be moving up to
higher paying  categories  that have multiple salary steps per year in excess of
the  5%  contractual   level.  In  addition,   the  demand  for  highly  skilled
professionals  has  resulted  in the need to  assess  salary  levels in order to
remain  competitive  in both  Dallas,  Texas  and the New  York  City,  New York
metropolitan  areas. It is expected that required salary adjustments will exceed
normal  increases given in the past. The Company will try to mitigate the effect
of these increases in labor costs by price increases,  if possible,  and expense
reductions.

ITEM 7.  FINANCIAL STATEMENTS

     The consolidated financial statements required to be filed hereunder are
indexed at Page 11 and are incorporated herein by reference.

ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE.

     Effective  September  8,  2000 the  Board of  Directors  elected  to change
independent  accountants.  Accordingly,  the  public  accounting  firm of  Moore
Stephens,  P.C. was notified that the  client-auditor  relationship would not be
renewed and the public accounting firm of Marcum & Kliegman,  LLP was engaged to
audit the Company's financial statements for the year 2000.

                                  PART III

Incorporated by reference to the Registrant's Definitive Proxy.



ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

Exhibit No.            Description of Exhibit                 Page No.

3.1    Certificate of Incorporation of the Company, as
       amended (Exhibit 3.1)(1)

3.2    By-Laws of the Company (2)

4.1    Specimen Common Stock Certificate (2)

10.1   Credit Agreement dated June 23, 1998  between
       Firetector Inc. as Borrower and Citizens Business Credit Company
       as Lender (3)

10.2   Form of First amendment to Credit Agreement dated October, 2000
       between Firetector Inc. as borrower and  Citizens Business Credit Company
       as Lender (4)

10.6   Form of Lease dated February, 2000 between Casey Systems as Tenant and
       First Industrial L.P. as Landlord (4)

22.1   Subsidiaries of the Registrant (Exhibit 22.1)(1)

- --------

     (1) Reference is made to the correspondingly  numbered Exhibit to Amendment
No. 1 to the  Company's  Registration  Statement on Form S-2,  Registration  No.
33-51472,  filed with the Commission on December 23, 1992, which is incorporated
herein by reference.

     (2) Reference is made to the correspondingly  numbered Exhibit to Amendment
No. 1 to the  Company's  Registration  Statement on Form S-1,  Registration  No.
22-26050,  filed with the Commission on January 23, 1989,  which is incorporated
herein by reference.

     (3)  Reference  is  made to the  correspondingly  numbered  Exhibit  to the
Company's  Annual Report on Form 10-KSB for the Fiscal Year Ended  September 30,
1998, which Exhibit is incorporated herein by reference.

     (4) To be filed by amendment

     (b)  Reports on Form 8-K

None


<PAGE>


                                   SIGNATURES

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

                              FIRETECTOR INC.
                              (Registrant)

                              By: /s/ Daniel S. Tamkin
                                  -----------------------------
                                  Daniel S. Tamkin,
                                  Chief Executive Officer and
                                  Director

Dated: December 26, 2001

     In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Company and in the capacities and on the
dates indicated.

SIGNATURE                          TITLE                           DATE

 /s/DANIEL S. TAMKIN           Chairman,                      December 26, 2001
 ----------------------        Chief Executive Officer
 Daniel S. Tamkin              and Director

                               President, Chief Operating
/s/JOSEPH VITALE               Officer and Director           December 26, 2001
------------------------
  Joseph Vitale

                              Vice President,                 December 26, 2001
/s/JOHN A. POSERINA           Chief Financial Officer
------------------------      Treasurer, Secretary,
 John A. Poserina             and Director

/s/HENRY SCHNURBACH           Director                        December 26, 2001
-----------------------
  Henry Schnurbach

/s/DENNIS P. McCONNELL       Director                        December 26, 2001
------------------------
 Dennis P. McConnell






<PAGE>


          Index to Consolidated Financial Statements

                   Firetector Inc. and Subsidiaries

                                     Item 7

Independent Auditors' Report ....................................       F1

Audited Consolidated Financial Statements

Consolidated Balance Sheet-September 30, 2001 ...................       F2 - F3

Consolidated Statements of Income
 Years Ended September 30, 2001 and 2000 ......................         F4

Consolidated Statements of Stockholders' Equity
 Years Ended September 30, 2001 and 2000 ......................         F5

Consolidated Statements of Cash Flows
 Years Ended September 30, 2001 and 2000 ......................         F6

Notes to Consolidated Financial Statements ...................          F7 - F21


<PAGE>




                           Independent Auditors Report

To the Stockholders and Board of Directors of
Firetector Inc. and Subsidiaries

We have audited the accompanying  consolidated  balance sheet of Firetector Inc.
and its  subsidiaries  as of  September  30, 2001 and the  related  consolidated
statements  of income,  stockholders'  equity,  and cash  flows for years  ended
September 30, 2001 and 2000. These financial  statements are the  responsibility
of the  Company's  management.  Our  responsibility  is to express an opinion on
these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain reasonable  assurance about whether the consolidated
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  consolidated  financial  statements.  An audit also includes  assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall  consolidated  financial  statement  presentation.  We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated statements referred to above present fairly, in
all material  respects,  the consolidated  financial position of Firetector Inc.
and its  subsidiaries as of September 30, 2001 and the  consolidated  results of
their operations and their cash flows for the years ended September 30, 2001 and
2000, in conformity with accounting  principles generally accepted in the United
States of America.


