Milastar Corporation and Consolidated Subsidiaries
                           Form 10-K



UNITED STATES SECURITIES AND EXCHANGE COMMISSION

            Washington, D.C. 20549

                  FORM 10-K

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

For the fiscal year ended April 30, 2002

Commission File Number: 0-5105

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

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


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

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

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

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

    Common Stock, par value $.05 per share
               (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding twelve
months (or for such a 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.  [ ]

The aggregate market value of the Class A Common Stock held by
non-affiliates of the Registrant on July 5, 2002 was $926,000
based upon the bid price of the Class A common stock as quoted
on OTC Electronic Bulletin Board.  On that date there were
2,723,264 shares of Class A Common Stock issued and outstanding.

         Documents Incorporated by Reference

Parts I and III incorporate by reference certain information to
be included in Registrant's definitive  Information Statement
relating to action taken by written consent of the Board of
Directors and Majority Stockholders, which Registrant intends to
file with the Securities and Exchange Commission pursuant to
Regulation 14C on or before August 9, 2002.


                        PART I

Item 1.  Business

    General

    Milastar Corporation ("Milastar" and sometimes the "Company")
sells special metallurgical services to a diversified list of
manufacturers primarily located in the greater Midwest
industrial market. The customer base manufactures a variety of
mechanical end-products and customarily outsources
(subcontracts) the processing of some components incorporated in
those end-products.  The menu of special processing services
performed include metallurgical engineering, heat treating,
brazing and surface finishing.

    Milastar owns the wholly-owned subsidiary; Flame Metals
Processing Corporation ("Flame Metals") located in Minnesota.
New England Metal Treating Corporation ("NEMT") located in
Auburn, Massachusetts was a wholly-owned subsidiary of Flame
Metals until its sale in August 2000.

    Flame Metals currently generates 100% of Milastar's consolidated
net sales, which flow from the sale of a variety of subcontract
services to industrial customers.  These special services
include metallurgical-related processing involving the heating
and cooling of metal products under controlled conditions in
order to restructure the molecular property of such products to
achieve specified characteristics.

    Flame Metals' customer list includes more than 800 firms
generally classified as manufacturers.  The customer furnishes
all direct materials and components processed for their account.
These parts are then heat treated, primarily to achieve a
certain hardness or surface finish, in preparation of the metal
parts for their designated use.  The Company's largest customer
accounted for 11 percent of total net sales in fiscal 2002 .

    Flame Metals' operating assets were acquired by Milastar in May
1985.  Flame Metals has since been expanded by a succession of
acquisitions of complementary businesses.  The initial
acquisition was consummated in October 1988 when Milastar
directly acquired certain assets of Northwest Engineering Labs,
Inc. ("Northwest") located in Minneapolis, MN.  The second
acquisition was consummated in November 1991 when Flame Metals
directly acquired certain assets and assumed certain liabilities
from Getchell Steel Treating Company, Inc. located in
Bloomington, MN.  The third acquisition occurred in April 1996
when Flame Metals directly acquired certain assets and assumed
certain liabilities from New England Metal Treating Inc. located
in Auburn, Massachusetts.  Flame Metals operated this entity as
the wholly owned subsidiary, New England Metal Treating
Corporation until its sale in August 2000.  The fourth
acquisition occurred in March 1998 when Flame Metals directly
acquired certain assets and assumed certain liabilities from
Twin City Steel Treating Company, Inc. located in Rogers, MN.

    The Company currently owns two plants located in the
Minneapolis-St. Paul, Minnesota area.  These include a 35,000
sq.  ft. facility in St. Louis Park, MN and a 48,000 sq.  ft.
facility in Rogers, MN.  The lease on a third facility in
Bloomington, MN expired in November 2001 and was not renewed.

    Milastar reported a loss before income taxes of $187,000 in
fiscal 2002 and a profit before income taxes of $207,000 in
fiscal 2001.  Net loss after taxes amounted to $194,000 in
fiscal 2002 and a net profit after taxes of $198,000 in fiscal
2001.  Results of operations are discussed more fully in
"Management's Discussion and Analysis" beginning on page 6.

    The Company's non-operating other income (expense) resulted in a
net expense of $299,000 in fiscal year 2002, up $15,000 from the
$284,000 in expense recorded in fiscal year 2001.  Current
assets as a percent of total assets amounted to 16% and 17% at
April 30, 2002 and 2001, respectively.  The book value per share
was $1.72 per share at April 30, 2002 compared with $1.79 per
share at April 30, 2001.  The bid price per share, as quoted on
the OTC Electronic Bulletin Board, was $0.34 as of April 30,
2002.


    Competition

    The heat treat business is highly competitive, with price,
quality and consistency of service being the principal factors
affecting customer preferences.  Since the customers' outside
manufactured product components are sensitive to freight
charges, the proximity of the heat treat facility to the
customers' production location is also a primary competitive
factor.  Thus Flame Metals' business is generally localized and,
to a lesser degree, regionalized.  In this regard, Flame Metals
has approximately five or six metallurgical processing
competitors in the Minneapolis-St. Paul, Minnesota market who
can be classified as being competitive with Flame Metals.  Some
of these competitors may possess greater resources and may be
more cost efficient.  Nevertheless, the Company  believes Flame
Metals' geographical location to customers, relative price
structure, processing quality and reliability, collectively,
provide Flame Metals with the resources to be competitive.

     Seasonality and Raw Materials

    The heat treat business is affected during the winter holiday
season and midsummer due to vacations and plant shutdowns by
Flame Metals' customers.  Flame Metals is not materially
affected by the sources or availability of raw material in that
nearly all revenue is generated by services performed on
customer owned products.

    Corporate

    Milastar was organized under Delaware law on February 24, 1969.
Its principal executive offices are located at 7317 West Lake
Street, Minneapolis, MN  55426.  Its communication numbers are:
Telephone (952) 929-4774 and fax number (952) 925-0572.

    Environmental

    To the best of its knowledge, the Company believes that it is
presently in substantial compliance with all existing applicable
environmental laws and does not anticipate that such compliance
will have a material effect on its future capital expenditures,
liquidity, earnings or competitive position.

    Employee Relations

    The Company currently operates two separate plant locations and
employs a total of approximately 64 employees; 38 in St. Louis
Park, MN, and 26 in Rogers, MN.  The Company believes the
prevailing wage rates, fringe benefits and working conditions
afforded its employees compare favorably with those received by
employees employed by regional businesses competitive with the
Company.  The Company believes its employee relations are
satisfactory; therefore the Company does not anticipate any
labor disruption during the forthcoming fiscal 2003.

Item 2.  Properties

    The Company believes that its property and equipment are well
maintained, in good working condition, and are adequately
insured.

    Executive Offices

    The Company currently maintains its executive offices at 7317
West Lake Street, Minneapolis, Minnesota.




