<PAGE>
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                               Washington DC 20549

                                   FORM 10-KSB

 [X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
       EXCHANGE ACT OF 1934

 [ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
       EXCHANGE ACT OF 1934

For the fiscal year ended  August 31, 2001        Commission File Number  0-2331
                           ---------------                                ------

                               GLASSMASTER COMPANY
--------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

          South Carolina                                    57-0283724
------------------------------------             ------------------------------
     (State of incorporation)                          (IRS Employer ID No.)

     PO Box 788, Lexington SC                                 29071
------------------------------------             ------------------------------
  (Address of principal executive offices)                  (Zip Code)

Issuer's telephone number, including area code: 803-359-2594

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

Securities registered pursuant to Section 12 (g) of the Exchange Act:
  Title of Class:    Common Stock, par value $.03 per share
                   -------------------------------------------

Indicate by an "X" whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act during the
preceding 12 months, and (2) has been subject to such filing requirements for
the past 90 days. YES [X]   NO [ ]

Indicate by an "X" if disclosure of delinquent filers in response to Item 405 of
regulation S-B is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]

State issuer's revenues for its most recent fiscal year.     $18,916,086  .
                                                          ----------------

The aggregate market value of the voting stock held by non-affiliates of the
registrant was approximately $347,300 as of October 31, 2001, based on the
average high and low sales price of $0.53 per share.

The number of shares outstanding of the registrant's common stock, as of October
31, 2001 was 1,630,696 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

The information set forth under items 9, 10, 11, and 12 of Part III of this
report is incorporated by reference from the issuer's definitive proxy statement
for the 2002 annual meeting of stockholders that will be filed no later than
December 31, 2001.


<PAGE>


PART I

Item 1.  Business

    (a)(b) General Development and Narrative Description of Business

           Glassmaster Company (the "Company") is a diversified manufacturer of
thermoplastic and thermoset plastic materials, industrial controls, and
electronics that produces and sells a broad range of product lines to customers
across multiple industries. The Company classifies its business into two
operating segments: Industrial Products, consisting of extruded synthetic
monofilaments and pultruded fiberglass and composites and; Controls and
Electronics, consisting of mechanical and electronic controls, electronic test
equipment, and circuit boards. For segment and geographic information, see Note
11 of Notes to Financial Statements.

           The Company was founded in 1946 and incorporated under the laws of
the State of South Carolina. The Company manufactured fiberglass pleasure boats
until 1982 when, due to the cyclical nature of the pleasure boat business, the
Company began to diversify into industrial-related manufacturing. During 1982
and 1983 the Company developed from within manufacturing facilities to produce
extruded monofilaments and fiberglass antennas. In 1988, the Company purchased
the industrial controls business to further diversify and expand its line of
industrial-related products, and Glassmaster Controls Company, Inc. was formed.
In 1989, the company discontinued the manufacture and sale of fiberglass boats.

           In recent years, the Company has expanded its product offerings to
include electronic test equipment. The Amtest line of test equipment was
acquired by Glassmaster Controls Company, Inc. in October, 1997. During the past
three years the company has internally developed the capability to provide
contract manufacturing services that produce customized electronic products,
including circuit boards utilizing surface mount and through-hole technologies.
The addition of electronic capabilities gives the company the ability to provide
its existing customer base with more complete product solutions as well as
entice new customers by offering vertically integrated, mechanical and
electronic contract manufacturing.

           During 1998 and 1999 the Company developed and introduced the
Glassmaster Composite Modular Building System(TM), which is a t-slotted
framework system used in a wide variety of industrial applications, including
machine frames, guarding and enclosures, workstations and tables, and shelving
for storage.

           During the fourth quarter of 1999, the Company announced its decision
to discontinue the manufacture and sale of its marine antennas and other low
margin product lines and in October, 1999 completed the sale of certain related
assets.

           There have been no bankruptcy, receivership, or similar proceedings
against the company since its inception. During the last three years there has
been no material acquisition or disposition of any significant amount of assets
other than that described above or in the ordinary course of business.

           The Company's common stock was first offered to the public in 1959
and currently has approximately 1,140 stockholders. The Company's common stock
is currently traded on the Over-the-Counter Bulletin Board (symbol: GLMA.OB).

INDUSTRIAL PRODUCTS

           The Company's Monofilament Division extrudes monofilaments from
nylon, polyester, polyolefins and other engineering resins for use in a wide
array of markets and applications including textiles (sewing thread), lawn and
garden care (trimmer line), recreational products (fish line), and industrial
weaving and industrial filtration. Monofilament, as produced by the Company,
begins with a thermoplastic resin which is processed through a melting device
(extruder) and subsequently oriented to form single strand fibers of various
diameters, tensile strengths and moduli. Specialized monofilaments for
industrial applications are manufactured for use in other major industries
including paper machine clothing for the paper industry and abrasive bristles
for brushes used in metal and wood finishing. The Company markets its
monofilament products primarily on a private brand basis, which are sold by in
house sales efforts and commissioned sales representatives to original equipment
manufacturers and distributors throughout North America and, to a lesser degree,
Europe, South America, and the Pacific Rim.



                                       2
<PAGE>


Item 1.  Business (Cont'd)

The Company's Composites Division manufactures pultruded fiberglass (thermoset)
and composite profiles that are used in the assembly of the Glassmaster
Composite Modular Building System(TM). This product line is sold by in house
sales efforts to original equipment manufacturers and distributors throughout
North America.

CONTROLS AND ELECTRONICS

           The Company, through its wholly-owned subsidiary, Glassmaster
Controls Company, Inc., located in Kalamazoo, Michigan, manufactures and
assembles a wide range of industrial controls, including mechanical cable and
wire assemblies, mechanical and electronic HVAC instrument panels, and circuit
board-based electronic controls and modules. Industrial mechanical controls are
used primarily in medium and large capacity trucks and to a lesser degree,
automobiles, farm equipment, and recreational boats and are sold to original
equipment manufacturers throughout North America by in-house sales efforts and
commissioned manufacturers sales representatives. The Company manufactures and
assembles the Amtest line of vehicle test equipment used by mechanics,
rebuilders, fleets, and garages to analyze and repair automotive and truck
engines and their related electronic devices. Amtest vehicle test equipment is
sold by in-house sales efforts to distributors throughout North America. The
company also offers custom circuit board design and contract assembly services
that are sold by in-house sales efforts and manufacturers sales representatives
primarily to original equipment manufacturers.

           The names "Glassmaster", "CompCore", "NYBRAD", and "Glassmaster
Composite Modular Building System" are registered trademarks of the Company. The
Company has applied for a U.S. Patent for its recently introduced product, the
"Glassmaster Composite Modular Building System".

           The Company believes it is a significant competitor in the United
States market for specialty monofilament products. While firm price competition
can be experienced within some lines of the monofilament and electronic
products, overall, the Company produces products which center on performance,
engineering and customer service and it is these product lines which provide the
Company with a stable revenue base. Sales and profitability growth are dependent
to varying degrees upon favorable economic conditions and penetration into the
industrial textile, and domestic truck manufacturing industries, as well as
acceptance of recently introduced electronics and composites products.
Unfavorable weather conditions can have an impact on monofilament trimmer line
sales.

           Sales of the Company's industrial products are somewhat seasonal with
sales to the lawn and garden care markets concentrated in the second and third
quarters of the fiscal year (December - May). While some fluctuations in
inventory levels will occur from time to time, the Company is not required to
carry significant amounts of inventory to meet delivery requirements or to carry
unusually large amounts of materials and supplies to insure itself of a
continuous allotment of goods from suppliers. The Company does not provide
extended payment terms to its customers in excess of those normally offered for
these industries. Other than as described in Note 11 of Notes to Financial
Statements, the dependence upon any one customer or small group of customers is
not material. The Company currently offers no product or service requiring
government approval and the effect of existing or probable government
regulations on the operations of the Company is considered to be immaterial.

           At August 31, 2001, the order backlog was $2,058,787 compared to
$1,948,006 at August 31, 2000.

