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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-KSB/A
                                   (Mark One)
     [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2002

     [  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
         For the transition period from               to
                                        -------------    --------------

         Commission File Number:  0-21142

                              NEMATRON CORPORATION
                 (Name of small business issuer in its charter)

               Michigan                                    38-2483796
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

                 5840 Interface Drive, Ann Arbor, Michigan 48103
               (Address of principal executive offices) (Zip Code)

                                 (734) 214-2000
                           (Issuer's telephone number)

         Securities registered under Section 12(b) of the Exchange Act:
         Title of Each Class              Name of Exchange on Which Registered
     Common Stock, no par value                The American Stock Exchange

       Securities registered under Section 12(g) of the Exchange Act: None

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

     Check if disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information state-ments incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ X ]

     Issuer's revenues for its most recent fiscal year:  $14,867,215

     The aggregate market value of the voting stock held by non-affiliates as of
March 28, 2003, computed by reference to the closing price of such stock on such
date as quoted on The American Stock Exchange, was approximately $787,000. For
purposes of this computation only, all executive officers, directors and
beneficial owners of more than 5% of the outstanding Common Stock are assumed to
be affiliates.

     The number of shares outstanding of the issuer's Common Stock on March 28,
2003 was 15,744,472.

          TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT [ ] Yes [ X ] No

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<PAGE>


     The Registrant hereby amends its Form 10-KSB for the year ended December
31, 2002 to add Items 9, 10, 11 and 12 as set forth below:

                                     PART II

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
        with Section 16(a) of the Exchange Act

Directors of the Company

Certain information relating to the persons who are the directors of the Company
is set forth below.

                                                                  Director Term
   Name              Age       Principal Occupation                Since Expires

Hugo E. Braun         45  Partner with North Coast Technology       1996    2005
                          Investors, L.P., a venture capital fund,
                          and a Director
Ronald C. Causley     60  President of A-OK Controls Engineering,   2002    2003
                          Inc., a wholly owned subsidiary of the
                          Company, and a Director
Joseph J. Fitzsimmons 68  Retired Executive of Bell & Howell        1997    2004
                          Company and its subsidiary, University
                          Microfilms International, a provider of
                          technology services to libraries and
                          other organizations
Matthew S. Galvez     47  President and CEO of the Company, and a   1998    2004
                          Director
Stephen E. Globus     56  Chairman of the Board of Globus Growth    1998    2003
                          Group, a venture capital company, a
                          director of Plasmaco, Inc., and a Director

     Hugo E. Braun became a director in March 1996.  Mr. Braun is a partner with
North Coast  Technology  Investors,  L.P., a venture capital fund,  where he has
been employed since 1989.

     Ronald C. Causley was  appointed to the Board of Directors in February 2002
to fill a vacancy on the Board.  Mr.  Causley is the  President  of A-OK Control
Engineering,  Inc., an industrial  controls design and application company and a
wholly-owned  subsidiary  of  Nematron.  Mr.  Causley  is the  founder  of  A-OK
Controls,  which was  incorporated  in 1976,  and he has served as its President
since its inception.

     Joseph J. Fitzsimmons became a director in March 1997. Mr. Fitzsimmons is a
retired   executive  of  Bell  &  Howell  Company  and   University   Microfilms
International  ("UMI"), a subsidiary of Bell & Howell. From January 1994 through
June 1995 when he retired,  Mr. Fitzsimmons was Corporate Vice President of Bell
& Howell and  Chairman  of UMI.  From  March 1987  through  December  1993,  Mr.
Fitzsimmons  was  Corporate  Vice  President of Bell & Howell and  President and
Chief  Executive  Officer of UMI, a leading  provider of technology  services to
libraries  and  other   organizations   regarding   acquiring,   preserving  and
distributing literature.