  Flame Metals

  Flame Metals owns the two industrial properties as listed below:



            ACTIVITY               LOCATION          SIZE (SQ. FT.)   STATUS

  Flame Metals                  St. Louis Park, MN       35,000        Owned

  Flame Metals                  Rogers, MN               48,000        Owned


Item 3.  Legal Proceedings

    The Company has been party to various legal proceedings
incidental to its normal operating activities.  Although it is
impossible to predict the outcome of such proceedings,
management believes, based on the facts currently available,
that none of such claims will result in losses that would have a
materially adverse effect on the Company's financial condition.

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

         No matter was submitted to a vote of the Company's security
holders during its fiscal year ended April 30, 2002.


Executive Officers of the Company

         The following table sets forth with respect to each executive
officer of the Company his name, age and all positions and
offices with the Company held by him since May 1, 1997.  Unless
otherwise indicated in the table below, all positions and
offices indicated have been continuously held since May 1, 1997.
All executive officers serve at the will of the Board of
Directors until their successors are duly appointed and
qualified.   Mr. J. Russell Duncan, Chairman of the Board and a
director of the Company, is the father of Mr. Lance H. Duncan,
Secretary and a director of the Company.  With the foregoing
exception, no family relationship exists among the officers of
the Company.


                                           Positions and Offices Held with
Name                          Age             the Company and Period Held


J. Russell Duncan (1) . . .    85          Chairman and Chief Executive
                                           Officer.
L. Michael McGurk . . . . .    51          President and Chief Operating
                                           Officer.
Dennis J. Stevermer . . . .    41          Vice President Treasurer.

Lance H. Duncan (2) . . . .    46          Secretary.


(1)
    Mr. J. Russell Duncan was Chairman and a director of Sound
    Techniques, Inc. (audio-video production studios) until December
    2001 and has otherwise been engaged in private investment
    activities for more than the past five years.

(2)
    Mr. Lance H. Duncan was President and Chief Operating Officer of
    Sound Techniques, Inc. (audio-video production studios) until
    December 2001 and has been engaged in private investment
    activities for more than the past five years.

    Similar information respecting the directors of the Company will
be included under the heading "Respecting the Election of
Directors" in the Company's definitive Information Statement
("Information Statement") to be distributed to the stockholders
of the Company and filed with the Securities and Exchange
Commission pursuant to the Securities and Exchange Act of 1934,
as amended, respecting notification of certain action taken by
written consent in lieu of the Company's Annual Meeting of
Stockholders for its 2002 fiscal year.  The Company expects to
file the Information Statement with the Securities and Exchange
Commission on or before August 9, 2002 and reference is
expressly made thereto for the information incorporated herein
by the aforesaid reference.


                       PART II

Item 5.
    Market for the Company's Common Equity and Related Stockholder
Matters

    The Company's Class A Common Stock is traded on the OTC Bulletin
Board and the Pink Sheets under the ticker symbol "MILAA".  The
following table provides, for the periods indicated, the high
and low bid prices per share of the Company's Class A Common
Stock.  The Class A share prices represent prices established
between broker-dealers and therefore do not reflect prices of
actual transactions.

                                        Fiscal 2002      Fiscal 2001
                                       High     Low     High     Low
 First Quarter . . . . . . . . . .   $ 0.45  $ 0.38   $ 0.38  $ 0.31
 Second Quarter. . . . . . . . . .   $ 0.43  $ 0.32   $ 0.56  $ 0.38
 Third Quarter . . . . . . . . . .   $ 0.40  $ 0.32   $ 0.59  $ 0.44
 Fourth Quarter. . . . . . . . . .   $ 0.34  $ 0.33   $ 0.56  $ 0.45

    On July 5, 2002 there were approximately 4,000 holders of record
of the Company's Common Stock.  The Company has not paid any
cash dividends in respect of its Class A Common Stock, and it is
not presently anticipating paying any cash dividends, thereon,
in the near term.

Item 6.

Selected Financial Data



                                              Year Ended April 30,
                                   2002     2001     2000     1999     1998
                                      (In thousands except per share data)

Net sales. . . . . . . . . . . . $ 8,215  $ 8,870  $ 9,064  $ 9,198  $ 8,261
Net income (loss). . . . . . . .    (194)     198      202      462      484
Net income (loss) per common
 share - basic . . . . . . . . .    (.07)     .07      .07      .17      .18
Net income (loss) per common
 share - diluted . . . . . . . .    (.07)     .07      .07      .16      .17

Financial Position:
 Total assets. . . . . . . . . .   9,702    9,212    8,611    9,165    9,022
 Short-term obligations. . . . .   1,660    1,538    1,988    1,926    1,838
 Long-term obligations . . . . .   3,362    2,800    1,947    2,765    3,172
 Stockholders' equity. . . . . . $ 4,680  $ 4,874  $ 4,676  $ 4,474  $ 4,012

During the periods presented, no cash dividends were declared.

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

         Overview

    The Company's operating results for the fiscal year ended April
30, 2002 showed a 7% decrease in sales and a 77% decrease in
operating income.  The lower operating profit is primarily due
to a weaker economy for the heat treating industry in the
Midwest.  The Company was able to replace most of the lost
revenues from the Company's traditional customers with new
customers.  However, the new work required additional training
and at least for the short term resulted in lower margins.

    Milastar's primary revenues flow from metallurgical services
provided by Flame Metals Processing Corporation  The Company
continues to strive to increase equipment utilization, expand
capacity and absorb fixed overhead costs.

    Milastar has net operating loss carryforwards for state and
federal purposes of approximately $1,186,000 and $210,000,
respectively, available to offset future taxable income, if any,
which in the future may enhance earnings as well as cash flow.
See note 5 to "Notes to Consolidated Financial Statements."


         Results of Operations

    Fiscal 2002 Compared to Fiscal 2001.  Net sales for fiscal 2002
totaled $8,215,000, a 7% decrease from $8,870,000 in fiscal
2001.  The sales decrease was primarily attributable to the loss
of revenue from the sale of New England Metal Treating in the
second quarter of fiscal 2001 and to a weaker economy for the
heat treating industry in the Midwest.

    Cost of sales of $6,046,000 (74% of sales) in fiscal 2002
decreased $164,000 from $6,210,000 (70% of sales) in the
previous fiscal year.  The decrease in total dollars was
primarily attributable to the sale of New England Metal
Treating, being partially offset by an increase in labor costs
in the Midwest.  The increase in cost of sales as a percent of
net sales from 70% to 74% was primarily the result of lower
sales and increased labor costs in the Midwest.  Gross profit
decreased by $491,000, from $2,660,000 in fiscal 2001 to
$2,169,000 in fiscal 2002.

    Selling, general and administrative (SG&A) expenses of
$1,976,000 (24% of sales) in fiscal 2002 decreased $98,000 from
$2,074,000 (23% of sales) for the same period a year earlier.
The decrease in SG&A expenses is primarily due to a decrease in
administrative salaries.