           The Company has no full-time employees engaged in research and
development activities, however, certain employees at each of the Company's
manufacturing locations spend a portion of their time in new product development
and process improvement. Expenditures for research and development were
approximately $425,000 in 2001 and $498,000 in 2000.

           No material effects have resulted from compliance with federal,
state, and local provisions regulating the discharge of materials into the
environment, or any other regulations protecting the environment. The Company
does not expect to make any material capital expenditures for environmental
control facilities for the current or succeeding fiscal year.

           The Company and its subsidiary furnished employment for approximately
189 persons at August 31, 2001 and 198 persons at August 31, 2000.



                                       3
<PAGE>


Item 2.  Properties

           General corporate offices, the monofilament manufacturing facilities
(Plant I & II), and the Monofilament Division offices are located at 126
Glassmaster Road in Lexington, South Carolina. The total facility is composed of
170,000 square feet, and is owned by the Company in fee simple.

           The Company formerly operated its Composites Division offices and
manufacturing plant at 71 Industrial Park Road in Newberry, South Carolina. The
total facility is composed of 31,000 square feet and is owned by the Company in
fee simple. During September and October, 2000, the company relocated its
Composites Division operations to the Lexington, SC facility. The Newberry, SC
facility is now on the market to be leased or sold.

           Glassmaster Controls Co., Inc. operates its industrial controls and
electronics business at 831 Cobb Ave. in Kalamazoo, Michigan. The total facility
is composed of 109,000 square feet and is owned by the Company in fee simple.

           The Company believes that facilities are adequate for the immediate
future, and that the machinery and equipment used in these facilities are well
maintained and in good operating condition. Estimated percentage utilization
capacities during the year ended August 31, 2001 were as follows: Monofilament
Plant - 65%; Composites Plant - 15%; Controls Plant - 40%.

Item 3.  Legal Proceedings

There are no material pending legal proceedings.

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

           There were no matters submitted during the fourth quarter of the
fiscal year covered by this report to a vote of security holders through the
solicitation of proxies or otherwise.

Item 5.  Market for Registrants Common Equity and Related Stockholder Matters

(a)(1) The Company's common stock trades on the Over-the-Counter market Bulletin
Board under the symbol GLMA.OB.

(a)(1)(ii) The table below sets forth the high and low sales price per share
during each quarter in the last two years as quoted on the Over-the-Counter
market Bulletin Board.

<TABLE>
<CAPTION>
              Quarter Ending                   High              Low
              --------------                   ----              ---
<S>                                           <C>              <C>
              August 31, 1999                  $1.094           $1.094
              November 28, 1999                 1.156             .813
              February 27, 2000                 3.375             .250
              May 28, 2000                      2.500             .813
              August 31, 2000                   1.344            1.125
              December 3, 2000                  1.297             .969
              March 4, 2001                      .969             .688
              June 3, 2001                       .688             .510
              August 31, 2001                    .510             .400
</TABLE>

Since September 1, 2001 and to the date of this report, the high and low sales
price per share was $0.41 and $0.31, respectively.

   (b) There were 1,140 shareholders of record at October 31, 2001.

(c)(1) On October 24, 1997, Directors of the Company declared a cash dividend of
$.03 per common share payable on or about January 30, 1998 to stockholders of
record on January 9, 1998. No other dividends have been declared or paid in the
last three years.

(c)(2) According to the terms of a financing agreement, the Company is
restricted from paying cash dividends unless approved by the lending
institution.




                                       4
<PAGE>


                                     PART II

Item 6.  Management's Discussion and Analysis

Review of Operations

                           Comparison of 2001 to 2000

    Consolidated sales for the fiscal year ended August 31, 2001 were $18.9
million compared to $21.5 million last year, a decrease in sales of 12.2%. The
net loss for the year was $1,271,671, or $0.78 per share, compared to a net loss
of $635,813, or $0.39 per share, last year.

    NET SALES. Industrial Products segment sales declined 19.6% to $12.7 million
this year compared to $15.8 million in the prior year. Monofilament sales
declined 19.4% versus last year primarily due to the contraction occurring in
the manufacturing sector of the national economy, particularly in the second
half of the fiscal year. Contributing to the decrease in monofilament sales were
the loss of a large domestic customer due to competitive pricing issues, lower
foreign shipments due to the strong U.S. dollar, and a continuing decline in
specialty sewing thread and fishing line sales due to the impact of offshore
competitive pressures on US producers. Partially mitigating these negative
developments were new product sales realized from recently developed filaments
for industrial original equipment manufacturers (OEM's), improved sales of
Nybrad(TM) abrasive and unfilled filaments used in brushes, and selling price
increases on selected product lines that were implemented during the second
quarter. Monofilament sales are expected to improve in tandem with the economy
during 2002 and as additional new product development efforts currently underway
begin to generate revenue in the second and third quarters of the 2002 fiscal
year. Sales of the Composites Modular Building System(TM) increased 85% this
year versus last year but sales were well short of expectations for this product
line. The company continues to search for additional distribution channels and
marketing partners to increase composites sales.

    Controls and Electronics segment sales increased 8.4% this year compared to
the prior year as an increase in electronic controls and circuit board sales
more than offset a 14.5% decline in sales of non-electronic cable systems and
control assemblies. Non-electronic sales have been negatively impacted by
persistent weakness in the heavy truck and bus industry, which has experienced
declining sales since the fourth quarter of 1999. Non-electronic sales were also
impacted by the bankruptcy filing and eventual sale of Outboard Marine
Corporation (OMC), one of Glassmaster Controls Company's largest customers.
Bombardier subsequently purchased the related assets from OMC and shipments have
since resumed, although at reduced levels. Sales of controls and electronics are
expected to improve further in 2002 due to new electronic products and related
circuit board contract manufacturing revenue. New product and engineering
innovations already approved on new heavy truck production will also contribute
to sales growth, particularly as the trucking industry begins to recover from
its prolonged slump.

    GROSS PROFIT. Total gross profit declined 31% from $2.47 million last year,
to $1.69 million during the 2001 fiscal year. The decline in gross profit is due
to lower sales of monofilament, an unfavorable mix of product sales, increased
fixed manufacturing costs at Controls as electronics production capabilities
were expanded, and a reduction in the carrying values of certain inventories at
both Controls and Composites. An improvement in gross profit during the 2002
fiscal year will be dependent upon; increased sales and production levels as
well as a more favorable mix of products sold at monofilament; higher production
volumes of circuit boards associated with new contract manufacturing services
revenue at Controls; and the identification and implementation of further
manufacturing cost reductions at all operating locations.

    EXPENSES. Total expenses increased 3.8% to $2.81 million this year versus
the prior year total of $2.71 million. The increase in expenses this year is
primarily due to higher costs associated with corporate employee benefits plans
and an increase in the reserves for bad debt expense at Controls.



                                       5
<PAGE>


Item 6.  Management's Discussion and Analysis (Cont'd)

                       Comparison of 2001 to 2000 (Cont'd)

    INCOME FROM OPERATIONS. The loss from operations increased to $1,114,985 in
the current year from a loss of $239,801 in the 2000 fiscal year. Lower sales
and gross profit at Monofilament caused an overall decline in operating profit
at the Industrial Products segment to $146,043 this year compared with $412,458
in the prior year to date period. The Controls and Electronics segment showed an
operating loss for the 2001 fiscal year of $330,712 compared to a profit
$121,097 in the prior year due to an unfavorable mix of products sold and
non-cash charges associated with inventory and bad debt reserves.

    INTEREST EXPENSE. Interest expenses increased to $832,110 this year compared
to $758,136 in the prior fiscal year. The increase in interest expense is
primarily due to higher average borrowings to support working capital at
Controls and the issuance and sale of $410,000 in subordinated convertible
debentures.

