Exhibit 13








                               ANNUAL REPORT 2002





                                   COVER PAGE


<PAGE>



                                  INSIDE COVER



<PAGE>



<TABLE>
<CAPTION>
                                          FINANCIAL SUMMARY

======================================================================================================

                                                                                   01 to 02  00 to 01
At or For Year Ended November 30                   2002        2001          2000  % Change  % Change
------------------------------------------------------------------------------------------------------

Operations
------------------------------------------------------------------------------------------------------

<S>                                          <C>         <C>           <C>            <C>        <C>
Net revenues                                 $4,317,258  $6,015,214    $4,849,528     (28.2)     24.0
Net gain on sale of real                                                                            NA
 property                                            $-    $581,023            $-    (100.0)
Operating income (loss)                       $(262,359)   $656,437     $(552,513)   (140.0)         *
Income (loss) before income taxes (benefit)   $(276,112)   $583,871     $(744,965)   (147.3)         *
Net income (loss)                             $(276,112)   $580,818     $(744,965)   (147.5)         *
Weighted average common shares outstanding    3,586,451   3,586,451     3,586,451         -         -

------------------------------------------------------------------------------------------------------

Per Share Data^
------------------------------------------------------------------------------------------------------

Net income (loss)                                 $(.08)       $.16         $(.21)   (147.5)         *
Cash dividends                                       $-          $-            $-         -         -
Stockholders' equity                                                                                 *
 (deficit)                                         $.00        $.08         $(.08)   (100.0)

------------------------------------------------------------------------------------------------------

Financial Position
------------------------------------------------------------------------------------------------------

Assets                                       $1,160,746  $1,984,837    $2,304,110     (41.5)    (13.9)
Working capital (deficit)                     $(126,195)   $124,511     $(340,372)   (201.4)         *
Property and equipment                         $104,227    $133,539    $1,013,063     (22.0)    (86.8)
Long-term debt, less current maturities              $-          $-      $988,702         -    (100.0)
Stockholders' equity                                                                                 *
 (Deficit)                                      $10,792    $286,904     $(293,914)    (96.2)

------------------------------------------------------------------------------------------------------

Number of employees                                  24          33            25
Number of stockholders                      approx. 660 approx. 800 approx. 800

------------------------------------------------------------------------------------------------------
 * Because the data changes from negative to positive, the percentage of change is not
   meaningful.
 ^ Earnings (loss) per share, assuming full dilution, are equivalent to earnings
   (loss) per share.
</TABLE>




=============================================================================

                                    INDEX
Financial Summary                                                          1
Letter to Shareholders                                                     2
Selected Financial Data                                                    4
Management's Discussion and Analysis                                       5
Independent Auditor's Report                                              11
Balance Sheets                                                            12
Statements of Operations                                                  14
Statements of Stockholders' Equity ( Deficit)                             15
Statements of Cash Flows                                                  16
Notes to the Financial Statements                                         18
Shareholder Information                                                   28
Directors and Officers                                                    28

                                       1

<PAGE>



                            DEAR FELLOW SHAREHOLDER:

================================================================================


Celebrating our 20th year of business providing Automatic Guided Vehicles system
and equipment brings many fond memories despite the current poor economic
conditions. The technology that we provide has continued to be a major force
behind our success. We started with wire and tape guidance and today we are on
our fourth generation of Laser guidance and are looking at other new exciting
guidance systems and applications. The 90's brought on a computer revolution-the
new millennium will continue to take advantage of such technologies and
technologies similar to ours to improve business operations.

We have seen many highs and lows over the years in the AGV market, but the last
several years seem very positive for our market. I believe we are positioning
the Company to take advantage of future automation needs . Despite our poor
working capital situation we were able to continue investing in research and
development of our vehicle manufacturing capabilities. We changed our name from
NDC Automation, Inc. to Transbotics Corporation and at the same time
significantly changed our message and marketing to the AGV market. In 2002 we
were able to expand our service and sales by opening an office in Detroit to
meet the automotive and northeast market needs.

The first quarter of 2002 was very slow for us after the events of September 11,
2001 and we realized a significant loss in that quarter. During the last three
quarters of 2002 we restructured our operations and we were able to bring the
Company back to an operating profit for the fourth quarter of 2002. These
realized operating efficiencies should position us well for the coming year
especially when the economy returns to normal.

                                       2

<PAGE>

I started my career with the Company 18 years ago and, over those years, have
worked with many of my existing colleagues. Our energy today remains as high or
higher as the first day we started working, for that we are thankful as we
continue to look forward to the future.

On behalf of the Board of Directors and our employees, I wish to thank you for
your interest and continued support.