December 6, 2001                         /s/ MARCUM & KLIEGMAN LLP
New York, NY

<PAGE>

                         Part I - FINANCIAL INFORMATION
                        FIRETECTOR INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET


                                                                September 30,
                                                                    2001
ASSETS

CURRENT ASSETS
 Cash and cash equivalents                                       $  299,000
 Accounts receivable, principally trade, less allowance
  for doubtful accounts of $328,000                               6,457,000
 Inventories                                                      2,291,000
 Deferred taxes                                                     251,000
 Prepaid expenses and other current assets                          238,000
                                                                 -----------
TOTAL CURRENT ASSETS                                             $9,536,000
                                                                 -----------


PROPERTY, PLANT AND EQUIPMENT -net                                  361,000

OTHER ASSETS                                                        191,000

DEFERRED TAXES                                                       60,000

                                                                ------------
TOTAL ASSETS                                                    $10,148,000
                                                                ============

See accompanying Notes to the Consolidated Financial Statements



<PAGE>
                        FIRETECTOR INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET


                                                                September 30,
                                                                    2001

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

   Other notes payable - principally to related party              $117,000
   Accounts payable and accrued expenses                          3,306,000
   Unearned service revenue                                         454,000
   Current portion of capital lease obligations                      24,000
                                                                 -----------
TOTAL CURRENT LIABILITIES                                         3,901,000
                                                                 -----------


   Note payable to bank                                           1,310,000
   Notes payable - principally to related party,
    less current portion                                             89,000
   Capital lease obligations, less current portion                   65,000
                                                                 -----------
TOTAL LIABILITIES                                                 5,365,000
                                                                 -----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY

  Preferred stock, 2,000,000 shares authorized-
     none issued and outstanding
  Common stock, 10,000,000 shares authorized, $.001
     par value; issued and outstanding 1,704,425 shares               2,000
  Capital in excess of par                                        5,279,000
  Deficit                                                          (498,000)
                                                                 -----------
TOTAL STOCKHOLDERS' EQUITY                                        4,783,000
                                                                 -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                      $10,148,000
                                                                 ===========

See accompanying Notes to the Consolidated Financial Statements


<PAGE>

                        FIRETECTOR INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
                                                            For the Year Ended
September 30,
                                                              2001             2000

                                                          -----------      ------------
-
<S>                                                       <C>                    <C>
Net sales                                                 $15,578,000     $14,921,000
Service revenue                                             4,349,000       4,166,000
                                                          ------------    ------------
Total revenues                                             19,927,000      19,087,000
                                                          ------------    ------------


Cost of sales                                              10,510,000       9,896,000
Cost of service                                             3,136,000       2,928,000
Selling, general and administrative                         5,252,000       5,016,000
Interest expense                                              146,000         249,000
Depreciation and amortization expense                         150,000         164,000
                                                          ------------    ------------
                                                           19,194,000      18,253,000
                                                          ------------    ------------
Income from  operations before provision
  for income taxes                                            733,000         834,000

Provision  for income taxes:
   Current                                                    334,000         335,000
   Deferred                                                   (34,000)         25,000
                                                          ------------    ------------
                                                              300,000         360,000

                                                          ------------    ------------
Net Income                                                $   433,000      $  474,000
                                                          ============     ===========
Earnings Per Common Share
  Basic Earnings Per Share                                      $0.25           $0.28
  Diluted  Earnings Per Share                                   $0.24           $0.26
                                                                =====           =====

Weighted Average Number of Common Shares Outstanding        1,704,425       1,682,198

Weighted Average Number of Common and Potential Dilutive
   Common Shares Outstanding                                1,784,089       1,853,792
</TABLE>


See accompanying Notes to the Consolidated Financial Statements

<PAGE>
                        FIRETECTOR INC. and SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 and 2000
<TABLE>
<CAPTION>
                                                TOTAL
                                            STOCKHOLDERS'                  PREFERRED STOCK                     COMMON STOCK
                                                EQUITY                SHARES               AMOUNT            SHARES         AMOUNT
                                            ------------             ----------          --------         ----------     ----------
<S>                                          <C>                           <C>                 <C>        <C>               <C>
Balance at September 30, 1999                $3,756,000                      0                  0         1,571,097         $2,000
                                            -----------                --------          ---------       -----------       --------
Issuance of shares from exercise
  of options                                    120,000                                                     133,333              0

