<PAGE>
================================================================================


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549



                                    FORM 10-Q


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



For the quarterly period ended: July 28, 2002    Commission file number: 0-25066



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



         Pennsylvania                                   23-2756709
(State or other jurisdiction of               (IRS Employer Identification No.)
 incorporation or organization)


         22543 Fisher Road
         PO Box 6660
         Watertown, New York                                        13601
 (Address of principal executive offices)                          (Zip Code)


       Registrant's telephone number, including area code: (315)-782-5910




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 [ ]


As of September 9, 2002, 5,874,345 shares of the Registrant's Common Stock, $.01
par value, were outstanding.

================================================================================
<PAGE>



OWOSSO CORPORATION
TABLE OF CONTENTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                             Page
PART I - FINANCIAL INFORMATION:

<S>                                                                                              <C>

         Item 1.           Financial Statements

                           Condensed Consolidated Statements of Operations                       3
                           for the three and nine months ended July 28, 2002 and
                           July 29, 2001 (unaudited)

                           Condensed Consolidated Balance Sheets at                              4
                           July 28, 2002 (unaudited) and October 28, 2001

                           Condensed Consolidated Statements of Cash Flows                       5
                           for the nine months ended July 28, 2002 and
                           July 29, 2001 (unaudited)

                           Notes to Condensed Consolidated Financial Statements                  6
                           (unaudited)

         Item 2.           Management's Discussion and Analysis of                               13
                           Financial Condition and Results of Operations

         Item 3.           Quantitative and Qualitative Disclosures about Market Risks           19

PART II - OTHER INFORMATION:

         Item 2.           Changes in Securities and Use of Proceeds                             20

         Item 3.           Defaults Upon Senior Securities                                       20

         Item 6.           Exhibits and Reports on Form 8-K                                      20
</TABLE>


                                        2
<PAGE>

OWOSSO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                Three Months Ended                      Nine Months Ended
                                                         --------------------------------        -------------------------------
                                                           July 28,           July 29,            July 28,            July 29,
                                                             2002               2001                2002                2001
                                                         -------------       ------------        ------------        ------------

<S>                                                      <C>                 <C>                 <C>                 <C>
Net sales                                                $  11,415,000       $ 13,813,000        $ 31,515,000        $ 42,374,000
Cost of products sold                                        9,743,000         10,749,000          26,913,000          33,782,000
                                                         -------------       ------------        ------------        ------------
Gross profit                                                 1,672,000          3,064,000           4,602,000           8,592,000
Selling, general and administrative expenses                 2,826,000          2,650,000           6,746,000           7,721,000
Write-down of net assets held for sale                               -          1,100,000                               1,100,000
                                                         -------------       ------------        ------------        ------------
Loss from operations                                        (1,154,000)          (686,000)         (2,144,000)           (229,000)
Interest expense                                               389,000            989,000           1,374,000           3,410,000
Other income                                                         -             (3,000)           (113,000)           (108,000)
                                                         -------------       ------------        ------------        ------------
Loss from continuing operations
     before income taxes                                    (1,543,000)        (1,672,000)         (3,405,000)         (3,531,000)
Income tax benefit                                            (424,000)          (566,000)         (5,182,000)         (1,135,000)
                                                         -------------       ------------        ------------        ------------
Income (loss) from continuing operations                    (1,119,000)        (1,106,000)          1,777,000          (2,396,000)
Income (loss) from discontinued operations, net of
     income taxes                                                    -            141,000                              (1,221,000)
                                                         -------------       ------------        ------------        ------------
Income (loss) before cumulative effect
     of accounting change                                   (1,119,000)          (965,000)          1,777,000          (3,617,000)
Cumulative effect of accounting change
     (net of tax of $34,000)                                         -                  -                                 (67,000)
                                                         -------------       ------------        ------------        ------------
Net income (loss)                                           (1,119,000)          (965,000)          1,777,000          (3,684,000)
Dividends and accretion on preferred stock                    (338,000)          (330,000)         (1,009,000)           (984,000)
                                                         -------------       ------------        ------------        ------------
Net income (loss) available for common shareholders      $  (1,457,000)      $ (1,295,000)       $    768,000        $ (4,668,000)
                                                         =============       ============        ============        ============
Basic and diluted income (loss) per common share:
     Income (loss) from continuing operations            $       (0.25)      $      (0.24)       $       0.13        $      (0.58)
     Income (loss) from discontinued operations                      -               0.02                   -               (0.21)
     Cumulative effect of account change, net                        -                  -                   -               (0.01)
                                                         -------------       ------------        ------------        ------------
Net income (loss) per share                              $       (0.25)      $      (0.22)       $       0.13        $      (0.80)
                                                         =============       ============        ============        ============
Weighted average number of
     common shares outstanding
          Basic                                              5,874,000          5,865,000           5,874,000           5,863,000
                                                         =============       ============        ============        ============
          Diluted                                            5,874,000          5,865,000           5,874,000           5,863,000
                                                         =============       ============        ============        ============

</TABLE>
See notes to condensed consolidated financial statements.

                                       3
<PAGE>

OWOSSO CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                                   July 28,             October 28,
                                                                                     2002                  2001
                                                                                  (Unaudited)           (See Note)
                                                                                -----------------     ----------------
<S>                                                                                  <C>                   <C>
ASSETS
CURRENT ASSETS:
       Cash and cash equivalents                                                  $    248,000          $    200,000
       Receivables, net                                                              3,084,000             6,061,000
       Inventories, net                                                              1,893,000             4,815,000
       Net assets held for sale                                                      6,016,000             1,181,000
       Prepaid expenses and other                                                      819,000             1,446,000
       Tax refund receivable                                                                               1,696,000
       Deferred taxes                                                                  393,000             2,453,000
                                                                                  ------------          ------------
            Total current assets                                                    12,453,000            17,852,000
PROPERTY, PLANT AND EQUIPMENT, NET                                                   6,072,000            11,874,000
GOODWILL, NET                                                                        8,894,000             9,395,000
OTHER INTANGIBLE ASSETS, NET                                                         5,317,000             5,614,000
NET ASSETS OF DISCONTINUED OPERATIONS HELD FOR SALE                                  1,078,000             1,078,000
OTHER ASSETS                                                                           142,000               581,000
                                                                                  ------------          ------------
TOTAL ASSETS                                                                      $ 33,956,000          $ 46,394,000
                                                                                  ============          ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
       Accounts payable - trade                                                   $  2,144,000          $  3,350,000
       Accrued expenses                                                              1,556,000             4,823,000
       Related party debt                                                                    -               400,000
       Current portion of long-term debt                                            19,304,000            23,684,000
                                                                                  ------------          ------------
            Total current liabilities                                               23,004,000            32,257,000
LONG-TERM DEBT, LESS CURRENT PORTION                                                 5,257,000             5,520,000
COMMON STOCK PUT OPTION                                                                600,000               600,000
POSTRETIREMENT BENEFITS AND OTHER LIABILITIES                                          405,000             3,532,000
DEFERRED TAXES                                                                       1,194,000             2,766,000
ACCRUED PREFERRED STOCK DIVIDENDS                                                    2,325,000             1,316,000
SHAREHOLDERS' EQUITY                                                                 1,171,000               403,000
                                                                                  ------------          ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                        $ 33,956,000          $ 46,394,000
                                                                                  ============          ============
</TABLE>

Note: the balance sheet at October 28, 2001 has been condensed from the audited
financial statements at that date

See notes to condensed consolidated financial statements.


