<PAGE>


                     U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                   FORM 10-KSB

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

     For the Fiscal Year Ended December 31, 2001.

                           Commission File No. 2-69336

                                  CRAMER, INC.

KANSAS                                           I.R.S. EMPLOYER IDENTIFICATION
                                                 NUMBER 48-0638707
625 ADAMS STREET, KANSAS CITY, KS 66105
TELEPHONE: (913) 621-6700


Securities registered under Section 12(g) of the Exchange Act:     Common Stock

Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 __ No X (The issuer's annual report on Form 10-KSB for the year ended
December 31, 2000 and the issuer's quarterly report on Form 10-QSB for the
quarter ended April 1, 2001 were filed late.)

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

The issuer's revenues for the 2001 fiscal year were $10,447,000

As of December 31, 2001 the aggregate market value of the common shares of
Cramer, Inc. held by non-affiliates was approximately $60,615.00, assuming the
market value of Cramer, Inc. common stock was approximately equal to $0.015 per
share at December 31, 2001. This valuation per share was determined by an
independent appraisal of the Company performed by Meara, King & Co., a Kansas
City accounting and valuation firm (See Item 5, "Market for Common Equity and
Related Stockholder Matters").











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<PAGE>
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 4,041,246 shares of common stock
(February 28, 2002).

Documents Incorporated by Reference: The Company's Proxy Statement for the 2002
Annual Meeting of Shareholders is incorporated by reference into Part III of
this Report.

Transitional Small Business Disclosure Format (check one): Yes    No  X
                                                              ---    ---




                                       2
<PAGE>

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                        PAGE NO.
                                                                                                        --------

<S>              <C>                                                                                    <C>
PART I

     Item 1.      Description of Business                                                                    4
     Item 2.      Description of Property                                                                   12
     Item 3.      Legal Proceedings                                                                         12
     Item 4.      Submission of Matters to a Vote of Security Holders                                       13

PART II

     Item 5.      Market for Common Equity and Related Stockholder Matters                                  14
     Item 6.      Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                                                       15
     Item 7.      Financial Statements                                                                      22
     Item 8.      Changes in and Disagreements with Accountants on
                  Accounting and Financial Disclosure                                                       38

PART III

     Item 9.      Directors, Executive Officers, Promoters and Control
                  Persons; Compliance with Section 16(a) of the Exchange Act                                39
     Item 10.     Executive Compensation                                                                    39
     Item 11.     Security Ownership of Certain Beneficial Owners and
                  Management                                                                                39
     Item 12.     Certain Relationships and Related Transactions                                            39
     Item 13.     Exhibits and Reports on Form 8-K                                                          39

</TABLE>




                                       3
<PAGE>




                                     PART I



ITEM 1. DESCRIPTION OF BUSINESS

Cramer, Inc. is a Kansas corporation engaged in the manufacture and sale of
seating and utility products designed for office and industrial settings. The
Company was established in 1886 as a manufacturer of safes and office products.
Descendants of the Cramer family owned the Company until 1961 when it was sold
to OLIX Industries, a public company located in Austin, Texas. In January 1981,
OLIX made a public distribution of its Cramer common stock.

Substantial Doubt About the Company's Ability to Continue as a Going Concern

The Company experienced continued recurring losses from operations, cash flow
difficulties and negative working capital during 2000 and 2001. As a result, the
Company is not in compliance with the financial net worth covenant in its bank
credit agreement. The Company has relied on a letter of credit posted by
Rotherwood Ventures, LLC ("Rotherwood") and the assets of Pacer, Inc. a wholly
owned subsidiary of Rotherwood, to secure the Company's credit facility. This
credit facility expires on April 27, 2002. There can be no assurance that the
Company can extend the bank credit agreement, obtain substitute or additional
debt financing, or obtain any equity financing, and thus there is no assurance
the Company can remain in business or avoid bankruptcy proceedings.

The primary factors causing the Company's continued lagging performance include
the following: 1) The recent recession and reduction in capital expenditures
across the country contributed to a rapid sales decline, particularly in the
seating business, and 2) Previous operating management allowed the Company's
operations and marketing focus to deteriorate. As a result, the Company
continues to invest in fundamental restructuring, which has adversely affected
the pace of new product development and marketing efforts.

The Company's auditors, in their audit report on the Company's 2001 financial
statements, opined that these financial statements and operational conditions
raise substantial doubt about the Company's ability to continue as a going
concern. The Company's previous auditors also issued a "going concern" opinion
on our 2000 financial statements (see Item 6 - "Management's Discussion and
Analysis of Financial Condition and Results of Operations", the financial
statements and notes thereto in Item 7 and "Management Changes and Turnaround
Plan" below).

Management Changes and Turnaround Plan

The Board of Directors has responded to the uncertainty about the Company's
continued viability as a going concern and the conditions which created that
uncertainty





                                       4
<PAGE>

by supporting ongoing efforts to reform operations, restore the Company to
positive cash flow and profitability and secure adequate financing.

On January 24, 2001, the Board appointed a new Chief Executive Officer, who
terminated the executives who served as President and Chief Operating Officer,
Chief Financial Officer and Vice President of Sales and Marketing during 1999
and 2000. The Company also eliminated a senior marketing position and changed or
restructured various supervisory positions. Two turnaround professionals were
also retained to perform defined duties in the areas of accounting/finance,
production methodology and marketing strategy. In November 2001 the Company
hired a new General Sales Manager to focus on overall sales management and
account development.

Following the appointment of the new CEO on January 24, 2001, the Company's new
management conducted a thorough review of the Company's operations and
strategies. As a result, new management commenced the following initiatives
designed to achieve positive cash flow and return the Company to profitability:

    -  The proprietary keyboard line was discontinued
    -  The direct-to-end-user marketing strategy was de-emphasized
    -  Efforts to eliminate obsolete and weak performing seating and utility
       products have continued
    -  Marketing efforts are being concentrated on the Company's core products
       and sales channels
    -  Manufacturing and inventory management practices have been improved
    -  The manufacture of certain utility products was outsourced to third-party
       manufacturers to increase margins and reduce operating overhead
    -  The Company reduced its workforce to accommodate declining sales and new
       production strategies
    -  Management is exploring the possibility of relocating to a smaller
       facility to streamline operations and achieve greater production
       efficiencies
    -  The Company has begun the process of identifying a new management
       information system to replace the current legacy application and improve
       business processes, reporting and analysis
    -  The Company has reviewed its marketing strategies and will implement new
       pricing, discount and commission structures to improve margins and
       simplify the administration of current sales channels
    -  The Board will recommend that its shareholders approve the authorization
       of additional shares of common stock and a class of undesignated
       preferred stock to allow the Company to raise additional capital if
       opportunities to do so become available (see Item 6 - "Management's
       Discussion and Analysis of Financial Condition and Results of
       Operations")

New management will continue to evaluate the Company's products, operations and
financing options in an effort to improve the Company's performance, achieve
positive cash flow, restore profitability and secure adequate capital.
Management is optimistic these goals can be achieved, but there can be no
assurance these measures will be






                                       5
<PAGE>

successful. In fact, the Company's revenues were substantially lower, and its
gross margins significantly lower, in 2001 than 2000 (see Item 6 - "Management's
Discussion and Analysis of Financial Condition and Results of Operations")

Business

The Company is a manufacturer that offers two lines of products with national
distribution. The largest line consists of various specialty seating products
designed and positioned in the marketplace for intensive use or 24/7
application. The Company distributes seating products through traditional
furniture channels, including independent manufacturers representatives,
wholesalers, dealers and catalogs. End-users consist of a variety of
enterprises, public and private, including the industrial, education, health
care and government sectors. The second line of products consists of various
utility products such as stepladders and stepstools, which are distributed
primarily through major domestic industrial catalogs.

The Company's business is not highly seasonal, but economic conditions do
influence purchase behavior by its customers.

The Company's seating products compete in the estimated $11 billion domestic
market for office furniture, which includes seating, desks, files, and panel
systems. Major companies serving this market are Steelcase, Herman Miller,
Knoll, Hayworth, Kimball, and HON Industries. These six companies supply
products in all major categories of this market. Together they account for an
estimated 60% of sales in this market. The remaining 40% of the market is served
by numerous smaller companies (typically sales of less than $75 million) that
primarily compete in selected segments of the market. These market segments are
delineated either by product type, such as seating or case goods, or by customer
category, for example high style, wood-finish, or budget-price.

Cramer's seating products are primarily non-wood, characterized by painted metal
finish and upholstered seats and backs. The product line includes standard
height chairs and a wide range of raised height models and stools. The Company
also manufactures Clean Room and Electro-Static Discharge seating which meet the
needs of certain specialized manufacturing and research environments. All offer
ergonomic design with varying degrees of adjustability to accommodate individual
users. The Company's seating products are recognized for quality construction
and lasting durability.

The Company's utility products include step stools and aluminum ladders
featuring the use of retractable casters. The design of these products and the
retractable caster concept are well recognized and accepted in the marketplace.
Certain utility products have been continuously manufactured by the Company for
sale in the United States since the 1950's.



                                       6
<PAGE>



Product Lines

Office Seating - The Company's flagship seating product is the Triton(R) chair.
The Company believes this chair is unique in the industry because it combines a
15-year, 24/7 warranty with steel structural components with full ergonomic
adjustability.

