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, 2000

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 7, 2000 was $1,027,000
based upon the bid price of the Class A common stock as quoted
on OTC Electronic Bulletin Board.  On that date there were
2,738,264 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 11, 2000.

                        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 and New
England regions. The customer base manufactures a variety of
mechanical end-products and customarily out sources
(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 is a wholly-owned subsidiary of Flame
Metals.

    Flame Metals and its subsidiary generate 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 does not have any
customer accounting for more than 10 percent of total net sales.

    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 operates this entity as
the wholly owned subsidiary, New England Metal Treating
Corporation.  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 has three plants located in the Minneapolis-St.
Paul, Minnesota area and one plant in Massachusetts.  These
facilities include Flame Metals - St. Louis Park, MN (35,000 sq.
ft. - owned), Flame Metals - Bloomington, MN  (35,000 sq. ft. -
leased) and Flame Metals - Rogers, MN (33,000 sq. ft. - owned).
The Company's fourth plant is operated by New England Metal
Treating Corporation - Auburn, MA (9,000 sq. ft. - leased).

    Milastar earned a profit before income taxes of $93,000 in
fiscal 2000 and $474,000 in fiscal 1999.  Net income after taxes
amounted to $202,000 in fiscal 2000 and $462,000 in fiscal 1999.
Results of operations are discussed more fully in "Management's
Discussion and Analysis" beginning on page 5.

    The Company's non-operating other income (expense) resulted in a
net expense of $353,000 in fiscal year 2000, up $20,000 from the
$333,000 in expense recorded in fiscal year 1999.  Current
assets as a percent of total assets amounted to 19% at April 30,
2000 and 1999.  The book value per share was $1.71 per share at
April 30, 2000 compared with $1.63 per share at April 30, 1999.
The bid price per share, as quoted on the OTC Electronic
Bulletin Board, was $0.375 as of April 30, 2000.

    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 both the Minneapolis-St. Paul, Minnesota and
Auburn, Massachusetts markets 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 operates four separate plant locations and employs a
total of approximately 74 employees; 38 in St. Louis Park, MN,
14 in Bloomington, MN, 14 in Rogers, MN and 8 in Auburn, MA.
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
2001.  Eleven production employees at the Bloomington, MN plant
are represented by the International Union of Electronic,
Electrical, Salaried, Machine and Furniture Workers, AFL-CIO
Local 1140.  The plants in St. Louis Park, MN, Rogers, MN and
Auburn, MA are not subject to a collective bargaining agreement.

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 or leases four industrial properties as listed below:


            ACTIVITY               LOCATION          SIZE (SQ. FT.)   STATUS

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

  Flame Metals                  Rogers, MN               33,000        Owned

  Flame Metals                  Bloomington, MN          35,000       Leased

  New England Metal Treating    Auburn, MA                9,000       Leased

    The lease on the Bloomington, MN plant is a ten-year lease
providing for annual rent of $72,000 per lease year in years one
through five and $75,600 per lease year in years six through
ten.  Such rental payments are payable in monthly installments
due and payable on the first day of each calendar month.  The
Company is obligated under the lease to pay all real estate
taxes, maintenance expense and insurance.  The lease is
renewable and the Company has the right to purchase the leased
building anytime during the lease term subject to the terms and
conditions specified in the lease.

    The lease on the Auburn, MA plant is a five-year lease providing
for annual rent of $46,000 adjusted each year for changes in the
Consumer Price Index.  Such rental payments are payable in
monthly installments due and payable on the first day of each
calendar month.  The lease is renewable and the Company does not
have a purchase option.

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, 2000.


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, 1995.  Unless
otherwise indicated in the table below, all positions and
offices indicated have been continuously held since May 1, 1995.
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) . . .    83          Chairman and Chief Executive
                                           Officer.
L. Michael McGurk . . . . .    49          President and Chief Operating
                                           Officer.
Dennis J. Stevermer . . . .    39          Vice President Treasurer.

Lance H. Duncan (2) . . . .    44          Secretary.


