** **

**SECURITIES ANDEXCHANGE COMMISSION**

**Washington,DC  20549**

 

**FORM 10-KSB**

 

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

 

**Forthe fiscal year ended March 31, 2002**

 

**Commissionfile number 1-4530**

 

| **ASTREX,  INC.**                                                  |
|--------------------------------------------------------------------|
| (Exact name of small  business issuer as specified in its charter) |
|                                                               |   |   |
| **DELAWARE**                                                       |   | **13-1930803** |
| (State of  incorporation)                                          |   | (IRS Employer  Identification No.) |
|                                                               |
| **205 Express Street, Plainview, New  York 11803**                 |
| (Address of principal  executive offices)  (Zip Code)         |
|                                                               |
| **516 - 433-1700**                                                 |
| (Issuer’s telephone  number, including area code)             |

 

Securitiesregistered pursuant to Section 12 (b) of the Act:  **None**

SECURITIES REGISTERED PURSUANT TO 12 (g) OF THE ACT:

 

**Common Stock, $.01 Par Value**

(Title of class)

 

Check whether the issuer (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the past 12 months (or for such shorter period that the registrantwas required to file such reports), and (2) has been subject to each filing requirementsfor the past 90 days.  **Yes**ý  No o.

 

Check if there is no disclosure of delinquent filersin response to Item 405 of Regulation S-B contained in this form, and nodisclosure will be contained, to the best of registrant’s knowledge, indefinitive proxy or information statements incorporated by reference in PartIII of this Form 10-KSB or any amendment to this Form 10-KSB.  o

 

State issuer’s revenues for its most recent fiscalyear*. ***$16,894,123.**

 

State the aggregate market value of the voting andnon-voting common equity held by non-affiliates computed by reference to theprice at which the stock was sold, or the average bid and asked prices of suchstock, as of a specified date within the past 60 days. **$761,548 as of May 24, 2002 [assumes conversion ofConvertible Preferred Stock (See Item 5)].**

 

State the number of shares outstanding of each of theissuer’s classes of common equity, as of the latest practicable date:  **5,648,842shares of Common Stock and 1,691,694 shares of Series B Convertible PreferredStock as of May 24, 2002.**

 

 

----

 

**ASTREX, INC.**

 

**CROSSREFERENCE SHEET**

 
| **Item required by Form 10-KSB** |   | **Location of Item**                                                                                             |
|----------------------------------|--------|------------------------------------------------------------------------------------------------------------------|
|                             |   |                                                                                                             |   |   |   |
| Item 1.                          | — | Description of Business                                                                                          |   | Item 1. | Business |
|                             |   |                                                                                                             |   |   |   |
| Item 2.                          | — | Description of Property                                                                                          |   | Item 2. | Description of Property |
|                             |   |                                                                                                             |   |   |   |
| Item 3.                          | — | Legal Proceedings                                                                                                |   | Item 3. | Legal Proceedings |
|                             |   |                                                                                                             |   |   |   |
| Item 4.                          | — | Submission of Matters to a Vote of Security Holders                                                              |   | Item 4. | Submission of Matter to a Vote of Security Holders |
|                             |   |                                                                                                             |   |   |   |
| Item 5.                          | — | Market for Common Equity and Related Shareholder  Matters                                                        |   | Item 5. | Market for Registrant’s Common Equity and Related  Shareholder Matters |
|                             |   |                                                                                                             |   |   |   |
| Item 6.                          | — | Management’s Discussion and Analysis or Plan of  Operation                                                  |   | Item 6. | Management’s Discussion and Analysis of Financial  Condition and Results of Operation |
|                             |   |                                                                                                             |   |   |   |
| Item 7.                          | — | Financial Statements                                                                                             |   | Item 13. | Exhibits, Financial Statements and Reports on Form  8-K |
|                             |   |                                                                                                             |   |   |   |
| Item 8.                          | — | Changes In and Disagreements With Accountants on  Accounting and Financial Disclosure                            |   | Item 8. | Changes in and Disagreements with Accountants on  Accounting and Financial Disclosure |
|                             |   |                                                                                                             |   |   |   |
| Item 9.                          | — | Directors, Executive Officers, Promoters and Control  Persons, Compliance with Section 16(a) of the Exchange Act |   | Item 9. | Directors and Executive Officers of the Company;  Compliance with Section 16(a) of the Exchange Act |
|                             |   |                                                                                                             |   |   |   |
| Item 10.                         | — | Executive Compensation                                                                                           |   | Item 10. | Executive Compensation |
|                             |   |                                                                                                             |   |   |   |
| Item 11.                         | — | Security Ownership of Certain Beneficial Owners and  Management                                                  |   | Item 11. | Security Ownership of Certain Beneficial Owners and  Management |
|                             |   |                                                                                                             |   |   |   |
| Item 12.                         | — | Certain Relationships and Related Transactions                                                                   |   | Item 12.  | Certain Relationships and Related Transactions |
|                             |   |                                                                                                             |   |   |   |
| Item 13.                         | — | Exhibits and Reports on Form 8-K                                                                                 |   | Item 13.  | Exhibits, Financial Statements and Reports on Form  8-K |

 

1

----

 

**Part I**

 

Item 1.  **Business.**

 

**General**

 

Astrex, Inc., a Delaware corporation (the “Company” or“Astrex”), is a value-added distributor of electronic components used toconnect, control, regulate or store electricity in equipment.  The principal products assembled and sold byAstrex are “connectors.”  Connectorslink a wire or group of wires to another wire or group of wires.  Other products sold include relays,switches, and LEDs.

 

The Company (including its wholly owned subsidiariesTF Cushing, Inc., which operations were discontinued effective November 1,2001, and AVest, Inc.) has 51 employees, principally at its facility inPlainview, New York and carries in inventory over 25,000 different electronicparts from approximately 20 manufacturers, including Amphenol Corporation,Hirose Electric (USA), Inc., ITT Cannon, ITW Switches, Litton WinchesterElectronics, Micro Switch (division of Honeywell, Inc.), Packard HughesInterconnect, Hypertronics Corporation and WPI Salem Division (Wire Pro).  While the Company sells a portion of thisinventory without any further value enhancements, a significant portion of itssales consists of components assembled to customer specifications. TheCompany’s sales are worldwide with a concentration in the Northeast andMid-Atlantic States.  The Company servesmore than 4,300 customers representing a broad range of electronics users frommajor original equipment manufacturers, to engineering firms and research andeducational institutions.  The Company’slargest industry markets include the defense, aerospace, industrial equipment,and computer industries.

 

Approximately 85% of the products sold by the Companyare connectors.  A connector linkselectronic components together and generally consists of a shell, insert,contacts and adaptive hardware.  Each ofthese four parts has many variations and can be assembled together in almostunlimited combinations.  Connectorsgenerally range in price, depending on design, complexity, use, andavailability from a few cents to $2,500 a connector.  The Company has traditionally emphasized the sale of connectorsthat meet a higher standard of reliability and performance including thosemeeting United States military specifications. Most of the connectors sold by the Company range in price from $5 to$150 each.

 

The Company has the capacity to both assemble and testconnectors to customer’s specifications, which is a capability that some of itscompetitors do not have.  The assemblycapability also enables the Company to inventory fewer finished parts and todeliver a wider variety of finished connectors, substantially enhancing serviceto its customers.  During the fiscalyear ended March 31, 2002, connector sales represented 85% of total sales. Ofthose connector sales approximately 70*%* were connectors assembled by theCompany, approximately 25*%* were connectors not requiring Companyassembly, and approximately 5*%* were unassembled connector parts.

 

2

----

 

The other products sold by the Company, representingapproximately 15*%*****of Company’s total sales, are devices thatcontrol or regulate the flow of electricity to or within components, includingrelays and switches that control current by opening or closing an electriccircuit.

 

Assembly of military specification connectors, asignificant part of the Company’s business, usually requires governmentapproval.  The Company has suchapprovals as are necessary for the military specification connectors it assemblesand does not foresee any future problems with respect to such approvals.

 

The nature of the Company’s business does not requiresignificant expenditures for product research and development and the Company’sexpenditures in that regard over the past two years have been nominal.

 

The Company has satisfactory relations with itssuppliers, most of which have done business with the Company for over 15years.  The Company believes that mostof the products it presently sells are available from other sources atcompetitive prices.  Most of theproducts sold by the Company are pursuant to franchise agreements that aretypically cancelable at any time.

 

As of March 31, 2002 the Company’s net inventoryaggregated approximately $5,019,000 of which approximately 86*%*****consistedof connectors.  While manufacturersgenerally do not give distributors, such as the Company, the absolute right toreturn unsold inventory, it is the policy of many manufacturers to protect orpartially protect franchised distributors, such as the Company, against thepotential write-down of inventories due to technological change ormanufacturer’s price reductions. Similarly, a manufacturer who elects toterminate a franchise may be required to purchase from the distributor asubstantial, if not the total, amount of its product carried in inventory. Noassurance can be given however, that these industry practices will continue.

 

The Company serves more than 4,300 customersrepresenting a broad spectrum of electronic users ranging from major originalequipment manufacturers to engineering firms and research and educationalinstitutions.  Such customers includemanufacturers in the aerospace, industrial, defense and computer industries.  No single customer accounted for more than10% of sales, during the years ended 2002 and 2001.

 

Many of the Company’s customers require deliveryschedules, which are generally not available on direct purchase frommanufacturers.  The Company offers itscustomers the convenience of diverse and extensive local inventories and rapiddeliveries.  In addition, because of itsexpertise in connectors, the Company can offer its customers technical adviceand support, and innovative solutions to customer problems.  The Company believes that it has goodlong-term relationships with its customers extending, in some cases, over aperiod of more than 20 years.

 

For the fiscal year ended March 31, 2002 and 2001, 70%and 71% of the Company’s sales, respectively, were in the Northeast andMid-Atlantic States with 18*%* and 16% of sales, respectively to otherparts of the country.  Export sales were12% and 13% of the Company’s net sales in 2002 and 2001, respectively.

 

Sales are generated by the Company’s field salesforce, which covers specific geographic territories and customers; by theCompany’s inside telephone and internet sales force; and by

 

3

----

 

independent sales representatives. These sales efforts are supported by an internet web site and by the useof space advertising in industry publications. Sales are managed and coordinated by regional sales managers and byproduct managers located in the Company’s Plainview, New York facility.

 

When used herein, the words “believe,” “anticipate,”“think,” “intend,” “will be,” “expect,” “foresee” and similar expressionsidentify forward-looking statements within the meaning of the PrivateSecurities Litigation Reform Act of 1995. Such statements speak only as of the date hereof, are not guarantees of futureperformance, events or trends and involve certain risks and uncertaintiesincluding those discussed herein, which could cause actual results to differmaterially from those in the forward-looking statements.  Readers are cautioned not to place unduereliance on the forward-looking statements. Readers are also urged carefully to review and consider the variousdisclosures made by the Company which attempt to advise interested parties ofthe factors which affect the Company’s business, including, without limitation,the disclosures made under the caption “Management’s Discussion and Analysis ofFinancial Condition and Results of Operation.” All references to fiscal year are to the Company’s fiscal year whichends March 31.

 

**RecentDevelopments**

 

During the fiscal year ended March 31, 2002, theCompany continued expanding its product offerings from existing suppliers, byadding ITW Pancon, a broad based connector line and Viking Connector, amanufacturer of PC board connectors. The Company continues to add value added assembly for several of itsexisting franchise lines.

 

On November 1, 2001, the Company approved a plan toclose TF Cushing, Inc., (TF Cushing) a wholly owned subsidiary of theCompany.  TF Cushing was primarily aMaintenance Repair Organization (“MRO”) seller of switches.  The decision was made based on TF Cushing’sdeclining sales over the past several years, and the Company’s opinion that areturn to profitability was unlikely. The Company also felt that TF Cushing’scustomer base, supplier base, and business focus (MRO vs Original EquipmentManufacturer, “OEM”) were significantly different from the Company’s corebusiness and therefore not easily integrated into the Company’s coreoperations. The Company recognized a loss for the period ended December 31,2001 from discontinued operations of approximately $80,000 (net of taxes ofapproximately $1,400) for the period April 1, 2001 through the measurementdate.  The Company recognized a lossfrom disposal of its discontinued operations of approximately $265,000 from themeasurement date to December 31, 2001. The loss on disposal includes operating losses from the measurement dateof approximately $44,000, loss on disposal of inventory of approximately$70,000 and estimates for further impairment of inventory caused by thedisposal decision of $100,000. The remainder of the disposal loss includesliabilities for severance and estimates for miscellaneous expenses related tothe disposal of TF Cushing.  For thefiscal year ended March 31, 2001, the loss from discontinued operations wasapproximately $41,500.

