<PAGE>   1
                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

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

FOR THE FISCAL YEAR ENDED MARCH 31, 1999

COMMISSION FILE NUMBER 09607

                            CENTRUM INDUSTRIES, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)
           DELAWARE                                     34-1654011
------------------------------------------------------------------------------
(STATE OR OTHER JURISDICTION OF                      (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)                       IDENTIFICATION NO.)

 441 EAST MAIN STREET, CORRY, PA                       16407
----------------------------------------          -------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)             (ZIP CODE)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (814) 665-5042
                                                   ---------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
                            NAME OF EACH EXCHANGE ON

     TITLE OF EACH CLASS                             WHICH REGISTERED
------------------------------------------------------------------------------
           NONE                                           NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                      COMMON CAPITAL STOCK, $.05 PAR VALUE
                     --------------------------------------
                                (TITLE OF CLASS)

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

Aggregate market value of voting stock held by non-affiliates of the registrant
at June 11, 1999. (For the sole purpose of making this calculation, the term
"non-affiliate" has been interpreted to exclude directors and executive officers
of the Company. Such interpretation is not intended to be, and should not be
construed to be, an admission of the Company that such directors and executive
officers of the Company are "affiliates" of Centrum Industries, Inc. as that
term is defined under the Securities Act of 1934, computed by reference to the
closing price of $1.00 in the over the counter market on the Bulletin Board on
June 11, 1999) was approximately $ 7,661,875.

Number of shares outstanding of common stock, $.05 par value, as of June 11,
1999: 8,486,001

<PAGE>   2




                            CENTRUM INDUSTRIES, INC.
                           ANNUAL REPORT ON FORM 10-K
                    FOR THE FISCAL YEAR ENDED MARCH 31, 1999

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
PART I                                                                                                                        PAGE

<S>                                                                                                                           <C>
Item 1.  Business...............................................................................................................3

Item 2.  Properties.............................................................................................................8

Item 3.  Legal Proceedings.....................................................................................................10

Item 4.  Submission of Matters to a Vote of Security Holders...................................................................10

PART II

Item 5.  Market for Centrum's Common Stock and Related Stockholder Matters.....................................................11

Item 6.  Selected Financial Data...............................................................................................12

Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations.................................13

Item 7.(A) Quantitative and Qualitative Disclosures About Market Risk..........................................................22

Item 8.  Financial Statements and Supplementary Data...........................................................................25

Item 9.  Changes in and Disagreements With Accountants on Accounting and Financial Disclosure..................................57

PART III

Item 10. Executive Officers and Directors of Centrum...........................................................................57

Item 11. Executive Compensation................................................................................................59

Item 12. Security Ownership of Certain Beneficial Owners and Management........................................................64

Item 13. Certain Relationships and Related Transactions........................................................................65

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K......................................................66
</TABLE>


                                       2
<PAGE>   3


THIS ANNUAL REPORT ON FORM 10-K CONTAINS STATEMENTS WHICH CONSTITUTE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. THESE STATEMENTS APPEAR IN A NUMBER OF PLACES,
INCLUDING ITEM 1. "BUSINESS", ITEM 3. "LEGAL PROCEEDINGS" AND ITEM 7.
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS". SUCH STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING
TERMINOLOGY SUCH AS "BELIEVES," "EXPECTS," "MAY", "ESTIMATES," "WILL," "SHOULD,"
"PLANS" "OPINION" OR "ANTICIPATES" OR THE NEGATIVE THEREOF OR OTHER VARIATIONS
THEREON OR COMPARABLE TERMINOLOGY, OR BY DISCUSSIONS OF STRATEGY. READERS ARE
CAUTIONED THAT ANY SUCH FORWARD-LOOKING STATEMENTS ARE NOT GUARANTEES OF FUTURE
PERFORMANCE AND INVOLVE SIGNIFICANT RISKS AND UNCERTAINTIES, AND THAT ACTUAL
RESULTS MAY VARY MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS AS A
RESULT OF VARIOUS FACTORS. THESE FACTORS INCLUDE THE EFFECTIVENESS OF
MANAGEMENT'S STRATEGIES AND DECISIONS, GENERAL ECONOMIC AND BUSINESS CONDITIONS,
DEVELOPMENTS IN TECHNOLOGY, NEW OR MODIFIED STATUTORY OR REGULATORY REQUIREMENTS
AND CHANGING PRICES AND MARKET CONDITIONS. THIS REPORT IDENTIFIES OTHER FACTORS
THAT COULD CAUSE SUCH DIFFERENCES. NO ASSURANCE CAN BE GIVEN THAT THESE ARE ALL
OF THE FACTORS THAT COULD CAUSE ACTUAL RESULTS TO VARY MATERIALLY FROM THE
FORWARD-LOOKING STATEMENTS.



                                     PART I

ITEM 1.  BUSINESS
(A)  GENERAL DEVELOPMENT OF BUSINESS

GENERAL

Centrum Industries, Inc. ("Centrum" or the "Company") is a Delaware holding
corporation which owns quality manufacturing companies in the metal forming and
material handling industries. All of Centrum's operating segments have been
acquired since 1993. During fiscal 1999, the Company made the strategic decision
that the metal forming segment represents the most significant opportunity for
future growth and profitability for the Company. For this reason, the Company
has decided to sell its material handling segment. Accordingly, this segment has
been classified as discontinued operations in the Consolidated Financial
Statements which are presented in Item 8 of this report.

The plan to sell the material handling segment operations is anticipated to be
completed by the end of the third quarter of fiscal 2000. See Note 2 of the
Notes to the Consolidated Financial Statements. Proceeds from the sale of the
segment will be used primarily to repay senior debt and to add to future
liquidity of the Company.


                                       3
<PAGE>   4


Centrum's long term strategy is to focus on acquisitions and growth in its metal
forming segment. The segment maintains significant capital and technology
barriers to entry. The Company seeks to acquire or combine with businesses in
the metal forming industry whose profitability can be improved by making
fundamental operating changes. Leveraging complementary acquisitions in metal
forming to enhance the value of the Company, by focusing on increased market
penetration, reducing fixed costs and maximizing operational efficiencies is the
cornerstone of Centrum's long term strategy.

(B)  FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

Information relating to the amounts of revenue, operating profit or loss and
identifiable assets attributable to each of the Company's industry segments for
1997-1999 is included in Note 14 to the Consolidated Financial Statements
presented in Item 8 of this report. (In this document, years reflect the fiscal
year ended March 31, unless otherwise noted.)

(C)  NARRATIVE DESCRIPTION OF THE BUSINESS

CONTINUING OPERATIONS

METAL FORMING OPERATIONS
The largest subsidiary of Centrum is McInnes Steel Company and its subsidiaries
(McInnes Steel). McInnes Steel was acquired in March 1996 and comprises the
metal forming operations. McInnes Steel operates four metal forming facilities:
McInnes Steel Company (MSC), McInnes Rolled Rings - Erie (MRR-Erie), McInnes
Rolled Rings - Memphis (MRR-Memphis), formerly Taylor Forge Company, acquired on
June 4, 1997, and Erie Bronze & Aluminum Company (EBA). Cross utilization of
equipment, materials and personnel is an important operational strategy of the
segment. The capabilities of each facility are utilized as needed to assist the
other facilities in producing the highest quality products.

Products and Markets
The metal forming operations produce specialty steel forgings, steel seamless
rolled rings, and nonferrous castings used in a variety of industries.

MSC is located in Northwestern Pennsylvania and produces forged steel
components, primarily utilizing an open-die forging manufacturing process.
Open-die forging is the process of compressing heated metal into a desired shape
using a press or hammer without completely enclosing the metal within the die.
The forgings can range in sizes up to 45,000 lbs. MSC also has heat treat
capabilities which are used to refine the microstructures and mechanical
properties of the metal. The forgings are then semi-finish machined, tested both
destructively and non-destructively, and certified to customer specifications.
Specialty steel forgings are used in many applications; however, the Company
primarily provides its products to the power generation, compressor, oil and
gas, and aircraft industries. MSC acquired new state of the art CNC machine
tools during 1999 in order to support growth in the power generation market.
There are numerous domestic and foreign competitors in the specialty steel
forging industry, however, Patriot Forge and FOMAS S.p.A. are the main
competitors in the commercial power generation


                                       4
<PAGE>   5


market. MSC has achieved the International Standards Organization ("ISO") 9002
Certification and management believes that its commitment to excellence in
quality will help MSC maintain a competitive edge in the market place.

MRR-Erie and MRR-Memphis produce forged steel seamless rolled rings from 4
inches to 160 inches, in weights from 2 to 11,000 pounds. This is an open die
forging process where a seamless rolled ring is produced by punching a hole in a
heated pre-formed round of metal and then rolling the pre-form on a radial-axial
ring mill to customer specifications. The rings are produced in various cross
sections and steel grades, including carbon, alloy, and stainless material, and
can be provided in a rough forged or machined condition. Rolled rings are sold
to bearing, off-road construction equipment manufacturers, oil and gas, mining
and specialty machine manufacturers. There are numerous domestic and foreign
competitors in the rolled ring industry; however, F.R.I.S.A., in Mexico, and
Ovako-Ajax, Inc. and Scot Forge in the United States are the main competitors in
the industry. MRR-Erie is recognized as an industry leader in quality, price and
delivery. This is due to the design of the MRR-Erie facility, which was
constructed in 1992 as a state of the art, fully automated seamless ring rolling
mill. MRR-Memphis is competitive in the 70 to 160 inch rolled ring market.
MRR-Memphis was purchased in June of 1997 in order to complement the MRR-Erie
facility in the larger ring size market. The combined MRR facilities have
products which serve the needs of over 90% of its target markets and represent
one of the largest suppliers in the industry.

Nonferrous castings are produced at EBA in Erie Pennsylvania. The castings range
in sizes from one ounce to 1,000 pounds in either bronze or aluminum materials.
EBA is one of two main suppliers to the domestic and Canadian glass bottle mold
producers. The other main supplier is Ross Mould. Sales are also made in the
international market. EBA sells its castings to the pump and valve industries
and other commercial manufacturers along with international glass customers.

Sales
The products of the metal forming operations are marketed primarily through an
internal sales force in combination with selected usage of outside manufacturers
representatives. The segment sells its products both domestically and
internationally; however, approximately 95% of the sales are made domestically.
The metal forming operations sales are subject to slight seasonal fluctuations
and quality, service, delivery and price are decisive competitive factors.

The global economic crisis and depressed conditions in the oil and gas industry
have had an adverse effect on domestic forging demand. As a result of these
conditions, markets supplied by this segment such as oil and gas, bearing,
construction equipment, and compressor manufacturers experienced a pronounced
slow down in order volume during the second half of fiscal 1999. Forging
industry revenues during the fourth quarter were down by approximately 21% when
compared to the comparable prior year period as published by the Forging
Industry Association. These conditions are being somewhat offset by renewed
demand in domestic power generation markets. Recurring "brown-outs" in the
United States during the summer of 1998 resulted in a significant acceleration
of planned capacity additions of gas turbine and steam turbine power


                                       5
<PAGE>   6


generators in the electric utility industry. This created new fiscal 2000 orders
for the metal forming companies that will help to offset the reductions in other
markets.

Sales during 1999 to General Electric Company (GE) were 10% of net sales on a
consolidated basis and 11% of the metal forming operations sales. No other
customer exceeds 10% of the consolidated or metal forming operations segment
sales. Approximately one-half to three quarters of the metal forming operations
segment customers provide repeat business and customers are billed for the
products upon shipment.

Backlog at this segment was $15.3 million at May 31, 1999 as compared to $17.3
million at May 31, 1998 or a reduction of approximately 11.6%. As mentioned
earlier, increased demand from power generation customers has helped to offset
reduced business in other areas. GE, the Company's largest power generation
customer, now accounts for approximately 41% of total backlogs. This is an
increase from approximately 20% in the prior year. Loss of this customer would
have an adverse impact on the Company.

Raw Materials
The primary raw material of the metal forming operations is steel, which is
purchased from regional and national suppliers. There are no long-term contracts
for the purchase of steel. The raw material supplies have been and are expected
to remain sufficiently abundant to support operations. The metal forming
operations require maintaining a stock inventory of raw materials due to the
variety of its products and customer lead-time requirements.

Energy is a significant requirement in the metal forming operations segments'
production and energy is required to forge and heat treat the product. Natural
gas and electricity are the main sources of energy. Supplies of natural gas and
electricity have been sufficient and are expected to remain at adequate levels.

Employees
At May 31, 1999, the metal forming operations had approximately 298 employees.
Approximately 145 employees are covered by three separate collective bargaining
agreement which expire during the fiscal year ending March 31, 2003.
Management believes that it has good relations with its employees.

CORPORATE AND OTHER

Activities within these operations consist primarily of corporate administrative
expenses, interest on holding company debt, and manufacturing operations which
are not sufficiently material to warrant separate discussion.

DISCONTINUED OPERATIONS

MATERIAL HANDLING
The material handling segment contains American Handling, Inc. (AHI) and
Northern Steel Company (Northern) which was acquired on November 5, 1997. As a
result of management's


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<PAGE>   7


decision to concentrate the Company's resources on the metal forming segment,
these operations are currently held for sale and classified as discontinued
operations in the Consolidated Financial Statements.

Products and Markets
AHI in Cleveland, Ohio, offers material handling systems and components to
companies with warehouse and distribution facilities. Designing a material
handling system requires expertise in facilities planning and system design,
inventory analysis and determination of equipment needs, procurement and
installation of equipment, and coordinated relocation of the customer inventory.
Northern supplies shelving, racks, conveyors, and other storage and distribution
equipment as components of material handling systems. Northern's operations are
located in Washington, California and Oregon. Northern complements AHI by
combining its distribution capabilities with AHI's design and integration
capabilities, as well as expanding the geographic presence of the segment,
providing an entry for AHI into one of the fastest growing regions in the
domestic material handling market.

AHI's principal customers have historically been in the automotive after-market.
Demand in the automotive aftermarket has declined in recent years, however, and
management has shifted the product mix at AHI to lessen the dependence on any
particular industry. AHI has recently received orders from such new market
sectors as construction, industrial supplies, medical products and printing.
Northern, as a full service distributor of material handling equipment, serves a
variety of markets. The majority of Northern's sales are to customers in the
western half of the United States and sales by AHI are to customers located
throughout the United States.

The material handling segment competes primarily on price, product, performance
guarantees and the extent of services which can be provided. There are few
direct competitors which provide the turnkey service provided by AHI; however,
Rapistan Systems and HK Systems are the main competitors in the full system
design and implementation of material handling systems. Competition is primarily
in the individual phases of systems work. For example, a competitor may provide
construction and installation services or design services, but few competitors
provide the range of services offered by AHI. There are numerous local and
regional material handling distributors competing with Northern. Price is a
primary competitive factor.

Sales
The material handling segment markets its services and products in the domestic
market through an internal sales force. Sales, to a large extent, are impacted
by the construction industry, which historically experiences lower sales levels
from January through May. Material handling systems projects have minimal
working capital requirements due to goods that are primarily shipped directly to
the customers' job site, which permits the maintenance of minimal inventory
levels. A systems project typically lasts from six to eight months and is
supported by a progress payment schedule to conserve working capital. Terms for
distribution sales are generally net 30, with deposits on special orders.

Backlogs at this segment increased by $6.7 million from the prior year level as
a result of the penetration of new markets by AHI. As of May 31, 1999, the
backlog of firm orders for the


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<PAGE>   8


segment is approximately $11.1 million as compared to $4.4 million at May 31,
1998. All of the backlog orders are expected to be filled within the next year.

Raw Materials
Raw materials are purchased to fabricate mezzanines structures, cart racks and
catwalks and consist mainly of raw steel. Other material handling products, such
as shelving, rack and conveyor equipment, are purchased from multiple suppliers.
Raw materials and material handling products are readily available from many
different suppliers.

Employees
At May 31, 1999, the material handling segment had approximately 79 employees,
who are not covered by a collective bargaining agreement. Management believes
that it has good relations with its employees.

(D)  COMPLIANCE WITH ENVIRONMENTAL REGULATIONS

The Company is subject to federal, state and local provisions dealing with the
protection of the environment. The Company is involved in certain regulatory
proceedings involving environmental matters which are incorporated by reference
from Note 11 to the Consolidated Financial Statements contained in Item 8
hereof.

Expenditures related to the environmental regulatory matters were not material
for fiscal 1999 and are not anticipated to be material for 2000. Based upon
historical experience and information currently available, the Company does not
expect compliance with environmental regulations to have a material adverse
effect on the Company's operations, capital expenditures, earnings, competitive
position or liquidity.


ITEM 2.  PROPERTIES

Centrum's principal facilities are set forth in the table below:

Location                        Use                               Leased/Owned

CONTINUING OPERATIONS

<TABLE>
<CAPTION>
METAL FORMING OPERATIONS

<S>                            <C>                                <C>
Corry, Pennsylvania            Administration/Sales Office
                               Production/Warehousing             Owned

Fairview, Pennsylvania         Administration/Sales Office
                               Production/Warehousing             Owned

</TABLE>


                                       8
<PAGE>   9


<TABLE>
<S>                            <C>                                <C>
Corry, Pennsylvania            Production                         Leased

Memphis, Tennessee             Administration/Sales Office
                               Production                         Owned

CORPORATE  AND OTHER
Medina County, Ohio            Oil & Gas Exploration              Leased (1)

Englewood, Ohio                Administration/Sales Office        Owned
                               Production/Warehousing


DISCONTINUED OPERATIONS

MATERIAL HANDLING
Cleveland, Ohio                Administration/Sales Office        Leased
                               Production/Warehousing

Cleveland, Ohio                Warehousing                        Leased

La  Mirada, California         Sales Office                       Leased

San Leandro, California        Sales Office / Warehouse           Leased

Portland, Oregon               Sales Office / Warehouse           Leased

Kent, Washington               Sales Office / Warehouse           Leased
</TABLE>


         The owned properties located in Pennsylvania, Tennessee, and Ohio
         secure bank debt and industrial development financing. Details of the
         encumbrances are incorporated by reference from Note 7 and Note 8 to
         the Consolidated Financial Statements contained in Item 8 hereof.

         The manufacturing facilities are well maintained and are suitable for
         the Company's current and anticipated needs. The facilities are
         operating at capacities which range from approximately 50% to 80%.

(1)      Represents mineral rights.






                                       9
<PAGE>   10


ITEM 3.  LEGAL PROCEEDINGS

The Company is involved in litigation arising out of the normal course of
business activities. None of these legal proceedings including the regulatory
proceedings discussed below are expected to have a material adverse effect on
the Company.

The Company is involved in certain regulatory proceedings involving
environmental matters. On October 16, 1989, the USEPA filed a federal court cost
recovery action in the United States District Court for the Western District of
Pennsylvania against various alleged owners and transporters relating to an
unpermitted landfill site in Millcreek Township, Erie County, Pennsylvania
("Millcreek site"). EBA was identified as one of various "potentially
responsible parties" ("PRP's") which allegedly caused "hazardous substances," as
defined in CERCLA, to be taken to the Millcreek site. With regard to this cost
recovery action, EBA has negotiated a settlement which has been approved in
federal court and has been concluded in May of 1996.

In addition to the above, on March 31, 1992, USEPA issued a CERCLA Section 106
unilateral administrative order ("Section 106 order") to EBA and most other
PRP's relating to the Millcreek site. The Section 106 order required the named
PRP's to perform soil cap remediation work at the Millcreek site. The PRP's have
submitted their work plan, which has been approved by the government and
construction is expected to begin during 2000.

Additional details involving environmental matters are incorporated by reference
from Note 11 to the Consolidated Financial Statements contained in Item 8
hereof.


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

There were no matters submitted to a vote of security holders, through
solicitation of proxies or otherwise, during the quarter, ended March 31, 1999.



                                       10
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                                     PART II

ITEM 5.  MARKET FOR CENTRUM'S COMMON STOCK AND RELATED
             STOCKHOLDER MATTERS

The Company's common stock is traded over the counter on the Bulletin Board
under the symbol CIII. Prior to September 1995, trades were primarily made
through Continental Capital, Inc. See Item 10, "Directors and Executive Officers
of Centrum," and Item 12, "Security Ownership of Certain Beneficial Owners and
Management."