    Total other expense amounted to $299,000 in fiscal 2002,
compared with other expense of $284,000 reported in fiscal 2001.
The increase was primarily attributable to $68,000 gain on the
sale of New England Metal Treating in fiscal 2001 being
partially offset by reduced interest expense in fiscal 2002.
The reduced interest expense is due to a reduction in interest
rates.

    The provision for income taxes for fiscal 2002 was $7,000
compared to income taxes of $9,000 in fiscal 2001. The income
tax expense in fiscal 2002 is due to minimum state income taxes.




    Fiscal 2001 Compared to Fiscal 2000.  Net sales for fiscal 2001
totaled $8,870,000, a 2% decrease from $9,064,000 in fiscal
2000.  The sales decrease was primarily attributable to the loss
of revenue from the sale of New England Metal Treating in the
second quarter of fiscal 2001 being partially offset by a
stronger economy for the heat treating industry in the Midwest.

    Cost of sales of $6,210,000 (70% of sales) in fiscal 2001
decreased $330,000 from $6,540,000 (72% of sales) in the
previous fiscal year.  The decrease in total dollars was
primarily attributable to the sale of New England Metal
Treating, which had lower margins, being partially offset by an
increase in natural gas costs.  The decrease in cost of sales as
a percent of net sales from 72% to 70% was primarily the result
of higher margin sales in the Midwest.  Gross profit increased
by $136,000, from $2,524,000 in fiscal 2000 to $2,660,000 in
fiscal 2001.  The increase was primarily attributable to
increased higher margin sales in the Midwest and the decreased
cost of sales that resulted from the sale of New England Metal
Treating.

    Selling, general and administrative (SG&A) expenses of
$2,074,000 (23% of sales) in fiscal 2001 increased $91,000 from
$1,983,000 (22% of sales) for the same period a year earlier.
The increase in SG&A expenses was primarily due to an increase
in administrative salaries.

    Total other expense amounted to $284,000 in fiscal 2001,
compared with other expense of  $353,000 reported in fiscal
2000.  The decrease was primarily attributable to $68,000 gain
on the sale of New England Metal Treating in fiscal 2001.

    The provision for income taxes for fiscal 2001 was $9,000, or an
effective tax rate of 4.3%, compared to an income tax benefit of
$109,000, or an effective tax rate of 117% in fiscal 2000.  The
low effective income tax rate, compared to the federal statutory
rate of 34% plus state and local taxes in fiscal 2001, was due
to a reduction in the valuation allowance resulting from the
utilization of net operating loss carryforwards in the current
year period.  The income tax benefit in fiscal 2000 was the
result of the reversal of a $118,000 reserve that was set up in
fiscal 1997 for a tax refund received in that same period.


         Effects of Inflation

    During fiscal 2002 and 2001 the Company's monetary liabilities
materially exceeded its monetary assets resulting in a net
negative monetary position.  In periods in which the general
price-level index is rising (inflation), it is advantageous to
maintain a net negative monetary position.  During periods of
significant price inflation, the Company's purchasing power
could be eroded if the value of the Company's underlying
tangible assets fail to appreciate in value.  Under such a
scenario, the Company may be positioned to raise prices to
offset the inflation effect and in addition take advantage of
revaluation of underlying tangible assets to bolster borrowing
capacity.  There is no clear correlation between the effects of
inflation and the Company's earning capacity.

          Critical Accounting Policies

     The Company's estimates related to certain
assets and liabilities are an integral part of the
consolidated financial statements.  These estimates are
considered critical to the consolidated financial
statements because they require subjective and complex
judgements.

Allowance for doubtful accounts - The Company records a
reserve for accounts receivable which are potentially
uncollectible.  The reserve is established by estimating
the amounts that are potentially uncollectible based on
a review of customer accounts, age of the receivable,
the customer's financial condition and industry, and
general economic conditions.  Results could be
materially different if economic conditions worsened for
the Company's customers.


          Liquidity and Capital Resources

     At April 30, 2002, the Company had negative
working capital of $69,000 compared with $63,000 of
positive working capital as of April 30, 2001, and the
ratio of current assets to current liabilities was
approximately 1.0 to 1.0 at both April 30, 2002 and
2001.  Cash and current receivables represented 69% (78%
at April 30, 2001) and 11% (14% at April 30, 2001) of
total current assets and total assets, at April 30,
2002, respectively.

    During fiscal 2002 cash provided by operating activities
amounted to $592,000 compared with cash provided of $1,245,000
in fiscal 2001.  The Company added $1,526,000 to property, plant
and equipment in fiscal 2002 compared with $1,991,000 in the
previous year.  Working capital requirements for fiscal 2002
were funded primarily from available cash, cash generated from
operations and issuance of long-term debt.

    The Company's contractual cash obligations at April 30, 2002,
are summarized by year in the following table.

<TABLE>
<CAPTION>

                           Total      2003     2004     2005     2006     2007  Thereafter
<S>                     <C>        <C>      <C>      <C>      <C>      <C>      <C>
Debt                     4,117,000  755,000  767,000  823,000  882,000  553,000  337,000
Operating leases            26,000   17,000    7,000    2,000
Total contractual
cash obligations         4,143,000  772,000  774,000  825,000  882,000  553,000  337,000

</TABLE>

    The Company believes it has sufficient capital resources to meet
its fiscal 2003 operations and equipment acquisitions cash flow
requirements.

         Market Risks

     The Company is exposed to certain market risks relative to
interest rates on its long-term debt and $500,000 line of credit
of which $0 is outstanding at April 30, 2002. The majority of
long-term debt bears interest at 2.5% above the LIBOR rate and
the line of credit bears interest at the bank's reference rate.

         Forward-Looking Statements

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

Item 8.  Financial Statements and Supplementary Data


             INDEPENDENT AUDITORS' REPORT

The Stockholders and Board of Directors
Milastar Corporation:

We have audited the consolidated balance sheets of Milastar
Corporation and subsidiaries as of April 30, 2002 and 2001, and
the related consolidated statements of operations, cash flows
and changes in stockholders' equity for each of the fiscal years
in the three-year period ended April 30, 2002.  In connection
with our audits of the consolidated financial statements, we
have also audited the accompanying consolidated financial
statement schedule.  These consolidated financial statements and
financial statement schedule are the responsibility of the
Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements and financial
statement schedule based on our audits.

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

In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of Milastar Corporation and subsidiaries as of April
30, 2002 and 2001, and the results of their operations and their
cash flows for each of the fiscal years in the three-year period
ended April 30, 2002 in conformity with accounting principles
generally accepted in the United States of America.  Also in our
opinion, the related consolidated financial statement schedule,
when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.