February 2003


Sincerely yours,



Claude Imbleau
CEO & President

                                       3

<PAGE>


<TABLE>
<CAPTION>

                                        SELECTED FINANCIAL DATA

========================================================================================================

                                                        At or For Year Ended November 30
                                        ----------------------------------------------------------------

                                               2002         2001         2000        1999          1998
--------------------------------------------------------------------------------------------------------
Statements of Operations Data:
<S>                                      <C>          <C>          <C>         <C>           <C>
    Net revenues                         $4,317,258   $6,015,214   $4,849,528  $5,818,222    $4,015,698
    Cost of goods sold                    2,844,282    3,959,246    3,320,829   3,614,922     2,387,342
--------------------------------------------------------------------------------------------------------
       Gross profit                      $1,472,976   $2,055,968   $1,528,699  $2,203,300    $1,628,356
--------------------------------------------------------------------------------------------------------

Net gain on sale of real
 property                                        $-     $581,023           $-          $-            $-
--------------------------------------------------------------------------------------------------------

Operating expenses:
    Selling                                $527,450     $673,671     $710,944    $723,162      $662,780
    General and administrative            1,074,520    1,226,321    1,317,182   1,222,476       996,994
    Research and development                133,365       80,562       53,086           -             -
--------------------------------------------------------------------------------------------------------
                                         $1,735,335   $1,980,554   $2,081,212  $1,945,638    $1,659,774
--------------------------------------------------------------------------------------------------------
       Operating income (loss)            $(262,359)    $656,437    $(552,513)   $257,662      $(31,418)
--------------------------------------------------------------------------------------------------------

Net interest expense                       $(13,753)    $(72,566)   $(192,452)  $(237,909)    $(244,865)
--------------------------------------------------------------------------------------------------------

Income (loss) before income taxes
 (benefit)                                $(276,112)    $583,871    $(744,965)    $19,753     $(276,283)
Federal and state income taxes                    -        3,053            -           -             -
--------------------------------------------------------------------------------------------------------
       Net income (loss)                  $(276,112)    $580,818    $(744,965)    $19,753     $(276,283)
========================================================================================================

Weighted average number of
   common shares outstanding
  (Basic and fully diluted)               3,586,451    3,586,451    3,586,451   3,458,552     3,453,451
========================================================================================================

Basic and diluted earnings (loss) per
 share                                        $(.08)        $.16        $(.21)       $.01         $(.08)
========================================================================================================

Cash dividend declared per common share          $-           $-           $-          $-            $-
========================================================================================================

Balance Sheets Data:
Working capital (Deficit)                 $(126,195)    $124,511    $(340,372)  $(560,625)    $(563,725)
Total assets                             $1,160,746   $1,984,837   $2,304,110  $3,392,190    $2,706,650
Long-term debt, less current maturities          $-           $-     $988,702          $-      $114,889
Total liabilities                        $1,149,954   $1,697,933   $2,598,024  $2,941,139    $2,325,352
Stockholders' equity (Deficit)              $10,792     $286,904    $(293,914)   $451,051      $381,298
</TABLE>

                                       4

<PAGE>


                      MANAGEMENT'S DISCUSSION AND ANALYSIS

================================================================================

     The following discussion and analysis should be read in conjunction with
the financial statements (including the notes thereto) presented elsewhere
herein.

Overview

     The Company derives virtually all of its revenues from the sale of
hardware, software and engineering services in connection with projects
incorporating its Automated Guided Vehicle (AGV) control technology. In prior
years the Company's net revenues from AGV systems, vehicles and technology were
derived primarily from sales to customers serving a limited number of industries
- automotive, food and paper, textiles and newspaper publishing. The Company's
results of operations can be expected to continue to depend substantially upon
the capital expenditure levels in those industries and in other industries that
it may enter.

     Due to the long sales cycle involved, uncertainties in timing of projects,
and the large dollar amount a typical project usually bears to the Company's
historical and current quarterly and annual net revenues, the Company has
experienced, and can be expected to continue to experience, substantial
fluctuations in its quarterly and annual results of operations.

     The Company sells its products and services primarily in two ways.
Vehicles, technology and other products and services may be sold in a "project"
that becomes an integrated AGV system. The other way is to sell hardware,
software and services as standard items, with less involvement by the Company in
overall system design. The Company generally would recognize lower net revenue
but would realize a higher gross profit margin percentage in selling standard
items, in each case compared to the sale of a project, due to the inclusion in
project sales of other vendors' products and services with margins generally
lower than the Company's own products and services. Between any given accounting
periods, the levels of and mixture of standard item sales and project sales can
cause considerable variance in net revenues, gross profit, gross profit margin,
operating income and net income.

     Revenues from standard item sales are recognized upon shipment, while
revenues from project sales are recognized under the "percentage of completion"
method. Under this method, with respect to any particular customer contract,
revenues are recognized as costs are incurred relative to each major component
of the project. Although the percentage of completion method will ordinarily
smooth out over time the net revenue and profitability effects of large
projects, such method nevertheless subjects the Company's results of operations
to substantial fluctuations dependent upon the progress of work on project
components. Such components can differ markedly from one another in amount and
in gross profit margin.

     Project contracts are billed upon attainment of certain "milestones." The
Company grants payment terms of 30 days to its customers. It typically receives
a cash advance ranging from 10% to 30% of the total contract amount. Bills are
thereafter delivered as milestones are reached. Upon delivery of the project,
the customer typically reserves a "retainage" of 10% to 20% pending system
acceptance.

     Notwithstanding the receipt by the Company of cash advances and periodic
payments upon reaching project milestones, the Company requires external
financing for its costs and estimated earnings in excess of billings on
uncompleted contracts, inventories, receivables and other assets.

     The Company's backlog consists of all amounts contracted to be paid by
customers but not yet recognized as net revenues by the Company.