The Triton's(R) design significantly upgrades the user's ability to meet
emerging ergonomic adjustability requirements yet have a chair that exceeds
industry durability specifications. The Triton(R) is designed to meet or exceed
all current standards of adjustability for prevention of repetitive stress
trauma, including the Human Factors Society standards and the San Francisco VDT
work-station standards; all flame-retarding specifications, including California
TB 117 and California TB 133; and industry testing for strength and component
failure (ANSI/BIFMA specifications). Additionally, a version of the Triton(R)
has been independently certified to pass the more rigorous U.S. General Services
Administration Intensive Use Seating specifications.

Typical purchasers of the Triton(R) are health-care facilities, professional
offices, production lines, airline reservation centers, police and emergency
dispatch stations and similar 24-hour use applications. The Triton product line
includes both a regular size version and a larger version called the Triton Max.
This version was specifically designed to accommodate larger-sized users.

Other significant seating products include the Fusion II(R), Aspira and Centris
chairs. They are intended to complement the Triton(R) line with its unique steel
seat pan and 24/7 warranty. Fusion II(R) chairs provide full ergonomic task
seating at moderate prices. Aspira and Centris chairs provide well-made
ergonomic seating for normal single-shift use in the workplace. Each of these
chairs follow the strict standards for design and function found in all of the
Company's active ergonomic seating lines. These products are designed to
function within office, manufacturing and laboratory settings. The Company
discontinued a number of seating products in 2000 and 2001 due to lagging sales
and/or unacceptable gross margins.

Utility - The Company's utility products include the Kik-Step(R), a round,
all-steel, 2-step stool that rolls on retractable casters and is frequently used
in libraries, file rooms, and stockrooms. This product was designed by Cramer in
1957 and continues to be an important part of the Company's product line. In
addition to the Kik-Step(R), Cramer manufactures several other small stools and
the PAL and StopStep ladders, a series of lightweight aluminum ladders featuring
the same retractable caster concept as the Kik-Step(R).

Industrial Seating - The Company's industrial seating line includes the Rhino
and RhinoPLUS chairs. Both are designed for a more rugged setting than a typical
office chair. The Rhino seating line is distinguished by its seat and back,
which are made from "tough-skinned" urethane foam. This technology offers
industrial-strength reliability for factory seating, including the ability to
easily wash the chair. The product line includes two sizes of chair or stool
components, a round backless stool, and a sit-stand model designed to relieve
weight from an individual's feet in industrial situations while allowing





                                       7
<PAGE>


freedom for physical activity. The RhinoPlus is a unique product that combines
the tough industrial strength urethane skin of the original Rhino with a
separate soft padded foam cushion. As a result, the RhinoPlus is significantly
more comfortable than other urethane chairs currently on the market. This
product was introduced in 2000.

Net sales by product group in 2001 and 2000 were as follows:

<TABLE>
<CAPTION>


                                                                 Year Ended December 31,
                                                                 -----------------------
                                                              2001                      2000
                                                              ----                      ----
<S>                                                    <C>                         <C>
                    Seating products                     $  6,336,000                $  8,204,000
                    Utility products                        4,111,000                   4,893,000
                                                         ------------                ------------
                                                         $ 10,447,000                $ 13,097,000
                                                         ============                ============
</TABLE>


Marketing and Sales

The majority of the Company's seating products are sold to independent office
furniture dealers who resell the products to end-users. Cramer has approximately
1,300 dealer accounts, although only a portion of these accounts is active in
any given year. For the past several years, sales to independent office
furniture dealers have accounted for 60% to 70% of the Company's revenue. These
sales efforts are focused through approximately 21 independent commissioned
sales representative organizations located in major markets throughout the
United States. These sales organizations typically employ from one to six
people, and represent three to six complimentary product lines such as desks,
panel systems, and lighting. Average tenure for the Company's sales
representatives is more than four years. These representatives initiate and
develop business directly with end users, designers and architects for
specification projects and coordinate and manage the Company's business
relationships with the independent office furniture dealers in their
territories.

The Company's utility products are sold primarily to approximately 85 wholesale
and catalog distributors. These distributors include office and industrial
suppliers, as well as specialty distributors serving health-care, scientific,
and safety markets. The Kik-Step(R) stool is also distributed to the home market
through catalog distributors. During 2001, the Company achieved promising
results with several new "upscale" specialty catalogs. Other manufacturers
produce competing products, but these competitors have, thus far, not been
successful in significantly reducing the Company's market share in utility
products. However, there is no guarantee that competitors will not be successful
in reducing the Company's market share in the future. While six wholesale and
catalog distributors accounted for 79% of the Company's 2001 utility product
sales, no single customer accounted for more than 8% of the Company's total
sales in 2001.

Cramer regularly participates in national office, industrial, and ergonomic
products trade shows and conferences. Sales representatives display product
samples and provide demonstration chairs for dealers and end-users.





                                       8
<PAGE>


Sales in the contract furnishing industry, where Cramer's seating products
compete, follow a pattern of slightly lower volume in the winter and summer and
higher volume in the spring and fall. Utility product sales are generally equal
through each quarter of the year.

The Company is currently in the process of creating new price books for the
seating and utility lines. As part of this process, the discount and commission
structures in place for each channel will be updated and simplified to enable
more efficient management of sales channel partners.

Manufacturing and Distribution

The Company's products are fabricated from components such as aluminum tubing,
plastic forms, foam and fabric purchased from sources locally and throughout the
United States and internationally.

Cramer understands the importance of developing partnerships with its vendors,
and has undertaken a program to work closely with suppliers to improve quality,
delivery, and price, while offering technical assistance and production planning
forecasts. Although this approach includes focusing greater purchases with fewer
vendors, the Company believes it retains the ability to change to alternative
suppliers in most cases.

Certain components of the Company's products are sourced from a single vendor.
Any disruption in these supply arrangements could result in temporary shipment
delays or increased costs. However, the Company believes it has the ability to
substitute suppliers for any component within a three-month period of time.

Production equipment used to manufacture the Company's products is owned and
maintained by the Company at its factory in Kansas City, Kansas. Production
equipment ranges from metalworking machinery to a powder coat painting system.
Some of the tooling used in the fabrication of specialized and proprietary
components is owned by the Company but located at vendor locations. The Company
believes it has sufficient production capacity to support a significant increase
in sales volume.

During 2001, the Company engaged an overseas manufacturer to produce certain
utility products for the Company. The Company receives these products in
finished form and retains responsibility for distribution to customers. The
Company has been able to improve margins under this new approach and continues
to explore additional outsourcing opportunities with this and other
manufacturers. The Company believes that successfully implementing the
outsourced manufacture of certain products will enable the Company to increase
its focus on marketing and distribution and reduce costs.

The Company's promised delivery schedule includes 5-day lead times for orders of
30 units or less. This schedule is significantly shorter than that offered by a
large portion of the Company's competition and is a competitive advantage in
certain situations. The Company produces most products to order and maintains
relatively little finished goods inventory, with the exception of outsourced
products. Some competitors offer a 5-day






                                       9
<PAGE>


or "Quick Ship" program; however, most of these orders are fulfilled from a
limited selection of product built for inventory. The Company's larger orders
typically are given a 3 week lead time, which is equal to or better than average
for our competition. While the majority of sales are configured using standard
components and options, Cramer is able to customize product specifications for
particular needs. At December 31, 2001, the Company's backlog of unfilled orders
was $326,687, the majority of which were shipped in the first quarter of 2002.

Employees

In response to the decline in sales and as part of the Company's overall
initiative to improve operating efficiencies, total employment was reduced from
86 as of December 31, 2000 to 55 full time employees at December 31, 2001: 21
office, supervisory and managerial personnel and 34 production personnel.
Additional layoffs were implemented in the first quarter of 2002, resulting in a
further reduction in workforce of 15 employees. Remaining employees have been
able to successfully continue required tasks and responsibilities.

Cramer management considers the ability to attract, train, and retain skilled
professional employees and production workers to be an important aspect of the
Company's competitive advantage. Management believes that it enjoys a good,
interdependent relationship with its employees and has instituted personnel
policies intended to maintain this relationship. The Company is an equal
opportunity employer and an active non-discrimination policy is integral to this
concept.

The factory workers are covered by a collective bargaining agreement with the
United Steelworkers of America that expires on September 30, 2002. The economic
portion of the agreement expired on October 1, 2001 and subsequently has been
renewed on a month-to-month basis. Any work stoppage could impact the Company's
ability to manufacture product, on-time delivery and product quality, which
could have a material adverse effect on the Company's business and financial
condition. While no work stoppages have occurred over the past ten years and
labor negotiations are an ordinary part of the Company's business, there can be
no assurance that a work stoppage can be avoided. The State of Kansas is a
right-to work state, so not all factory workers belong to the Union. At
year-end, 16 of the 34 factory workers were not dues paying members. The Company
believes that strong labor relations are an important aspect of its business.

Competition

The domestic ergonomic furniture market is highly competitive. In addition to
its large competitors that offer broad lines of products, Cramer frequently
competes in its narrow market area against similar-sized specialty
manufacturers. Cramer competes by focusing on products that have high quality
and a reputation for long-term reliability. The Company also differentiates
itself by a commitment to customer service and on-time delivery. The Company's
110+ year history and the proven reliability of its products support a strong
reputation and product awareness in the marketplace.





                                       10
<PAGE>


Patents, Trademarks and Government Regulation

The name Cramer and the Company's Kik-Step(R), Triton(R), and Fusion(R) product
names are registered trademarks. The Company's other office and utility seating
products are marketed under the Nimbus, RhinoPLUS and Rhino trademarks. The
Company also considers the overall design and appearance of the Kik-Step(R) to
be a trademark of the product.