Net Income                                      474,000
                                            -----------                --------          ---------       -----------       --------
Balance at September 30, 2000                $4,350,000                      0                 $0         1,704,430         $2,000

Net Income                                     $433,000
                                            -----------                --------          ---------       -----------       --------
Balance at September 30, 2001                $4,783,000                      0                 $0         1,704,430         $2,000
                                            ===========                ========          =========       ===========       ========
</TABLE>

See accompanying Notes to the Consolidated Financial Statements
<PAGE>


                        FIRETECTOR INC. and SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
                 FOR THE YEARS ENDED SEPTEMBER 30, 2001 and 2000
                                (continued)

                                                  CAPITAL
                                                 IN EXCESS
                                                  OF PAR             DEFICIT
                                                -----------       -------------

Balance at September 30, 1999                    $5,159,000        $(1,405,000)

Issuance of shares from exercise
  of options                                        120,000


Net Income                                                            $474,000
                                                ------------      -------------
Balance at September 30, 2000                    $5,279,000         $( 931,000)
                                                ------------      -------------

Net Income                                                             433,000
                                                ------------       ------------
Balance at September 30, 2001                    $5,279,000          $(498,000)
                                                ============       ============

See accompanying Notes to the Consolidated Financial Statements
<PAGE>
                        FIRETECTOR INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                           For the Year Ended September 30,
                                                               2001                  2000
                                                           -----------            ----------
<S>                                                          <C>                    <C>
OPERATING ACTIVITIES
Net income                                                  $433,000               $474,000
 Adjustments to reconcile net income to net cash
   provided by operating activities:
  Depreciation and amortization                              150,000                164,000
  Deferred income tax (benefit) expense                      (34,000)                25,000
  Provision for doubtful accounts                            (21,000)               128,000
 Changes in operating assets and liabilities:
  Accounts receivable                                       (319,000)              (712,000)
  Inventories, prepaid expenses and other current assets     (66,000)               (34,000)
  Other assets                                               (39,000)                 1,000
  Accounts payable and accrued expenses                      446,000                731,000
  Unearned service revenue                                    80,000                 33,000
                                                           ------------           -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES                    630,000                810,000
                                                           ------------           -----------
INVESTING ACTIVITIES
 Purchases of property, and equipment                       (148,000)               (97,000)
                                                           ------------           -----------
NET CASH (USED IN) INVESTING ACTIVITIES                     (148,000)               (97,000)
                                                           ------------           -----------
FINANCING ACTIVITIES

 Proceeds from exercise of stock options                                            120,000
 Principal payments on revolving line of credit,
  long-term debt, notes payable and capital lease
  obligations                                               (271,000)              (719,000)
 Proceeds from revolving line of credit, notes payable
   and capital lease obligations                              92,000                 80,000
 Notes payable to affiliated companies                      (243,000)              (189,000)
                                                          ------------           -----------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES         (422,000)              (708,000)
                                                          ------------           -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                     60,000                  5,000

Cash and cash equivalents at beginning of period             239,000                234,000
                                                          ------------           -----------
Cash and cash equivalents at end of period                  $299,000               $239,000
                                                          ============           ===========
SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid during the period for:
     Income taxes                                           $389,000                $67,000
     Interest                                               $145,000               $234,000
</TABLE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

During the year ended September 30, 2001, the Company  incurred no capital lease
obligations  for the  acquisition of equipment.  During the year ended September
30, 2000,  the Company  incurred  capital  lease  obligations of $94,000 for the
acquisition of equipment.

See accompanying Notes to the Consolidated Financial Statements

<PAGE>

                        Firetector Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                               September 30, 2001



1. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent assets and liabilities at September 30, 2001, and reported amounts of
revenues and expenses  during the fiscal year.  Actual results could differ from
those estimates.

Principles of Consolidation

The consolidated  financial  statements  include the accounts of the Company and
its  subsidiaries,  all of which  are  wholly  owned.  The  principal  operating
subsidiaries  are: Casey Systems Inc.  ("Casey"),  General Sound (Texas) Company
("GenSound"),  Pyrotech Service Inc.  ("Pyrotech"),  Systems Service  Technology
Corp. ("SST") and Amco Maintenance  Corporation  ("AMCO").  Effective October 1,
1999,  the  operations  of Pyrotech and Amco became part of the operation of SST
and these two companies  became  inactive.  Significant  intercompany  items and
transactions have been eliminated in consolidation.  The Company is a subsidiary
of Mirtronics, Inc. ("Mirtronics"), an Ontario publicly-held corporation.