                                       5

<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS

================================================================================

        Strategy diversification: Management has taken the following actions in
an attempt to increase revenues and minimize losses. To date such actions other
than reducing operating expenses have not been successful. These approaches
include the following:

o Establish and develop strategic alliances with selected customers
o Pursue AGV system business in selected market niches
o Grow the distribution business by adding supplementary products
o Expand the aftermarket sales business
o Reduce operating expenses including the possibility of a taking the Company
  private.

    The Company is exploring various actions to overcome the urgent need for
capital. The Company is also reviewing the possibility or feasibility of taking
the Company private to reduce expenses if capital is not available through the
existing market. (See Liquidity and Capital Resources for further information).

      Forward-looking statements: This report (including information included or
incorporated by reference herein) contains certain forward-looking statements
with respect to the financial condition, results of operation, plans,
objectives, future performance and business of the Company.

      These forward-looking statements involve certain risk and uncertainties.
Factors that may cause actual results to differ materially from those
contemplated by such forward-looking statements include, among others, the
following possibilities:

o Revenues from end user systems sales, new OEMs and new niches may be lower
  than expected or delayed.
o The Company might be unable to raise the additional working capital needed to
  finance the current business strategy, either directly or through a business
  combination.
o General economic or business conditions, either nationally or in the markets
  in which the Company is doing business, may be less favorable than expected
  resulting in, among other things, a deterioration of market share or reduced
  demand for its products.


                                       6

<PAGE>


                      MANAGEMENT'S DISCUSSION AND ANALYSIS

================================================================================

RESULTS OF OPERATIONS

     The table below shows the relationship of income and expense items relative
to net revenues for the fiscal years ended November 30, 2002, 2001 and 2000,
respectively.
<TABLE>
<CAPTION>

                                                                                           Percentage of Change
                                                                                             Period to Period
                                                  Percentage of Net Revenues                Increase (Decrease)
----------------------------------------------------------------------------------------------------------------------
                                                                                      Year Ended       Year Ended
                                                        For year Ended                 November 30,    November 30,
                                                 2002        2001        2000         2001 to 2002     2000 to 2001
----------------------------------------------------------------------------------------------------------------------

<S>                                              <C>         <C>        <C>              <C>                 <C>
Net Revenues                                     100.0 %     100.0 %    100.0  %         (28.2)              24.0   %
Cost of goods sold                                65.9        65.8       68.5            (28.2)              19.2
----------------------------------------------------------------------------------------------------------------------

Gross profit                                     34.1         34.2       31.5            (28.4)              34.5

Net gain on sale of property                        -          9.6          -          (100.00)                NA

Operating expenses:
   Selling                                       12.2         11.2       14.7            (21.7)              (5.2)
   General and administrative                    24.9         20.4       27.1            (12.4)              (6.9)
   Research and development                       3.1          1.3        1.1             65.5               51.8
----------------------------------------------------------------------------------------------------------------------

                                                 40.2         32.9       42.9            (12.4)              (4.8)
----------------------------------------------------------------------------------------------------------------------

Operating income (loss)                          (6.1)        10.9      (11.4)               *                  *
Net interest expense                             (0.3)        (1.2)      (4.0)           (81.1)             (62.3)
----------------------------------------------------------------------------------------------------------------------

Income (loss) before income
  taxes (benefit)                                (6.4)         9.7      (15.4)               *                  *
Income Tax Expense                                  -           .1          -           (100.0)                 -
----------------------------------------------------------------------------------------------------------------------

Net income (loss)                                (6.4) %       9.6 %    (15.4) %             *   %              * %
======================================================================================================================
*   Because the data changes from negative to positive, or from positive to negative, the percentage of change
    is not meaningful.
</TABLE>

                                       7

<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS

================================================================================

Fiscal Year Ended November 30, 2002 Compared To Fiscal Year Ended
November 30, 2001.

     Net revenues decreased by $1,697,956 or 28.2% from $6,015,214 for the
fiscal year ended November 30, 2001 to $4,317,258 for the fiscal year ended
November 30, 2002. The decrease is primarily due to a slow economy which
resulted in decreased project AGV system sales and aftermarket revenues for the
Company compared to the prior year. The Company revenues during 2002 were
primarily derived from the automotive, packaging, food and beverage Industries.

     Cost of goods sold decreased from $3,959,246 to $2,844,282, or 28.2%, due
primarily to the lower revenues. As a percentage of net revenues, cost of goods
sold remained unchanged compared to the prior year. Gross profit decreased by
$582,992, or 28.4%, from $2,055,968 to $1,472,976.

     The Company closed on the sale of its land and building in March 2001 for
$1,600,000 and realized a gain of $581,023 after deducting moving expenses of
approximately $30,000 (see Note 11). In the new location, the Company combined
all its operations for testing, development, manufacturing and distribution to
improve its operating efficiencies. The Company had no such sale in 2002.

    Selling expenses decreased from $673,671 to $527,450, or 21.7% primarily due
to lower personnel and travel costs compared to the prior year. General and
administrative expenses decreased by $151,801 from $1,226,321 to $1,1,074,520,
or 12.4%. The decrease compared to the prior year was primarily due to the
reductions in personnel cost, bad debt expense and professional fees. The
Company continued to invest in the development of new AGV products and increased
its expenditures by 65.5% or $52,803 in the 2002 compared to 2001 expenditures.