The following table presents the quarterly high and low selling price in the
over the counter market.

<TABLE>
<CAPTION>
1999:                                                            High                        Low
<S>                                                             <C>                         <C>
   Quarter ended June 30, 1998                                  $3.00                       $1.50
   Quarter ended September 30, 1998                              3.03                        1.88
   Quarter ended December 31, 1998                               1.75                         .88
   Quarter ended March 31, 1999                                  1.19                         .65


1998:
  Quarter ended June 30, 1997                                   $2.94                       $1.75
   Quarter ended September 30, 1997                              2.00                        1.75
   Quarter ended December 31, 1997                               2.25                        1.88
   Quarter ended March 31, 1998                                  2.19                        1.50
</TABLE>


As of June 25, 1999, there are approximately 1,000 shareholders of record.
Shareholders are entitled to receive dividends when and as declared by the Board
of Directors. However, Centrum has never paid a dividend, and intends to
conserve capital to finance future acquisitions and, accordingly, does not
anticipate payment of any dividends in the foreseeable future. Furthermore, any
proposed dividends must be approved, in advance, by both the holders of the 11%
convertible, unsecured notes payable and the Company's senior lender.



                                       11
<PAGE>   12


ITEM 6.  SELECTED FINANCIAL DATA

The following five year selected financial data should be read in conjunction
with the Consolidated Financial Statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations that appear elsewhere
in this report.

<TABLE>
<CAPTION>
                                                               As of and for the Years Ended March 31,
                                                               ---------------------------------------
                                               1999            1998 (B)            1997              1996 (A)            1995
SUMMARY OF OPERATIONS:
<S>                                     <C>                 <C>               <C>               <C>                <C>
Net sales                               $  52,288,939       $ 57,103,774      $ 54,971,724       $   8,074,435     $   5,322,699
Other expense                              (3,017,226)        (2,892,038)       (2,486,890)           (299,452)         (194,501)

Income (loss) from continuing
    operations before income taxes      $  (2,877,734)      $    972,934      $  1,223,721       $     355,332     $    (113,073)
Income taxes                               (1,586,787)           321,669          (865,242)            (58,455)           29,750
                                           -----------       ------------      ------------       -------------     -------------
Income (loss) from continuing
    operations                          $  (1,290,946)      $    651,265      $  2,088,963       $     413,787     $    (142,823)
                                        ==============      =============     =============      ==============    ==============

PER SHARE DATA:
Income (loss) from continuing
    operations - Basic                  $        (.15)      $        .08      $        .36       $         .07     $        (.02)
Income (loss) from continuing
    operations - diluted                $        (.15)      $        .08      $        .34       $         .07     $        (.02)




FINANCIAL POSITION:
Total assets                            $  44,742,747       $ 47,415,477      $ 39,282,907       $  35,455,419     $   6,149,725
Long-term liabilities                      17,838,355         11,758,478        10,423,248          11,944,380         3,103,487
Total Liabilities                          37,759,282         37,291,177        30,540,269          31,872,427         4,643,977
Net Worth                                   6,983,465         10,124,300         8,742,638           3,582,992         1,505,748
</TABLE>

(A) On March 8, 1996, McInnes Steel Company was purchased through a subsidiary
merger. This transaction was accounted for as a purchase and its operations have
been included in the consolidated financial statements since that date. McInnes
had net sales of $2,539,899 and income from continuing operations of $70,141 for
the period from March 8, 1996 to March 31, 1996.

(B) On June 4, 1997, the Company acquired substantially all of the assets and
certain liabilities which comprise MRR-Memphis. MRR-Memphis had net sales of
$7,114,015 and a loss from continuing operations of $114,594 for the ten month
period ended March 31, 1998. This acquisition has been accounted for as a
purchase and the results of operations have been included in the Consolidated
Financial Statements since the date of acquisition.

During the five year period ending March 31, 1999 no dividends were declared or
paid.


                                       12
<PAGE>   13



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

This annual report on Form 10-K contains statements which constitute
"forward-looking statement" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements appear in a number of places,
including Item 7. "Management's Discussion and Analysis of Financial Condition
and Results of Operations". Such Statements can be identified by the use of
forward-looking terminology such as "believes", "expects", "may", "estimates",
"will", "should", "plans", "opinions" or "anticipates" or the negative thereof
or other variations thereon or comparable terminology, or by discussions of
strategy. Readers are cautioned that any such forward-looking statements are not
guarantees of future performance and involve significant risks and
uncertainties, and that actual results may vary materially from those in the
forward-looking statements as a result of various factors. These factors include
the effectiveness of management's strategies and decisions, general economic and
business conditions, developments in technology, new or modified statutory or
regulatory requirements and changing prices and market conditions. This report
identifies other factors that could cause such differences. No assurance can be
given that these are all of the factors that could cause actual results to vary
materially from the forward-looking statements.





Summarized results of operations by business segment for the years ended
March 31, 1999, 1998, and 1997.


<TABLE>
<CAPTION>

RESULTS OF OPERATIONS                                                                                  % Change from Prior Year
                                                                                              ------------------------------------

Years Ended March 31  ( Dollars in Thousands )      1999            1998          1997                     1999            1998
==================================================================================================================================
<S>                                                 <C>             <C>           <C>                     <C>              <C>
CONTINUING OPERATIONS
           Metal Forming                             $ 48,520       $ 52,025       $ 46,639               -6.7%            11.5%
           Corporate & Other                            3,769          5,078          8,333              -25.8%           -39.1%
                                                ---------------------------------------------------------------------------------
                                                     $ 52,289       $ 57,103       $ 54,972
==================================================================================================================================

     GROSS MARGIN:
           Metal Forming                              $ 9,652       $ 10,864        $ 9,207              -11.1%            18.0%
           Corporate & Other                              907          1,250          1,651              -27.5%           -24.3%
                                                ---------------------------------------------------------------------------------
                                                     $ 10,559       $ 12,114       $ 10,858
==================================================================================================================================

     OPERATING INCOME (LOSS):
           Metal Forming                                $ 984        $ 4,717        $ 3,953              -79.1%            19.3%
           Corporate & Other                             (844)          (852)          (242)              -0.9%           252.1%
                                                ---------------------------------------------------------------------------------
                                                        $ 140        $ 3,865        $ 3,711
==================================================================================================================================

DISCONTINUED OPERATIONS
     Net Sales                                       $ 26,243       $ 21,811        $16,183               20.3%            34.8%
     Gross Margin                                    $  5,575       $  4,903        $ 3,744               13.7%            31.0%
     Operating Income (Loss)                         $ (2,105)      $    229        $   444               N/M   [1]      -48.42%
==================================================================================================================================
</TABLE>


[1]  Not meaningful  (N/M)





                                       13

<PAGE>   14

The following discussion of the Company's results of operations should be read
in conjunction with the Consolidated Financial Statements of the Company and the
Notes thereto.

BASIS OF FINANCIAL STATEMENTS
During fiscal 1999, the Company committed to plans to sell the material handling
segment consisting of the operations of American Handling, Inc. (AHI) and
Northern Steel Company (Northern). The Company intends to complete the sale
before the end of the third quarter of fiscal 2000.
Accordingly, the assets of AHI and Northern are treated as "held for sale" and
the related operating results have been classified as discontinued operations in
the Consolidated Financial Statements for all periods presented. The Company
recorded a loss from these discontinued operations of $1.7 million, net of taxes
in fiscal 1999. The components of this net loss are discussed further under the
caption "Discontinued Operations - Material Handling Segment".


CONTINUING OPERATIONS

OVERVIEW
Centrum is a holding company that owns and acquires metal forming operations
that have strong niche positions. The Company's long range goal is to enhance
the overall value of its metal forming operations through a combination of
increased market penetration and complementary acquisitions or strategic
business combinations. Revenues in the metal forming operations are affected by
worldwide demand in the power generation, compressor, mining, construction
equipment, aerospace and oil and gas industries.

RESULTS OF OPERATIONS
The Company's continuing operations consist primarily of the metal forming
segment. The metal forming segment was established on March 8, 1996 with the
acquisition of McInnes Steel Company (McInnes), and consists of steel open die
forging, nonferrous casting and seamless rolled ring operations. McInnes Rolled
Rings - Memphis (MRR-Memphis), formerly known as Taylor Forge Company, was
acquired on June 4, 1997 to expand this segment and is included in the results
of operations since the acquisition date. The Corporate and Other contains the
corporate office which functions to oversee the manufacturing operations and
pursue future strategic opportunities for growth. In addition, this contains
manufacturing operations which are not sufficiently material to warrant separate
discussion.

YEAR ENDED MARCH 31, 1999 COMPARED TO MARCH 31, 1998

Consolidated Results
Net Sales decreased by $4.8 million or 8.4% to $52.3 million during fiscal 1999.
Lower revenues were caused by weaker demand during the second half of 1999 in
most markets served by the metal forming operations. Gross margin on a
consolidated basis declined to 16.9% of sales in fiscal 1999 as compared to
21.2% in the prior year. This reduction is primarily attributable to the revenue
reduction discussed above as margins felt the pressure of reduced volumes and
changes in product mix. Revenues in the metal forming segment experienced a
steep decline during the second half of fiscal 1999 as a result of significantly
lower worldwide demand in the markets served by the segment. Although plant
costs were cut substantially during this period, margins were adversely affected
by the revenue decline. Selling, General and Administrative expense (SG&A)
increased to 16.7% of sales from 14.4% in the prior year. The primary cause for
this increase as a percentage of sales was approximately $1.2



                                       14
<PAGE>   15
million in pretax charges. These charges were taken as a result of the
reduction in revenues discussed above and the realignment of certain metal
forming operations. See the more detailed discussion under "Metal Forming
Operations" below.

As a result of the items discussed above, operating income fell from $3.9
million in the prior year to $100,000 in fiscal 1999. In addition, a one-time
charge of $210,000 was taken during 1999 to miscellaneous expense in order to
reflect the write-off of certain acquisition costs associated with a potential
transaction that was not completed.

The current year provision for income taxes reflects a tax benefit rate of (44%)
as compared to a fiscal 1998 tax provision rate of 33%. The current year tax
benefit rate primarily results from the creation of federal and state Net
Operating Loss ("NOL") carryforwards. In addition, during 1999, management
recorded an $827,000 credit to deferred income expense. The credit to the
deferred income tax provision was to reduce the existing valuation allowance and
was based on new information regarding certain federal net operating loss
carryforwards (NOLs). This information reduced the level of uncertainties with
respect to a portion of these NOLs whereby management concluded that it was more
likely than not that the Company would realize these benefits.

The Company also recorded an extraordinary charge of $295,000, net of taxes in
fiscal 1999. The extraordinary item relates to the refinancing of the Company's
senior debt during the fourth quarter. The extraordinary item consists of costs
associated with the closing of the previous senior debt facility, the write-off
of intangible assets associated with the facility and professional fees. Please
refer to the liquidity and capital resources discussion for a more detailed
description of the new senior debt facility.

Results for the individual segments follow.


METAL FORMING OPERATIONS

Sales in the metal forming operations were $48.5 million in fiscal 1999 as
compared to $52 million in the prior year or a reduction of $3.5 million or
6.7%. Domestic demand in the metal forming operations has been adversely
affected by the global economic crisis and depressed conditions in the oil and
gas industry. Industry revenues during the fourth quarter were down by
approximately 21% when compared to the comparable prior year period as published
by the Forging Industry Association. Markets supplied by this segment such as
oil and gas, bearing, construction equipment, and compressor manufacturers
experienced a pronounced reduction in order volume during the second half of
fiscal 1999. As a result of these conditions, revenues in the segment declined
from a high of $13.6 million in the first quarter of fiscal 1999 to $10.6
million in the fourth quarter reflecting a reduction of 22% between the periods.

This revenue trend is expected to recover during the next year as the segment
realizes the benefit of renewed order activity from the domestic power
generation market. Recurring "brown-outs" in the United States during the summer
of 1998 resulted in a significant acceleration of planned capacity additions of
gas turbine and steam turbine power generators in the electric utility industry.
General Electric, the Company's largest power generation customer, has reported
a 62% increase in order volume during calendar 1999 and early orders for
calendar 2000 indicate another 19% growth. Industrial gas turbines are expected
to supply 25% of global power in the year 2000 up from 13% last year. This has
created new orders for the segment during the fourth quarter that will benefit
revenues in fiscal 2000.


                                       15

<PAGE>   16


Gross margin for the segment fell to 16.5% in fiscal 1999 from 20.9% in the
prior year. This reduction in margins is primarily attributable to the reduction
in revenues discussed above. Although employment levels were reduced by
approximately 20% and plant costs were cut significantly during the year, these
reductions could not maintain pace with the revenue reductions experienced
during the third and fourth quarter. In addition, margins were under pressure by
a change in mix during the year as the segment sought thinner margin commercial
products in order to bolster volume. Gross margins are expected to improve in
the coming year as a result of the operating costs reductions implemented during
the second half of fiscal 1999. In addition, margins will be benefited by an
improvement in volume during fiscal 2000 as the revenue stream realizes the
benefit of increased order activity in the domestic and worldwide power
generation markets.

SG&A expenses increased to 14.4% of sales from 11.8% in the prior year. The
primary cause for this increase is approximately $1.2 million in one-time
charges arising from the reduction in revenue levels and the realignment of the
segment's operations. The major components of these charges were approximately
$300,000 in bad debt expense related to accounts in the oil and gas markets,
$250,000 for severance accruals, and $200,000 in adjustments to insurance
reserves. These charges are expected to be non-recurring. As a result of the
decline in revenues, margins, and the one time charges discussed above,
operating income for the segment was reduced to $1 million in fiscal 1999 from
$4.7 million in the prior year.

During fiscal 2000, the Company expects operating profits to realize the benefit
of a recovery in revenues as a result of increased demand in the power
generation markets. In addition, margins will improve to more historical levels
benefited by recovering revenues and reductions in operating costs initiated
during the second half of fiscal 1999. As a result of these trends, management
anticipates a return to historical operating margin rates during the next year.

CORPORATE AND OTHER

Pretax loss in this segment increased to $1.8 million in the current fiscal year
as compared to $1.6 million in the prior year as a result of a one time charge
of $210,000 to write off certain acquisition costs. Also, during 1999, the
Company closed it corporate office in Toledo, Ohio and relocated these
operations to the metal forming headquarters in Corry, Pennsylvania as a direct
result of its commitment to the metal forming operations.

DISCONTINUED OPERATIONS - MATERIAL HANDLING SEGMENT

As mentioned above, the Company has committed to a formal plan to sell
the operations that comprise the material handling segment. The sale of AHI and
Northern is projected to be before the end of the third quarter of fiscal 2000.
For this reason, the net assets of the segment have been classified as "held for
sale" and the operating results have been classified as discontinued operations
in the Consolidated Financial Statements for all periods presented.

Revenue in the material handling segment increased by $4.4 million or 20.3% to
$26.2 million in fiscal 1999 as compared to $21.8 million in the prior year.
However, excluding the acquisition of Northern, revenues at the segment
decreased by 22.2% or $3.6 million during fiscal 1999. Revenues deteriorated
primarily because of lack of demand in the automotive aftermarket for material
handling systems. As a result of this, management focused intensely on the
development of new sections of the material handling market during fiscal 1999.


                                       16

<PAGE>   17


Orders were received from such new sectors as construction, industrial supplies,
medical products and printing. In addition, margin levels in these growing
sectors have improved when compared to the traditional automotive aftermarket.
Backlogs for the segment have increased from $4.4 million in the prior year to
$11.1 million primarily as a result of the penetration of these new markets. The
revenue stream is expected to return to historical levels during fiscal 2000 as
the segment realizes the benefit of the increased backlogs.

Gross margins for the segment fell to 20.7% in fiscal 1999 from 22.6% in the
prior year. The primary cause of the reduction in margin was the inclusion of
Northern in a full year of operations. Excluding Northern, margins at the
segment improved to 23.2% in fiscal 1999 as compared to 20.7% in the prior year.
The prior year margins were impacted by the underperformance of a $6 million
project for the segment which represented an entry into a new market. The
current year margin rate of 23.2% represents a return to more historical levels.
Margins at Northern were 18.3% for the current year. These margin levels are
consistent with other material handling distributors. Management's strategy is
to use Northern as an entry into the west coast markets for the segment's higher
margin system design products.

SG&A at the segment increased to 28.2% of sales in fiscal 1999 from 20.8% in the
prior year as a result of management's commitment to maintaining the
administrative infrastructure necessary to penetrate new sectors of the material
handling market. These costs will return to more traditional levels as a
percentage of sales during the next fiscal year as the revenue stream realizes
the benefit of the increased backlogs. Interest expense for the segment
increased by approximately $180,000 as a result of the inclusion of Northern in
a full year of operations.

As a result of the preceding items, the segment recorded a $2.4 million pretax
loss in fiscal 1999 compared to $1.0 million (including a one time gain of
$745,000) in pretax income in the prior year. Management expects revenues and
operating profits to recover significantly during fiscal 2000 as a result of
stronger backlogs and an improvement in product mix during 1999.


YEAR ENDED MARCH 31, 1998 COMPARED TO MARCH 31, 1997

Consolidated results
Net sales from continuing operations increased by $2.1 million or 3.9% to $57.1
million for fiscal 1998 as a result of the inclusion of MRR-Memphis in the
results of operations. Excluding this acquisition, consolidated revenues
declined by $4.9 million to $50 million or (10%) during the current year. This
change in revenue stems from a $1.7 million reduction in sales in the metal
forming operations and a $3.2 million reduction at the manufacturing operations
included in Corporate and Other. Gross margin on a consolidated basis increased
to 21.2% in 1998 from 19.8% in 1997 as a result of improvement in the product
mix at metal forming. See the more detailed discussion under "Metal Forming
Operations" below.

The current year provision for income taxes reflects an effective rate of 32.9%
as compared to a fiscal 1997 tax benefit rate of (46.1%). During 1997,
management recorded a provision for income tax expense of $827,000 which was
offset by a $1.6 million credit to deferred income tax expense. The credit to
deferred income tax expense was to reduce existing valuation allowances and was
based upon new information evaluated during the year regarding the availability
of certain federal net operating loss carryforwards (NOLs) and the continued
improvements and operating profits throughout the Company.



                                       17

<PAGE>   18


Results for each of the individual segments are as follows.


METAL FORMING OPERATIONS

Sales at the metal forming operations were $52 million as compared to $46.6
million in the prior year or an increase of 11.5%. The increase is due entirely
to the inclusion of MRR-Memphis in the current year results of operations.
Revenue growth in this segment slowed during fiscal 1998 from the rate achieved
during fiscal 1997. Growth in the seamless rolled ring market coupled with the
addition of new forged product lines was offset by a reduction in demand for
open die forgings in the power generation market. Strong demand from both
bearing and gear producers has continued to fuel the revenue stream in the
segments' rolled ring operations. This was coincident with the addition of
several new forged product lines for the aircraft and oil and gas markets.
However, overall sales growth was diminished, as orders for open die forgings
for the power generation markets slowed during the fourth quarter with the
continuation of the economic crisis in Asia. Management believes demand trends
in the power generation market will remain sluggish during the first half of
fiscal 1999 and then return to historic rates during the second half of the
fiscal year. During the first half of fiscal 1999, the revenue stream is
expected to realize the benefit of the new product lines discussed above,
offsetting shortages caused by the power generation markets.

Gross margins for the segment increased to 20.9% in fiscal 1998 from 19.7% in
the prior year. Gross margin was 23.1% excluding the results of MRR-Memphis.
Margins have been positively impacted at this segment by the addition of the new
products for the aircraft and oil and gas markets. In addition, management's
emphasis on cost reductions continue to have a positive impact on manufacturing
costs. Operating income for the segment increased to 9.1% in the current year
and 9.6% excluding the results of MRR-Memphis as compared to 8.5% in fiscal
1997. The majority of the improvement in gross margins was translated into a
positive impact on earnings as management held SG&A, as a percentage of sales,
consistent with prior year levels. As a result of this, operating income for the
segment grew by $764,000 or 19.3% during fiscal 1998 and $352,000 or 8.5%
excluding the results of MRR-Memphis.