The Company has filed for patent protection for the urethane skins used in
RhinoPlus seating products.

No government approval is required for Cramer's products. The Company designs
its products to meet voluntary industry standards for strength and reliability
(ANSI/BIFMA). The Company maintains ANSI/BIFMA test equipment at its factory and
has implemented a program of systematically testing its products for
reliability. Certain products are designed to meet the more rigorous
requirements of the General Services Administration. This provides the Company
with competitive advantages in certain situations.

The Federal Occupational Safety and Health Administration (OSHA) conducted an
inspection of the Company in late 2000 during which a number of areas of
noncompliance were detected. On April 23, 2001, the Company received
notification that it was subject to citation and fines totaling $117,500 based
on these areas of non-compliance. Prior to receiving the citation, the Company
had taken proactive steps to correct areas of non-compliance identified at the
time of the OSHA site inspection and believes these measures have brought the
Company into substantial compliance. The Company requested a reduction or
suspension of the fines and is in receipt of a settlement agreement from OSHA
that requires total payments of $23,000 to settle all outstanding fines. The
Company intends to sign the agreement by April 7, 2002. Management believes
modifications to its facility and operating methods required to bring the
Company into OSHA compliance, and compliance with other laws and regulations,
will not have a material adverse effect on its overall business. An accrual of
$23,000 was recorded at December 31, 2001 for the OSHA settlement.

Environment

The Company's production processes use several hazardous or polluting
substances. Employees are provided protective clothing and equipment where
necessary or appropriate, such as breathing masks on the paint line. Disposal of
wastes is conducted according to applicable regulations using authorized and/or
licensed vendors where required. These substances are commonly used in the
industry and the Company does not use them in great quantity. Accordingly, the
impact of environmental compliance costs on the Company's operations is believed
to be minimal.

ITEM 2.  DESCRIPTION OF PROPERTY




                                       11
<PAGE>

The Company's corporate headquarters and manufacturing facility are located on a
5-acre tract at 625 Adams Street, Kansas City, KS in a building owned and
occupied by the Company since 1957. This facility comprises 165,000 square feet,
including 20,000 office, 2,000 showroom, and 143,000 manufacturing space.

Due to the facility's age, its overall condition is relatively poor and requires
continuous maintenance. However, the Company considers the building to be
currently serviceable considering the type of manufacturing conducted. The
Company believes that its facilities are adequately insured.

In the first quarter of 2002, management began exploring the feasibility of
relocating to a new facility that more closely matches the Company's current
size and manufacturing needs. The Company anticipates that relocating the
business could reduce operating overhead significantly and improve production
efficiency. However, there is no assurance we can sell or lease our existing
facility without spending significantly on renovation.

ITEM 3. LEGAL PROCEEDINGS

The Company is a defendant in several lawsuits relating to product liability
claims arising from accidents allegedly occurring in connection with the use of
its products. The claims are covered by insurance and are being defended by the
Company's independent counsel or by counsel assigned by the Company's insurance
carriers. These claims are subject to deductibles ranging from $0 to $100,000
and $50,000 is the most common deductible. The Company maintains product
liability insurance coverage with limits of $1 million per occurrence and $2
million aggregate, plus $15 million in umbrella coverage. The Company has been
able to offset settlement costs through amounts paid by co-defendants in certain
cases historically.

Over the last five fiscal years, the Company has averaged 3.7 new claims per
year. An average of approximately 50% of those claims resulted in defense costs
and settlement amounts or awards exceeding $50,000. The average total cost of
defense and settlement awards paid by the Company over that period was $35,000.

The Company has six open claims for which the Company has incurred aggregate
defense costs of $115,200, $66,300 of which has been paid by the Company and
$48,900 has been paid by insurance carriers. The Company does not believe these
open claims will have materially different average results than the historical
experience described above. None of the claims allege damages in excess of
policy limits. However, several of the claimants allege substantial damages. One
of the claimants alleges damages of $375,000. The Company's insurance carrier
has assumed defense of this claim. While management believes the Company has
substantial defenses with respect to these claims, the ultimate outcome of such
litigation cannot be predicted with certainty. Such claims are an ordinary
aspect of the Company's business and industry. The Company does not believe
these products are at all inherently dangerous or likely to cause harm, and
believes it adequately reserves against its reasonably likely exposure under
these claims based upon past experience.






                                       12
<PAGE>


The Company discusses each claim with its legal counsel to determine the merits
of the case and the most likely outcome. In some cases, it is too early to make
that assessment. At December 31, 2001, unless specific information pertaining to
the case indicated otherwise, a specific reserve for each case was calculated,
equal to the historical average cost per completed case of $35,000 less costs
incurred to date. The Company recorded a reserve for specific claims of $104,000
at December 31, 2001.

In addition to reserves for specific cases, the Company estimates its exposure
for unasserted claims and records additional reserves using the claims history
discussed above as well as recent trend insights. The Company had received
notice of six incidents for which no claims had been asserted at December 31,
2001. The Company recorded a reserve for unasserted claims of $113,000 at
December 31, 2001.

The Company was assessed $117,500 in penalties by OSHA as a result of an
inspection conducted in 2000 and is in receipt of a settlement agreement from
OSHA which calls for payments of $23,000 (see "Patents, Trademarks and
Government Regulation" in Item 1).

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

None





                                       13
<PAGE>




                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Cramer's common stock is not listed on NASDAQ or any exchange and there is no
public trading market for the stock.

As of December 31, 2001, there were 746 shareholders of record.

Since being publicly held, the Company has never paid cash dividends and does
not anticipate paying any cash dividends in the foreseeable future. The
Company's ability to pay cash dividends on its common stock will depend upon its
capital surplus, loan covenants and cash requirements.

Odd Lot Tender Offer

In the fourth quarter of 2001, the Board approved an "Odd Lot" Tender Offer, in
which the Company offered to purchase the shares held by shareholders owning
fewer than 100 shares.

There are two reasons the Board undertook this offer. First, since there is no
trading in Cramer Inc. stock, shareholders have not had a way to trade their
shares in order to recognize any income tax loss they may have in their stock,
this offer provided "Odd Lot" holders a method to do this. Second, the Company
continues to look for every cost saving it can find. "Odd Lot" shareholders
represented 35% of all shareholders. The Company's intention was to save the
annual expenses associated with reporting to these shareholders.

Since Cramer's stock is not traded on NASDAQ or any exchange, there is no market
for the stock and it is difficult to know its value. Cramer hired Meara, King &
Co., a Kansas City accounting and valuation firm, to analyze the current value
of Cramer and its stock. The results of their study, which included, among other
considerations, earnings tests and asset appraisals, valued the stock at $.015
per share. The Company offered to pay $.015 per share in cash to each "Odd Lot"
shareholder. In recognition of this low value, the Company also agreed to send a
Kik-Step to every "Odd Lot" shareholder who accepted this offer.

48 "Odd Lot" shareholders, holding an aggregate of 1,889 shares, accepted the
offer and tendered their shares to the Company for an aggregate purchase price
of $28.34 plus Kik-Steps valued at $2,400. The Odd Lot Tender Offer is now
closed.





                                       14
<PAGE>



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


A.            FORWARD LOOKING STATEMENTS

              Except for the historical information contained herein, this
              report on Form 10-KSB contains forward-looking statements that
              involve risks and uncertainties. The Company's actual results
              could differ materially. In connection with the "safe harbor"
              provisions of the Private Securities Litigation Reform Act of
              1995, Cramer reminds readers that there are many important factors
              that could cause the Company's actual results to differ materially
              from those projected in forward-looking statements made by, or on
              behalf of, the Company. When used in this Form 10-KSB and in other
              filings by the Company with the Securities and Exchange
              Commission, in the Company's press releases and in oral statements
              made with the approval of an authorized executive officer, words
              or phrases such as "will likely result", "expects", "are expected
              to", "will continue", "is anticipated", "estimate", "project" or
              similar expressions are intended to identify forward-looking
              statements. The Company wishes to caution readers not to place
              undue reliance on such forward-looking statements.

              There are a number of reasons why investors should not place undue
              reliance on forward-looking statements. Among the risks and
              uncertainties that could cause the Company's actual results for
              future periods to differ materially from any forward-looking
              statements made are the following:

                  -  The Company's continuing declines in revenues and
                     continuing losses
                  -  Questions about the Company's continuing viability as a
                     going concern and management's plans to address that issue
                  -  Any failure of the Company's turnaround plan to achieve its
                     objectives
                  -  The possibility that the bank will not renew the Company's
                     credit facility and that the Company could not obtain
                     substitute or additional debt financing, or obtain any
                     equity financing
                  -  Fluctuations or reductions in product demand and market
                     acceptance
                  -  The level of product development by the Company
                  -  Capacity, facility and supply constraints or difficulties
                  -  The possibility that Cramer's sister company will borrow
                     more funds than anticipated under the Rotherwood credit
                     facility, which would further reduce the Company's
                     borrowing capacity under the Company's credit facility
                  -  The effect of new laws and regulations
                  -  Unexpected additional expenses or operating losses
                  -  Strong competition
                  -  Reliance on certain vendors for key products and components
                  -  Deferred plant maintenance and the cost of future
                     maintenance






                                       15
<PAGE>


                  -  If product and warranty liability claims exceed the amounts
                     reserved
                  -  Control by insiders

             The foregoing list of risks and uncertainties is not meant to be
             complete.

