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U.S. SECURITIES AND EXCHANGE COMMISSION

Washington DC 20549


FORM 10-KSB/A

[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, 2002 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
(Address of principal executive offices) |  | 29071
(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. $17,644,613.

The aggregate market value of the voting stock held by non-affiliates of the
registrant was approximately $91,563 as of October 31, 2002, based on the
average high and low sales price of $0.12 per share.

The number of shares outstanding of the registrants common stock, as of
October 31, 2002 was 1,643,390 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 2003 annual meeting of stockholders that will be filed no
later than December 31, 2002.





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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, 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 engineered 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

2



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Item 1. Business (Contd)

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.

The Company manufactures pultruded fiberglass (thermoset) and composite
profiles that are used in the assembly of the Glassmaster Composite Modular
Building System. 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 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, 2002, the order backlog was $2,113,221 compared to
$2,058,787 at August 31, 2001.

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
$340,000 in 2002 and $425,000 in 2001.

3



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Item 1. Business (Contd)

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 169
persons at August 31, 2002 and 189 persons at August 31, 2001.

Item 2. Properties

General corporate offices, the monofilament manufacturing facilities
(Plant I & II), the Monofilament Division offices, and the composites
manufacturing facilities 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.

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, 2002 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.

|                 |  |      |       |     |  |  |       | 
|---------------- |  | ---- | ----- | --- |  |  | ----- | 
|Quarter Ending   |  | High |       | Low
|                 |  |      |       |    
|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  | 
|December 2, 2001 |  |      | .410  |     |  |  | .310  | 
|March 3, 2002    |  |      | .600  |     |  |  | .210  | 
|June 2, 2002     |  |      | .200  |     |  |  | .200  | 
|August 31, 2002  |  |      | .150  |     |  |  | .120  | 

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Item 5. Market for Registrants Common Equity and Related Stockholder Matters (Contd)

Since September 1, 2002 and to the date of this report, the high and low sales
price per share was $0.15 and $0.12, respectively.

(b)        There were 1,141 shareholders of record at October 31, 2002.

(c)(1)     No 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.

5



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PART II

Item 6. Managements Discussion and Analysis

Review of Operations

Comparison of 2002 to 2001

Consolidated sales for the fiscal year ended August 31, 2002 were $17.6
million compared to $18.9 million last year, a decrease in sales of 6.7%. The
net loss for the year was $543,332, or $0.33 per share, compared to a net loss
of $1,271,671, or $0.78 per share, last year.

Net Sales.Industrial Products segment sales declined 7.4% to $11.7
million this year compared to $12.7 million in the prior year. Sales in the
first and second quarters of the 2002 fiscal year declined 12.7% and 28.1%,
respectively, when compared to the prior year periods, reflecting the impact of
the September 11th terrorist attacks on a U.S. manufacturing economy already in
recession. Sales in the third and fourth quarters increased 3.5% and 13.7%,
respectively, compared to the same prior year periods as some gradual
improvement in customer order patterns was seen. Industrial Products sales,
including Specialty Monofilament and The Composite Modular Building System,
are expected to improve in tandem with the economy and as recently developed
products begin to generate additional revenue in 2003. Several new products
have been approved for production, however release dates from our customers
continue to be delayed due to the uncertain economic climate. The company
continues to search for additional distribution channels and marketing partners
to increase sales of Industrial Products.

Controls and Electronics segment sales declined 3.8% for the year to $5.9
million. Electronic controls products and contract manufacturing services saw
increased sales that offset the decline in sales of cable systems and control
assemblies used in the heavy truck and bus industry which has been depressed
for the past three years. Sales of controls and electronics are expected to
improve in 2003 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 and
increased market penetration, particularly as the trucking industry begins to
recover from its prolonged slump.

Gross Profit.Total gross profit increased 35.5%, to $2.29 million,
compared with $1.69 million during the 2001 fiscal year. The increase in gross
profit is due to manufacturing cost reductions implemented throughout the year,
with the significant effect on gross profit occurring during the last six
months of the 2002 fiscal year. The company continues in its efforts to reduce
the cost of manufacturing on all products, but any significant future increases
in gross profit will result from increasing levels of throughput at
Monofilament and higher rates of utilization on electronic production equipment
at Controls.

Expenses.Total expenses for the year decreased 18.1% to $2.30 million
this year versus the prior year total of $2.81 million. The decrease in
expenses this year is primarily due to a decline in corporate overhead
resulting from personnel reductions and cost savings recognized from the
reduction or elimination of employee benefit plans.

Income From Operations.The loss from operations for the 2002 fiscal year
was $8,029, a significant improvement compared to the prior year loss of
$1,114,985. Operating profit at the Industrial Products segment improved to
$462,167 this year compared to $146,043 in the prior year to date period. The
Controls and Electronics segment showed an operating profit of $123,266
compared to a loss of $330,712 last year. The improvement in operating
earnings is primarily due to cost reductions implemented at all operating
units.

Interest Expense.Interest expenses decreased to $665,781 this year
compared to $832,110 in the prior fiscal year. The decrease in interest
expense is primarily due to reductions in both interest rates and long term
debt.

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

Comparison of 2002 to 2001 (Contd)

Provision for Income Taxes.The company has recognized a total benefit
from income taxes in the current year of $130,477, compared with a benefit of
$675,424 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, 2002 is $1,252,077. 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 2001 to 2000
(Excerpted from the 2001 Form 10-KSB)

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 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 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.

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

Comparison of 2001 to 2000 (Contd)

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.

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.

Liquidity and Capital Resources

Cash provided (used) by operating activities was $367,942 this fiscal year
compared with ($38,292) during the prior year. The increase in cash provided by
operating activities in the current year was primarily due to improved
operating earnings.

Cash provided (used) by investing activities was $34,815 this year versus
($300,228) last year. Net cash was provided by investing activities due to the
liquidation of cash surrender values of life insurance policies and a reduced
investment in fixed assets this year compared with the prior year.

Cash provided (used) by financing activities was ($328,666) in the current
year compared to $247,704 in the prior fiscal year. The decline in cash
provided by financing activities is due to net repayments of long term debt in
the current year.

The Company has incurred recurring losses from operations during the past
four 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.).

In South Carolina, indebtedness outstanding as of August 31, 2002 subject
to the loan agreement includes $1,946,875 under the Revolving Working Capital
Credit Line (total line of $2.5 Million) and $4,345,492 under an Equipment and
Real Estate Term Loan. The working capital credit line is currently scheduled
to mature on January 5, 2003.