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

(2)
    Mr. Lance H. Duncan is President and Chief Operating Officer of
    Sound Techniques, Inc. (audio-video production studios) 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 2000 fiscal year.  The Company expects to
file the Information Statement with the Securities and Exchange
Commission on or before August 11, 2000 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 2000      Fiscal 1999
                                       High     Low     High     Low
 First Quarter . . . . . . . . . .   $ 1.25  $ 0.44   $ 1.06  $ 0.75
 Second Quarter. . . . . . . . . .   $ 1.13  $ 0.75   $ 0.81  $ 0.56
 Third Quarter . . . . . . . . . .   $ 0.75  $ 0.38   $ 0.56  $ 0.44
 Fourth Quarter. . . . . . . . . .   $ 0.38  $ 0.38   $ 0.63  $ 0.38

    On July 7, 2000 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,
                                    2000     1999     1998     1997     1996
                                      (In thousands except per share data)

Net sales. . . . . . . . . . . . $ 9,002  $ 9,119  $ 8,261  $ 7,325  $ 6,642
Net income (loss). . . . . . . .     202      462      484      (63)    (254)
Net income (loss) per common
 share - basic . . . . . . . . .     .07      .17      .18     (.02)    (.09)
Net income (loss) per common
 share - diluted . . . . . . . .     .07      .16      .17     (.02)    (.09)

Financial Position:
 Total assets. . . . . . . . . .   8,611    9,165    9,022    6,093    5,902
 Short-term obligations. . . . .   1,988    1,926    1,838    1,493    1,433
 Long-term obligations . . . . .   1,947    2,765    3,172    1,072      842
 Stockholders' equity. . . . . . $ 4,676  $ 4,474  $ 4,012  $ 3,528  $ 3,627

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, 2000 showed a 1% decrease in sales and a 56% decrease in
after tax profit.  The lower profit is primarily due to lower
sales in the Midwest which resulted in reduced operating income.

    Milastar's primary revenues flow from metallurgical services
provided by Flame Metals Processing Corporation  and New England
Metal Treating Corporation.  Significant progress continues to
be made in reducing factory labor, energy costs and primary
production supplies as a percentage of sales.  These major areas
will continue to receive increased focus as the Company strives
to increase equipment utilization, expand capacity and absorb
fixed overhead costs.

    Milastar has net operating loss carry forwards for state and
federal purposes of approximately $2,994,000 and $1,089,000,
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 2000 Compared to Fiscal 1999.  Net sales for fiscal 2000
totaled $9,002,000, a 1% decrease from $9,119,000 in fiscal
1999. The sales decrease was primarily attributable to changes
in the economy which resulted in higher sales in the New England
area being offset by lower sales in the Midwest.

    Cost of sales of $6,478,000 (72% of sales) in fiscal 2000
increased $205,000 from $6,273,000 (69% of sales) in the
previous fiscal year. The dollar increase was primarily
attributable to additional payroll and supply costs at the New
England facility which was the result of increased production in
that territory.  Gross profit decreased by $322,000, from
$2,846,000 in fiscal 1999 to $2,524,000 in fiscal 2000.  The
decrease in gross profit is the result of a combination of
increased operating costs at the New England plant and lower
sales in the Midwest.

    Selling, general and administrative expense increased as a
percentage of sales to 22% in fiscal 2000, up 1% from 21% in
fiscal 1999.  The increase as a percent of sales is the result
of relatively fixed overhead costs being absorbed by lower net
sales.

    Total other expense amounted to $353,000 in fiscal 2000,
compared with other expense of  $333,000 reported in fiscal
1999.  The increase was primarily attributable to lower interest
expense in fiscal 2000 being offset by a $54,000 net gain on a
settlement of a non-compete agreement in fiscal 1999.

    The Company recorded an income tax benefit of $109,000 in fiscal
2000 compared with an income tax expense of $12,000 in fiscal
1999.  The recording of the refund 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.


    Fiscal 1999 Compared to Fiscal 1998.  Net sales for fiscal 1999
totaled $9,119,000, a 10% increase from $8,261,000 in fiscal
1998.  The increase was primarily attributable to additional
production capacity as a result of the March 1998 acquisition of
the Rogers, MN facility.

    Cost of sales as a percentage of sales was 69% in both fiscal
1999 and 1998.  Gross profit increased by $304,000, from
$2,542,000 in fiscal 1998 to $2,846,000 in fiscal 1999.  The
increase in gross profit was the result of a combination of
higher sales and the proportionately increased costs associated
with the operation of the Rogers, MN plant.