 

During the fiscal year ended March 31, 2002, theCompany purchased an additional 103,000 shares of its common stock for $29,825on the open market.  This is in additionto the 145,500 shares of its common stock the Company purchased betweenDecember 2000 and March 31, 2001 on the open market for $43,042.  Furthermore, in fiscal 1997, the Companyalso purchased 913,586 shares of its common stock for $264,940 from one of itsprincipal shareholders.  These 1,162,086shares are being held as treasury shares.

 

4

----

 

Prior to the fiscal year ended March 31, 2001 theCompany owned an 8% equity interest in Enigma Energy Company, L.L.C.(“Enigma”), a Texas based producer of natural gas and oil.  In October, 1999 the equity holders ofEnigma, including Astrex, optioned their respective Enigma equity interests toComanche Energy Inc., a public company principally engaged in the production ofoil and gas (“Comanche”).  Comancheexercised that option in January 2000 and the transaction closed during fiscalyear ending March 31, 2001.  Astrexreceived 115,253 shares of Comanche common stock in consideration for theoption and received 268,925 shares in consideration for its equity interest inEnigma when the transaction closed.   AtMarch 31, 2001 the Company reduced the carrying value of the Comanche commonstock by $65,000 to $24,830.  At March31, 2002 the Company reduced the entire carrying amount of $24,830 down tozero.

 

On June 29, 2000 the Board of Directors declared adividend on the Company’s Common Stock of one share of a new Series BConvertible Preferred Stock for every three shares of Common Stock held as of5:00 p.m. EDT July 7, 2000 (“Record Date”).

 

In declaring the dividend the Board took into accountnot only the Company’s strong performance of the fiscal year ended March 31,2000 but also the Company’s need to preserve capital for future growth, therelatively low Common Stock ‘float’, the desire to better protect the Company’snet operating loss federal tax loss carry forwards, and to better allow anyfuture ‘acquisition for stock’ and capital raising opportunities to be freefrom management stability issues.  Forthese reasons a dividend of a newly defined Series B Convertible PreferredStock with special characteristics was decided upon.

 

The characteristics of the Series B ConvertiblePreferred Stock (“Preferred Stock”) are definitively delineated in the “Astrex,Inc. Certificate Of Designations, Preferences And Rights Of Series B ConvertiblePreferred Stock” (“Certificate”) which should be reviewed for a full andcontrolling description but in summary, the principal characteristics are:

 

1.                                       ThePreferred Stock will not be entitled to any preferential dividends, but will beentitled to any dividend declared on the Common Stock, and the Common Stockwill be entitled to any dividend declared on the Preferred Stock.

 

2.                                       Eachshare of the Preferred Stock will have a liquidation right of twenty-fivecents.

 

3.                                       ThePreferred Stock will be entitled to vote on all matters that the Common Stockis entitled to vote on and will have twelve votes per Preferred Stock share.

 

4.                                       Beginningon July 31, 2001 and essentially at all times thereafter the Preferred Stockwill be convertible at the option of the holder into Common Stock on a sharefor share basis.

 

5.                                       ThePreferred Stock is subject to significant and very limiting restrictions ontransfer by sale or otherwise.  Therestrictions are set fourth in detail in the Certificate but in essence thePreferred Stock is (i) only transferable to a person or entity who upontransfer will be the bona fide beneficial owner, or trustee for the beneficialowner (as opposed to a ‘nominee’ or ‘street name’ holder) of the shares, andfurther (ii) the transferee must be closely related (as defined in theCertificate) to the transferor. Additionally, prior to July 31, 2001 any such transfers will also be atthe sole discretion of the Company and will only be allowed to the extent, inthe sole opinion of the Company, the transfer will not impair or make it moredifficult to preserve any tax attributes of the Company (including withoutlimitation, net operating losses, or the rate of use of

 

5

----

 

the same under the United States Income Taxlaws).  (Preferred Stock sharesinitially dividended to a holder who is not the beneficial owner, uponapplication to the Company may be transferred to the person or entity who wasthe beneficial owner on the dividend record date).

 

The foregoing is only a brief summary of some of theterms of the Certificate and in all matters the Certificate and not thissummary controls.  The Certificate isavailable from the Company without charge upon request and is also on publicfile with the Secretary of State of the State of Delaware.

 

Since the dividend was made equally to all holders(with some slight variations as a nominal consequence of rounding) there hasbeen no change in the economic or voting interest of any holder.  However, because the Preferred Stock shareshave multiple votes, the holders of those shares collectively have votingcontrol of the Company and beginning July 31, 2001 to the extent a holderconverts Preferred Stock shares to Common Stock they will lose those multiplevotes (but gain freely transferable shares). Prior to the dividend present management of the Company held more then amajority of the Common Stock and the dividend does not change that control. Inthe future the Preferred Stock may make it easier or more difficult fornon-management stockholders to effect a ‘hostile take over’ depending upon towhat extent present management converts or holds that stock.  Since the Preferred Stock has only verylimited transferability a ‘market’ for those shares will not develop, effectivelymaking conversion of those shares to Common Stock after July 31, 2001 the onlyalternative for those holders who do not wish to continue to hold the PreferredStock or transfer the same to closely related persons or entities.

 

As of March 31, 2002, 198,230 shares of Series BConvertible Preferred Stock have been converted into the Company’s commonstock.

 

**Competition**

 

The Company operates in a highly competitiveenvironment.  The sale and distributionof products sold by the electronics distribution industry is extremelycompetitive, particularly with regard to price and product availability.  The Company competes with numerous local,regional, and national distributors, many of which have greater financial resourcesand sales than the Company.  To acertain extent, the Company also competes with manufacturers of electronicparts and components, including some of its suppliers, which are involved inthe direct sales of their products.

 

**Backlog**

 

At April 1, 2002, the Company’s total backlog ofconfirmed, unfilled orders, was approximately $2,932,000*,* a decrease of 35.8*%*from the April 1, 2001 backlog of $4,568,000. The Company expects almost the entire backlog to be shipped before theend of the fiscal year ending March 31, 2003. The backlog at year-end is not necessarily indicative of sales for anyspecific subsequent period.

 

6

----

 

**Compliance with Environmental Laws**

 

In the fiscal years ended March 31, 2002 and 2001 theCompany expended less than $10,000 in order to comply with environmental lawswith respect to the Plainview building. The Company has had no other expenditures with respect to such laws inthat time period.

 

**Employees**

 

As of March 31, 2002 the Company had 51employees.  The Company’s senioroperating personnel are located at its Plainview, New York, some of whom havebeen with the Company for more than 15 years. Management believes that its relations with its employees aresatisfactory.

 

Item 2.  **Properties.**

 

Through its wholly owned subsidiary, AVest, Inc., theCompany owns a 22,000 square foot building at 205 Express Street, Plainview,New York which is subject to a mortgage described in more detail below in Item6, Management’s Discussion and Analysis of Financial Condition and Results ofOperation, Liquidity and Capital Resources. The Company’s principal executive offices occupy approximately 750square feet of that building with the balance of the building spaceconstituting office, warehouse and assembly facilities for the Company.  The property is adequately covered byinsurance and there are at present no significant renovation, improvement ordevelopment plans with respect to the facility**. **In addition the Company presently maintains sales offices inEndwell, New York (1,500 square feet, $475 monthly rent, with a month-to-monthoccupancy under a lease that expired December 31, 2000), Willow Grove,Pennsylvania (1,323 square feet, $1,838 monthly rent, month-to-month occupancyunder a lease which expired June 1, 1999) and Woburn, Massachusetts (1,058square feet, $32,249 annual rent, under a lease that expires November 30,2003).  All of the Company’s premisesare adequate for the Company’s current and foreseeable requirements.  The Company has no present plans tosignificantly renovate or improve any of its leased properties.

 

The Company’s now closed T.F. Cushing, Inc. facilityand business occupied 3,500 square feet in West Springfield,Massachusetts.  Prior to closing, thatoccupancy was a month-to-month under terms of a lease which expired August 31,2000, at a monthly rent of $1,730.

 

During fiscal year ended March 31, 1998 the Companymade a long-term investment of $50,000 in a real estate investment partnership,which owns and leases commercial property. The investment is being held for income generated from it’s interest inthe partnership.  The income wasapproximately $9,000 and $9,600 for fiscal years 2001 and 2002,respectively.  The Company may engage insuch investments in the future but has no present plans to do so and hasformulated no policies with respect to any possible future real estateinvestments.

 

7

----

 

Item 3.  **LegalProceedings.**

 

As of March 31, 2002 and the date hereof there was nolitigation pending against or on behalf of the Company or its properties.

 

Item 4.  **Submissionof Matters to a Vote of Security Holders.**

 

None

 

**Part II**

 

Item 5.  **Market forRegistrant’s Common Equity and Related Stockholder Matters.**

 

The Company’s common stock (“Astrex Common Stock”) tradeson the over-the-counter market, “electronic Bulletin Board” under the symbol“ASXI”. The following table sets forth the high and low closing bids for AstrexCommon Stock. These over-the-counter market quotations reflect inter-dealerprices without retail mark-up, mark-down or commission, are approximate and maynot necessarily represent actual transactions. (Source: Bloomberg)

 

| **Fiscal Year****& Quarter** |           | **High  Closing Bid** |   | **Low  Closing Bid** |
|----------------------------------|----------------|-----------------------|--------|----------------------|
| 2002                             | First Quarter  |                  | .35    |                 | .27 |
|                             | Second Quarter |                  | .33    |                 | .28 |
|                             | Third Quarter  |                  | .29    |                 | .27 |
|                             | Fourth Quarter |                  | .30    |                 | .25 |
| 2001                             | First Quarter  |                  | .97    |                 | .38 |
|                             | Second Quarter |                  | .69    |                 | .46 |
|                             | Third Quarter  |                  | .59    |                 | .25 |
|                             | Fourth Quarter |                  | .41    |                 | .27 |

 

For purposes of the disclosure of the aggregate marketvalue of the voting stock held by non-affiliates as set forth on page 1 of thisReport, the Company has used the price of .26 cents per share, which is theaverage of the reported closing bid and ask prices on May 24, 2002 and assumesthe conversion of Preferred Stock.

 

8

----

 

The Company currently has no equity compensationplans, and accordingly, has no securities authorized for issuance under anysuch plans.  The Company reserves theright to establish such plans in the future.

 

The Company is not aware of any contractual or similarrestrictions that limit its ability to pay dividends on common equity,currently or in the future.

 

On June 29, 2000 the Board of Directors declared adividend on the Company’s common stock of one share of a new Series B ConvertiblePreferred Stock for every three shares of Common Stock held as of 5:00 p.m. EDTJuly, 2000.  Other than that dividend ofPreferred Stock no dividends have been paid on common stock since April 1978and the Company does not anticipate paying either cash or non cash dividendswith respect to either its preferred or common stock in the foreseeable future.

 

On June 29, 2000, the Company granted and issued onJuly 5, 2000, 40,000 unregistered, forfeitable shares of the Company’s commonstock to several employees as compensation. Each employee’s shares are subject to forfeiture in the event theemployee ceases to be employed by the Company, for reasons other than death,prior to June 30, 2002.  These sharesare exempt from registration pursuant to Section 4(2) of the Securities Act of1933.

 

On June 29, 2000, the Company granted and issued onJuly 5, 2000, 20,000 shares of the Company’s common stock to the President. Theissuance of these shares is forfeitable and contingent upon the Presidentsatisfying certain requirements.  Theseshares are exempt from registration pursuant to Section 4(2) of the SecuritiesAct of 1933.  These shares were fullyvested on August 1, 2001.

 

On June 29, 2000, the Company granted and issued onJuly 5, 2000, 5,000 shares of the Company’s common stock to a non-employee. Theshares vested immediately at the date of grant.  These shares are exempt from registration pursuant to Section4(2) of the Securities Act of 1933.

 

As of March 31, 2002,198,230 shares of Series B Convertible Preferred Stock have been converted intothe Company’s common stock.

 

As of May 24, 2002, not including treasury shares,there were 5,648,842 shares of the Company’s common stock outstanding and heldby 335****holdersof record and 1,691,694 shares of the Company’s preferred stock outstanding andheld by 767 holders of record.