     Matthew S.  Galvez  became a director  in August  1998 upon his joining the
Company as its Chief  Operating  Officer.  On October  1, 1998,  Mr.  Galvez was
appointed to the office of the  President of the Company.  Mr.  Galvez served as

                                       2
<PAGE>

Chief Executive  Officer of ISDA & Co., a privately held apparel  company,  from
June 1994 until June 1998.  From 1990 until June 1994, Mr. Galvez was a director
and Chief Financial Officer of Manufacturers Products Corporation, a supplier of
plastic products to the automotive  industry.  In 1994 he became Chief Executive
Officer of that company as well.  Prior to 1990,  Mr. Galvez was Executive  Vice
President - Corporate Operations and General Counsel to a developer and supplier
of graphics translation software for the industrial marketplace and served as an
officer of two acquisition  funds.  Mr. Galvez serves as Chairman and a Director
of Waltec  Plastics  Co. in Midland,  Ontario,  Canada,  and IMC Plastics in Los
Angeles, California.

     Stephen E. Globus became a director in December  1998. He has been Chairman
of the Board of Globus  Growth Group,  Inc., a New York - based venture  capital
company  specializing in providing  startup and seed capital,  since 1984. He is
also a director of Plasmaco,  Inc., a flat computer screen manufacturer owned by
Matsushita  (Panasonic).  Mr.  Globus is the founder of several  privately  held
biotechnology companies,  including Kimeragen, Inc., NuGene Technologies,  Inc.,
Thermaphore Sciences, Inc. and Genitope, Inc.

Executive Officers

     The Company has two executive officers that serve in their positions at the
pleasure of the Board of Directors.  Mr. Matthew S. Galvez, 47, is the President
and Chief  Operating  Officer,  and Mr. David P. Gienapp is the  Company's  Vice
President - Finance and Administration,  Secretary and Treasurer. See "Directors
of the Company" for further  information  concerning Mr. Galvez. Mr. Gienapp has
been the Vice  President  - Finance  and  Administration  and  Treasurer  of the
Company since joining the Company in September  1994 and has served as Secretary
since March 1996.  Mr.  Gienapp  served as a director of the Company  from March
1995 until August 1998. Prior to joining the Company,  Mr. Gienapp spent over 20
years with Deloitte & Touche LLP, a certified public accounting firm.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

     Section 16(a) of the Securities Act of 1934 requires all Company  executive
officers and directors and persons who own more than ten percent of a registered
class of the Company's equity securities to file reports of their ownership with
the  Securities  and Exchange  Commission.  Executive  officers,  directors  and
greater than ten percent  shareholders are required by SEC regulation to furnish
the Company with copies of all Section  16(a)  reports  they file.  Specific due
dates for these  reports  have been  established  and the Company is required to
report any delinquent filings and failures to file such reports.

     Based solely on its review of the copies of such reports received by it and
written  representations of its executive officers and incumbent directors,  the
Company  believes  that during the year ended  September  30,  1998,  all filing
requirements under Section 16(a) applicable to its executive officers, directors
and greater than ten percent beneficial owners were complied with.


Item 10. Executive Compensation

Summary

     The  following  table  sets forth  information  for the  periods  indicated
concerning the aggregate  compensation  paid by the Company and its subsidiaries
to the Company's  President and Chief Executive Officer.  Mr. Matthew S. Galvez,
the Company's only executive officer whose salary and bonus exceeded $100,000 in
2002 (the "Named Executive").

                                       3
<PAGE>

                      SUMMARY COMPENSATION TABLE

                                                       Long Term
                                                      Compensation
  Name and Principal            Annual Compensation      Awards       All Other
                                -------------------      ------     Compensation
         Position        Year   Salary ($)  Bonus ($)  Options (#)     ($) (1)
         --------        ----   ----------  ---------  -----------     -------

  Matthew S. Galvez,     2002    $200,000      $-0-      -0-           $16,400
    President and Chief  2001     200,000       -0-      -0-            20,445
    Executive Officer    2000     200,000       -0-      -0-            18,071

(1)      All Other Compensation in the table above includes the following:

                                  Housing       Auto      401(k) Plan
                                  Allowance   Allowance      Match
                                  ---------   ---------      -----

  Mr. Galvez            2002       $8,600      $4,800       $3,000
                        2001        9,576       4,800        6,069
                        2000        7,715       4,800        5,556

Options

         The following table sets forth information concerning options granted
to the Named Executive in the year ended December 31, 2002.