     Primarily as a result of the foregoing, the operating income decreased by
$918,796 from an operating income of $656,437 to an operating loss of $262,359
for the current year.

    Net interest expense decreased from $72,566 to $13,753, a decrease of 81.1%.
The repayment of the mortgage loan and line of credit in March 2001
significantly lowered the Company's 2002 borrowing costs compared to the prior
year.

     Primarily due to the income from the sale of the land and building in 2001
and lower revenues in 2002, offset in part by lower general and administrative
expenses as described above, the Company's net income decreased by $856,930 from
a net income of $580,818 in the year ended 2001 to a net loss of $276,112 in the
year ended 2002.

Backlog

       Backlog consists of all amounts contracted to be paid by customers but
not yet recognized as net revenues by the Company. At November 30, 2002, the
Company had a backlog of approximately $1,040,000 compared to $1,450,000 total
backlog one year earlier. Substantial fluctuations in backlog are considered
normal due to the size of AGV system contracts.

                                       8

<PAGE>



                      MANAGEMENT'S DISCUSSION AND ANALYSIS

================================================================================

Fiscal Year Ended November 30, 2001 Compared To Fiscal Year Ended
November 30, 2000.

     Net revenues increased by $1,165,686 or 24.0% from $4,849,528 for the
fiscal year ended November 30, 2000 to $6,015,214 for the fiscal year ended
November 30, 2001. The increase is primarily due to the increased turnkey
project AGV system sales compared to the prior year. The company revenues during
2001 were derived from industries such as special niche aviation, automotive,
printing, food and beverage. The Company realized lower revenues in 2001 from
the entertainment industry compared to the prior year, and no new systems were
released in 2001. The Company will continue to focus on increasing revenues in
2002 by providing more AGV turnkey systems.

     Cost of goods sold increased from $3,320,829 to $3,959,246, or 19.2%, due
primarily to the increased revenues. As a percentage of net revenues, cost of
goods sold decreased to 65.8% compared to 68.5% the prior year. The primary
reason for the decrease in percentage is the Company experienced higher margins
on its turnkey AGV systems revenues in the current year compared to the prior
year. The Company also experienced lower cost for goods that were imported due
to a strong U.S. dollar. Gross profit increased by $527,269, or 34.5%, from
$1,528,699 to $2,055,968.

    The Company closed on the sale of its land and building in March 2001 for a
sale price of $1,600,000 and realized a gain of $581,023 after deducting moving
expenses of approximately $30,000. The sale significantly improved the Company's
liquidity (see Note 11). The new location is 3400 Latrobe Drive, Charlotte, NC,
28211. In the new location, the Company is combining all its operations for
testing, development, manufacturing and distribution to improve its operating
efficiencies.

    Selling expenses decreased from $710,944 to $673,671, or 5.2% primarily due
to lower travel expenses compared to the prior year. General and administrative
expenses decreased by $90,861 from $1,317,182 to $1,226,321, or 6.9%. The
decrease compared to the prior year was primarily due to the following: 1) lower
office equipment lease and maintenance expense of approximately $40,000 and 2)
decreased expenses in telephone, taxes, insurance and other general expenses of
approximately $50,000. As a percentage of net revenues, general and
administrative expenses decreased from 27.1% to 20.4% primarily due to the
increase in revenues in 2001. The Company continued to invest in the development
of new AGV products and increased its expenditures by 51.8% or $27,476 in the
current year compared to the prior year.

     Primarily as a result of the foregoing, the operating income increased by
$1,208,950 from an operating loss of $552,513 to an operating income of $656,437
for the current year.

    Net interest expense decreased from $192,452 to $72,566, a decrease of
62.3%. The repayment of the mortgage loan and line of credit in March 2001
significantly lowered the borrowing costs compared to the prior year resulting
in the decline.

     Income tax expense of $3,053 is due to limitations on the utilization of
the net operating loss carryforward. The Company continues to have loss
carryforwards that are not assured to be realized.

     Primarily due to the sale of the land and building, higher gross profit and
lower general and administrative expenses as described above, the Company's net
income increased by $1,325,783 from a net loss of $744,965 to a net income of
$580,818.


                                       9

<PAGE>


                      MANAGEMENT'S DISCUSSION AND ANALYSIS

================================================================================

Liquidity and Capital Resources

     The Company experiences needs for external sources of financing to support
its working capital, capital expenditures and acquisition requirements when such
requirements exceed its cash generated from operations in any particular fiscal
period. The amount and timing of external financing requirements depend
significantly upon the nature, size, number and timing of projects and
contractual billing arrangements with customers relating to project milestones.
The Company has relied upon bank financing under a revolving working capital
facility, long-term debt, capital leases and proceeds of its public and private
offerings to satisfy its external financing needs.

      During the year ended November 30, 2002 net cash used in operating
activities was $221,068. The Company continues to experience deficiency in its
cash flow. At November 30, 2002 approximately $320,000 of payables were not
being paid according to the vendor terms.

     The Company has been operating under adverse liquidity conditions due to an
equity deficit and negative working capital as described in note 13. The
accounts payable balance to Netzler & Dahlgren (its major supplier of
technology) at November 30, 2002 was approximately $199,375. In 2001, the
Company's receivables were pledged to Netzler & Dahlgren to secure a note
receivable from the Company, such note having a principal balance of $27,051 at
November 30, 2002 ("the N & D note"), in exchange for the security interest
previously held by Netzler & Dahlgren in the office property. The note was paid
in full December 2002 and the pledge on the Company's receivables released as of
such date.