KPMG LLP

Minneapolis,  Minnesota
June 3, 2002


Milastar Corporation and Consolidated Subsidiaries
Financial Statements

<TABLE>
<CAPTION>
      Milastar Corporation and Consolidated Subsidiaries
                      Financial Statements

                 CONSOLIDATED BALANCE SHEETS

                   April 30, 2002 and 2001

                           ASSETS

                                                    2002             2001
<S>
Current assets:                              <C>              <C>
Cash and cash equivalents. . . . . . . .           69,000          229,000
Accounts and other receivables:
 Trade, less allowance for doubtful
  accounts of $50,000 in 2002 and
  50,000 in 2001 . . . . . . . . . . . .        1,027,000        1,025,000
Inventory. . . . . . . . . . . . . . . .          183,000          120,000
Prepaid supplies and other . . . . . . .          312,000          227,000

    Total current assets . . . . . . . .        1,591,000        1,601,000

Property, plant and equipment:
 Land. . . . . . . . . . . . . . . . . .          420,000          420,000
 Buildings and improvements. . . . . . .        2,935,000        2,851,000
 Deposits on equipment . . . . . . . . .          564,000
 Equipment . . . . . . . . . . . . . . .        9,491,000        8,962,000
                                               13,410,000       12,233,000
  Less accumulated depreciation. . . . .       (5,377,000)      (4,781,000)
                                                8,033,000        7,452,000
Other assets:
 Non-compete agreements, net of
   accumulated amortization of
   $368,000 & $287,000 respectively. . .           78,000          159,000

    Total assets . . . . . . . . . . . .        9,702,000        9,212,000
</TABLE>
<TABLE>
<CAPTION>
      Milastar Corporation and Consolidated Subsidiaries
                   Financial Statements

                 CONSOLIDATED BALANCE SHEETS

                   April 30, 2002 and 2001

            LIABILITIES AND STOCKHOLDERS' EQUITY


                                                    2002             2001
<S>
Current liabilities:                         <C>              <C>
Current maturities of long-term debt . .          755,000          543,000
Accounts payable . . . . . . . . . . . .          441,000          457,000
Accrued payroll and benefits . . . . . .          272,000          329,000
Accrued real estate taxes. . . . . . . .           92,000          108,000
Other accrued liabilities. . . . . . . .          100,000          101,000

    Total current liabilities. . . . . .        1,660,000        1,538,000

Long-term debt, less current
 maturities. . . . . . . . . . . . . . .        3,362,000        2,800,000

    Total liabilities. . . . . . . . . .        5,022,000        4,338,000

Commitments and contingencies (Notes 10)

Stockholders' equity:
Preferred stock, $1.00 par value;
 authorized 0 shares in 2002 and
 5,000,000 shares in 2001, none
 issued. . . . . . . . . . . . . . . . .
Common stock, Class A, $.05 par
 value.  Authorized 7,500,000 shares,
 issued and outstanding 2,723,264
 shares in 2002 and 2001 . . . . . . . .          136,000          136,000
Additional paid-in capital . . . . . . .        1,647,000        1,647,000
Retained earnings. . . . . . . . . . . .        2,897,000        3,091,000

   Total stockholders' equity. . . . . .        4,680,000        4,874,000

    Total liabilities and
     stockholders' equity. . . . . . . .        9,702,000        9,212,000
</TABLE>
<TABLE>
<CAPTION>
      Milastar Corporation and Consolidated Subsidiaries
                   Financial Statements


            CONSOLIDATED STATEMENTS OF OPERATIONS

                Fiscal Years Ended April 30,


                                       2002             2001             2000
<S>                              <C>              <C>              <C>
Net sales. . . . . . . . . . . .   8,215,000        8,870,000        9,064,000
Cost of sales. . . . . . . . . .   6,046,000        6,210,000        6,540,000

Gross profit . . . . . . . . . .   2,169,000        2,660,000        2,524,000
Selling, general and
 administrative expenses . . . .   1,976,000        2,074,000        1,983,000
Amortization of non-compete
 agreements. . . . . . . . . . .      81,000           95,000           95,000

Operating income . . . . . . . .     112,000          491,000          446,000

Other income (expense):
 Dividend and interest income. .       2,000           14,000            2,000
 Interest expense. . . . . . . .    (243,000)        (293,000)        (290,000)
 Net gain on sale of net assets
  of a business. . . . . . . . .                       68,000
 Net gain on sale
  of property and equipment. . .       7,000
 Net loss on sale
  of property and equipment. . .     (65,000)         (73,000)         (65,000)
Total other expense. . . . . . .    (299,000)        (284,000)        (353,000)

Income (loss) before taxes . . .    (187,000)         207,000           93,000
Income tax expense (benefit) . .       7,000            9,000         (109,000)

Net income (loss). . . . . . . .    (194,000)         198,000          202,000

Net income (loss) per Class A
 common share - basic. . . . . .        (.07)             .07              .07

Net income (loss) per Class A
 common share - diluted. . . . .        (.07)             .07              .07
</TABLE>
<TABLE>
<CAPTION>
      Milastar Corporation and Consolidated Subsidiaries
                   Financial Statements

            CONSOLIDATED STATEMENTS OF CASH FLOWS

                Fiscal Years Ended April 30,

                                       2002             2001             2000
<S>                              <C>              <C>              <C>
CASH FLOWS FROM OPERATING
 ACTIVITIES:
  Net income (loss). . . . . . .    (194,000)         198,000          202,000
  Adjustments to reconcile
   net income (loss) to net
   cash provided by operating
   activities:
   Depreciation and
    amortization . . . . . . . .     961,000          964,000          999,000
  Net loss on disposal
    of property and equipment. .      65,000           73,000           65,000
  Gain on sale of the net
    assets of a business . . . .                      (68,000)
Changes in operating assets
   and liabilities, net of
   effect of the sale of
   the net assets of a business:
   Accounts and other
    receivables. . . . . . . . .      (2,000)          61,000          125,000
   Inventory . . . . . . . . . .     (63,000)          (4,000)          51,000
   Prepaid supplies and other. .     (85,000)         (80,000)           1,000
   Accounts payable and
    accrued expenses . . . . . .     (90,000)         101,000          (19,000)
   Income taxes payable. . . . .                                      (121,000)

Net cash provided by
 operating activities. . . . . .     592,000        1,245,000        1,303,000

CASH FLOWS FROM
 INVESTING ACTIVITIES:
  Purchases of  property, plant
   and equipment, net of effect
   of the sale of the net
   assets of a business. . . . .    (962,000)      (1,991,000)        (610,000)
  Proceeds from disposal of
   property, plant and
   equipment . . . . . . . . . .                        2,000            5,000
  Deposits made for equipment. .    (564,000)                          (45,000)
  Proceeds from the sale of the
   net assets of a business. . .                      615,000

Net cash used in investing
 activities. . . . . . . . . . .  (1,526,000)      (1,374,000)        (650,000)