    Selling, general and administrative expense decreased as a
percentage of sales to 21% in fiscal 1999, down 1% from 22% in
fiscal 1998.  The decrease as a percent of sales was the result
of overhead costs being absorbed by increased net sales.

    Total other expense amounted to $333,000 in fiscal 1999,
compared with other expense of  $158,000 reported in fiscal
1998.  The increase was directly attributable to an increase in
interest expense due to additional debt resulting from the
acquisition of the Rogers, MN facility.

         Effects of Inflation

    During fiscal 2000 and 1999 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.

         Liquidity and Capital Resources

    At April 30, 2000, the Company had negative working capital of
$361,000 compared with $159,000 of negative working capital as
of April 30, 1999, and the ratio of current assets to current
liabilities was 0.8 to 1.0 and 0.9 to 1.0 at April 30, 2000 and
1999, respectively.  Cash and current receivables represented
83% (82% at April 30, 1999) and 16% (16% at April 30, 1999) of
total current assets and total assets, at April 30, 2000,
respectively.

    During fiscal 2000 cash provided by operating activities
amounted to $1,303,000 compared with cash provided of $1,314,000
in fiscal 1999.  The Company added $610,000 to property, plant
and equipment in fiscal 2000 compared with $1,194,000 in the
previous year.  Working capital requirements for fiscal 2000
were funded primarily from available cash, cash generated from
operations and short-term borrowings under the line of credit.

    The Company believes it has sufficient capital resources to meet
its fiscal 2001 operations and equipment acquisitions cash flow
requirements.




         Year 2000

    Management devoted resources throughout the company to minimize
the risk of potential disruption from year 2000 issues related
to computers or other equipment with date-sensitive software and
embedded chip systems.  There were no disruptions that adversely
impacted our operations and as such there was no material impact
to our financial position, results of operations or cash flows.


         Market Risks

      The Company is exposed to certain market risks with its
$500,000 line of credit of which $250,000 is outstanding at
April 30, 2000.  The line bears interest at the bank's reference
rate plus .25%.


         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.
Milastar Corporation and Consolidated Subsidiaries
Auditors' Report





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, 2000 and 1999, and
the related consolidated statements of operations, cash flows
and changes in stockholders' equity and comprehensive income for
each of the fiscal years in the three-year period ended April
30, 2000.  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, 2000 and 1999, and the results of their operations and their
cash flows for each of the fiscal years in the three-year period
ended April 30, 2000 in conformity with auditing 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 2, 2000

Milastar Corporation and Consolidated Subsidiaries
Financial Statements

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

                 CONSOLIDATED BALANCE SHEETS

                   April 30, 2000 and 1999

                           ASSETS

                                                    2000             1999
<S>
Current assets:                              <C>              <C>
Cash and cash equivalents. . . . . . . .           56,000           19,000
Accounts and other receivables:
 Trade, less allowance for doubtful
  accounts of $50,000 in 2000 and
  50,000 in 1999 . . . . . . . . . . . .        1,281,000        1,408,000
 Other . . . . . . . . . . . . . . . . .           16,000           14,000
Inventory. . . . . . . . . . . . . . . .          116,000          167,000
Prepaid supplies and other . . . . . . .          158,000          159,000

    Total current assets . . . . . . . .        1,627,000        1,767,000

Property, plant and equipment:
 Land. . . . . . . . . . . . . . . . . .          420,000          420,000
 Buildings and improvements. . . . . . .        2,274,000        2,145,000
 Deposits on equipment . . . . . . . . .           45,000
 Equipment . . . . . . . . . . . . . . .        8,704,000        8,314,000
                                               11,443,000       10,879,000
  Less accumulated depreciation. . . . .       (4,714,000)      (3,831,000)
                                                6,729,000        7,048,000
Other assets:
 Non-compete agreements, net of
   accumulative amortization of
   $191,000 & $96,000 respectively . . .          255,000          350,000

    Total assets . . . . . . . . . . . .        8,611,000        9,165,000
</TABLE>
<TABLE>
<CAPTION>
      Milastar Corporation and Consolidated Subsidiaries
                   Financial Statements