 

9

----

 

Item 6.  **Management’sDiscussion and Analysis of Financial Condition and Results of Operation.**

 

Results of Operations

 

During the quarter ending December 31, 2001 theCompany approved and implemented a plan to close its wholly owned subsidiary,TF Cushing. TF Cushing had operated as a separate Maintenance RepairOrganization (“MRO”) distributor of electronic, electrical, and industrial supplies,with a customer base, supplier base and business focus (MRO vs OriginalEquipment Manufacturer (“OEM”)), significantly different from the Company’score business.  Based on several yearsof declining sales, the potential loss of two key franchises, the Company’sopinion that a return to profitability was extremely unlikely, and theCompany’s opinion that TF Cushing’s business could not be efficientlyintegrated into its core business, the decision was made to discontinueoperations.

 

The following discussion of results of operations isfrom continuing operations and exclusive of the Company’s TF Cushingsubsidiary.

 

The Company’s income from continued operations forfiscal year ended March 31, 2002 was approximately $640,000 versusapproximately $876,000 for fiscal year ended March 31, 2001.  Income before income tax benefit anddiscontinued operations was approximately $563,000 for fiscal year ended March31, 2002 versus approximately $666,000 for fiscal year ended March 31,2001.  The decrease in income isattributable to 5.7% lower sales.  Giventhe severe downturn generally experienced in the electronic distributionindustry the Company is very pleased with these results**. **Future results are somewhat dependent on the overallelectronic component market, although the Company’s non-reliance on any onemarket segment helps mitigate any future negative impact.

 

The Company’s grossmargins remained relatively constant at 22.9% and 22.5% in fiscal years endedMarch 31, 2002 and March 31, 2001, respectively.

 

Net sales for the fiscalyear ended March 31, 2002 decreased approximately $1 million or 5.7% fromapproximately $17.9 million for the fiscal year ended March 31, 2001 toapproximately $16.9 million

 

At April 1, 2002, the Company’s total backlog of confirmed,unfilled orders was approximately $2,932,000 a decrease of 35.8% from the April1, 2001 backlog of $4,568,000.

 

Selling, general andadministrative expenses increased less then 1% or approximately $11,000 for thefiscal year ended March 31, 2002, as compared to fiscal year ended March31, 2001**.**

 

Interest expense decreased to approximately $118,000in fiscal year ended March 31, 2002 from $156,000 in fiscal year ended March31, 2001.  This was due to a decrease ininterest rates as well as a decrease in borrowings in fiscal year 2002.

 

10

----

 

Liquidity and Capital Resources

 

The Company generated approximately $560,000 in cashfrom operations in fiscal year 2002.  AtMarch 31, 2002, the Company had working capital of $5,514,908 and itsstockholders’ equity was $4,735,865. The Company believes that its present working capital, cash generatedfrom operations and amounts available under its present credit facility discussedbelow will be sufficient to meet its cash needs during the next year.

 

The Company’sprincipal credit facility is a line of credit (“Line”) entered into on July 9,1997.  The Line is secured bysubstantially all of the Company’s assets, and since May 14, 1999, includes aterm loan collateralized by a mortgage on the 205 Express Street property.  Borrowings under the Line, other than withrespect to the mortgage, is based on the Company’s inventory andreceivables.  During the fiscal yearended March 31, 1999 the provisions of the Line were modified to reduce theinterest rate, increase the maximum availability and extend the then term.  Since that time, on May 14, 1999, the Linewas further modified to increase the overall borrowing availability by convertinga negative pledge on the Company’s 205 Express Street property to a mortgagesecuring a term loan and extending the term of the Line generally to April 30,2002.

 

On April 30, 2002, the Company renewed itscollateralized lending agreement with its bank, as amended, with the same termsand conditions as above except for an increase in the inventory availabilitymaximum from $1,000,000 to $1,500,000. The Company’s line of credit is still equal to 85% of its eligibleaccounts receivable and 25% of its eligible net inventory up to a maximum of$3,150,000, and provides a term loan of $850,000 collateralized by a mortgageon the 205 Express Street property.  Theterm loan and the mortgage both mature on April 30, 2005.  Interest is payable monthly at short-term,fixed-rate borrowings, for fixed amounts at LIBOR plus 1-1/2%, or dailyborrowing at the bank’s prime rate or a mixture of the two.  A previous Swap agreement was not renewed.

 

On March 31, 2002,the Company owed $1,528,515 on the Line. The Company’s relationship with itssecured lender is satisfactory and the Company believes that the lendingarrangement will be adequate for the foreseeable future.

 

The Company believes that the relatively moderaterates of inflation in the year 2002 and 2001 have not had a significant impacton sales and profitability.

 

Critical Accounting Policies and Estimates

 

The Company’s financial statements have been preparedin accordance with accounting principles generally accepted in the UnitedStates of America. The preparation of these financial statements requires theCompany to make significant estimates and judgments that affect the reportedamounts of assets, liabilities, revenues and expenses and related disclosure ofcontingent assets and liabilities. The Company evaluates its estimates,including those related to bad debts, inventories, intangible assets, incometaxes and contingencies and litigation, on an ongoing basis. The Company basesits estimates on historical experience and on various other assumptions thatare believed to be reasonable under the circumstances, the results of whichform the basis for making judgments about the

 

11

----

 

carrying values of assets and liabilities that are not readily apparentfrom other sources. Actual results may differ from these estimates underdifferent assumptions or conditions.

 

The Company believes the following critical accountingpolicies, among others, involve the more significant judgments and estimatesused in the preparation of its consolidated financial statements:

 

The Company recognizes revenue in accordance with SECStaff Accounting Bulletin No. 101, “Revenue Recognition in FinancialStatements” (“SAB 101”). Under SAB 101, revenue is recognized when the titleand risk of loss have passed to the customer, there is persuasive evidence ofan arrangement, delivery has occurred or services have been rendered, the salesprice is determinable and collectibility is reasonably assured. The Companyrecognizes revenues at time of shipment of its products and sales are recordednet of discounts and returns.

 

The Company maintains allowances for doubtful accountsfor estimated bad debts. If the financial condition of the Company’s customerswere to deteriorate, resulting in an impairment of their inability to makepayments, additional allowances might be required.

 

Inventories are recorded at the lower of cost ormarket. Write-downs of inventories to market value are based upon productfranchise agreements governing price protection, stock rotation andobsolescence, as well as assumptions about future demand and market conditions.If assumptions about future demand/or actual market conditions are lessfavorable than those projected by management, additional write-downs ofinventories could be required.

 

The carrying value of the Company’s deferred taxassets is dependent upon the Company’s ability to generate sufficient futuretaxable income in certain tax jurisdictions. Should the Company determine that it would not be able to realize all orpart of its deferred tax assets in the future, an adjustment to the deferredtax assets would be charged to income in the period such determination wasmade.

 

Recently Issued Accounting Standards

 

In July 2001, the Financial Accounting Standards Boardissued SFAS No. 141, “Business Combinations” (“SFAS No. 141”) and SFAS No. 142,“Goodwill and Other Intangible Assets” (“SFAS No. 142”).  SFAS No. 141 requires all businesscombinations initiated after June 30, 2001 to be accounted for using the purchasemethod.  Under SFAS No. 142, goodwill andintangible assets with indefinite lives are no longer amortized but arereviewed annually (or more frequently if impairment indicators arise) forimpairment. Separable intangible assets that are not deemed to have indefinitelives will continue to be amortized over their useful lives (but with nomaximum life).  The amortizationprovisions of SFAS No. 142 apply to goodwill and intangible assets acquiredafter June 30, 2001.  There will be noimpact on the Company’s financial position and results of operations as aresult of the adoption of these statements.

 

In June 2001, the Financial Accounting Standards Boardissued SFAS No. 143, “Accounting for Assets Retirement Obligations” (“SFAS No.143”).  SFAS No. 143 addresses financialand reporting obligations associated with the retirement of intangiblelong-lived assets and the associated asset retirement costs.  It applies to legal obligations associatedwith retirement of long-lived assets that result from acquisition,construction, development and/or the normal operation of long-lived assets,except for certain obligations of lessees. SFAS No. 143 is effective for financial statements issued for fiscalyears

 

12

----

 

beginning after June 15, 2002. The Company is currently evaluating the effect of adoption on itsfinancial position and results of operations, which the Company expects willnot be material.

 

In August 2001, the Financial Accounting StandardsBoard issued SFAS No. 144, “Accounting for Impairment or Disposal of Long-LivedAssets, (“SFAS No. 144”).  SFAS No. 144supersedes SFAS No. 121 “Accounting for Impairment of Long-Lived Assets and forLong-Lived Assets to Be Disposed Of” and Accounting Principles Board OpinionNo. 30, “Reporting Results of Operations – Reporting the Effects of Disposal ofa Segment of a Business, and Extraordinary, Unusual and Infrequently OccurringEvents and Transactions.”  Thisstatement retains the fundamental provisions of SFAS No. 121 for therecognition and measurement of impairment, but amends the accounting andreporting standards for segments of a business to be disposed of.  The provisions of SFAS No. 144 are requiredto be adopted no later than fiscal years beginning after December 31, 2001,with early adoption encouraged.  TheCompany is currently evaluating the impact of the adoption of SFAS No. 144,which the Company expects will not be material.

 

Item 7.  **FinancialStatements and Supplementary Data.**

 

Pages F-1 et. seq. of this Form 10-KSB are by thisreference incorporated herein.

 

Item 8.  **Changes inand Disagreements with Accountants on Accounting and Financial Disclosure.**

 

None

 

**Part III**

 

Item 9.  **Directorsand Executive Officers of the Company; Compliance with Section 16(a) of theExchange Act.**

 

The following table sets forth for current officersand directors: (i) that person’s name, (ii) if applicable the Director Classelected to, (iii) all positions with the Company held by that person, (iv) thatperson’s age, (v) that person’s principal occupation for the past five yearsand (vi) with respect to directors the date on which that person first became adirector of the Company.  Unlessotherwise indicated, each person has held the position shown, or has beenassociated with the named employer in an executive capacity, for more than fiveyears.  The terms of the currentdirectors are for three years or until their respective successors are electedand qualified.  The Class I, Class II andClass III expire in 2004, 2003 & 2002, respectively.  The terms of the classes of directors arestaggered in order of roman numeral class number so that one class of directorsis elected each year.    The terms ofofficers expire at the pleasure of the Board of Directors.

 

13

----

 
| **Name, Age, Cal. Year First  Became a Director or Officer &  Director Class if applicable** |   | **Principal  Occupation**                                                                                                                                                                                                                                                                                                                                                                                |
|--------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Howard Amster  Director  54 - since 1992  Class III  Director                               |   | Principle with Ramat Securities, LTD., Beachwood,  Ohio.  Director, Geauga Savings Bank,  a northern Ohio savings and loan; Director, Horizon Group Properties Inc.,  Chicago, IL, a real estate company; Director of Prime Retail, Inc.,  Baltimore, MD, a retail outlet and a Director of Wilshire Financial Services,  Portland, OR a savings and loan.                                          |
|                                                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                     |
| John C. Loring  Director and Chairman  57 - since 1988  Class III  Director                 |   | Attorney and private investor, Chicago,  Illinois.  Director of Geauga Savings  Bank, a northern Ohio savings and loan.                                                                                                                                                                                                                                                                             |
|                                                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                     |
| Michael McGuire  Director, CEO  and President  47 - since 1991  Class I Director                 |   | Mr. Michael McGuire joined the Company in 1969.  Prior to becoming CEO and President he was  the Company’s General Manager and Director of Operations.  Mr. Michael McGuire is not related to Mr.  Robert McGuire.                                                                                                                                                                        |
|                                                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                     |
| Robert McGuire  Executive Vice President  51 - since 1997                                        |   | Mr. Robert McGuire joined the Company in 1981.  Prior to becoming an Executive Vice  President he held the position of Warehouse Manager.  He has worked in the distribution industry  since 1976.  Mr. Robert McGuire is not  related to Mr. Michael McGuire.                                                                                                                            |
|                                                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                     |
| Wayne Miller  Executive Vice President  47 - since 1997                                          |   | Mr. Miller joined the Company in 1996 as the  Director of New Business Development.   Prior to joining the Company Mr. Miller was Director of Sales for  Summit Radio Corporation for a year and a half and prior to that time General  Manager of Time Electronics, Inc., a division of Avnet, Inc., for fifteen  years.  He has worked in the  electronics distribution industry since 1975. |
|                                                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                     |
| Lori A. Sarnataro  CFO, Executive Vice President,  Treasurer  and Secretary  37 - since 1998     |   | Prior to joining the Company in 1998, Ms. Sarnataro,  a Certified Public Accountant, was employed with Physician Computer Network,  Inc. for five years as Manager of Corporate Accounting and Systems Implementation.  Prior to that she was employed with KPMG  LLP for five years as a Senior Auditor and Tax Specialist.                                                                        |
|                                                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                     |
| Mark Schindler  Director  80**-**  since 1960  Class II Director                                 |   | Mr. Schindler is a self-employed consultant, private  investor, and a partner in Madison Venture Capital II, Inc., New York, New  York.  Mr. Schindler is also a Vice  President, Secretary and Director of Kushi Natural Foods Corp. and formerly  owned his own electronics distribution business.  Mr. Schindler founded Astrex, Inc.                                                       |
|                                                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                     |
| David S. Zlatin  Director  50 - since 1993  Class II Director                                    |   | Chief Operating Officer of Ramat Securities, Ltd.,  Rabbi and private investor.                                                                                                                                                                                                                                                                                                                          |

 

14

----

 

Messrs. Amster, Loring and Michael McGuire are membersof the Board’s Executive Committee.  Inaddition John Loring is Chairman and Secretary of the Company’s wholly ownedsubsidiary AVest, Inc. and David Zlatin is President and Treasurer of AVest,Inc.  They are also AVest’s twodirectors.  The directors of T.F.Cushing, Inc. were the same as for the Company, and Mr. Michael McGuire was itsPresident and Ms. Sarnataro its Treasurer and Secretary.