   B.        QUESTIONS ABOUT THE COMPANY'S ABILITY TO CONTINUE AS A GOING
             CONCERN

             In light of our continuing losses and negative cash flow and the
             other contingencies cited in Item 1 - "Business - Substantial Doubt
             About the Company's Ability to Continue as a Going Concern" and in
             the report of our independent auditors on our 2001 financial
             statements, our auditors have issued a "going concern" opinion on
             our 2001 financial statements that raises substantial doubt about
             the Company's ability to continue as a going concern. The Company's
             management are performing a thorough review of Company operations
             and implementing a turnaround plan with the objective of generating
             positive cash flow and returning the Company to profitability. The
             Company suffered a substantial reduction in 2001 revenues, which
             will make this task more difficult. If management is unsuccessful
             in achieving these objectives, or if the Company cannot obtain new
             or increased debt or equity financing, the Company may not remain
             viable and may have to cease operations or find a buyer for the
             Company, which cannot be assured.

   C.       SUMMARY OF OPERATIONS

            Comparison of Fiscal Year 2001 vs. Fiscal Year 2000

            Net sales decreased in 2001 to $10,447,000, a decline of $2,650,000
            or 20% from 2000. This decrease was due to the following factors: 1)
            Seating products declined by 24% overall, primarily due to lagging
            sales of the Triton and Aspira lines. These products were impacted
            directly by the recent recession and are subject to more intense
            competition. A $301,500 increase in the Rhino product line offset
            the overall seating decline. The Rhino Plus was introduced in 2000
            and continued to experience improved market acceptance. 2) Utility
            products declined consistently across all models, decreasing by 15%
            as a group. The weaker performance of catalog distributors as a
            whole contributed to the decline.

            The Company's order backlog at December 31, 2001 of $326,687 was
            $826,313 lower than the December 31, 2000 backlog, a 69% decline.
            This could mean further reduction in 2002 revenues.

            Gross margins declined from $3,341,000 in 2000 to $2,314,000 in
            2001. As a percent of sales, Gross margins were 22% in 2001,
            compared to 26% in 2000. Lower margins as a percent of sales were
            the combined result of increased freight and material costs, less
            efficient utilization of plant overhead due to lower sales volume
            and adjustments to warranty reserves.





                                       16
<PAGE>


            Operating expenses declined in total by $588,000 from $3,916,000 in
            2000 to $3,328,000 in 2001.

            General and administrative costs were $1,305,000 in 2001 compared to
            $1,222,000 in 2000, an increase of $83,000. The following factors
            contributed to higher general and administrative costs: 1) The
            Company had significant payroll severance costs associated with the
            management restructuring discussed in Item 1. 2) Legal costs were
            significantly higher, due primarily to costs associated with the
            OSHA settlement, significant layoffs, the Odd Lot Tender Offer and
            additional assistance in preparation of the 2000 10-KSB and 2001 and
            2002 proxy statements in light of the additional disclosures
            resulting from the Company's recent problems, and 3) The Company
            incurred a $40,000 charge in connection with the letter of credit
            provided by Rotherwood (see "Financial Condition, Liquidity and
            Capital Resources" below).

            The Company had no charges for impairment of assets in 2001,
            compared to $289,000 of asset impairment charges in 2000 associated
            with the write-off of intangible assets related to the discontinued
            keyboard business.

            Selling expenses declined from $2,405,000 in 2000 to $2,023,000, a
            decrease of $382,000. The most significant factor was a decrease in
            costs of $271,000 in 2001 as a result of closing the Minneapolis
            sales office and ceasing related direct-to-end user sales and
            marketing efforts. In addition, direct mail and marketing literature
            costs declined in 2001. These decreases were offset by increased
            catalog program costs and higher personnel and consulting costs
            associated with the management restructuring.

            Interest expense decreased from $222,000 in 2000 to $174,000 in
            2001. While the credit facility balance was higher on average
            throughout 2001, the interest rate is tied to the prime rate, which
            decreased significantly throughout 2001.

            The Company incurred a net loss before tax of $1,202,000 in 2001,
            compared to a loss of $1,017,000 in 2000. Included in the 2000 loss
            were total charges for the discontinued keyboard business of
            $363,000, including a write-off of long-term assets and accounts
            receivable.

            Comparison of Fiscal Year 2000 vs. Fiscal Year 1999

            At $13,097,000, net sales in 2000 increased by $404,000, or 3.2%,
            over 1999. This increase was due to an 18% increase in sales of
            utility products to catalog distributors. The increase in utility
            products was offset by a 4% decline in sales of the Company's
            seating line to furniture dealers. This decrease was primarily due
            to greater competition in the 24 hour, heavy duty seating market
            which affected the Company's Triton seating line.


                                       17
<PAGE>


            The Company's order backlog at the end of December 2000 was
            $1,189,000, an increase of $189,000 over 1999.

            As a percentage of net sales, gross margins in 2000 were 25.5% as
            compared to 28.2% in 1999. This decrease in gross margins was
            largely the result of three factors: (1) a write-down of raw
            materials and finished goods inventory due to product discontinuance
            and obsolescence, including abandonment of the proprietary keyboard
            line, (2) additional inventory carrying costs associated with the
            unsuccessful implementation of a Kanban production control system,
            and (3) decreased direct labor productivity.

            Total operating expenses during 2000 were $3,916,000, compared to
            $3,675,000 during 1999.

            Fiscal year 2000 interest expense of $222,000, when compared to 1999
            interest expense of $122,000, increased by $100,000. In light of the
            Company's cash flow difficulties, the Company has been utilizing the
            Rotherwood revolving line of credit more extensively, as evidenced
            by the comparison of year ending borrowing balances of $2,302,000 in
            2000 and $1,842,000 in 1999.

            The Company incurred a net loss before tax of $1,017,000 in 2000,
            compared to a loss of $292,000 in 1999. Included in the 2000 loss
            are charges for the discontinued keyboard business totaling
            $363,000. Additional charges for bad debt expense and obsolete
            inventory totaled $19,000 and $219,000, respectively.

    D.      ACCOUNTING ESTIMATES

            Accounting estimates are an integral part of the financial
            statements and are based on management's knowledge and experience
            about past and current events and assumptions about future events.
            Certain accounting estimates are particularly sensitive because of
            their significance to the financial statements and because of the
            possibility that future events affecting them may differ
            significantly from those expected. The most sensitive estimates
            affecting the financial statements were the warranty and product
            liability accruals, and the inventory reserve.

            The Company offers product warranties with terms of up to fifteen
            years. The majority of the Company's warranty claims relate to
            failed seating parts. The Company estimates its accrual for future
            warranty costs based on durability testing, engineering studies,
            actual costs incurred in prior years and historical sales data. The
            warranty accrual increased from $100,000 at December 31, 2000 to
            $232,000 at December 31, 2001. This increase was the result of
            management's re-evaluation of cost exposure in light of on-going
            production experience and claims history, reflecting the Company's
            desire to be conservative with respect to warranty accruals. The
            increase was not the






                                       18
<PAGE>
             result of escalating warranty costs, as warranty claims remained
             consistent in 2001.

             The reserve for obsolete and slow-moving inventory is based on
             management's analysis of inventory turns, historical write-offs,
             future production plans including any product line changes, and
             sales trends. The decrease in inventory reserves from $162,000 at
             December 31, 2000 to $110,000 as of December 31, 2001 was the
             result of an overall decrease in inventories due to declining sales
             and production.


   E.        FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

             Cash flow from operations improved from a deficit of $295,000 in
             2000 to a surplus of $580,000 in 2001. The increase in cash from
             operations was due primarily to reductions of inventories and
             accounts receivable.

             Accounts receivable totaled $563,000 at December 31, 2001 compared
             to $1,509,000 at December 31, 2000. The decline was a combination
             of lower December sales in 2001 compared to the prior year and
             improved collection results. Days' sales outstanding decreased from
             43 in 2000 to 36 in 2001.

             Inventories declined from $1,558,000 at December 31, 2000 to
             $721,000 at December 31, 2001, a 54% decrease. A general decline in
             sales, combined with efforts to manage purchasing more tightly
             contributed to the change. In addition, raw and WIP inventories
             were increased at December 31, 2000 to support a large, end-of-year
             chair order.

             Accounts payable declined $281,000 in 2001 as a result of reduced
             production levels.

             Capital expenditures of $30,000 during 2001 related primarily to
             manufacturing equipment and plant updates.

             The Company borrowed an additional $18,000 from its combined bank
             credit facility in 2001, increasing the total outstanding balance
             to the maximum amount allowed under the agreement, or $2,320,000.
             The combined facility, which was extended in August 2001, is
             secured by a $2,000,000 letter of credit from Rotherwood, the
             Company's parent, and security interests in the assets of both
             Cramer and Pacer Corporation, a company owned by Rotherwood. Cramer
             and Pacer are co-borrowers on the total amount of the credit
             facility (see Note 3 to the Financial Statements).

             A letter of credit in the amount of $139,000, which had previously
             been issued on behalf of Pacer under the credit facility, has
             expired. Pacer has no indebtedness or letters of credit issued
             under the credit facility. The Company, having access to Pacer's
             financial condition and management






                                       19
<PAGE>

             plans, believes Pacer has no intentions of using the credit
             facility, even if amounts drawn by Cramer under the credit facility
             were less than the maximum amount allowed.