                         OPTION GRANTS IN LAST FISCAL YEAR

                             Individual Grants
                       --------------------------------
                         Number of     Percent of Total
                         Securities    Options Granted    Exercise or
                         Underlying     To Employees      Base Price  Expiration
         Name          Options Granted  In Fiscal Year     ($/Share)     Date
         ----          ---------------   -------------     ---------     ----

   Matthew S. Galvez        -0-               -0-%           ---        ---

     The Named Executive did not exercise any options in the year ended December
31, 2002. The following table provides  information  with respect to unexercised
options held by the Named Executives as of December 31, 2002.

               AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
                             YEAR-END OPTION VALUES

                        Number of Securities         Value of Unexercised
                            Underlying                    In-the-Money
                         Unexercised Options            Options at Year End
                           at Year-End (#)                   ($) (a)
                      --------------------------     ---------------------------
       Name           Exercisable  Unexercisable     Exercisable   Unexercisable

   Matthew S. Galvez    860,000         -0-              $-0-           $-0-

     (a) Value of unexercised  in-the-money options is determined by multiplying
the number of shares subject to the option by the difference between the closing
price of the Common Stock on the American  Stock Exchange at the end of 2002 and
the option exercise price.

                                       4
<PAGE>

Employment Agreement
--------------------
     Mr.  Galvez was a party to an  employment  agreement  with the Company that
provided for Mr. Galvez to serve as the President and Chief Executive Officer of
the Company for an annual base salary through  December 31, 2001 of $200,000,  a
housing  allowance and an automotive  allowance.  That employment  agreement has
expired and the Company has not initiated a new agreement.

Compensation of Directors

     Each  director who is not an officer or employee of the Company is eligible
to receive for his  services as such a fee of $1,000 per  meeting  attended  and
$500  for  each  committee  meeting  attended.  Committee  chairmen  receive  an
additional $250 for each committee  meeting.  The directors  waived the director
fees for  meetings  held  during  quarterly  periods  during  which the  Company
reported  a loss from  operations,  which  were all  quarters  of the last three
years.  Directors  who are  officers  or  employees  of the  Company  receive no
additional  compensation  for their  service as a  director,  although  they are
reimbursed  for their  reasonable  travel  expenses  when meetings are held in a
location other than the metropolitan area in which they reside.

     The Company has a 1993 Directors Stock Option Plan (the "Directors  Plan").
Pursuant to the provisions of the Directors Plan, each director is automatically
and without discretion awarded options to purchase 4,500 shares of Common Stock,
with an exercise  price equal to 110% of the fair market  value per share on the
grant  date,  beginning  on the date of the  Company's  2000  annual  meeting of
shareholders  and every three  years  thereafter.  The  options are  exercisable
annually  in  increments  of 33 1/3%  beginning  on the  grant  date,  the first
anniversary  of the date of the grant and the second  anniversary  of the grant.
All options granted under the Directors Plan expire on the fifth  anniversary of
the date the option was granted.  The ability to exercise  these  options may be
accelerated  in the event of a change in control of the  Company  (as defined in
the Directors Plan). No options were granted during 2002.

Item 11 . Security Ownership of Certain Beneficial Owners and Management

     The  following  table sets forth  information  as of December 31, 2002 with
respect to the beneficial ownership of Common Stock by each board nominee,  each
other current director, each executive officer named in the Summary Compensation
Table under  "Executive  Compensation",  all  current  directors  and  executive
officers as a group and all other persons  known by the Company to  beneficially
own more than 5% of its outstanding Common Stock (each, a "5% Owner"). Except as
noted below,  each  shareholder  exercises sole voting and investment power with
respect to the shares beneficially owned.

                                      Number of                Percent of Class
      Name                              Shares                     (11)
      ----                              ------                     ----
Directors and Management:
  Hugo E. Braun                       36,819,408   (1)             71.47%
  Ronald C. Causley                    2,102,950   (2)             12.21%
  Stephen E. Globus                    1,285,235   (3)              8.16%
  Matthew S. Galvez                      860,100   (4)              5.18%
  Joseph J. Fitzsimmons                  905,482   (5)              5.44%
  David P. Gienapp                       158,526   (6)              1.00%
  All directors and executive
    officers as group (6 persons)     42,131,701   (7)             76.79%

5% Owners:
  James A. Nichols                     2,600,378   (8)             15.89%
  J. Eric May, Trustee Under
    Declaration of Trust               1,493,425   (9)              9.49%
  Dennis A. Sierk                      1,482,286  (10)              9.37%