CORPORATE AND OTHER

Sales decreased at Corporate and Other by 39% or $3.2 million during fiscal 1998
to $5.1 million in the current year from $8.3 million the prior year. This
reduction is primarily the result of a shift in product. The decrease in sales,
coupled with an increase of $200,000 in SG&A, caused the 1999 operating loss to
increase by $600,000 over the prior year level. Interest expense reflected a
reduction of $172,000 attributable to the repayment of bridge notes issued in
connection with the McInnes acquisition during fiscal 1997.


DISCONTINUED OPERATIONS - MATERIAL HANDLING SEGMENT

Revenues in the material handling segment increased by $5.6 million or 34.8% to
$21.8 million in fiscal 1998 from $16.2 million in fiscal 1997. The entire
increase was due to the inclusion of Northern in the results of operations.
Although the material handling industry has been growing between 3% - 5%
annually, the automotive after-market niche served by AHI did not experience
such a robust growth rate. Revenue growth is


                                       18

<PAGE>   19


expected to begin during the second half of fiscal 1999 at rates consistent with
the overall industry as a result of management's continued focus on the
development of new sectors of the material handling market. Until this time,
however, the first half of fiscal 1999 will be impacted by lower than historical
volumes in this segment.

Gross margin for the material handling segment fell to 22.5% in fiscal 1998, and
20.7% excluding the results of Northern, from 23.1% in the prior year. The
primary reason for the reduction in gross margin is the underperformance of a $6
million installation project at AHI. The project represented an entry for the
company into a new market and was completed during the fiscal year. Margins on
the remainder of AHI products remain at traditional levels and management
anticipates that future orders will perform at margin levels consistent with
prior year results. Operating income decreased to 1.0% of sales in fiscal 1998
from 2.7% in fiscal 1997. Operating income was 1.4% of sales excluding the
results of Northern. The reduction in operating income is mainly attributable to
the underperformance in gross margin discussed above.

The material handling segment recognized a one-time pretax gain of $745,000
during fiscal 1998 as a result of the relinquishment of a contractual right to
purchase the office and warehouse building leased by AHI. In December 1997, the
building was sold by the landlord to a third party and a cash payment was
received. This pretax gain was recorded as other income in the consolidated
financial statements. A one year lease has been obtained from the buyer which
should allow AHI adequate time to relocate. The recognition of similar gains is
not expected to be a continuing trend in future years.


LIQUIDITY AND CAPITAL RESOURCES

BASIS OF PRESENTATION
For purposes of analyzing the cashflow and liquidity of the Company, the
Statement of Cashflows in the accompanying Consolidated financial Statements has
been presented by aggregating both "continuing" and "discontinued" operations.

OPERATING ACTIVITIES CASH FLOW
Cash provided by operating activities during fiscal 1999 was $3.1 million. The
primary sources of cash during fiscal 1999 were reductions in accounts
receivable of $2 million and inventories of $1.1 million resulting from
management's goals to reduce these balances during the year. In addition, cash
was raised through increases in accounts payable of $1.8 million and accrued
expenses of $2 million. Management has continued its emphasis on managing
payables and accruals to assist in reducing interest expense.

Cash provided by operating activities during fiscal 1998 was $3.7 million. The
primary source of cash other than net income, and depreciation, was a $1.5
million reduction in costs and estimated earnings in excess of billings on
uncompleted contracts. The reduction of this asset was caused by the reduction
in revenue at one of the Company's operating facilities as a result of a change
in product mix. The decrease in accrued expenses of $1.7 million was caused by a
reduction in deposits at the material handling and corporate and other segments
due to the completion of long term contracts during the fiscal year and the
payment of contingent liabilities associated with the acquisition of Northern.
Cash used by operating activities for the year ended March 31, 1997 was $1.6
million. During 1997 the largest uses of cash were the reduction of accounts
payable by $2.8 million and the $1.1 million increase in costs and estimated
earnings in excess of billings due to the timing of


                                       19

<PAGE>   20


certain vendor payments and the timing of billings related to two large
contracts which were in process at year end.

FINANCING AND INVESTING ACTIVITIES CASH FLOWS
To finance acquisitions, capital expenditures, and debt maturities during 1999,
1998 and 1997, Centrum relied upon a combination of new capital, senior debt and
operating cash flow. During fiscal 1999, the Company refinanced its senior debt
with a new lender. Proceeds from the issuance of this debt were sufficient to
satisfy the financing and investing activities of the Company. Operating
cashflow in fiscal 1998 was sufficient to support the retirement of $2.5 million
in term debt coupled with a $1.1 million reduction in the line of credit. During
1998, debt proceeds of $8 million were used to finance acquisitions. During
1997, Centrum completed a Private Placement Offering ("Offering") for 2.4
million shares of its common stock. Total proceeds from the Offering were $3.1
million, which is net of $347,000 in issuance costs and expenses. During 1997,
an additional $2.8 million was drawn on the revolving line of credit to support
operations and working capital requirements.

Senior Facility
On February 26, 1999, the Company entered into a new senior debt facility with a
lender ("Lender"). The facility consists of various debt instruments including a
$20 million revolving line of credit note ("Revolver"), a $13.5 million term
note, an $8 million capital expenditure line, and a $5 million acquisition line
of credit (collectively the "Senior Facility"). The Senior Facility replaces the
previous facilities maintained separately by McInnes and AHI and permits the
utilization of cashflow and collateral on a consolidated basis when calculating
availability under the Revolver. As of March 31, 1999, approximately $33.5
million in loans and commitments were available of which the Company has
borrowed $22.2 million. Availability under the Revolver as of May 31, 1999 was
$1.6 million. The financing provided by the Lender is secured by substantially
all the real and personal property of Centrum and its direct and indirect
subsidiaries and contains various financial, operational and reporting
covenants. Included among these covenants is a prohibition on the Company from
incurring new secured debt or new unsecured debt in excess of certain thresholds
or from making any business acquisitions, unless an approval is first obtained
from the Lender. During 1999, the company violated certain covenants of the
Senior facility. These covenants were waived and reset by the lender. The
current financial covenants include the requirements that Centrum maintain a
fixed charge coverage ratio of 1.1 to 1 at year end and certain levels of
minimum net worth.

Acquisitions
On June 4, 1997, Centrum acquired substantially all of the assets of
MRR-Memphis, through a subsidiary of McInnes. MRR-Memphis produces steel
seamless rolled rings for the oil, bearing and miscellaneous commercial
industries. The purchase price of approximately $6.8 million was financed by
debt agreements and the issuance of 33,264 shares of the Company's common stock.

Centrum acquired substantially all of the assets and certain liabilities of
Northern Steel, Inc., (NSI), on November 5, 1997, through an American Handling,
Inc. subsidiary. The subsidiary is now known as Northern Steel Company
(Northern). Northern supplies shelving, racks, conveyors, and other storage and
distribution equipment as components of material handling systems. The initial
purchase price of approximately $2.4 million was funded by a line of credit at
the material handling segment and cash. Subsequent to the closing, a purchase
price adjustment of $598,000 was reimbursed to the Company by the seller. The
purchase price


                                       20

<PAGE>   21


adjustment was based upon changes in the closing net worth of NSI as determined
by the purchase agreement and certain post closing adjustments agreed upon by
the parties.

The Company currently has a Note and Warrant Purchase Agreement (Notes) entered
into with three investment funds which provides for $2.5 million aggregate
principal amount of 11% convertible debt with warrants for the purchase of
1,250,000 shares of the Company's common stock for $2 per share. The Notes are
convertible at any time at the option of the holder (Holders) to shares of the
Company's common stock. The Notes are presently secured by the guarantees of two
of the Company's subsidiaries, and the Notes have been subordinated to the
Senior Facility. The Note agreements contain various financial, operational, and
reporting covenants and requirements including a requirement that each of the
Holders must approve certain financial and operational transactions of the
Company, including the incurrence of new secured or unsecured debt, with certain
exceptions, and any business acquisitions. The financial covenants include the
requirements that the Company maintain a fixed charge coverage ratio not less
than 1 to 1. This ratio was not maintained by the Company during fiscal 1999 and
the requirement was waived by the Holders. The Company is also required to
maintain a ratio of total liabilities to net worth not to exceed 5.4, 3.5 and
2.4 to 1 for the years ending March 31, 1997, 1998 and 1999, respectively.
However, due to the acquisitions of MRR-Memphis and Northern, the Company did
not meet the total liabilities to net worth ratio at March 31, 1998 and March
31, 1999 and a waiver from the Holders was obtained for both years. Net worth is
not to be less than $5.1, $7.4 and $9.8 million at March 31, 1997, 1998 and
1999, respectively. The Net Worth requirement was not met for fiscal 1999 and a
waiver was obtained from the Holders. Additionally, the Company may not pay
dividends or issue additional shares of common stock (with certain exceptions),
without the prior approval of the Holders. The Company has also entered into an
Equity Holders Agreement, in which the Company has agreed to use its best
efforts to cause two persons designated by the Holders to be nominated to the
Company's Board of Directors. Pursuant to which, the Board nominated, and the
shareholders elected, two designees, (Messrs. Schroder and Klaffky), to the
Board during 1997, and returned for 1998 and 1999.

Capital expenditures
Centrum has no material commitments for capital expenditures at this time.
During 2000 capital expenditures, primarily at the metal forming operations, are
expected to be approximately $1.2 million.

Future Funding
The primary sources of funds available to the Company in fiscal 2000 for
operations, planned capital expenditures and debt repayments include available
cash, operating income and funds available under the line of credit agreement.
Management believes that sufficient funds for operations, debt repayments and
acquisitions can be raised through cash flows generated by the operating
subsidiaries and funds available under the Senior Facility during the next year.
The $2.5 million in subordinated debt is scheduled to mature during fiscal 2001.
Management believes that cashflows from operations and funds available under the
Senior Facility will be sufficient to satisfy this maturity. In addition, the
Senior Facility will mature in 2002 and funds from operations are not expected
to be sufficient to satisfy this maturity. Management intends to refinance or
extend the facility prior to maturity.

Tax and other matters
At March 31, 1999 and 1998, the Company had $17 million and $9 million in net
operating loss carryforwards (NOLs) available which would reduce income tax
payable in future years. However, there are uncertainties related to both the
amount and ultimate realization of the NOLs. At March 31, 1999 and 1998, a
remaining


                                       21

<PAGE>   22


valuation reserve of $840,000 and $1.7 million has been maintained, primarily
due to limitations on the usage of certain pre-acquisition NOLs. The remaining
valuation allowance could be increased or reduced in the near term if estimates
of future taxable income during the carryforward period change substantially.
During 1998, and 1997, the Company reduced its income taxes payable by $293,000
and $534,000 respectively, through the use of NOLs.

Quantitative and Qualitative Disclosures About Market Risk
The principal market risk (i.e., the risk of loss arising from adverse changes
in market rates and prices) that the Company is exposed to is interest rate
risks. The adverse effects of potential changes in this market risk is discussed
below. The sensitivity analyses presented does not consider the effects that
such adverse changes may have on overall economic activity, nor do they consider
additional actions management may take to mitigate the Company's exposure to
such changes. Actual results may differ. See the Notes to the Consolidated
Financial Statements for a description of the Company's accounting policies and
other information related to these financial instruments.

Variable-Rate Debt. As of March 31, 1999, the Company had approximately $22.5
million outstanding under the Senior Facility. The interest rate on the term
debt portion, $13.5 million at March 31, 1999, of the credit facility is based
upon a 2.75% spread above the London Interbank Offered Rate (LIBOR). The amount
outstanding under the line of credit portion of the revolving credit facility,
$9 million at March 31, 1999, bears interest at LIBOR plus 2.25%. The Company
also has the option to set interest rates on these instruments in relation to
the Prime Rate. The amount outstanding under this revolving credit facility will
fluctuate throughout the year based upon working capital requirements. Based
upon the $22.5 million outstanding under the revolving credit facility at March
31, 1999, a 1.0% change in the interest rate (from the March 31, 1999 rate)
would cause a change in interest expense of approximately $225,000 on an annual
basis. The Company's objective in maintaining these variable rate borrowings is
flexibility and lower overall cost as compared with fixe-rate borrowings.

Fixed-Rate Debt. As of March 31, 1999, the Company had approximately $5.4
million long-term debt, outstanding, with an estimated fair value approximating
the carrying value. Market risk, estimated as the potential increase in fair
value resulting from a hypothetical 1.0% decrease in interest rates, was
approximately $50,000 as of March 31, 1999.


YEAR 2000 (Y2K) DATE CONVERSION ISSUES

The Year 2000 issue was caused by many computers and software systems using an
abbreviated two-digit date field to designate a year. As a result, computerized
systems may not properly process transactions using a year 2000 or later date.

The Company is aware of the Year 2000 computer issue, and has evaluated its
existing computer hardware and software systems. The Company's objective is to
address the Y2K issues, both internally and externally. The Metal Forming
Operations Segment has addressed the Year 2000 issue as part of the ongoing
implementation of their normal upgrading of hardware and software. At the
Material Handling Segment, American Handling is integrating their operations
with Northern, whose software is Year 2000 capable. The Company presently
believes that, with modifications to existing software and conversions to new
software, the


                                       22

<PAGE>   23


Year 2000 problem will not pose significant operational problems for the
Company's computer systems as so modified and converted. However, if such
modifications and conversions are not completed timely, the Year 2000 problem
may have a material impact on the operations of the Company.

The process of contingency planning has begun during the remediation of the
internal IT and non-IT systems. Management expects that post remediation testing
will be completed by the end of 1999 and contingency plan formalized at that
time.

The Company has undertaken assessing the Y2K readiness of key suppliers and
customers. However, the Company is unable to definitively determine that all key
suppliers and customers will be Y2K compliant. In addition, there can be no
assurance that the systems of other companies on which the Company relies will
be corrected as planned or that such failure to correct this issue by another
company would not have an adverse effect on the Company.

Costs to address the Y2K issue have not been individually tracked or budgeted as
separate projects by the Company. The Y2K costs, which have been incurred, have
been recorded as part of the normal operating costs. The total cost for the
Company to achieve Y2K compliance is currently estimated at $300,000,
approximately one half of this amount has already been incurred. In addition,
while many costs have been anticipated, the ultimate costs of the Y2K issue are
unknown.

Management believes the risk of unresolved Y2K problems in the year 2000 or
later having a material adverse impact on the Company's results of operations,
liquidity or financial position to be low. However, the Company will continue to
assess the risk associated with both internal and external factors and the
possible impact of various scenarios involving Y2K problems. The mostly likely
worst case scenario involves production disruption due to the inability of a
supplier to provide critical elements. The Company is unable to quantify the
impact of such a scenario, but management believes such an occurrence would be
temporary in nature.

The foregoing disclosure is based on the Company's current expectations,
estimates and projections, which could ultimately prove to be inaccurate.


LEGAL MATTERS

The Company is involved in routine litigation and various legal efforts
incidental to the normal operations of its business. In management's opinion,
none of these matters will have material adverse effects on the Company's
liquidity or results of operations. See also "Environmental Matters," below.


ENVIRONMENTAL MATTERS

The Company's continuing compliance with existing federal, state and local
provisions dealing with the protection of the environment is not expected to
have a material effect upon the Company's capital expenditures, earnings,
competitive position or liquidity.


                                       23

<PAGE>   24


EBA is a direct defendant in two governmental cost recovery actions and other
related private party actions at a waste disposal site. With regard to the most
significant cost recovery action, EBA has negotiated a settlement which has been
approved in federal court. In addition, EBA and other parties are responsible
for performing certain cleanup work at the site pursuant to a government order.

Private party suits and actual cleanup costs in excess of governmental estimates
can affect the reliability of the Company's loss estimates. In addition,
unasserted claims are not reflected in the Company's cost estimates. Pursuant to
the environmental statutes, the Company may be found jointly and severally
liable to the government for cleanup costs; however, management believes that
the current status of government settlements and group cleanup participation at
the site indicates that the liability will be shared by responsible parties.
Currently, there are at least 17 parties participating in a pro rata cost
sharing arrangement with respect to the site cleanup work. The Company has
negotiated an insurance settlement which requires the carrier to reimburse the
Company for site expenses, subject to a ceiling. At March 31, 1999 and 1998, the
Company has recorded a liability of $400,000 of which $163,800 was recorded as
current liability. At March 31, 1999 and 1998, the Company has recorded a
receivable from its insurance carrier which is included in current assets. Funds
are expected to be paid over approximately two years. The total anticipated site
costs and private suits are not expected to vary materially from the recorded
amounts.


OUTLOOK

Revenues from continuing operations on a consolidated basis are expected to
increase between 5% and 10% during fiscal 2000 as a result of the significant
increase in domestic demand for gas turbine and steam turbine power generation
equipment. This activity is expected to offset the continued slow conditions in
the remaining markets served by the metal forming operations. The pace of
recovery in global economic conditions over the next year will have a
significant impact on the markets served by this segment. Management has
positioned the metal forming operations to perform at historical margin levels
by reducing the workforce by approximately 20% and aggressively cutting
operating and administrative expenses during the second half of 1999. As a
result of these reductions, the metal forming operations stand competitively
positioned to capitalize on any further recovery in the marketplace during
fiscal 2000.

Management will continue its focus on further improvements in operating margins
at the metal forming corporate segment over the next year. In addition, the
Company will pursue potential acquisitions, combinations or strategic alliances
which will complement the current operations and enhance future earnings.
Management will continue their long term emphasis on improving operating margins
and attaining annual consolidated revenue growth fueled by both complementary
acquisitions or business combinations and increased market penetration.


                                       24
<PAGE>   25



ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Financial Statements and Financial Statement Schedule

<TABLE>
<CAPTION>
       Financial Statements:                                                              Page
                                                                                          ----
<S>                                                                                       <C>
       Report of Independent Accountants                                                   26
       Consolidated Balance Sheet at March 31, 1999 and 1998                               27

       Consolidated Statement of Operations for the three years ended March 31,1999        28
       Consolidated Statement of Changes in Shareholders' Equity
          for the three years ended March 31, 1999                                         30
       Consolidated Statement of Cash Flows for the
          three years ended March 31, 1999                                                 31

       Notes to Consolidated Financial Statements                                          32

Financial Statement Schedule for the three years ended March 31, 1999

Schedule II  Valuation and Qualifying Accounts                                             57
</TABLE>

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



                                       25
<PAGE>   26
      CENTRUM INDUSTRIES, INC.
       AND ITS SUBSIDIARIES
      CONSOLIDATED FINANCIAL STATEMENTS
      MARCH 31, 1999


<PAGE>   27


                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Shareholders of
Centrum Industries, Inc.


In our opinion, the consolidated financial statements listed in the accompanying
index present fairly, in all material respects, the financial position of
Centrum Industries, Inc. and its subsidiaries at March 31, 1999 and 1998, and
the results of their operations and their cash flows for each of the three years
in the period ended March 31, 1999, in conformity with generally accepted
accounting principles. In addition, in our opinion, the financial statement
schedule listed in the accompanying index presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements. These financial statements and
financial statement schedule are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits. We conducted
our audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.