                 CONSOLIDATED BALANCE SHEETS

                   April 30, 2000 and 1999

            LIABILITIES AND STOCKHOLDERS' EQUITY


                                                    2000             1999
<S>
Current liabilities:                         <C>              <C>
Note payable to bank . . . . . . . . . .          250,000          100,000
Current maturities of long-term debt . .          844,000          792,000
Accounts payable . . . . . . . . . . . .          382,000          321,000
Income taxes payable . . . . . . . . . .                           121,000
Accrued payroll and benefits . . . . . .          303,000          332,000
Accrued real estate taxes. . . . . . . .          105,000          106,000
Other accrued liabilities. . . . . . . .          104,000          154,000

    Total current liabilities. . . . . .        1,988,000        1,926,000

Long-term debt, less current
 maturities. . . . . . . . . . . . . . .        1,947,000        2,765,000

    Total liabilities. . . . . . . . . .        3,935,000        4,691,000

Commitments and contingencies (Notes 10 and 11)

Stockholders' equity:
Preferred stock, $1.00 par value;
 authorized 5,000,000 shares, none
 issued. . . . . . . . . . . . . . . . .
Common stock, Class A, $.05 par
 value.  Authorized 7,500,000 shares,
 issued and outstanding 2,738,264
 shares in 2000 and 1999 . . . . . . . .          137,000          137,000
Note receivable from officer . . . . . .          (20,000)         (20,000)
Additional paid-in capital . . . . . . .        1,666,000        1,666,000
Retained earnings. . . . . . . . . . . .        2,893,000        2,691,000

   Total stockholders' equity. . . . . .        4,676,000        4,474,000

    Total liabilities and
     stockholders' equity. . . . . . . .        8,611,000        9,165,000
</TABLE>
<TABLE>
<CAPTION>
      Milastar Corporation and Consolidated Subsidiaries
                   Financial Statements


            CONSOLIDATED STATEMENTS OF OPERATIONS

                Fiscal Years Ended April 30,


                                       2000             1999             1998
<S>                              <C>              <C>              <C>
Net sales. . . . . . . . . . . .   9,002,000        9,119,000        8,261,000
Cost of sales. . . . . . . . . .   6,478,000        6,273,000        5,719,000

Gross profit . . . . . . . . . .   2,524,000        2,846,000        2,542,000
Selling, general and
 administrative expenses . . . .   1,983,000        1,954,000        1,851,000
Amortization of non-compete
 agreements. . . . . . . . . . .      95,000           85,000           35,000

Operating income . . . . . . . .     446,000          807,000          656,000

Other income (expense):
 Dividend and interest income. .       2,000            8,000           15,000
 Interest expense. . . . . . . .    (290,000)        (346,000)        (177,000)
 Net gain on settlement
  of non-compete agreement . . .                       54,000
 Net gain (loss) on sale
  of property and equipment. . .     (65,000)         (49,000)           4,000
Total other expense. . . . . . .    (353,000)        (333,000)        (158,000)

Income before income taxes . . .      93,000          474,000          498,000
Income tax expense (benefit) . .    (109,000)          12,000           14,000

Net income . . . . . . . . . . .     202,000          462,000          484,000

Net income per Class A
 common share - basic. . . . . .         .07              .17              .18

Net income per Class A
 common share - diluted. . . . .         .07              .16              .17
</TABLE>
<TABLE>
<CAPTION>
      Milastar Corporation and Consolidated Subsidiaries
                   Financial Statements

            CONSOLIDATED STATEMENTS OF CASH FLOWS

                Fiscal Years Ended April 30,

                                       2000             1999             1998
<S>                              <C>              <C>              <C>
CASH FLOWS FROM OPERATING
 ACTIVITIES:
  Net income . . . . . . . . . .     202,000          462,000          484,000
  Adjustments to reconcile
   net income to net
   cash provided by operating
   activities:
   Depreciation and
    amortization . . . . . . . .     999,000          895,000          718,000
  Net gain on settlement
    of non-compete agreement . .                      (54,000)
  Net loss (gain) on disposal
    of property and equipment. .      65,000           49,000           (4,000)
 Changes in operating assets
   and liabilities, net of
   effect of the purchase of
   the net assets of a business:
   Accounts and other
    receivables. . . . . . . . .     125,000          (74,000)          78,000
   Inventory . . . . . . . . . .      51,000          (14,000)          32,000
   Prepaid supplies and other. .       1,000          (20,000)          14,000
   Accounts payable and
    accrued expenses . . . . . .     (19,000)          69,000         (538,000)
   Income taxes payable. . . . .    (121,000)           1,000