                                       5
<PAGE>

(1)  The shares shown in the table for Mr. Braun include (i) 1,050,000 shares of
     Common Stock owned by North Coast Technology Investors L.P. ("North Coast")
     and Access Venture Fund L.P., of which Mr. Braun is a partner, (ii) options
     to purchase  21,164 shares of Common Stock which are currently  exercisable
     or are exercisable within sixty days, (iii) currently  exercisable warrants
     to purchase  500,000 shares of Common Stock pursuant to a warrant issued to
     North Coast in March 2001, (iv) currently  exercisable warrants to purchase
     5,440,000  shares of Common  Stock  pursuant  to a warrant  issued to North
     Coast in connection with issuances of subordinated  debt and warrants under
     a borrowing arrangement between the Company and North Coast, and (v) rights
     to convert the  principal  amount of $750,000 of  subordinated  convertible
     notes to 4,166,666  shares of Common Stock at the lowest  closing price per
     share  during the  period  that the notes are  outstanding  ($0.05 in April
     2003),  and (vi) rights to convert the  principal  amount of  $2,470,000 of
     subordinated  convertible  notes to 26,141,578 shares of Series A Preferred
     Stock at $0.10  per  share.  If such  warrants,  rights  and  options  were
     exercised,  Mr. Braun would have sole voting  rights and shared  investment
     power with respect to the underlying  shares.  Mr.  Braun's  address is 206
     South Fifth Avenue, Suite 550, Ann Arbor, MI 48104.

(2)  The shares shown in the table for Mr. Causley include (i) 624,086 shares of
     Common  Stock owned  outright,  (ii) options to purchase  30,000  shares of
     Common Stock which are  currently  exercisable  or are  exercisable  within
     sixty  days;  (iii)  warrants  to  purchase a maximum of 198,864  shares of
     Common Stock issued in March 2002 in connection with the Company's issuance
     of  subordinated  notes  and  warrants;  and (iv)  rights  to  convert  the
     principal amount of $125,000 of subordinated convertible notes to 1,125,000
     shares  of  Series A  Preferred  Stock at $0.10 per  share.  Mr.  Causley's
     address is 4375 Giddings Road, Auburn Hills, MI 48326.

(3)  The shares shown in the table for Mr. Globus  include (i) 255,062 shares of
     Common Stock owned  outright by Mr.  Globus,  (ii) 672,358 shares of Common
     Stock owned by companies and  partnerships  over which Mr. Globus exercises
     voting and investment power,  (iii) 343,315 shares of Common Stock owned by
     certain relatives of Mr. Globus over which Mr. Globus exercises  beneficial
     ownership,  and (iv) options to purchase 4,500 shares of Common Stock which
     are currently exercisable or are exercisable within sixty days. Mr. Globus'
     address is 44 West 24th Street, New York, NY 10010.

(4)  The  shares  shown in the table for Mr.  Galvez  include  (i) 100 shares of
     Common Stock owned outright, and (ii) options to purchase 860,000 shares of
     Common Stock which are  currently  exercisable  or are  exercisable  within
     sixty days. Mr.  Galvez's  address is 5840 Interface  Drive,  Ann Arbor, MI
     48103.

(5)  The shares shown in the table for Mr. Fitzsimmons include (i) 21,164 shares
     of Common Stock owned  outright,  (ii) options to purchase 21,164 shares of
     Common Stock which are  currently  exercisable  or are  exercisable  within
     sixty days, and (iii) warrants to purchase a maximum of 119,3184  shares of
     Common Stock issued in March 2002 in connection with the Company's issuance
     of  subordinated  notes  and  warrants,  and (iv)  rights  to  convert  the
     principal  amount of $75,000 of subordinated  convertible  notes to 750,000
     shares of Series A  Preferred  Stock at $0.10 per share.  Mr.  Fitzsimmons'
     address is 5840 Interface Drive, Ann Arbor, MI 48103.

(6)  The shares shown in the table for Mr. Gienapp, the Company's Vice President
     - Finance and Administration,  Treasurer and Secretary,  include (i) 41,860
     shares of Common Stock owned  outright and (ii) options to purchase  84,999
     shares of Common Stock which are currently  exercisable or are  exercisable
     within sixty days.  Mr.  Gienapp's  address is 5840  Interface  Drive,  Ann
     Arbor, MI 48103.