PricewaterhouseCoopers LLP
Toledo, Ohio
June 25, 1999



<PAGE>   28

<TABLE>
<CAPTION>



CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                                                     2

CONSOLIDATED BALANCE SHEET
-------------------------------------------------------------------------------------------------------------------

                                                                                           MARCH 31,
                                                                                   1999                1998
<S>                                                                           <C>                <C>
ASSETS
Current assets:
   Cash and cash equivalents                                                  $        83,873    $     1,072,081
   Accounts receivable, less allowance for doubtful
    accounts of $59,775 and $45,840, respectively                                   7,777,609         10,561,404
   Cost and estimated earnings in excess of
    billings on uncompleted contracts                                                 619,378            239,947
   Inventories, net                                                                10,474,845         10,850,042
   Net assets held for sale (Note 2)                                                2,291,501          4,022,551
   Prepaid expenses and other                                                         229,260            824,011
                                                                              ---------------    ---------------
        Total current assets                                                       21,476,466         27,570,036
Property, plant and equipment, net                                                 17,911,234         16,542,228
Other assets                                                                        5,355,047          3,303,213
                                                                              ---------------    ---------------

        Total assets                                                          $    44,742,747    $    47,415,477
                                                                              ===============    ===============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Revolving line of credit                                                   $     7,108,942    $    11,548,899
   Current portion of long-term debt                                                1,844,242          3,159,086
   Accounts payable                                                                 8,195,551          8,256,841
   Deferred income taxes                                                              238,340            110,218
   Accrued expenses and other                                                       2,533,848          2,457,655
                                                                              ---------------    ---------------
        Total current liabilities                                                  19,920,923         25,532,699
                                                                              ---------------    ---------------
Long-term debt, less current portion                                               17,055,190         11,180,914
                                                                              ---------------    ---------------
Other liabilities                                                                     783,169            577,564
                                                                              ---------------    ---------------
Commitments and contingent liabilities (Note 11)
                                                                              ---------------    ---------------

Shareholders' equity:
   Preferred stock - $.05 par value, 1,000,000 shares authorized, 70,000 issued
    and outstanding (liquidation
    preference of $10 per share)                                                        3,500              3,500
   Common stock - $.05 par value, 45,000,000 shares
    and 15,000,000 authorized, respectively,
    8,486,001 and 8,403,501 issued and
    outstanding, respectively                                                         424,300            420,175
   Additional paid-in capital                                                       8,104,222          7,992,847
   Retained earnings (deficit)                                                     (1,548,557)         1,707,778
                                                                              ---------------    ---------------
        Total shareholders' equity                                                  6,983,465         10,124,300
                                                                              ---------------    ---------------

        Total liabilities and shareholders' equity                            $    44,742,747    $    47,415,477
                                                                              ===============    ===============
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.


<PAGE>   29
<TABLE>
<CAPTION>


CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                                                     3

CONSOLIDATED STATEMENT OF OPERATIONS
-------------------------------------------------------------------------------------------------------------------

                                                                                 FOR THE YEAR ENDED
                                                                                      MARCH 31,
                                                                        1999            1998              1997

<S>                                                             <C>               <C>              <C>
Net sales                                                       $     52,288,939  $    57,103,774  $     54,971,724
                                                                ----------------  ---------------  ----------------
Cost and expenses:
   Cost of goods sold                                                 41,729,535       43,395,025        42,840,124
   Depreciation                                                        1,711,292        1,594,990         1,273,707
                                                                ----------------  ---------------  ----------------
   Gross margin                                                        8,848,112       12,113,759        10,857,893

   Selling, general and administrative expenses                        8,708,619        8,248,787         7,147,282
                                                                ----------------  ---------------  ----------------

Operating income                                                         139,493        3,864,972         3,710,611
                                                                ----------------  ---------------  ----------------

Other income (expense):
   Interest expense, net                                              (2,787,966)      (2,948,064)       (2,557,885)
   Miscellaneous, net                                                   (229,260)          56,026            70,995
                                                                ----------------  ---------------  ----------------
      Total other expense, net                                        (3,017,226)      (2,892,038)       (2,486,890)
                                                                ----------------  ---------------  ----------------

Income (loss) from continuing operations before
 income taxes                                                         (2,877,733)         972,934         1,223,721
                                                                ----------------  ---------------  ----------------

Provision (benefit) for income taxes:
   Current                                                               190,828           30,743          (247,335)
   Deferred                                                           (1,777,615)         290,926          (617,907)
                                                                ----------------  ---------------  ----------------
      Total provision (benefit) for income taxes                      (1,586,787)         321,669          (865,242)
                                                                ----------------  ---------------  ----------------

Income (loss) from continuing operations                              (1,290,946)         651,265         2,088,963

Discontinued operations - Note 2

   Income (loss) from discontinued operations,
      net of income taxes                                             (1,670,531)         654,053           361,315
                                                                ----------------  ---------------  ----------------

Income (loss) before extraordinary item - Note 7                      (2,961,477)       1,305,318         2,450,278

   Extraordinary item, net of income taxes                              (294,858)               -                 -
                                                                ----------------  ---------------  ----------------

Net income (loss)                                               $     (3,256,335) $     1,305,318  $      2,450,278
                                                                ================  ===============  ================

Basic earnings per common share
   Continuing operations                                        $          (.15)  $            .08 $            .28
   Discontinued operations                                                 (.20)               .08              .05
   Extraordinary item                                                      (.04)                -                 -
                                                                ---------------   ---------------  ----------------
   Net income (loss)                                            $          (.39)  $            .16 $            .33
                                                                ===============   ================ ================
Diluted earnings per share
   Continuing operations                                        $          (.15)  $            .08 $            .26
   Discontinued operations                                                 (.20)               .08              .05
   Extraordinary items                                                     (.04)                -                 -
                                                                ---------------   ---------------  ----------------
   Net income (loss)                                            $          (.39)  $            .16 $            .31
                                                                ===============   ================ ================

Weighted average number of common shares - basic                       8,423,617        8,412,642         7,481,617
                                                                ================  ===============  ================

Weighted average number of common shares - diluted                     8,423,617        8,652,255         7,893,061
                                                                ================  ===============  ================
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.


<PAGE>   30

<TABLE>
<CAPTION>


CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                                                             4

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
---------------------------------------------------------------------------------------------------------------------------

                                                                                               Additional      Retained
                                        Preferred Stock                Common Stock              Paid-in       Earnings
                                        ---------------                ------------
                                    Shares         Amount          Shares         Amount         Capital       (Deficit)

<S>              <C> <C>              <C>        <C>              <C>           <C>            <C>           <C>
Balance at March 31, 1996             70,000     $     3,500      6,170,860     $  308,543     $ 5,318,767   $ (2,047,818)
    Issuance of common stock               -               -      1,954,523         97,726       2,494,676              -
    Exercise of warrants and
     options                               -               -        243,521         12,176         104,790              -
    Net income                             -               -              -              -               -      2,450,278
                                 -----------     -----------    -----------     ----------     -----------   ------------

Balance at March 31, 1997             70,000           3,500      8,368,904        418,445       7,918,233        402,460
    Issuance of  common stock              -               -         33,264          1,663          73,181              -
    Exercise of warrants                   -               -          1,333             67           1,433              -
    Net income                             -               -              -              -               -      1,305,318
                                 -----------     -----------    -----------     ----------     -----------   ------------

Balance at March 31, 1998             70,000           3,500      8,403,501        420,175       7,992,847      1,707,778
    Issuance of warrants                                             82,500          4,125         111,375
    Net loss                                                                                                   (3,256,335)
                                 -----------     -----------    -----------     ----------     -----------   -------------

Balance at March 31, 1999             70,000     $     3,500      8,486,001     $  424,300     $ 8,104,222   $ (1,548,557)
                                 ===========     ===========    ===========     ==========     ===========   ============
</TABLE>






The accompanying notes are an integral part of the consolidated financial
statements.


<PAGE>   31
<TABLE>
<CAPTION>


CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                                                         5

CONSOLIDATED STATEMENT OF CASH FLOWS
-----------------------------------------------------------------------------------------------------------------------

                                                                                   FOR THE YEAR ENDED
                                                                                        MARCH 31,
                                                                        1999            1998             1997
<S>                                                             <C>               <C>              <C>
Cash flows from operating activities:
   Net income (loss)                                            $     (3,256,335) $     1,305,318  $      2,450,278
   Adjustments to reconcile net income to
    net cash provided by (used for) operating activities:
      (Gain) loss on sale of fixed assets                                 31,733          (38,272)          (55,683)
      Gain on sale of contractual right                                        -         (744,736)                -
      Depreciation                                                     1,857,120        1,708,289         1,346,125
      Amortization of intangible assets                                  140,774          150,250           143,143
      Amortization of debt premium and issue costs                       769,434          367,197           334,892
      Deferred income taxes                                           (2,797,981)         452,867          (817,446)
      Warrants issued for services provided                               33,000                -                 -
      Changes in assets and liabilities that provided (used)
       operating cash, net of acquisition:
        Accounts receivable                                            2,022,699          460,965          (101,653)
        Costs and estimated earnings in excess
         of billings on uncompleted contracts                           (872,479)       1,487,790        (1,141,109)
        Inventories                                                    1,057,066         (277,056)         (502,681)
        Accounts payable                                               1,843,752          910,439        (2,865,241)
        Prepaid expenses and other                                       252,864         (355,612)           87,707
        Accrued expenses and other                                     2,050,682       (1,716,105)         (457,643)
                                                                ----------------  ---------------  ----------------
              Net cash provided by (used for)
               operating activities                                    3,132,329        3,711,334        (1,579,311)
                                                                ----------------  ---------------  ----------------

Cash flows from investing activities:
   Proceeds from sale of contractual right                                     -          776,965                 -
   Purchase of Taylor, net of cash acquired                                    -       (6,784,734)                -
   Purchase of Northern, net of cash acquired                                  -       (2,440,406)                -
   Purchase of property and equipment, other                          (2,220,085)      (1,245,755)         (815,215)
   Purchase of property and equipment, Taylor                         (1,231,586)               -                 -
Other                                                                          -           98,000           (86,343)
                                                                ----------------  ---------------  ----------------
              Net cash used for investing activities                  (3,451,671)      (9,595,930)         (901,558)
                                                                ----------------  ---------------  ----------------

Cash flows from financing activities:
   Proceeds from debt                                                 19,665,081                -                 -
   Proceeds from issuance of acquisition debt                                  -        8,028,531           525,000
   Debt issue costs                                                     (380,864)               -                 -
   Net change in bank lines of credit                                 (4,615,855)      (1,146,367)        2,758,239
   Repayments of term debt                                           (15,225,648)      (2,459,567)       (2,854,267)
   Proceeds from the issuance of common stock
    and exercise of warrants and options                                  82,500            1,500         2,709,367
                                                                ----------------  ---------------  ----------------
              Net cash provided by financing
               activities                                               (474,786)       4,424,097         3,138,339
                                                                ----------------  ---------------  ----------------

Increase (decrease) in cash and cash equivalents                        (794,128)      (1,460,499)          657,470
Cash and cash equivalents at beginning of year                         1,297,720        2,758,219         2,100,749
                                                                ----------------  ---------------  ----------------

Cash and cash equivalents at end of year                                 503,592        1,297,720         2,758,219

Less cash at discontinued operations                                     419,719          225,639         1,818,387
                                                                ----------------  ---------------  ----------------

Cash and cash equivalents at year end,
 net of discontinued operations                                 $         83,873  $     1,072,081  $        939,832
                                                                ================  ===============  ================
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.


<PAGE>   32


CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                  6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

    1.   NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         BUSINESS
         Centrum Industries, Inc. and its subsidiaries (the Company) consists of
         the following operations:

         Metal Forming Operations
         McInnes Steel Company and its subsidiaries (McInnes), with operations
         in Northwestern Pennsylvania and Tennessee, produces open die steel
         forgings for the power generation, compressor and other industrial
         markets. McInnes also produces seamless steel rolled rings for bearing
         and special machine manufacturers and nonferrous castings for the glass
         container manufacturers and pump and valve industries. Sales of
         McInnes' products are made to both domestic and international
         customers. During 1998, McInnes purchased Taylor Forge International,
         Inc. (Taylor) (see Note 3).

         Corporate and Other
         Activities within these operations consist primarily of corporate
         administrative expenses, interest on holding company debt, and
         manufacturing operations which are not sufficiently material to warrant
         separate disclosure.

         Discontinued Operations
         American Handling, Inc. and its subsidiaries (AH), with operations in
         Ohio and Washington, designs, manufactures and installs material
         handling equipment for various domestic manufacturing companies. During
         1998, AH purchased Northern Steel Inc. (Northern) (see Note 3). As more
         fully discussed in Note 2, AH is held for sale and presented as a
         discontinued operation.

         CONSOLIDATION
         The consolidated financial statements include the accounts of the
         holding company and its wholly-owned subsidiaries. All significant
         intercompany accounts and transactions are eliminated.



<PAGE>   33

CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                  7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

    1.   NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         (CONTINUED)

         USE OF ESTIMATES
         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect the reported amounts of assets and
         liabilities at the date of the consolidated financial statements and
         the reported amounts of revenues and expenses during the reporting
         period. Some of the more significant estimates include depreciation and
         amortization of long lived assets, deferred income tax and inventory
         valuations, environmental accruals, postemployment and postretirement
         benefits and allowances for doubtful accounts. Actual results could
         differ from those estimates.

         DEBT ISSUANCE COSTS
         Debt issuance costs are deferred and amortized over the life of the
         related note utilizing the straight-line method over the life of the
         debt agreement.

         ENVIRONMENTAL LIABILITIES AND EXPENDITURES
         The Company expenses environmental expenditures related to existing
         conditions resulting from past or current operations and from which no
         current or future benefit is discernible. The Company determines its
         liability on a site-by-site basis and records a liability at the time
         when it is probable and can be reasonably estimated. Unasserted claims
         are not included in the estimated liability. The Company's estimated
         liability is reduced to reflect the anticipated participation of other
         potentially responsible parties in those instances where it is probable
         that such parties are legally responsible and financially capable of
         paying their respective shares of the relevant costs. Where the cost
         estimates result in a range of equally probable amounts, the lower end
         of the range is accrued. The estimated liability of the Company is not
         discounted or reduced for possible recoveries from insurance carriers.
         Potential insurance recoveries are evaluated separately from the
         related liability and are recorded only if they are probable of
         receipt.

         INVENTORIES
         Inventories are valued at the lower of cost or market. Inventory cost
         is principally determined by the last in, first out (LIFO) method. At
         March 31, 1999 and 1998, approximately 96% and 94%, respectively, of
         inventories are valued using the LIFO method.


<PAGE>   34

CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                  8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

    1.   NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         (CONTINUED)

         GOODWILL
         Goodwill is being amortized using the straight-line method over 20
         years, which is the period expected to be benefited.

         PROPERTY, PLANT AND EQUIPMENT
         Property, plant and equipment is stated at cost. Depreciation is
         computed over the estimated useful lives using the straight-line method
         for financial reporting purposes and accelerated methods for federal
         income tax purposes. Management reviews long-lived assets for
         impairment whenever events and circumstances indicate that recovery of
         the asset's carrying value is unlikely. In performing the reviews for
         recoverability, management compares the carrying value of the asset
         against the estimated future cash flows expected to result from the use
         of the asset and its eventual disposition. If the cash flows are less
         than the carrying value, the asset is written down to its estimated
         fair market value.

         REVENUE RECOGNITION
         Sales of products and services, primarily made by McInnes, are
         recognized as products are shipped and services are performed. The
         estimated sales value of performance under significant contracts,
         supplied by AH, is recognized under the percentage-of-completion method
         of accounting measured by the contract costs incurred to date as a
         percentage of total estimated contract costs. Contracts executed by AH
         generally have terms of less than one year.

         FINANCIAL INSTRUMENTS
         The carrying amounts of the Company's financial instruments, which
         include cash and cash equivalents, accounts receivable, accounts
         payable and debt, approximate their fair market values at March 31,
         1999 and 1998.


<PAGE>   35

CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                  9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

    1.   NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         (CONTINUED)

         CONCENTRATIONS OF CREDIT RISK
         Financial instruments which potentially expose the Company to
         concentrations of credit risk consist primarily of trade accounts
         receivable. The Company sells the majority of its products to
         distributors and original equipment manufacturers in a variety of
         industries including the power generation, compressor and other
         industrial markets. The Company performs continuing credit evaluations
         of its customers and, in certain circumstances, the Company may require
         letters of credit from its customers. Historically, the Company has not
         experienced significant losses related to receivables from individual
         customers or groups of customers in any particular industry or
         geographic area.

         PENSION PLANS
         Annual net periodic pension costs under the Company's defined benefit
         pension plans are determined on an actuarial basis. Monthly benefits
         are based upon a rate per year of service and vest upon the completion
         of five years of service. The Company's funding policy is to contribute
         amounts sufficient to satisfy ERISA funding requirements.

         POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
         Annual net postretirement benefits liability and expenses are
         determined on an actuarial basis. The Company's current policy is to
         pre-fund these benefits to the extent allowable under current IRS
         guidelines. Benefits are determined primarily based upon employees'
         length of service and include applicable employee cost sharing.

         WORKERS' COMPENSATION EXPENSE
         The Company recognizes workers' compensation expense based upon the
         level of premiums for each fiscal year and also evaluates the adequacy
         of the workers' compensation accrual quarterly based upon actual and
         forcasted experience. Changes in claims experience are recognized
         currently as adjustments to workers' compensation expense.

         STOCK-BASED COMPENSATION
         Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting
         for Stock-Based Compensation," encourages, but does not require
         companies to record compensation for stock-based employee compensation
         plans at fair value. The Company has chosen to account for stock-based
         compensation using the intrinsic value method prescribed in Accounting
         Principles Board Opinion No. 25, "Accounting for Stock Issued to
         Employees," and related interpretations.



<PAGE>   36

CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                 10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

    1.   NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         (CONTINUED)

         INCOME TAXES
         Current tax liabilities and assets are recognized for the estimated
         taxes payable or refundable on the tax returns for the current year.
         Deferred tax liabilities or assets are recognized for the estimated
         future tax effects attributable to temporary differences and
         carryforwards that result from events that have been recognized in
         either the financial statements or the tax returns, but not both. The
         measurement of deferred tax liabilities and assets is based on
         provisions of enacted tax laws. Deferred tax assets are reduced, if
         necessary, by the amount of any tax benefits that are not expected to
         be realized.

         NET INCOME PER COMMON SHARE
         Basic and diluted net income per share have been computed in accordance
         with SFAS No. 128, "Earnings per Share".

         STATEMENT OF CASH FLOWS
         For purposes of the consolidated statement of cash flows, the Company
         considers all cash and highly liquid investments with an original
         maturity of three months or less to be cash equivalents.

         RECLASSIFICATIONS
         Certain prior year amounts have been reclassified to conform to the
         current year's presentation.


    2.   DISCONTINUED OPERATIONS

         During fiscal 1999, the Company made the strategic decision that the
         metal forming segment represents the most significant opportunity for
         future growth and profitability of the Company. As a direct result of
         this decision, the Company adopted a formal plan in March 1999 to sell
         the operations of AH. Pursuant to Accounting Principles Board Opinion
         No. 30, "Reporting the Results of Operations Reporting the
         Effects of Disposal of a Segment of a Business, and Extraordinary,
         Unusual and Infrequently Occurring Events and Transactions," the
         consolidated financial statements have been reclassified to reflect AH
         as a discontinued operation. The operating results of AH have been
         reported as "Income (Loss) from Discontinued Operations", net of
         applicable income tax expense (benefit) of $(774,737), $317,814 and
         $91,567 for fiscal 1999, 1998 and 1997, respectively. The net assets of
         AH have been reported as "Net Assets Held for Sale".


<PAGE>   37

CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                 11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

    2.   DISCONTINUED OPERATIONS (CONTINUED)

         The following presents summarized financial information for AH
         excluding certain corporate expense allocations.
<TABLE>
<CAPTION>



                                                        1999                  1998                 1997
<S>                                              <C>                     <C>                     <C>
         For the year ended March 31:
           Operating revenues                    $   26,242,730         $ 21,810,889             $16,183,002
           Income (loss) before
            provision for income taxes               (2,445,268)             971,867                 452,882
           Income (loss) from discontinued
            operations, net of income taxes          (1,670,531)             654,053                 361,315

         At March 31:
           Current assets                        $    6,897,192         $  6,486,651            $  4,025,698
           Total assets                              11,400,594            9,778,796               6,724,590
           Current liabilities                        8,962,441            5,756,245               2,523,414
           Total liabilities                          9,109,093            5,756,245               2,873,414
           Net assets of discontinued
            operations                                2,291,501            4,022,551               3,851,176
</TABLE>


         Included in income from discontinued operations for fiscal 1998 is a
         gain from the sale of a contractual right to purchase a building leased
         by AH in the amount of $744,736 ($491,526 after tax).