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Liquidity and Capital Resources (Contd)

In Michigan, indebtedness outstanding as of August 31, 2002 subject to the
applicable loan agreement included $852,500 under the Working Capital Revolver
(total line of $1,150,000) and $806,127 under the Equipment and Real Estate
Term Loan. The amount of indebtedness outstanding under the revolver will vary
with fluctuations in accounts receivable and inventories. The Working Capital
Revolver is scheduled to mature on December 24, 2002, however the lender has
indicated a willingness to renew the agreement and extend the maturity date.

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, maximum debt to net worth, and other minimum financial ratio
requirements. The Company and its subsidiary are in negotiations with the
primary lenders to renew the financing agreements that are set to expire on the
dates stated above. The Company is also seeking alternate sources of financing
if an acceptable agreement with its current lenders cannot be reached.

Item 7. Financial Statements

Financial Statements of Glassmaster Company and the Notes to Financial
Statements for the fiscal years ended August 31, 2002 and 2001 appear on pages
15 through 29, the Index to the Exhibits and Exhibits appear on page 10, and
the Report of Independent Auditors appears on page 30 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.

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 2003 Annual Meeting of Shareholders to be held on January 24, 2003 and
is incorporated herein by reference.

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PART IV

Item 13. Exhibits and Reports on Form 8-K

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

|            |  |                                                                                                                                                                                       
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Exhibit                                                                                                                                                                               
|            |  |                                                                                                                                                                                       
|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                                                                                                                                                        

(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, 2002.

Item 14. Controls and Procedures

(a)  Evaluation of disclosure controls and procedures. The Companys principal
executive officer and its principal financial officer, after evaluating the
effectiveness of the Companys disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14(c) and 15d-14(c)), have concluded that, as of such
date, the Companys disclosure controls and procedures were adequate and
effective to ensure that material information relating to the Company and its
consolidated subsidiaries would be made known to them by others within those
entities.

(b)  Changes in internal controls. There were no significant changes in the
Companys internal controls or in other factors that could significantly affect
the Companys disclosure controls and procedures subsequent to the date of
their evaluation, nor were there any significant deficiencies or material
weaknesses in the Companys internal controls. As a result, no corrective
actions were required or undertaken.

10



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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/ William Beckham                                                                               
|   |  | Raymond M. Trewhella, CEO
(Principal Executive Officer) |  |    |  | William Beckham, Corporate Controller (Principal
Financial Officer) (Principal
Accounting Officer)

|                      |                       | 
|--------------------- | --------------------- | 
|Date   March 17, 2003 | Date   March 17, 2003 | 

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   March 17, 2003 | Date   March 17, 2003 | 

|   |  |                                     |  |    |  |                           
|-- |  | ----------------------------------- |  | -- |  | --------------------------
|By |  | /s/ Stephen W. Trewhella, Jr.       |  | By |  | /s/ Melvin L. Chavis      
|   |  | Stephen W. Trewhella, Jr., Director |  |    |  | Melvin L. Chavis, Director

|                      |                       | 
|--------------------- | --------------------- | 
|Date   March 17, 2003 | Date   March 17, 2003 | 

Certifications

I, Raymond M. Trewhella , certify that:

1.  I have reviewed this annual report on Form 10-KSB of Glassmaster Company;

2.  Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3.  Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.  The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

11



---



##### 



Certifications (contd)

b) evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the Evaluation Date); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5.  The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.  The registrants other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: March 17, 2003

/s/ Raymond M. Trewhella

Raymond M. Trewhella
CEO and Chairman of the Board of Directors
Principal Executive Officer

I, William Beckham , certify that:

1.  I have reviewed this annual report on Form 10-KSB of Glassmaster Company;

2.  Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3.  Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.  The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

12



---



##### 



Certifications (contd)

b) evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the Evaluation Date); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5.  The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.  The registrants other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: March 17, 2003

/s/ William Beckham

William Beckham
Corporate Controller
Principal Financial Officer
Principal Accounting Officer

13



---



##### 



GLASSMASTER COMPANY

LEXINGTON, SC

FINANCIAL STATEMENTS

FISCAL YEARS ENDED AUGUST 31, 2002 AND 2001

|                                 |  |          |       | 
|-------------------------------- |  | -------- | ----- | 
|                                 |  | Page No.
|                                 |  |         
|Balance Sheet                    |  |          | 15    | 
|Statement of Stockholders Equity |  |          | 16    | 
|Income Statement                 |  |          | 17    | 
|Statement of Cash Flows          |  |          | 18    | 
|Notes to Financial Statements    |  |          | 19-29 | 
|Independent Auditors Report     |  |          | 30    | 