Net cash provided by
 operating activities. . . . . .   1,303,000        1,314,000          784,000

CASH FLOWS FROM
 INVESTING ACTIVITIES:
  Purchases of  property, plant
   and equipment, net of effect
   of the purchase of the net
   assets of a business. . . . .    (610,000)      (1,194,000)        (656,000)
  Proceeds from disposal of
   property, plant and
   equipment . . . . . . . . . .       5,000           39,000           24,000
  Deposits made for equipment. .     (45,000)                         (279,000)
  Payment for purchase of net
   assets of a business. . . . .                                      (174,000)

Net cash used in investing
 activities. . . . . . . . . . .    (650,000)      (1,155,000)      (1,085,000)

CASH FLOWS FROM
 FINANCING ACTIVITIES:
  Proceeds from bank line
   of credit . . . . . . . . . .     150,000          100,000
  Principal payments of
   long-term debt. . . . . . . .    (766,000)        (789,000)        (317,000)
  Proceeds from issuance of
   long-term debt, net of effect
   of the purchase of the net
   assets of a business. . . . .                      485,000          776,000
   Repayments on note
    payable - stockholder. . . .                     (100,000)         (65,000)

Net cash provided by (used in)
 financing activities. . . . . .    (616,000)        (304,000)         394,000

NET INCREASE (DECREASE)
 IN CASH AND CASH EQUIVALENTS. .      37,000         (145,000)          93,000

CASH AND CASH EQUIVALENTS,
 BEGINNING OF YEAR . . . . . . .      19,000          164,000           71,000

CASH AND CASH EQUIVALENTS,
 END OF YEAR . . . . . . . . . .      56,000           19,000          164,000

Supplemental disclosures of
 cash flow information:
  Cash paid during the year for:
   Interest. . . . . . . . . . .     277,000          346,000          181,000
   Income taxes. . . . . . . . .       9,000           12,000           14,000
Supplemental disclosures of
 non-cash investing and
 financing activities:
  Capital lease obligations for
   purchases of equipment. . . .                       15,000
</TABLE>
<TABLE>
<CAPTION>
      Milastar Corporation and Consolidated Subsidiaries
                   Financial Statements



  CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

      Fiscal Years Ended April 30, 2000, 1999 and 1998




                                            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, 1997 .  2,738,264    137,000     (20,000)   1,666,000    1,745,000     3,528,000

Net income
for 1998 . . . .                                                     484,000       484,000

Balance,
April 30, 1998 .  2,738,264    137,000     (20,000)   1,666,000    2,229,000     4,012,000

Net income
for 1999 . . . .                                                     462,000       462,000

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

</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 and New England regions. 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 ("Flame
Metals") and Flame Metals' wholly owned subsidiary New England
Metal Treating 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 generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of 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 notes receivable and notes payable approximate their
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).

      New Accounting Rules - During 1999, the Financial
Accounting Standards Board (FASB) issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities."
SFAS 133 as amended by SFAS 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of Effective Date
of SFAS 133", is effective for us in our fiscal 2002.  We are
assessing the impact of adoption of SFAS 133 on our financial
statements.

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


2   ACQUISITION

    On March 16, 1998, the Company acquired certain assets and
assumed certain liabilities from Twin City Steel Treating
Company, Inc. (TCST), a commercial heat treater, located in
Rogers, Minnesota.  This acquisition was accounted for using the
purchase method and, accordingly, the aggregate acquisition
costs have been allocated to the net assets acquired based on
the fair values of such assets and liabilities at the
acquisition date.  The operating results of this additional
plant location have been included in the Company's statement of
operations for fiscal 1998 from the acquisition date forward.