     Netzler & Dahlgren has indicated to the Company that Netzler & Dahlgren's
financial exposure to the Company must be reduced by timely payment of its
payables. To ensure prompt payments, the Company must remain profitable or raise
additional equity and/or debt to improve its working capital. In the first
quarter of 2002, the Company began paying vendors on a deferred basis to meet
its obligation to Netzler & Dahlgren on the note payable and retain its license
agreement. Notwithstanding the pay off of the Netzler and Dahlgren note, the
Company continues to be unable to satisfy the payment terms with Netzler &
Dahlgren for its current payables, the Company risks termination of its license
agreement with Netzler & Dahlgren if it can not meet the payable terms.

     There are no assurances that the deficiency in the cash flow will not
continue. The Company continues exploring the possibility of raising additional
equity capital or subordinated debt, either directly or possibly through a
business combination, in order to improve its financial position and have the
working capital to address potential growth opportunities. The Company is also
reviewing the possibility or feasibility of going private to reduce its
operating expenses. The Company's current expenses relating to being public are
approximately $175,000 annually. There can be no assurances that the Company
will be successful in regaining its profitability or raising the additional
capital or subordinated debt that may be necessary for the Company's operations.
There is substantial doubt about the Company's ability to continue as a going
concern if the Company is not able to improve its working capital and liquidity.

                                       10

<PAGE>


                          INDEPENDENT AUDITOR'S REPORT


To the Board of Directors
Transbotics Corporation
Charlotte, North Carolina

We have audited the accompanying balance sheets of Transbotics Corporation as
of November 30, 2002 and 2001, and the related statements of operations,
stockholders' equity (deficit), and cash flows for each of the three years in
the period ended November 30, 2002. 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 financial position of Transbotics Corporation as of
November 30, 2002 and 2001, and the results of its operations and its cash flows
for each of the three years in the period ended November 30, 2002 in conformity
with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 13 to the
financial statements, there is substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 13. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.



                                                     McGLADREY & PULLEN, LLP

Charlotte, North Carolina
February 21, 2003

                                       11

<PAGE>

<TABLE>
<CAPTION>
                                    BALANCE SHEETS

=======================================================================================
                                                                    November 30,
                                                                2002         2001
---------------------------------------------------------------------------------------

      ASSETS (Note 4)

CURRENT ASSETS
<S>                                                                <C>       <C>
     Cash and cash equivalents (Note 1)                            $8,365    $427,288
     Accounts receivable, net (Notes 2, 4, 5 and 8)               713,874     858,985
     Inventories                                                  268,402     262,542
     Costs and estimated earnings in excess of
            billings on uncompleted contracts (Note 3)             18,271     248,074
     Prepaid expenses and other assets                             14,847      25,555
---------------------------------------------------------------------------------------
          Total current assets                                 $1,023,759  $1,822,444
---------------------------------------------------------------------------------------

NONCURRENT DEPOSITS                                               $32,760     $28,854
---------------------------------------------------------------------------------------

PROPERTY AND EQUIPMENT
      Furniture, fixtures, and office equipment                  $155,410    $140,378
      Machinery and equipment                                      95,732      89,805
---------------------------------------------------------------------------------------
                                                                 $251,142    $230,183
       Less accumulated depreciation                              146,915      96,644

---------------------------------------------------------------------------------------
                                                                 $104,227    $133,539

---------------------------------------------------------------------------------------
                                                               $1,160,746  $1,984,837
=======================================================================================
</TABLE>

See Notes to Financial Statements

                                       12

<PAGE>

<TABLE>
<CAPTION>


                                    BALANCE SHEETS

=======================================================================================

                                                                   November 30,
                                                                2002         2001
---------------------------------------------------------------------------------------

      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
<S>                                                               <C>        <C>
     Current maturities of long- term debt (Note 4 and 8)         $27,051    $178,739
     Accounts payable and accrued expenses;                       698,083   1,160,072
     Billings in excess of costs and estimated
              earnings on uncompleted contracts (Note 3)          424,820     356,069
     Income tax payable                                                 -       3,053
---------------------------------------------------------------------------------------
          Total current liabilities                            $1,149,954  $1,697,933
---------------------------------------------------------------------------------------



COMMITMENTS  (Note  9 )

STOCKHOLDERS' EQUITY  (Notes 10 and 11)
       Preferred stock, par value $.01 per share
             authorized 1,000,000 shares; no shares issued
       Common stock, par value $.01 per share;
                11,000,000 shares authorized
                at 2002 and 2001; 3,586,451 shares
                 were issued and outstanding at 2002                   $-          $-
                and 2001, respectively                             35,864      35,864
       Additional paid-in capital                               4,260,236   4,260,236
       Accumulated deficit                                     (4,285,308) (4,009,196)
---------------------------------------------------------------------------------------
                                                                  $10,792    $286,904
---------------------------------------------------------------------------------------
                                                               $1,160,746  $1,984,837
=======================================================================================
</TABLE>

                                       13

<PAGE>

<TABLE>
<CAPTION>
                                   STATEMENTS OF OPERATIONS

==============================================================================================