    PROVISION FOR INCOME TAXES. The company has recognized a total benefit from
income taxes in the current year of $675,424, compared with a benefit of
$362,124 last year. The benefit recognized in the current and prior year relate
primarily to deferred tax assets recognized as a result of federal and state net
operating tax loss carry-forwards that will be used to offset future taxable
income. The total deferred tax asset recognized in the balance sheet as of
August 31, 2001 is $1,121,630. Utilization of this tax asset is dependent upon
future taxable profits in excess of existing taxable temporary differences.
Although the company has experienced net losses for the past three years, the
asset has been recognized in its entirety because the company estimates the
market value of its assets, if realized, would generate taxable gains in excess
of the net operating loss carryovers. For further information, refer to Note 3
of the Notes to Financial Statements.

                           Comparison of 2000 to 1999
                      (Excerpted from the 2000 Form 10-KSB)

    Consolidated sales increased 2.5% to $21.5 million during the fiscal year
ended August 31, 2000 compared to prior year sales of $21.0 million. The net
loss for the year was $635,813, or $0.39 per share compared to a net loss of
$995,984, or $0.61 per share last year. The prior year loss includes
non-recurring, after-tax charges of $459,000, or $.28 per share, that were
associated with the Company's decision to discontinue certain product lines.

    NET SALES. Industrial Products segment sales increased 8.8% to $15.8
million, in fiscal year 2000, from $14.6 million during 1999. Sales of specialty
monofilaments increased 14.1% compared with the prior year, primarily due to
revenue from new products recently developed for industrial applications. Sales
of bulk and packaged nylon trimmer line and Nybrad(R) abrasive monofilaments
also improved compared to the prior year, while sewing thread sales declined for
the second consecutive year as difficult market conditions in the North American
textile industry continue. Composites Division sales declined 74% this fiscal
year compared to the prior year due to discontinued product lines and the sale
of the marine antenna business. Sales of the Composite Modular Building
System(TM) improved by 140% versus the prior year period. While revenues from
this product line, introduced in 1999, have been below expectations, a major
industrial supply company, with nationwide distribution, will include this
product line in its 2001 catalog and further sales increases are anticipated as
a result of the additional exposure.

    Controls and Electronics segment sales declined 11.5% to $5.7 million
compared to the prior year due to a slowdown in the heavy truck and bus
manufacturing industry and the discontinuance of a certain product class
resulting from a truck model engineering change. Sales of electronic assemblies
and test equipment gained as the 2000 fiscal year progressed and were ahead of
the prior year by 26%. While the slowdown in truck and bus manufacturing is
expected to continue well into 2001, expanding sales of recently developed
electronic controls and circuit boards should allow overall revenue in the
controls and electronics segment to increase in fiscal 2001.

    GROSS PROFIT. Total gross profit increased more than 20%, from $2.03 million
last year to $2.47 million during the 2000 fiscal year, however, the prior year
cost of goods sold included a charge of $599,260 to write down inventories
associated with discontinued product lines. Net of this charge, prior year gross
profit was $2.63 million, or 12.4% of sales versus $2.47 million, or 11.5% of
sales this year. The decline in year over year adjusted gross profit is
primarily due to lower sales and related manufacturing throughput at Controls,
as well as higher variable manufacturing expenses associated with employee
benefit costs at Controls.


                                       6
<PAGE>

Item 6.  Management's Discussion and Analysis (Cont'd)

                       Comparison of 2000 to 1999 (Cont'd)
                      (Excerpted from the 2000 Form 10-KSB)

While increased sales and related throughput at Monofilament led to slightly
higher margins at the division level, disappointing manufacturing performance
during the second half of the fiscal year, when monofilament orders and
shipments were accelerating, restrained gross profit growth there and
contributed to the small decline in consolidated gross profit. Manufacturing
process improvements and cost adjustments are being implemented at all operating
divisions and, with continued increases in revenue anticipated from new product
sales, consolidated comparative gross margins are expected to improve during the
2001 fiscal year.

    EXPENSES. Total expenses declined 11.2% to $2.71 million this year from
$3.05 million last year. Included in the prior year total was a $114,297 loss on
the sale of assets related to the discontinued marine antenna product line. Net
of this amount, total expenses declined by approximately $227,000, or 7.8%, when
compared to the adjusted prior year total, primarily due to non-recurring
credits and miscellaneous income at Controls and Composites and, to a lesser
degree, selling and administrative expense reductions at Composites.

    INCOME FROM OPERATIONS. The loss from operations was $239,801 in the 2000
fiscal year, declining from a loss of $1,020,619 during the previous year.
Higher sales and gross profit at Monofilament and a reduced operating loss at
Composites produced an operating profit at the Industrial Products segment of
$412,458 this year compared with a segment operating loss of $681,654 in the
prior fiscal year. Income from operations at the Controls and Electronics
segment declined to $121,097 this year versus $397,403 last year, due to lower
sales and corresponding gross profit.

    INTEREST EXPENSE. Interest expense increased to $758,136 this year compared
with $669,006 in the previous fiscal year. The increased interest expense is
primarily due to higher average borrowings to support working capital and
finance additional electronics equipment at Controls, coupled with higher
average interest rates on short term borrowings.

    PROVISION FOR INCOME TAXES. The Company has recognized a total benefit from
income taxes in the current year of $362,124, compared with a benefit of
$693,641 in the prior year. The benefit recognized in the current and prior year
relate primarily to deferred taxes due to federal and state net operating loss
carry-forwards that will be used to offset future taxable income.

Liquidity and Capital Resources

   Cash provided (used) by operating activities was ($38,292) this fiscal year
compared with ($281,085) during the prior year. The cash used by operating
activities in the current year was due to the net loss incurred and a reduction
in outstanding accounts payable trade credit. These negative cash flows were
mostly offset by decreases in accounts receivable and inventories at
Monofilament, due to a significant decline in sales and production during the
last half of the fiscal year.

   Cash used by investing activities was $300,228 this year versus $625,901 last
year. The decline is due to much lower capital spending this year compared with
the prior year.

   Cash provided by financing activities was $247,704 in the current year
compared to $970,710 in the prior fiscal year. The decline in cash provided by
financing activities is due to net repayments on long term debt in the current
year of $521,671, while in the prior fiscal year, proceeds from new long term
debt exceeded repayments by $405,300 due to the financing of equipment at
Controls and Monofilament. Also during the current year, officers short term
notes payable totaling $410,00 were converted to long term debt when the company
issued five year Subordinated Convertible Debentures.

   The Company has incurred recurring losses from operations during the past
three fiscal years and as a result, is in violation of certain financial
covenants contained in its primary lending agreements. These agreements
currently provide for revolving working capital lines of credit and long term
equipment and real estate financing for the company's industrial products
segment in South Carolina and its controls and electronics segment in Michigan
(through its wholly owned subsidiary, Glassmaster Controls Company, Inc.).



                                       7
<PAGE>



Item 6.  Management's Discussion and Analysis (Cont'd)

Liquidity and Capital Resources (Cont'd)

In South Carolina, indebtedness outstanding as of October 31, 2001 subject to
the loan agreement includes $1,832,568 under the Revolving Working Capital
Credit Line (total line of $2.5 Million), $250,000 under the Supplemental
Working Capital Credit Line (total line of $300,00), and $3,988,226 under an
Equipment and Real Estate Term Loan. The working capital credit lines are
currently scheduled to mature on December 28, 2001. The company is in
discussions with the lending institution involved to temporarily waive their
rights under the loan agreement related to the covenant violations, revise
certain loan covenants contained in the lending agreement going forward, and
extend the working capital credit lines maturity dates. As of the date of this
report the company and the lender had not reached an agreement on any of the
necessary waivers or loan agreement revisions and there are no assurances that a
satisfactory agreement can be reached. The company is confident that an
acceptable agreement will be negotiated.

In the absence of an agreement on revised covenants and an extension of the
working capital credit lines, the company would be required to find alternative
sources of funding, which may be obtained through other secured lenders,
additional equity investments, the sale of assets, or other extraordinary
transactions. At this time the company has no agreement, arrangement, or
understanding with any person or entity with respect to any such transaction
and, if it should prove to be necessary, there is no assurance that a
transaction could be negotiated on terms that would be acceptable.