    The Company paid $174,000 in cash and issued a note payable in
the amount of $454,000 to the former owner of TCST for the
remainder of the purchase price.

    The assets acquired and liabilities assumed consist of the
following:


         Accounts and other receivables              $     266,000
         Property, plant and equipment                   2,052,000
         Non-compete agreement                             446,000
         Accounts payable                                 (516,000)
         Long-term debt                                 (1,620,000)
               Total                                 $     628,000

    The operating results of this acquisition are included in the
Company's consolidated results of operations from the date of
acquisition.  The following unaudited pro forma summary presents
the consolidated results of operations as if the acquisition had
occurred at the beginning of fiscal 1997, after giving effect to
certain adjustments, including amortization of the non-compete
agreement, interest expense on the acquisition debt and related
tax effects.  These unaudited pro forma results have been
prepared for comparative purposes only and do not purport to be
indicative of what would have occurred had the acquisition been
made as of those dates or of results which may occur in the
future.




                                              Fiscal 1998         Fiscal 1997
    Net sales                             $     10,092,000    $      9,248,000
    Net income                                     737,000             111,000
    Net income per common share - basic                .27                 .04
    Net income per common share - diluted $            .25                 .04

3  LONG-TERM DEBT

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

                                                           2000          1999

Amount due under loan agreement
 with GE Capital, payable in
 monthly installments of varying
 amounts, including interest at
 10.3%  through October, 2000                       $    352,000  $    551,000
Amount due under loan agreement
 with First Mass Bank as part of the
 purchase of NEMT, payable in monthly
 installments of $9,926, including
 interest at 8.85% through April, 2000                                 114,000
Amount due under loan agreement
with TCF National Bank as part of
the purchase of TCST, payable in
monthly installments of $21,896,
including interest at 8.2% through
March, 2003                                              675,000       858,000
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                                                601,000       614,000
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                 478,000       493,000
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                255,000       350,000
Amount due under loan agreement
with TCF National Bank, payable in
monthly installments of $9,840
including interest at 8.0% through
July, 2004                                               344,000       424,000
Capital lease obligations, secured by
 specific equipment                                       86,000       153,000
                                                       2,791,000     3,557,000
Less current maturities                                 (844,000)     (792,000)

Total long-term debt                                 $  1,947,000 $  2,765,000

    Maturities of long-term debt and capitalized lease obligations
for each of the five years following April 30, 2000 are as
follows:

               2001                   $     844,000
               2002                         523,000
               2003                         411,000
               2004                          76,000
               2005 and thereafter          937,000
               Total obligations      $   2,791,000

    Total interest expense incurred on long-term debt and
capitalized lease obligations for the years ended April 30,
2000, 1999 and 1998 amounted to $290,000, $343,000 and $158,000,
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 plus .25%
and are secured by the general assets of the Company (rate at
April 30, 2000 and April 30, 1999 was 9.0% and 7.75%,
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, 2000.  At April 30, 2000 and
1999, borrowings outstanding under this agreement were $250,000
and $100,000, respectively.


5  INCOME TAXES

   Income tax expense attributable to net income (loss) from
operations consists of:


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

   Year ended April 30, 1999:
    U.S. Federal                       $         -     $        -   $        -
    State and local                         12,000              -       12,000
       Total                           $    12,000     $        -   $   12,000

  Year ended April 30, 1998:
    U.S. Federal                       $     7,000     $        -   $    7,000
    State and local                          7,000              -        7,000
       Total                           $    14,000     $        -   $   14,000


    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:


                                             2000           1999         1998

  Computed expected tax expense
   (benefit) at 34%                    $     31,500    $  161,500  $   169,600
  State taxes, net of federal
   effect                                     5,900         7,900       (1,500)
  Decrease in valuation allowance           (22,800)     (161,500)    (323,900)
  Adjustments to prior year
   temporary differences                          -             -      161,400
  Tax benefit from reduction of
   carryback loss reserve                  (118,000)            -            -
  Other net                                  (5,600)        4,100        8,400
                                       $   (109,000)       12,000   $   14,000