CASH FLOWS FROM
 FINANCING ACTIVITIES:
  Proceeds (repayments) from
   bank line of credit . . . . .                     (250,000)         150,000
  Principal payments of
   long-term debt. . . . . . . .    (661,000)        (846,000)        (766,000)
  Proceeds from issuance of
   long-term debt, net of effect
   of the purchase of the net
   assets of a business. . . . .   1,435,000        1,398,000

Net cash provided by (used in)
 financing activities. . . . . .     774,000          302,000         (616,000)

NET INCREASE (DECREASE)
 IN CASH AND CASH EQUIVALENTS. .    (160,000)         173,000           37,000

CASH AND CASH EQUIVALENTS,
 BEGINNING OF YEAR . . . . . . .     229,000           56,000           19,000

CASH AND CASH EQUIVALENTS,
 END OF YEAR . . . . . . . . . .      69,000          229,000           56,000

Supplemental disclosures of
 cash flow information:
  Cash paid during the year for:
   Interest. . . . . . . . . . .     243,000          289,000          277,000
   Income taxes. . . . . . . . .       4,000           38,000            9,000
Supplemental disclosures of
 non-cash investing and
 financing activities:
  Reduction of officer note
   receivable for stock. . . . .                       20,000
</TABLE>
<TABLE>
<CAPTION>
      Milastar Corporation and Consolidated Subsidiaries
                   Financial Statements



  CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

      Fiscal Years Ended April 30, 2002, 2001 and 2000




                                            Note
                    Common     Common    receivable   Additional                   Total
                    Stock      Stock        from       paid in     Retained     Stockholders'
                    Shares     Amount     officer      capital     earnings        Equity


<S>             <C>          <C>         <C>         <C>         <C>           <C>
Balance,
April 30, 1999 .  2,738,264    137,000     (20,000)   1,666,000    2,691,000     4,474,000

Net income
for 2000 . . . .                                                     202,000       202,000

Balance,
April 30, 2000 .  2,738,264    137,000     (20,000)   1,666,000    2,893,000     4,676,000

Repurchase
Shares . . . . .    (15,000)    (1,000)     20,000      (19,000)

Net income
for 2001 . . . .                                                     198,000       198,000

Balance,
April 30, 2001 .  2,723,264    136,000           -    1,647,000    3,091,000     4,874,000

Net loss
for 2002 . . . .                                                    (194,000)     (194,000)

Balance,
April 30, 2002 .  2,723,264    136,000           -    1,647,000    2,897,000     4,680,000

</TABLE>

The accompanying notes are an integral part of these financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    Nature of business   Milastar Corporation ("Milastar" and
sometimes the "Company") sells special metallurgical services to
a diversified list of manufacturers primarily located in the
greater Midwest region. The menu of special processing services
performed include metallurgical engineering, heat treating,
brazing and surface finishing.  The Company extends credit to
many of its customers.

    Principles of consolidation   The consolidated financial
statements include the accounts of the Company and its wholly
owned subsidiary, Flame Metals Processing Corporation.  In
consolidation, all significant intercompany accounts and
transactions are eliminated.

    Cash and cash equivalents   The Company considers cash
equivalents to include all investments purchased with an
original maturity of 90 days or less.

    Inventory   Inventory is valued at the lower of cost or market
utilizing costing methods that approximate the First-In-First-
Out (FIFO) method.

    Prepaid supplies   Prepaid supplies are expensed as used.

    Property, plant and equipment   Property, plant and equipment
are carried at cost.  Depreciation is computed using the
straight-line method.  When assets are retired or otherwise
disposed of, the cost and related depreciation are removed from
the accounts, and any gain or loss is reflected in income for
the period.  The cost of maintenance and repairs is charged to
income as incurred, whereas significant renewals and betterments
are capitalized and deductions are made for retirements
resulting from the renewals or betterments.

    The estimated useful lives of the fixed assets are as follows:



                 Buildings . . . . . . . . . . .35 to 40 years
                 Equipment . . . . . . . . . . . 5 to 12 years
                 Vehicles. . . . . . . . . . . . 3 to 5 years

    Other assets   Other assets are comprised of one five-year non-
compete agreement which is being amortized over 60 months using
the straight-line method.

    Income taxes   Deferred tax assets and liabilities are
recognized for the estimated future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax bases.  Deferred tax assets and liabilities are
measured using enacted tax rates in effect for the year in which
those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that
includes the enactment date.

    Accounting estimates   The preparation of financial statements
in conformity with accounting principles generally accepted in
the United States of America requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period.  Actual results could differ from those estimates.

     Fair value of financial instruments   The
Company's financial instruments are recorded on its
balance sheet.  The carrying amount for cash, accounts
receivable, accounts payable, and accrued expenses
approximates fair value due to the immediate or short-
term maturity of these financial instruments.  The fair
value of long term debt approximates its carrying value.

     Impairment of long-lived assets and long-lived
assets to be disposed of   Long-lived assets and certain
identifiable intangibles are reviewed for impairment
whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and
used is measured by a comparison of the carrying amount
of an asset to future net cash flows expected to be
generated by the asset. If such assets are considered to
be impaired, the impairment to be recognized is measured
by the amount by which the carrying amount of the assets
exceed the fair value of the assets.  Assets to be
disposed of are reported at the lower of the carrying
amount or fair value less costs to sell.

     Stock-based compensation   The Company uses the
intrinsic value method prescribed by Accounting
Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," and related interpretations in
accounting for employee stock options. Under the
intrinsic value method, compensation expense is recorded
only to the extent that the market price of the common
stock exceeds the exercise price of the stock option on
the date of grant. (See note 7).

     Earnings per share   Basic EPS is computed by
dividing net earnings by the weighted average number of
common shares outstanding.  Diluted EPS includes the
effect of all dilutive potential common shares
(primarily related to stock options), unless the effect
is anti-dilutive.

      New Accounting Rules - During 1999, the Financial
Accounting Standards Board (FASB) issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities"
(as amended by SFAS No. 137 with respect to the effective date
and SFAS No. 138 with respect to certain hedging activities),
which establishes new standards for recognizing all derivatives
as either assets or liabilities, and measuring those instruments
at fair value.  The Company adopted the new standard in fiscal
2002 and has determined that there is no impact to the financial
statements.

    In July 2001, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) 141,
"Business Combinations" and SFAS 142, "Goodwill and Other
Intangible Assets."  SFAS 141 requires that the purchase method
of accounting be used for all business combinations initiated
after June 30, 2001.  SFAS 141 also specifies criteria that
identifies intangible assets acquired in a purchase method
business combination must be recognized and reported apart from
goodwill.  SFAS 142 requires that goodwill and intangible assets
with indefinite useful lives no longer be amortized, but instead
tested for impairment at least annually.  SFAS 142 also requires
that intangible assets with definite useful lives be amortized
over their respective estimated useful lives.  The Company
adopted SFAS 141 in fiscal 2002 and has determined that there is
no impact to the financial statements.  The Company will adopt
the provisions of SFAS 142 on May 1, 2002, and does not expect
adoption will have a material impact on its consolidated results
of operations or financial position.