Business

The Company operates in one industry segment: the design, manufacture, marketing
and  service  of a variety  of data  communications  product  and  systems  with
applications   in  the  fire  alarm,   life   safety,   transit,   security  and
communications industry.

Revenue Recognition

Sales are recognized when product is shipped to customers.  Service revenue from
maintenance  contracts is recognized on a straight-line  basis over the terms of
the  respective  contract,  which is generally  one year.  Non-contract  service
revenue is recognized when services are performed.

Inventories

Inventories are priced at the lower of cost (first-in,  first-out) or market and
consist primarily of raw materials.

Property and Equipment

Property  and  equipment  are stated at  historical  cost.  Leases  meeting  the
criteria for  capitalization  are recorded at the present  value of future lease
payments.

Depreciation  and  amortization  of machinery  and  equipment  and furniture and
fixtures are provided primarily by the straight-line method over their estimated
useful lives. The Company depreciates  machinery and equipment over periods of 3
to 10 years and  amortizes  leasehold  improvements  and assets  acquired  under
capitalized  leases over the life of the lease or their  economic  useful  life,
whichever is shorter.

Other Assets

Other assets are comprised principally of the excess of cost over the fair value
of the assets acquired in the acquisition of certain subsidiaries. The excess of
cost over the fair value of the assets  acquired  approximates  $110,000 (net of
accumulated  amortization  of  $64,000)  and  relates  principally  to the  1990
acquisition of GenSound.  This amount is being  amortized over forty years under
the straight line method.

The Company evaluates the periods of goodwill  amortization to determine whether
later events and  circumstances  warrant revised  estimates of useful lives. The
Company  also  evaluates  whether  the  carrying  value of  goodwill  has become
impaired.

Advertising  Costs

Advertising  Costs are expensed as incurred during the year.  Advertising  Costs
for the years ended September 30, 2001 and 2000 amounted to $26,000 and $20,000,
respectively.

Research and Development Cost

Research  and  development  costs are  expensed  as  incurred  during  the year.
Research and  development  costs for the years ended September 30, 2001 and 2000
amounted to $142,000 and $135,000, respectively.

Income Taxes

The Company  accounts for income taxes under  Statement of Financial  Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes". Under SFAS No. 109, the
asset  and  liability  method  is used to  determine  deferred  tax  assets  and
liabilities based on differences  between  financial  reporting and tax bases of
assets and  liabilities  and are  measured  using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse.

Earnings Per Share

SFAS No. 128 "Earnings Per Share" requires companies to report basic and diluted
earnings per share  ("EPS")  computations.  Basic EPS  excludes  dilution and is
based on the  weighted-average  common shares  outstanding and diluted EPS gives
effect to potential  dilution of securities  that could share in the earnings of
the Company. Diluted EPS reflects the assumed issuance of shares with respect to
the Company's employee stock options, non-employee stock options, and warrants.

Cash Equivalents

The Company  considers all highly liquid  investments  with  maturities of three
months or less when purchased to be cash equivalents.

Concentration of Credit Risk

The Company's  operations  are located in two large U.S.  cities (New York City,
New York and Dallas, Texas), each of which is an independent market. The Company
grants  credit  to its  customers,  principally  all of  which  are  general  or
specialized construction  contractors,  none of which individually constitutes a
significant  portion  of  outstanding  receivables.  Approximately  84% of  such
outstanding  receivables  at  September  30, 2001 are due from  customers in New
York.

At September 30, 2001,  the Company had  approximately  $381,000 based on checks
that had not  cleared  the  financial  institutions  that are subject to insured
amount limitations. The Company does not require collateral to support financial
instruments subject to credit risk.

Stock Options and Similar Equity Instruments

The Company  adopted the  disclosure  requirements  of  Statement  of  Financial
Accounting   Standards   ("SFAS")   No.   123,   "Accounting   for   Stock-Based
Compensation," for stock options and similar equity  instruments  (collectively,
"Options") issued to employees;  however, the Company will continue to apply the
intrinsic  value based  method of  accounting  for options  issued to  employees
prescribed by Accounting  Principles  Board ("APB") Opinion 25,  "Accounting for
Stock  Issues  to  Employees,"  rather  than  the fair  value  based  method  of
accounting prescribed by SFAS No. 123. SFAS No. 123 also applies to transactions
in which an entity  issues its equity  instruments  to acquire goods or services
from  non-employees.  Those transactions must be accounted for based on the fair
value of the consideration  received or the fair value of the equity instruments
issued, whichever is more reliably measured. (see Note 9).

2. Transactions with Related Parties

Mirtronics  is the  largest  shareholder  of the  Company.  In  1994  and  1995,
Mirtronics  provided  financial  assistance to the Company by way of a Letter of
Credit in support of the  company's  credit  facility,  further  advances to the
Company,  and an exchange of debt for equity.  In connection with this financial
assistance,  the Company has outstanding  warrants to purchase 310,000 shares of
the Company's  Common Stock,  which were issued in 1998, and are  exercisable at
any time until December 31, 2003 at an exercise price of $1.02 per share.