                                       4
<PAGE>

OWOSSO CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>


                                                                                             Nine Months Ended
                                                                                     ------------------------------------
                                                                                         July 28,             July 29,
                                                                                           2002                 2001
                                                                                     ----------------       -------------
<S>                                                                                   <C>                   <C>
OPERATING ACTIVITIES:
       Net income (loss)                                                             $  1,777,000           $ (3,684,000)
       Loss from discontinued operations                                                                       1,221,000
       Adjustments to reconcile net income (loss) to cash
            provided by (used in) operating activities:
            Depreciation                                                                1,967,000              2,061,000
            Amortization                                                                  802,000                798,000
            Other                                                                         313,000                317,000
            Changes in operating assets and liabilities                                   130,000                 14,000
                                                                                     ------------           ------------
       Net cash provided by continuing operations                                       4,989,000                727,000
       Net cash used in discontinued operations                                                               (4,956,000)
                                                                                     ------------           ------------
       Net cash provided by (used in) operating activities                              4,989,000             (4,229,000)
                                                                                     ------------           ------------
INVESTING ACTIVITIES:
       Proceeds from the sale of businesses                                                                    5,996,000
       Purchases of property, plant and equipment                                        (293,000)              (576,000)
       Other                                                                             (369,000)             1,336,000
                                                                                     ------------           ------------
       Net cash provided by (used in) continuing operations                              (662,000)             6,756,000
       Net cash provided by discontinued operations                                                           12,405,000
                                                                                     ------------           ------------
       Net cash provided by (used in) investing activities                               (662,000)            19,161,000
                                                                                     ------------           ------------
FINANCING ACTIVITIES:
       Net payments on revolving credit agreement                                      (4,400,000)           (14,150,000)
       Payments on long-term debt                                                        (242,000)              (406,000)
       Payments on related party debt                                                    (400,000)              (375,000)
       Dividends paid                                                                                           (142,000)
       Other                                                                                                     142,000
                                                                                     ------------           ------------
       Net cash used in continuing operations                                          (5,042,000)           (14,931,000)
       Net cash provided by (used in) discontinued operations                             763,000               (185,000)
                                                                                     ------------           ------------
       Net cash used in financing activities                                           (4,279,000)           (15,116,000)
                                                                                     ------------           ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS                                                  48,000               (184,000)
CASH AND CASH EQUIVALENTS, BEGINNING                                                      200,000                491,000
                                                                                     ------------           ------------
CASH AND CASH EQUIVALENTS, ENDING                                                    $    248,000           $    307,000
                                                                                     ============           ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
       Interest paid                                                                 $  2,299,000           $  2,718,000
                                                                                     ============           ============
       Taxes paid (refunded)                                                         $ (6,392,000)          $    226,000
                                                                                     ============           ============
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
     FINANCING ACTIVITIES:
       Dividends payable                                                             $  2,325,000              $ 984,000
                                                                                     ============           ============
</TABLE>


See notes to condensed consolidated financial statements.



                                       5
<PAGE>

OWOSSO CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
--------------------------------------------------------------------------------

1.       NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         The Company - The condensed consolidated financial statements represent
         the consolidated financial position, results of operations and cash
         flows of Owosso Corporation and its subsidiaries (the "Company"). The
         Company currently operates in only one business segment.

         The Motors segment, which includes Stature Electric, Inc. ("Stature"),
         Motor Products - Owosso Corporation ("Motor Products"), and Motor
         Products Ohio Corporation ("MP-Ohio"), manufactures fractional and
         integral horsepower motors, gear motors, and motor part sets.
         Significant markets for the Motors segment include commercial products
         and equipment, healthcare, recreation and non-automotive
         transportation. The Company sells its motors primarily throughout North
         America and also in Europe.

         The Company's former Other segment consisted of Cramer Company
         ("Cramer"). The Company completed the sale of the assets associated
         with the timer and switch line of Cramer on December 4, 2000 and
         disposed of substantially all of the remaining Cramer assets in a
         separate transaction completed on September 23, 2001. The Company
         intends to dispose of the remaining Cramer asset in fiscal 2002.
         Accordingly, such asset has been included in net assets held for sale
         in the condensed consolidated balance sheets.

         Discontinued operations included the operations of Sooner Trailer
         Manufacturing Company ("Sooner Trailer") and the former Coils segment
         which consisted of Astro Air Coils, Inc. ("Astro Air"), Snowmax
         Incorporated ("Snowmax") and Astro Air UK, LTD. ("Astro UK"). The
         Company completed the sale of Sooner Trailer in January 2001. The
         Company's interest in Astro UK was sold on May 9, 2001. Astro Air and
         Snowmax were sold on October 26, 2001. The Company intends to dispose
         of the remaining Coil asset as soon as practicable. Accordingly, such
         asset has been included in the net assets of discontinued operations
         held for sale in the condensed consolidated balance sheets.

         Financial Statements - The condensed consolidated balance sheet as of
         July 28, 2002, the condensed consolidated statements of operations for
         the three and nine months ended July 28, 2002 and July 29, 2001 and
         cash flows for nine months ending July 28, 2002 and July 29, 2001 have
         been prepared by the Company, without audit. In the opinion of
         management, all adjustments considered necessary to present fairly the
         financial position, results of operations and cash flows as of July 28,
         2002 and for all periods presented have been made. Certain information
         and footnote disclosures normally included in financial statements
         prepared in accordance with generally accepted accounting principles
         have been condensed or omitted. These financial statements should be
         read in conjunction with the consolidated financial statements and
         notes thereto included in the Company's October 28, 2001 Annual Report
         on Form 10-K.

         Reclassifications - Certain reclassifications were made to the 2001
         condensed consolidated financial statements to conform to the 2002
         classifications.

                                       6
<PAGE>

         Earnings (loss) per share - Basic earnings per common share is computed
         by dividing net earnings (loss) available for common stockholders (the
         numerator) by the weighted average number of common shares outstanding
         during each period (the denominator). The computation of diluted
         earnings per common share is similar to that of basic earnings per
         common share, except that the denominator is increased by the dilutive
         effect of stock options outstanding, computed using the treasury stock
         method.