    3.   ACQUISITIONS

         On November 5, 1997, the Company acquired substantially all of the
         assets and assumed certain liabilities of Northern. The purchase method
         of accounting was used to account for this business combination and
         Northern's operations have been included in the consolidated financial
         statements as part of the material handling systems since the
         acquisition date. See Note 2 regarding management's decision to
         discontinue these operations. The purchase price of approximately $2.9
         million was funded by $1.5 million from a new line of credit and $1.4
         million in cash. Subsequent to closing, a purchase price adjustment of
         $598,000 was reimbursed to the Company by the seller. The purchase
         price adjustment was based on changes in the closing net worth of
         Northern as determined by the purchase agreement and certain post
         closing adjustments as agreed upon by the parties to the transaction.


<PAGE>   38
CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                 12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


     3.  ACQUISITIONS (CONTINUED)

         As part of the acquisition, the Company decided to consolidate the
         operations of Northern. The Company accrued the estimated costs
         associated with the closing or relocation of certain facilities and
         termination or relocation of related employees. The Company recorded a
         reserve of $380,000 and $256,000 in 1999 and 1998, respectively. These
         amounts recognize severance and benefits for employees to be
         terminated, holding costs of vacated facilities and other costs to
         complete the consolidation. At March 31, 1999 and 1998, a liability in
         the amount of $413,000 and $256,000 is recorded for these costs.

         On June 4, 1997, the Company purchased all of the assets of Taylor. The
         purchase method of accounting was used to account for this business
         combination. The operating results of Taylor have been included in the
         consolidated financial statements as part of the metal forming
         operations since the date of acquisition. The total purchase price of
         approximately $6.8 million included the repayment of $4.5 million in
         existing debt. The Taylor acquisition was financed by the proceeds of a
         $4 million term debt agreement, a draw of $2.2 million on a line of
         credit and the issuance of 33,264 shares of the Company's common stock.

         The following unaudited information presents the Company's results of
         continuing operations for the years ended March 31, 1998 and 1997 as if
         the acquisition of Taylor had occurred at the beginning of the period.
         The pro forma information is not necessarily indicative of the results
         of operations which would have actually been achieved had the
         acquisition occurred then.

<TABLE>
<CAPTION>


                                                                               FOR THE YEARS ENDED
                                                                                    MARCH 31,
                                                                            1998               1997
                                                                                   (UNAUDITED)

<S>                                                                   <C>                <C>
         Sales                                                        $    58,311,889    $     64,194,499
         Net income from continuing operations                        $       532,908    $      1,812,105
         Net income from continuing operations
          per common share - basic                                    $           .06    $           .24
         Net income from continuing operations
          per common share - diluted                                  $           .06    $           .23

         Weighted average number of common
          shares - basic                                                    8,412,642           7,448,944
         Weighted average number of common
          shares - diluted                                                  8,652,255           7,860,388
</TABLE>




<PAGE>   39
CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                 13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


    4.   INVENTORIES

         Inventories consist of the following:

<TABLE>
<CAPTION>

                                                                                    MARCH 31,
                                                                              1999             1998

<S>                                                                    <C>               <C>
              Raw materials                                            $     4,549,144   $      5,300,180
              Work in process                                                4,898,479          4,822,092
              Finished goods                                                 1,045,895            762,010
                                                                       ---------------   ----------------
                                                                            10,493,518         10,884,282
              LIFO reserve                                                      79,827             65,904
              Reserve for excess of cost over market                           (98,500)          (100,144)
                                                                       ---------------   ----------------
                                                                       $    10,474,845   $     10,850,042
                                                                       ===============   ================
</TABLE>



    5.   PROPERTY, PLANT AND EQUIPMENT

         Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>


                                                                                    MARCH 31,
                                                                              1999             1998

<S>                                                                    <C>               <C>
           Land                                                        $       556,807   $       467,510
           Buildings                                                         4,893,456         4,826,518
           Machinery and equipment                                          16,383,313        13,741,344
           Furniture, fixtures and vehicles                                    815,305           548,314
                                                                       ---------------   ---------------
               Total                                                        22,648,881        19,583,686
           Accumulated depreciation                                         (4,737,647)       (3,041,458)
                                                                       ---------------   ---------------
                                                                       $    17,911,234   $    16,542,228
                                                                       ===============   ===============
</TABLE>



    6.   COMPOSITION OF OTHER ASSETS

         Other assets consist of the following:
<TABLE>
<CAPTION>

                                                                                    MARCH 31,
                                                                            1999               1998

<S>                                                                    <C>               <C>
         Deferred income tax benefits                                  $     4,070,251   $     1,989,286
         Debt issue costs, net of $9,474 and $572,969
          in accumulated amortization, respectively                            891,169           913,512
         Other                                                                 393,627           400,415
                                                                       ---------------   ---------------
                                                                       $     5,355,047   $     3,303,213
                                                                       ===============   ===============
</TABLE>




<PAGE>   40
CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                 14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


    7.   REVOLVING LINES OF CREDIT

         On February 25, 1999, the Company entered into an agreement with a new
         senior lender to borrow up to $20,000,000 on a revolving basis. Under
         this line of credit, interest accrues at LIBOR (4.93% at year end) plus
         2.25%. At March 31, 1999, $8,729,592 was outstanding, of which
         $1,620,650 is allocated to net assets held for sale.

         The agreement also contains an $8,000,000 capital expenditure line of
         credit and a $5,000,000 acquisition line of credit. Interest accrues on
         these two facilities as described above. At March 31, 1999, there were
         no amounts outstanding under these facilities.

         The agreement requires all assets of the Company, including existing
         and subsequently acquired assets, to be used as collateral for present
         and future obligations. The Company is also required to be in
         compliance with certain financial ratios and nonfinancial covenants
         which include restrictions on incurring additional indebtedness, limits
         on investments and capital expenditures, and restrictions on mergers,
         consolidations and dispositions.

         The Company is required to pay a monthly charge of .375% on the unused
         portion of the line of credit as well as a quarterly administration fee
         in the amount of $40,000.

         The Company had two separate agreements with a previous senior lender
         which permitted McInnes and AH to borrow up to $18,500,000 and
         $4,000,000, respectively, on a revolving basis, subject to available
         collateral. On February 25, 1999, all amounts due under these
         agreements were paid in full utilizing the new revolving credit
         facility obtained from the new senior lender. The extinguishment of
         this debt resulted in a pre-tax charge of $491,431 ($294,858 net of
         tax), which was due primarily to debt issue costs.

    8.   LONG-TERM DEBT

         Long-term debt consists of the following:
<TABLE>
<CAPTION>

                                                                                           MARCH 31,
                                                                                    1999             1998

<S>                                                                                <C>
         Note payable to senior lender, in quarterly installments of $375,000,
         increasing $62,500 each year through May 2005 and then decreasing to
         $187,500 until maturity in February 2006. The note bears interest at
         the prime rate plus .50% or LIBOR plus 2.75%. The note is secured by
         certain property specified in the agreement. This agreement has
         restrictions similar to the senior lender revolving credit facility
         (See Note 7).                                                             $  13,500,000
</TABLE>



<PAGE>   41
CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                 15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


8.       LONG-TERM DEBT (CONTINUED)
<TABLE>
<CAPTION>

                                                                                             MARCH 31,
                                                                                       1999             1998
<S>                                                                                  <C>              <C>
         $2.5 million aggregate principal amount of 11% convertible,
         unsecured subordinated notes and warrants. The notes are
         convertible for up to 1,250,000 shares of Centrum's common stock
         and include warrants for the purchase of 1,250,000 shares of
         Centrum's common stock at $2 per share.  The notes were
         originally recorded net of $600,000 allocated to the warrants.
         The implicit interest rate on the notes is 14.5% and the
         outstanding balance is due in March 2001.  This agreement places
         certain restrictions on the Company, including the requirement
         that the holders of the notes approve, in advance, any
         dividends, the incurrence of new debt (with certain exceptions),
         and acquisitions.
                                                                                     $ 2,260,000      $ 2,140,000

         Note payable to Asea Brown Boveri, due in monthly installments of
         $13,346, including interest at an implicit rate of 8.61% per annum,
         through June 2005. A balloon payment of $1,452,384 will be payable in
         June 2005. The note is secured by land and buildings which have a
         carrying value of $735,000 at March 31,
         1999.                                                                         1,615,795        1,635,929

         Unsecured notes payable to individuals, including $325,000 at March 31,
         1999 and 1998, to certain shareholders of the Company, with attached
         warrants. The notes are due in March 2001 with interest accruing at a
         rate of 10% per annum. The attached warrants allow the note holders to
         purchase 1,000 shares of the Company's common stock for each $10,000 of
         notes held at a
         purchase price of $1 per share.                                                 526,000          526,000

         Unsecured five year term notes payable to individuals, including
         $210,845 at March 31, 1999 and 1998, to certain shareholders of the
         Company, with attached warrants. The notes bear interest at prime plus
         0.5% to 1%. Principal and interest payments are due monthly. The
         attached warrants allow the note holders to purchase 20,000 shares of
         the Company's common stock for each
         $50,000 of notes held at a purchase price of $1 per share.                      321,539          608,903
</TABLE>



<PAGE>   42
CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                 16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


8.       LONG-TERM DEBT (CONTINUED)
<TABLE>
<CAPTION>
                                                                                                  MARCH 31,
                                                                                             1999             1998


<S>                                                                                  <C>              <C>
         Unsecured notes payable to individuals, including $195,000 at March 31,
         1999 and 1998, to certain shareholders of the Company. The notes bear
         interest ranging from 10% to 12% with interest payable semi-annually.
         The notes are due in March 2001.                                            $       265,000  $       265,000

         Unsecured promissory note to a shareholder of the Company. The note
         bears interest at prime rate plus 1.25%. The agreement requires
         quarterly interest payments only until June 2000, when
         the principal and remaining interest is due in full.                                218,803          250,000

         City of Erie Enterprise Development Zone term note payable in monthly
         principal and interest installments of $4,625. The note bears interest
         at 3% per annum and matures on November 2, 2002. The note is secured by
         specific property with a carrying value
         of $856,399 at March 31, 1999.                                                      192,295         241,134

         Note payable to previous senior lender.  This note was paid in
         full during 1999.                                                                                  3,333,340

         Note payable to previous senior lender.  This note was paid in
         full during 1999.                                                                                  1,860,400

         Industrial development revenue bonds payable.  These bonds were
         paid in full during 1999.                                                                          3,000,000

         Pennsylvania Industrial Development Authority note payable.
         This note was paid in full during 1999.                                                              479,294
                                                                                     ---------------  ---------------
                                                                                          18,899,432       14,340,000
         Less current maturities                                                           1,844,242        3,159,086
                                                                                     ---------------  ---------------

         Noncurrent portion of long-term debt                                        $    17,055,190  $    11,180,914
                                                                                     ===============  ===============
</TABLE>


         Included in "Net Assets Held for Sale" at March 31, 1999 and 1998 are
         $80,000 in unsecured notes payable to shareholders. The notes bear
         interest ranging from 10% to 12% with interest payable semi-annually.
         It is anticipated that these notes will be repaid from the proceeds of
         the sale of AH (See Note 2).


<PAGE>   43
CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                 17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


8.       LONG-TERM DEBT (CONTINUED)

         The aggregate scheduled maturities of long-term debt for the fiscal
         years subsequent to March 31, 1999 are as follows:

<TABLE>
<CAPTION>


<S>                                                                             <C>
           2000                                                                 $     1,844,242
           2001                                                                       5,145,167
           2002                                                                       2,079,541
           2003                                                                       2,314,946
           2004                                                                       2,531,140
           Thereafter                                                                 4,984,396
                                                                                ---------------
                                                                                $    18,899,432
                                                                                ===============
</TABLE>



         At March 31, 1999, the Company was not in compliance with certain
         financial covenants of the new senior lender line of credit (See Note
         7), the senior lender note payable and the subordinated notes and
         warrants. The Company has obtained waivers for these covenant
         violations.

         Cash paid for interest was $3,044,780, $2,766,228, and $2,821,336 for
         the years ended March 31, 1999, 1998 and 1997, respectively.

    9.   PENSION AND OTHER POSTRETIREMENT BENEFITS

         McInnes provides two noncontributory defined benefit pension plans
         covering substantially all of its hourly employees. The Company also
         provides other postretirement benefits for certain employees upon
         retirement, which are primarily health insurance benefits under terms
         of various agreements. The following tables provide a summarization of
         the changes in the defined benefit pension plans' and other
         postretirement plans' benefit obligations and fair value of assets,
         statements of the funded status and schedules of the net amounts
         recognized.


<PAGE>   44
CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                 18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


    9.   PENSION AND OTHER POSTRETIREMENT BENEFITS (CONTINUED)

<TABLE>
<CAPTION>



                                                      PENSION BENEFITS                    OTHER BENEFITS
                                                   1999              1998             1999              1998
<S>                                            <C>             <C>              <C>               <C>
         CHANGE IN BENEFIT OBLIGATION

         Benefit obligation at beginning
          of year                              $   4,880,000   $    4,638,000   $     554,000     $    1,221,000

         Service cost                                167,000          151,000            12,000           30,000
         Interest cost                               349,000          327,000            37,000           72,000

         Amendments                                                                                     (382,000)

         Actuarial gain (loss)                       336,000           23,000           517,000         (275,000)

         Benefits paid                              (380,000)        (259,000)         (106,000)        (112,000)
                                               -------------    -------------     -------------    -------------

         Benefit obligation at end of
          year                                 $   5,352,000    $   4,880,000     $   1,014,000    $     554,000
                                               =============    =============     =============    =============
</TABLE>

<TABLE>
<CAPTION>

                                                      PENSION BENEFITS                    OTHER BENEFITS
                                                   1999              1998             1999              1998
<S>                                            <C>              <C>               <C>              <C>
         CHANGE IN PLAN ASSETS

         Fair value of plan assets at
          beginning of year                    $   5,182,000    $   4,623,000     $   1,253,000    $   1,178,000

         Actual return on plan assets                647,000          675,000           102,000          187,000

         Employer contribution                       174,000          143,000

         Benefits paid                              (380,000)        (259,000)         (106,000)        (112,000)
                                               -------------    -------------     -------------    -------------

         Fair value of plan assets at
          end of year                          $   5,623,000    $   5,182,000     $   1,249,000    $   1,253,000
                                               =============    =============     =============    =============
</TABLE>



<PAGE>   45
CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                 19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


    9.   PENSION AND OTHER POSTRETIREMENT BENEFITS (CONTINUED)

<TABLE>
<CAPTION>

                                                      PENSION BENEFITS                    OTHER BENEFITS
                                                   1999              1998             1999              1998
<S>                                            <C>              <C>               <C>              <C>
         Funded status                         $     271,000    $     302,000     $     235,000    $     699,000

         Unrecognized net actuarial
          loss (gain)                                (95,000)        (186,000)          428,000         (170,000)

         Unrecognized prior service cost              60,000           65,000          (321,000)        (382,000)
                                               -------------    -------------     -------------    -------------

         Prepaid benefit cost                  $     236,000    $     181,000     $     342,000    $     147,000
                                               =============    =============     =============    =============
</TABLE>

<TABLE>
<CAPTION>


                                                      PENSION BENEFITS                    OTHER BENEFITS
                                                1999        1998         1997        1999      1998       1997
<S>                                         <C>           <C>         <C>          <C>        <C>       <C>
         COMPONENTS OF NET PERIODIC
          BENEFIT COST
         Service cost                       $  167,000    $ 151,000   $  131,000   $  33,000  $30,000   $ 30,000

         Interest cost                         349,000      327,000      319,000      67,000   72,000     87,000

         Expected return on plan assets       (404,000)    (361,000)    (327,000)    (96,000) (94,000)  (101,000)

         Amortization of prior service
          cost                                   5,000        5,000            -     (61,000)       -          -

         Amortization of unrecognized
          gain (loss)                            1,000            -            -      39,000   (1,000)         -
                                            ----------    ---------   ----------   ---------  -------   --------

         Net periodic benefit cost          $  118,000    $ 122,000   $  123,000   $ (18,000) $ 7,000   $ 16,000
                                            ==========    =========   ==========   =========  =======   ========
</TABLE>


         The assumptions used to determine pension costs and projected benefit
obligations are as follows:

<TABLE>
<CAPTION>
                                                    PENSION BENEFITS                      OTHER BENEFITS
                                               1999       1998       1997           1999       1998       1997
<S>                                            <C>        <C>      <C>            <C>          <C>        <C>
         Discount Rate                         7.00%      7.25%    7.50%          7.00%        7.25%      7.50%
         Expected return on plan assets        8.00%      8.00%    7.50%          8.00%        8.00%      8.00%
</TABLE>





<PAGE>   46
CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                 20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


    9.   PENSION AND OTHER POSTRETIREMENT BENEFITS (CONTINUED)

         Investments in these plans consist of investments in money market
         funds, fixed income securities, investment contracts and equity mutual
         funds.

         A medical costs trend rate of 6% per year is assumed up to a maximum
         benefit of $3,120 per year pre age 65 and $924 post age 64. An increase
         or decrease in the assumed medical trend rate of 1% would increase or
         decrease the accumulated postretirement benefit obligation as of March
         31, 1999 by approximately $21,000. The increase to the aggregate of the
         service and interest cost component of the net postretirement benefit
         cost would not be material.

         The Company also sponsors various 401(k) profit sharing plans at its
         operating facilities covering substantially all salaried employees. The
         Company's contributions to these plans in 1999, 1998 and 1997 were
         $196,000, $177,000, and $123,200, respectively.


   10.   INCOME TAXES

         The provision (benefit) for income taxes consists of the following
         components:
<TABLE>
<CAPTION>

                                                                              YEAR ENDED MARCH 31,
                                                                1999                1998               1997
<S>                                                         <C>                 <C>              <C>
         Current:
             Federal                                        $        19,821     $      30,743    $      30,000
             State and local                                        135,960           155,873           13,771
                                                            ---------------     -------------    -------------
                                                                    155,781           186,616           43,771
                                                            ---------------     -------------    -------------

         Deferred:
             Federal                                             (2,820,309)          763,675         (749,747)
             State and local                                        106,431          (310,808)         (67,699)
                                                            ---------------     -------------    -------------
                                                                 (2,713,878)          452,867         (817,446)
                                                            ---------------     -------------    -------------

         Total provision (benefit)                          $    (2,558,097)    $     639,483    $    (773,675)
                                                            ===============     =============    =============
</TABLE>




<PAGE>   47
CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                 21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


   10.   INCOME TAXES (CONTINUED)

         The difference between the total income tax provision (benefit)
         computed using the federal statutory income tax rate and the Company's
         effective tax rate is as follows:
<TABLE>
<CAPTION>


                                                                           YEAR ENDED MARCH 31,
                                                               1999                1998                1997

<S>                                                               <C>                 <C>                 <C>
         Federal statutory rate                                   (34.0)%             34.0%               34.0%

         Amortization of intangibles                                 .8                2.5                 2.8
         Utilization of state tax credit                                             (11.9)                -
         Change in valuation allowance                            (14.2)               -                 (96.7)
         State and local taxes                                      4.2                2.3                 1.4
         Other                                                      (.8)               6.0                12.4
                                                             ----------          ---------          ----------

         Effective tax rate                                       (44.0)%             32.9%              (46.1)%
                                                             ==========          =========          ==========
</TABLE>


         During 1999 and 1997, management reduced the valuation allowance by
         $827,000 and $1,600,000, respectively.  The reduction in the valuation
         allowance is primarily related to utilization of certain net operating
         loss carryforwards (NOLs) not previously recognized.  At March 31, 1999
         and 1998, a remaining valuation reserve of $840,000 and $1,700,000,
         respectively, has been maintained primarily due to limitations on the
         usage of certain pre-acquisition NOLs. The remaining valuation
         allowance could be increased or reduced in the near term if estimates
         of future taxable income during the carryforward period change
         substantially or if new information regarding the uncertainties is
         received.