               The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets (liabilities) at
April 30, 2000 and 1999 are as follows:
                                      2000       2000       1999       1999
                                    Current  Non-current  Current  Non-current
  Allowance for doubtful
   accounts                       $  19,400  $       -  $  20,800  $       -
  Accrued vacation pay               38,500          -     16,100          -
  Accrued legal fees                      -          -     11,600          -
  Accrued bonus                       9,700          -     27,200          -
  Differences in tax and
   book depreciation of
   plant and equipment                    -   (644,800)         -   (596,500)
  Differences in tax and
   book amortization of
   intangibles                            -     49,400          -     23,700
  Foreign tax credit
   carryforward                           -          -          -     16,600
  Alternative minimum tax
   credit carry forwards                  -     74,700          -     76,300
  State net operating loss
   carryforward                           -    248,900          -    232,900
  Federal net operating loss
   carryforwards, net of state
   net operating loss impact              -    285,700          -    275,600
  Capital loss carryover                  -    216,100          -    216,100
    Total gross deferred tax asset   67,600    230,000     75,700    244,700
  Less valuation allowance          (67,600)  (230,000)   (75,700)  (244,700)
  Net deferred tax asset          $       -  $       -  $       -  $       -

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

                                                    2000           1999

  Valuation allowance at beginning of year     $  320,400     $  509,400
  Decrease in allowance                           (22,800)      (189,000)
  Valuation allowance at end of year           $  297,600     $  320,400

    At April 30, 2000, the Company has net operating loss carry
forwards for federal purposes of $1,089,000 which are available
to offset future federal taxable income, if any, and expire
between April 30, 2007 and April 30, 2012. The Company also has
net operating loss carry forwards for state purposes of
$2,994,000 which are available to offset future state taxable
income, if any, and expire between April 30, 2007 and April 30,
2014. The Company also has federal and state alternative minimum
tax credit carry forwards of approximately $75,000 which are
available to reduce future federal and state regular income
taxes, if any, over an indefinite period.

    The valuation allowance for the period ended April 30, 2000 was
$297,600.  In assessing the reliability 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.  Based upon historical levels of taxable
income, management believes it is more likely than not the
Company will realize the benefits of its deferred tax assets,
net of the existing valuation allowance at April 30, 2000.

    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 has been reduced to zero in
fiscal 2000 and has been reflected in the consolidated
statements of operations as a tax benefit.


6   OPTIONS

    Pursuant to the terms of two Promissory Notes each dated April
26, 1988, issued by the Company to Mimi G. Duncan, the wife of
J. Russell Duncan, Chairman of the Board and a director of the
Company, which Promissory Notes have been repaid in full, the
Company granted Mrs. Duncan options to purchase an aggregate of
233,333 shares of the Company's Class A common stock ("Class A
Stock") at $0.6738 per share, 115% of the average of the closing
"bid" and "ask" quotations for a share of such Common Stock on
the date of grant.  On June 19, 1989, Mrs. Duncan, exercised
options to purchase 66,666 shares of the Company's Class A Stock
and acquired the same for a purchase price of $45,000.  The
unexercised options granted to Mrs. Duncan expired on April 26,
1999.  On April 30, 1999 the board of directors elected to
extend Mrs. Duncan's options to April 30, 2001 at a price of
$0.6738 per share.

    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.

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 2000, 1999 and 1998 are as follows:
                                             2000          1999          1998

  Options outstanding May 1                368,666       368,666       273,666
  Granted                                  225,000                      95,000
  Exercised
  Canceled
  Options outstanding at April 30          593,666       368,666       368,666
  Weighted average exercise
   price at April 30                      $  .4880      $  .6380      $  .6640
  Option price range at April 30          $  .4375      $  .5625      $  .5625
                                               to            to            to
                                             .9609         .9609         .9609
  Options exercisable at April 30          593,666       368,666       368,666
  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:

                                             2000          1999          1998
Net income (loss) - as reported       $   202,000    $  462,000   $   484,000
Net income (loss) - pro forma         $   160,000    $  462,000   $   464,000
Net income (loss) per
 share - basic - as reported          $       .07    $      .17   $       .18
Net income (loss) per
 share - basic - pro forma            $       .06    $      .17   $       .17

       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:

                                             2000          1999          1998
  Dividend yield                               0%            0%            0%
  Expected volatility                         64%           48%           59%
  Risk-free interest rate                    6.0%          6.0%          6.0%
  Expected lives                          10 years       5 years       5 years