 

Section (16a) BeneficialOwnership Reporting Requirement

 

The Company is not aware of any person who failed tofile on a timely basis any reports relating to the Company required by Section16(a) of the Securities Exchange Act during the fiscal year that ended March31, 2002.

 

Item 10.  **ExecutiveCompensation.**

 

The following table shows information concerning thecompensation paid or awarded by the Company and its subsidiaries for servicesto its Chief Executive Officer and its Executive Vice President of Sales andMarketing during fiscal years ended March 31, 2002, 2001 and 2000.  Other then Mr. Michael McGuire and Mr.Miller there were no executive officers of the Company whose compensation wasor exceeded $100,000.  The Company (i)has no retirement, pension, profit sharing, stock option, stock appreciationrights or long term incentive plans for the years in question,  (ii) has not awarded any bonuses during orfor the years in question, except as set forth in the table below, and to twoother executive officers, and  (iii) hasno employment contracts or termination of employment and change of controlarrangements for any of the Company’s executive officers.

 

In the first quarter of fiscal year ended March 31,1997, the Company awarded 135,000 unregistered forfeitable shares of theCompany’s common stock to 19 employees (including Mr. Michael McGuire whoreceived 15,000 shares), none of whom received more than 15,000 shares.  The award provided that to the extent anemployee ceased to be employed by the Company prior to April 1, 2000 (otherthan on account of death) the shares awarded to said employee were forfeited tothe Company.  At March 31, 2000, 100,000shares of the original 135,000 shares vested according to the terms of the

 

15

----

 

award, 35,000 shares having been previously forfeited by personsleaving the employ of the Company during the four year vesting period.  It is not expected that any cash dividendswill be paid on these shares for the foreseeable future.

 

On July 5, 2000, 20,000 and 10,000 shares of theCompany’s Common Stock were awarded to Mr. Michael McGuire and Mr. WayneMiller, respectively.  These shares aresubject to forfeiture to the extent they leave the employ of the Company priorto June 30, 2002.  Mr. Michael McGuirereceived an additional 20,000 shares of the Company’s Common Stock subject toforfeiture if he takes certain actions prior to July 31, 2001. These sharesbecame fully vested on August 1, 2001. All Common Stock issued in July 2000 participated in the Preferred Stockdividend.

 
|                               |   | **SUMMARY  COMPENSATION TABLE** |   |
|------------------------------------|--------|---------------------------------|--------|
|                               |   | **Annual  Compensation**        |   | **Long Term  Compensation  Awards** |   |
| **(a)**                            |   | **(b)**                         |   | **(c)** |   | **(d)** |   | **(f)** |   |
| **Name and  Principal Position**   |   | **Fiscal  Year**                |   | **Salary ($)** |   | **Bonus ($)** |   | **Restricted  Stock  Awards ($)** |   |
|                               |   |                            |   |   |   |   |   |   |   |
| Michael McGuire                    |   | 2002                            |   | $ | 244,798 |   | $ | 88,000 | (3) | — |   |
| CEO &  President               |   | 2001                            |   | $ | 240,869 |   | $ | 177,260 |   | $ | 28,050  | (1) (2) |
|                               |   | 2000                            |   | $ | 231,438 |   | $ | 86,518 |   | — |   |
|                               |   |                            |   |   |   |   |   |   |   |
| Wayne Miller                       |   | 2002                            |   | $ | 121,471 |   | — |   | — |   |
| Executive Vice  President of Sales |   | 2001                            |   | $ | 113,305 |   | $ | 26,600 |   | $ | 15,450 | (1) (2) |
| & Marketing                    |   | 2000                            |   | $ | 113,305 |   | $ | 18,000 |   | — |   |
|                                    |        |                                 |        |  |  |  |  |  |  |  |  |  |  |

 

----

(1)          Mr. McGuire and Mr.Miller were each given 15,000 unregistered forfeitable shares of Common stockas compensation in fiscal year 1997 with a fair market value of 31 cents pershare at the time.  These shares wereforfeitable to the extent they ceased to be employed by the Company  (other than on account of death) beforeApril 1, 2000.  On April 1, 2000 thefair market value of the 30,000 shares were 75 cents per share for an aggregatefair value of $11,250 to each.

(2)          On June 29, 2000 Mr.Miller and Mr. McGuire were awarded 10,000 and 20,000 shares of Common stock,respectively.  These shares areforfeitable to the extent they cease to be employed by the Company (other thanon account of death) before July 1, 2002. These shares on June 29, 2000 were valued at 42 cents per share for anaggregate fair value of $4,200 and $8,400, respectively. In addition, on June29, 2000, Mr. McGuire received an additional 20,000 shares of Common stockwhich are forfeitable if he takes certain actions prior to July 31, 2001.  On June 29, 2000 these shares were valued at42 cents per share for an aggregate fair market value of $8,400. In addition,on June 29, 2000, Mr. McGuire received an additional 20,000 shares of Commonstock which were forfeitable if he took certain actions prior to July 31,2001.  On June 29, 2000 these shareswere valued at 42 cents per share for an aggregate fair market value of $8,400(incl. above).  On August 1, 2001 theseshares became vested at 33 cents per share for an aggregate fair market valueof $6,600.

(3)          On March 27, 2002, theBoard of Directors granted Mr. McGuire a bonus of $88,000 subject toreconsideration upon receipt of the final audit, payable half then and half twoweeks after receipt of the final audit results.

 

The Board of Directors held 4 meetings during fiscalyear ended March 31, 2002.  Each of thedirectors of the Company attended each of those meetings.  During that fiscal year the Board ofDirectors had one active standing committee, the Executive Committee, composedof Messrs. Amster, Loring and McGuire. For the fiscal year to end March 31, 2002 each director not a full timeemployee of the Company received a director fee of $10,000 paid in equalquarterly installments and in lieu of meeting fees other than reimbursement ofactual expenses.  In addition, duringthe fiscal year ended March 31, 2002, Mr. Loring for services as Chairman ofthe Board and as a member of the Executive Committee received $26,000 and$49,000 respectively and $5,000 for ordinary office expenses, and Mr. Amster for

 

16

----

 

services as a member of the Executive Committee received $49,000.During the fiscal year ended March 31, 2002, Messrs. Amster and Loring werealso each awarded a bonus of $22,000 subject to the right of the Board toreconsider following receipt of the final audit results.  Half of those bonus amounts have been paidand the balance is payable two weeks following receipt of the final auditresults for the fiscal year ended March 31, 2002.

 

Item 11.  **SecurityOwnership of Certain Beneficial Owners and Management.**

 

The following table sets forth the number andpercentage of shares of the Company’s common stock beneficially owned as of May24, 2002 by persons who are known (based on the Company’s review of Forms 13Gand 13D delivered to the Company) by the Company to be the beneficial owners ofmore than 5% of the Company’s outstanding common stock as of that date, and thedirectors of the Company and its chief executive officer, and all officers anddirectors of the Company as a group. For purposes of this Report, beneficial ownership is defined inaccordance with Rule 13d-3 of the Securities and Exchange Commission to meangenerally the power to vote or dispose of shares, regardless of any economicinterest therein.  The persons listedhave direct sole voting power and direct sole dispositive power with respect toall shares set forth in the table unless otherwise specified in the footnotesto the table.

 

***Beneficial HoldersOf More Than 5% Of Common Stock and Preferred Stock, Series B***
| **Title and  Class** |   | **Name and  Address of Beneficial Owners**                        |   | **Amount and  Nature of  Beneficial Ownership** |      | **Percentage  Of Class** |   |
|----------------------|--------|-------------------------------------------------------------------|--------|-------------------------------------------------|-----------|--------------------------|--------|
| Common  Stock        |   | Howard Amster(9)  205 Express Street  Plainview, New York 11803   |   | 1,180,565                                       | (1)       | 19.86%                   | (2)    |
| Common  Stock        |   | John C. Loring(9)  205 Express Street  Plainview, New York 11803  |   | 2,401,710                                       | (3)(4)(5) | 38.43%                   | (2)    |
| Common  Stock        |   | Michael McGuire(9)  205 Express Street  Plainview, New York 11803 |   | 433,967                                         | (6)(7)(8) | 7.55%                    | (2)    |

 

----

“Footnotes follow thenext table”

 

17

----

 

***Officer andDirector Holdings Of Common Stock and Preferred Stock, Series B***
| **Title  and Class** |   | **Name and  Address of Beneficial Owners**                                      |   | **Amount and  Nature of Beneficial Ownership** |      | **Percentage  Of Class** |   |
|----------------------|--------|---------------------------------------------------------------------------------|--------|------------------------------------------------|-----------|--------------------------|--------|
| Common  stock        |   | Howard Amster(9)                                                                |   | 1,180,565                                      | (1)       | 19.86%                   | (2)    |
| Common  stock        |   | John C. Loring(9)                                                               |   | 2,401,710                                      | (3)(4)(5) | 38.43%                   | (2)    |
| Common  stock        |   | Michael McGuire(9)                                                              |   | 433,967                                        | (6)(7)(8) | 7.55%                    | (2)    |
| Common  stock        |   | Mark Schindler(9)                                                               |   | 1,932                                          | (10)      |                     | *(2)   |
| Common  stock        |   | David S. Zlatin                                                                 |   | 0                                              |      |                     | *(2)   |
| Common  stock        |   | Wayne Miller(9)                                                                 |   | 72,001                                         | (11)      |                     | *(2)   |
| Common  stock        |   | All Other Officers(9)                                                           |   | 26,667                                         | (12)      |                     | *(2)   |
| Common  stock        |   | All Officers and Directors as a group (8 persons)  1,3,4,5,6,7,8,10,11,12,13,14 |   | 4,116,842                                      |      | 72.88%                   | (2)    |

 

----

*                 Less than 1%.

(1)          Includes 295,140 sharesof common stock issuable upon conversion of an equal number of shares ofConvertible Preferred Series B stock which is eligible to convert.

(2)          Based on 5,648,842Common shares outstanding and the shareholder’s Convertible Preferred Series Boutstanding.

(3)          Includes 271,970 Commonshares owned by his spouse’s IRA, the beneficial ownership of which hedisclaims.

(4)          Includes 90,657Convertible Preferred Series B shares owned by his spouse’s IRA, the beneficialownership of which he disclaims.

(5)          Includes 600,430 sharesof common stock issuable upon conversion of an equal number of shares ofConvertible Preferred Series B stock which is eligible to convert.

(6)          Includes 104,537 Commonshares owned by his spouse’s IRA, the beneficial ownership of which hedisclaims.

(7)          Includes 34,846Convertible Preferred, Series B shares owned by his spouse’s IRA, thebeneficial ownership of which he disclaims.