                                                            Years ended November 30,
                                                       2002          2001           2000
----------------------------------------------------------------------------------------------

<S>                                                   <C>           <C>            <C>
Net revenues (Notes 5 and 8)                          $4,317,258    $6,015,214     $4,849,528
Cost of goods sold (Note 8)                            2,844,282     3,959,246      3,320,829
----------------------------------------------------------------------------------------------
    Gross profit                                      $1,472,976    $2,055,968     $1,528,699
----------------------------------------------------------------------------------------------

Net gain on sale of real
 property                                                     $-      $581,023             $-
----------------------------------------------------------------------------------------------

Operating expenses:
      Selling                                           $527,450      $673,671       $710,944
      General and administrative (Note 9)              1,074,520     1,226,321      1,317,182
      Research and development                           133,365        80,562         53,086
----------------------------------------------------------------------------------------------
                                                      $1,735,335    $1,980,554     $2,081,212
----------------------------------------------------------------------------------------------
            Operating income (loss)                    $(262,359)     $656,437      $(552,513)
----------------------------------------------------------------------------------------------

Net interest expense (Note 8):                          $(13,753)     $(72,566)     $(192,452)
----------------------------------------------------------------------------------------------

Income (loss) before income taxes                      $(276,112)     $583,871      $(744,965)

Federal and state income taxes  (Note 6)                       -         3,053              -
----------------------------------------------------------------------------------------------
           Net income (loss)                           $(276,112)     $580,818      $(744,965)
==============================================================================================

Basic and diluted earnings (loss) per share                $(.08)         $.16          $(.21)
==============================================================================================

Weighted average common shares outstanding             3,586,451     3,586,451      3,586,451
==============================================================================================

Dividends per common share                                    $-            $-             $-
==============================================================================================
</TABLE>

See Notes to Financial Statements

                                       14

<PAGE>

<TABLE>
<CAPTION>

                                    STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

=====================================================================================================================


                                                                     Years Ended November 30,
---------------------------------------------------------------------------------------------------------------------
                                                           2002                   2001                   2000
                                                    Amount     Shares       Amount    Shares      Amount     Shares
                                             ------------------------------------------------------------------------
Common Stock:
<S>                                                 <C>      <C>           <C>      <C>           <C>      <C>
        Balance, beginning                          $35,864  3,586,451     $35,864  3,586,451     $35,864  3,586,451
---------------------------------------------------------------------------------------------------------------------
        Balance, ending                             $35,864  3,586,451     $35,864  3,586,451     $35,864  3,586,451
=====================================================================================================================

Additional Paid-in Capital:
       Balance, beginning                        $4,260,236             $4,260,236             $4,260,236
---------------------------------------------------------------------------------------------------------------------
       Balance, ending                           $4,260,236             $4,260,236             $4,260,236
=====================================================================================================================

Accumulated Deficit:
       Beginning deficit                        $(4,009,196)           $(4,590,014)           $(3,845,049)
       Net income (loss)                           (276,112)               580,818               (744,965)
---------------------------------------------------------------------------------------------------------------------
       Ending deficit                           $(4,285,308)           $(4,009,196)           $(4,590,014)
=====================================================================================================================


---------------------------------------------------------------------------------------------------------------------
Stockholders' Equity (Deficit) at November 30       $10,792  3,586,451    $286,904  3,586,451   $(293,914) 3,586,451
=====================================================================================================================
</TABLE>

See Notes to Financial Statements

                                       15

<PAGE>


<TABLE>
<CAPTION>

                                     STATEMENTS OF CASH FLOWS

==================================================================================================

                                                                  Years ended November 30,
                                                                   2002       2001          2000
--------------------------------------------------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                           <C>          <C>          <C>
         Net income (loss)                                    $(276,112)   $580,818     $(744,965)
         Adjustments to reconcile net income (loss) to net
           cash provided by (used in) operating activities:
              Depreciation                                       50,268      52,494        82,327
              Increase (decrease) in provision for doubtful
                accounts                                        (64,000)     46,275       (12,275)
              (Gain) loss  on sale of property and equipment       (450)   (584,232)        9,454
              Gain (loss) on foreign currency exchange rate      25,661      (7,203)      (11,980)
        Change in assets and liabilities:
              (Increase) decrease in accounts receivable        209,111     (71,779)    1,061,087
              (Increase) decrease in inventories                 (5,860)    109,181        (5,358)
              (Increase) decrease in costs and estimated
                earnings in excess of billings on
                uncompleted contracts                           229,803    (208,106)       (4,944)
              (Increase) decrease in prepaid expenses
                and other assets                                  6,802     (13,301)       10,484
              Increase (decrease) in accounts payable
                and accrued expenses                           (461,989)    396,300      (106,156)
              Increase (decrease) in income tax payable          (3,053)      3,053             -
              Increase (decrease) in billings in excess of
                costs and estimated earnings on
                uncompleted contracts                            68,751     173,459       (26,662)
--------------------------------------------------------------------------------------------------
              NET CASH PROVIDED BY (USED IN)
                OPERATING ACTIVITIES                          $(221,068)   $476,959      $251,012
--------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
        Proceeds from the sale of property and equipment           $450  $1,471,507            $-
        Purchase of equipment                                   (20,956)    (60,245)      (93,168)
--------------------------------------------------------------------------------------------------
            NET CASH PROVIDED BY (USED IN)
              INVESTING ACTIVITIES                             $(20,506) $1,411,262      $(93,168)
--------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Financial Statements