In Michigan, indebtedness outstanding as of October 31, 2001 subject to the
applicable loan agreement included $675,00 under the Working Capital Revolver
(total line of $675,00), $250,000 under a Supplemental Working Capital Credit
Line (total line of $250,00) and $912,850 under the Equipment and Real Estate
Term Loan. On November 23, 2001 the lender agreed to provide up to an additional
$255,00 in working capital by combining the two outstanding lines of credit
($675,000 and $250,000) into a single revolver with a total line of $1,150,000.
The amount of indebtedness outstanding under the revolver will vary with
fluctuations in accounts receivable and inventories. The lender also agreed to
waive its rights under the loan agreement with respect to the covenant
violations and has revised the financial covenants going forward. The lender has
also indicated a willingness to extend the maturity date beyond January 31, 2002
if current financial projections are met.

Item 7.  Financial Statements

           Financial Statements of Glassmaster Company and the Notes to
Financial Statements for the fiscal years ended August 31, 2001 and 2000 appear
on pages 12 through 25, the Index to the Exhibits and Exhibits appear on pages
27 through 29, and the Report of Independent Auditors appears on page 26 of this
report.

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

           There have been no changes in or disagreements with accountants on
accounting financial disclosures.




                                       8
<PAGE>



                                    PART III

Items 9, 10, 11, and 12. Directors, Executive Officers, Promoters and Control
Persons; Compliance With Section 16 (a) of the Exchange Act; Executive
Compensation; Security Ownership of Certain Beneficial Owners and Management;
and Certain Relationships and Related Transactions.

           Information for items 9-12 of this report appears in the Proxy
Statement for the 2002 Annual Meeting of Shareholders to be held on January 18,
2002 and is incorporated herein by reference.

                                     PART IV

Item 13.  Exhibits and Reports on Form 8-K

    (a)    Exhibits (numbered in accordance with Item 601 of Regulation S-B)

<TABLE>
<CAPTION>
           Exhibit No.                          Exhibit
           -----------                          -------
<S>                           <C>
               3.1            Amended and Restated Certificate of Incorporation of the
                              Company, filed as Exhibit 3.1 to Form 10-K for the year
                              ended August 31, 1991 and incorporated herein by reference.

               3.2            Amended and Restated Bylaws of the Company, filed as
                              exhibit 3.2 to Form 10-K for the year ended August 31,
                              1991 and incorporated herein by reference.

              10              Amended and restated Glassmaster Company 1992 Incentive Stock
                              Option Plan, filed as exhibit 10 to Form 10-KSB for the year
                              ended August 31, 1993 and incorporated herein by reference.

              11              Statement re Computation of Per Share Earnings

              21              Subsidiaries of the Registrant
</TABLE>

    (b)    Reports on Form 8-K

           No reports on Form 8-K were filed during the fourth quarter of the
           fiscal year ended August 31, 2001.





                                       9
<PAGE>



                                   Signatures

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

GLASSMASTER COMPANY


By   /s/ Raymond M. Trewhella                By   /s/ Steven R. Menchinger
   ----------------------------------           -------------------------------
    Raymond M. Trewhella, CEO                   Steven R. Menchinger, Corporate
     (Principal Executive Officer)                   Controller and Treasurer
                                                  (Principal Financial Officer)
                                                  (Principal Accounting Officer)

Date      November 30, 2001                 Date       November 30, 2001
     --------------------------------            -------------------------------



        Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant, and in the capacities, and on the dates indicated.

By   /s/ Stephen W. Trewhella               By    /s/ Raymond M. Trewhella
   ----------------------------------          --------------------------------
     Stephen W. Trewhella, Director             Raymond M. Trewhella, Director

Date      November 30, 2001                 Date       November 30, 2001
     --------------------------------            ------------------------------


By     /s/ H. D. Harrelson                  By     /s/ Melvin L. Chavis
   ----------------------------------          --------------------------------
       H. D. Harrelson, Director                  Melvin L. Chavis, Director

Date      November 30, 2001                 Date       November 30, 2001
     --------------------------------            ------------------------------


By       /s/ James F. Kane
   ----------------------------------
           James F. Kane, Director

Date      November 30, 2001
     ---------------------------------





                                       10
<PAGE>



                               GLASSMASTER COMPANY

                                  LEXINGTON, SC

                              FINANCIAL STATEMENTS

                   FISCAL YEARS ENDED AUGUST 31, 2001 AND 2000

<TABLE>
<CAPTION>
                                                                Page No.
                                                                --------
<S>                                                             <C>
          Balance Sheet .................................          12
          Statement of Stockholders Equity ..............          13
          Income Statement ..............................          14
          Statement of Cash Flows .......................          15
          Notes to Financial Statements .................          16-25

          Independent Auditor's Report ..................          26
</TABLE>












                                       11
<PAGE>


                               GLASSMASTER COMPANY
                                  LEXINGTON SC
                                  BALANCE SHEET
                            AUGUST 31, 2001 AND 2000


<TABLE>
<CAPTION>
                                                              August 31, 2001                 August 31, 2000
                                                        --------------------------       --------------------------
<S>                                                     <C>            <C>               <C>            <C>
Assets
------
Cash                                                                   $    99,205                      $   190,021
Accounts Receivable - Trade                             $2,928,654                       $3,404,922
Less: Allowance for Doubtful Accts                         113,803       2,814,841           53,050       3,351,872
                                                        ----------                       ----------
Accounts Receivable - Other                                                    682                           17,522
Inventories                                                              2,923,260                        3,172,858
Prepaid Expenses                                                            70,340                          174,957
Deferred Income Taxes                                                       39,759                           19,572
                                                                       -----------                      -----------
Current Assets                                                           5,948,097                        6,926,802
--------------

Fixed Assets (Net of Depreciation)
------------
   Manufacturing Property                                                4,961,733                        5,581,579

Other Assets                                                             1,409,002                          952,872
------------                                                           -----------                      -----------

Total Assets                                                           $12,318,832                      $13,461,253
------------                                                           ===========                      ===========


Liabilities
-----------
Accounts Payable                                                         2,210,222                        2,343,844
Accrued Expenses                                                           223,492                          208,326
Notes, Mortgages Payable - Current                                       3,719,543                        3,574,664
                                                                       -----------                      -----------
Current Liabilities                                                      6,153,257                        6,126,834
-------------------

Other Liabilities
   Notes, Mortgages and Debentures
     Payable - Long Term                                                 5,217,449                        5,114,622
                                                                       -----------                      -----------

Total Liabilities                                                       11,370,706                       11,241,456
-----------------

Stockholders' Equity
--------------------
Capital Stock (Authorized 5,000,000 Shares
   $.03 Par - 1,630,696 Shares Issued
   and Outstanding)                                       48,921                             48,921
Paid-In Capital                                        1,357,840                          1,357,840
Donated Capital                                          124,210                            124,210
Retained Earnings                                       (582,845)          948,126          688,826       2,219,797
                                                      -----------       ----------       ----------     -----------

Total Liabilities and Equity                                           $12,318,832                      $13,461,253
----------------------------                                           ===========                      ===========
</TABLE>







               The accompanying notes to financial statements are
                      an integral part of this statement.




                                       12
<PAGE>



                               GLASSMASTER COMPANY
                                  LEXINGTON SC
                        STATEMENT OF STOCKHOLDERS EQUITY
                   FISCAL YEARS ENDED AUGUST 31, 2001 AND 2000



<TABLE>
<CAPTION>
                                                   August 31, 2001          August 31, 2000
                                                   ---------------          ---------------
<S>                                                <C>                      <C>
Capital Stock:
--------------
   Balance - September 1                              $   48,921             $   48,921
   Proceeds from Sale of Shares
      Under Stock Option Plan
                                                      ----------             ----------
   Balance - August 31                                    48,921                 48,921
   -------------------                                ----------             ----------

Additional Paid In Capital:
---------------------------
   Balance - September 1                               1,357,840              1,357,840
   Proceeds from Sale of Shares
      Under Stock Option Plan
                                                      ----------             ----------
   Balance - August 31                                 1,357,840              1,357,840
   -------------------                                ----------             ----------

Donated Capital:                                         124,210                124,210
----------------                                      ----------             ----------

Retained Earnings:
------------------
   Balance - September 1                                 688,826              1,324,639
   Net Income (Loss)                                  (1,271,671)              (635,813)
   Common Stock Dividends Paid
                                                      ----------             ----------
   Balance - August 31                                  (582,845)               688,826
   -------------------                                ----------             ----------

Total Stockholders Equity                             $  948,126             $2,219,797
-------------------------                             ==========             ==========
</TABLE>






               The accompanying notes to financial statements are
                      an integral part of this statement.