    SFAS 144, "Accounting for the Impairment or Disposal of Long-
Lived Assets" was issued in October 2001.  SFAS 144 provides new
guidance on the recognition of impairment losses on long-lived
assets to be held and used or to be disposed of and also
broadens the definition of what constitutes a discontinued
operation and how the results of a discontinued operation are to
be measured and presented.  The provisions of SFAS 144 are
effective for fiscal years beginning after December 15, 2001.
The Company will adopt the provisions of this statement on May
1, 2002, and does not expect adoption will have a material
impact on its consolidated results of operations or financial
position.

      Revenue Recognition   The Company recognizes
revenue when the metallurgical services have been
completed and the product has been received by the
customer.

2   SALE OF SUBSIDIARY

     On August 25, 2000, the Company sold all of the
assets of its wholly owned subsidiary, New England Metal
Treating Corporation located in Auburn, Massachusetts.  The
Company received $615,000 in cash from the sale and recorded a
$68,000 gain.  The net book value of the assets sold consisted
of the following:


         Machinery & Equipment              $     325,000
         Accounts Receivable                      211,000
         Other                                     11,000
               Total                        $     547,000


3  LONG-TERM DEBT

               Long-term debt consisted of the following at April 30:

                                                           2002          2001

Amount due under loan agreement
 with TCF National Bank, payable in
 monthly installments of $61,685
 including interest at 2.5% above the
 LIBOR rate through December, 2006                  $  3,087,000
Amount due under loan agreement
 with TCF National Bank as part of
 the purchase of TCST, payable in
 monthly installments of $10,672
 including interest at 2.5% above the
 LIBOR rate through February, 2007                       547,000
Amount due under loan agreement
 with TCF National Bank, payable in
 monthly installments of $42,010
 including interest at 7.4% through
 April, 2006                                                         2,100,000
Amount due under loan agreement
 with TCF National Bank as part of
 the purchase of TCST, payable in
 monthly installments of $5,891
 including interest at 9.4% through
 May, 2017                                                             589,000
Amount due under loan agreement
 with the Small Business
 Administration, facilitated by
 TCF National Bank, as part of the
 purchase of TCST, payable in monthly
 installments of $4,321 including
 interest at 7.4% through December, 2016                 444,000       461,000
Amount due under loan agreement with
 Marvin Schendel as part of the
 purchase of TCST, payable in monthly
 installments of $10,000, including
 interest at 8.0% through September, 2002                 39,000       151,000
Capital lease obligations, secured by
 specific equipment                                                     42,000
                                                       4,117,000     3,373,000
Less current maturities                                 (755,000)     (543,000)

Total long-term debt                                $  3,365,000  $  2,800,000

    Maturities of long-term debt and capitalized lease obligations
for each of the five years following April 30, 2002 are as
follows:

               2003                   $     755,000
               2004                         767,000
               2005                         823,000
               2006                         882,000
               2007                         553,000
               Thereafter                   337,000
               Total obligations      $   4,117,000

    Total interest expense incurred on long-term debt and
capitalized lease obligations for the years ended April 30,
2002, 2001 and 2000 amounted to $230,000, $265,000 and $290,000,
respectively.


4   BANK CREDIT LINE

     The Company has a revolving line of credit with
its bank, which permits borrowings of up to $500,000.
Borrowings under the agreement bear interest at the
bank's reference rate and are secured by the general
assets of the Company (rate at April 30, 2002 and April
30, 2001 was 4.75% and 8.5%, respectively).  The
agreement contains covenants that, among other things,
require the Company to maintain a minimum capital base,
current ratio, and other financial ratios.  The current
agreement, which is subject to annual renewal by the
Company and the bank, expires on August 30, 2002 and is
expected to be renewed.  There were no borrowings
outstanding under this agreement at April 30, 2002 and
2001.


5   INCOME TAXES

    Income tax expense (benefit) attributable to income before
income taxes consists of:


                                           Current       Deferred       Total
   Year ended April 30, 2002:
    U.S. Federal                       $         -     $        -   $        -
    State and local                          7,000              -        7,000
       Total                           $     7,000     $        -   $    7,000

   Year ended April 30, 2001:
    U.S. Federal                       $         -     $        -   $        -
    State and local                          9,000              -        9,000
       Total                           $     9,000     $        -   $    9,000

   Year ended April 30, 2000:
    U.S. Federal                       $  (118,000)    $        -   $ (118,000)
    State and local                          9,000              -        9,000
       Total                           $  (109,000)    $        -   $ (109,000)


    The provision (benefit) for income taxes differs from the amount
computed by applying the statutory U.S. federal income tax rate
to operations for the following reasons:


                                             2002           2001         2000

  Computed expected tax expense
   (benefit) at 34%                    $    (63,800)   $   70,300  $    31,500
  State taxes, net of federal
   effect                                     4,400         6,200        5,900
  Decrease in valuation allowance           (10,500)      (66,500)     (22,800)
  Tax benefit from reduction of
   carryback loss reserve                         -             -     (118,000)
  State net operating loss carryforward      74,400
  Other net                                   2,500        (1,000)      (5,600)
                                       $      7,000         9,000   $ (109,000)

     The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets (liabilities) at
April 30, 2002 and 2001 are as follows:
                                      2002       2002       2001       2001
                                    Current  Non-current  Current  Non-current
  Allowance for doubtful
   accounts                       $  19,400  $       -  $  19,400  $       -
  Accrued vacation pay               14,900          -     16,600          -
  Accrued legal fees                      -          -      5,800          -
  Accrued bonus                      40,700          -     23,300          -
  Other                               5,400          -      4,300          -
  Differences in tax and
   book depreciation of
   plant and equipment                    -   (715,900)         -   (657,100)
  Differences in tax and
   book amortization of
   intangibles                            -     94,700          -     74,700
  Alternative minimum tax
   credit carryforwards                   -     74,700          -     74,700
  State net operating loss
   carryforward                           -    137,500          -    207,200
  Federal net operating loss
   carryforwards, net of state
   net operating loss impact              -    403,200          -    317,700
  Capital loss carryover                  -    216,100          -    216,100
    Total gross deferred tax asset   80,400    210,300     69,400    233,300
  Less valuation allowance          (80,400)  (210,300)   (69,400)  (233,300)
  Net deferred tax asset          $       -  $       -  $       -  $       -

     A reconciliation of the valuation allowance for deferred taxes
is as follows:

                                                    2002           2001

  Valuation allowance at beginning of year     $  302,700     $  369,200
  Decrease in allowance                           (12,000)       (66,500)
  Valuation allowance at end of year           $  290,700     $  302,700

    At April 30, 2002, the Company has net operating loss carry-
forwards for federal purposes of $1,186,000 which are available
to offset future federal taxable income, if any, and expire
between April 30, 2010 and April 30, 2022. The Company also has
net operating loss carryforwards for state purposes of $210,000
which are available to offset future state taxable income, if
any, and expire between April 30, 2010 and April 30, 2017. The
Company also has federal and state alternative minimum tax
credit carryforwards of approximately $74,000 which are
available to reduce future federal and state regular income
taxes, if any, over an indefinite period.