14



---



##### 



GLASSMASTER COMPANY
LEXINGTON SC
BALANCE SHEET
AUGUST 31, 2002 AND 2001

|                                                                                                           |                                                     |   |            |                 |  |                 |            |           |  |   |           |   |  |   |            |           |  | 
|---------------------------------------------------------------------------------------------------------- | --------------------------------------------------- | - | ---------- | --------------- |  | --------------- | ---------- | --------- |  | - | --------- | - |  | - | ---------- | --------- |  | 
|                                                                                                           |                                                     |   |            | August 31, 2002 |  | August 31, 2001
|                                                                                                           |                                                     |   |            |                 |  |                
|Assets                                                                                                     |                                                     |   |            |                 |  |                 |            |           |  |   |           |   |  |   |            |          
|Cash                                                                                                       |                                                     |   |            |                 |  | $               | 173,296    |           |  |   |           |   |  | $ | 99,205     |          
|Accounts Receivable - Trade                                                                                |                                                     | $ | 2,954,060  |                 |  |                 |            |           |  | $ | 2,928,654 |   |  |   |            |          
|Less: Allowance for Doubtful Accts                                                                         |                                                     |   | 136,132    |                 |  |                 | 2,817,928  |           |  |   | 113,803   |   |  |   | 2,814,841  |          
|                                                                                                           |                                                     |   |            |                 |  |                 |            |           |  |   |           |   |  |   |            |          
|Accounts Receivable - Other                                                                                |                                                     |   |            |                 |  |                 | 7,276      |           |  |   |           |   |  |   | 682        |          
|Inventories                                                                                                |                                                     |   |            |                 |  |                 | 2,723,476  |           |  |   |           |   |  |   | 2,923,260  |          
|Prepaid Expenses                                                                                           |                                                     |   |            |                 |  |                 | 48,668     |           |  |   |           |   |  |   | 70,340     |          
|Deferred Income Taxes                                                                                      |                                                     |   |            |                 |  |                 | 47,526     |           |  |   |           |   |  |   | 39,759     |          
|                                                                                                           |                                                     |   |            |                 |  |                 |            |           |  |   |           |   |  |   |            |          
|Current Assets                                                                                             |                                                     |   |            |                 |  |                 | 5,818,170  |           |  |   |           |   |  |   | 5,948,097  |          
|Fixed
Assets (Net of Depreciation)Manufacturing Property                                                   |                                                     |   |            |                 |  |                 | 4,283,253  |           |  |   |           |   |  |   | 4,961,733  |          
|Other Assets                                                                                               |                                                     |   |            |                 |  |                 | 1,333,381  |           |  |   |           |   |  |   | 1,409,002  |          
|                                                                                                           |                                                     |   |            |                 |  |                 |            |           |  |   |           |   |  |   |            |          
|Total Assets                                                                                               |                                                     |   |            |                 |  | $               | 11,434,804 |           |  |   |           |   |  | $ | 12,318,832 |          
|                                                                                                           |                                                     |   |            |                 |  |                 |            |           |  |   |           |   |  |   |            |          
|Liabilities                                                                                                |                                                     |   |            |                 |  |                 |            |           |  |   |           |   |  |   |            |          
|Accounts Payable                                                                                           |                                                     |   |            |                 |  |                 | 2,248,128  |           |  |   |           |   |  |   | 2,210,222  |          
|Accrued Expenses                                                                                           |                                                     |   |            |                 |  |                 | 173,556    |           |  |   |           |   |  |   | 223,492    |          
|Notes, Mortgages & Debentures Payable - Current                                                            |                                                     |   |            |                 |  |                 | 3,732,818  |           |  |   |           |   |  |   | 3,719,543  |          
|                                                                                                           |                                                     |   |            |                 |  |                 |            |           |  |   |           |   |  |   |            |          
|Current Liabilities                                                                                        |                                                     |   |            |                 |  |                 | 6,154,502  |           |  |   |           |   |  |   | 6,153,257  |          
|Other Liabilities                                                                                          |                                                     |   |            |                 |  |                 |            |           |  |   |           |   |  |   |            |          
|                                                                                                           | Notes,
Mortgages and Debentures Payable - Long Term |   |            |                 |  |                 |            | 4,865,508 |  |   |           |   |  |   |            | 5,217,449 | 
|                                                                                                           |                                                     |   |            |                 |  |                 |            |           |  |   |           |   |  |   |            |          
|Total Liabilities                                                                                          |                                                     |   |            |                 |  |                 | 11,020,010 |           |  |   |           |   |  |   | 11,370,706 |          
|Stockholders Equity                                                                                       |                                                     |   |            |                 |  |                 |            |           |  |   |           |   |  |   |            |          
|Capital Stock (Authorized 5,000,000 Shares
$.03 Par  1,643,390 & 1,630,696 Shares Issued and Outstanding) |                                                     |   | 49,302     |                 |  |                 |            |           |  |   | 48,921    |   |  |   |            |          
|Paid-In Capital                                                                                            |                                                     |   | 1,367,459  |                 |  |                 |            |           |  |   | 1,357,840 |   |  |   |            |          
|Donated Capital                                                                                            |                                                     |   | 124,210    |                 |  |                 |            |           |  |   | 124,210   |   |  |   |            |          
|Retained Earnings (Deficit)                                                                                |                                                     |   | (1,126,177 | )               |  |                 | 414,794    |           |  |   | (582,845  | ) |  |   | 948,126    |          
|                                                                                                           |                                                     |   |            |                 |  |                 |            |           |  |   |           |   |  |   |            |          
|Total Liabilities and Equity                                                                               |                                                     |   |            |                 |  | $               | 11,434,804 |           |  |   |           |   |  | $ | 12,318,832 |          
|                                                                                                           |                                                     |   |            |                 |  |                 |            |           |  |   |           |   |  |   |            |          

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

15



---



##### 



GLASSMASTER COMPANY
LEXINGTON SC
STATEMENT OF STOCKHOLDERS EQUITY
FISCAL YEARS ENDED AUGUST 31, 2002 AND 2001

|                            |                                                      |   |         |                 |   |                 |         |            |   | 
|--------------------------- | ---------------------------------------------------- | - | ------- | --------------- | - | --------------- | ------- | ---------- | - | 
|                            |                                                      |   |         | August 31, 2002 |   | August 31, 2001
|                            |                                                      |   |         |                 |   |                
|Capital Stock:              |                                                      |   |         |                 |   |                 |         |           
|                            | Balance - September 1                                |   | $       | 48,921          |   |                 | $       | 48,921     |  
|                            | Proceeds from Sale of Shares Under Stock Option Plan |   |         | 381             |   |                 |         |            |  
|                            |                                                      |   |         |                 |   |                 |         |           
|                            | Balance - August 31                                  |   |         | 49,302          |   |                 |         | 48,921     |  
|                            |                                                      |   |         |                 |   |                 |         |            |  
|Additional Paid In Capital: |                                                      |   |         |                 |   |                 |         |           
|                            | Balance - September 1                                |   |         | 1,357,840       |   |                 |         | 1,357,840  |  
|                            | Proceeds from Sale of Shares Under Stock Option Plan |   |         | 9,619           |   |                 |         |            |  
|                            |                                                      |   |         |                 |   |                 |         |           
|                            | Balance - August 31                                  |   |         | 1,367,459       |   |                 |         | 1,357,840  |  
|                            |                                                      |   |         |                 |   |                 |         |            |  
|Donated Capital:            |                                                      |   | 124,210 |                 |   |                 | 124,210 |           
|                            |                                                      |   |         |                 |   |                 |         |            |  
|Retained Earnings:          |                                                      |   |         |                 |   |                 |         |           
|                            | Balance - September 1                                |   |         | (582,845        | ) |                 |         | 688,826    |  
|                            | Net Income (Loss)                                    |   |         | (543,332        | ) |                 |         | (1,271,671 | )
|                            | Common Stock Dividends Paid                          |   |         |                 |   |                 |         |            |  
|                            | Balance - August 31                                  |   |         | (1,126,177      | ) |                 |         | (682,845   | )
|                            |                                                      |   |         |                 |   |                 |         |            |  
|Total Stockholders Equity   |                                                      | $ | 414,794 |                 |   | $               | 948,126 |           
|                            |                                                      |   |         |                 |   |                 |         |            |  