                                       13
<PAGE>



                               GLASSMASTER COMPANY
                                  LEXINGTON SC
                                INCOME STATEMENT
                   FISCAL YEARS ENDED AUGUST 31, 2001 AND 2000


<TABLE>
<CAPTION>
                                                                        August 31, 2001         August 31, 2000
                                                                        ---------------         ---------------
<S>                                                                     <C>                     <C>
Sales                                                                     $18,916,086             $21,546,782
-----
  Cost of Sales                                                            17,223,701              19,081,495
                                                                          -----------             -----------

Gross Profit on Sales                                                       1,692,385               2,465,287
---------------------

Expenses
--------
  Selling Expense                                                             931,076               1,118,767
  General and Administrative and Other Expense                              1,810,500               1,575,583
  Provision for Doubtful Accounts                                              65,794                  10,738
                                                                          -----------             -----------
      Total Expenses                                                        2,807,370               2,705,088
                                                                          -----------             -----------

Income (Loss) from Operations                                              (1,114,985)               (239,801)
-----------------------------

  Interest Expense                                                            832,110                 758,136
                                                                           ----------             -----------

Income (Loss) Before Income Taxes                                          (1,947,095)               (997,937)
---------------------------------

Provision for Income Taxes
--------------------------
  Current                                                                                              12,271
  Deferred                                                                   (675,424)               (374,395)
                                                                          -----------             -----------
      Total - Provision for Income Taxes                                     (675,424)               (362,124)
                                                                          -----------             -----------

Net Income (Loss)                                                         $(1,271,671)            $  (635,813)
-----------------                                                         ===========             ===========


Earnings (Loss) Per Common Share
  (Basic and Diluted)

  Income from Continuing Operations                                       $      (.78)             $     (.39)
  ---------------------------------                                       ===========            ============

  Net Income (Loss) Per Share                                             $      (.78)             $     (.39)
  ---------------------------                                             ===========            ============
</TABLE>



               The accompanying notes to financial statements are
                      an integral part of this statement.




                                       14
<PAGE>


                               GLASSMASTER COMPANY
                                  LEXINGTON SC
                             STATEMENT OF CASH FLOWS
                   FISCAL YEARS ENDED AUGUST 31, 2001 AND 2000


<TABLE>
<CAPTION>
                                                             August 31, 2001   August 31, 2000
                                                             ---------------   ---------------
<S>                                                          <C>               <C>
Cash Flows From Operating Activities
------------------------------------
   Net Income (Loss)                                           $(1,271,671)      $  (635,813)
   Adjustments to Reconcile Net Income to Net Cash
    Provided (Used) by Operating Activities:
      Depreciation & Amortization                                  920,016           855,435
      Increase (Decrease) in Deferred Income Taxes                (675,424)         (374,395)
      (Loss) Gain on Sale of Assets                                 16,299             6,884
      (Increase) Decrease in CSV Life Insurance                    182,867           (50,133)
    Changes in Operating Assets and Liabilities:
         Accounts Receivable Decrease (Increase)                   537,027          (675,517)
         Accounts Receivable-Other Decrease (Increase)              16,841           127,361
         Inventories Decrease (Increase)                           249,597          (347,555)
         Prepaid Expenses Decrease (Increase)                      104,616           (87,090)
         Income Tax Refund Receivable Decrease (Increase)                             83,515
         Accounts Payable Increase (Decrease)                     (157,925)          905,684
         Accrued Expenses Increase (Decrease)                       39,465           (89,461)
         Income Taxes Payable Increase (Decrease)
                                                               -----------       -----------

   Net Cash Provided (Used) by Operating Activities                (38,292)         (281,085)
                                                               -----------       -----------

Cash Flows From Investing Activities
------------------------------------
   Cash Payments for the Purchase of Fixed Assets                 (293,552)         (704,975)
   Cash Payments for Deferred Charges                             (110,609)          (38,735)
   Cash Proceeds from the Sale of Property                          22,000
   Cash Advanced from Cash Surrender Value Life Insurance          134,299           174,681
   Premiums Paid for Cash Surrender Value Life Insurance           (52,366)          (56,872)
                                                               -----------       -----------

   Net Cash Provided (Used) by Investing Activities               (300,228)         (625,901)
                                                               -----------       -----------

Cash Flows From Financing Activities
------------------------------------
   Proceeds From Issuance of Common Stock
   Proceeds From Issuance of Short-term Debt                     1,265,000           300,000
   Proceeds From Issuance of Long-Term Debt                        475,984         1,463,501
   Proceeds From Issuance of Debentures                            410,000
   Principal Payments on Short-Term Debt                          (750,000)         (250,000)
   Principal Payments on Long-Term Debt                           (997,655)       (1,058,201)
   Net Borrowings (Repayments) Under Line of Credit               (155,625)          515,410
                                                               -----------       -----------

   Net Cash Provided (Used) by Financing Activities                247,704           970,710
                                                               -----------       -----------

Net Increase (Decrease) in Cash                                    (90,816)           63,724
-------------------------------

Cash at Beginning of Year                                          190,021           126,297
-------------------------                                      -----------       -----------

Cash at End of Year                                            $    99,205       $   190,021
-------------------                                            ===========       ===========

Supplemental Disclosures of Cash Flow Information
-------------------------------------------------
   Cash Paid For:
     Interest (Net of Amount Capitalized)                      $   816,003       $   752,052
     Income Taxes Paid
</TABLE>



               The accompanying notes to financial statements are
                      an integral part of this statement.




                                       15
<PAGE>


                            GLASSMASTER COMPANY, INC.
                            LEXINGTON, SOUTH CAROLINA
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 2001 AND 2000


Note 1.         Summary of Significant Accounting Policies

                Description of Business

                        Glassmaster Company is a manufacturer and supplier of
                extruded (thermoplastic) synthetic monofilament, pultruded
                (thermoset) fiberglass products and composites. Glassmaster
                Controls Company, Inc., its wholly owned subsidiary, designs,
                manufactures, and assembles a wide range of electronic and
                mechanical industrial controls and electronic testing equipment.
                Information about the Company's business operating segments is
                presented in more detail in Note 11.

                Use of Estimates

                        The preparation of financial statements in conformity
                with generally accepted accounting principles requires
                management to make estimates and assumptions that affect certain
                reported amounts and disclosures. Accordingly, actual results
                could differ from those estimates.

                Principles of Consolidation

                        The consolidated financial statements for the year ended
                August 31, 2001 and 2000, include the accounts of Glassmaster
                Company and its wholly owned subsidiary, Glassmaster Controls
                Company, Inc. which was organized and incorporated under the
                laws of the State of Michigan, on October 28, 1988. All material
                intercompany transactions have been eliminated.

                Revenue Recognition

                        The Company recognizes revenue from product sales upon
                shipment to its customers.

                Reclassifications

                        Certain prior year amounts have been reclassified to
                conform to the current year presentation.

                Cash and Cash Equivalents

                        For the purpose of the statement of cash flows, the
                company considers all short-term debt securities purchased with
                a maturity of three months or less to be cash equivalents.

                Accounts Receivable and Allowances

                        Accounts receivable are the result of the Company's
                sales activities. The company provides an allowance for losses
                on trade receivables based on a review of its past collection
                history. Accounts receivables have been reduced by an allowance
                for doubtful accounts in the amount of $113,803 and $53,050 for
                the years ended August 31, 2001 and 2000, respectively.