         Comprehensive income - The Company presents comprehensive income (loss)
         as a component of shareholders' equity. The components of comprehensive
         income are as follows:


<TABLE>
<CAPTION>
                                                     Three Months Ended                    Nine Months Ended
                                                  ----------------------------------------------------------------
                                                  July 28,         July 29,             July 28,        July 29,
                                                    2002             2001                 2002            2001
                                                  --------         --------             --------        --------
<S>                                              <C>              <C>                 <C>             <C>
         Net income (loss)                       $ (1,119,000)    $   (965,000)       $  1,777,000    $ (3,684,000)
         Foreign currency translation                                  194,000                             143,000
                                                 ------------     ------------        ------------    ------------
         Total comprehensive income (loss)       $ (1,119,000)    $   (771,000)       $  1,777,000    $ (3,541,000)
                                                 ============     ============        ============    ============
</TABLE>


         New Accounting Pronouncements - In July 2001, the Financial Accounting
         Standards Board issued SFAS No. 141 "Business Combinations" (SFAS No.
         141") and SFAS No. 142 "Goodwill and Other Intangible Assets" ("SFAS
         No. 142"). SFAS No. 141 requires business combinations initiated after
         June 30, 2001 to be accounted for using the purchase method of
         accounting, and broadens the criteria for recording intangible assets
         separate from goodwill. Recorded goodwill and intangibles will be
         evaluated against this new criteria and may result in certain
         intangibles being reclassified as goodwill, or alternatively, amounts
         initially recorded as goodwill may be separately identified and
         recognized apart from goodwill. SFAS No. 142 requires the use of a
         nonamortization approach to account for purchased goodwill and certain
         intangibles. Under a nonamortization approach, goodwill and certain
         intangibles will not be amortized into results of operations but,
         instead, would be reviewed for impairment and written down and charged
         to results of operations only in the periods in which the recorded
         value of goodwill and certain intangibles is more than its fair value.
         The provisions of each statement which apply to goodwill and intangible
         assets acquired prior to June 30, 2001 are required to be adopted for
         the fiscal years beginning after December 15, 2001. The Company has not
         yet completed its analysis of the effects of adopting these statements
         on its consolidated financial position or results of operations.

         In August 2001, the Financial Accounting Standards Board issued SFAS
         No. 144, "Accounting for the Impairment or Disposal of Long-Lived
         Assets" ("SFAS No. 144"). SFAS No. 144, which addresses financial
         accounting and reporting for the impairment of long-lived assets and
         for long-lived assets to be disposed of, supercedes SFAS No. 121 and is
         effective for fiscal years beginning after December 15, 2001. The
         Company has not yet completed its analysis of the effects of adopting
         the statement on its consolidated financial position or results of
         operations.

                                       7


<PAGE>
         In April 2002, the Financial Accounting Standards Board issued SFAS
         No.145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of
         FASB Statement No. 13, and Technical Corrections". This Statement
         rescinds FASB Statement No. 4, Reporting Gains and Losses from
         Extinguishment of Debt, and an amendment of that Statement, FASB
         Statement No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund
         Requirements. This Statement also rescinds FASB Statement No. 44,
         Accounting for Intangible Assets of Motor Carriers. This Statement
         amends FASB Statement No. 13, Accounting for Leases, to eliminate an
         inconsistency between the required accounting for sale-leaseback
         transactions and the required accounting for certain lease
         modifications that have economic effects that are similar to
         sale-leaseback transactions. This Statement also amends other existing
         authoritative pronouncements to make various technical corrections,
         clarify meanings, or describe their applicability under changed
         conditions. The Company has not yet completed its analysis of the
         effects of adopting this statement on its consolidated financial
         position or results of operation.

         In June 2002, the Financial Accounting Standards Board issued SFAS
         No.146 "Accounting for Costs Associated with Exit or Disposal
         Activities". This Statement addresses financial accounting and
         reporting for costs associated with exit or disposal activities and
         nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability
         Recognition for Certain Employee Termination Benefits and Other Costs
         to Exit an Activity (including Certain Costs Incurred in a
         Restructuring)." The Company has not yet completed its analysis of the
         effects of adopting this statement on its consolidated financial
         position or results of operation.


2.       LIQUIDITY AND FINANCING

         The Company has experienced a significant downturn in its operating
         results over the past two years and has been unable to remain in
         compliance with its debt covenants under its revolving credit facility.
         In February 2001, the Company entered into an amendment to its
         revolving credit facility agreement, wherein the lenders agreed to
         forbear from exercising their rights and remedies under the facility in
         connection with such non-compliance until February 15, 2002, at which
         time the facility was to mature. As further disclosed in Note 6 "Long
         Term Debt", the Company entered into a further amendment to the
         facility in February 2002, which extended the maturity date to December
         31, 2002. The amendment calls for further reductions in the outstanding
         balance based on expected future asset sales and increases the interest
         rate charged. The accompanying condensed consolidated financial
         statements have been prepared on a going concern basis of accounting
         and do not reflect any adjustments that might result if the Company is
         unable to continue as a going concern. The Company's recurring losses
         from operations, working capital deficiencies, default under its debt
         agreements and inability to comply with debt covenants raise
         substantial doubt about its ability to continue as a going concern.

         Management of the Company has taken a series of steps intended to
         stabilize and improve the operating results including the
         implementation of cost and personnel reductions at the corporate office
         throughout fiscal 2001 and reductions in fixed costs at the remaining
         operating units, commensurate with reductions in sales volumes.
         Effective February 15, 2002, the corporate function was merged and
         absorbed by Stature. In order to reduce its obligation under its
         revolving credit facility, the Company completed the sale of Dura-Bond
         Bearing Company ("Dura-Bond") and Sooner Trailer, the sale of
         substantially all of the assets of Cramer and substantially all the
         assets of the Company's Coils segment. Subsequent to the third quarter,
         the Company completed the sale of all of the outstanding stock of Motor
         Products and MP-Ohio , which comprise a significant portion of Owosso's
         non-gearmotor business, to a subsidiary of Hathaway Corporation
         (Nasdaq: HATH) for $11.5 million in cash and a $300,000 note guaranteed
         by Hathaway Corporation. Net proceeds from these sales were utilized to
         reduce the Company's revolving credit facility. Management intends to
         dispose of the real estate at the former Cramer and Snowmax
         subsidiaries as soon as practicable and net proceeds, which are
         expected to be between $1.5 and $2.5 million, will also be utilized to
         reduce the Company's revolving credit facility. Management believes
         that, along with the sale of assets, available cash and cash
         equivalents, cash flows from operations and available borrowings under
         the Company's revolving credit facility will be sufficient to fund the
         Company's operating activities, investing activities and debt
         maturities for fiscal 2002. As of July 28, 2002, the Company's
         outstanding revolving credit facility maturing in December 2002 is
         $17.6 million and is classified as current on the balance sheet. At the
         end of the third quarter of 2002, the Company was not in compliance
         with its debt covenant requirements, however, the Company has entered
         into a thirteenth amendment which anticipates that the Company and its
         lenders will agree upon replacement debt covenants. It is management's
         intent to refinance the Company's revolving credit facility prior to
         its maturity in December 2002. However, there can be no assurance that
         management's plans will be successfully executed.

                                       8

<PAGE>


3.       DISCONTINUED OPERATIONS

         Sooner Trailer- On January 24, 2001, the Company completed the sale of
         the stock of Sooner Trailer to the McCasland Investment Group and
         certain members of Sooner Trailer's management for cash of $11,500,000,
         subject to certain post-closing adjustments based on changes in working
         capital, plus the assumption of debt of approximately $670,000. In May
         2001, the Company received approximately $2,000,000 related to such
         post-closing adjustments. In connection with the anticipated sale, the
         Company recognized a loss of $8,600,000 in the fourth quarter of 2000
         to adjust the carrying value of Sooner Trailer's assets to their
         estimated fair value based on an expected sales price. No additional
         gain or loss was recorded upon completion of the sale.