(7)  The  shares  shown in the table for all  current  directors  and  executive
     officers as a group  include the shares  described in footnotes (1) through
     (6).

                                       6
<PAGE>

(8)  The shares shown in the table for Mr. Nichols include (i) 1,733,704  shares
     of Common Stock owned  outright,  (ii) 244,451 shares of Common Stock owned
     by an investment  club of which Mr.  Nichols is a member,  (iii)  currently
     exercisable  warrants to purchase  66,667 shares of Common Stock,  and (iv)
     rights to convert the principal amount of $100,000 subordinated convertible
     notes to 555,556  shares of Common  Stock at the lowest  closing  price per
     share during the period that the note is outstanding ($0.05 in April 2003).
     Mr. Nichols' address is 3707 West Maple Road, Bloomfield Hills, MI 48301.

(9)  The shares shown in the table for Mr. May, Trustee include 1,493,425 shares
     of Common Stock owned by J. Eric May,  Trustee Under  Declaration of Trust.
     Mr.  May's  address is c/o  Wilmington  Trust  Company,  1100 North  Market
     Street, Wilmington, DE 19890.

(10) The shares shown in the table for Mr. Sierk include (i) 1,145,620 shares of
     Common Stock owned by Mr. Sierk and his wife,  and (ii) options to purchase
     66,666  shares  of Common  Stock  which are  currently  exercisable  or are
     exercisable  within  sixty days.  Mr.  Sierk's  address is 2800 Bob Wallace
     Avenue, Suite L3, Huntsville, AL 35805.

(11) For purposes of  calculating  the  percentage of Common Stock  beneficially
     owned by each  person,  the shares  issuable  upon  exercise of options and
     warrants held by such person are  considered  outstanding  and added to the
     shares of Common Stock actually outstanding.

Item 12. Certain Relationships and Related Transactions

     10% Convertible Subordinated Promissory Note - Mr. Hugo Braun, a Director
     -------------------------------------------------------------------------
     In March 2001,  the  Company  completed  a sale of $1.2  million  principal
amount of Convertible  Subordinated  Promissory Notes and Warrants to purchase a
total of  800,000  shares  of  Common  Stock to  certain  accredited  investors,
including North Coast Technology Investors LP ("North Coast"), of which Mr. Hugo
Braun, a Company Director, is a partner. The Convertible Subordinated Promissory
Notes,  which are  secured  by a second  lien on the  Company's  assets  and are
subordinated in right of payment to the Company's bank lender,  bear interest at
10% and were due on  August  31,  2001  (the  "10%  Notes").  The 10%  Notes are
currently due and payable,  but are  subordinated  to the Company's bank lender.
The 10% Notes are  prepayable  at any time without  penalty  upon prior  written
notice as provided in the Notes.  The holders of the 10% Notes are not permitted
to transfer them without the Company's prior written consent. The holders of the
10% Notes could have converted the principal and accrued  interest  thereon into
shares of a planned  equity  offering,  if such offering was completed by August
31,  2001.  After  that,  the  principal  and  accrued  interest  thereon may be
converted  into  shares of Common  Stock.  The number of shares of Common  Stock
issuable upon exercise of the  Conversion  Option is equal to (x) the sum of the
principal  and interest  then due and  payable,  divided by (y) the Common Stock
Conversion  Price.  The Common Stock Conversion Price was initially set at $0.30
and is adjusted to the lowest closing price of the Common Stock as quoted on the
AMEX if the closing  price fell below $0.30 for five  consecutive  trading days.
The lowest  closing  price of the Common  Stock s traded on the AMEX  during the
period the Convertible  Promissory  Notes have been  outstanding has been $0.05.
Information  concerning  the 10% Notes and  Warrants  sold to North  Coast is as
follows:

    10% Notes purchased                                           $750,000
    Warrants purchased                                             500,000
    Common Stock which may be obtained through
       exercise of the Conversion Option - $0.05 per share       4,166,666
    Interest accrued and unpaid - 2001                             $57,123
    Interest accrued and unpaid - 2002                             $70,358