Notes Payable  Principally  to Related Party  includes  $105,000 due to a former
officer/director  of the Company under a seven year installment  promissory note
dated January 1, 1997 that bears interest at 4% per annum.

3. Property and Equipment

Property and equipment (including those arising from capital leases) are
summarized as follows:

                                                           September 30,
                                                               2001
                                                       ----------------------
   Machinery and equipment                                  $1,342,000
   Furniture and fixtures                                      136,000
   Leasehold improvements                                       16,000
                                                       ----------------------
                                                             1,494,000
   Less accumulated depreciation and amortization
                                                             1,133,000
                                                       ----------------------
                                                              $361,000
                                                       ======================

Annual   amortization  of  equipment  under  capital  leases  is  included  with
depreciation and amortization expense.

Depreciation  and  amortization  expense was $129,000 and $127,000 for the years
ended September 30, 2001 and 2000, respectively.

4. Long-Term Debt

In 1998,  the Company  entered into a revolving  credit  facility  with Citizens
Business Credit Company of Boston,  Massachusetts (the "Credit  Facility").  The
Credit  Facility  was revised in  September  2000 and  provides for a $3,000,000
revolving line of credit  through  December 2004 and carries an interest rate of
prime plus 3/4% on outstanding balances (6% at September 30, 2001). The interest
rate was  reduced to prime  plus 1/4%  effective  October  1,  2001.  The Credit
facility limits capital  expenditures to $250,000 in each year. At September 30,
2001 $1,310,000 was outstanding  under this facility.  Advances under the credit
facility  are  measured   against  a  borrowing  base   calculated  on  eligible
receivables  and inventory.  The credit facility is secured by all of the assets
of the Company and all of its operating subsidiaries.

The Credit Facility includes certain  restrictive  covenants,  which among other
things,  impose  limitations on declaring or paying dividends,  acquisitions and
capital expenditure.  The Company is also required to maintain certain financial
ratios.  At  September  30,  2001,  the Company was not in default of any of its
financial covenants.


Annual maturities of Loans and Notes Payable are as follows:

                                Bank                      Other Notes
                                Loan                        Payable
                           ------------                   ----------

   2002                   $                                $117,000
   2003                          --                          67,000
   2004                          --                          17,000
   2005                       1,310,000                       5,000
                          --------------                  -----------
   Total                     $1,310,000                    $206,000
                          ==============                  ===========

The Company previously had a 10% note payable to Mirtronics, which was paid off,
with accrued interest, on March 5, 2001.

5. Leases

The Company  leases  certain  office and  warehouse  space  under  noncancelable
operating  leases  expiring at various times through 2007. In February 2000, the
Company  signed a new lease for office,  manufacturing  and  warehouse  space in
Syosset,  New York.  This lease  expires in June 2007.  In September  2000,  the
Company also  entered into a new lease for its service  center in New York City.
This lease expires in August 2003. However, either party may terminate the lease
with six months notice.  The Company also leases  certain  office  equipment and
vehicles under  noncancelable  capital and operating  leases expiring in various
years through fiscal 2005.

The  following  is a schedule  of future  minimum  payments,  by year and in the
aggregate,  under non  cancelable  capital and operating  leases with initial or
remaining terms of one year or more at September 30, 2001:
<TABLE>
<CAPTION>

                                                                      Capital Leases    Operating Leases

<S>                                                                      <C>                  <C>
2002                                                                     $33,000              $353,000
2003                                                                       31,000              326,000
2004                                                                       26,000              180,000
2005                                                                       21,000              186,000
2006                                                                                           192,000
2007                                                                                           148,000
                                                                    --------------------------------------
Total minimum lease payments                                             111,000            $1,385,000
                                                                                        ==================
Less amount representing interest                                          22,000
                                                                    --------------------
Present value of net minimum lease payments (including current
   portion of $24,000)                                                   $89,000
                                                                    ====================
</TABLE>

Rental expense amounted to $343,000 and $307,000 for 2001 and 2000,
respectively.