(8)          Includes 100,992 sharesof common stock issuable upon conversion of an equal number of shares ofConvertible Preferred Series B stock which is eligible to convert.

(9)          The Common Stock isentitled to one vote per share, Preferred Stock, Series B is entitled to voteon all matters which the Common Stock can vote on and is entitled to twelvevotes per share.  Beginning on July 31,2001 and thereafter, at the option of the holder, a share of the PreferredStock is convertible into a share of the Common Stock.

(10)    Includes 483 shares of commonstock issuable upon conversion of an equal number of shares of ConvertiblePreferred Series B stock which is eligible to convert.

(11)    Includes 18,001 shares ofcommon stock issuable upon conversion of an equal number of shares ofConvertible Preferred Series B stock which is eligible to convert.

(12)    Includes 6,667 shares ofcommon stock issuable upon conversion of an equal number of shares ofConvertible Preferred Series B stock which is eligible to convert.

 

Item 12.  **CertainRelationships and Related Transactions.**

 

None

 

18

----

 

**PART IV**

 

Item 13.  **Exhibits,Financial Statement Schedules and Reports on Form 8-K.**

 
| (a) (1) | Financial Statements                                                                               |
|---------|----------------------------------------------------------------------------------------------------|
|    |                                                                                               |
|    | Reports  of Independent Certified Public Accountants                                               |
|    |                                                                                               |
|    | Consolidated Balance Sheet  as of  March 31, 2002                                             |
|    |                                                                                               |
|    | Consolidated Statements of Earnings for the years  ended March 31, 2002 and 2001                   |
|    |                                                                                               |
|    | Consolidated  Statements of Shareholders’ Equity for the years ended March 31, 2002 and  2001 |
|    |                                                                                               |
|    | Consolidated  Statements of Cash Flows for the years ended March 31, 2002 and 2001                 |
|    |                                                                                               |
|    | Notes to  Consolidated Financial Statements                                                        |

 

19

----

 

(a)(3)       Exhibits

 

The exhibits listed onthe accompanying Exhibit Index are filed as part of this report.

 
| **Exhibit** |   | **Description**                                                                                           |   | **Previously Filed and Incorporated  by reference or Filed Herewith**                             |
|-------------|--------|-----------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|
|        |   |                                                                                                      |   |                                                                                              |
| 3 (a)       |   | Certificate of Incorporation of Astrex, Inc., as  amended (a Delaware corporation)                        |   | Filed as Exhibit 3(a) to the Form 10-QSB of the  Company for the quarter ended September 30, 1997 |
|        |   |                                                                                                      |   |                                                                                              |
| 3 (b)       |   | By-Laws of Astrex, Inc., as amended                                                                       |   | Filed as Exhibit 3(b) to the Form 10-QSB of the  Company for the quarter ended September 30, 1996 |
|        |   |                                                                                                      |   |                                                                                              |
| 4           |   | Astrex, Inc. Certificate of Designations,  Preferences and Rights of Series B Convertible Preferred Stock |   | Filed as Exhibit 4 to the Form 10-QSB of the Company  for the quarter ended June 30, 2000         |
|        |   |                                                                                                      |   |                                                                                              |
| 10(a)       |   | Amendment No. 3 To Credit and Security  Agreement  dated May 14, 1999.                               |   | Filed as Exhibit 10(a) to the Form 10-QSB of the  Company for the quarter ended June 30, 1999     |
|        |   |                                                                                                      |   |                                                                                              |
| 10(b)       |   | Second Amended and Restated Revolving Credit  Promissory Note dated May 14, 1999                          |   | Filed as Exhibit 10(b) to the Form 10-QSB of the  Company for the quarter ended June 30, 1999     |
|        |   |                                                                                                      |   |                                                                                              |
| 10(c)       |   | Term Loan Promissory Note, dated May 14, 1999                                                             |   | Filed as Exhibit 10(c) to the Form 10-QSB of the  Company for the quarter ended June 30, 1999     |
|        |   |                                                                                                      |   |                                                                                              |
| 10(d)       |   | Guaranty Confirmation Agreement (With  Modifications), dated May 14, 1999                                 |   | Filed as Exhibit 10(d) to the Form 10-QSB of the  Company for the quarter ended June 30, 1999     |
|        |   |                                                                                                      |   |                                                                                              |
| 10(e)       |   | Mortgage from Avest, Inc. To Fleet National Bank,  dated May 14, 1999                                     |   | Filed as Exhibit 10(e) to the Form 10-QSB of the  Company for the quarter ended June 30, 1999     |
|        |   |                                                                                                      |   |                                                                                              |
| 10(f)       |   | Amendment No. 4 To Credit and Security  Agreement  dated April 30, 2002.                             |   | Filed herewith as Exhibit 10(a)                                                                   |
|        |   |                                                                                                      |   |                                                                                              |
| 10(g)       |   | Third Amended and Restated Revolving Credit  Promissory Note dated April 30, 2002.                        |   | Filed herewith as Exhibit 10(b)                                                                   |
|        |   |                                                                                                      |   |                                                                                              |
| 10(h)       |   | Amended and Restated Term Loan Promissory Note,  dated April 30, 2002                                     |   | Filed herewith as Exhibit 10(c)                                                                   |
|        |   |                                                                                                      |   |                                                                                              |
| 10(i)       |   | Guaranty Confirmation Agreement, dated April 30,  2002                                                    |   | Filed herewith as Exhibit 10(d)                                                                   |
|        |   |                                                                                                      |   |                                                                                              |
| 21          |   | Subsidiaries  of the registrant                                                                           |   | Filed  as Exhibit 21 to Form 10-KSB/A-1 of the Company for the year ended March 31,  1998         |

 

(b)                                 NoCurrent Reports on Form 8-K were filed by the Company.

 

20

----

 

**REPORT OF INDEPENDENT CERTIFIEDPUBLIC ACCOUNTANTS**

 

The Board of Directorsand Shareholders

**Astrex, Inc.**

 

We have audited theaccompanying consolidated balance sheet of Astrex, Inc. and subsidiaries (the“Company”) as of March 31, 2002 and the related consolidated statements ofearnings, shareholders’ equity and cash flows for the years ended March 31,2002 and 2001.  These consolidatedfinancial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinionon these consolidated financial statements based on our audits.

 

We conducted our auditsin accordance with auditing standards generally accepted in the United Statesof America.  Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatement.  An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financialstatements.  An audit also includesassessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statementpresentation.  We believe that ouraudits provide a reasonable basis for our opinion.

 

In our opinion, theconsolidated financial statements referred to above present fairly, in all materialrespects, the consolidated financial position of Astrex, Inc. and subsidiariesas of March 31, 2002 and the results of their operations and their cash flowsfor the years ended March 31, 2002 and 2001 in conformity with accountingprinciples generally accepted in the United States of America.

 

 

/s/ GRANT THORNTON LLP

 

Melville, New York

June 7, 2002

 

F-1

----

 

Astrex, Inc. andSubsidiaries

 

**CONSOLIDATED BALANCE SHEET**

 

March 31, 2002

 
| ASSETS                                                                                                                                                                    |   |      |      |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------|-----------|
|                                                                                                                                                                      |   |      |      |
| CURRENT  ASSETS                                                                                                                                                           |   |      |      |
| Cash  and cash equivalents                                                                                                                                                |   | $         | 4,449     |   |
| Accounts  receivable (net of allowance for doubtful accounts of $92,967)                                                                                                  |   | 1,907,209 |      |
| Inventory                                                                                                                                                                 |   | 5,018,972 |      |
| Prepaid  expenses and other current assets                                                                                                                                |   | 57,046    |      |
| Deferred  tax asset                                                                                                                                                       |   | 290,000   |      |
|                                                                                                                                                                      |   |      |      |
| Total  current assets                                                                                                                                                     |   | 7,277,676 |      |
|                                                                                                                                                                      |   |      |      |
| FIXED  ASSETS, NET                                                                                                                                                        |   | 697,598   |      |
|                                                                                                                                                                      |   |      |      |
| INVESTMENTS                                                                                                                                                               |   | 51,874    |      |
|                                                                                                                                                                      |   |      |      |
|                                                                                                                                                                      |   | $         | 8,027,148 |   |
|                                                                                                                                                                      |   |      |      |
| LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                                                                                 |   |      |      |
|                                                                                                                                                                      |   |      |      |
| CURRENT  LIABILITIES                                                                                                                                                      |   |      |      |
| Accounts  payable                                                                                                                                                         |   | $         | 1,039,539 |   |
| Accrued  payroll                                                                                                                                                          |   | 140,988   |      |
| Accrued  bonus                                                                                                                                                            |   | 225,063   |      |
| Accrued  inventory                                                                                                                                                        |   | 276,174   |      |
| Accrued  other                                                                                                                                                            |   | 81,004    |      |
|                                                                                                                                                                      |   |      |      |
| Total  current liabilities                                                                                                                                                |   | 1,762,768 |      |
|                                                                                                                                                                      |   |      |      |
| LONG-TERM  DEBT                                                                                                                                                           |   | 1,528,515 |      |
|                                                                                                                                                                      |   |      |      |
| SHAREHOLDERS’  EQUITY                                                                                                                                                |   |      |      |
| Preferred  stock, Series A - par value $5 per share; authorized, 200,000 shares; issued,  none                                                                            |   | —    |      |
| Preferred  stock, Series B - par value $.01 per share; authorized, 10,000,000 shares;  issued and outstanding, 1,699,151 shares (liquidation preference of $.25 a  share) |   | 16,992    |      |
| Common  stock - par value $.01 per share; authorized, 15,000,000 shares; issued and  outstanding, 6,803,593 shares                                                        |   | 68,036    |      |
| Additional  paid - in capital                                                                                                                                             |   | 3,927,794 |      |
| Retained  earnings                                                                                                                                                        |   | 1,061,491 |      |
| Deferred  compensation                                                                                                                                                    |   | (641      | )         |
| Treasury  stock - 1,162,086 shares, at cost                                                                                                                               |   | (337,807  | )         |
|                                                                                                                                                                      |   |      |      |
|                                                                                                                                                                      |   | 4,735,865 |      |
|                                                                                                                                                                      |   |      |      |
|                                                                                                                                                                      |   | $         | 8,027,148 |   |

 

*The accompanying notes are an integral part of thisstatement.*

 

F-2

----

 

Astrex, Inc. andSubsidiaries

 

**CONSOLIDATED STATEMENTS OF EARNINGS**

 
|                                                                     |   | **Year ended  March 31,** |           |
|--------------------------------------------------------------------------|--------|---------------------------|----------------|
|                                                                     |   | **2002**                  |           | **2001** |   |
|                                                                     |   |                      |           |   |   |
| Net  sales                                                               |   | **$**                     | **16,894,123** |   | $ | 17,931,610 |   |
| Cost  of sales                                                           |   | **13,015,259**            |           | 13,882,681 |   |
|                                                                     |   |                      |           |   |   |
| Gross  profit                                                            |   | **3,878,864**             |           | 4,048,929 |   |
|                                                                     |   |                      |           |   |   |
| Selling,  general and administrative expenses                            |   | **3,172,958**             |           | 3,161,759 |   |
|                                                                     |   |                      |           |   |   |
| Income  from operations                                                  |   | **705,906**               |           | 887,170 |   |
|                                                                     |   |                      |           |   |   |
| Write-down  of investment                                                |   | **(24,830**               | **)**          | (65,000 | ) |
| Interest  expense                                                        |   | **(117,973**              | **)**          | (155,949 | ) |
|                                                                     |   |                      | ** **     |   |   |
| Income  before income tax benefit and discontinued operations            |   | **563,103**               | ** **     | 666,221 |   |
|                                                                     |   |                      | ** **     |   |   |
| Income  tax benefit                                                      |   | **(76,706**               | **)**          | (210,160 | ) |
|                                                                     |   |                      | ** **     |   |   |
| Income  from continuing operations                                       |   | **639,809**               | ** **     | 876,381 |   |
|                                                                     |   |                      | ** **     |   |   |
| Loss  from discontinued operations                                       |   | **(80,477**               | **)**          | (41,504 | ) |
|                                                                     |   |                      | ** **     |   |   |
| Loss  from disposal of discontinued operations                           |   | **(265,178**              | **)**          | — |   |
|                                                                     |   |                      | ** **     |   |   |
| Net  income                                                              |   | **$**                     | **294,154**    |   | $ | 834,877 |   |
|                                                                     |   |                      |           |   |   |
| Net  income per common share:                                            |   |                      |           |   |   |
| Basic                                                                    |   |                      |           |   |   |
| Income  from continuing operations                                       |   | **$**                     | **.11**        | ** ** | **$** | **.15** | ** ** |
| Loss  from discontinued operations                                       |   | **(.01**                  | **)**          | **(.01** | **)** |
| Loss  from disposal of discontinued operations                           |   | **(.05**                  | **)**          | **(.00** | **)** |
| Net  income per common share                                             |   | **$**                     | **.05**        | ** ** | **$** | **.14** | ** ** |
|                                                                     |   |                      |           |   |   |
| Diluted                                                                  |   |                      |           |   |   |
| Income  from continuing operations                                       |   | **$**                     | **.09**        | ** ** | **$** | **.13** | ** ** |
| Loss  from discontinued operations                                       |   | **(.01**                  | **)**          | **(.01** | **)** |
| Loss  from disposal of discontinued operations                           |   | **(.04**                  | **)**          | **(.00** | **)** |
| Net  income per common share                                             |   | **$**                     | **.04**        | ** ** | **$** | **.12** | ** ** |
|                                                                     |   |                      |           |   |   |
| Weighted-average  common shares and common equivalent shares outstanding |   |                      |           |   |   |
| Basic                                                                    |   | **5,569,140**             |           | 5,602,102 |   |
|                                                                     |   |                      |           |   |   |
| Diluted                                                                  |   | **7,308,291**             |           | 7,007,374 |   |