         Coils Segment - On October 26, 2001, the Company completed the sale of
         the assets of its Coils segment, which included Astro Air and Snowmax
         (together, the "Coils Subsidiaries"). The sale of the Coils
         Subsidiaries was effectuated pursuant to an Asset Purchase Agreement,
         dated as of October 26, 2001, by and among the Coils Subsidiaries,
         Astro Air, Inc. (the "Buyer"), and Rex Dacus, the manager of the Coils
         segment and the person from whom the Company acquired the assets and
         operations of Astro Air Coils, Inc. in 1998. Proceeds from the sale
         were $5,600,000 of cash and the assumption of approximately $3,700,000
         of liabilities. The Company recorded a pretax charge of $9,340,000
         related to this sale in the fourth quarter of 2001.

         On May 9, 2001, the Company completed the sale of substantially all of
         the assets of Astro UK to ACR Heat Transfer, LTD., of Norfolk, England
         for cash of (pound)450,000 (approximately $643,000). Based upon the
         terms of the sale, the Company recorded, in the second quarter of 2001,
         a pretax charge of $700,000 to adjust the carrying value of the
         Company's portion of Astro UK's assets to their estimated realizable
         value. No additional gain or loss was recorded upon completion of the
         sale.

         Revenues from discontinued operations, Sooner Trailer and the Coil
         Group were $8,183,000 and $28,645,000 for the three and nine months
         July 29, 2001, respectively.

         At July 28, 2002 and October 28, 2001, net assets of discontinued
         operations held for sale were $1,078,000 and represent the carrying
         value of the Snowmax building, the only remaining Coil segment asset.

4.       NET ASSETS HELD FOR SALE

         On December 4, 2000, the Company completed the sale of the assets
         associated with the timer and switch line of Cramer to Capewell
         Components, LLC of South Windsor, Connecticut for cash of approximately
         $2,000,000, plus the assumption of approximately $400,000 in
         liabilities. In connection with the sale of the timer and switch line
         and the anticipated sale of the remainder of the assets of Cramer, the
         Company recorded, in the fourth quarter of fiscal 2000, a pre-tax
         charge of $1,600,000 to adjust the carrying value of Cramer's assets to
         their estimated fair value, based upon an estimated sales price of the
         assets. On September 23, 2001, the company sold substantially all of
         the remaining assets of Cramer to the Chestnut Group of Wayne,
         Pennsylvania for cash proceeds of $565,000, plus the assumption of
         $317,000 in liabilities. In connection with such sale, the Company
         recorded a further adjustment to the carrying value of the Cramer
         assets resulting in a pre-tax charge of $1,100,000, recorded in the
         third fiscal quarter of 2001. In addition to the Cramer real estate,
         which has a carrying value of $1,070,000, the net assets of Motor
         Products and MP-OH (collectively "Motor Assets") are included in the
         net assets held for sale in the condensed consolidated balance sheets.
         The combined value of the Motor Assets were $4,946,000 as of July 28,
         2002.

                                       9


<PAGE>


5.       INVENTORIES


                                             July 28,             October 28,
                                               2002                  2001
                                             --------             -----------

         Raw materials and purchased parts  $  652,000            $1,858,000
         Work in process                     1,159,000             1,662,000
         Finished goods                         82,000             1,295,000
                                            ----------            ----------

         Total                              $1,893,000            $4,815,000
                                            ==========            ==========


6.       LONG-TERM DEBT

         At October 29, 2000, the Company was not in compliance with covenants
         under its revolving credit facility. As a result, in February 2001, the
         Company entered into an amendment to its revolving credit facility,
         wherein the lenders agreed to forbear from exercising their rights and
         remedies under the facility in connection with such non-compliance
         until February 15, 2002, at which time the facility was to mature. The
         amendment to the revolving credit facility, which has been further
         amended since February 2001, called for reductions in the outstanding
         balance during calendar 2001, modified the interest rates charged and
         required additional collateral and reporting requirements. The
         amendment also required the suspension of principal and interest
         payments on subordinated debt, with an aggregate outstanding balance of
         $2.0 million at July 28, 2002, and prohibits the payment of preferred
         or common stock dividends. In addition, the amendment required the
         Company to maintain minimum operating profits. Beginning in August
         2001, the Company was not in compliance with the minimum operating
         profit covenant. In February 2002, the Company entered into a further
         amendment to the facility which extends the maturity date to December
         31, 2002. This amendment calls for further reductions to the
         outstanding balance based on expected future asset sales. In addition,
         the interest rate was modified so that borrowings under the facility
         are charged interest of the Prime Rate plus 1.75% through June 30,
         2002. Beginning July 1, 2002, borrowings under the facility will be
         charged interest of the Prime Rate plus 2.75%. At July 28, 2002 the
         Prime Rate was 4.75%. At July 28, 2002, $17,600,000 was outstanding
         under the facility, classified as current on the balance sheet, and
         $2,109,000 was available for additional borrowing. At the end of the
         third quarter of 2002, the Company was not in compliance with its debt
         covenant requirements, however, the Company has entered into a
         thirteenth amendment which anticipates that the Company and its lenders
         will agree upon replacement debt covenants. It is management's intent
         to refinance the Company's revolving credit facility prior to its
         maturity in December 2002. However, there can be no assurance that
         management's plans will be successfully executed.

         Repayment of the Industrial Revenue Bond of the Company's Stature
         subsidiary, $4,850,000 as of July 28, 2002, has been guaranteed by the
         Company.

                                       10


<PAGE>


         Derivative Interest Rate Contracts - The Company has two interest rate
         swap agreements, each with a $7,500,000 notional amount, that matured
         in July 2002. In addition, the Company has an interest rate swap
         agreement with one of its banks with a notional amount of $4,850,000.
         The agreement requires the Company to make quarterly fixed payments on
         the notional amount at 4.22% through October 2003 in exchange for
         receiving payments at the BMA Municipal Swap Index (1.27% at July 28,
         2002). The Company entered into these interest rate swap agreements to
         change the fixed/variable interest rate mix of its debt portfolio to
         reduce the Company's aggregate risk to movements in interest rates.
         Such swap agreements do not meet the stringent requirements for hedge
         accounting under SFAS No. 133. Accordingly, changes in the fair value
         of such agreements are recorded in the Consolidated Statement of
         Operations as a component of interest expense. The fair market value of
         the swap agreement liability decreased to $143,000 at July 28, 2002,
         resulting in a credit to interest income of $556,000 for the nine
         months ended July 28, 2002. The fair market value of the swap agreement
         liability increased to $635,000 at July 29, 2001, resulting in a charge
         to interest expense of $533,000.

7.       COMMITMENTS AND CONTINGENCIES

         The Company is subject to federal, state and local environmental
         regulations with respect to its operations. The Company believes that
         it is operating in substantial compliance with applicable environmental
         regulations. Manufacturing and other operations at the Company's
         various facilities may result, and may have resulted, in the discharge
         and release of hazardous substances and waste from time to time. The
         Company routinely responds to such incidents as deemed appropriate
         pursuant to applicable federal, state and local environmental
         regulations.

         The Company is a party to a consent decree with the State of
         Connecticut pursuant to which it has agreed to complete its
         environmental investigation of the site on which its Cramer facility
         was previously located and conduct any remedial measures which may be
         required. Based upon the amounts recorded as liabilities, the Company
         does not believe that the ultimate resolution of this matter will have
         a material adverse effect on the consolidated financial results of the
         Company.