                                       16
<PAGE>
                            GLASSMASTER COMPANY, INC.
                            LEXINGTON, SOUTH CAROLINA
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 2001 AND 2000



Note 1.         Summary of Significant Accounting Policies (Cont'd)

                Inventories

                        The method of determining the amount of inventories is
                the lower of cost or market on a first-in, first-out basis.

                        Inventories as shown on the Balance Sheet are classified
                below:

<TABLE>
<CAPTION>
                                                        2001                2000
                                                        ----                ----
<S>                                                 <C>                 <C>
                    Materials                       $ 1,775,663         $ 1,583,936
                    Work in Process                     421,079             486,191
                    Finished Products                   726,518           1,102,731
                                                    -----------         -----------

                    Total                             2,923,260           3,172,858
                                                    ===========         ===========
</TABLE>

                Advertising

                        The company follows the policy of charging the costs of
                advertising to expense as incurred. Advertising expense was
                $67,887 and $100,348 for the years ended August 31, 2001 and
                2000, respectively.

                Research and Development

                        Research and development costs are charged to expense as
                incurred. The costs incurred for the years ended August 31, 2001
                and 2000 were $424,703 and $498,609, respectively. Those costs
                have generally been charged to cost of good sold.

                Long-Lived Assets

                        The Company periodically evaluates long-lived assets for
                impairment of value by assessing current and future cash flows
                including the consideration of factors such as business trends,
                prospects and market conditions.

                Income Taxes

                        Income taxes are provided for in accordance with SFAS
                No. 109, "Accounting for Income Taxes" which requires that
                income taxes be provided for using the liability method.

Note 2.         Fixed Assets

                        The basis for determining the values of fixed assets is
                cost. Included in land is property valued at $100,374 that was
                donated to the Company by Lexington County, South Carolina.




                                       17
<PAGE>

                            GLASSMASTER COMPANY, INC.
                            LEXINGTON, SOUTH CAROLINA
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 2001 AND 2000



Note 2.         Fixed Assets (Cont'd)

                        The provision for depreciation charged against income
                for the fiscal years ended August 31, 2001 and 2000, totaled
                $875,190 and $836,268, respectively. The company computes
                depreciation using the straight line method over the estimated
                useful lives of the assets as indicated below. The company
                utilizes applicable accelerated methods for tax purposes.

<TABLE>
<CAPTION>
                                                                                                      Estimated
                                                            2001                2000                 Useful Lives
                                                            ----                ----                 ------------
<S>                                                    <C>                  <C>                      <C>
                 Land                                  $     190,274        $    190,274                  N/A
                 Buildings                                 3,843,757           3,836,361             30 to 40 years
                 Furniture and Fixtures                      494,172             487,743              5 to 7 years
                 Automotive Equipment                        151,689             245,184              3 to 5 years
                 Plant Equipment                           7,452,424           7,237,590              7 to 10 years
                 Tooling & Dies                              742,713             700,078              3 to 5 years
                                                       -------------        ------------
                 Total                                    12,875,029          12,697,230
                 Less:
                 Accumulated Depreciation                 (7,913,296)         (7,115,651)
                                                       -------------        ------------
                 Fixed Assets, net                         4,961,733           5,581,579
                                                       =============        ============
</TABLE>


Note 3.         Income Taxes

                        Components of the provision (benefit) for income taxes
                on continuing operations are shown below:

<TABLE>
<CAPTION>
                                                  2001                               2000
                                                  ----                               ----
                                      Current            Deferred           Current         Deferred
                                      -------            --------           -------         --------
<S>                                 <C>                 <C>                 <C>            <C>
                  Federal                               $(611,590)          $ 12,271       $(308,276)
                  State                                   (63,834)                           (66,119)
                                    ------------        ---------           --------       ---------
                  Total                                  (675,424)            12,271       $(374,395)
                                    ============        =========           ========       =========
</TABLE>



                The principal elements accounting for the difference between the
                statutory federal income tax rate and the effective rates are:

<TABLE>
<CAPTION>
                                                                 2001             2000
                                                                 ----             ----
<S>                                                             <C>              <C>
                  Expected tax at statutory rates               $   0            $     0
                  Refund of tax due to NOL carryback                              12,271
                                                                -----            -------
                  Current Tax Provision                                           12,271
                                                                =====            =======
</TABLE>


                        For South Carolina tax purposes a net operating loss
                carry-forward of $4,476,422 is available for future periods. The
                carry-forward will expire in the year ended August 31, 2016. For
                Federal tax purposes, the corporation sustained net operating
                losses of $1,586,592 and $958,771 for the years ended August 31,
                2001 and 2000 respectively. The Company has net operating loss
                carryforwards of $3,976,050 available for future periods and
                will expire in the year ended August 31, 2021.




                                       18

<PAGE>

                            GLASSMASTER COMPANY, INC.
                            LEXINGTON, SOUTH CAROLINA
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 2001 AND 2000



Note 3.         Income Taxes - (Cont'd)

                        For income tax reporting, an Alternative Minimum Tax
                credit of $28,697 is indefinitely available to reduce future
                regular taxes. For financial statement reporting, the credit has
                been recognized as a deferred tax asset.

                        The net deferred tax assets and liabilities consisted of
                the following components as of August 31, 2001 and 2000.

<TABLE>
<CAPTION>
                                                                       2001                2000
                                                                       ----                ----
<S>                                                                <C>                 <C>
                  Deferred Tax Assets Relating to:
                      Allowance for Doubtful Accounts              $      39,759       $      19,572
                      Alternative Minimum Tax Credit                      28,697              28,697
                      Federal and State NOL carryforwards              1,578,265             965,831
                  Deferred Tax Liabilities Relating to:
                      Property and Equipment                            (525,091)           (567,894)
                                                                   -------------       -------------

                  Net Deferred Tax Asset (Liability)                   1,121,630             446,206
                                                                   =============       =============
</TABLE>

                The components giving rise to the deferred tax assets and
                liability described above have been included in the accompanying
                balance sheet as of August 31, 2001 and 2000 as follows:

<TABLE>
<CAPTION>
                                                               2001              2000
                                                               ----              ----
<S>                                                         <C>                <C>
                  Current Assets                            $   39,759         $  19,572
                  Other Assets                               1,081,871           426,634
</TABLE>

                Utilization of the deferred tax asset of $1,121,630 disclosed
                above is dependent on future taxable profits in excess of
                profits arising from existing taxable temporary differences.
                Although there have been reported losses for the past three
                years, the asset has been recognized because the Company
                estimates the market value of the Company's assets, if realized,
                would generate gains in excess of the net operating loss
                carryovers. The Company still plans to return to profitability
                and to utilize the deferred tax assets on future income from
                operations. For further information on the Company's plans for
                future operations, see note 12.

Note 4.         Other Assets

                   Other assets are composed of the following:

<TABLE>
<CAPTION>
                                                                    2001             2000
                                                                    ----             ----
<S>                                                              <C>              <C>
                   CSV Life Insurance                            $  175,337       $ 440,139
                   Deferred Tax Assets                            1,081,871         426,634
                   Loan Fees, net of Amortization                    58,034          46,223
                   Other                                             93,760          39,876
                                                                 ----------       ---------

                   Total                                          1,409,002         952,872
                                                                 ==========       =========
</TABLE>




                                       19
<PAGE>

                            GLASSMASTER COMPANY, INC.
                            LEXINGTON, SOUTH CAROLINA
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 2001 AND 2000



Note 5.         Financial Instruments

                (A) Balance Sheet Financial Instruments

                        The carrying amount reported in the balance sheets for
                cash and cash equivalents, accounts receivable and accounts
                payable approximates fair value because of the immediate or
                short-term maturity of these financial instruments. The carrying
                amount for long-term debt approximates fair value because the
                underlying instruments are primarily at current market rates.