             In exchange for Rotherwood's financial accommodation to the
             Company, the Company agreed to pay Rotherwood a fee equal to 2% per
             quarter of the total amount of the letter of credit until the
             letter of credit expires. This agreement took effect on October 1,
             2001. If the fee were paid in cash, it would equal $40,000 per
             quarter. The Company is not generating sufficient cash flow to pay
             the fee in cash. Rotherwood has agreed to accept payment in shares
             of Common Stock at the rate of one share for each $0.05 of the 2%
             quarterly fee amount, or an aggregate of 800,000 shares per
             quarter. The per share valuation price of $0.05 is higher than the
             price per share determined by the Meara King valuation of $0.015
             (see Item 5), resulting in fewer shares issued. If the fee payable
             to Rotherwood were paid in Common Stock at the rate of $0.015 per
             share, an aggregate of 2,666,667 shares of Common Stock would be
             issued to Rotherwood each quarter during the remaining term of the
             letter of credit. The Company has sufficient authorized Common
             Stock to pay the letter of credit fee for two quarters (1,600,000
             shares), but will not have sufficient authorized Common Stock to
             pay the fee for any additional quarters or to issue Common Stock to
             any prospective investor (see discussion below regarding the
             proposed increase in authorized shares). At December 31, 2001, the
             Company recorded a liability of $40,000 for Rotherwood guarantee
             fees accruing in the fourth quarter of 2001. The Company plans to
             issue common stock for these fees in the future.

             Management believes that the Company would not be able to secure
             financing of this nature without the credit enhancements provided
             by Pacer and Rotherwood. Management also believes that access to
             this larger credit facility more than offsets the risk of potential
             exposure associated with Pacer's ability to utilize the credit
             facility as a co-borrower. The interest rate charged on $2,000,000
             of outstanding borrowings was at the Bank's prime interest rate and
             the remaining $320,000 was at the prime rate plus 2%. Management
             believes this was a lower combined interest rate than the rate
             Cramer would be required to pay if it tried to finance its working
             capital needs by itself.

             The Company is not in compliance with the financial net worth
             covenant in the loan agreement governing the credit facility. For
             this and other reasons, the Company is unable to predict whether
             the bank will renew the credit facility when it matures in April,
             2002. If the bank does not renew or increase the facility and the
             Company cannot obtain substitute or additional debt financing or
             obtain an equity investment in the Company, the Company may be
             required to seek bankruptcy protection or to cease operations.

             The Company believes significant investments in property, equipment
             and working capital will be required to execute its operating plans
             in 2002. Among the anticipated requirements are the cost of a new
             management information






                                       20
<PAGE>

            system, costs associated with the proposed relocation of operations,
            final production and printing of the new price book and increased
            investment in inventory as a result of outsourced manufacturing
            initiatives discussed in Item 1. Management believes the cost of
            these initiatives as a whole could total $200,000 or more. The
            Company will not be able to implement these initiatives if it cannot
            obtain an extension of the credit facility or substitute debt or
            equity financing.

            Management believes that the turnaround plans discussed in Item 1
            will improve operations significantly, and in some cases these
            efforts have already had a positive impact on the Company's
            performance, although there was a substantial decrease in sales for
            2001. However, since the Company has no additional borrowing
            capacity and there is no assurance the Company can obtain an
            extension of or increase in the current credit facility or a
            substitute credit facility, the Company will seek needed additional
            capital by offering shares of common stock or preferred stock to one
            or more large investors in a private negotiated transaction.
            Although the Company would prefer to find an outside source of
            capital, that would appear unlikely given the Company's financial
            condition. For this reason, the Company may pursue an additional
            investment transaction with Rotherwood. Although the Company has no
            definitive agreement or understanding with Rotherwood, the Company
            is considering an offer to sell 30 to 60 million shares of Common
            Stock to Rotherwood for cash at a purchase price of $0.05 per share.
            This transaction may provide $1,500,000 to $3,000,000 in much needed
            capital to the Company to support operations, reduce amounts owed
            under the bank line of credit and enable the Company to continue its
            turnaround plans.

            The Company does not have a sufficient number of authorized shares
            of Common Stock to complete any such investment transaction. For
            this reason, the Board of Directors considers it advisable to
            increase the authorized shares of Common Stock and authorize a class
            of undesignated preferred stock, and is planning to bring this
            matter to a vote of shareholders at the upcoming Annual Meeting.

            Neither Rotherwood nor any other party has committed to invest any
            additional capital in the Company or to purchase any of the Common
            Stock or preferred stock which may be authorized. There is no
            assurance the Company will be able to obtain any equity investment
            from Rotherwood or any other investor. If the Company is not able to
            obtain a significant equity investment in the near future, the
            uncertainty regarding the Company's ability to continue as a going
            concern will continue and may increase. The continuing viability of
            the Company as a going concern will depend on management's ability
            to increase sales, achieve positive cash flow, restore the Company
            to profitability, extend its credit facility and/or obtain
            additional debt or equity financing, none of which can be assured.




                                       21
<PAGE>





ITEM 7.  FINANCIAL STATEMENTS

The following financial statements of Cramer, Inc. are included herewith:


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                                          Page
                                                                                                          ----

<S>                                                                                                      <C>
Independent Auditors' Report - 2001                                                                        F-1

Independent Auditors' Report - 2000                                                                        F-1a.


Financial Statements:

   Balance Sheets                                                                                          F-2

   Statements of Operations                                                                                F-3

   Statements of Stockholders' Equity (Deficit)                                                            F-4

   Statements of Cash Flows                                                                                F-5

   Notes to Financial Statements                                                                           F-6

</TABLE>






                                       22
<PAGE>






To the Board of Directors and Stockholders
CRAMER, INC.
Kansas City, Kansas

                          INDEPENDENT AUDITORS' REPORT


We have audited the accompanying balance sheet of Cramer, Inc. (a majority-owned
subsidiary of Rotherwood Ventures, LLC) as of December 31, 2001, and the related
statements of operations, stockholders' equity (deficit) and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The financial statements of Cramer,
Inc. as of December 31, 2000, were audited by other auditors whose report dated
May 4, 2001, on those statements included an explanatory paragraph describing
conditions that raised substantial doubt about the Company's ability to continue
as a going concern.

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

In our opinion, the 2001 financial statements present fairly, in all material
respects, the financial position of Cramer, Inc. as of December 31, 2001, and
the results of its operations and its cash flows for the year then ended in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company's recurring losses from operations, cash flow
difficulties, negative working capital, stockholders' capital deficiency and
lack of compliance with debt covenants raise substantial doubt about its ability
to continue as a going concern. Management's plans concerning these matters are
also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.



/s/ Stirtz Bernards Boyden Surdel & Larter, P.A.

Stirtz Bernards Boyden Surdel & Larter, P.A.
Edina, Minnesota
March 6, 2002





                                       F-1

<PAGE>


To the Board of Directors and Stockholders
CRAMER, INC.
Kansas City, Kansas

                          INDEPENDENT AUDITORS' REPORT


We have audited the accompanying balance sheet of Cramer, Inc. (a majority-owned
subsidiary of Rotherwood Ventures, LLC) as of December 31, 2000 and the related
statements of operations, stockholders' equity (deficit) and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2000, and the
results of its operations and its cash flows for the year then ended in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company's recurring losses from operations, cash flow
difficulties, negative working capital, stockholders' capital deficiency and
lack of compliance with debt covenants raise substantial doubt about its ability
to continue as a going concern. Management's plans concerning these matters are
also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.



/s/ Deloitte & Touche LLP

Deloitte & Touche LLP
Kansas City, Missouri
May 4, 2001








F-1a.




<PAGE>




                                  CRAMER, INC.

                                 BALANCE SHEETS

                    (Amounts In Thousands, Except Share Data)

<TABLE>
<CAPTION>

                                                                                       DECEMBER 31,
                                                                        --------------------------------------------
                                                                                2001                   2000
                                                                        ---------------------  ---------------------
                                ASSETS

<S>                                                                    <C>                    <C>
Current assets:
   Cash                                                                   $           282        $          -
   Accounts  receivable,  less  allowance for doubtful  accounts of
     $30 in 2001 and $38 in 2000                                                      563                  1,509
   Inventories,  less allowance for  obsolescence  and shrinkage of
     $110 in 2001 and $162 in 2000                                                    721                  1,558
   Prepaid expenses and other current assets                                          325                    336
                                                                          ---------------        ---------------

         Total current assets                                                       1,891                  3,403
                                                                          ---------------        ---------------




Property, plant and equipment                                                       6,215                  6,187
Less accumulated depreciation                                                      (5,585)                (5,369)
                                                                          ---------------        ---------------

         Total property, plant and equipment                                          630                    818
                                                                          ---------------        ---------------




Other assets:
   Intangible pension asset                                                             4                     56
                                                                          ---------------        ---------------




         Total assets                                                     $         2,525        $         4,277
                                                                          ===============        ===============

</TABLE>







F-1a.






<PAGE>



(Balance Sheets, continued)

<TABLE>
<CAPTION>


                                                                                       DECEMBER 31,
                                                                        --------------------------------------------
                                                                                2001                   2000
                                                                        ---------------------  ---------------------
            LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

<S>                                                                    <C>                    <C>
Current liabilities:
   Cash overdrafts                                                      $               -      $             282
   Notes payable                                                                    2,320                  2,302
   Accounts payable                                                                   485                  1,004
   Accounts payable - related party                                                   101                   -
   Accrued liabilities                                                                801                    664
                                                                        -----------------      -----------------

         Total current liabilities                                                  3,707                  4,252
                                                                        -----------------      -----------------

Noncurrent liabilities:
   Pension benefits payable                                                           326                    316
   Other                                                                              218                    185
                                                                        -----------------      -----------------

         Total noncurrent liabilities                                                 544                    501
                                                                        -----------------      -----------------

Commitments and contingencies (Note 7)

Stockholders' equity (deficit):
   Common stock, no par value, authorized, 6,000,000 shares; issued and
     outstanding 4,041,400 shares in 2001 and 4,051,400
     shares in 2000                                                                 3,820                  3,824
   Accumulated deficit                                                             (5,198)                (3,996)
                                                                        -----------------      -----------------
                                                                                   (1,378)                  (172)
   Accumulated other comprehensive income (loss)                                     (348)                  (304)
                                                                        -----------------      -----------------
         Total stockholders' equity (deficit)                                      (1,726)                  (476)
                                                                        -----------------      -----------------

         Total liabilities and stockholders' equity (deficit)           $           2,525      $           4,277
                                                                        =================      =================

</TABLE>







                       See Notes to Financial Statements.