 

*The accompanying notes are an integral part of thesestatements.*

 

F-3

----

 

Astrex, Inc. andSubsidiaries

 

**CONSOLIDATED STATEMENT OFSHAREHOLDERS’ EQUITY**

 

Years ended March31, 2002 and 2001

 
|                                                            |   | **Preferred stock  par value $.01 per share** |       | **Common stock,  par value $.01 per share** |       | **Additional  paid-in  capital** |          | **Deferred  compensation** |       | **Retained  earnings/  (deficit)** |       | **Treasury stock,** |          |       |                |
|-----------------------------------------------------------------|--------|-----------------------------------------------|------------|---------------------------------------------|------------|----------------------------------|---------------|----------------------------|------------|------------------------------------|------------|---------------------|---------------|------------|---------------------|
|                                                            |   | **Shares**                                    |       | **Amount**                                  |       | **Shares**                       |          | **Amount**                 |       |                               |       |                | **Shares**    |       | **at cost  Amount** |   | **Total** |   |
|                                                            |   |                                          |       |                                        |       |                             |          |                       |       |                               |       |                |          |       |                |   |   |   |   |   |   |
| **Balance, April 1, 2000**                                      |   | **—**                                    | ** ** | **—**                                  | ** ** | **6,540,363**                    | ** **    | **$**                      | **65,404** | ** **                         | **$**      | **3,901,631**       | ** **    | **$**      | **711**             | ** ** | **$** | **(48,566** | **)** | **913,586** | ** ** | **$** | **(264,940** | **)** | **$** | **3,654,240** | ** ** |
|                                                            |   |                                          | ** ** |                                        | ** ** |                             | ** **    |                       | ** ** |                               | ** ** |                | ** **    |       | ** **          |   | ** ** |   | ** ** |   | ** ** |
| Shares issued as stock  dividend                                |   | 1,897,381                                     |       | $                                           | 18,974     |                             | —        |                       | —     |                               | —     |                | —        |       | (18,974             | ) | — |   | — |   | — |   |
| Amortization of deferred compensation                           |   | —                                        |       | —                                      |       | —                           |          | —                     |       | —                             |       | 12,398              |          | —     |                | — |   | — |   | 12,398 |   |
| Shares granted to employees  and President (forfeitable)        |   | —                                        |       | —                                      |       | 40,000                           |          | 400                        |       | 16,100                             |       | (16,500             | )             | —     |                | — |   | — |   | — |   |
| Shares granted to President (forfeitable)                       |   | —                                        |       | —                                      |       | 20,000                           |          | 200                        |       | 8,050                              |       | (8,250              | )             | —     |                | — |   | — |   | — |   |
| Shares granted to nonemployee                                   |   | —                                        |       | —                                      |       | 5,000                            |          | 50                         |       | 2,013                              |       | —              |          | —     |                | — |   | — |   | 2,063 |   |
| Purchase of treasury stock for retirement                       |   | —                                        |       | —                                      |       | —                           |          | —                     |       | —                             |       | —              |          | —     |                | 145,500 |   | (43,042 | ) | (43,042 | ) |
| Net income                                                      |   | —                                        |       | —                                      |       | —                           |          | —                     |       | —                             |       | —              |          | 834,877    |                | — |   | — |   | 834,877 |   |
|                                                            |   |                                          |       |                                        |       |                             |          |                       |       |                               |       |                |          |       |                |   |   |   |   |   |   |
| **Balance, March 31, 2001**                                     |   | **1,897,381**                                 | ** ** | **$**                                       | **18,974** | ** **                       | **6,605,363** | ** **                 | **$**      | **66,054**                         | ** ** | **$**               | **3,927,794** | ** ** | **$**               | **(11,641** | **)** | **$** | **767,337** | ** ** | **1,059,086** | ** ** | **$** | **(307,982** | **)** | **$** | **4,460,536** | ** ** |
|                                                            |   |                                          |       |                                        |       |                             |          |                       |       |                               |       |                |          |       |                |   |   |   |   |   |   |
| Amortization of deferred compensation                           |   | —                                        |       | —                                      |       | —                           |          | —                     |       | —                             |       | 11,000              |          | —     |                | — |   | — |   | 11,000 |   |
| Conversion of Series B  Preferred  stock into common Stock |   | (198,230                                      | )          | (1,982                                      | )          | 198,230                          |          | 1,982                      |       |                               |       |                |          |       |                |   |   |   |   |   |   |
| Purchase of treasury stock for retirement                       |   | —                                        |       | —                                      |       | —                           |          | —                     |       | —                             |       | —              |          | —     |                | 103,000 |   | (29,825 | ) | (29,825 | ) |
| Net income                                                      |   | —                                        |       | —                                      |       | —                           |          | —                     |       | —                             |       | —              |          | 294,154    |                | — |   | — |   | 294,154 |   |
|                                                            |   |                                          | ** ** |                                        | ** ** |                             | ** **    |                       | ** ** |                               | ** ** |                | ** **    |       | ** **          |   | ** ** |   | ** ** |   | ** ** |
| **Balance, March 31, 2002**                                     |   | **1,699,151**                                 | ** ** | **$**                                       | **16,992** | ** **                       | **6,803,593** | ** **                 | **$**      | **68,036**                         | ** ** | **$**               | **3,927,794** | ** ** | **$**               | **(641** | **)** | **$** | **1,061,491** | ** ** | **1,162,086** | ** ** | **$** | **(337,807** | **)** | **$** | **4,735,865** | ** ** |

 

*The accompanying notes are an integral part of thisstatement*

 

F-4

----

 

Astrex, Inc. andSubsidiaries

 

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

 
|                                                                              |   | **Year ended  March 31,** |        |
|-----------------------------------------------------------------------------------|--------|---------------------------|-------------|
|                                                                              |   | **2002**                  |        | **2001** |   |
| Cash flows from  operating activities                                             |   |                      |        |   |   |
| Net income                                                                        |   | **$**                     | **294,154** | ** ** | $ | 834,877 |   |
|                                                                              |   |                      | ** **  |   |   |
| Net income from  continued operations                                             |   |                      | ** **  |   |   |
| Adjustments to  reconcile net income to net cash provided by operating activities |   |                      | ** **  |   |   |
| Loss from  discontinued operations                                                |   | **80,477**                | ** **  | 41,504 |   |
| Loss from  disposal of discontinued operations                                    |   | **265,178**               | ** **  | **—** | ** ** |
| Depreciation and  amortization                                                    |   | **65,914**                | ** **  | 84,804 |   |
| Amortization of  deferred stock compensation                                      |   | **11,000**                | ** **  | 14,462 |   |
| Amortization of  deferred financing costs                                         |   | **11,239**                | ** **  | 11,239 |   |
| Deferred tax  asset                                                               |   | **(90,000**               | **)**       | (200,000 | ) |
| Write-down of investment                                                          |   | **24,830**                | ** **  | 65,000 |   |
| Changes in  assets and liabilities                                                |   |                      | ** **  |   |   |
| Decrease  (increase) in accounts receivable, net                                  |   | **414,123**               | ** **  | (130,249 | ) |
| Decrease  (increase) in inventory                                                 |   | **38,692**                | ** **  | (892,274 | ) |
| Decrease  (increase) in prepaid expenses and other current assets                 |   | **1,354**                 | ** **  | (12,864 | ) |
| (Decrease)  increase in accounts payable                                          |   | **(464,663**              | **)**       | 421,586 |   |
| (Decrease)  increase in accrued liabilities                                       |   | **(58,124**               | **)**       | 204,532 |   |
|                                                                              |   |                      | ** **  |   |   |
| Net cash  provided by continuing operations                                       |   | **594,174**               | ** **  | 442,617 |   |
| Net cash used in  discontinued operations                                         |   | **(34,109**               | **)**       | (88,118 | ) |
| Net cash  provided by operating activities                                        |   | **560,065**               | ** **  | 354,499 |   |
|                                                                              |   |                      | ** **  |   |   |
| Cash flows from  investing activities                                             |   |                      | ** **  |   |   |
| Purchases of  property and equipment                                              |   | **(62,574**               | **)**       | (82,767 | ) |
| Net cash used in  investing activities                                            |   | **(62,574**               | **)**       | (82,767 | ) |
|                                                                              |   |                      | ** **  |   |   |
| Cash flows from  financing activities                                             |   |                      | ** **  |   |   |
| Repayments of  loan payable                                                       |   | **(471,485**              | **)**       | (250,000 | ) |
| Purchase of  treasury stock                                                       |   | **(29,825**               | **)**       | (43,042 | ) |
| Principal  payments under capital lease obligations                               |   | **—**                | ** **  | (31,618 | ) |
|                                                                              |   |                      | ** **  |   |   |
| Net cash used in  financing activities                                            |   | **(501,310**              | **)**       | (324,660 | ) |
|                                                                              |   |                      | ** **  |   |   |
| NET DECREASE IN  CASH AND CASH EQUIVALENTS                                        |   | **(3,819**                | **)**       | (52,928 | ) |
|                                                                              |   |                      | ** **  |   |   |
| Cash and cash  equivalents at beginning of year                                   |   | **8,268**                 | ** **  | 61,196 |   |
|                                                                              |   |                      | ** **  |   |   |
| Cash and cash  equivalents at end of year                                         |   | **$**                     | **4,449**   | ** ** | $ | 8,268 |   |
|                                                                              |   |                      | ** **  |   |   |
| Supplemental  disclosures of cash flow information:                               |   |                      | ** **  |   |   |
| Cash paid during  the year for                                                    |   |                      | ** **  |   |   |
| Interest                                                                          |   | **$**                     | **127,555** | ** ** | **$** | **154,861** | ** ** |
| Income taxes                                                                      |   | **$**                     | **29,739**  | ** ** | **$** | **4,987** | ** ** |

* *

*Theaccompanying notes are an integral part of these statements.*

 

F-5

----

 

Astrex, Inc. andSubsidiaries

 

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

 

March 31, 2002 and 2001

 

**NOTE A -DESCRIPTION OF BUSINESS**

 

Astrex, Inc. and subsidiaries (the “Company”) sells,assembles and distributes electronic parts and components in one businesssegment.  Approximately 85% and 87% ofthe Company’s sales in fiscal 2002 and 2001, respectively, consist ofconnectors that link electronic components together and generally consist of ashell, insert, contacts and adaptive hardware. The other products sold by the Company, which comprise the remaining 15%****and13% of sales in fiscal 2002 and 2001, respectively, are devices that control orregulate the flow of electricity to or within components.  The Company’s largest markets include thedefense, aerospace, industrial and computer industries, which sales areworldwide with a concentration in the Northeast and Mid-Atlantic states.

 

**NOTE B -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

 

A summary of the significant accounting policiesapplied in the preparation of the accompanying consolidated financialstatements is as follows:

 

*Principles of Consolidation*

 

The consolidated financial statements include theaccounts of Astrex, Inc. and its subsidiaries, all of which arewholly-owned.  All significantintercompany accounts and transactions have been eliminated.