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

16



---



##### 



GLASSMASTER COMPANY
LEXINGTON SC
INCOME STATEMENT
FISCAL YEARS ENDED AUGUST 31, 2002 AND 2001

|                                                     |                                              |                                    |            |                 |           |                 |            |            |           |  
|---------------------------------------------------- | -------------------------------------------- | ---------------------------------- | ---------- | --------------- | --------- | --------------- | ---------- | ---------- | --------- | -
|                                                     |                                              |                                    |            | August 31, 2002 |           | August 31, 2001
|                                                     |                                              |                                    |            |                 |           |                
|Sales                                                |                                              | $                                  | 17,644,613 |                 |           | $               | 18,916,086 |           
|                                                     | Cost of Sales                                |                                    |            | 15,354,996      |           |                 |            | 17,223,701 |          
|                                                     |                                              |                                    |            |                 |           |                 |            |           
|Gross Profit on Sales                                |                                              |                                    | 2,289,617  |                 |           |                 | 1,692,385  |           
|Expenses                                             |                                              |                                    |            |                 |           |                 |            |           
|                                                     | Selling Expense                              |                                    |            | 766,575         |           |                 |            | 931,076    |          
|                                                     | General and Administrative and Other Expense |                                    |            | 1,492,903       |           |                 |            | 1,810,500  |          
|                                                     | Provision for Doubtful Accounts              |                                    |            | 38,167          |           |                 |            | 65,794     |          
|                                                     |                                              |                                    |            |                 |           |                 |            |           
|                                                     |                                              | Total Expenses                     |            |                 | 2,297,645 |                 |            |            | 2,807,370 |  
|                                                     |                                              |                                    |            |                 |           |                 |            |           
|Income (Loss) from Operations                        |                                              |                                    | (8,028     | )               |           |                 | (1,114,985 | )         
|                                                     | Interest Expense                             |                                    |            | 665,781         |           |                 |            | 832,110    |          
|                                                     |                                              |                                    |            |                 |           |                 |            |           
|Income (Loss) Before Income Taxes                    |                                              |                                    | (673,809   | )               |           |                 | (1,947,095 | )         
|Provision for Income Taxes                           |                                              |                                    |            |                 |           |                 |            |           
|                                                     | Current                                      |                                    |            |                 |           |                 |            |            |          
|                                                     | Deferred                                     |                                    |            | (130,477        | )         |                 |            | (675,424   | )        
|                                                     |                                              |                                    |            |                 |           |                 |            |           
|                                                     |                                              | Total
- Provision for Income Taxes |            |                 | (130,477  | )               |            |            | (675,424  | )
|                                                     |                                              |                                    |            |                 |           |                 |            |           
|Net Income (Loss)                                    |                                              | $                                  | (543,332   | )               |           | $               | (1,271,671 | )         
|                                                     |                                              |                                    |            |                 |           |                 |            |           
|Earnings (Loss) Per Common Share
(Basic and Diluted) |                                              |                                    |            |                 |           |                 |            |           
|                                                     | Income from Continuing Operations            |                                    | $          | (.33            | )         |                 | $          | (.78       | )        
|                                                     |                                              |                                    |            |                 |           |                 |            |           
|                                                     | Net Income (Loss)                            |                                    | $          | (.33            | )         |                 | $          | (.78       | )        
|                                                     |                                              |                                    |            |                 |           |                 |            |           

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

17



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##### 



GLASSMASTER COMPANY
LEXINGTON SC
STATEMENT OF CASH FLOWS
FISCAL YEARS ENDED AUGUST 31, 2002 AND 2001

|                                                  |                                                                                          |                                              |                                              |                                               |         |                 |         |                 |         |          |          |  
|------------------------------------------------- | ---------------------------------------------------------------------------------------- | -------------------------------------------- | -------------------------------------------- | --------------------------------------------- | ------- | --------------- | ------- | --------------- | ------- | -------- | -------- | -
|                                                  |                                                                                          |                                              |                                              |                                               |         | August 31, 2002 |         | August 31, 2001
|                                                  |                                                                                          |                                              |                                              |                                               |         |                 |         |                
|Cash Flows From Operating Activities              |                                                                                          |                                              |                                              |                                               |         |                 |         |                
|                                                  | Net Income (Loss)                                                                        |                                              | $                                            | (543,332                                      | )       |                 | $       | (1,271,671      | )      
|                                                  | Adjustments to Reconcile Net Income to Net Cash
Provided (Used) by Operating Activities: |                                              |                                              |                                               |         |                 |         |                 |        
|                                                  |                                                                                          |                                              | Depreciation & Amortization                  |                                               |         | 802,273         |         |                 |         | 920,016  |         
|                                                  |                                                                                          |                                              | (Increase) Decrease in Deferred Income Taxes |                                               |         | (130,477        | )       |                 |         | (675,424 | )       
|                                                  |                                                                                          |                                              | (Gain) Loss on Sale of Assets                |                                               |         | 2,223           |         |                 |         | 16,299   |         
|                                                  |                                                                                          |                                              | Impairment of Long-Lived Assets              |                                               |         | 37,500          |         |                 |         |          |         
|                                                  |                                                                                          |                                              | (Increase) Decrease in CSV Life Insurance    |                                               |         |                 |         |                 |         | 182,867  |         
|                                                  |                                                                                          | Changes in Operating Assets and Liabilities: |                                              |                                               |         |                 |         |                 |         |         
|                                                  |                                                                                          |                                              |                                              | Accounts Receivable Decrease (Increase)       |         |                 | (3,078  | )               |         |          | 537,027  |  
|                                                  |                                                                                          |                                              |                                              | Accounts ReceivableOther Decrease (Increase) |         |                 | (6,594  | )               |         |          | 16,841   |  
|                                                  |                                                                                          |                                              |                                              | Inventories Decrease (Increase)               |         |                 | 199,783 |                 |         |          | 249,597  |  
|                                                  |                                                                                          |                                              |                                              | Prepaid Expenses Decrease (Increase)          |         |                 | 21,673  |                 |         |          | 104,616  |  
|                                                  |                                                                                          |                                              |                                              | Accounts Payable Increase (Decrease)          |         |                 | 37,905  |                 |         |          | (157,925 | )
|                                                  |                                                                                          |                                              |                                              | Accrued Expenses Increase (Decrease)          |         |                 | (49,934 | )               |         |          | 39,465   |  
|                                                  |                                                                                          |                                              |                                              |                                               |         |                 |         |                 |        
|                                                  |                                                                                          |                                              |                                              | Income Taxes Payable Increase (Decrease)      |         |                 |         |                 |         |          |          |  
|                                                  | Net Cash Provided (Used) by Operating Activities                                         |                                              |                                              | 367,942                                       |         |                 |         | (38,292         | )      
|                                                  |                                                                                          |                                              |                                              |                                               |         |                 |         |                 |        
|Cash Flows From Investing Activities              |                                                                                          |                                              |                                              |                                               |         |                 |         |                
|                                                  | Cash Payments for the Purchase of Fixed Assets                                           |                                              |                                              | (110,951                                      | )       |                 |         | (293,552        | )      
|                                                  | Cash Payments for Deferred Charges                                                       |                                              |                                              | (21,415                                       | )       |                 |         | (110,609        | )      
|                                                  | Cash Proceeds from the Sale of Property                                                  |                                              |                                              |                                               |         |                 |         | 22,000          |        
|                                                  | Cash Advanced from Cash Surrender Value Life Insurance                                   |                                              |                                              | 167,181                                       |         |                 |         | 134,299         |        
|                                                  | Premiums Paid for Cash Surrender Value Life Insurance                                    |                                              |                                              |                                               |         |                 |         | (52,366         | )      
|                                                  |                                                                                          |                                              |                                              |                                               |         |                 |         |                 |        
|                                                  | Net Cash Provided (Used) by Investing Activities                                         |                                              |                                              | 34,815                                        |         |                 |         | (300,228        | )      
|                                                  |                                                                                          |                                              |                                              |                                               |         |                 |         |                 |        
|Cash Flows From Financing Activities              |                                                                                          |                                              |                                              |                                               |         |                 |         |                
|                                                  | Proceeds From Issuance of Common Stock                                                   |                                              |                                              | 10,000                                        |         |                 |         |                 |        
|                                                  | Proceeds From Issuance of Short-term Debt                                                |                                              |                                              |                                               |         |                 |         | 1,265,000       |        
|                                                  | Proceeds From Issuance of Long-Term Debt                                                 |                                              |                                              | 609,106                                       |         |                 |         | 475,984         |        
|                                                  | Proceeds From Issuance of Debentures                                                     |                                              |                                              |                                               |         |                 |         | 410,000         |        
|                                                  | Principal Payments on Short-Term Debt                                                    |                                              |                                              | (500,000                                      | )       |                 |         | (750,000        | )      
|                                                  | Principal Payments on Long-Term Debt                                                     |                                              |                                              | (793,765                                      | )       |                 |         | (997,655        | )      
|                                                  | Net Borrowings (Repayments) Under Line of Credit                                         |                                              |                                              | 345,993                                       |         |                 |         | 155,625         | )      
|                                                  |                                                                                          |                                              |                                              |                                               |         |                 |         |                 |        
|                                                  | Net Cash Provided (Used) by Financing Activities                                         |                                              |                                              | (328,666                                      | )       |                 |         | 247,704         |        
|                                                  |                                                                                          |                                              |                                              |                                               |         |                 |         |                 |        
|Net Increase (Decrease) in Cash                   |                                                                                          |                                              | 74,091                                       |                                               |         |                 | (90,816 | )              
|Cash at Beginning of Year                         |                                                                                          |                                              | 99,205                                       |                                               |         |                 | 190,021 |                
|                                                  |                                                                                          |                                              |                                              |                                               |         |                 |         |                 |        
|Cash at End of Year                               |                                                                                          | $                                            | 173,296                                      |                                               |         | $               | 99,205  |                
|                                                  |                                                                                          |                                              |                                              |                                               |         |                 |         |                 |        
|Supplemental Disclosures of Cash Flow Information |                                                                                          |                                              |                                              |                                               |         |                 |         |                
|                                                  | Cash Paid For:                                                                           |                                              |                                              |                                               |         |                 |         |                 |        
|                                                  |                                                                                          | Interest (Net of Amount Capitalized)         |                                              | $                                             | 690,679 |                 |         | $               | 816,003 |         
|                                                  |                                                                                          | Income Taxes Paid                            |                                              |                                               |         |                 |         |                 |         |         