                                       16

<PAGE>

<TABLE>
<CAPTION>

                                          STATEMENTS OF CASH FLOWS

=============================================================================================================

                                                                            Years ended November 30,
                                                                       2002          2001          2000
-------------------------------------------------------------------------------------------------------------

CASH FLOW FROM FINANCING ACTIVITIES
<S>                                                                           <C>    <C>            <C>
        Net borrowings (payments) on revolving credit  agreement              $-     $(293,082)     $124,929
        Principle payments on long-term borrowings                     $(151,688)   (1,179,821)     (328,696)
-------------------------------------------------------------------------------------------------------------

              NET CASH  USED IN
                   FINANCING ACTIVITIES                                $(151,688)  $(1,472,903)    $(203,767)
-------------------------------------------------------------------------------------------------------------
       Effect of foreign currency exchange rate changes
          on cash and cash equivalents                                  $(25,661)       $7,203        $5,450
-------------------------------------------------------------------------------------------------------------
       Increase (decrease) in cash and cash equivalents                $(418,923)     $422,521      $(40,473)

      Cash and cash equivalents:

           Beginning                                                     427,288         4,767        45,240
-------------------------------------------------------------------------------------------------------------
           Ending                                                         $8,365      $427,288        $4,767
=============================================================================================================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
       Cash payments for :
           Interest                                                      $13,753       $72,566      $191,956
SUPPLEMENTAL SCHEDULE OF NON CASH FINANCING ACTIVITIES
      Conversion of trade payables to long term debt                          $-            $-      $606,046
</TABLE>

                                       17

<PAGE>


                          NOTES TO FINANCIAL STATEMENTS

================================================================================

Note 1.  Nature of Business and Significant Accounting Policies

Nature of business:

    The Company was formed to acquire, develop, market, and sell hardware,
software and engineering services that are incorporated into and used to control
automatic guided vehicle systems ("AGVS"). The Company markets its products and
services to designers of integrated automation systems, original equipment
manufacturers, and end users primarily within the North American continent.

    A summary of the Company's significant accounting policies follows:


Revenue recognition:

    The Company recognizes revenue from the sales of commercial products as
shipments are made.

    The Company recognizes revenues under long-term contracts on the percentage
of completion method, measured by the percentage of each component cost incurred
to date to estimated total component contract costs for each component in the
contract. Component costs include material, direct labor, subcontracts,
engineering, overhead, and miscellaneous costs. Provisions for estimated losses
are made in the period in which they first become determinable.

    "Costs and estimated earnings in excess of billings on uncompleted
contracts" represent revenue recognized in excess of amounts billed. "Billings
in excess of costs and estimated earnings on uncompleted contracts" represent
billings in excess of revenues recognized.

Estimates:

    The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.

Cash and cash equivalents:

    For purposes of reporting the statements of cash flows, the Company
considers all cash accounts, and all highly liquid debt instruments purchased
with a maturity of three months or less, to be cash equivalents. The Company
maintains demand deposits with a financial institution which are in excess of
the federally insured amount.

Inventories:

    The inventories are priced at the lower of cost or market, with cost being
determined by the weighted average method. Inventories consist primarily of
parts for computerized material handling systems purchased from Danaher formerly
Netzler & Dahlgren and motor-in-wheel drive units purchased from Sauer Danfoss
formerly Schabmuller GMBH.


Property and equipment:

    Property and equipment is stated at cost. Depreciation and amortization are
primarily computed using the straight-line method over the following useful
lives:
                                                                  Years
                                                                  -----
          Furniture, fixtures and office equipment                 4-7
          Machinery and equipment                                  3-5

                                       18

<PAGE>

                          NOTES TO FINANCIAL STATEMENTS

================================================================================

Note 1.  Nature of Business and Significant Accounting Policies (Continued)



Foreign currency translation:

    Payables to foreign companies that are denominated in foreign currencies are
translated at rates that approximate the year-end foreign exchange rates.
Resultant gains or losses are reflected in cost of goods sold. The costs of
items of foreign origin which are included in inventory have been translated at
historical exchange rates prevailing at the date of acquisition.


Income taxes:

    Provisions for income taxes are provided on a liability method whereby
deferred tax assets are recognized for deductible temporary differences,
operating losses, and tax credit carryforwards, and deferred tax liabilities are
recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax
bases. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment.


Earnings (losses) per common share:

     The Company adopted Statement of Financial Accounting Standards No. 128
(SFAS No.128) Earnings Per Share, which supersedes APB Opinion No. 15. SFAS No.
128 requires the presentation of earnings per share by all entities that have
common stock or potential common stock, such as options, warrants, and
convertible securities, outstanding that trade in a public market. Basic per
share amounts are computed, generally, by dividing net income or loss by the
weighted-average number of common shares outstanding. Diluted per share amounts
assume the conversion, exercise, or issuance of all potential common stock
instruments unless the effect is antidilutive, thereby reducing a loss or
increasing the income per common share. As described in Note 10, at November 30,
2002, 2001 and 2000 the Company had options outstanding to purchase a total of
310,000, 93,500 and 90,617 shares of common stock, respectively, at a
weighted-average exercise price of varying amounts. The inclusion of those
potential common shares in the calculation of diluted loss per share would have
an antidilutive effect. Therefore, basic and diluted loss per share amounts are
the same in 2002, 2001 and 2000.