    The valuation allowance at April 30, 2002 was
$290,700.  In assessing the realizability of deferred tax
assets, management considers whether it is more likely than not
that some portion or all of the deferred tax assets will not be
realized.  Management considers the scheduled reversal of
deferred tax liabilities, projected future taxable income, tax
carryover periods available, and tax planning strategies in
making this assessment.

    On March 8, 1996, the Company filed Form 1139 "Corporate
Application for Tentative Refund," to carry back losses under
Section 172(f) of the Internal Revenue Code, for a refund amount
of $146,300.  The Company was notified in April 1996 that the
IRS had allowed the carry back loss and it received a refund in
June 1996.  Section 172(f) is an area of the tax law without
substantial legal precedent or guidance.   Consequently, a
reserve  of $118,000 had been recorded in the amount of the
refund net of the collection expenses which would be reimbursed
if the Company's position did not withstand any such challenge
and the refund was reversed.  Due to the expiration of the
statute of limitations, the reserve was reduced to zero in
fiscal 2000 and has been reflected in the consolidated
statements of operations as a tax benefit.

6   OPTIONS

    In accordance with the terms of an Executive Employment
Agreement dated as of April 12, 1989, between the Company and L.
Michael McGurk, the then Vice President and Secretary of the
Company, and a Stock Option Agreement dated as of April 12,
1989, between the Company and Lance H. Duncan, the then
President of the Company, the Company granted each of Messrs.
McGurk and Duncan options to purchase 100,000 shares of the
Company's Class A Stock at $1.125 per share, the average of the
closing "bid" and "ask" quotations for a share of the Company's
Class A Stock on the date of grant.  The unexercised options
granted to Messrs. McGurk and Duncan expired on April 12, 2000.
On April 26, 2000 the board of directors elected to extend
Messrs. McGurk's and Duncan's options to April 12, 2010 at a
price of $0.4375 per share.

    In connection with the surrender of 15,000 shares of common
stock by Mr. McGurk, on February 19, 2001 (see note 8) the
Company granted Mr. McGurk 15,000 options to purchase common
shares at the market price of the stock on the date of grant.

7   STOCK OPTION PLAN

    In accordance with the Milastar Corporation Stock Option Plan
(the "Option Plan") options to purchase 800,000 shares of Class
A Stock may be granted to directors, key employees and key
consultants.  The options granted under the Option Plan may be
incentive or nonstatutory stock options and are subject to
approval by a stock option committee (the "Committee") comprised
of one or more disinterested persons and appointed by the Board
of Directors.  Nonstatutory options have a per share exercise
price of not less than 85% of the fair market value of a share
of Class A Stock on the effective date of the grant of the stock
option while incentive options have a per share exercise price
of not less than 100% of the fair market value of a share of
Class A Stock on the effective date of the grant.  Options are
exercisable in such installments and during such period as may
be fixed by the Committee at the time of grant, but no option is
exercisable after the expiration of ten years from the date of
grant of such option.

               Transactions for 2002, 2001 and 2000 are as follows:
                                             2002          2001          2000

  Options outstanding May 1                335,000       593,666       368,666
  Granted                                                 15,000       225,000
  Exercised
  Expired                                                273,666
  Options outstanding at April 30          335,000       335,000       593,666
  Weighted average exercise
   price at April 30                      $  .4790      $  .4790      $  .4880
  Option price range at April 30          $  .4375      $  .4375      $  .4375
                                               to            to            to
                                             .5625         .5625         .9609
  Options exercisable at April 30          335,000       335,000       593,666
  Options available for grant
   at April 30



    The Company has adopted the disclosure-only provisions of SFAS
No. 123, Accounting for Stock-Based Compensation.  Accordingly,
no compensation cost has been recognized with respect to the
Option Plan.  Had compensation cost for the Option Plan been
determined based on the fair value methodology prescribed by
SFAS 123, the Company's earnings per share would have been
reduced to the pro forma amounts indicated below:

                                             2002          2001          2000
Net income (loss) - as reported       $  (194,000)   $  198,000   $   202,000
Net income (loss) - pro forma         $  (200,000)   $  192,000   $   160,000
Net income (loss) per
 share - basic - as reported          $      (.07)   $      .07   $       .07
Net income (loss) per
 share - basic - pro forma            $      (.07)   $      .07   $       .06

    The pro forma amounts may not be representative of the
effects on reported net income (loss) for future years.  The per
share, weighted-average fair value of each option granted is
calculated using the Black-Scholes option-pricing model with the
following weighted-average assumptions used for grants in the
following years:

                                             2002          2001          2000
  Dividend yield                               0%            0%            0%
  Expected volatility                         64%           66%           64%
  Risk-free interest rate                    6.0%          5.0%          6.0%
  Expected lives                          10 years       5 years      10 years



    At April 30, 2002, the weighted average remaining contractual
life of the outstanding options was 7.0 years.

8   RELATED PARTY TRANSACTIONS

    Notes Receivable

    The Company entered into a note during fiscal 1993 with L.
Michael McGurk, President, Chief Operating Officer and a
director of the Company who, with the encouragement of the
Company, bought 15,000 shares of Milastar Class A Common Stock
and entered into a note with the Company.  The note of $20,000
was dated August 15, 1992 and bore interest at 50 basis points
over NYC Prime adjustable upward or downward at the end of each
six-month period, which interest rate was subject to an 8% "cap"
during the life of the loan.  Interest on the principal was
payable each year on the anniversary date of the note.  The
principal portion of the note that was originally due on August
15, 1995 had been extended until August 15, 2002.  On February
19, 2001 the Milastar Board of Directors and Mr. McGurk agreed
to surrender the 15,000 shares of common stock in satisfaction
of the officer note receivable.  The interest due on the note of
$19,000 was expensed in fiscal 2001.

    Total interest income related to this note for the fiscal years
ended April 30, 2002, 2001 and 2000 amounted to $0, $3,000 and
$3,000, respectively.