<PAGE>   48
CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                 22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


   10.   INCOME TAXES (CONTINUED)

         Deferred income tax assets and liabilities are comprised of the
         following at March 31:
<TABLE>
<CAPTION>

                                                                                    1999              1998
<S>                                                                             <C>              <C>
         Assets:
             Environmental liabilities                                          $      80,116    $      80,530
             Vacation                                                                 133,613          189,340
             Bonus                                                                      2,550          154,020
             Other employee-related accruals                                           20,122           32,641
             Other                                                                    607,970          642,720
             Net operating loss and alternative
              minimum tax carryforwards                                             6,622,766        3,850,958
                                                                                -------------    -------------

         Deferred tax assets before valuation allowance                             7,467,137        4,950,209
         Valuation allowance                                                         (838,054)      (1,664,790)
                                                                                --------------   -------------
         Deferred tax assets after valuation allowance                              6,629,083        3,285,419
                                                                                -------------    -------------

         Liabilities:
             Inventory                                                               (650,296)        (650,236)
             Property, plant and equipment                                         (1,164,229)        (534,503)
                                                                                --------------   -------------

         Deferred tax liabilities                                                  (1,814,525)      (1,184,739)
                                                                                --------------   -------------

         Net deferred tax asset                                                 $   4,814,558    $   2,100,680
                                                                                =============    =============
</TABLE>


         At March 31, 1999 and 1998, $982,647 and $222,937, respectively, of net
         deferred tax assets are classified with net assets held for sale.

         At March 31, 1999 and 1998, the Company had approximately $17,000,000
         and $9,000,000, respectively, in federal NOLs available which expire in
         the years 2003 through 2013, and alternative minimum tax credit
         carryforwards of $834,000 and $830,000 at March 31, 1999 and 1998,
         respectively, which do not expire. Under Section 382 of the United
         States Internal Revenue Code of 1986, as amended (the Code), a portion
         of the NOLs may be subject to limitations. If certain stock ownership
         changes described in the Code occur in the future, these restrictions
         would further limit the Company's future use of its NOLs.



<PAGE>   49
CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                 23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


   11.   COMMITMENTS AND CONTINGENT LIABILITIES

         LITIGATION
         The Company is involved in routine litigation and various legal efforts
         incidental to the normal operations of its business. In management's
         opinion, none of these matters will have a material adverse effect on
         the Company's consolidated financial position or results of operations.

         ENVIRONMENTAL
         Erie Bronze (Erie), a subsidiary of McInnes, is a direct defendant in
         two governmental cost recovery actions and other related private party
         actions at a waste disposal site. With regard to the most significant
         cost recovery action, Erie has negotiated a settlement which has been
         approved in federal court. In addition, Erie and other parties are
         responsible for performing certain cleanup work at the site pursuant to
         a government order.

         Private party suits and actual cleanup costs in excess of governmental
         estimates can affect the reliability of the Company's loss estimates.
         Pursuant to the environmental statutes, the Company may be found
         jointly and severally liable to the government for cleanup costs;
         however, management believes that the current status of government
         settlements and group cleanup participation at the site indicates that
         the liability will be shared by responsible parties. Currently, there
         are at least 18 parties participating in various settlements of the
         cost recovery actions, including a pro rata cost sharing arrangement
         with respect to the site cleanup work. The Company has negotiated an
         insurance settlement which requires the carrier to reimburse the
         Company for site expenses and certain legal fees subject to a ceiling.
         At March 31, 1999 and 1998, the Company has recorded a liability of
         $400,000, of which $163,800 was recorded as a current liability at
         March 31, 1999 and 1998, respectively. Funds are expected to be paid
         over approximately two years. The total anticipated site costs and
         private suits are not expected to materially exceed the recorded
         liabilities.

         LEASE COMMITMENTS
         The Company leases certain equipment and vehicles under operating lease
         agreements which expire at various dates through fiscal 2004 and
         thereafter. The aggregate minimum commitments relating to these
         operating leases subsequent to March 31, 1999 are set forth below:
<TABLE>


<S>                                                                      <C>
                      2000                                               $   1,181,065
                      2001                                                   1,025,351
                      2002                                                     913,209
                      2003                                                     821,595
                      2004                                                     554,627
                      Thereafter                                             1,399,743
                                                                         -------------
                                                                         $   5,895,590
</TABLE>



<PAGE>   50
CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                 24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


   11.   COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)

         The Company also leases office space and additional warehouse space on
         a month to month basis. Total rental expense under these agreements was
         $354,406, $461,702 and $326,563 for the years ended March 31, 1999,
         1998 and 1997, respectively.


   12.   CAPITAL STOCK

         The Company is a Delaware corporation with two classes of stock, common
         stock and serial preferred stock.

         During 1999, 1998 and 1997, options and warrants to acquire 82,500,
         1,333 and 243,521, respectively, shares of common stock were exercised
         at prices of $.372 and $1.00 per share.

         During 1998, the Company issued common stock valued at $74,844 in
         connection with the purchase of Taylor (see Note 3). During 1997, the
         Company issued common stock valued at $48,000 to pay director fees and
         $72,251 for payment of a note payable. These transactions have been
         excluded from the accompanying consolidated statement of cash flows
         since they are non-cash transactions.

         During 1997, the Company sold 2 million shares of common stock for
         approximately $2,500,000, which is net of $274,000 in issuance costs.
         The shares were sold by Continental Capital, Inc. (Continental) (see
         Note 13).

         The difference between the weighted average number of common shares
         used in the basic and diluted earnings per share computations for 1998
         and 1997 is due to incremental shares from the assumed conversion of
         warrants. Net income amounts used in the basic and diluted earnings per
         share calculations are the same for 1999, 1998 and 1997.

         In addition, options and warrants to purchase 4,128,600, 2,159,000 and
         871,000 shares of common stock were outstanding during 1999, 1998 and
         1997, respectively, but were not included in the computation of diluted
         earnings per share as the effects of converting the options and
         warrants would be antidilutive.

         The preferred stock is issuable in series and the Board of Directors,
         at their discretion, may fix for each series (1) the rate of dividend,
         (2) the price at and the terms and conditions on which shares may be
         redeemed, (3) the amount payable per share in the event of voluntary or
         involuntary liquidation, (4) sinking fund provisions, (5) the terms and
         conditions on which shares may be converted, if a convertible series,
         and (6) voting rights, if any.


<PAGE>   51

CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                 25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

   13.   RELATED PARTIES

         The Company has subordinated debt agreements with First New England
         Capital, MorAmerica and the North Dakota Small Business Investment
         Company. Two representatives of the lenders are also members of the
         Company's board of directors. The Company recorded $289,000 in interest
         expense related to these debt agreements during fiscal 1999 and 1998.

         Continental is a shareholder of the Company. Continental's Chairman and
         Chief Executive Officer is a director of the Company. In 1997, the
         Company paid Continental $274,000 for fees related to the issuance of
         stock and debt.

         At March 31, 1999 and 1998, the Company had unsecured notes payable to
         certain of its shareholders, as described in Note 8.


   14.   REPORTABLE SEGMENTS

         Effective April 1, 1998, the Company adopted Statement of Financial
         Accounting Standards No. 131, "Disclosures about Segments of an
         Enterprise and Related Information ("SFAS 131"). This statement
         establishes standards for reporting information about operating
         segments, products and services and geographic areas and major
         customers. The Company's reportable segment, metal forming operations,
         is described in Note 1.


<PAGE>   52
CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                 26

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


   14.   REPORTABLE SEGMENTS (CONTINUED)

         Income and expenses not allocated to reportable segments in computing
         operating income include certain corporate expenses, interest expenses
         and interest income. There are no intersegment sales. The segment
         information is prepared consistent with the accounting policies
         outlined in Note 1.

<TABLE>
<CAPTION>


                                                          METAL          CORPORATE
                                                         FORMING            AND
               1999                                    OPERATIONS          OTHER           TOTAL

<S>                                                   <C>              <C>           <C>
          Net sales                                   $ 48,520,403     $  3,768,536  $ 52,288,939
          Operating income (loss)                          983,589         (844,096)      139,493
          Interest expense, net                          2,039,069          748,897     2,787,966
          Loss before taxes                             (1,036,990)      (1,840,743)   (2,877,733)
          Income tax benefit                              (542,945)      (1,043,842)   (1,586,787)
          Net loss                                        (706,785)      (2,549,550)   (3,256,335)
          Depreciation                                   1,666,843           44,449     1,711,292
          Total assets                                  38,238,912        6,503,835    44,742,747
          Capital expenditures                           1,768,849           22,688     1,791,537

               1998

          Net sales                                   $ 52,025,186     $  5,078,588  $ 57,103,774
          Operating income (loss)                        4,717,165         (852,193)    3,864,972
          Interest expense, net                          2,188,891          759,173     2,948,064
          Income (loss) before taxes                     2,580,923       (1,607,989)      972,934
          Income tax expense                                89,195          232,474       321,669
          Net income (loss)                              2,491,728       (1,186,410)    1,305,318
          Depreciation                                   1,544,949           50,041     1,594,990
          Total assets                                  38,814,839        8,600,638    47,415,477
          Capital expenditures                           1,141,740           13,572     1,155,312

               1997

          Net sales                                   $ 46,638,620     $  8,333,104  $ 54,971,724
          Operating income (loss)                        3,952,713         (242,102)    3,710,611
          Interest expense, net                          1,643,110          914,775     2,557,885
          Income (loss) before taxes                     2,336,974       (1,113,253)    1,223,721
          Income tax expense (benefit)                     452,345       (1,317,587)     (865,242)
          Net income                                     1,884,629          565,649     2,450,278
          Depreciation                                   1,227,152           46,555     1,273,707
          Total assets                                  29,837,983        6,438,074    36,276,057
          Capital expenditures                             612,443          107,472       719,915
</TABLE>


         During fiscal 1999 and 1997, the Company's sales to its largest
         customer totaled $5.2 million and $10.3 million, or 10% and 14% of
         sales, respectively. These sales were recorded by the metal forming
         operations to a Company in the power generation market.


<PAGE>   53
CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                 27

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


   15.    STOCK OPTIONS AND WARRANTS

          During 1999, non-employee directors of the Company's board of
          directors received options to acquire 70,000 shares of the Company's
          common stock with an exercise price of $2.00 per share. Also during
          1999, officers and employees of the Company received vested options to
          acquire 364,100 shares of the
          Company's common stock with an exercise price of $2.00 per share.
          During 1998, non-employee directors of the Company's board of
          directors received options to acquire 105,000 shares of the Company's
          common stock with an exercise price of $2.00 per share. Also during
          1998, officers and employees of the Company received vested options to
          acquire 392,500 shares and non-vested options to acquire 450,000
          shares of the Company's common stock with an exercise price of $2.00
          per share. The non-vested options will vest upon the attainment of
          certain sales levels and earnings before interest and taxes during
          future fiscal years. These levels were not attained during 1999 or
          1998, and therefore, none of the options are currently vested.

          During 1997, non-employee directors of the Company's board of
          directors received options to acquire 50,000 and 25,000 shares of the
          Company's common stock with exercise prices of $1.50 and $2.00 per
          share, respectively. Options and warrants to acquire 243,521 shares of
          common stock were exercised at
          option prices ranging between $.372 and $1.00 per share. Also during
          1997, officers and employees of the Company received options to
          acquire 100,000 and 226,568 shares of the Company's common stock with
          exercise prices of $1.50 and $2.00 per share, respectively.



<PAGE>   54
CENTRUM INDUSTRIES, INC. AND ITS SUBSIDIARIES                                 28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


   15.    STOCK OPTIONS AND WARRANTS (CONTINUED)

          The following summarizes the stock option and warrant transactions for
          the three years ended March 31, 1999:
<TABLE>
<CAPTION>

                                                                          NUMBER             PRICE PER
                                                                         OF SHARES             SHARE

<S>                                                                  <C>                 <C>
          Outstanding at March 31, 1996                                  3,086,088       $ .372 - 2.00
                      Granted                                              401,568         1.50 - 2.00
                      Exercised                                           (243,521)        .372 - 1.00
                      Cancelled                                            (13,300)               .372
                                                                     -------------       -------------
          Outstanding at March 31, 1997                                  3,230,835          .64 - 2.00
                      Granted                                              963,992                2.00
                      Exercised                                             (1,000)               1.00
                      Cancelled                                           (114,073)       1.00 -  2.00
                                                                     -------------       -------------
          Outstanding at March 31, 1998                                  4,079,754          .64 - 2.00
                      Granted                                              542,946                2.00
                      Exercised                                            (82,500)               1.00
                      Cancelled                                           (411,600)       1.00 -  2.00
                                                                     -------------       -------------
          Outstanding at March 31, 1999                                  4,128,600       $  .64 - 2.00
                                                                     =============       =============
</TABLE>


          No expense has been charged to income relating to stock options. If
          the fair value method of accounting for stock options prescribed by
          SFAS No. 123 had been used, the expense relating to the stock options
          would have been $256,000 in 1999, $215,000 in 1998, and $97,500 in
          1997. Pro forma net income (loss) would have been $(3,375,198) in
          1999, $1,163,440 in 1998 and $2,385,913 in 1997. Pro forma basic
          earnings per share would have been $(.40), $.14 and $.32 in 1999, 1998
          and 1997, respectively. The pro forma effect on net income (loss) is
          not representative of the pro forma effect on net income (loss) that
          will be disclosed in future years because it does not take into
          consideration pro forma compensation expense relating to grants made
          prior to 1996.

          The fair value of each option grant was estimated on the date of grant
          using the Black Scholes model with the following assumptions.
<TABLE>
<CAPTION>


                                              1999                   1998                  1997

<S>                                         <C>                  <C>                     <C>
          Risk-free interest rate           5.7%                 6.6 - 6.7%              6.4%
          Expected average life             10 years              10 years               10 years
          Stock price volatility            36.6%                  36.6%                 35%
</TABLE>




<PAGE>   55



Centrum Industries, Inc.
Schedule II - Valuation and Qualifying Accounts

<TABLE>
<CAPTION>
         Column A                   Column B                    Column C                 Column D            Column E
----------------------------        ----------        -------------------------------    --------            --------
                                                                Additions

                                    Balance at        Charged to         Charged to
                                    Beginning         Costs and        Other Accounts    Deductions          Balance at
        Description                 of Period         Expenses           -Describe        -Describe          End of Period
----------------------------        ----------        -------------------------------    ----------          -------------
<S>                                 <C>               <C>              <C>               <C>                 <C>
Year ended March 31, 1999


Valuation allowance for
  deferred tax asset                $ 1,664,790                                          $ (826,735)(A)      $   838,055
Valuation allowance for
  excess cost over market               100,144       $       (1,644)                                             98,500
Valuation for LIFO reserve              (65,904)             (13,923)                                            (79,827)
Valuation allowance
  for accounts receivable                88,181               71,085                                             159,266
Valuation allowance for
  note receivable                        24,733                                                                   24,733

   Year ended March 31, 1998

Valuation allowance for
  deferred tax asset                $ 1,664,790                                                              $ 1,664,790
Valuation allowance for
  excess cost over market               100,100       $           44                                             100,144
Valuation for LIFO reserve              120,442             (186,346)                                            (65,904)
Valuation allowance
  for accounts receivable                78,161               10,020                                              88,181
Valuation allowance for
  note receivable                        24,733                                                                   24,733

Year ended March 31, 1997

Valuation allowance for
  deferred tax asset                $ 3,285,790                                          $(1,621,000)(A)     $ 1,664,790
Valuation allowance for
  excess cost over market               450,767                                             (350,667)(B)         100,100
Valuation for LIFO reserve             (172,720)      $     293,162                                              120,442
Valuation allowance
  for accounts receivable                93,761                                              (15,600)(C)          78,161
Valuation allowance for
  note receivable                        24,733                                                                   24,733
</TABLE>



(A) - Based on information regarding the realization of certain deferred tax
assets, the valuation reserve was reduced.
(B) - Disposal of inventory.
(C) - Allowance for doubtful accounts was reduced by the amount of accounts
written off.


<PAGE>   56

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

This item is not applicable.



                                    PART III

ITEM 10.  EXECUTIVE OFFICERS AND DIRECTORS OF CENTRUM

The executive officers and directors of Centrum at March 31, 1999 were as
follows:

George H. Wells                                    Chief Executive Officer since
                                                   June 1995. President since
                                                   1992. Chief Operating Officer
                                                   from 1992 to May 1995.
                                                   Chairman and Chief Executive
                                                   Officer, McInnes Steel
                                                   Company since March 1996.
                                                   Director since 1992.

William C. Davis                                   Director since 1988.
                                                   Secretary from December 1995
                                                   to December 1997. Vice
                                                   President from May 1995 to
                                                   December 1997. Chief
                                                   Executive Officer, from 1992
                                                   to May 1995.

Timothy M. Hunter                                  Chief Financial Officer and
                                                   Treasurer of Centrum since
                                                   August 1996. Secretary of
                                                   Centrum since December 1997.
                                                   Chief Financial Officer,
                                                   McInnes Steel Company, since
                                                   March 1996. Executive Vice
                                                   President, McInnes Steel
                                                   Company since March 1998.
                                                   Vice President, McInnes
                                                   Steel Company from March
                                                   1996 to March 1998.

Robert J. Fulton                                   Director, since 1993.

David L. Hart                                      Director, since 1989.

Richard C. Klaffky                                 Director, since 1996.

Mervyn H. Manning                                  Director, since 1996.

David R. Schroder                                  Director, since 1996.

Thomas E. Seiple                                   Director, since 1988.


Information concerning the backgrounds and occupations for directors and
executive officers is as follows:


George H. Wells, age 55, currently a director, is Chairman of the Board,
President and Chief Executive Officer of the Company. From 1990 to October 1991,
he served as President and Chief Executive Officer of Doehler-Jarvis, a Toledo,
Ohio-based producer of die cast and semi-permanent mold aluminum components
utilized by the automotive industry and in general industrial applications. From
1985-1989, he served as President and Chief Operating Officer and as a Director
of National Forge Company of Irvine, Pennsylvania, which produced precision
machined components. Mr. Wells has been a Director since 1992.


                                       57

<PAGE>   57


William C. Davis, age 53, currently a Director, is Chairman of the Board of
Continental Capital Company. He graduated from Ohio Northern University in 1968
with a degree in Business Administration. He has more than 20 years of
experience in finance, marketing and business. Mr. Davis has been a Director
since 1988.

Robert J. Fulton, age 56, currently a Director, President and Chief Executive
Officer of Hoeganaes Corporation, a major supplier of powder metals, previously
served Centrum as an officer and consultant. From 1990 until December 1992, he
served as Executive Vice President and Chief Operating Officer of
Doehler-Jarvis, a Toledo-based producer of die cast and semi-permanent mold
aluminum components utilized by the automotive industry and in general
industrial applications. From 1986 through 1990, he served as a Director and
Executive Vice President in charge of marketing and manufacturing of National
Forge Company of Irvine, Pennsylvania, which produced precision machined
components. Mr. Fulton has been a Director since 1992.

David L. Hart, age 54, currently a Director, attended Colgate University. He has
worked as a manufacturer's representative in the automotive industry, and for
over five years has been the president of LeeHart Associates, in Toledo, Ohio.
Mr. Hart has been a Director since 1989.

Richard C. Klaffky, age 52, currently a Director, is President and Chief
Executive Officer of First New England Capital LP, a lender to Centrum. Mr.
Klaffky is a member of the Board of Governors of the National Association of
Small Business Investment Companies and serves on the boards of several
companies. Mr. Klaffky holds a BA from Brown University and an MBA from Columbia
University. Mr. Klaffky has been a Director since 1996.

Mervyn H. Manning, age 66, currently a Director, is a retired senior executive
of Ford Motor Company, where he had overall responsibility for Latin American
and Asian Automotive Operations. Mr. Manning is a Director of several companies
and has recently served as the Chairman of Sinai Hospital of Detroit. Mr.
Manning holds a BBA from the University of Michigan, as well as an MBA from
Harvard Business School. Mr. Manning has been a Director since 1996.

David R. Schroder, age 56, currently a Director, is President of InvestAmerica
Investment Advisors, Inc. and InvestAmerica N.D. Management Inc. These two
companies manage MorAmerica Capital Company and the North Dakota Small Business
Investment Company respectively, both of whom are lenders to Centrum. Mr.
Schroder holds a BS degree from Georgetown University, as well as an MBA from
the University of Wisconsin. Mr. Schroder has been a Director since 1996.

Thomas E. Seiple, age 53, currently a Director, graduated from Bowling Green
State University in 1967, with a degree in Business Administration. Since 1981,
he has been the President of United Roofing & Sheet Metal, Inc., a regional
fabricator and construction business located in Toledo, Ohio. Mr. Seiple has
been a Director since 1988.