                                       F-2





<PAGE>


                                  CRAMER, INC.

                            STATEMENTS OF OPERATIONS

                  (Amounts In Thousands, Except Per Share Data)

<TABLE>
<CAPTION>

                                                                               YEARS ENDED DECEMBER 31,
                                                                         ---------------------------------
                                                                               2001              2000
                                                                         -----------------  --------------

<S>                                                                    <C>                    <C>
Net sales                                                                    $ 10,447           $ 13,097
Cost of sales                                                                   8,133              9,756
                                                                             --------           --------

         Gross profit                                                           2,314              3,341
                                                                             --------           --------

Operating expenses:
   Selling                                                                      2,023              2,405
   General and administration                                                   1,305              1,222
   Impairment of intangibles                                                       --                289
                                                                             --------           --------

         Total operating expenses                                               3,328              3,916
                                                                             --------           --------

         Loss from operations                                                  (1,014)              (575)

Other expense:
   Interest expense                                                              (174)              (222)
   Other                                                                          (14)              (220)
                                                                             --------           --------

         Loss before income taxes                                              (1,202)            (1,017)

Income taxes                                                                       --                 --
                                                                             --------           --------

         Net loss                                                            $ (1,202)          $ (1,017)
                                                                             ========           ========


Net loss per common share - basic and diluted                                $  (0.30)          $  (0.25)
                                                                             ========           ========

Weighted  average  number of common  and common  equivalent  shares
   outstanding, basic and diluted                                               4,041              4,051
                                                                             ========           ========

Comprehensive loss:
   Net loss                                                                  $ (1,202)          $ (1,017)
   Minimum pension liability adjustment, net of $-0- taxes                        (44)              (107)
                                                                             --------           --------

         Total comprehensive loss                                            $ (1,246)          $ (1,124)
                                                                             ========           ========
</TABLE>






                       See Notes to Financial Statements.

                                       F-3

<PAGE>

                                  CRAMER, INC.

                  STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

                             (Amounts in Thousands)

<TABLE>
<CAPTION>


                                                                                                 ACCUMULATED        TOTAL
                                                                                                    OTHER        STOCKHOLDERS'
                                                NUMBER OF                      ACCUMULATED      COMPREHENSIVE       EQUITY
                                                 SHARES       COMMON STOCK       DEFICIT        INCOME (LOSS)      (DEFICIT)
                                              ------------   --------------    ------------    ---------------  ---------------


<S>                                          <C>             <C>               <C>             <C>               <C>
BALANCE, December 31, 1999                        4,051          $ 3,824          $(2,979)         $  (197)         $   648

   Net loss                                          --               --           (1,017)              --           (1,017)

   Minimum pension liability adjustment              --               --               --             (107)            (107)
                                                -------          -------          -------          -------          -------

BALANCE, December 31, 2000                        4,051            3,824           (3,996)            (304)            (476)

   Net loss                                          --               --           (1,202)              --           (1,202)

   Retirement of common stock                       (10)              (4)              --               --               (4)

   Minimum pension liability adjustment              --               --               --              (44)             (44)
                                                -------          -------          -------          -------          -------

BALANCE, December 31, 2001                        4,041          $ 3,820          $(5,198)         $  (348)         $(1,726)
                                                =======          =======          =======          =======          =======

</TABLE>






                       See Notes to Financial Statements.

                                       F-4


<PAGE>
                                  CRAMER, INC.

                            STATEMENTS OF CASH FLOWS

                           Increase (Decrease) in Cash

                             (Amounts in Thousands)

<TABLE>
<CAPTION>
                                                                           YEARS ENDED DECEMBER 31,
                                                                     -------------------------------------
                                                                          2001                   2000
                                                                     --------------         --------------
<S>                                                                     <C>                    <C>
Cash flows from operating activities:
   Net loss                                                              $(1,202)              $(1,017)
   Adjustments to reconcile net loss to net cash flows from
     operating activities:
       Depreciation                                                          218                   267
       Impairment of intangibles                                              --                   289
   Changes in operating assets and liabilities:
     Accounts receivable                                                     946                  (246)
     Inventories                                                             837                  (203)
     Prepaid expenses and other current assets                                11                   (27)
     Intangible pension asset                                                 52                    52
     Accounts payable and accrued liabilities                               (281)                  725
     Noncurrent pension benefits payable                                     (34)                  (92)
     Other noncurrent liabilities                                             33                   (43)
                                                                         -------               -------
         Net cash flows from operating activities                            580                  (295)
                                                                         -------               -------

Cash flows from investing activities:
   Purchases of property, plant and equipment                                (30)                 (250)
                                                                         -------               -------

Cash flows from financing activities:
   Retirement of common stock                                                 (4)                   --
   Net change in cash overdraft                                             (282)                   85
   Net change in notes payable                                                18                   460
                                                                         -------               -------
         Net cash flows from financing activities                           (268)                  545
                                                                         -------               -------

         Net change in cash                                                  282                    --

Cash at beginning of year                                                     --                    --
                                                                         -------               -------

Cash at end of year                                                      $   282               $    --
                                                                         =======               =======


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

   Cash paid during the year for:
     Interest                                                            $   174               $   222
                                                                         =======               =======

     Income tax                                                          $    --               $    --
                                                                         =======               =======
</TABLE>





                       See Notes to Financial Statements.

                                       F-5

<PAGE>


                                  CRAMER, INC.

                          NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2001 AND 2000




1.       SUMMARY OF ACCOUNTING POLICIES

       Organization

       Cramer, Inc. ("Cramer" or "the Company") is a manufacturer of a variety
       of products for office and industrial use. The Company sells its products
       throughout the United States. International sales are limited. The
       Company's principal customers are office furniture dealers (seating
       products) and wholesale catalog distributors (utility and seating
       products). Approximately 61% and 63% of net sales were seating products
       and approximately 39% and 37% of net sales were utility products in 2001
       and 2000, respectively. Cramer is a 51.5% owned subsidiary of Rotherwood
       Ventures LLC ("Rotherwood"), a Minneapolis, Minnesota based holding
       company.

       Going Concern

       The accompanying financial statements have been prepared on a going
       concern basis, which contemplates the realization of assets and the
       satisfaction of liabilities in the ordinary course of business. The
       Company experienced recurring losses from operations, cash flow
       difficulties and negative working capital during 2001 and 2000 and had a
       stockholders' capital deficiency of $1,726,000 at December 31, 2001. As a
       result, the Company is not in compliance with the financial net worth
       covenant in its bank credit agreement. These conditions raise substantial
       doubt about the Company's ability to continue as a going concern.

       Management plans include obtaining adequate equity financing from
       Rotherwood, paying down certain bank debt and obtaining adequate working
       capital financing. Management continues to evaluate the Company's
       products, methods and operations in an effort to improve Company
       performance, achieve positive cash flow and restore profitability. There
       can be no assurance these measures will be successful. Management is
       uncertain whether its bank credit facility can be renewed after it
       expires on April 27, 2002, whether substitute debt financing can be
       obtained, or whether Rotherwood or any other party will make an equity
       investment in the Company. If adequate debt or equity financing cannot be
       obtained, the Company may not be able to remain in business.

       Pervasiveness 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 the date of the
       financial statements and the reported amounts of sales and expenses
       during the reporting period. Actual results could differ from those
       estimates.

       Revenue Recognition

       The Company recognizes revenue when products are shipped to customers.
       Provisions for discounts, estimated returns and allowances, and other
       adjustments are provided for in the same period the related sales are
       recorded.





(Continued)
                                       F-6
<PAGE>




                                  CRAMER, INC.

                          NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2001 AND 2000



1.     SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

       Inventories

       Inventories consist of raw materials, work-in-process and finished goods
       and are valued at the lower of cost or market. Cost is determined by the
       first-in, first-out (FIFO) method.

       Property, Plant and Equipment

       Property, plant and equipment are carried at cost. Depreciation is
       computed using the straight-line method over the estimated useful lives.
       When assets are retired or otherwise disposed of, the cost and related
       accumulated depreciation are removed from the accounts and any resulting
       gain or loss is recognized. The cost of maintenance and repairs is
       expensed as incurred and significant renewals and betterments are
       capitalized.

       Impairment of Long-Lived Assets

       The Company reviews its long-lived assets for impairment whenever events
       or changes in circumstances indicate that the carrying amount of an asset
       may not be recoverable. Recoverability of assets to be held and used is
       measured by a comparison of the carrying amount of an asset to
       undiscounted future net cash flows expected to be generated by the
       assets. If these assets are considered to be impaired, the impairment to
       be recognized is measured by the amount by which the carrying amount of
       the assets exceeds the fair value of the assets.