9   INCOME PER COMMON SHARE

    The following table presents a reconciliation of the
denominators used in the computation of net income per common
share - basic and net income per common share - diluted for the
years ended April 30, 2002, 2001 and 2000:

                                             2002          2001          2000
Weighted shares of Class A
 Stock outstanding - basic               2,723,264     2,723,264     2,738,264
Weighted shares of Class A
 Stock assumed upon exercise
 of stock options                                _       106,621       360,681
Weighted shares of Class A
 Stock outstanding - diluted             2,723,264     2,829,885     3,098,945

Options excluded from the net income
 (loss) calculations because the effect
 on net income (loss) per share
 would not have been dilutive              116,455


10   COMMITMENTS AND CONTINGENCIES

     The Company has been party to various legal proceedings
incidental to its normal operating activities.  Although it is
impossible to predict the outcome of such proceedings,
management believes, based on the facts currently available,
that none of such claims will result in losses that would have a
materially adverse effect on the Company's financial condition.

      In conjunction with the sale of New England Metal Treating
Corporation, the Company guaranteed the lease payments to the
landlord for the property located in Auburn, Massachusetts until
April 4, 2006 for a maximum amount of $50,000.



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

    None


                       PART III

Item 10.
    Directors and Executive Officers of the Registrant

    Certain of the information respecting Registrant's executive
officers required by this Item is set forth under the caption
"Executive Officers of Registrant" in Part I.  Other information
respecting the executive officers, as well as the required
information for directors, will be contained in the Information
Statement, and reference is expressly made thereto for the
information incorporated herein by the aforesaid reference.

Item 11.
    Executive Compensation

    The information required by this Item will be contained in the
Information Statement, and reference is expressly made thereto
for the information incorporated herein by the aforesaid
reference.

Item 12.
    Security Ownership of Certain Beneficial Owners and Management

    The information required by this Item will be contained in the
Information Statement, and reference is expressly made thereto
for the information incorporated herein by the aforesaid
reference.

Item 13.
    Certain Relationships and Related Transactions

    Certain information required by this Item is set forth under the
caption "Related Party Transactions" in Part II, Item 8, Note 8.
Other information required by this Item will be contained in the
Information Statement, and reference is expressly made thereto
for the information incorporated herein by the aforesaid
reference.


                       PART IV

Item 14.
    Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)  The following documents are filed as part of this report:

                                                                   Page No.
  1. Financial Statements
      Independent Auditors' Report                                    9
      Consolidated Balance Sheets at April 30, 2002 and 2001       10 - 11
      Consolidated Statements of Operations for
       the three years ended April 30, 2002                          12
      Consolidated Statements of Cash Flows for
       the three years ended April 30, 2002                          13
      Consolidated Statements of Changes in
       Stockholders' Equity for the
       three years ended April 30, 2002                              14
      Notes to Consolidated Financial Statements                   15 - 23

  2.  Financial Statement Schedules
      Schedule II-Valuation and Qualifying Accounts                  25

      Schedules other than those listed above have been omitted
       since they are either not applicable, not required or
       the information is included elsewhere herein.

  3.  Exhibits                                                       24

Milastar Corporation and Consolidated Subsidiaries

                     INDEX TO EXHIBITS

Exhibit
  No.      Description

  3.1      Certificate of Incorporation, as amended, a copy of which was
            filed as Exhibit (1) to Registrant's Registration Statement on
            Form 10 dated August 27, 1970 and, by this reference, such
            Exhibit is incorporated herein

  3.2      By-laws, as amended a copy of which was filed as Exhibit 3.2
            to Registrant's Form 10-K dated for the fiscal year ended
            April 30, 1998 and, by this reference, such Exhibit is
            incorporated herein

  3.3      Certificate of Amendment to Certificate of Incorporation, a
            copy of which was filed as Exhibit 3.3 to Registrant's Annual
            Report on Form 10-K for the fiscal year ended April 30,
            1984 and, by this reference, such Exhibit is incorporated
            herein

  3.4      Certificate of Amendment to Restated Certificate of
            Incorporation a copy of which was filed as Exhibit 3.4 to
            Registrant's Annual Report on Form 10-K for the fiscal year
            ended April 30, 1987 and, by this reference, such Exhibit is
            incorporated herein

  3.5      Certificate of Amendment to Certificate of Incorporation of
            Milastar Corporation, a copy of which was filed as Exhibit
            3.5 to Registrant's Form 10-Q for the quarter ended January
            31, 1989 and, by this reference, such Exhibit is incorporated
            herein

 10.1      Milastar Corporation Stock Option Plan dated as of March 4,
            1991 a copy of which was filed as Exhibit 10.6 to
            Registrant's Form 10-K for the fiscal year ended April 30,
            1991 and, by this reference, such Exhibit is incorporated
            herein

 10.2      Asset Purchase Agreement dated as of April 4, 1996, between
            Registrant and New England Metal Treating Inc., a copy of
            which was filed as Exhibit 10.10 to the Registrant's Current
            Report on Form 8-K dated April 17, 1996 and, by this
            reference, such Exhibit is incorporated herein

 10.3      Executive Employment Agreement dated as of April 30, 1997
            by and between Registrant and L. Michael McGurk

 10.4       Asset Purchase Agreement dated as of March 16, 1998,
             between Registrant and Twin City Steel Treating Inc., a copy
             of which was filed as Exhibit 10.5 to the Registrant's Current
             Report on Form 8-K dated March 27, 1998 and, by this
             reference, such Exhibit is incorporated herein

 21.1       List of Significant Subsidiaries

                      Subsidiary                     State of Incorporation
            Flame Metals Processing Corporation             Delaware

      (b)   Reports on Form 8-K:

            None.

Milastar Corporation and Consolidated Subsidiaries



               Schedule II

      VALUATION AND QUALIFYING ACCOUNTS




                        Balance                                       Balance
                     at beginning                                      at end
                        of year      Additions    Deductions (1)      of year

Allowance for doubtful accounts:

   April 30, 2002   $    50,000    $     1,000     $   1,000      $   50,000

   April 30, 2001   $    50,000    $    35,000     $  35,000      $   50,000

   April 30, 2000   $    50,000    $     4,000     $   4,000      $   50,000

   (1)  Direct write-off of accounts deemed uncollectible.

Milastar Corporation and Consolidated Subsidiaries

                  SIGNATURES

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




                                                 MILASTAR CORPORATION
                                                     (REGISTRANT)



                                              By:   /s/ J. RUSSELL DUNCAN
                                                        J. Russell Duncan
                                                      Chairman of the Board
                                                      Dated:  July 29, 2002



  Pursuant to the requirements of the Securities Exchange Act of 1934, the
following persons on behalf of the Registrant and in the capacities indicated
this report of the Registrant and in the capacities indicated on
July 29, 2002.





        /s/ J. RUSSELL DUNCAN                 /s/ L. MICHAEL McGURK
            J. Russell Duncan,                    L. Michael McGurk
 Chairman of the Board, Chief Executive    President, Chief Operating Officer
       Officer and Director                         and Director






         /s/ DENNIS J. STEVERMER              /s/ LANCE H. DUNCAN
             Dennis J. Stevermer                  Lance H. Duncan
          Vice President Treasurer,
           Principal Financial                   Secretary and Director
          and Accounting Officer