                                       7
<PAGE>

     14% Convertible Subordinated Promissory Note - Mr. Hugo Braun, a Director
     -------------------------------------------------------------------------
     In March 2002, the Company executed a Convertible  Subordinated  Promissory
Note  with  North  Coast  that  documented  the terms of an  agreement  that was
informally in place  beginning in October 2001.  The agreement has been modified
through  April 2003.  The  agreement  provides for a maximum of $3,000,000 to be
available  to the  Company  as  funds  are  needed  and not  available  from the
Company's  senior  bank  lender  or  other  sources.  North  Coast  is  under no
obligation to fund the Company's advance request.  The Convertible  Subordinated
Promissory  Note,  which is secured by a second lien on the Company's assets and
is subordinated in right of payment to the Company's bank lender,  bear interest
at 14% and advances  thereunder  are due demand (the "14% Note").  Advances made
under  the 14% Note  are  prepayable  at any time  without  penalty  upon  prior
written.  North  Coast is not  permitted  to transfer  the 14% Note  without the
Company's prior written consent.  Pursuant to the terms of the 14% Note, because
Nematron  did not  complete  an equity  financing  pursuant to which it received
gross  proceeds  of at least $1.5  million on or before  August  31,  2002,  the
principal and interest due and payable under this Note may be converted by North
Coast,  in whole or in part, into shares of Series A Preferred Stock of Nematron
beginning  on September  1, 2002,  upon at least three (3)  business  days prior
written notice from North Coast to Nematron and prior to the payment of 14% Note
in full.

     A summary of the terms of the Series A Preferred is as follows:

     Dividends:  No dividends will be required to be paid by the  "Company".  If
any dividends are paid on the Company's common stock ("Common"),  the holders of
the Series A Preferred  shall be entitled to receive  dividends in preference to
any  dividend on the Common in an amount per share equal to or greater  than any
dividend paid on the Common.

     Liquidation  Preference:  In the event of any  liquidation or winding up of
the Company,  the holders of the Series A Preferred shall be entitled to receive
in  preference  to the holders of Common an amount equal to the  original  issue
price for the Series A Preferred Stock.  Thereafter,  any remaining  liquidation
proceeds  will be  distributed  to the holders of the Series A Preferred and the
Common on a pro rata basis. A merger,  consolidation or  reorganization in which
the  shareholders  of the Company  own less than 50% of the voting  power of the
surviving company and any transaction or series of related transactions in which
in excess of 50% of the Company's  voting power is transferred  shall be treated
as a liquidation.

     Conversion:  Each  holder of  Series A  Preferred  shall  have the right to
convert its shares at any time into  shares of Common at the initial  conversion
rate  of 1:1.  The  conversion  rates  shall  be  subject  from  time to time to
antidilution adjustments as set forth below.

     Voting  Rights:  The holder of each share of Series A Preferred  shall have
the right to that number votes equal to the number of shares of Common  issuable
upon  conversion  of the Series A Preferred.  The Series A Preferred  shall vote
with  Common  on all  matters  except  as  specifically  provided  herein  or as
otherwise required by law.

     Board of  Directors:  The holders of the Series A Preferred  shall have the
right to elect one member to the Company's Board of Directors. If the holders of
the Series A Preferred choose not to exercise this right, the Series A Preferred
shall vote with Common in the election of directors.

     Protective  Provisions:  Consent of a majority  in interest of the Series A
Preferred  will be  required to (a)  purchase or redeem any Common or  Preferred
Stock,  (b) authorize or issue any senior or parity  securities,  (c) declare or
pay dividends on or make any  distribution on account of the Common,  (d) merge,
consolidate or sell or assign all or substantially  all of the Company's assets,
(e) increase or decrease  authorized  Preferred  Stock and (f) amend Articles or
Incorporation  to change the rights,  preferences,  privileges or limitations of
any Preferred Stock.

                                       8
<PAGE>

     Antidilution:  The  conversion  price for the Series A  Preferred  shall be
subject  to  proportional   antidilution  protection  for  stock  splits,  stock
dividends, etc. In the event that the Company issues additional shares of Common
or Common  equivalents (other than shares issues to officers or employees of the
Company  pursuant to plans  approved by the  Company's  board of directors) at a
purchase price less than the applicable Series A Preferred conversion price, the
Series A  Preferred  conversion  price  shall be  adjusted  to that  same  lower
purchase price.