       Income Taxes

       Deferred income taxes are provided to reflect the tax effect of
       differences between financial and income tax bases of certain assets and
       liabilities. Items with differences between financial and income tax
       bases are shown in Note 5.

       Warranties

       Depending on the product model, the Company warranties its products for
       periods up to 15 years. The Company's reserve for anticipated warranty
       costs of $223,000 at December 31, 2001, and $100,000 at December 31,
       2000, is included in accrued liabilities. The warranty reserve is
       estimated based on durability testing, engineering studies, and actual
       costs incurred in prior years.

       Advertising Costs

       The Company expenses advertising costs as incurred. Advertising costs
       were $100,000 in 2001 and $127,000 in 2000.

       Comprehensive Income




(Continued)

                                      F-7




<PAGE>

                                  CRAMER, INC.

                          NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2001 and 2000

1.     SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

       The Company reports comprehensive income (loss) in accordance with FASB
       Statement No. 130, "Reporting Comprehensive Income." This statement
       establishes standards for reporting comprehensive income in financial
       statements. Material components of accumulated other comprehensive income
       (loss) must also be disclosed. This statement only modifies disclosures,
       including financial statements disclosures, and does not result in other
       changes to the results or financial position of the Company.

       Earnings (Loss) Per Share

       Basic and diluted earnings (loss) per share are calculated in accordance
       with the provisions of SFAS No. 128, "Earnings Per Share." Basic earnings
       (loss) per share is computed by dividing income available to common
       shareholders by the weighted average number of common shares outstanding
       for the reporting period. Diluted earnings (loss) per share reflects the
       potential dilution that could occur if securities or other contracts to
       issue common stock were exercised or converted into common stock. There
       were no dilutive securities or contracts outstanding in 2001 or 2000.

       New Accounting Pronouncements

       In June 2001, the Financial Accounting Standards Board issued SFAS No.
       141, "Business Combinations," and SFAS No. 142. "Goodwill and Other
       Intangible Assets." Under these new standards, all acquisitions
       subsequent to June 30, 2001, must be accounted for under the purchase
       method of accounting, and purchased goodwill is no longer amortized over
       its useful life. Rather, goodwill will be subject to a periodic
       impairment test based on its fair value. SFAS 142 is effective for fiscal
       years beginning after December 15, 2001, although earlier adoption is
       permitted. We will adopt these standards beginning in 2002.

       In October 2001, the Financial Accounting Standards Board issued SFAS No.
       144, "Accounting for the Impairment or Disposal of Long-Lived Assets."
       SFAS 144 supersedes SFAS 121. SFAS 144 primarily addresses significant
       issues relating to the implementation of SFAS 121 and develops a single
       accounting model for long-lived assets to be disposed of, whether
       primarily held, used or newly acquired. The provisions of SFAS 144 will
       be effective for fiscal years beginning after December 15, 2001. We will
       adopt this standard beginning in 2002.

       The Company believes the adoption of the above standards will result in
       no transitional adjustment or have any material impact on its financial
       statements.

       Concentrations

         Credit Risk

         Financial instruments that potentially subject the Company to
         concentrations of credit risk consist principally of trade accounts
         receivable. The Company has many customers across the United States.
         The Company performs ongoing evaluations of its customers' financial
         condition







(Continued)

                                      F-8

<PAGE>

                                  CRAMER, INC.

                          NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2001 AND 2000


         and generally requires no collateral from its customers. The risk is
         limited due to the large number of entities comprising the Company's
         customer base. The Company maintains its cash in bank deposit accounts
         which, at times, may exceed federally insured limits. The Company has
         not experienced any losses in such accounts. The Company believes it is
         not exposed to any significant credit risk on cash.













(Continued)


                                      F-9

<PAGE>



                                  CRAMER, INC.

                          NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2001 AND 2000




1.  SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

       Concentrations (Continued)

         Suppliers

         Certain components of the Company's products are sourced from a single
         vendor. Any disruption in these supply arrangements could result in
         temporary shipment delays or increased costs. However, the Company
         believes it has the ability to substitute suppliers for any component
         within a three-month period of time.

         Customers

         No single customer accounted for more than 8% of the Company's net
         sales in 2001.

       Shipping and Handling Costs

       Shipping and handling costs are included in cost of sales.


2.  INVENTORIES

    Inventories consisted of the following (in thousands):

<TABLE>
<CAPTION>


                                                       2001                2000
                                                  ---------------     ---------------

<S>                                              <C>                   <C>
Raw materials                                       $   482               $ 1,067
Work-in-process                                         126                   490
Finished goods                                          223                   163
Reserve for obsolescence and shrinkage                 (110)                 (162)
                                                    -------               -------

                                                    $   721               $ 1,558
                                                    =======               =======
</TABLE>



3.  PROPERTY, PLANT AND EQUIPMENT

    Property, plant and equipment consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                                                                                      ESTIMATED
                                                                   2001              2000            USEFUL LIVES
                                                             ---------------    ---------------    ---------------

<S>                                                        <C>                  <C>                   <C>
        Land                                                 $          29        $        29                 -
        Buildings                                                      917                908           5  - 40
        Machinery and equipment                                      3,861              3,848           3  - 10
        Furniture and equipment                                      1,408              1,402           5  - 10
                                                             -------------        -----------

                                                             $       6,215        $     6,187
                                                             =============        ===========

</TABLE>




(Continued)



                                      F-10

<PAGE>


                                  CRAMER, INC.

                          NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2001 AND 2000


4.   NOTES PAYABLE

     The Company and Pacer Corporation (a subsidiary of Rotherwood) participate
     in a combined credit facility with Firstar Bank. The credit facility
     provides the Company and Pacer with access to a revolving line-of-credit of
     $2,000,000 with interest payable monthly at the bank's prime rate and a
     $320,000 line-of-credit with interest payable monthly at the prime plus 2%.
     The Company accounted for 100% of the $2,320,000 in borrowings at December
     31, 2001.

     The combined credit facility, which matures on April 27, 2002, is secured
     by the general intangibles, inventory, accounts receivable and equipment of
     the Company and Pacer. Rotherwood has provided the bank with a $2,000,000
     letter of credit as additional collateral for the loan.

     The Company is not in compliance with the net worth covenants in the loan
     agreements governing the credit facility. Accordingly, there is a risk the
     bank could curtail the Company's right to borrow additional funds under the
     credit facility, require the Company to prepay all or a portion of the
     principal balance under the credit facility prior to the maturity date, or
     fail to renew the credit facility when it matures April 27, 2002. Any such
     action would make it much more difficult for the Company to support
     operations and achieve positive cash flow and profitable operations, and
     could require the Company to curtail operations.


5.   INCOME TAXES

     Deferred income taxes reflect the net tax effects of temporary differences
     between the carrying amounts of assets and liabilities for financial
     reporting purposes and the amounts used for income tax purposes.
     Significant components of the Company's deferred tax assets and liabilities
     as of December 31, 2001 and 2000, are as follows (in thousands):

<TABLE>
<CAPTION>

                                                                             2001                      2000
                                                                       ----------------          ----------------
<S>                                                                    <C>                       <C>
        Deferred tax assets:
          Net operating loss carryforwards                             $       4,377              $      4,011
          Tax credit carryforwards                                                --                       317
          Pension costs                                                          126                       102
          Product liability accrual                                               85                        72
          Accrued compensation and vacations                                       7                        22
          Warranty accrual                                                        87                        39
          Inventories                                                             51                        86
          Other - net                                                             29                        37
                                                                       -------------              ------------

              Total deferred tax assets                                        4,762                     4,686
              Deferred tax liabilities                                            --                       (16)
                                                                       -------------              ------------

              Net deferred tax asset                                           4,762                     4,670
              Valuation allowance                                             (4,762)                   (4,670)
                                                                       -------------              ------------

                                                                       $          --              $         --
                                                                       =============              ============

</TABLE>




(Continued)

                                      F-11

<PAGE>







                                  CRAMER, INC.

                          NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2001 AND 2000























(Continued)


                                      F-12

<PAGE>




                                  CRAMER, INC.

                          NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2001 AND 2000

5.   INCOME TAXES (CONTINUED)

     A reconciliation of the income tax provision (benefit) to the amounts
     computed at the federal statutory rate is as follows (in thousands):

<TABLE>
<CAPTION>


                                                                       2001               2000
                                                                  --------------     --------------

<S>                                                               <C>                <C>
Tax benefit provision (benefit) at statutory rate                      $(409)             $(333)
State income taxes, net of federal taxes                                 (60)               (45)
Changes in valuation reserve related to utilization
  or generation of tax credits and net operating loss
  carryforwards                                                          466                381
Other                                                                      3                 (3)
                                                                       -----              -----

                                                                       $   -              $   -
                                                                       =====              =====
</TABLE>


     At December 31, 2001, the Company has available $11,223,000 of net
     operating loss carryforwards to reduce future income taxes, subject to
     applicable limitations. The carryforwards expire beginning in 2006 through
     2021.


6.   BENEFIT PLANS

         Defined Benefit Plan

         The Company has a defined benefit pension plan covering all of its
         bargaining unit employees working as of September 30, 1988. Effective
         September 30, 1988, the plan was amended to freeze future benefit
         accruals. As a result of freezing the benefits, no further benefits
         accrue to plan participants. The amount of pension a participant will
         receive was frozen at $9.00 multiplied by the number of years of
         service from the later of the date of hire or January 1, 1942, through
         September 30, 1988. Effective September 30, 1988, new employees have
         not accrued benefits under the defined benefit plan. The Company's
         funding of the plan is equal to, or exceeds, the minimum contribution
         required by ERISA and totaled $65,000 and $114,000 in 2001 and 2000,
         respectively.