         In addition to the matters reported herein, the Company is involved in
         litigation dealing with a number of aspects of its business operations.
         The Company believes that settlement of such litigation will not have a
         material adverse effect on its consolidated financial position or
         results of operations.

                                       11


<PAGE>


8.        SEGMENT INFORMATION


<TABLE>
<CAPTION>
                                                     Three Months Ended                    Nine Months Ended
                                                  ----------------------------------------------------------------
                                                  July 28,         July 29,             July 28,        July 29,
                                                    2002             2001                 2002            2001
                                                  --------         --------             --------        --------
<S>                                              <C>              <C>                 <C>             <C>
         Net sales:
         Motors                                  $11,415,000     $13,105,000          $31,515,000     $39,831,000
         Other                                                       708,000                            2,543,000
                                                 -----------     -----------          -----------     -----------
            Total net sales                      $11,415,000     $13,813,000          $31,515,000     $42,374,000
                                                 -----------     -----------          -----------     -----------
         Income (loss) from operations:
         Motors                                  $   386,000     $ 1,690,000          $   710,000     $ 4,365,000
         Other                                                    (1,178,000)              44,000      (1,452,000)
         Corporate(1)                             (1,540,000)     (1,198,000)          (2,898,000)     (3,142,000)
                                                 -----------     -----------          -----------     -----------

            Total income (loss) from operations  $(1,540,000)    $  (686,000)         $(2,144,000)    $  (229,000)
                                                 ===========     ===========          ===========     ===========
</TABLE>

         (1)  Includes unallocated corporate expenses, primarily salaries and
              benefits, information technology and other administrative
              expenses.

         The Company derives substantially all of its revenues from within the
         United States. Identifiable assets of the segments are not materially
         different from amounts disclosed in the Company's 2001 Annual Report on
         Form 10-K. Information about interest expense, other income and income
         taxes is not provided on a segment level. The accounting policies of
         the segments are the same as those described in the summary of
         significant accounting policies and in the Company's 2001 Annual Report
         on Form 10-K.

9.       INCOME TAX REFUND

         The Company recorded an income tax benefit in the second quarter of
         2002 of $4.8 million as a result of recent changes in federal tax laws,
         which allow the carryback of net operating losses for five years. The
         Company received $4.6 million of the refund in the second quarter and
         the balance was received during the third quarter. All of the refund
         received was utilized to pay down the Company's revolving credit
         facility.

10.      SUBSEQUENT EVENT

         On July 9, 2002, the Company announced it signed a definitive agreement
         to sell the stock of its Motor Products and MP-OH subsidiaries, which
         comprise a significant portion of the Company's non-gearmotor business,
         to a subsidiary of Hathaway Corporation (Nasdaq: HATH) for $11.5
         million in cash and a $300,000 note guaranteed by Hathaway Corporation.
         On July 30, 2002, the Company completed this transaction. Net proceeds
         of $10.7 million from the sale, after payment of certain transaction
         costs, were utilized to reduce outstanding bank debt. Owosso expects to
         recognize a pretax gain, net of expenses, on the sale of approximately
         $6.0 million, and that gain from the sale will be substantially
         sheltered by net operating losses.


                                       12


<PAGE>


         ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

         The following discussion addresses the financial condition of the
         Company as of July 28, 2002 and the results of operations for the three
         and nine months ended July 28, 2002 and July 29, 2001. This discussion
         should be read in conjunction with the financial statements included
         elsewhere herein and the Management's Discussion and Analysis and
         Financial Statement sections of the Company's Annual Report on Form
         10-K to which the reader is directed for additional information.

         General

         In 1998, the Company formulated a long-term plan to concentrate on
         value-added components for industry. In connection with its
         implementation of that plan, the Company began a series of divestitures
         beginning with the sale of the four businesses comprising its former
         Agricultural Equipment segment. The sale of the last of those
         businesses was completed in January 2001 with the divestiture of Sooner
         Trailer Manufacturing Company. During that time, however, the Company
         experienced a significant downturn in its operating results and at the
         end of fiscal 2000 was out of compliance with covenants under its
         revolving credit facility.

         In February 2001, the Company entered into an amendment to its
         revolving credit facility agreement, wherein the lenders agreed to
         forbear from exercising their rights and remedies under the facility in
         connection with such non-compliance until February 15, 2002, at which
         time the facility was to mature. In February 2002, the Company entered
         into a further amendment to the facility which extends the maturity
         date to December 31, 2002. The amendment calls for further reductions
         in the outstanding balance, based on expected future asset sales, and
         increases the interest rate charged. The Company's recurring losses
         from operations, working capital deficiencies, default under its debt
         agreements and inability to comply with debt covenants raise
         substantial doubt about its ability to continue as a going concern.

         Management of the Company has taken a series of steps intended to
         stabilize and improve the operating results including the
         implementation of cost and personnel reductions at the corporate office
         throughout fiscal 2001 and reductions in fixed costs at the remaining
         operating units, commensurate with reductions in sales volumes.
         Effective February 15, 2002, the corporate function was merged and
         absorbed by Stature. In order to reduce its obligation under its
         revolving credit facility, the Company completed the sale of Dura-Bond
         Bearing Company ("Dura-Bond") and Sooner Trailer, the sale of
         substantially all of the assets of Cramer and substantially all the
         assets of the Company's Coils segment. Subsequent to the third quarter,
         the Company completed the sale of all of the outstanding stock of Motor
         Products and MP-Ohio , which comprise a significant portion of Owosso's
         non-gearmotor business, to a subsidiary of Hathaway Corporation
         (Nasdaq: HATH) for $11.5 million in cash and a $300,000 note guaranteed
         by Hathaway Corporation. Net proceeds from these sales were utilized to
         reduce the Company's revolving credit facility. Management intends to
         dispose of the real estate at the former Cramer and Snowmax
         subsidiaries as soon as practical and net proceeds, which are expected
         to be between $1.5 and $2.5 million, will also be utilized to reduce
         the Company's revolving credit facility. Management believes that,
         along with the sale of assets, available cash and cash equivalents,
         cash flows from operations and available borrowings under the Company's
         revolving credit facility, will be sufficient to fund the Company's
         operating activities, investing activities and debt maturities for
         fiscal 2002. At the end of the third quarter of 2002, the Company was
         not in compliance with its debt covenant requirements, however, the
         Company has entered into a thirteenth amendment which anticipates that
         the Company and its lenders will agree upon replacement debt covenants.
         It is management's intent to refinance the Company's revolving credit
         facility prior to its maturity in December 2002. However, there can be
         no assurance that management's plans will be successfully executed.

                                       13


<PAGE>


         Three months ended July 28, 2002 compared to three months ended July
         29, 2001

         Net sales. Net sales for the third quarter of 2002 decreased 17.4%, or
         $2.4 million, to $11.4 million, as compared to net sales of $13.8
         million in the prior year quarter. Net sales from Motors, the Company's
         only remaining segment, decreased 12.9% to $11.4 million in 2002, from
         $13.1 million in 2001. Although improved over the first quarter of
         fiscal 2002, the general economic slowdown continued to effect the
         Company's primary markets, particularly the heavy truck and
         recreational vehicle markets. Pricing pressures and increased Pacific
         Rim competition in the healthcare market also continues to adversely
         affect the Company's results. The quarter results also include the
         effect of disposing of Cramer in 2001, which was included in the
         Company's Other segment. Sales attributable to Cramer were $708,000 in
         the third quarter of 2001.