     Rights of First Refusal:  Each holder of Series A Preferred  shall have the
right to participate in any Company financing up to its pro-rata ownership.

     Information  Rights:  Holders of Series A  Preferred  Stock  shall have the
right to  receive  annual  and  quarterly  financial  statements  and an  annual
business plan.

     Information concerning the 14% Notes and Warrants sold to North Coast is as
follows:

    Advances made under the 14% Note purchased through April 2003     $2,470,000
    Warrants purchased through April 2003                              4,940,000
    Series A Preferred Stock issuable upon conversion of the 14% Note 26,141,578
    Interest accrued and unpaid on Subordinated Promissory Notes:
       In 2001                                                            $5,370
       In 2002                                                           $72,058

     8% Convertible Subordinated Promissory Note -
     Mr. Ronald C. Causley and Mr. Joseph J. Fitzsimmons and, Directors
     ------------------------------------------------------------------
     In March 2002, the Company completed a sale of $200,000 principal amount of
Convertible  Subordinated Promissory Notes and Warrants to Ronald C. Causley and
Joseph J. Fitzsimmons,  directors of the Company.  The Convertible  Subordinated
Promissory Notes, which are secured by a second lien on the Company's assets and
are subordinated in right of payment to the Company's bank lender, bear interest
at 8% and are due on October  31,  2002 (the "8%  Notes").  The  Company did not
repay the 8% Notes and the  agreement  was  amended on that date and the warrant
conversion  price and the  conversion  rights were modified to the same terms as
the 14% Notes to North Coast discussed above. The 8% Notes may be prepaid at any
time without penalty upon prior written notice.  The holders of the 8% Notes are
not  permitted to transfer them without the  Company's  prior  written  consent.
Information  concerning  the 8% Notes and Warrants  sold to Mr.  Causley and Mr.
Fitzsimmons is as follows:

                                                          Ronald C.   Joseph J.
                                                           Causley   Fitzsimmons
                                                           -------   -----------
    Convertible Subordinated Promissory Notes purchased    $125,000    $75,000
    Warrants purchased                                      198,863    119,318
    Series A Preferred Stock issuable upon conversion of
       the Convertible Subordinated Promissory Notes      1,125,000    750,000
    Interest accrued and unpaid on Convertible
        Subordinated Promissory Notes in 2002                $8,192     $4,569

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<PAGE>

     Acquisition Debt - Mr. Ronald C. Causley, a Director
     ----------------------------------------------------
     Pursuant to the terms of the Purchase Agreement by and between the Company,
A-OK Controls Engineering,  Inc. and Ronald C. Causley dated June 30, 2000 under
which the Company  purchased  100% of the equity of A-OK  Controls  Engineering,
Inc. from its sole stockholder, Mr. Causley on that date, Nematron agreed to pay
the final cash  installment  related  to the  purchase  price  within 60 days of
closing. Such amount,  totaling $351,867,  was not paid and has accrued interest
at 9% per annum since that date.  Interest  accrued  and unpaid  during 2001 and
2002 was $34,521 and $37,759,  respectively.  Total accrued and unpaid  interest
due to Mr. Causley as of December 31, 2002 is $88,414.



     Operating Leases - Mr. Ronald C. Causley, a Director
     ----------------------------------------------------
     The Company  leases under  ten-year  operating  leases its Auburn Hills and
Saginaw,  Michigan system  integration  offices from Mr. Ronald C. Causley,  the
president  of A-OK  Controls  Engineering,  Inc.  and a director of the Company.
Management  believes  that  these  leases,  which  were  executed  prior  to the
Company's acquisition of A-OK Controls, represent fair market lease rates. Lease
expense on these related party leases totaled approximately $398,000 in 2001 and
approximately  $493,000  in 2002.  The lease on the  Saginaw  facility  requires
monthly lease  payments of $3,150  through  January  2009,  and the lease on the
Auburn Hills facility  requires  monthly lease  payments of $30,000  through May
2008.  Minimum lease payments  through the expiration  dates of the leases total
$2,210,000.


                                   SIGNATURES

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

NEMATRON CORPORATION


By:  /s/ David P. Gienapp                               Dated:    April 15, 2003
     --------------------------------------------                 --------------
     David P. Gienapp
     Vice President - Finance and Administration,
     Secretary and Treasurer





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