 

*Financial Instruments and Business Concentrations*

 

Financial instruments which potentially subject theCompany to concentration of credit risk consist principally of accountsreceivable.  Concentration of creditrisk with respect to accounts receivable is generally mitigated due to thelarge number of entities comprising the Company’s customer base and theirdispersion across geographic areas and industries.  The Company routinely addresses the financial strength of itscustomers and, as a consequence, believes that its accounts receivable creditrisk exposure is limited.  No singlecustomer accounted for more than 10% of the Company’s sales and accountsreceivable in fiscal 2002 and 2001.

 

Statement of Financial Accounting Standards No. 107(“SFAS No. 107”), “Fair Value of Financial Instruments,” requires disclosure ofthe estimated fair value of an entity’s financial instrument assets and liabilities.  The Company’s principal financial instrumentconsists of a line of credit and term loan facility and an interest rate swapagreement, expiring April 30, 2002, with one participating bank.  This lending agreement was renewed on April30, 2002 (see Note E).  The Companybelieves that the carrying amounts of such debt and the interest rate swapagreement approximate the fair value as the interest rates approximate thecurrent prevailing interest rates.

 

F-6

----

 

The Company generally purchases products frommanufacturers pursuant to nonexclusive distributor agreements.  The Company’s top four suppliers accountedfor 57**%**and 43% of purchases for the fiscal years ended March 31, 2002 and 2001,respectively.  There can be no assurancethat, in the event a supplier cancels its distributor agreement with theCompany, the Company will be able to replace the sales with sales of otherproducts.

 

*Use of Estimates*

 

In preparing financial statements in conformity with accountingprinciples generally accepted in the United States of America, management isrequired to make estimates and assumptions that affect the reported amounts ofassets and liabilities and disclosure of contingent assets and liabilities atthe date of the financial statements, as well as the reported amounts ofrevenues and expenses during the reporting period.

 

*Revenue Recognition*

 

The Company recognizes revenue as products are shippedand title passes to customers.  Right ofreturn exists only for damaged products.

 

*Shipping and Handling Costs*

 

Pursuant to EITF 00-10, “Accounting for Shipping andHandling Fees and Costs,” the Company includes fees billed to a customerrelating to shipping and handling costs in net sales.  All shipping and handling expenses incurred by the Company areincluded in cost of sales.

 

*Investments*

 

Investments in companies where the Company holds lessthan a 20% voting interest are accounted for using the cost method, because theCompany does not exercise significant influence over financial or operatingpolicies of these companies.

 

*Inventory*

 

Inventory, consisting principally of finished goods,is stated at the lower of cost or market. Cost is determined using the first-in, first-out method.

 

F-7

----

 

*Long-Lived Assets*

 

The Company monitors the recoverability of long-livedassets, including investments and fixed assets, based on estimated use factorssuch as future asset utilization, business climate and future undiscounted cashflows expected to result from the use of the related assets or realized uponsale. The Company’s policy is to write down assets to their net recoverableamount in the period when it is determined that the carrying amount of theasset is not likely to be recoverable.

 

*Fixed Assets*

 

Fixed assets are stated at cost less accumulateddepreciation.  Depreciation of fixedassets is computed by the straight-line method over the estimated useful livesof the assets.

 

*Derivative Financial Instruments*

 

The FASB recently issued Statement of FinancialAccounting Standards No. 137 (“SFAS No. 137”), “Accounting for DerivativeInstruments and Hedging Activities - Deferral of Effective Date of SFASStatement No. 133.”  SFAS No. 137 deferredfor one year the effective date of SFAS Statement No. 133, “Accounting forDerivative Instruments and Hedging Activities.”  The rule now applies to all fiscal quarters of all fiscal yearsbeginning after June 15, 2000.  TheCompany adopted the standard as of July 1, 2000.  SFAS No. 137 requires the Company to recognize all derivatives onthe balance sheet at fair value. Derivatives that are not designated as hedges must be adjusted to fairvalue through income.  If the derivativeis designated as a hedge, depending on the nature of the hedge, changes in thefair value of the derivatives will either be offset against the change in fairvalue of the hedged assets, liabilities, or firm commitments through earningsor recognized in other comprehensive income until the hedged item is recognizedin earnings.  The ineffective portion ofthe change in fair value of a derivative that is designated as a hedge will beimmediately recognized in earnings.  TheCompany does not invest in derivatives for trading purposes.  Derivative financial instruments are used bythe Company principally in the management of its interest rate exposures (seeNote E).

 

*Advertising*

 

Advertising costs are expensed as incurred and totaled$83,334 and $61,201 for the fiscal years ended March 31, 2002 and 2001,respectively.

 

F-8

----

 

*Income Taxes*

 

Deferred income taxes are recognized for temporarydifferences between financial statement and income tax bases of assets andliabilities and net operating loss carryforwards for which income tax expensesor benefits are expected to be realized in future years.  A deferred tax asset has been established asit is more likely than not that all, or some portion, of such deferred taxassets will be realized.  The effect ondeferred taxes of a change in tax rates is recognized in income in the periodthat includes the enactment date.

 

*Net Income Per Common Share*

 

Net income per common share is computed by dividingnet income available to common stockholders by the weighted average number ofshares outstanding during the period. Diluted earnings per share reflect thepotential dilution that could occur if securities or other contracts to issuecommon stock were exercised or converted into common stock or resulted in theissuance of common stock.

 

The following table sets forth the reconciliation ofthe weighted average number of common shares:

 
|                                      |   | **2002**      |   | **2001**  |   |
|-------------------------------------------|--------|---------------|--------|-----------|--------|
|                                      |   |          |   |      |   |
| Basic                                     |   | **5,569,140** |   | 5,602,102 |   |
| Effect of  Convertible Series B Preferred |   | **1,699,151** |   | 1,341,162 |   |
| Effect of  dilutive securities            |   | **40,000**    |   | 64,110    |   |
|                                      |   |          |   |      |   |
| Diluted                                   |   | **7,308,291** |   | 7,007,374 |   |

 

*Reclassifications*

 

Certain prior year balances have been reclassified toconform with current year presentation.

 

*Recently Issued Accounting Standards*

 

In July 2001, the Financial Accounting Standards Boardissued SFAS No. 141, “Business Combinations”       (“SFAS No. 141”) and SFAS No. 142, “Goodwill and OtherIntangible Assets” (“SFAS No. 142”). SFAS No. 141 requires all business combinations initiated after June 30,2001 to be accounted for using the purchase method.  Under SFAS No. 142, goodwill and intangible assets withindefinite lives are no longer amortized but are reviewed annually (or morefrequently if impairment indicators arise) for impairment. Separable intangibleassets that are not deemed to have indefinite lives will continue to be

 

F-9

----

 

amortized over their useful lives (but with no maximumlife).  The amortization provisions ofSFAS No. 142 apply to goodwill and intangible assets acquired after June 30,2001.  There will be no impact on theCompany’s financial position and results of operations as a result of theadoption of these statements.

 

In June 2001, the Financial Accounting Standards Boardissued SFAS No. 143, “Accounting for Assets Retirement Obligations” (“SFAS No.143”).  SFAS No. 143 addresses financialand reporting obligations associated with the retirement of intangiblelong-lived assets and the associated asset retirement costs.  It applies to legal obligations associatedwith retirement of long-lived assets that result from acquisition,construction, development and/or the normal operation of long-lived assets,except for certain obligations of lessees. SFAS No. 143 is effective for financial statements issued for fiscalyears beginning after June 15, 2002. The Company is currently evaluating the effect of adoption on itsfinancial position and results of operations, which the Company expects willnot be material.

 

In August 2001, the Financial Accounting StandardsBoard issued SFAS No. 144, “Accounting for Impairment or Disposal of Long-LivedAssets, (“SFAS No. 144”).  SFAS No. 144supersedes SFAS No. 121 “Accounting for Impairment of Long-Lived Assets and forLong-Lived Assets to Be Disposed Of” and Accounting Principles Board OpinionNo. 30, “Reporting Results of Operations — Reporting the Effects of Disposal ofa Segment of a Business, and Extraordinary, Unusual and Infrequently OccurringEvents and Transactions.”  This statementretains the fundamental provisions of SFAS No. 121 for the recognition andmeasurement of impairment, but amends the accounting and reporting standardsfor segments of a business to be disposed of. The provisions of SFAS No. 144 are required to be adopted no later thanfiscal years beginning after December 31, 2001, with early adoptionencouraged.  The Company is currentlyevaluating the impact of the adoption of SFAS No. 144, which the Companyexpects will not be material.

 

**NOTE C –DISCONTINUED OPERATIONS**

 

On November 1, 2001, the measurement date, the Companyapproved a plan to close TF Cushing, Inc., (“TF Cushing”) a wholly-ownedsubsidiary of the Company.  The decisionwas made based on TF Cushing’s declining sales over the past several years, andthe Company’s opinion that a return to profitability was unlikely. The Companyalso felt that TF Cushing’s customer base, supplier base, and business focus ofMaintenance Repair Organization (“MRO”) versus Original Equipment Manufacturer(“OEM”) were significantly different from the Company’s core business andtherefore not easily integrated into the Company’s core operations. The Companyrecognized a loss for the period ended December 31, 2001 from discontinuedoperations of approximately $80,000 (net of taxes of approximately $1,400) forthe period April 1, 2001 through the measurement date.  The Company recognized a loss from disposalof discontinued operations of approximately $265,000 from the measurement dateto December 31, 2001.  The loss ondisposal includes operating losses from the

 

F-10

----

 

measurement date of approximately $44,000, loss ondisposal of inventory of approximately $70,000 and estimates for furtherimpairment of inventory caused by the disposal decision of $100,000. Theremainder of the disposal loss includes liabilities for severance and estimatesfor miscellaneous expenses related to the disposal of TF Cushing.  The Company retained TF Cushing’s remainingassets and assumed its liabilities at December 31, 2001, consisting of net accountsreceivable of approximately $44,000, net inventory of approximately $15,000 andliabilities of approximately $59,000. There were no net assets for TF Cushingat March 31, 2002 and approximately $311,000 at March 31, 2001.  For the fiscal year ended March 31, 2001,the loss from discontinued operations was approximately $41,500.

 

**NOTE D -FIXED ASSETS**

 

Fixed assets consist of the following at March 31,2002:

 
|                               |   | **Estimated  useful life** |   |      |    |
|------------------------------------|--------|----------------------------|--------|-----------|---------|
|                               |   |                       |   |      |    |
| Land                               |   |                       |   | $         | 128,836 |   |
| Building and  improvements         |   | 2 to 30 years              |   | 650,898   |    |
| Equipment,  furniture and fixtures |   | 5 to 10 years              |   | 601,563   |    |
|                               |   |                       |   |      |    |
|                               |   |                       |   | 1,381,297 |    |
|                               |   |                       |   |      |    |
| Less accumulated  depreciation     |   |                       |   | 683,699   |    |
|                               |   |                       |   |      |    |
|                               |   |                       |   | $         | 697,598 |   |

 

Depreciation expense onfixed assets was $ 65,914 and $84,804 for the years ended March 31, 2002 and2001, respectively.

 

F-11

----

 

**NOTE E -LOANS PAYABLE**

 

The Company’s collateralized lending agreement withits bank (the “Agreement”), as amended, provides the Company with a line ofcredit equal to 85% of its eligible accounts receivable and 25% of its eligiblenet inventory up to a maximum of $3,150,000, through April 2002, and provides aterm loan of $850,000 collateralized by a mortgage on the 205 Express Streetproperty, with a maturity date of April 2002. Interest is payable monthly at short-term, fixed-rate borrowings, forfixed amounts at LIBOR plus 1-1/2%, or daily borrowing at the bank’s prime rateor a mixture of the two.  Debtoutstanding at March 31, 2002, amounted to $1,528,515 and has been classifiedin accordance with the terms of the April 30, 2002 amendment, as discussedbelow.  At March 31, 2002 the Companyhad approximately $2,000,000 available under the agreement.  The Agreement contains certain financial covenantsrelating to the maintenance of various financial ratios and restrictions on thepayment of dividends by the Company.

 

On July 1, 1999, the Company entered into a swapagreement which expired in April 2002 for an aggregate notional amount of $2,250,000to limit the effect of increases in the interest rates on any floating ratedebt. The swap agreement exchanges a floating rate for fixed interest paymentsperiodically over the life of the agreement without the exchange of theunderlying notional amount.  At March31, 2002, $750,000 remained under this swap agreement.  The effect of this swap agreement was tolimit the interest rate exposure on the Company’s debt to 6.2% plus 1-1/2% on$750,000 ($2,250,000 reduced by $750,000 every year after July 1, 1999 untilApril 30, 2002).  The Company did notrenew its swap agreement.