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

18



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##### 



GLASSMASTER COMPANY, INC.
LEXINGTON, SOUTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2002 AND 2001

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, 2002 and 2001, 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 $136,132 and $113,803 for the years ended
August 31, 2002 and 2001, respectively.                                                                                                 

19



---



##### 



GLASSMASTER COMPANY, INC.
LEXINGTON, SOUTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2002 AND 2001

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:                                                   

|                  |  |      |           |      |  |   |           | 
|----------------- |  | ---- | --------- | ---- |  | - | --------- | 
|                  |  | 2002 |           | 2001
|                  |  |      |           |     
|Materials         |  | $    | 1,812,589 |      |  | $ | 1,775,663 | 
|Work in Process   |  |      | 341,760   |      |  |   | 421,079   | 
|Finished Products |  |      | 569,127   |      |  |   | 726,518   | 
|                  |  |      |           |      |  |   |           | 
|Total             |  |      | 2,723,476 |      |  |   | 2,923,260 | 
|                  |  |      |           |      |  |   |           | 



| |                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Advertising                                                                                                                                                                                                                                
|
| | The company follows the policy of charging the costs of
advertising to expense as incurred. Advertising expense was $
22,903 and $67,887 for the years ended August 31, 2002 and 2001,
respectively.                                       
|
| | Research and Development                                                                                                                                                                                                                   
|
| | Research and development costs are charged to expense as
incurred. The costs incurred for the years ended August 31, 2002
and 2001 were $327,657 and $424,703, respectively. Those costs
have generally been charged to cost of goods 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.

20



---



##### 



GLASSMASTER COMPANY, INC.
LEXINGTON, SOUTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2002 AND 2001

Note 2.      Fixed Assets(Contd)



| |                                                                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The provision for depreciation charged against income for the
fiscal years ended August 31, 2002 and 2001, totaled $749,924 and
$875,190, 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.

|                         |  |      |            |      |  |              |            |   |  |           |                | 
|------------------------ |  | ---- | ---------- | ---- |  | ------------ | ---------- | - |  | --------- | -------------- | 
|                         |  |      |            |      |  |              |            |   |  | Estimated
|                         |  | 2002 |            | 2001 |  | Useful Lives
|                         |  |      |            |      |  |             
|Land                     |  | $    | 190,274    |      |  | $            | 190,274    |   |  |           | N/A            | 
|Buildings                |  |      | 3,713,950  |      |  |              | 3,843,757  |   |  |           | 30 to 40 years | 
|Furniture and Fixtures   |  |      | 491,399    |      |  |              | 494,172    |   |  |           | 5 to 7 years   | 
|Automotive Equipment     |  |      | 151,689    |      |  |              | 151,689    |   |  |           | 3 to 5 years   | 
|Plant Equipment          |  |      | 7,438,336  |      |  |              | 7,452,424  |   |  |           | 7 to 10 years  | 
|Tooling & Dies           |  |      | 815,858    |      |  |              | 742,713    |   |  |           | 3 to 5 years   | 
|                         |  |      |            |      |  |              |            |   |  |           |                | 
|Total                    |  |      | 12,801,506 |      |  |              | 12,875,029 |   |  |           |                | 
|Less:                    |  |      |            |      |  |              |            |   |  |           |                | 
|Accumulated Depreciation |  |      | (8,518,253 | )    |  |              | (7,913,296 | ) |  |           |                | 
|                         |  |      |            |      |  |              |            |   |  |           |                | 
|Fixed Assets, net        |  |      | 4,283,253  |      |  |              | 4,961,733  |   |  |           |                | 
|                         |  |      |            |      |  |              |            |   |  |           |                | 