         Loss from operations. For the third quarter of fiscal 2002, the Company
         reported a loss from operations of $1,154,000 as compared to loss from
         operations of $686,000 in the prior year third quarter. The Motors
         segment reported income from operations of $386,000, or 3.4% of net
         sales, in the third quarter of 2002, as compared to $1.7 million, or
         12.9% of net sales, in the prior year quarter. These results reflect
         decreased sales volume and decreased margins caused by price pressures
         and changes in product mix, as well as the under absorption of overhead
         costs, partially offset by a 15.1%, or $230,000, decrease in selling,
         general and administration expenses.

         In April 2002, union employees of the Company's Motor Products
         subsidiary agreed to modify their collective bargaining agreement,
         allowing a two-tiered compensation and benefits arrangement. In July
         2002, the Company closed its MP - Ohio facility and consolidating the
         production from that facility to the Motor Products facility located in
         Michigan. A one-time cost related to the move of approximately $200,000
         was recorded in the third quarter of 2002.

         Corporate expenses included in selling, general and administrative
         costs were $1,540,000 in the third quarter of 2002, as compared to
         $977,000 in the prior year third quarter. This increase primarily
         reflects the increase of the expense estimate of outstanding workman's
         compensation claims, increased professional fees, other miscellaneous
         expenses, less reductions in personnel at the corporate office.

         Interest expense. Interest expense was $389,000 for the third quarter
         of fiscal 2002, as compared to $989,000 in the prior year quarter. The
         current year quarter includes income of $151,000 resulting from a
         decrease in the fair market value of the Company's interest rate swap
         liability. The prior year quarter includes interest expense of $81,000,
         resulting from an increase in the fair market value of the Company's
         interest rate swap liability. These amounts were recorded in accordance
         with SFAS 133. Exclusive of the effects of interest rate swap
         agreements, interest expense would have been $540,000 for the third
         quarter of 2002, as compared to $908,000 in the prior year quarter.
         Interest expense decreased primarily as a result of lower debt levels.

         Loss from discontinued operations. Discontinued operations represent
         the operations of Sooner Trailer, which was sold in January 2001, and
         the Coils segment, which included Astro Air Coils, Inc. ("Astro Air"),
         Snowmax, and Astro Air UK, LTD. ("Astro UK"). Astro UK was sold in May
         2001. Astro Air and Snowmax were sold in October 2001.

         For the third quarter of 2001, the Company recorded a loss from
         discontinued operations of $53,000 (net of a tax benefit of $20,000).
         Revenues from discontinued operations were $8.2 million.

                                       14


<PAGE>


         Net income (loss) available for common shareholders.

         Net loss available for common shareholders was $1.5 million, or $.25
         per share, in the third quarter of fiscal 2002, as compared to a net
         loss of $1.3 million, or $.22 per share, in the prior year quarter.
         Income or loss available for common shareholders is calculated by
         subtracting dividends on preferred stock of $338,000 and $330,000 for
         2002 and 2001, respectively.

         Nine months ended July 28, 2002 compared to nine months ended July 29,
         2001

         Net sales. Net sales for the first nine months of 2002 decreased 25.6%,
         or $10.9 million, to $31.5 million, as compared to net sales of $42.4
         million in the prior year. Net sales from Motors, the Company's only
         remaining segment, decreased 20.9% to $31.5 million in 2002, from $39.8
         million in 2001, as a result of both price reduction and the general
         economic slowdown. These results also include the effect of disposing
         of Cramer in 2001, and which was included in the Company's Other
         segment. Sales attributable to Cramer were $2.6 million in the first
         nine months of 2001.

         Loss from operations. For the first nine months of 2002, the Company
         reported a loss from operations of $2,144,000 as compared to loss from
         operations of $229,000 in the prior year period. The Motors segment
         reported income from operations of $710,000, or 2.3% of net sales, in
         2002, as compared to $4.4 million, or 11.0% of net sales, in the prior
         year period. These results reflect decreased sales volume and decreased
         margins caused by price pressures and changes in product mix, as well
         as the under absorption of overhead costs, partially offset by a
         $409,000 or 9.6% reduction in selling, general and administrative
         expenses.

         In April 2002, union employees of the Company's Motor Products
         subsidiary agreed to modify their collective bargaining agreement,
         allowing a two-tiered compensation and benefits arrangement. In July
         2002, the Company closed its MP - Ohio facility and consolidating the
         production from that facility to the Motor Products facility located in
         Michigan. A one-time cost related to the move of approximately $200,000
         was recorded in the third quarter of 2002.

         Income from operations for the Company's Other segment was $44,000 for
         the first nine months of 2002 and represents lease income on the former
         Cramer building. The prior year quarter results include the results of
         operations of Cramer, which reported a loss from operations of
         $352,000.

         Corporate expenses included in selling, general and administrative
         costs were $2.9 million in the first nine months of 2002, as compared
         to $2.9 million in the prior year period. The impact of the expense
         estimate of outstanding workman's compensation claims, increased
         professional fees, other miscellaneous expenses was offset by
         reductions in personnel at the corporate office.

         Interest expense. Interest expense was $1.4 million for the first nine
         months of 2002, as compared to $3.4 million in prior year period. The
         current year period includes income of $556,000 resulting from a
         decrease in the fair market value of the Company's interest rate swap
         liability. The prior year includes interest expense of $533,000,
         resulting from an increase in the fair market value of the Company's
         interest rate swap liability. These amounts were recorded in accordance
         with SFAS 133. Exclusive of the effects of interest rate swap
         agreements, interest expense would have been $2.0 million for the
         current period, as compared to $2.9 million in the prior year. Interest
         expense decreased primarily as a result of lower debt levels.

                                       15


<PAGE>


         Income tax benefit. The Company recorded an income tax benefit of $5.2
         million for 2002 of which $4.8 million was as a result of recent
         changes in federal tax laws, which allow the carryback of net operating
         losses for five years.

         Loss from discontinued operations. Discontinued operations represent
         the operations of Sooner Trailer and the Coils segment.

         For the first nine months of 2001, the Company recorded a loss from
         discontinued operations of $1.2 million (net of a tax benefit of
         $336,000). Revenues from discontinued operations for the period were
         $28.6 million.

         Net income (loss) available for common shareholders. Net income
         available for common shareholders was $768,000, or $.13 per share, in
         the first nine months of 2002, as compared to a net loss of $4.7
         million, or $.80 per share, in the prior year period. Income or loss
         available for common shareholders is calculated by subtracting
         dividends on preferred stock of $1,009,000 and $984,000 for 2002 and
         2001, respectively.

         Liquidity and Capital Resources

         Cash and cash equivalents were $248,000 at July 28, 2002. The Company
         had negative working capital of $10.6 million at July 28, 2002, as
         compared to negative working capital of $14.4 million at October 28,
         2001. Net cash provided by operating activities of continuing
         operations was $5.0 million as compared to net cash provided by
         operating activities from continuing operations of $727,000 in the
         prior period.