                (B) Concentration of Credit Risk

                        Financial instruments that potentially subject the
                Company to concentrations of credit risk consist of accounts
                receivable. All receivables originate from the Company's normal
                business activities as described in note one. These receivables
                are unsecured.

Note 6.         Notes, Mortgages, & Debentures Payable

                        Substantially all property, plant and equipment and a
                portion of CSV Life Insurance are pledged as collateral for the
                scheduled borrowings. In addition, inventories and customer
                receivables are pledged as collateral to provide the company and
                it's subsidiary with revolving lines of credit for working
                capital requirements. The amount available for borrowings under
                these lines of credit varies with fluctuations in the amount of
                inventories on hand and customer receivables outstanding with
                maximum available credit lines of $2,500,000 for the company and
                $675,000 for the company's subsidiary. The balances as of August
                31, 2001 were $1,778,382 and $675,000 and the balances as of
                August 31, 2000 were $1,934,006 and $410,000. These credit
                agreements are subject to renegotiation and renewal and will
                expire December 31, 2001 and January 29, 2002.

                        Special provisions of the loan agreements restrict
                payment of cash dividends without the consent of the lender as
                well as providing for minimum working capital requirements and
                maximum debt to net worth requirements in addition to providing
                for other minimum financial ratio requirements. The company was
                in violation of several of the non-monetary loan covenants as of
                August 31, 2001. The primary lender for the controls and
                electronics segment has waived the current non-monetary covenant
                violations for the current year and has adjusted the
                non-monetary covenants as part of a renewed financing package.
                The company and the primary lender for the industrial products
                segment are in discussions concerning the financing package that
                is currently set to expire as of December 31, 2001.

                        The Company approved the issuance of debentures
                convertible to shares of common stock of the company at the rate
                of $3 per share. The debentures have a maturity date of December
                30, 2005 and bear interest at 10.5% per annum. The debentures
                can be converted to stock at anytime.




                                       20
<PAGE>
                            GLASSMASTER COMPANY, INC.
                            LEXINGTON, SOUTH CAROLINA
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 2001 AND 2000


Note 6.         Notes and Mortgages Payable (Cont'd)

                The following table sets forth the Company's indebtedness as of
                August 31, 2001 and 2000.


<TABLE>
<CAPTION>
                                                                     2001                              2000
                                                          --------------------------        --------------------------
                                                           Current        Long-Term           Current       Long-Term
                                                          ----------      ----------        ----------      ----------
<S>                                                       <C>             <C>               <C>             <C>
           Mortgages, interest from 8.15% to
           8.68% fixed, maturities to 2008                $  353,430      $4,119,796        $  466,323      $4,363,795

           Notes, interest from prime + .5% to
           prime + 1.25%, due within 1 year                2,953,384                         2,344,007

           Installment Notes, interest from
           6.5% to prime + 1%, maturities to
           2002                                              162,729         687,653           264,334         750,827

           Debentures, interest  10.5%, due
           12/30/05, convertible to common
           stock @ $3 per share                                              410,000

           Notes from Individuals, interest
           10%, maturities within 12 months                  200,000                           200,000

           Notes from Officers, interest 10%,
           due within 1 year                                  50,000                           300,000
                                                          ----------      ----------        ----------      ----------

           Total                                           3,719,543       5,217,449         3,574,664       5,114,622
                                                          ==========      ==========        ==========      ==========
</TABLE>

                        The Prime interest rate was 6.50% and 9.50% for the
                years ended August 31, 2001 and 2000 respectively.

                        The principal maturities on the notes and mortgages
                payable over the next five years is as follows:

<TABLE>
<CAPTION>
                                Fiscal Year Ending                Amount
                                ------------------                ------
<S>                                                             <C>
                                       2002                     $ 3,719,543
                                       2003                         996,387
                                       2004                         663,923
                                       2005                         731,918
                                       2006                       1,061,920
                                    After 2007                    1,763,301
                                                                -----------

                                      Total                       8,936,992
                                                                ===========
</TABLE>




                                       21
<PAGE>
                            GLASSMASTER COMPANY, INC.
                            LEXINGTON, SOUTH CAROLINA
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 2001 AND 2000



Note 7.         Leases

                        The Company entered into an operating lease for various
                pieces of equipment on August 19, 1997. The lease calls for
                monthly payments of $11,171 for a period of sixty months. Future
                minimum lease payments under the lease are as follows:

<TABLE>
<CAPTION>
                          Fiscal Year Ending                        Amount
                          ------------------                       --------
<S>                                                                <C>
                                 2002                              $122,881
                                                                   --------

                                Total                              $122,881
                                                                   ========
</TABLE>


Note 8.         Stock Options

                        The Company has an incentive stock option plan. Under
                the plan the Company may grant options for up to 260,000 shares
                of common stock. Options granted under the plan become
                exercisable at varying percentages from date of grant through
                expiration, either at termination of employment or ten years
                after date of grant. The exercise price of each option is equal
                to the market price of the company's stock on the date of grant.
                The exercise prices for the options range from $0.85 to $4.00.

                        Following is a summary of the status of the incentive
                stock options for the years ended August 31, 2001 and 2000:

<TABLE>
<CAPTION>
                                                                  2001                              2000
                                                         -------------------------       -------------------------
                                                                          Weighted                        Weighted
                                                                          Average                          Average
                                                         Number of        Exercise       Number of        Exercise
                                                           Shares          Price          Shares            Price
                                                         ---------        --------       ---------        --------
<S>                                                      <C>              <C>            <C>              <C>
      Outstanding-Beginning of Year                        24,400         $  3.51         33,700           $  3.34
      Granted                                              83,000             .85
      Exercised
      Forfeited                                            (7,100)           3.15         (9,300)             3.43
                                                          -------         -------         ------           -------
      Outstanding-End of Year                             100,300            1.33         24,400              3.51
                                                          =======         =======         ======           =======
</TABLE>

                        Following is a summary of the status of the incentive
                options outstanding at August 31, 2001:

<TABLE>
<CAPTION>
                                             Outstanding Options                                Exercisable Options
                           ---------------------------------------------------------           ---------------------
                                                           Weighted
                                                            Average         Weighted
                                                           Remaining         Average
                           Exercise                       Contractual       Exercise                        Exercise
                            Price           Number            Life           Price             Number         Price
                            -----           ------            ----           -----             ------         -----
<S>                        <C>              <C>           <C>               <C>                <C>          <C>
                           $  1.00           2,000           1 years        $  1.00             4,000        $  1.00
                              4.00          15,300           3 years           4.00            20,400           4.00
                               .85          83,000          10 years            .85                --            .85
</TABLE>




                                       22
<PAGE>

                            GLASSMASTER COMPANY, INC.
                            LEXINGTON, SOUTH CAROLINA
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 2001 AND 2000


Note 9.         Earnings Per Share

                        The weighted average number of shares used in the
                computation of basic and diluted earnings per common share were
                1,630,696 in 2001 and 2000. Options on 100,300 and 24,400 shares
                of common stock as of August 31, 2001 and 2000 respectively were
                not included in computing diluted earnings per share because
                their effects were antidilutive.

Note 10.        Defined Contribution Plan

                        The Company established a qualified 401(K) defined
                contribution plan effective January 1, 1990. The plan year ends
                on December 31. Participation in the plan is voluntary and
                employees may contribute from 1% to 15% of eligible compensation
                on a tax-deferred basis. The amount to be contributed by the
                company will be determined each year prior to December 1. The
                company match for both years is $.25 cents for each $1.00 of
                employee contributions up to a maximum 6% of eligible
                compensation.

                        The plan provides for the company to make a
                discretionary contribution on behalf of all eligible employees
                (those with one full year of active service) regardless of
                whether they have elected to voluntarily participate in the
                plan. This discretionary contribution will be allocated based on
                a ratio of the employees total W-2 earnings to the total W-2
                earnings of all eligible employees. Any discretionary
                contribution will be dependent upon the overall profitability of
                the corporation and will be made with the approval of the Board
                of Directors.

                        The amount of expense charged to operations was $36,693
                for the year ended August 31, 2001 and $52,460 for 2000.