Note 3.      Income Taxes



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

|        |  |         |  |          |  |         |          |          |  |  |  |  |  |   |          |  
|------- |  | ------- |  | -------- |  | ------- | -------- | -------- |  |  |  |  |  | - | -------- | -
|        |  | 2002    |  | 2001    
|        |  |         |  |         
|        |  | Current |  | Deferred |  | Current |          | Deferred
|        |  |         |  |          |  |         |          |         
|Federal |  |         |  |          |  | $       | (145,579 | )        |  |  |  |  |  | $ | (611,590 | )
|State   |  |         |  |          |  |         | 15,102   |          |  |  |  |  |  |   | (63,834  | )
|        |  |         |  |          |  |         |          |          |  |  |  |  |  |   |          |  
|Total   |  |         |  |          |  |         | (130,477 | )        |  |  |  |  |  |   | (675,424 | )
|        |  |         |  |          |  |         |          |          |  |  |  |  |  |   |          |  



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | For South Carolina tax purposes a net operating loss
carry-forward of $4,974,200 is available for future periods. The
carry-forward will expire in the year ended August 31, 2017. For
Federal tax purposes, the corporation sustained net operating
losses of $470,752 and $1,586,592 for the years ended August 31,
2002 and 2001 respectively. The Company has net operating loss
carryforwards of $4,452,316 available for future periods and will
expire in the year ended August 31, 2022.



| |                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.

21



---



##### 



GLASSMASTER COMPANY, INC.
LEXINGTON, SOUTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2002 AND 2001

Note 3.      Income Taxes  (Contd)



| |                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------
| | The net deferred tax assets and liabilities consisted of the
following components as of August 31, 2002 and 2001.

|                                      |                                 |                                     |           |        |           |      |           |        |           |  
|------------------------------------- | ------------------------------- | ----------------------------------- | --------- | ------ | --------- | ---- | --------- | ------ | --------- | -
|                                      |                                 |                                     |           | 2002   |           | 2001
|                                      |                                 |                                     |           |        |           |     
|Deferred Tax Assets Relating to:      |                                 |                                     |           |        |           |      |           |       
|                                      | Allowance for Doubtful Accounts |                                     | $         | 47,526 |           |      | $         | 39,759 |          
|                                      | Alternative Minimum Tax Credit  |                                     |           | 28,697 |           |      |           | 28,697 |          
|                                      |                                 | Federal and State NOL carryforwards |           |        | 1,658,979 |      |           |        | 1,579,265 |  
|Deferred Tax Liabilities Relating to: |                                 |                                     |           |        |           |      |           |       
|                                      |                                 | Property and Equipment              |           |        | (483,125  | )    |           |        | (525,091  | )
|                                      |                                 |                                     |           |        |           |      |           |        |          
|Net Deferred Tax Asset (Liability)    |                                 |                                     | 1,252,077 |        |           |      | 1,121,630 |       
|                                      |                                 |                                     |           |        |           |      |           |        |          



| |                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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, 2002 and 2001 as follows:

|               |  |      |           |      |  |   |           | 
|-------------- |  | ---- | --------- | ---- |  | - | --------- | 
|               |  | 2002 |           | 2001
|               |  |      |           |     
|Current Assets |  | $    | 47,526    |      |  | $ | 39,759    | 
|Other Assets   |  |      | 1,204,551 |      |  |   | 1,081,871 | 



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Utilization of the deferred tax asset of $1,252,077 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:

|                               |  |      |           |      |  |   |           | 
|------------------------------ |  | ---- | --------- | ---- |  | - | --------- | 
|                               |  | 2002 |           | 2001
|                               |  |      |           |     
|CSV Life Insurance             |  | $    |           |      |  | $ | 175,337   | 
|Deferred Tax Assets            |  |      | 1,204,551 |      |  |   | 1,081,871 | 
|Loan Fees, net of Amortization |  |      | 55,105    |      |  |   | 58,034    | 
|Other                          |  |      | 73,725    |      |  |   | 93,760    | 
|                               |  |      |           |      |  |   |           | 
|Total                          |  |      | 1,333,381 |      |  |   | 1,409,002 | 
|                               |  |      |           |      |  |   |           | 

22



---



##### 



GLASSMASTER COMPANY, INC.
LEXINGTON, SOUTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2002 AND 2001

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 $1,150,000 for the
companys subsidiary. The balances as of August 31, 2002 were
$1,946,875 and $852,500 and the balances as of August 31, 2001 were
$1,778,382 and $675,000. These credit agreements are subject to
renegotiation and renewal and will expire January 3, 2002 and
December 24, 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 and its
subsidiary are in negotiations with the primary lenders to renew
the financing agreements set to expire on the dates stated above.
The Company is also actively seeking alternate sources of financing
if an acceptable agreement with its current lenders cannot be
reached.

23



---



##### 



GLASSMASTER COMPANY, INC.
LEXINGTON, SOUTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2002 AND 2001

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



| |                                                                                          
| | -----------------------------------------------------------------------------------------
| | The following table sets forth the Companys indebtedness as
of August 31, 2002 and 2001.

|                                                                                     |  |         |           |           |  |         |           |           |  |   |           |  |  |   |           | 
|------------------------------------------------------------------------------------ |  | ------- | --------- | --------- |  | ------- | --------- | --------- |  | - | --------- |  |  | - | --------- | 
|                                                                                     |  | 2002    |           | 2001     
|                                                                                     |  |         |           |          
|                                                                                     |  | Current |           | Long-Term |  | Current |           | Long-Term
|                                                                                     |  |         |           |           |  |         |           |          
|Mortgages, interest
from Prime + 2% to
8.68% fixed,
maturities to 2004               |  | $       | 600,000   |           |  | $       | 4,170,492 |           |  | $ | 353,430   |  |  | $ | 4,119,796 | 
|Notes, interest
from prime + 1% to
prime + 2%, due
within 1 year                     |  |         | 2,799,375 |           |  |         |           |           |  |   | 2,953,384 |  |  |   |           | 
|Installment Notes,
interest from
8.75%, maturities
to 2004                           |  |         | 83,443    |           |  |         | 285,016   |           |  |   | 162,729   |  |  |   | 687,653   | 
|Debentures,
interest 10.5%,
due 12/30/05,
convertible to
common stock @ $3
per share |  |         |           |           |  |         | 410,000   |           |  |   |           |  |  |   | 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    |           |  |         |           |           |  |   | 50,000    |  |  |   |           | 
|                                                                                     |  |         |           |           |  |         |           |           |  |   |           |  |  |   |           | 
|Total                                                                                |  |         | 3,732,818 |           |  |         | 4,865,508 |           |  |   | 3,719,543 |  |  |   | 5,217,449 | 
|                                                                                     |  |         |           |           |  |         |           |           |  |   |           |  |  |   |           | 



| |                                                                                                       
| | ------------------------------------------------------------------------------------------------------
| | The Prime interest rate was 4.75% and 6.50% for the years
ended August 31, 2002 and 2001 respectively.