         Net pension costs included the following components (in thousands):

<TABLE>
<CAPTION>


                                                                 2001              2000
                                                            --------------     --------------

<S>                                                         <C>               <C>
Service cost - benefits earned during the period                 $ --              $ --
Interest cost on projected benefit obligation                      52                58
Expected return on plan assets                                    (38)              (43)
Net amortization and deferral                                      69                59
                                                                 ----              ----

                 Total pension costs                             $ 83              $ 74
                                                                 ====              ====

</TABLE>





(Continued)


                                      F-13


<PAGE>


                                  CRAMER, INC.

                          NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2001 AND 2000





6.   BENEFIT PLANS (CONTINUED)

         Defined Benefit Plan (Continued)

         Net regular periodic pension cost was calculated using the following
assumptions:

<TABLE>
<CAPTION>


                                                                                2001                      2000
                                                                          ----------------          ---------------

<S>                                                                       <C>                       <C>
            Weighted Average Discount Rate                                         7.0%                      7.5%
            Expected Long-Term Rate of Return                                      8.0%                      8.0%
</TABLE>



         The plan's funded status as of December 31, 2001 and 2000, is
         summarized below (in thousands):

<TABLE>
<CAPTION>


                                                                                2001                      2000
                                                                          ----------------          ---------------
<S>                                                                       <C>                       <C>

            Actuarial present value of projected benefit obligation         $      (705)              $     (781)
            Plan assets at fair value                                               379                      465
            Remaining unrecognized net transition obligation                          4                       56
            Unrecognized net loss                                                   348                      304
            Adjustment required to recognize minimum liability                     (352)                    (360)
                                                                            -----------                 --------

                  Net pension liability recognized                          $      (326)                $   (316)
                                                                            ===========                 ========
</TABLE>


         An intangible asset of $4,000 equal to the unrecognized prior service
         cost and transition obligation has been included in the balance sheet.
         The remaining additional minimum liability of $348,000 related to the
         unrecognized net loss has been recorded as a decrease in stockholders'
         equity at December 31, 2001. The change in this amount of $44,000
         during 2001 has been included as a component of other comprehensive
         income.

         The fair value of plan assets changed in 2001 and 2000, as follows (in
         thousands):

<TABLE>
<CAPTION>


                                                                                2001                     2000
                                                                        --------------------     ---------------------

<S>                                                                       <C>                      <C>
            Fair value of plan assets, beginning of year                    $           465          $           503
            Contributions                                                                65                      114
            Benefit payments                                                            (88)                    (100)
            Investment return, net of investment expenses                               (63)                     (52)
                                                                            ---------------         ----------------

                  Fair value of plan assets, end of year                    $           379          $           465
                                                                            ===============          ===============
</TABLE>






(Continued)



                                      F-14
<PAGE>


                                  CRAMER, INC.

                          NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2001 AND 2000



         The projected benefit obligation in 2001 and 2000, as follows (in
         thousands):

<TABLE>
<CAPTION>

                                                                                  2001                     2000
                                                                          -------------------      ------------------

<S>                                                                     <C>                      <C>
            Projected benefit obligation, beginning of year                 $          (781)         $          (805)
            Interest costs                                                              (52)                     (58)
            Benefits paid                                                                88                      100
            Actuarial gains and (losses)                                                 40                      (18)
                                                                            ---------------          ---------------

                  Projected benefit obligation, end of year                 $          (705)         $          (781)
                                                                            ===============          ===============

</TABLE>









(Continued)

                                      F-15

<PAGE>



                                  CRAMER, INC.

                          NOTES TO FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 2001 AND 2000





6.   BENEFIT PLANS (CONTINUED)

         Defined Benefit Plan (Continued)

         Plan assets are held by trust funds devoted to servicing pension
         benefits and are invested in a diversified portfolio of fixed income
         and equity securities.

         In providing the Defined Benefit Plan analysis, the Company relied upon
         information provided by an independent actuary.

         Defined Contribution Plan

         The Company sponsors a 401(k) plan covering substantially all
         employees. Participants may contribute from 1% to 15% of compensation,
         subject to annual limitations. In 1999, the Company instituted a
         matching contribution equal to 25% of a participant's contribution that
         is less than or equal to 6% of gross salary. In addition, the plan
         provides for discretionary contributions as determined by the Board of
         Directors. Total Company contributions consisted solely of matching
         contributions in 2001 and 2000 and were $12,000 and $19,000,
         respectively.


7.   COMMITMENTS AND CONTINGENCIES

     The Company is a defendant in lawsuits related to product liability claims
     that are considered a routine aspect of its business. The claims are
     covered by insurance and are being defended by the Company's counsel or by
     counsel assigned by the Company's insurance carriers. The Company's
     liability insurance coverage obligates the Company to pay the first $50,000
     of settlement or award and related defense costs. Any settlement or award
     and defense cost in excess of the $50,000 deductible is covered by
     insurance. At December 31, 2001, unless specific information pertaining to
     the case indicated otherwise, a specific reserve for each case was accrued
     for based on historical case cost not exceeding the deductible, less costs
     incurred to date. The Company has recorded an accrual of $218,000 at
     December 31, 2001, and $185,000 at December 31, 2000, for product liability
     claims. Management believes the outcome of these claims will not have a
     material adverse effect on the Company's financial position or results of
     operations.

     The Company was assessed OSHA penalties aggregating $117,500 as a result of
     an inspection conducted in 2000. In February 2002, the Company and OSHA
     have agreed to settle the claims for $23,000 and settlement documents have
     been submitted to the Company by OSHA. The Company has recorded an accrual
     for OSHA penalties of $23,000 at December 31, 2001, and $35,000 at December
     31, 2000.




                                      F-16


(Continued)



<PAGE>




 8.  RELATED PARTY TRANSACTIONS

     Rotherwood, the Company's majority owner, provides management services to
     the Company. The cost to the Company for these services was approximately
     $91,500 in 2001 and $28,000 in 2000. In addition, Cramer incurred expense
     of $40,000 for a loan guarantee fee by Rotherwood. At December 31, 2001,
     Cramer owed Rotherwood $100,900 for these expenses along with other
     expenses incurred by Rotherwood for the benefit of Cramer.


9.   IMPAIRMENT OF INTANGIBLES

     In 2000, the Company wrote-off $289,000 of goodwill, customer lists and
     patents related to a proprietary keyboard product line that was
     discontinued.


10.  FINANCIAL INSTRUMENTS

     At December 31, 2001 and 2000, the carrying value of the Company's cash,
     accounts receivable, and accounts payable approximate fair value. Based on
     borrowing rates currently available to the Company for bank loans with
     similar terms and collateral, the fair value of the Company's short-term
     notes payable approximates their carrying value.


11.  STOCK OPTION PLAN

     In 1989, the Company implemented a stock option plan (the "Plan") which
     provided for the grant of incentive awards to directors, officers and other
     key employees. The Plan expired in 2000. There were no outstanding stock
     option grants or shares exercised under this plan in 2000.


12.  COLLECTIVE BARGAINING AGREEMENT

     The factory workers are covered by a collective bargaining agreement with
     the United Steelworkers of America that expires on September 30, 2002. The
     economic portion of the agreement expired on October 1, 2001, and
     subsequently has been renewed on a month-to-month basis. Any work stoppage
     could impact the Company's ability to manufacture product, on-time
     delivery, and product quality, which in turn could have a material adverse
     effect on the Company's business and financial condition.


14.  SIGNIFICANT ITEMS AFFECTING FOURTH QUARTER

     In the fourth quarter of 2001, the Company recorded charges for warranty
     reserves and other accruals of approximately $196,000, and wrote-off a
     grant receivable of approximately $82,000 related to expenditures for
     consulting services that were previously expected to be reimbursed through
     a grant. These adjustments increased the fourth quarter net loss by $.07
     per share.


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

The Company previously reported a change in accountants.




<PAGE>



                                    PART III

ITEM 9.       DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
              COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT - This
              information will be included in the Company's 2002 Proxy Statement
              pursuant to Section 14A of the Securities Exchange Act and is
              incorporated by reference herein.

ITEM 10.      EXECUTIVE COMPENSATION - This information will be included in
              the Company's 2002 Proxy Statement pursuant to Section 14A of the
              Securities Exchange Act and is incorporated by reference herein.

ITEM 11.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
              - This information will be included in the Company's 2002 Proxy
              Statement pursuant to Section 14A of the Securities Exchange Act
              and is incorporated by reference herein.

ITEM 12.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - This
              information will be included in the Company's 2002 Proxy Statement
              pursuant to Section 14A of the Securities Exchange Act and is
              incorporated by reference herein.

ITEM 13.      EXHIBITS AND REPORTS ON FORM 8-K

(a) None





<PAGE>





                                   SIGNATURES



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

                                  CRAMER, INC.



3/29/02           /s/ Gregory Coward
-------           ---------------------------------------------
                  Gregory Coward
                  Chief Executive Officer
                  (Principal Executive Officer)

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



3/29/02           /s/ James R. Zicarelli
-------           ---------------------------------------------
                  James R. Zicarelli
                  Director



3/29/02           /s/ David E. Crandall
-------           ---------------------------------------------
                  David E. Crandall
                  Director



3/29/02           /s/ Nicholas Christianson
-------           ---------------------------------------------
                  Interim Chief Financial Officer
                  (Principal Financial and Accounting Officer)