Note 11.        Business Segments

                        The Company classifies its business into two segments
                based on products offered and geographic location; Industrial
                Products and Controls and Electronics. The Industrial Products
                segment produces extruded synthetic monofilament line, pultruded
                fiberglass products, and composites that are sold to original
                equipment manufacturers and distributors for use in a variety of
                industrial applications and markets. The Controls and
                Electronics segment produces electronic testing equipment,
                flexible cable controls, mechanical and electronic HVAC
                controls, and molded control panels that are sold to original
                equipment manufacturers and distributors in the heavy truck,
                marine, and agricultural industries and is a contract
                manufacturer of custom electronic products.

                        The accounting policies of the segments are the same as
                those described in the summary of significant accounting
                policies. The Company evaluates performance based on profit or
                loss from operations before income taxes not including
                nonrecurring gains and losses. There are currently no
                significant intersegment sales and transfers, therefore no
                eliminations have been made to the information below.




                                       23
<PAGE>

                            GLASSMASTER COMPANY, INC.
                            LEXINGTON, SOUTH CAROLINA
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 2001 AND 2000


Note 11.        Business Segments (Cont'd)

                        Included in the tables below is relevant financial data
                provided by each reportable segment. The amounts shown in the
                Other column are generally those expenses and assets which are
                associated with the Company's corporate headquarters and other
                entity wide expenses which have not been included in segment
                information.

<TABLE>
<CAPTION>
                                                                        Year Ended August 31, 2001
                                                       ---------------------------------------------------------------
                                                       Industrial       Controls &
                                                        Products        Electronics         Other             Total
                                                       ----------       ----------       ----------        -----------
<S>                                                    <C>              <C>              <C>               <C>
                  Segment Assets                       $6,570,348       $4,056,715       $1,691,769        $12,318,832
                  Expenditures for
                  Segment Assets                           25,171          259,465            8,917            293,553
                  Depreciation and
                    Amortization                          577,100          298,090           44,826            920,016
                  Research and
                  Development                             353,182           49,189                             402,371
                  Revenues from
                   External Customers                  12,730,065        6,186,021                          18,916,086
                  Segment Profit (Loss)                   146,043         (330,712)        (930,316)        (1,114,985)
                  Interest Expense                                                                             832,110
                                                                                                           -----------
                  Income (Loss) Before Income Taxes                                                         (1,947,095)
                                                                                                           ===========
</TABLE>



<TABLE>
<CAPTION>
                                                                            Year Ended August 31, 2000
                                                         ----------------------------------------------------------------
                                                         Industrial       Controls &
                                                          Products        Electronics          Other             Total
                                                         -----------       ----------       ----------        -----------
<S>                                                      <C>               <C>              <C>               <C>
                  Segment Assets                         $ 8,107,502       $3,941,836       $1,411,915        $13,461,253
                  Expenditures for Segment
                    Assets                                   349,363          363,972           14,522            727,857
                  Depreciation and
                    Amortization                             540,678          277,313           37,444            855,435
                  Research and Development                   470,930           27,679                             498,609
                  Revenues from
                   External Customers                     15,840,246        5,706,536                          21,546,782
                  Segment Profit (Loss)                      412,458          121,097         (773,356)          (239,801)
                  Interest Expense                                                                                758,136
                                                                                                              -----------
                  Income (Loss) Before Income Taxes                                                              (997,937)
                                                                                                              ===========
</TABLE>






                                       24
<PAGE>


                            GLASSMASTER COMPANY, INC.
                            LEXINGTON, SOUTH CAROLINA
                          NOTES TO FINANCIAL STATEMENTS
                            AUGUST 31, 2001 AND 2000



Note 11.        Business Segments (Cont'd)
                Geographic Information

<TABLE>
<CAPTION>
                                                                                   Year Ended August 31, 2001
                                                                      -------------------------------------------------

                                                                                                             Long-Lived
                                                                        Revenues         Total Assets          Assets
                                                                      -----------        ------------        ----------
<S>                                                                   <C>                <C>                 <C>
                United States                                         $15,838,530        $12,318,832         $4,961,733
                Other Foreign Countries                                 3,077,556
</TABLE>

<TABLE>
<CAPTION>
                                                                                   Year Ended August 31, 2000
                                                                      -------------------------------------------------

                                                                                                             Long-Lived
                                                                       Revenues          Total Assets          Assets
                                                                      -----------        ------------        ----------
<S>                                                                   <C>                <C>                 <C>
                United States                                         $17,676,605        $13,461,253         $5,581,579
                Other Foreign Countries                                 3,870,177
</TABLE>

                        Revenues in the above schedule are attributed to
                countries based on the location of the customer.

                Major Customer

                        Revenues from one customer of Glassmaster Company's
                Controls and Electronics segment represented approximately
                $1,382,840 and $1,913,486 of the Company's consolidated revenues
                for the years ended August 31, 2001 and 2000, respectively.

 Note 12.       Going Concern

                        As shown in the accompanying financial statements, the
                Company has incurred recurring losses from operations, and as of
                August 31, 2001, the Company's current liabilities exceeded its
                current assets by $205,160. Its total liabilities of $11,370,706
                exceed its total Assets of $12,318,832 less deferred tax assets
                of $1,121,630 by $173,504. These factors raise substantial doubt
                about the Company's ability to continue as a going concern.
                Management has instituted cost reduction programs and is
                pursuing opportunities to raise additional equity capital
                through outside sources. Additionally, the Company's management
                may pursue possible sales of assets and product lines or pursue
                affiliations with other companies to sustain operations until
                current sales levels of existing products and known sales of new
                products, along with expected improved profit margins through
                cost reductions, can move the Company toward future
                profitability.

                        Management and the primary lender for the industrial
                products segment are in negotiations concerning the current
                financing package set to expire on December 31, 2001. Management
                is confident that a new agreement with the current primary
                lender or another institution will be reached to insure a stable
                operating environment.

                        The accompanying financial statements do not include any
                adjustments that might be necessary if the Company is unable to
                continue as a going concern.




                                       25
<PAGE>



                          Independent Auditor's Report

The Board of Directors
Glassmaster Company
126 Glassmaster Road
Lexington, S.C.  29072

        We have audited the accompanying consolidated balance sheets of
Glassmaster Company and subsidiary as of August 31, 2001 and 2000, and the
related statements of income, stockholders' equity and cash flows for the years
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

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

        In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Glassmaster Company and subsidiary as of August 31, 2001 and 2000, and the
consolidated results of their operations and their cash flows for the years then
ended, in conformity with accounting principles generally accepted in the United
States of America.

        The accompanying financial statements have been prepared assuming that
the Company and its subsidiary will continue as a going concern. As discussed in
Note 12 to the financial statements, the Company and its subsidiary has suffered
recurring losses from operations and does not have sufficient tangible equity
capital to sustain operations for the next year, which raise substantial doubt
about its ability to continue as a going concern. Management's plans regarding
those matters also are described in Note 12. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

November 10, 2001





                                       26
<PAGE>


                                  Exhibit Index

<TABLE>
<CAPTION>
Exhibit No.                              Exhibit                                        Sequential Page No.
-----------                              -------                                        -------------------
<S>            <C>                                                                      <C>
    3.1        Amended and Restated Certificate of Incorporation of the Company,
               filed as Exhibit 3.1 to Form 10-K for the year ended August 31,
               1991 and incorporated herein by reference.                                       --

    3.2        Amended and Restated Bylaws of the company, filed as Exhibit 3.2
               to Form 10-K for the year ended August 31, 1991 and incorporated
               herein by reference.                                                             --

   10          Amended and restated Glassmaster Company 1992 Incentive Stock
               Option Plan, filed as exhibit 10 to Form 10-KSB for the year
               ended August 31, 1993 and incorporated herein by reference.                      --

   11          Computation of Earnings Per Share for two years ended August 31, 2001
               and 2000.                                                                        --

   21          Subsidiaries of the Company.                                                     --
</TABLE>







                                       27