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

|                   |  |            |  |   |           | 
|------------------ |  | ---------- |  | - | --------- | 
|Fiscal Year Ending |  | Amount    
|                   |  |           
|                   |  | 2003       |  | $ | 3,732,818 | 
|                   |  | 2004       |  |   | 682,000   | 
|                   |  | 2005       |  |   | 682,000   | 
|                   |  | 2006       |  |   | 1,092,000 | 
|                   |  | 2007       |  |   | 647,965   | 
|                   |  | After 2008 |  |   | 1,761,543 | 
|                   |  |            |  |   |           | 
|                   |  | Total      |  |   | 8,598,326 | 
|                   |  |            |  |   |           | 

24



---



##### 



GLASSMASTER COMPANY, INC.
LEXINGTON, SOUTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2002 AND 2001

Note 7.      Leases



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company renegotiated an existing equipment lease in
December 2001 with the lessor that reduced scheduled lease payments
during the year ended August 31, 2002 and extended the lease term
which was to expire in August of 2002. The renewed lease was
effective as of December 1, 2001 and calls for gradusted monthly
payments $0 to $8,503 for a period of thirty-six months. Future
minimum lease payments under the lease are as follows:

|                   |       |        |   |         | 
|------------------ | ----- | ------ | - | ------- | 
|Fiscal Year Ending |       | Amount
|                   |       |       
|                   | 2003  |        | $ | 97,608  | 
|                   |       |        |   |        
|                   | 2004  |        |   | 102,036 | 
|                   |       |        |   |        
|                   | 2005  |        |   | 25,509  | 
|                   |       |        |   |        
|                   | Total |        | $ | 225,153 | 
|                   |       |        |   |        

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, 2002 and 2001:

|                              |  |           |         |          |  |           |      |          |  |  |         |          |  |   |      | 
|----------------------------- |  | --------- | ------- | -------- |  | --------- | ---- | -------- |  |  | ------- | -------- |  | - | ---- | 
|                              |  | 2002      |         | 2001    
|                              |  |           |         |         
|                              |  |           |         |          |  | Weighted  |      |          |  |  |         | Weighted
|                              |  |           |         |          |  | Average   |      |          |  |  |         | Average 
|                              |  | Number of |         | Exercise |  | Number of |      | Exercise
|                              |  | Shares    |         | Price    |  | Shares    |      | Price   
|                              |  |           |         |          |  |           |      |         
|Outstanding-Beginning of Year |  |           | 100,300 |          |  | $         | 1.33 |          |  |  | 24,400  |          |  | $ | 3.51 | 
|Granted                       |  |           | 7,500   |          |  |           | .85  |          |  |  | 83,000  |          |  |   | .85  | 
|Exercised                    
|Forfeited                     |  |           | (30,200 | )        |  |           | 1.76 |          |  |  | (7,100  | )        |  |   | 3.15 | 
|                              |  |           |         |          |  |           |      |          |  |  |         |          |  |   |      | 
|Outstanding-End of Year       |  |           | 77,600  |          |  |           | 1.12 |          |  |  | 100,300 |          |  |   | 1.33 | 
|                              |  |           |         |          |  |           |      |          |  |  |         |          |  |   |      | 



| |                                                                                              
| | ---------------------------------------------------------------------------------------------
| | Following is a summary of the status of the incentive options
outstanding at August 31, 2002:

|                    |      |                     |  |      |        |             |  |           |  |          |      |  |  |          |        |  |  |   |      |  |  | 
|------------------- | ---- | ------------------- |  | ---- | ------ | ----------- |  | --------- |  | -------- | ---- |  |  | -------- | ------ |  |  | - | ---- |  |  | 
|Outstanding Options |      | Exercisable Options
|                    |      |                    
|                    |      |                     |  |      |        |             |  | Weighted  |  |          |      |  |  |          |        |  |  |   |      | 
|                    |      |                     |  |      |        |             |  | Average   |  | Weighted |      |  |  |          |        |  |  |  
|                    |      |                     |  |      |        |             |  | Remaining |  | Average  |      |  |  |          |        |  |  |  
|Exercise            |      |                     |  |      |        | Contractual |  | Exercise  |  |          |      |  |  | Exercise
|Price               |      | Number              |  | Life |        | Price       |  | Number    |  | Price   
|                    |      |                     |  |      |        |             |  |           |  |         
|$                   | 4.00 |                     |  |      | 6,600  |             |  | 2 years   |  | $        | 4.00 |  |  |          | 6,600  |  |  | $ | 4.00 | 
|                    | .85  |                     |  |      | 71,000 |             |  | 9 years   |  |          | .85  |  |  |          | 12,700 |  |  |   | .85  | 

25



---



##### 



GLASSMASTER COMPANY, INC.
LEXINGTON, SOUTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2002 AND 2001

Note 9.      Earnings Per Share



| |                                                                                                                                                                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The weighted average number of shares used in the computation
of basic and diluted earnings per common share were 1,636,469 in
2002 and 1,630,696 in 2001. Options on 77,600 and 100,300 shares of
common stock as of August 31, 2002 and 2001 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 calendar year 2001 was $.25 cents for each $1.00 of
employee contributions up to a maximum 6% of eligible compensation.
As of January 1, 2002, the company discontinued matching
contributions.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 $11,087 for
the year ended August 31, 2002 and $36,693 for 2001.

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.