         Cash flows used in investing activities from continuing operations was
         662,000 including $293,000 for capital expenditures for equipment. Cash
         flows provided by investing activities from continuing operations also
         includes approximately $6.0 million received for asset sales in the
         prior year. The Company currently plans to invest approximately $90,000
         during the remainder of fiscal 2002. Management anticipates funding
         capital expenditures with cash from operations and proceeds from the
         Company's revolving credit facility.

         Net cash used in financing activities from continuing operations
         included net repayments of $4.4 million under the Company's revolving
         credit agreement, debt repayments of $242,000, and the payment in full
         of related party debt of $400,000.

         At July 28, 2002, $17.6 million was outstanding under the Company's
         revolving credit facility. As a result of noncompliance with covenants
         contained in its revolving credit facility at October 29, 2000, the
         Company, in February 2001, entered into an amendment to its revolving
         credit facility, wherein the lenders agreed to forbear from exercising
         their rights and remedies under the facility in connection with such
         non-compliance until February 15, 2002, at which time the facility was
         to mature. This amendment called for reductions in the outstanding
         balance during calendar 2001, modified the interest rates charged and
         required additional collateral and reporting requirements. The
         amendment also required the suspension of principal and interest
         payments on subordinated debt, with an aggregate outstanding balance of
         $2.0 million at July 28, 2002, and prohibits the payment of preferred
         or common stock dividends. In addition, the amendment required the
         Company to maintain minimum operating profits. Beginning in August
         2001, the Company was not in compliance with the minimum operating


                                       16

<PAGE>
         profit covenant. In February 2002, the company entered into a further
         amendment to the facility, which extends the maturity date to December
         31, 2002. This amendment calls for further reductions to the
         outstanding balance based on expected future asset sales. In addition,
         the interest rate was modified so that borrowings under the facility
         are charged interest at the Prime Rate plus 1.75% though June 30, 2002.
         Beginning July 1, 2002, borrowings under the facility will be charged
         interest at the Prime Rate plus 2.75%. At July 28, 2002 the Prime Rate
         was 4.75%. At July 28, 2002, $2.1 million was available under the
         facility for additional borrowing. At the end of the third quarter of
         2002, the Company was not in compliance with its debt covenant
         requirements, however, the Company has entered into a thirteenth
         amendment which anticipates that the Company and its lenders will agree
         upon replacement debt covenants.

         The Company has a interest rate swap agreement with its banks with
         notional amounts totaling $4.85 million. The Company entered into these
         agreements to change the fixed/variable interest rate mix of its debt
         portfolio, in order to reduce the Company's aggregate risk from
         movements in interest rates. In that the Company's interest rate swap
         agreements do not meet the stringent requirements for hedge accounting
         under SFAS 133, future earnings could reflect greater volatility.

         New Accounting Pronouncements - In July 2001, the Financial Accounting
         Standards Board issued SFAS No. 141 "Business Combinations" (SFAS No.
         141") and SFAS No. 142 "Goodwill and Other Intangible Assets" ("SFAS
         No. 142"). SFAS No. 141 requires business combinations initiated after
         June 30, 2001 to be accounted for using the purchase method of
         accounting, and broadens the criteria for recording intangible assets
         separate from goodwill. Recorded goodwill and intangibles will be
         evaluated against this new criteria and may result in certain
         intangibles being reclassified as goodwill, or alternatively, amounts
         initially recorded as goodwill may be separately identified and
         recognized apart from goodwill. SFAS No. 142 requires the use of a
         nonamortization approach to account for purchased goodwill and certain
         intangibles. Under a nonamortization approach, goodwill and certain
         intangibles will not be amortized into results of operations but,
         instead, would be reviewed for impairment and written down and charged
         to results of operations only in the periods in which the recorded
         value of goodwill and certain intangibles is more than its fair value.
         The provisions of each statement which apply to goodwill and intangible
         assets acquired prior to June 30, 2001 are required to be adopted for
         the fiscal years beginning after December 15, 2001. The Company has not
         yet completed its analysis of the effects of adopting these statements
         on its consolidated financial position or results of operations.

         In August 2001, the Financial Accounting Standards Board issued SFAS
         No. 144, "Accounting for the Impairment or Disposal of Long-Lived
         Assets" ("SFAS No. 144"). SFAS No. 144, which addresses financial
         accounting and reporting for the impairment of long-lived assets and
         for long-lived assets to be disposed of, supercedes SFAS No. 121 and is
         effective for fiscal years beginning after December 15, 2001. The
         Company has not yet completed its analysis of the effects of adopting
         the statement on its consolidated financial position or results of
         operations.

         In April 2002, the Financial Accounting Standards Board issued SFAS No.
         145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of
         FASB Statement No. 13, and Technical Corrections". This Statement
         rescinds FASB Statement No. 4, Reporting Gains and Losses from
         Extinguishment of Debt, and an amendment of that Statement, FASB
         Statement No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund
         Requirements. This Statement also rescinds FASB Statement No. 44,
         Accounting for Intangible Assets of Motor Carriers. This Statement
         amends FASB Statement No. 13, Accounting for Leases, to eliminate an
         inconsistency between the required accounting for sale-leaseback
         transactions and the required accounting for certain lease
         modifications that have economic effects that are similar to
         sale-leaseback transactions. This Statement also amends other existing
         authoritative pronouncements to make various technical corrections,
         clarify meanings, or describe their applicability under changed
         conditions. The Company has not yet completed its analysis of the
         effects of adopting this statement on its consolidated financial
         position or results of operation.

         In June 2002, the Financial Accounting Standards Board issued SFAS No.
         146 "Accounting for Costs Associated with Exit or Disposal Activities".
         This Statement addresses financial accounting and reporting for costs
         associated with exit or disposal activities and nullifies Emerging
         Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for
         Certain Employee Termination Benefits and Other Costs to Exit an
         Activity (including Certain Costs Incurred in a Restructuring)." The
         Company has not yet completed its analysis of the effects of adopting
         this statement on its consolidated financial position or results of
         operation.


         Cautionary Statement for Purposes of the "Safe Harbor" Provisions of
         the Private Securities Litigation Reform Act of 1995

         The following information is provided pursuant to the "Safe Harbor"
         provisions of the Private Securities Litigation Reform Act of 1995.
         Certain statements in Management's Discussion and Analysis of this Form
         10-Q, including those which express "belief", "anticipation" or
         "expectation" as well as other statements which are not historical
         fact, are "forward-looking statements" made pursuant to these
         provisions. Such statements are subject to certain risks and
         uncertainties which could cause actual results to differ materially
         from those projected. Readers are cautioned not to place undue reliance
         on these forward-looking statements which speak only as of the date
         hereof. The Company undertakes no obligation to republish revised
         forward-looking statements to reflect events or circumstances after the
         date hereof or to reflect the occurrence of unanticipated events.