Timothy M. Hunter, age 36, was appointed Chief Financial Officer, Treasurer and
Assistant Secretary in August 1996 and Secretary in 1997. He has been Executive
Vice-President and Chief Financial Officer of McInnes Steel Company since March
1998 and formerly served as Vice President and Chief Financial Officer from
March 1996 to March 1998. He has been with McInnes Steel Company since 1986,
where he served as Treasurer, prior to March 1996. Mr. Hunter is a certified
public accountant.


Section 16(a) Beneficial Ownership Reporting Compliance

Under Section 16 of the Securities Exchange Act of 1934, the Company's
directors, certain of its officers, and beneficial owners of more than 10% of
the outstanding Common Stock are required to file reports with the Securities
and Exchange Commission concerning their ownership of and transactions in Common
Stock; such persons are also required to furnish the Company with copies of such
reports.

Based solely upon the reports and related information furnished to the Company,
the Company believes that all such filing requirements were complied with in a
timely manner during and with respect to 1999.




                                       58
<PAGE>   58

ITEM 11.  EXECUTIVE COMPENSATION

The following table shows compensation paid or awarded by Centrum during the
fiscal years ended March 31, 1999, 1998, and 1997 to the current executive
officer of Centrum and the other executive officers of the Company for services
in all capacities.

<TABLE>
<CAPTION>

                                         SUMMARY COMPENSATION TABLE


                                                          Annual Compensation
                                                          -------------------                     Long term
    Name and                                                                Other annual         compensation
principal position               Year        Salary        Bonus            compensation (1)      Options (#)

<S>                              <C>       <C>          <C>                <C>                   <C>
George H. Wells                  1999      $  227,173   $        0         $ 56,109 (3)                --
Chief Executive                  1998      $  210,000   $  113,800         $ 44,982 (3)           450,000
  Officer                        1997      $  189,600   $  114,100         $  6,860               100,000

Timothy M. Hunter                1999      $  138,154   $        0         $  6,166                52,930(2)
 Chief Financial                 1998      $  121,731   $   36,899         $  6,166                55,671
Officer                          1997      $  101,339   $   33,385         $  6,085                 1,898

Anthony A. Montani               1999 (4)  $  160,461   $        0         $  6,379                58,970(2)
Chief Operating                  1998      $  151,769   $   40,587         $  6,379                55,671
Officer, McInnes                 1997      $  141,185   $   33,385         $  6,389                 1,898
Steel Company and Subsidiaries
</TABLE>

-------------------

(1)  Automobile Lease
(2)  Stock options were granted June 10, 1998 based upon the fiscal 1998
     performance.
(3)  Includes cost of retirement annuity paid or accrued. See Executive
     Compensation below.
(4)  Retired on March 8, 1999.

<TABLE>
<CAPTION>


                                               OPTION GRANTS IN 1999
                                           For Named Executive Officers


                           Number of       Percent of
                            securities    total options
                           underlying      granted to       Exercise or
                             options      employees in      base price        Expiration              Grant date
                             granted       fiscal year       per share             Date                value (1)
                          ----------------------------------------------------------------------------------------

<S>                              <C>         <C>                 <C>          <C>                     <C>
Timothy M. Hunter                52,930        14.5%             2.00        June 10, 2008               51,818
Anthony A. Montani               58,970        16.2%             2.00        June 10, 2008               57,732
</TABLE>

-----------------

1)Based on the Constant Elasticity Variance of the Black-Scholes model using the
following assumptions: (a) a ten year option term; (b) 36% volatility rate; and
(c) 0% dividend yield. Actual gain, if any, is dependent upon the actual
performance of the shares of common stock underlying these options. There is no
assurance that the amounts shown in this column will be achieved.

No options were exercised during the fiscal year ended March 31, 1999 by any of
the named executives included in the summary compensation table.

                                       59
<PAGE>   59


EXECUTIVE COMPENSATION (INCLUDING TERMINATION OF EMPLOYMENT) AGREEMENTS


The following table sets forth information concerning the aggregate number of
options held and the value of unexercised "in-the-money" options held at March
31, 1999 (the difference between the aggregate exercise price of all such
options held and the market value of the shares covered by such options at March
31, 1999).
<TABLE>
<CAPTION>

                                          AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                                                  AND FISCAL YEAREND OPTION VALUES


                                           Number of Securities                     Value of Unexercised
                                         Underlying Unexercised                         In-the-Money
                                             Options/SARs at                           Options/SARs at
                                            Fiscal Year end (#)                       Fiscal Year end ($)
                                   ---------------------------------------------------------------------------
         Name                      Exercisable       Unexercisable             Exercisable       Unexercisable
         -----------------------------------------------------------------------------------------------------

<S>                                   <C>               <C>                     <C>              <C>
         George H. Wells              416,667           450,000                 $    41,667      $      ----

         Timothy M. Hunter            279,632             -----                 $    15,888      $      ----

         Anthony A. Montani           332,739             -----                 $    23,832      $      ----
</TABLE>



Mr. George Wells has an employment agreement with the Company which provides for
an annual salary of $230,000. The employment agreement was approved by the
Compensation Committee and the Company's Board of Directors to provide Mr. Wells
with compensation and benefits which are comparable to companies similar in size
and to ensure continuity in management at the Chief Executive level. Mr. Wells
also receives a performance bonus of 5% of Centrum's consolidated before tax
profit. In addition, Mr. Wells is entitled to an annual payment that net of
applicable payroll taxes enables him to fund $25,000 toward a retirement
annuity. The agreement also calls for an annual stock or cash bonus to be
awarded at the discretion of the Board. Mr. Wells was not be awarded any cash or
stock bonus for 1999. The contract has a three year term, which renews
automatically unless terminated by either party in writing 60 days prior to the
expiration date. In August 1997, Mr. Wells was granted a stock option for
450,000 shares of common stock. The options are exercisable and vested upon the
attainment of certain sales levels and earnings before interest and taxes during
future fiscal years. These levels were not attained during 1999 and, therefore,
none of the options vested.

The employment agreement with Mr. Wells provides for the termination of Mr.
Wells for cause. In the event that Mr. Wells is terminated for any reason other
than cause prior to expiration of the agreement, he is entitled to severance
compensation of twenty four months salary, any discretionary bonus awarded but
not yet paid, and the pro rata amount of the performance bonus earned prior to
termination.

Messrs. Timothy Hunter and Anthony Montani entered into employment agreements
with McInnes Steel Company, a subsidiary of Centrum, dated February 29, 1996
which had a three year term. The agreements automatically renewed from year to
year on the anniversary commencing on the expiration of the three year term
unless terminated by either party in writing 30 days prior to the expiration
date. Effective March 8, 1999, Mr. Montani retired from his position as
President and Chief Operating Officer of McInnes Steel Company and Subsidiaries.
Mr. Montani is entitled to monthly severance compensation of his base monthly
salary reduced by


                                       60

<PAGE>   60

any salary or consulting income received from any source for the remaining term
of the agreement for a minimum period of one year.

Mr. Hunter's annual salary from McInnes is $126,000 and Mr. Montani's annual
salary prior to retirement was $160,000. Mr. Hunter's salary is to be increased
annually by a minimum of the greater of the change in the CPI or 4% per year. In
addition to his salary, Mr. Hunter is entitled to cash bonuses as approved by
the Board of Directors. He participates in the pool of stock options awarded to
the management of the Metal Forming Operations segment. Neither Messrs. Hunter
or Montani will be awarded cash bonuses or stock option grants for 1999 as a
result of the Company's performance. In addition, to his employment agreement
with McInnes, Mr. Hunter is compensated $24,000 annually as an employee of
Centrum.

Mr. Hunter's contract provides for his termination for cause. In the event that
Mr. Hunter is terminated for any reason other than cause prior to expiration of
the agreement, he is entitled to monthly severance compensation of his base
monthly salary reduced by any salary or consulting income received from any
source for a minimum period of one year.

Messrs. Wells, Hunter and Montani are eligible to participate in the Company's
401(K) plans. Substantially all salaried employees are eligible to participate
in the plans. The Company contributes to the plans and the Company's
contribution is allocated to the accounts of the plan participants on a
nondiscriminatory basis. The Company contributed $4,770, $4,024 and $4,400 on
behalf of Messrs. Wells, Hunter and Montani, respectively, during 1999.

On June 10, 1998, the Company's Board of Directors adopted the Centrum
Industries, Inc. Executive Employees Deferred Compensation Plan to permit
selected executive employees of the Company to elect to defer receipt of all or
part of their current salaries and/or cash earned under the Company's
Performance Award Plan, described below. Participation in the Deferred
Compensation Plan is entirely voluntary. Deferred amounts will be credited to an
account for the executive's benefit on the Company's books and will be interest
at the prevailing prime rate, but such amounts will remain Company assets.
Payment will be made in a lump sum or in annual installments following
termination of employment. The Company does not contribute to this Plan or match
an individual's contributions to the Plan.

On June 10, 1998, the Company's Board of Directors also adopted a Performance
Award Plan, which was approved by the Company's shareholders at the Annual
Meeting of Shareholders held on November 12, 1998. The Performance Award Plan
provides for the granting and, to the extent earned, the payment of performance
awards to officers and other selected management employees who contribute to the
annual and long-term success of the Company by making the amount of their
compensation significantly contingent upon the Company's annual and long-term
profitable performance and growth. The Performance Award Plan is administered by
the Compensation Committee of the Board of Directors (the "Committee") and the
Company's Chief Executive Officer ("CEO"). Any elected officer of the Company
and other key management employees recommended by the CEO and approved by the
Committee are eligible to participate in the Performance Award Plan. The
Performance Award Plan provides for the payment of performance awards which have
been earned on the basis of the Company's financial performance for each fiscal
year and/or for longer award periods of up to five years. These award periods
and the related performance objectives are established by the Committee. The
Performance Award Plan permits earned awards to be paid in cash, in shares of
the Company's Common Stock, in stock subject to specified restrictions, or in
stock options issued pursuant to the Employees Stock Option Plan, described
below. The Performance Award Plan permits up to 250,000 shares of the Company's
common stock to be issuable in the aggregate under the Performance Award Plan,
excluding



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<PAGE>   61


shares issued upon exercise of options granted under the Employees Stock Option
Plan. The Committee has not approved any awards under the Performance Award Plan
for 1999 as a result of the Company's performance.

The Centrum Industries, Inc. Employees Stock Option Plan was also approved by
the shareholders at the Annual Meeting of Shareholders on November 12, 1998,
which is administered by the Committee and the CEO, except that all matters with
respect to grants to the CEO must be approved by the entire Board of Directors.
A maximum of 1,000,000 shares may be granted under this Plan, on terms and
conditions specified by the Committee. Any current management employee of the
Company who is recommended by the CEO and approved by the Committee is eligible
to be granted an option. The Committee has not approved the grant of any options
for 1999 as a result of the Company's performance.


DIRECTORS' FEES AND COMPENSATION

Directors who are employees of the Company or any subsidiary do not receive any
fees for Board or committee service. The Company reimburses all directors for
travel, lodging, and related expenses that they may incur in attending Board and
committee meetings.

During 1999, the seven non-employee directors received $2,500 for each Board
meeting attended subsequent to April 1, 1998 and $1,000 for each committee
meeting attended subsequent to April 1, 1998. During 1999, the Company paid
aggregate fees of $75,000 to the current directors.

On June 10, 1998, the Company's Board of Directors adopted the Centrum
Industries, Inc. Directors Deferred Compensation Plan to permit directors of the
Company to elect to defer receipt of all or part of their current directors
fees. Participation in the Deferred Compensation Plan is entirely voluntary.
Deferred amounts will be credited to an account for the director's benefit on
the Company's books and will be interest at the prevailing prime rate, but such
amounts will remain Company assets. Payment will be made in a lump sum or in
annual installments following termination of the director's service. The Company
does not contribute to this Plan or match a director's contributions to the
Plan.

At the Annual Meeting of Shareholders held on November 12, 1998, the
shareholders approved the Stock and Option Plan for Directors of the Company, to
provide outside Directors with the opportunity to become owners of the Company's
common stock. Options for a maximum of 750,000 shares may be granted under this
Plan. No stock options will be granted under this Plan in fiscal 2000 based upon
the Company's 1999 financial performance.

The following table sets forth the stock option grants received by Directors
during 1999 for fiscal 1998 performance. No stock options will be granted in
fiscal 2000 to the Directors based upon the Company's 1999 financial
performance. No options were exercised for the fiscal year ended March 31, 1999
by any of the Directors included in the option grant table.




                                       62
<PAGE>   62

<TABLE>
<CAPTION>





                                               OPTION GRANTS IN 1999
                                              For Board of Directors


                           Number of
                            securities   Percentage of
                           underlying      total options   Exercise or
                             options       granted in       base price        Expiration           Grant date
                             granted       fiscal year       per share          date                 value (1)
                           ----------------------------------------------------------------------------------------

<S>                        <C>               <C>            <C>            <C>                      <C>
William C. Davis           10,000            2.3%           $   2.00       June 10, 2008            $9,790

Robert J. Fulton           10,000            2.3%           $   2.00       June 10, 2008            $9,790

David L. Hart              10,000            2.3%           $   2.00       June 10, 2008            $9,790

Richard C. Klaffky         10,000            2.3%           $   2.00       June 10, 2008            $9,790

Mervyn H. Manning          10,000            2.3%           $   2.00       June 10, 2008            $9,790

David R. Schroder          10,000            2.3%           $   2.00       June 10, 2008            $9,790

Thomas E. Seiple           10,000            2.3%           $   2.00       June 10, 2008            $9,790
</TABLE>



-----------------

(1)  Based on the Constant Elasticity Variance of the Black-Scholes model using
     the following assumptions: (a) a ten year option term; (b) 36% volatility
     rate; and (c) 0% dividend yield. Actual gain, if any, is dependent upon the
     actual performance of the shares of common stock underlying these options.
     There is no assurance that the amounts shown in this column will be
     achieved.



                                       63

<PAGE>   63



ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table shows the number of shares of Common Stock
beneficially owned as of May 30, 1999 by each director and nominee, each of the
executive officers named in the Summary Compensation Table included elsewhere
herein, all directors and executive officers of the Company as a group, and each
5% holder. The address of each beneficial owner and executive officer listed
below, unless otherwise noted, is c/o Centrum Industries, Inc., 441 East Main
Street, Corry, PA 16407.

<TABLE>
<CAPTION>


                                                              Number of shares of Centrum
                                                                      common stock
                                                        beneficially owned           % of class
                                                        ------------------           ----------
<S>                                                         <C>                        <C>
         George H. Wells (a)                                  586,545                   4.8
         William C. Davis (b)                                 140,000                   1.2
         Timothy M. Hunter (c)                                291,632                   2.4
         Anthony A. Montani (d)                               332,739                   2.7
         Robert J. Fulton (e)                                 484,545                   4.0
         David L. Hart (f)                                    270,418                   2.2
         Mervyn H. Manning (g)                                 75,000                   0.6
         David R. Schroder (h)                                938,987                   7.7
         Thomas E. Seiple (i)                                 147,163                   1.2
         MorAmerica Capital Corporation (j)(k)              1,350,338                  11.1
         North Dakota Small Business                        1,350,338                  11.1
           Investment Company (j)(k)
         First New England Capital Limited                  1,350,338                  11.1
           Partnership (j)(k)
         All current directors and executive
           officers of the company as group                 3,675,169                 29.94
</TABLE>


The beneficial owner has sole voting and investment power with respect to all
shares listed, unless otherwise noted.
(a) Includes 416,667 shares Mr. Wells currently has the right to acquire
pursuant to stock options; includes 3,211 shares with respect to Mr. Wells'
ownership of shares held by Seneca Sheet Metal Company.
(b) Includes 140,000 shares Mr. Davis currently has the right to acquire
pursuant to stock options.
(c) Includes 279,632 shares Mr. Hunter currently has the right to acquire
pursuant to stock options.
(d) Includes 332,739 shares Mr. Montani currently has the right to acquire
pursuant to stock options.
(e) Includes 306,667 shares Mr. Fulton currently has the right to acquire
pursuant to stock options; includes 3,211 shares with respect to Mr. Fulton's
ownership of shares held by Seneca Sheet Metal Company.
(f) Includes 40,000 shares Mr. Hart currently has the right to acquire pursuant
to stock options; includes 29,085 shares held by Mr. Hart's wife with respect to
which she has sole voting and dispositive power.
(g) Includes 25,000 shares Mr. Manning has the right to acquire pursuant to
stock options; includes 50,000 shares held by the Mervyn H. Manning Trust.
(h) Includes 655,403 shares MorAmerica Capital Corporation (MorAmerica)
currently has the right to acquire and 258,584 shares North Dakota Small
Business Investment Company (NDSBIC) currently has the right to acquire pursuant
to a note and warrant agreement with the holders of the 11% convertible
subordinated debt. Includes 17,927 shares MorAmerica has the right to acquire
and 7,073 shares NDSBIC has the right to acquire pursuant to the assignment of a
stock option from Mr. Schroder. Mr. Schroder serves as the President of the
entities managing MorAmerica and NDSBIC.
(i) Includes 40,000 shares Mr. Seiple currently has the right to acquire
pursuant to stock options.

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<PAGE>   64

(j) MorAmerica, NDSBIC, First New England Capital LP (FNEC) jointly filed a
schedule 13D subsequent to the issuance of the note and warrant agreement with
the holders of the 11% convertible subordinated debt.
(k) Includes 655,403 shares MorAmerica currently has the right to acquire,
258,584 shares NDSBIC currently has the right to acquire, and 386,351 shares
FNEC currently has the right to acquire pursuant to a note and warrant agreement
with the holders of the 11% convertible subordinated debt. Includes 17,927
shares MorAmerica has the right to acquire and 7,073 shares NDSBIC has the right
to acquire pursuant to the assignment of a stock option from David Schroder;
includes 25,000 shares FNEC has the right to acquire pursuant to the assignment
of a stock option from Richard Klaffky. The address of MorAmerica and NDSBIC is
101 Second Street S.E., Suite 800, Cedar Rapids IA 52401. The address of FNEC is
100 Pearl St, Hartford CT 06103.



ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Continental Capital, Inc. (Continental) is a shareholder of the Company and, Mr.
William C. Davis, its Chairman and Chief Executive Officer was, from 1988 to
1995, a Director and Chief Executive Officer of the Company and has been a
Director since June 1995. Mr. Davis was Vice President and Secretary for the
period of December 1995 to December 1997. In 1997 the Company paid Continental
$274,000 for fees relating to the issuance of stock. No payments were made nor
were any due to Continental, in 1998 and 1999.

                                       65
<PAGE>   65



ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8K

 (a)     The following exhibits are filed as part of the report:

                  3.1      Certificate of Incorporation, as amended (filed as
                           Exhibit 3.1 to the Company's Report on Form 10-K for
                           the fiscal year ended March 31, 1996, file number
                           0-9607, and incorporated herein by reference).

                  3.2      Bylaws (filed as Exhibit 3.2 to the Company's Report
                           on Form 10-K for the fiscal year ended March 31,
                           1996, file number 0-9607, and incorporated herein by
                           reference).

                  3.3      Participating Preferred Agreement (filed as Exhibit
                           3.3 to the Company's Report on Form 10-K for the
                           fiscal year ended March 31, 1996, file number 0-9607,
                           and incorporated herein by reference).

                  4.1      The instruments defining the rights of the holders of
                           debentures issued in calendar year 1995, with options
                           at $1.00 per share are not being filed herewith, as
                           permitted by Regulation Section 229.601(b)(4)(iii),
                           because such securities do not exceed 10 percent of
                           the total assets of the Company and its consolidated
                           subsidiaries. The Company hereby agrees to furnish a
                           copy of such agreements to the Commission upon
                           request.

                  4.2      The instruments defining the rights of the holders of
                           certain notes, styled as "Loans," issued in
                           1991-1993, are not being filed herewith, as permitted
                           by Regulation Section 229-601(b)(4)(iii), because
                           such securities do not exceed 10 percent of the total
                           assets of the Company and its consolidated
                           subsidiaries. The Company hereby agrees to furnish a
                           copy of such agreements to the Commission upon
                           request.