26



---



##### 



GLASSMASTER COMPANY, INC.
LEXINGTON, SOUTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2002 AND 2001

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.

|                                  |  |                            |            |             |  |       |           |       |  |   |            |   |  |   |            |  
|--------------------------------- |  | -------------------------- | ---------- | ----------- |  | ----- | --------- | ----- |  | - | ---------- | - |  | - | ---------- | -
|                                  |  | Year Ended August 31, 2002
|                                  |  |                           
|                                  |  | Industrial                 |            | Controls &  |  |       |           |       |  |   |            |  
|                                  |  | Products                   |            | Electronics |  | Other |           | Total
|                                  |  |                            |            |             |  |       |           |      
|Segment Assets                    |  | $                          | 6,291,722  |             |  | $     | 3,560,047 |       |  | $ | 1,583,035  |   |  | $ | 11,434,804 |  
|Expenditures for
Segment Assets   |  |                            | 7,035      |             |  |       | 109,940   |       |  |   |            |   |  |   | 116,975    |  
|Depreciation and
Amortization     |  |                            | 490,379    |             |  |       | 283,949   |       |  |   | 27,945     |   |  |   | 802,273    |  
|Research and
Development          |  |                            | 288,707    |             |  |       | 38,950    |       |  |   |            |   |  |   | 327,657    |  
|Revenues from
External Customers  |  |                            | 11,695,740 |             |  |       | 5,948,874 |       |  |   |            |   |  |   | 17,644,613 |  
|Segment Profit
(Loss)             |  |                            | 993,775    |             |  |       | 123,266   |       |  |   | (1,125,070 | ) |  |   | (8,029     | )
|Interest Expense                  |  |                            | 531,608    |             |  |       | 134,173   |       |  |   |            |   |  |   | 665,781    |  
|                                  |  |                            |            |             |  |       |           |       |  |   |            |   |  |   |            |  
|Income (Loss)
Before Income Taxes |  |                            |            |             |  |       |           |       |  |   |            |   |  |   | (673,809   | )
|                                  |  |                            |            |             |  |       |           |       |  |   |            |   |  |   |            |  

|                                  |  |                            |            |             |  |       |           |       |  |   |           |   |  |   |            |  
|--------------------------------- |  | -------------------------- | ---------- | ----------- |  | ----- | --------- | ----- |  | - | --------- | - |  | - | ---------- | -
|                                  |  | Year Ended August 31, 2001
|                                  |  |                           
|                                  |  | Industrial                 |            | Controls &  |  |       |           |       |  |   |           |  
|                                  |  | Products                   |            | Electronics |  | Other |           | Total
|                                  |  |                            |            |             |  |       |           |      
|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 | )
|                                  |  |                            |            |             |  |       |           |       |  |   |           |   |  |   |            |  

27



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##### 



GLASSMASTER COMPANY, INC.
LEXINGTON, SOUTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2002 AND 2001

Note 11.      Business Segments (Contd)



| |                       
| | ----------------------
| | Geographic Information

|                        |  |                            |            |              |  |            |            |  |  |   |           | 
|----------------------- |  | -------------------------- | ---------- | ------------ |  | ---------- | ---------- |  |  | - | --------- | 
|                        |  | Year Ended August 31, 2002
|                        |  |                           
|                        |  |                            |            |              |  | Long-Lived
|                        |  | Revenues                   |            | Total Assets |  | Assets    
|                        |  |                            |            |              |  |           
|United States           |  | $                          | 14,985,068 |              |  | $          | 11,434,804 |  |  | $ | 4,283,253 | 
|Other Foreign Countries |  |                            | 2,659,545  |              |  |            |            |  |  |   |           | 

|                        |  |                            |            |              |  |            |            |  |  |   |           | 
|----------------------- |  | -------------------------- | ---------- | ------------ |  | ---------- | ---------- |  |  | - | --------- | 
|                        |  | Year Ended August 31, 2001
|                        |  |                           
|                        |  |                            |            |              |  | Long-Lived
|                        |  | Revenues                   |            | Total Assets |  | Assets    
|                        |  |                            |            |              |  |           
|United States           |  | $                          | 15,838,530 |              |  | $          | 12,318,832 |  |  | $ | 4,961,733 | 
|Other Foreign Countries |  |                            | 3,077,556  |              |  |            |            |  |  |   |           | 



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



| |                
| | ---------------
| | Major Customers



| |                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Revenues from two customers of the Controls and Electronics
segment represented approximately $1,905,019 and $1,382,840 of the
Companys consolidated revenues for the years ended August 31, 2002
and 2001, respectively. Revenues from one customer of the
Industrial Products segment represented approximately $2,490,748 of
the companys consolidated revenues for the year ended August 31,
2002.

Note 12.      Going Concern



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As shown in the accompanying financial statements, the Company
has incurred recurring losses from operations, and as of August 31,
2002, the Companys current liabilities exceeded its current assets
by $379,397. Its total liabilities of $11,020,010 exceed its total
Assets of $11,434,804 less deferred tax assets of $1,204,551 by
$789,757. These factors raise substantial doubt about the Companys
ability to continue as a going concern. Management has continued
cost reduction programs and is pursuing opportunities to raise
additional equity capital through outside sources. Additionally,
the Companys management is pursuing possible sales of assets and
product lines, and pursuing 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.

28



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##### 



GLASSMASTER COMPANY, INC.
LEXINGTON, SOUTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2002 AND 2001

Note 12.      Going Concern (Contd)



| |                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Management and the primary lenders for both business segments
are in negotiations concerning the current financing packages set
to expire in late December 2002 and early January 2003.
Management is confident that a new agreement with the current
primary lenders or other lending sources 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.

Note 13.      Subsequent Events



| |                                                                                                                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The company completed the sale of its vacant plant facility in
Newberry, SC in September, 2002 for $350,000. The net proceeds
after costs of the sale were applied to existing loans from its
primary lender. Approximately $250,000 was applied to the mortgage
loan and $91,000 was applied to the revolving credit line.

Note 14.      Impairment of Assets



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In 2002, during the course of the companys strategic review
of its Industrial Products segment, the company assessed the
recoverability of the carrying value of certain assets related to
its composites product lines which resulted in a write down of
excess inventories of $37,500 and an impairment loss of $37,500.
The impairment loss reflects the amounts by which the carrying
values of these assets exceed their estimated fair values
determined by their estimated future discounted cash flows. The
write down of composite inventory is recorded as a component of
cost of goods sold. The impairment loss is recorded as a component
of general, administrative and other expense in the income
statement for the year ended August 31, 2002.

29



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##### 



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, 2002 and 2001, 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, 2002 and 2001, 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.

Brittingham, Dial, and Jeffcoat
Certified Public Accountants
West Columbia, SCOctober 31, 2002

30



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##### 



Exhibit Index

|            |  |                                                                                                                                                                                       |  |                    
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------
|Exhibit No. |  | Exhibit                                                                                                                                                                               |  | Sequential Page No.
|            |  |                                                                                                                                                                                       |  |                    
|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, 2002
and 2001.                                                                                                       |  | 32                 
|            |  |                                                                                                                                                                                       |  |                    
|21          |  | Subsidiaries of the Company                                                                                                                                                           |  | 33                 

31