 

On April 30, 2002, the Company renewed itscollateralized lending agreement with its bank, as amended, with substantiallythe same terms and conditions as above except for an increase in the inventoryavailability maximum from $1,000,000 to $1,500,000.  The Company’s line of credit is still equal to 85% of itseligible accounts receivable and 25% of its eligible net inventory up to amaximum of $3,150,000, and provides a term loan of $850,000 collateralized by amortgage on the 205****Express Street property.****Theterm loan and the mortgage both mature on April 30, 2005.  Interest is payable monthly at short-term,fixed-rate borrowings, for fixed amounts at LIBOR plus 1-1/2%, or daily borrowingat the bank’s prime rate or a mixture of the two.

 

F-12

----

 

**NOTE F -INCOME TAXES**

 

Total income tax benefit for fiscal 2002 and 2001differed from the amounts computed by applying the United States Federal incometax rate of 34% to income before income taxes as a result of the following:

 
|                                             |   | **2002**    |        | **2001** |   |
|--------------------------------------------------|--------|-------------|-------------|----------|--------|
|                                             |   |        |        |     |   |
| Computed  “expected” tax               |   | **$**       | **73,932**  |     | $      | 212,145 |   |
| State income  taxes, net                         |   | **11,991**  |        | (7,207   | )      |
| Other                                            |   | **1,303**   |        | (3,713   | )      |
| Utilization of  net operating loss carryforwards |   | **(73,932** | **)**       | (212,145 | )      |
| Valuation  allowance                             |   | **(90,000** | **)**       | (200,000 | )      |
|                                             |   |        | ** **  |     |   |
|                                             |   | **$**       | **(76,706** | **)**    | $      | (210,920 | ) |

 

The tax effects of temporary differences that giverise to significant portions of the deferred tax assets and deferred tax liabilitiesat March 31, 2002 and 2001 are presented below:

 
|                                        |   | **2002**       |          | **2001**   |   |
|---------------------------------------------|--------|----------------|---------------|------------|--------|
| Deferred tax  assets                        |   |           |          |       |   |
| Net operating  loss and other carryforwards |   | **$**          | **1,975,000** |       | $      | 2,037,000 |   |
| Inventory                                   |   | **459,000**    |          | 476,000    |   |
| Write-down of  investment                   |   | **89,000**     |          | 89,000     |   |
| Bad debts                                   |   | **37,000**     |          | 32,000     |   |
| Compensation and  other                     |   | **87,000**     |          | 74,000     |   |
|                                        |   |           |          |       |   |
| Total gross  deferred tax assets            |   | **2,647,000**  |          | 2,708,000  |   |
|                                        |   |           |          |       |   |
| Less valuation  allowance                   |   | **(2,299,000** | **)**         | (2,453,000 | )      |
|                                        |   |           |          |       |   |
|                                        |   | **348,000**    |          | 255,000    |   |
|                                        |   |           |          |       |   |
| Deferred tax  liabilities                   |   |           |          |       |   |
| Depreciation and  other                     |   | **(58,000**    | **)**         | (55,000    | )      |
|                                        |   |           |          |       |   |
|                                        |   | **$**          | **290,000**   |       | $      | 200,000 |   |

 

F-13

----

 

In prior years, primarily due to competitive pricingpressures in the Company’s industry and their potential impact on operatingresults, the Company did not believe that it was more likely than not that itwould utilize its deferred tax assets. However, as a result of favorableoperations in two successive years, the Company recognized a deferred tax assetin the amount of $200,000 at March 31, 2001. As a result of continued favorable operations, the Company recognized anincrease to the deferred tax asset of $90,000, which results in a deferred taxasset of $290,000 at March 31, 2002.

 

At March 31, 2002, the Company has a net operatingloss carryforward available for Federal income tax purposes of approximately$5,807,000, expiring 2004 through 2020. During 1992, the Company experienced an ownership change, as defined bySection 382 of the Internal Revenue Code of 1986, as amended, and Section 383of the Code.  As a result of this event,the Company will be limited in its ability to use net operating losscarryforwards in future years (the annual limitation is $453,000).  The net operating loss carryforwards notsubject to limitation amounted to approximately $4,016,000 at March 31, 2002.

 

**NOTE G -RETIREMENT PLAN**

 

The Company has a defined contribution plan which isqualified under Section 401(k) of the Internal Revenue Code.  All regular full-time employees are eligiblefor voluntary participation upon completing one year of service and havingattained the age of twenty-one.  TheCompany currently matches employee contributions to the plan.  Employer contributions to the plan wereapproximately $11,540 for both fiscal years 2002 and 2001.

 

**NOTE H -IMPAIRMENT OF ASSETS**

 

On July 20, 1998, the Company entered into anagreement with Enigma Energy Company, L.L.C.      (“Enigma”) and its members to purchase an 8% equity interestin Enigma with an option (“Option”) to purchase the remaining equity interestat a later date.  The purchase price forthe 8% equity interest in Enigma and the Option was $300,000 ($225,000attributed to the equity interest and $75,000 attributed to the Option).

 

F-14

----

 

On December 15, 1998, the Company determined, in lightof Enigma’s post-1998 drilling results and the depressed energy market, that itwould not exercise the Option.  As aconsequence of this decision, the Company recognized an impairment charge of$232,500 for the fiscal year ended March 31, 1999.

 

In October 1999, the equity holders of Enigma,including Astrex, optioned their respective equity interests to Comanche EnergyInc. (“Comanche”), a nonreporting public company.  Astrex received 115,253 shares of Comanche common stock inconsideration for the option and received an additional 268,925 shares for itsentire equity interest upon final settlement of the agreement.  No gain or loss was recognized on theexchange.  At March 31, 2001, theCompany reduced the carrying value of the Comanche common stock by$65,000.  During the year ended March31, 2002, the Company determined that the carrying amount of this asset was notlikely to be recoverable and wrote off this investment in Comanche andrecognized an additional impairment charge of approximately $25,000.

 

**NOTE I -SHAREHOLDERS’ EQUITY**

 

During the fiscal year ended March 31, 2002, theCompany purchased 103,000 shares of its common stock for $29,825 on the openmarket.  In fiscal 1997, the Companyalso purchased 913,586 shares of its common stock for $264,940 from one of itsprincipal shareholders.  During theperiod of December 2000 through March 31, 2001, the Company purchased 145,500shares of its common stock for $43,042 on the open market.  These shares are being held as treasuryshares.

 

F-15

----

 

On June 29, 2000, the Board of Directors declared adividend on the Company’s common stock of one share of a new Series BConvertible Preferred Stock (the “Preferred Stock”) for every three shares ofcommon stock held as of July 7, 2000. On July 17, 2000, the Company issued 1,897,381 shares of PreferredStock. The characteristics of the Series B Convertible Preferred Stock(“Preferred Stock”) are definitively delineated in the “Astrex, Inc.Certificate of Designations, Preferences and Rights of Series B ConvertiblePreferred Stock” (“Certificate”), which should be reviewed for a full andcontrolling description, but, in brief summary, the principal terms of thePreferred Stock are as follows:

 

1.               The Preferred Stockis not entitled to any preferential dividends, but is entitled to any dividenddeclared on the common stock and the common stock will be entitled to anydividend declared on the Preferred Stock.

 

2.               Each share of thePreferred Stock has a liquidation right of twenty-five cents.

 

3.               The Preferred Stockis entitled to vote on all matters that the common stock is entitled to vote onand will have twelve votes per Preferred Stock share.

 

4.               Subsequent to July30, 2001, the Preferred Stock will be convertible at the option of the holderinto common stock on a share-for-share basis.

 

5.               The Preferred Stockis subject to severe restrictions on transfer by sale or otherwise, as defined.

 

Beginning July 31, 2001, holders of these preferredshares will have the option of converting shares of the Preferred Stock for anequal number of shares of Common Stock. The declaration of this dividend didnot have any economic impact on the capital structure of the Company, andaccordingly, the par value of the Preferred Stock aggregating $18,974 wasrecorded through a reduction in retained earnings.

 

As of March 31, 2002, 198,230 shares of Series BConvertible Preferred Stock have been converted into the Company’s commonstock.

 

On June 29, 2000, the Company granted 40,000registered, forfeitable shares of the Company’s common stock, which were issuedon July 5, 2000 to several employees. Each employee’s shares are subject to forfeiture in the event the employeeceases to be employed by the Company, for reasons other than death, prior toJune 30, 2002.  On the date of grant,the Company recorded deferred compensation aggregating $16,500 which is basedon the unadjusted quoted market price of the Company’s common stock at the dateof grant.  Such deferred compensationwill be charged to compensation expense ratably over the two-year vestingperiod.

 

F-16

----

 

On June 29, 2000, theCompany granted 20,000 shares of the Company’s common stock to the President tobe issued on July 5, 2000. The issuance of these shares is contingent upon thePresident satisfying certain requirements. On the date of grant, the Company recorded deferred compensationaggregating $8,250 which is based on the unadjusted quoted market price of theCompany’s common stock at the date of grant. This charge will be amortized to compensation expense over the one-yearvesting period and will be adjusted for increases and decreases in theunadjusted quoted market price of the Company’s common stock until suchrequirements are satisfied.  Theseshares were fully vested on August 1, 2001.

 

On June 29, 2000, the Company granted 5,000 shares ofthe Company’s common stock to a non-employee. The shares vested immediately atthe date of grant.  During the yearended March 31, 2001, the Company recorded a charge to operations of $2,063representing the fair market value of these shares on the date of grant.

 

**NOTE J -COMMITMENTS**

 

*Leases*

 

The Company is obligated under noncancellableoperating leases covering office facilities through 2004.  At March 31, 2002, minimum annual futurerental commitments under these leases are as follows:

 

| Fiscal year ending March 31, |   |   |   |
|------------------------------|--------|--------|--------|
| 2003                         |   | $      | 50,000 |   |
| 2004                         |   | 21,000 |   |
|                         |   |   |   |
|                         |   | $      | 71,000 |   |

 

Rent expense (for leased property and equipment)included in selling, general and administrative expenses for the years endedMarch 31, 2002 and 2001 was $63,328 and $91,394, respectively.

 

**NOTE K -EXPORT SALES**

 

Export sales were $1,979,794 and $2,281,000 in 2002and 2001, respectively, representing an aggregate of 12% and 13% of theCompany’s net sales in 2002 and 2001, respectively.

 

F-17

----

 

**Signatures**

 

In accordance withSection 13 or 15(d) of the Exchange Act, the registrant has duly caused thisreport to be signed on its behalf by the undersigned, thereunto dulyauthorized.

 

**ASTREX, INC.**

(Registrant)

 

| by         | /s/  Michael  McGuire |   |
|--------------------------------|----------------------------|--------|
| Michael McGuire,  President    |
| and Chief Executive  Officer   |
| (principal executive  officer) |
| Dated:  June  28, 2002    |

 

In accordance with theExchange Act, this report has been signed below by the following persons onbehalf of the Registrant and in the capacities and on the dates indicated.

 
| /s/  John C.  Loring                          |   |                                         | /s/  Michael  McGuire |   |
|----------------------------------------------------|--------|----------------------------------------------|----------------------------|--------|
| John C. Loring, Chairman of the Board and Director |   | Michael McGuire, Director,                   |
|                                               |   |                                         |
| Dated:  June  28, 2002                        |   | Dated:  June  28, 2002                  |
|                                               |   |                                         |
| /s/  Howard  Amster                           |   |                                         | /s/  Mark  Schindler  |   |
| Howard Amster, Director                            |   | Mark Schindler, Director                     |
|                                               |   |                                         |
|                                               |   | Dated:  June  28, 2002                  |
| Dated:  June  28, 2002                        |   |                                         |
|                                               |   |                                         |
| /s/ David S. Zlatin                                |   |                                         | /s/ Lori A. Sarnataro      |   |
| David S. Zlatin, Director                          |   | Lori A. Sarnataro, CFO, Executive Vice       |
|                                               |   | President, Treasurer and Secretary           |
| Dated:  June  28, 2002                        |   | (principal financial and accounting officer) |
|                                               |   |                                         |
|                                               |   | Dated:  June  28, 2002                  |

 

21

----