                  4.3      The instruments defining the rights of the holders of
                           certain subordinated notes originally issued by
                           American Handling, Inc. in 1991 are not being filed
                           herewith, as permitted by Regulation Section
                           229-601(b)(4)(iii), because such securities do not
                           exceed 10 percent of the total assets of the Company
                           and its consolidated subsidiaries. The Company hereby
                           agrees to furnish a copy of such agreements to the
                           Commission upon request.

                  4.4      The instruments defining the rights of the holders of
                           certain notes, styled as "Loans with Warrants,"
                           issued in 1993-1995, are not being filed herewith, as
                           permitted by Regulation Section 229-601(b)(4)(iii),
                           because such securities do not exceed 10 percent of
                           the total assets of the Company and its consolidated
                           subsidiaries. The Company hereby agrees to furnish a
                           copy of such agreements to the Commission upon
                           request.

                  4.5      The 11% Convertible Subordinated Notes issued in
                           March 1996 in the aggregate principal amount of
                           $2,500,000 (issued together with warrants for
                           1,250,000 shares of the Company's common stock) are
                           not being filed herewith, as permitted by Regulation


                                       66
<PAGE>   66

                           Section 229-601(b)(4)(iii), because such securities
                           do not exceed 10 percent of the total assets of the
                           Company and its consolidated subsidiaries. The
                           Company hereby agrees to furnish a copy of such
                           agreements to the Commission upon request.

                  4.6      Certain subordination agreements executed in March
                           1996 by new and existing noteholders of the Company
                           are not being filed herewith, as permitted by
                           Regulation Section 229.601(b)(4)(iii), because such
                           securities do not exceed 10 percent of the total
                           assets of the Company and its consolidated
                           subsidiaries. The Company hereby agrees to furnish a
                           copy of such agreements to the Commission upon
                           request.

                  4.7      The instrument defining the rights of the holders
                           certain debt incurred in the acquisition of
                           substantially all the assets of MRR-Memphis Forge
                           International, Inc., issued in June 1997 in the
                           principal amount of $250,000, is not being filed
                           herewith, as permitted by Regulation Section
                           229.601(b)(4)(iii), because such security does not
                           exceed 10 percent of the total assets of the Company
                           and its consolidated subsidiaries. The Company hereby
                           agrees to furnish a copy of such to the Commission
                           upon request.

                  4.8      The instruments defining the rights of the holders of
                           certain debt incurred in the acquisition of Micafil,
                           Inc., in May 1993, including the restatements of such
                           original instruments, are not being filed herewith,
                           as permitted by Regulation Section
                           229.601(b)(4)(iii), because such securities do not
                           exceed 10 percent of the total assets of the Company
                           and its consolidated subsidiaries. The Company hereby
                           agrees to furnish a copy of such agreements to the
                           Commission upon request.

                  4.9      Reimbursement Agreement, dated as of February 29,
                           1996, with respect to a letter of credit issued by
                           The Huntington National Bank, relating to $6,000,000
                           Erie County Industrial Development Authority Variable
                           Rate Demand Industrial Development Revenue Bonds
                           (McInnes Steel Company Project) (filed as Exhibit 4.9
                           to the Company's Report on Form 10-K for the fiscal
                           year ended March 31, 1996, file number 0-9607, and
                           incorporated herein by reference).

                  4.10     Installment Sales Agreement, dated as of November 1,
                           1991, relating to the loan of proceeds from the sale
                           of $6,000,000 Erie County Industrial Development
                           Authority Variable Rate Demand Industrial Development
                           Revenue Bonds (McInnes Steel Company Project) (filed
                           as Exhibit 4.10 to the Company's Report on Form 10-K
                           for the fiscal year ended March 31, 1996, file number
                           0-9607, and incorporated herein by reference).

                  9.1      Equity Holders Agreement dated as of February 29,
                           1996, effective as of March 8, 1996, by and among
                           First New England Capital Limited Partnership,
                           MorAmerica Capital Corp., North Dakota Small Business
                           Investment Company, Centrum Industries, Inc. and
                           certain shareholders of Centrum Industries, Inc.
                           (filed as Exhibit 9.1 to the Company's Report on Form
                           10-K for the fiscal year ended March 31, 1996, file
                           number 0-9607, and incorporated herein by reference).

                  10.1     Asset Purchase Agreement by and among Centrum
                           Industries, Inc., Centrum Acquisition Corporation,
                           and MRR-Memphis Forge International, Inc., dated as
                           of April 29, 1997 as



                                       67

<PAGE>   67


                           amended May 14, 1997 (filed as Exhibit 10.1 to the
                           Company's Report on Form 8-K, filed with the
                           Commission on June 19, 1997, file number 0-9607, and
                           incorporated herein by reference).

                  10.2     Registration Rights Agreement by and among Centrum
                           Industries, Inc. and MRR-Memphis Forge International,
                           Inc., dated June 4, 1997 (filed as Exhibit 10.2 to
                           the Company's Report on Form 8-K, filed with the
                           Commission on June 19, 1997, file number 0-9607, and
                           incorporated herein by reference).

                  10.3     Note and Warrant Purchase Agreement dated as of
                           February 29, 1996 and effective as of March 8, 1996,
                           by and among MorAmerica Capital Corporation, First
                           New England Capital Limited Partnership, and North
                           Dakota Small Business Investment Company and Centrum
                           Industries, Inc. with respect to 11% convertible,
                           subordinated notes and warrants for the purchase of
                           1,250,000 shares of the Company's common stock (filed
                           as Exhibit 10.3 to the Company's Report on Form 10-K
                           for the fiscal year ended March 31, 1996, file number
                           0-9607, and incorporated herein by reference).

                  10.4     Common Stock Warrant dated as of February 29, 1996
                           and effective as of March 8, 1996, issued to
                           MorAmerica Capital Corporation for 627,445 shares of
                           common stock (filed as Exhibit 10.4 to the Company's
                           Report on Form 10-K for the fiscal year ended March
                           31, 1996, file number 0-9607, and incorporated herein
                           by reference).

                  10.5     Common Stock Warrant dated as of February 29, 1996
                           and effective as of March 8, 1996, issued to First
                           New England Capital Limited Partnership for 375,000
                           shares of common stock (filed as Exhibit 10.5 to the
                           Company's Report on Form 10-K for the fiscal year
                           ended March 31, 1996, file number 0-9607, and
                           incorporated herein by reference).

                  10.6     Common Stock Warrant dated as of February 29, 1996
                           and effective as of March 8, 1996, issued to First
                           New England Capital Limited Partnership and North
                           Dakota Small Business Investment Company for 247,555
                           shares of common stock (filed as Exhibit 10.6 to the
                           Company's Report on Form 10-K for the fiscal year
                           ended March 31, 1996, file number 0-9607, and
                           incorporated herein by reference).

                  10.7     Put Agreement by and among MorAmerica Capital
                           Corporation, First New England Capital Limited
                           Partnership, and North Dakota Small Business
                           Investment Company and Centrum Industries, Inc.
                           (filed as Exhibit 10.7 to the Company's Report on
                           Form 10-K for the fiscal year ended March 31, 1996,
                           file number 0-9607, and incorporated herein by
                           reference).

                  10.8     Registration Rights Agreement dated as of February
                           29, 1996, effective as of March 8, 1996, by and among
                           MorAmerica Capital Corporation, First New England
                           Capital Limited Partnership and North Dakota Small
                           Business Investment Company and Centrum Industries,
                           Inc. (filed as Exhibit 10.8 to the Company's Report
                           on Form 10-K for the fiscal year ended March 31,
                           1996, file number 0-9607, and incorporated herein by
                           reference).



                                       68

<PAGE>   68

                  10.9     Loan and Security Agreement dated as of February 29,
                           1996, by and among The Huntington National Bank and
                           McInnes Steel Company, Eballoy Glass Products
                           Company, Erie Bronze & Aluminum Company, and McInnes
                           International, Inc. as Borrowers, and Centrum
                           Industries, Inc. and McInnes Services, Inc. as
                           Guarantors (filed as Exhibit 10.9 to the Company's
                           Report on Form 10-K for the fiscal year ended March
                           31, 1996, file number 0-9607, and incorporated herein
                           by reference).

                  10.10    Amended and Restated Continuing Guaranty Unlimited of
                           Centrum dated June 4, 1997 (filed as Exhibit 10.6 to
                           the Company's report on Form 8-K, filed with the
                           Commission on June 19, 1997, file number 0-9607, and
                           incorporated herein by reference).

                  10.11    Form of Common Stock Warrant, issued in connection
                           with the debt instruments referenced in Exhibits 4.5
                           above (filed as Exhibit 10.11 to the Company's Report
                           on Form 10-K for the fiscal year ended March 31,
                           1996, file number 0-9607, and incorporated herein by
                           reference).

                  10.12    Loan Agreement by and between the City of Erie by and
                           through the Enterprise Development Zone Revolving
                           Loan Fund and McInnes Steel Company dated as of
                           November 2, 1995 (filed as Exhibit 10.12 to the
                           Company's Report on Form 10-K for the fiscal year
                           ended March 31, 1996, file number 0-9607, and
                           incorporated herein by reference).

                  10.13    Amended and Restated Employment Agreement with George
                           H. Wells executed November 18, 1996 (filed as Exhibit
                           10.13 to the Company's Report on Form 10-K for the
                           fiscal year ended March 31, 1997, file number 0-9607,
                           and incorporated herein by reference).

                  10.14    Employment Agreement with Anthony A. Montani (filed
                           as Exhibit 10.14 to the Company's Report on Form 10-K
                           for the fiscal year ended March 31, 1996, file number
                           0-9607, and incorporated herein by reference).

                  10.15    Employment Agreement with Timothy M. Hunter (filed as
                           Exhibit 10.15 to the Company's Report on Form 10-K
                           for the fiscal year ended March 31, 1996, file number
                           0-9607, and incorporated herein by reference).

                  10.16    Services Agreement with Stephen J. Mahoney (filed as
                           Exhibit 10.16 to the Company's Report on Form 10-K
                           for the fiscal year ended March 31, 1996, file number
                           0-9607, and incorporated herein by reference).

                  10.17    Stock Option Agreement with Anthony A. Montani (filed
                           as Exhibit 10.17 to the Company's Report on Form 10-K
                           for the fiscal year ended March 31, 1996, file number
                           0-9607, and incorporated herein by reference).

                  10.18    Stock Option Agreement with Anthony A. Montani (filed
                           as Exhibit 10.18 to the Company's Report on Form 10-K
                           for the fiscal year ended March 31, 1996, file number
                           0-9607, and incorporated herein by reference).


                                       69

<PAGE>   69


                  10.19    Stock Option Agreement with Timothy M. Hunter (filed
                           as Exhibit 10.19 to the Company's Report on Form 10-K
                           for the fiscal year ended March 31, 1996, file number
                           0-9607, and incorporated herein by reference).

                  10.20    Stock Option Agreement with Timothy M. Hunter (filed
                           as Exhibit 10.20 to the Company's Report on Form 10-K
                           for the fiscal year ended March 31, 1996, file number
                           0-9607, and incorporated herein by reference).

                  10.21    Bonus and Stock Option Plan of McInnes Steel Company
                           and its Subsidiaries (filed as Exhibit 10.21 to the
                           Company's Report on Form 10-K for the fiscal year
                           ended March 31, 1996, file number 0-9607, and
                           incorporated herein by reference).

                  10.22    Bonus and Stock Option Plan of Micafil, Inc. (filed
                           as Exhibit 10.22 to the Company's Report on Form 10-K
                           for the fiscal year ended March 31, 1996, file number
                           0-9607, and incorporated herein by reference).

                  10.23    Amendment No. 2 to Loan Agreement with Huntington
                           National Bank dated June 4, 1997 (filed as Exhibit
                           10.5 to the Company's report on Form 8-K, filed with
                           the Commission on June 19, 1997, file number 0-9607,
                           and incorporated herein by reference).

                  10.24    Model Board of Directors Stock Option Agreement
                           (filed as Exhibit 10.24 to the Company's Report on
                           Form 10-Q for the quarter ended December 31, 1996,
                           file number 0-9607, and incorporated herein by
                           reference).

                  10.25    Model Employee Stock Option Agreement (filed as
                           Exhibit 10.25 to the Company's Report on Form 10-Q
                           for the quarter ended December 31, 1996, file number
                           0-9607, and incorporated herein by reference).

                  10.26    Stock Option Agreement with George H. Wells dated
                           December 2, 1996 (filed as Exhibit 10.26 to the
                           Company's Report on Form 10-Q for the quarter ended
                           December 31, 1996, file number 0-9607, and
                           incorporated herein by reference).

                  10.27    Stock Option Agreement with Timothy M. Hunter dated
                           December 2, 1996 (filed as Exhibit 10.27 to the
                           Company's Report on Form 10-Q for the quarter ended
                           December 31, 1996, file number 0-9607, and
                           incorporated herein by reference).

                  10.28    Stock Option Agreement with Anthony A. Montani dated
                           December 2, 1996 (filed as Exhibit 10.28 to the
                           Company's Report on Form 10-Q for the quarter ended
                           December 31, 1996, file number 0-9607, and
                           incorporated herein by reference).

                  10.29    Amendment No. 1 to Loan Agreement with Huntington
                           National Bank dated January 1, 1997 (filed as Exhibit
                           10.29 to the Company's Report on Form 10K in the
                           fiscal year ended March 31, 1998, file number 0-9607,
                           and incorporated herein by reference.

                  10.30    Model Employee Stock Option Agreement (filed as
                           Exhibit 10.30 to the



                                       70
<PAGE>   70

                           Company's Report on Form 10-Q for the quarter ended
                           June 30, 1997, file number 0-9607, and incorporated
                           herein by reference).

                  10.31    Stock Option Agreement with Timothy M. Hunter dated
                           July 21, 1997 (filed as Exhibit 10.31 to the
                           Company's Report on Form 10-Q for the quarter ended
                           June 30, 1997, file number 0-9607, and incorporated
                           herein by reference).

                  10.32    Stock Option Agreement with Anthony A. Montani dated
                           July 21, 1997 (filed as Exhibit 10.32 to the
                           Company's Report on Form 10-Q for the quarter ended
                           June 30, 1997, file number 0-9607, and incorporated
                           herein by reference.)

                  10.33    Amendment to Amended and Restated Employment
                           Agreement with George H. Wells executed June 27, 1997
                           (filed as Exhibit 10.33 to the Company's Report on
                           Form 10-Q for the quarter ended June 30, 1997, file
                           number 0-9607, and incorporated herein by reference).

                  10.34    Stock Option Agreement with George H. Wells, dated
                           August 26, 1997 (filed as Exhibit 4.8 to the
                           Company's Registration Statement under the Securities
                           act of 1933 on Form S-8, filed with the commission on
                           September 3, 1997, number 0-9607, and incorporated
                           herein by reference.)

                  10.35    Stock Option Agreement with William C. Davis, dated
                           May 7, 1997, memorializing options granted April 15,
                           1995 (filed as Exhibit 4.20 to the Company's
                           Registration Statement under the Securities act of
                           1933 on Form S-8, filed with the commission on
                           September 3, 1997, file number 0-09607, and
                           incorporated herein by reference.)

                  10.36    Stock Option Agreement with George H. Wells, dated
                           May 7, 1997, memorializing options granted April 15,
                           1995 (filed as Exhibit 4.21 to the Company's
                           Registration Statement under the Securities act of
                           1933 on Form S-8, filed with the commission on
                           September 3, 1997, file number 0-09607, and
                           incorporated herein by reference.)

                  10.37    Stock Option Agreement with George H. Wells, Dated
                           August 15, 1995 (filed as Exhibit 4.22 to the
                           Company's Registration Statement under the Securities
                           act of 1933 on Form S-8, filed with the Commission on
                           September 3, 1997, file number 0-9607, and
                           incorporated herein by reference).

                  10.38    Stock Option Agreement with Robert J. Fulton, Dated
                           August 15, 1995 (filed as Exhibit 4.23 to the
                           Company's Registration Statement under the Securities
                           act of 1933 on Form S-8, filed with the Commission on




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<PAGE>   71


                           September 3, 1997, file number 0-9607, and
                           incorporated herein by reference).

                  10.39    Stock Option Agreement with Robert J. Fulton, Dated
                           January 10, 1993 (filed as Exhibit 4.24 to the
                           Company's Registration Statement under the Securities
                           act of 1933 on Form S-8, filed with the Commission on
                           September 3, 1997, file number 0-9607, and
                           incorporated herein by reference).

                  10.40    Model Directors Stock Option Agreement for options
                           dated September 1, 1997 (filed as Exhibit 4.25 to the
                           Company's Registration Statement under the Securities
                           act of 1933 on Form S-8, filed with the Commission on
                           September 3, 1997, file number 0-9607, and
                           incorporated herein by reference).

                  10.41    Loan and Security Agreement dated as of February 25,
                           1999, by and among BankAmerica Business Credit, Inc.
                           as Lender and McInnes Steel Company, MRR-Memphis
                           Forge Company, Erie Bronze & Aluminum Company,
                           Eballoy Glass Products Company, McInnes
                           International, Inc, American Handling, Inc., Northern
                           Steel Company and Micafil, Inc. as Borrowers.

                  10.42    Centrum Industries, Inc. Executive Employees Deferred
                           Compensation Plan (filed herewith).

                  10.43    Centrum Industries, Inc. Directors Deferred
                           Compensation Plan (filed herewith).

                  10.44    Centrum Industries, Inc. Performance Award Plan
                           (filed as Appendix 1 to the Company's Definitive
                           Proxy Statement filed with the Commission on
                           September 24, 1998, file number 0-9607, and
                           incorporated herein by reference).

                  10.45    Centrum Industries, Inc. Employees Stock Option Plan
                           (filed as Appendix 2 to the Company's Definitive
                           Proxy Statement filed with the Commission on
                           September 24, 1998, file number 0-9607, and
                           incorporated herein by reference).

                  10.46    Stock and Option Plan for Directors of Centrum
                           Industries, Inc. (filed as Appendix 3 to the
                           Company's Definitive Proxy Statement filed with the
                           Commission on September 24, 1998, file number 0-9607,
                           and incorporated herein by reference).


                  21       List of Subsidiaries of Centrum Industries, Inc.
                           (filed herewith).

                                       72

<PAGE>   72


                  27       Financial Data Schedules (filed herewith).


(b)  Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter of the fiscal year
ended March 31, 1999.














                                       73
<PAGE>   73





                                   SIGNATURES

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

                                    CENTRUM INDUSTRIES, INC.



                                    By: /s/ Timothy M. Hunter
                                        ----------------------
                                         Timothy M. Hunter
                                         Chief Financial Officer



                                    Date: June 29, 1999





                                       74
<PAGE>   74

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

<TABLE>
<CAPTION>

                  Signature                                                              Date

<S>                                               <C>                              <C>
         /s/ George H. Wells                      Principal                        June 29, 1999
         ----------------------------
         George H. Wells                          Executive
         Chief Executive Officer, Member -        Officer
         Board of Directors

         /s/ William C. Davis                                                      June 29, 1999
         ----------------------------
         William C. Davis
         Member Board of Directors

         /s/ Timothy M. Hunter                    Principal                        June 29, 1999
         ----------------------------
         Timothy M. Hunter                        Financial and Accounting
         Chief Financial Officer                  Officer

         /s/ Robert J. Fulton                                                      June 29, 1999
         ----------------------------
         Robert J. Fulton
         Member  Board of Directors

         /s/ David L. Hart                                                         June 29, 1999
         ----------------------------
         David L. Hart
         Member  Board of Directors

         /s/ Richard C. Klaffky                                                    June 29, 1999
         ----------------------------
         Richard C. Klaffky
         Member  Board of Directors

         /s/ Mervyn H. Manning                                                     June 29, 1999
         ----------------------------
         Mervyn H. Manning
         Member  Board of Directors

         /s/ David R. Schroder                                                     June 29, 1999
         ----------------------------
         David R. Schroder
         Member  Board of Director

         /s/ Thomas E. Seiple                                                      June 29, 1999
         ----------------------------
         Thomas E. Seiple
         Member  Board of Directors
</TABLE>





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