6. Significant Customers
During fiscal 2001 and 2000, no customer accounted for more than 10% of sales.

7. Income Taxes

During the year ended  September 30, 2001, the Company  recorded a tax provision
of $300,000  compared to  $360,000  for the year ended  September  30,  2000.  A
reconciliation  of such with the  amounts  computed by  applying  the  statutory
federal income tax rate is follows:
<TABLE>
<CAPTION>
                                                            Year ended September 30,
                                                               2001             2000
                                                            ---------------------------
<S>                                                             <C>              <C>
Statutory federal income tax rate                               34%              34%
Computed expected tax from income                            $249,000         $284,000
Increase in taxes resulting from:
 State and local income taxes, net of Federal tax benefit      53,000           97,000
 Nondeductible expenses                                         8,000            8,000
(Decrease) in taxes resulting from
 benefit of future tax deductible items                       (10,000)         (29,000)
                                                            ----------------------------
Provision                                                   $300,000          $360,000
                                                            ============================
                                                            ============================
</TABLE>

The Company  provided  $14,000 and  $13,000  for state and local  franchise  and
capital  taxes for the years ended  September  30, 2001 and 2000,  respectively.
These  expenses  have been  included  in  selling,  general  and  administrative
expenses for each of the years presented.

The Company has  recorded a deferred  tax asset at  September  30, 2001 and 2000
related  to certain  book  provisions  to be  deducted  in future  tax  returns.
Management  anticipates  profitable  operations to continue at a level that will
result in the utilization of the entire deferred tax asset.

The components of deferred tax assets at September 30, 2001 and 2000 consist of
the following:


Allowance for doubtful accounts                   $131,000           $140,000
Inventory reserve                                  120,000            103,000
Depreciation and amortization                       60,000             34,000
                                                  --------           ---------
Total deferred tax asset                          $311,000           $277,000
                                                  =========          =========


8. Earnings Per Share

Shown below is a table that presents for 2001 and 2000 the computation of basic
earnings per share, diluted earnings per share, weighted shares outstanding, and
weighted average shares after potential dilution.


                                                             Year Ended
Basic EPS Computation                                  2001              2000
---------------------                                ---------------------------
  Net Income available to common
       shareholders                                   $433,000         $474,000
  Weighted average outstanding shares                1,704,425        1,682,198

  Basic EPS                                               $.25             $.28
                                                          ====             ====


Diluted EPS Computation
-----------------------
  Income available to common
   shareholders                                       $433,000         $474,000

  Diluted net income                                  $433,000         $474,000

  Weighted-average shares                            1,704,425        1,682,198
   Plus:  Incremental shares from
          assumed conversions
     Non Employee Stock Options                                          10,242
     Employee Stock Options                             18,640           40,693
     Warrants*                                          61,024          120,659
                                                        ------          -------
  Dilutive potential common shares                      79,664          171,594
                                                        ------          -------
    Adjusted weighted-average shares                 1,784,089        1,853,792
                                                     ---------        ---------
    Diluted EPS                                           $.24             $.26
                                                         =====            =====

*Warrants convertible into 16,667 shares were antidilutive in the years ended
September 30, 2001 and 2000, respectively.

9.  Employee Stock Options, Options, and Warrants

On April 30, 1997, the Company and its stockholders adopted a nonqualified stock
option plan ("1997  Plan"),  which  expires  September  30,  2002,  except as to
options then outstanding  under the 1997 Plan. Under the 1997 Plan, the Board of
Directors  may grant options to eligible  employees at exercise  prices not less
than 100% of the fair market  value of the common  shares at the time the option
is granted.  The number of shares of Common  Stock that may be issued  shall not
exceed an aggregate of up to 10% of its issued and outstanding  shares from time
to time.  Options vest at a rate of 20% per year  commencing one year after date
of grant. Issuances under the 1997 Plan are to be reduced by options outstanding
under a 1990 nonqualified stock option plan (replaced by the 1997 Plan).

The Company  applies the intrinsic  value base method of accounting  for options
issued to employees  rather than the fair value based method of  accounting.  On
December 29, 2000,  options on 43,375  shares of common stock were  extended for
five more years and the option price was reset from $1.00 to $1.03 per share. If
the Company had elected to recognize  compensation  expense  based upon the fair
value at the  grant  date for  awards  under  these  plans  consistent  with the
methodology  prescribed by SFAS 123, the Company's net income and net income per
share for 2001 would be reduced to the pro forma amounts indicated below:

                                    2001                        2000
Net Income:
    As reported                    $433,000                   $474,000
    Pro forma                       404,000                    474,000

Earnings per common share:
    As reported
      Basic                           $0.25                      $0.28
      Diluted                         $0.24                      $0.26
                                      =====                      =====

    Pro forma
      Basic                           $0.24                      $0.28
      Diluted                         $0.23                      $0.26
                                      =====                      =====

These pro forma amounts may not be  representative  of future  disclosures since
the  estimated  fair value of stock  options is  amortized  to expense  over the
vesting  period for  purposes of future pro forma  disclosures,  and  additional
options  may be granted in future  years.  The fair value of these  options  was
estimated at the date of grant using the Black-Scholes option-pricing model with
the following  weighted  average  assumptions for 2001:  dividend yield of zero;
expected  volatility of 75% and expected life of 5 years.  The weighted  average
risk fee interest rates for 2001 were 4.64%.  The weighted average fair value of
options  granted  during 2001,  for which the exercise  price equaled the market
price on the grant dates, was $1.03.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded  options which have no vesting  restrictions  and are fully
transferable.  In addition,  option valuation models require the input of highly
subjective  assumptions  including the expected  price  volatility.  Because the
Company's employees' stock options have characteristics  significantly different
from  those of traded  options,  and  because  changes in the  subjective  input
assumptions  can materially  affect the fair value  estimate,  in  management's'
opinion,  the  existing  models do not  necessarily  provide a  reliable  single
measure of the fair value of employee stock options.