                                      17


<PAGE>



         The Company cautions readers that the following important factors,
         among others, have in the past affected and could in the future affect
         the Company's actual results of operations and cause the Company's
         actual results to differ materially from the results expressed in any
         forward-looking statements made by or on behalf of the Company:

         o    The Company's continued liquidity is dependent upon its ability
              to achieve levels of revenue necessary to support the Company's
              cost structure, its ability to maintain adequate financing, its
              ability to maintain compliance with debt covenants and its
              ability to generate sufficient cash flows to meet its obligations
              on a timely basis.

         o    The Company's results have been and can be expected to continue
              to be affected by the general economic conditions in the United
              States and specific economic factors influencing the
              manufacturing sector of the economy. Lower demand for the
              Company's products can lower revenues as well as cause
              underutilization of the Company's plants, leading to reduced
              gross margins.

         o    Metal prices, particularly of aluminum, copper and steel, can
              affect the Company's costs as well as demand for the Company's
              products and the value of inventory held at the end of a
              reporting period. Lack of availability of certain commodities
              could also disrupt the Company's production.

         o    Changes in demand that change product mix may reduce operating
              margins by shifting demand toward less profitable products.

         o    Loss of a substantial customer or customers may affect results of
              operations.

         o    The influence of foreign competition from low-cost areas of the
              world have affected and may continue to affect results of
              operations.

         o    The Company's results have been and can in the future be affected
              by engineering difficulties in designing new products or
              applications for existing products to meet the requirements of
              its customers.

         o    The Company's results can be affected by changes in manufacturing
              processes and techniques.

         o    Obsolescence or quality problems leading to returned goods in
              need of repair can affect the value of the Company's inventories
              and its profitability.

         o    The Company has a substantial amount of floating rate debt.
              Increases in short-term interest rates could be expected to
              increase the Company's interest expense.

         o    In that the Company's outstanding derivative instrument does not
              meet the stringent requirements for hedge accounting under SFAS
              133, future earnings could reflect greater volatility.


                                       18



<PAGE>


         Item 3.           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
                           RISK

         The Company uses a revolving credit facility, an industrial revenue
         bond and term loans to finance a significant portion of its operations.
         These on-balance sheet financial instruments, to the extent they
         provide for variable rates of interest, expose the Company to interest
         rate risk resulting from changes in the prime rate. The Company uses
         interest rate swap agreements to partially hedge interest rate exposure
         associated with the Company's variable rate debt. All of the Company's
         derivative financial instrument transactions are entered into for
         non-trading purposes.

         To the extent that the Company's financial instruments expose the
         Company to interest rate risk and market risk, they are presented in
         the table below. The table presents principal cash flows and related
         interest rates by year of maturity for the Company's revolving credit
         facility, industrial revenue bonds and term loans in effect at July 28,
         2002. For interest rate swaps, the table presents notional amounts and
         the related reference interest rates by year of maturity. Fair values
         included herein have been determined based upon (1) rates currently
         available to the Company for debt with similar terms and remaining
         maturities, and (2) estimates obtained from dealers to settle interest
         rate swap agreements. Note 6 to the condensed consolidated financial
         statements should be read in conjunction with the table below (dollar
         amounts in thousands).


<TABLE>
<CAPTION>
                                                                                                                          Fair Value
                                                      Year of Maturity                                     Total Due          at
                                        2002      2003      2004      2005      2006      Thereafter      at Maturity      07/28/02
                                        ----      ----      ----      ----      ----      ----------      -----------      --------

<S>     <C>                             <C>        <C>        <C>       <C>       <C>       <C>              <C>            <C>
         Debt:
            Fixed rate                  $ 1,404     $  253    $  258    $  92     $  96     $    8           $ 2,111        $ 2,111
            Average interest rate          8.0%       8.0%      8.0%     8.0%      8.0%       8.0%
            Variable rate               $17,900     $  300    $  600    $ 600     $ 600     $2,450           $22,450        $22,450
            Average interest rate          8.1%       2.8%      2.8%     2.8%      2.8%       2.8%

         Interest rate swap agreements:
            Variable to fixed swap      $     -     $4,850    $    -    $   -     $   -     $    -           $ 4,850        $  (143)
            Average pay rate                          4.2%
            Average receive rate                      1.4%
</TABLE>




                                       19



<PAGE>


         Part II.          OTHER INFORMATION

         Item 2.           Changes in Securities and Use of Proceeds

         Effective for the second quarter of 2000, the Company modified certain
         covenants included in its revolving credit facility. In accordance with
         such modifications, the Company was, and continues to be, prohibited
         from making common stock dividend payments. Further modifications to
         the Company's revolving credit facility in February 2001 resulted in
         the Company also being prohibited from making future preferred stock
         dividend payments.

         Item 3.           Defaults Upon Senior Securities

         Since February 2001, the Company has been prohibited from making
         dividend payments on its Class A Convertible Preferred Stock in
         connection with modifications to its revolving credit facility. As of
         the date of the filing of this report, accrued dividends on the Class A
         Convertible Preferred Stock total $2,325,000.

         Item 6.           Exhibits and Reports on Form 8-K

(a)      Exhibits

         Exhibit No.       Description

         10.23             Twelfth Amendment to the Amended and Restated Credit
         Agreement by and among Owosso Corporation, its subsidiaries, Bank One,
         Michigan and PNC Bank, N.A. effective July 8, 2002.

         10.24             Thirteenth Amendment to the Amended and Restated
         Credit Agreement by and among Owosso Corporation, its subsidiaries,
         Bank One, Michigan and PNC Bank, N.A. effective July 30, 2002.

         11                Computation of Per Share Earnings

(b)      Form 8-K

         The Company filed a report on Form 8-K, dated July 9, 2002, to report
         under Item 5 that the Company had signed a definitive agreement to sell
         the stock of its Motor Products subsidiaries, which comprise a
         significant portion of Owosso's non-gearmotor business, to a subsidiary
         of Hathaway Corporation (Nasdaq: HATH) for $11.5 million in cash and a
         $300,000 note guaranteed by Hathaway Corporation.

         The Company filed a report on form 8-K, dated August 13, 2002, to
         report under Item 2 that the Company had completed the sale of all of
         the outstanding stock of Motor Products - Owosso Corporation, a
         Delaware corporation and Motor Products - Ohio Corporation, a Delaware
         corporation (together, "Motor Products"), manufacturers of fractional
         and integral horsepower motors.

                                       20


<PAGE>


                                   SIGNATURES



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



                                       OWOSSO CORPORATION



         Date:  September 10, 2002     By: /s/ George B. Lemmon, Jr.
                                           -------------------------
                                           George B. Lemmon, Jr.
                                           President and Chief Executive Officer
                                           (Principal Executive Officer and
                                           Principal Financial Officer)





<PAGE>







                                  Exhibit Index


<TABLE>
<CAPTION>
Exhibit No.       Description                                                                    Page
-----------       -----------                                                                    ----

<S>               <C>                                                                             <C>
10.23             Twelfth Amendment to the Amended and Restated Credit                            A-1
                  Agreement by and among Owosso Corporation, its subsidiaries,
                  Bank One, Michigan and PNC Bank, N.A. effective July 8, 2002.


10.24             Thirteenth Amendment to the Amended and Restated Credit                         B-1
                  Agreement by and among Owosso Corporation, its subsidiaries,
                  Bank One, Michigan and PNC Bank, N.A. effective July 30, 2002


11                Computation of Per Share Earnings                                               C-1



99.1              302 Certification                                                               D-1


99.2              906  Certification                                                              E-1
</TABLE>