    At April 30, 2000, the weighted average remaining contractual
life of the outstanding options was 3.7 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
is dated August 15, 1992 and bears interest at 50 basis points
over NYC Prime adjustable upward or downward at the end of each
six-month period, which interest rate is subject to an 8% "cap"
during the life of the loan.  Interest on the principal is
payable each year on the anniversary date of the note.  The
principal portion of the note that was originally due on August
15, 1995 has been extended until August 15, 2001.  The Company
is holding Mr. McGurk's 15,000 shares of Milastar Class A Common
Stock as collateral for the note.

    Total interest income related to this note for the fiscal years
ended April 30, 2000, 1999 and 1998 amounted to $3,000, $3,000
and $3,000, respectively.

    Notes Payable

    During fiscal 1995 the Company entered into a series of note
payable transactions which at April 30, 2000 had a balance of
$0, including accrued interest, payable to J. Russell Duncan,
Chairman of the Board and a director of the Company.  The notes
bore an interest rate of 8% and were payable on demand.  The
Company classified the notes payable as a current liability.
Total interest expense related to this note payable for the
fiscal years ended April 30, 2000, 1999 and 1998 was $0, $0 and
$5,000, respectively.

    During fiscal 1996 the Company entered into a $100,000 note
payable, which at April 30, 2000 had a balance of $0, including
accrued interest, to L. Michael McGurk, President, Chief
Operating Officer and a director of the Company.  The note bore
an interest rate of 8.7% and was payable on demand.  The Company
classified the note payable as a current liability.  Total
interest expense related to this note payable for the fiscal
years ended April 30, 2000, 1999 and 1998 was $0, $8,000 and
$9,000, 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, 2000, 1999 and 1998:

                                             2000          1999          1998
Weighted shares of Class A
 Stock outstanding - basic               2,738,264     2,738,264     2,738,264
Weighted shares of Class A
 Stock assumed upon exercise
 of stock options                          360,681        80,533       196,941
Weighted shares of Class A
 Stock outstanding - diluted             3,098,945     2,818,817     2,935,205

10  OPERATING LEASE COMMITMENTS

    Leased property is comprised of Company automobiles, plant
equipment and two buildings.  The buildings represent the
majority of future minimum rental payments.  The leases are
renewable and provide for the Company to pay all real estate
taxes and maintenance expenses.

    Future minimum rental payments under noncancellable operating
leases, excluding real estate taxes, are as follows:

               2001         $     163,000
               2002                70,000
               2003                17,000
               2004                15,000
               2005                15,000
               Thereafter           9,000
                            $     289,000

      Total rent expense, excluding real estate taxes, for the
fiscal years ended April 30, 2000, 1999 and 1998 was $208,000,
$211,000 and $203,000, respectively.


11    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.


12    SUBSEQUENT EVENTS

      On May 5, 2000, the Company signed a letter of intent to sell
New England Metal Treating Corporation located in Auburn,
Massachusetts, a wholly owned subsidiary of Flame Metals.  The
Company anticipates no loss will be incurred as a result of this
transaction.

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
      Auditors' Report                                                8
      Consolidated Balance Sheets at April 30, 2000 and 1999        9 - 10
      Consolidated Statements of Operations for
       the three years ended April 30, 2000                          11
      Consolidated Statements of Cash Flows for
       the three years ended April 30, 2000                          12
      Consolidated Statements of Changes in
       Stockholders' Equity for the
       three years ended April 30, 2000                              13
      Notes to Consolidated Financial Statements                   14 - 22

  2.  Financial Statement Schedules
      Schedule II-Valuation and Qualifying Accounts                24

      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                                                       23

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      Executive Employment Agreement dated as of April 30, 1997
            by and between Registrant and J. Russell Duncan

 10.5       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
            New England Metal Treating Corporation       Massachusetts

      (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, 2000   $    50,000    $     4,000     $   4,000      $   50,000

   April 30, 1999   $    50,000    $     8,000     $   8,000      $   50,000

   April 30, 1998   $    35,000    $    21,000     $   6,000      $   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 28, 2000



  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 28, 2000.





        /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