Transactions involving stock options are summarized as follows:
<TABLE>
<CAPTION>

                                                                           Weighted Average
                                                                          Exercise Price of
                                      Stock Options Outstanding          Options Outstanding
<S>               <C> <C>                    <C>                               <C>
Balance September 30, 1999                   107,958                           $1.04
Balance September 30, 2000                   107,958                            1.04
   Options granted                            43,375                            1.03
   Options expired                            43,375                            1.00
Balance September 30, 2001                   107,958                           $1.05
</TABLE>

There  were  93,958  exercisable  options  at  September  30,  2001  and  75,402
exercisable  options at September  30, 2000. . The  following  table  summarizes
information concerning currently outstanding and exercisable stock options.
<TABLE>
<CAPTION>

                           Outstanding at          Weighted Average         Exercisable at
Exercise Price            September 30, 2001      Contractual Life       September 30, 2001
<S>                           <C>                     <C>                       <C>
  1.00                        4,500                   .3 years                  4,500
  1.00                       25,083                  1.0 years                 25,083
  1.13                       35,000                  3.0 years                 21,000
  1.03                       43,375                  4.3 years                 43,375
</TABLE>

The  Company  granted  Mirtronics  warrants to  purchase  310,000  shares of the
Company's  Common Stock which are  exercisable  at a price of $1.02 per share at
any time until  December  31,  2001.  (See Note 2 -  Transactions  with  Related
Parties)

In May 1995, the Company  granted  Judson  Enterprises,  Ltd.  33,334 options to
purchase  common stock at a price of $3.00 per share in exchange for  investment
banking  services.  In April 1997,  the Company  entered  into an  agreement  to
exchange 16,667 of these options for 16,667 new options to purchase common stock
at a price of $4.50 and these  options will expire in April 2002.  The remaining
16,667 options  expired in May 2000.  Based on  calculations  done in accordance
with the requirements of SFAS 123, stock based  compensation  expense  resulting
from this transaction was immaterial.

Transactions involving non-employee stock options and warrants are summarized as
follows:
<TABLE>
<CAPTION>
                                                                              Weighted Average
                                       Options and Warrants                   Exercise Price of
                                           Outstanding                       Options Outstanding
<S>               <C> <C>                   <C>                                    <C>
Balance September 30, 1999                  486,667                                $1.17
Balance September 30, 2000                  326,667                                 1.20
Balance September 30, 2001                  326,667                                $1.20
</TABLE>

All of these options were exercisable at the end of the periods indicated in the
above schedule.

The following table summarizes information concerning currently outstanding and
exercisable non-employee stock options and warrants.
<TABLE>
<CAPTION>

                                 Outstanding at        Weighted Average            Exercisable at
Exercise Price                 September 30, 2001      Contractual Life          September 30, 2001
       <S>                         <C>                     <C>                         <C>
       4.50                         16,667                  .5 years                    16,667
       1.02                        310,000                 2.3 years                   310,000
</TABLE>

10. Contingencies

In the normal course of its operations, the Company has been or, from time to
time, may be named in legal actions seeking monetary damages. Management does
not expect, based upon consultation with legal counsel, that any material item
exists that will affect the Company's business or financial condition.


11. Other

Approximately  34%  of  the  Company's   employees  are  covered  by  collective
bargaining agreements. The present contract expires in June 2002.

Effective  January 1, 1996,  the Board of  Directors  instituted a 401K plan for
nonunion  employees.  The  plan  includes  a  profit  sharing  provision  at the
discretion  of the  Board  of  Directors.  In 2001  and  2000 a  profit  sharing
contribution of $44,000 and $44,000, respectively, was charged to expense.


12. Fair Value of Financial Instruments

SFAS No. 107, "Disclosures about Fair Values of Financial Instruments", requires
disclosing fair value to the extent practicable for financial  instruments which
are  recognized  or  unrecognized  in the balance  sheet.  The fair value of the
financial instruments disclosed herein is not necessarily  representative of the
amount  that  could be  realized  or  settled,  nor does the fair  value  amount
consider the tax consequences of realization or settlement.

For certain financial  instruments,  including cash and cash equivalents,  trade
receivables and payables,  and short-term debt, it was assumed that the carrying
amount  approximated  fair  value  because of the near term  maturities  of such
obligations.  The fair value of long-term debt was  determined  based on current
rates at which the Company could borrow funds with similar remaining maturities,
which amount approximates its carrying value.

13.  Authoritative Pronouncements

The  Financial  Accounting  Standards  Board  (FASB)  has issued  SFAS No.  133,
Accounting  for  Derivative  Instruments  and Hedging  Activities.  SFAS No. 133
establishes  accounting  and  reporting  standards for  derivative  instruments,
including  certain  derivative  instruments  embedded in other contracts and for
hedging activities.

SFAS No. 133 requires that an entity  recognize all derivatives as either assets
or  liabilities  in the  statement  of  financial  position  and  measure  those
instruments  at fair value.  The  accounting  for changes in the fair value of a
derivative  depends on the intended use of derivative  and how it is designated,
for  example,  gains  or  losses  related  to  changes  in the  fair  value of a
derivative not  designated as a hedging  instrument is recognized in earnings in
the  period of the  change,  while  certain  types of hedging  may be  initially
reported as a component of other  comprehensive  income (outside earnings) until
the consummation of the underlying transaction.

SFAS No. 133 is  effective  for all fiscal  quarters of fiscal  years  beginning
after June 15,  2000.  Initial  application  of SFAS No. 133 should be as of the
beginning  of a fiscal  quarter;  on that date,  hedging  relationships  must be
designated  anew and  documented  pursuant  to the  provisions  of SFAS No, 133.
Earlier  application  of all of the  provisions  of  SFAS  No.  133 is not to be
applied retroactively to financial statements of prior periods. The requirements
do not have a material impact on the Company's results of operations,  financial
position, or cash flows.

In July 2001, the ("FASB") issued SFAS No. 141,  "Business  Combinations".  SFAS
No. 141 requires the purchase  method of  accounting  for business  combinations
initiated  after June 30, 2001 and eliminates the  pooling-of-interests  method.
The  Company  does not  believe  that the  adoption  of SFAS No.  141 will  have
significant impact on its financial statements.

In July 2001,  the FASB  issued  SFAS No. 142,  "Goodwill  and Other  Intangible
Assets",  which is effective for all fiscal years  beginning  after December 15,
2001;  however,  early  adoption is permitted for fiscal years  beginning  after
March 15, 2001. SFAS No. 142 require,  among other things, the discontinuance of
goodwill  amortization.  In addition,  the standard includes  provisions for the
reclassification  of  certain  existing  recognized   intangibles  as  goodwill,
reassessment   of  the  useful   lives  of  existing   recognized   intangibles,
reclassification  of certain intangibles out of previously reported goodwill and
the identification of reporting units for purposes of assessing potential future
impairment of goodwill.  The Company is required to adopt SFAS No. 142 in fiscal
2003.  The Company is currently  assessing but has not yet determined the impact
of SFAS No. 142 on its financial position and results of operations.

The Financial  Accounting Standards Board (FASB) issued SFAS No. 144, Accounting
for the Impairment or Disposal of Long-Lived Assets in August 2001. SFAS No. 144
changes the accounting for long-lived  assets to be held and used by eliminating
the  requirement  to  allocate  goodwill to  long-lived  assets to be tested for
impairment, by providing a probability weighted cash flow estimation approach to
deal with  situations  in which  alternative  courses of action to  recover  the
carrying   amount  of  possible   future  cash  flows  and  by   establishing  a
primary-asset  approach to determine the cash flow estimation period for a group
of assets and liabilities  that represents the unit of accounting for long-lived
assets to be held and used.  SFAS No. 144 changes the  accounting for long-lived
assets to be disposed of other than by sale by  requiring  that the  depreciable
life of a  long-lived  asset to be  abandoned  be revised to reflect a shortened
useful life and by requiring the impairment  loss to be recognized at the date a
long-lived  asset is exchanged for a similar  productive asset or distributed to
owners in a spin-off if the carrying amount of the asset exceeds its fair value.
SFAS No. 144 changes the accounting  for long-lived  assets to be disposed of by
sale by requiring that discontinued  operations no longer be recognized on a net
realizable  value basis (but at the lower of carrying  amount or fair value less
costs to sell),  by eliminating the  recognition of future  operating  losses of
discontinued  components before they occur and by broadening the presentation of
discontinued  operations  in the income  statement  to include a component of an
entity rather than a segment of a business.  A component of an entity  comprises
operations and cash flows that can be clearly distinguished,  operationally, and
for financial  reporting  purposes,  from the rest of the entity.  The effective
date for SFAS No. 144 is for fiscal years beginning after December 15, 2001.

The Company expects that the adoption of the new statement will not have a
significant impact on its financial statements. It is not possible to quantify
the impact until the newly issued statement has been studied.