Advertising:

    The Company follows the policy of charging production cost of advertising to
expense as incurred. Advertising expenses for the years ending November 30,
2002, 2001 and 2000 were $20,755, $14,860, and $25,645 respectively.

Stock Options:

Grants to employees under the stock option plans are accounted for following the
provisions of APB Opinion No. 25 and related interpretations. Accordingly, no
compensation cost has been recognized for these outstanding grants under the
stock option plans since the exercise price was equal to the market value of the
stock at the date of the grant. Grants under the stock option plans are
accounted for following provisions of Statement No. 123, Accounting for
Stock-Based Compensation, and amended by Statement No. 148.




                                       19

<PAGE>

                          NOTES TO FINANCIAL STATEMENTS

================================================================================

Note 2. Accounts Receivable

    Accounts receivable consist of the following at November 30, 2002 and 2001,
respectively:

                                             2002               2001

----------------------------------------------------------------------------
Trade and contract                           $  733,825          $  939,413

Less: Allowance for doubtful accounts           (20,000)            (84,000)
----------------------------------------------------------------------------
                                             $  713,815          $  855,413
Other
                                                      -                   -
Employees                                            59               3,572
----------------------------------------------------------------------------
                                             $  714,874          $  858,985
============================================================================

      Accounts receivables are recognized at either the sales or contract price.
Accounts receivable are considered past due or delinquent when payment is not
received within the credit terms extended to the customer. An allowance for loss
on accounts receivables is provided based on a review of the accounts along with
an analysis of historical losses and recoveries. Receivables are written off
when deemed to be uncollectible.



Note 3.  Costs and Estimated Earnings on Uncompleted Contracts

       Costs and estimated earnings on uncompleted contracts consist of the
following at November 30, 2002 and 2001, respectively:

                                                2002               2001

-------------------------------------------------------------------------------
Costs incurred on uncompleted contracts   $     536,350        $ 2,173,777
Estimated earnings                              328,578          1,143,233
-------------------------------------------------------------------------------
                                          $     864,928        $ 3,317,010
Less billings to date                        (1,271,477)        (3,425,005)
-------------------------------------------------------------------------------
                                          $    (406,549)       $  (107,995)
===============================================================================

       Included in the accompanying balance sheets under the following captions:

                                                      2002          2001

--------------------------------------------------------------------------------
Costs and estimated earnings in excess of billings
     on uncompleted contracts                          $   18,271   $   248,074
Billings in excess of costs and estimated earnings
     on uncompleted contracts                            (424,820)     (356,069)
--------------------------------------------------------------------------------
                                                       $ (406,549)  $  (107,995)
================================================================================

                                       20

<PAGE>

                          NOTES TO FINANCIAL STATEMENTS

================================================================================


Note 4.  Pledged Assets, Note Payable, Bank and Long-Term Debt

Long-term debt consists of the following :
--------------------------------------------------------------------------------


Note payable to Netzler & Dahlgren Co AB, based on a 4.50% fixed rate from
November 30, 2000 until March 31, 2001 and then 9.0% fixed rate from April 1,
2001 thru June 30, 2002. Original principal balance to be repaid in one payment
of 952,412 Swedish Krona or approximately US$95,042 depending on the exchange
rate at time of payment on April 1, 2001 and then fifteen (15) consecutive
monthly principal payments of 238,103 Swedish Krona starting April 1, 2001, or
approximately US$23,760 depending on the exchange rate at time of payment, plus
interest. The note was collaterized by the Company's land and building until the
sale as per Note 11; the Note was collaterized solely by the Company's accounts
receivable. The note was paid in full in December 2002.

                                                 $  27,051       $  178,739

Less current maturities:                            27,051          178,739
----------------------------------------------------------------------------
                                                 $       -       $        -
============================================================================

Note 5.  Major Customers

       Net revenues and accounts receivable as of and for the years ended
November 30, 2002, 2001, and 2000, respectively, include sales to the following
major customers (each of which accounted for 10% or more of the total net
revenues of the Company for the years indicated):

                                           Amount of Net Revenues
                                          Year Ended November 30,

Customer                            2002            2001            2000
------------------------------------------------------------------------------

A                                     $     *          $    *     $ 1,057,382
B                                           *         951,603               *
C                                           *         675,944               *
D                                           *         622,392               *
E                                     427,131               *               *

                                            Accounts Receivable
                                                November 30,

                                    2002            2001            2000
------------------------------------------------------------------------------

A                                      $    *          $    *      $  225,574
B                                           *          71,453               *
C                                           *               -               *
D                                           *               -               *
E                                      31,217               *               *


*Not a major customer.

                                       21

<PAGE>


                          NOTES TO FINANCIAL STATEMENTS

================================================================================

Note 6.   Income Taxes

    Income taxes consist of the following components for the years ended
November 30, 2002, 2001, and 2000, respectively:

                               2002                2001               2000
----------------------- ------------------ ------------------- -----------------

Current                  $          -       $     3,053         $          -
Deferred                            -                 -                    -
----------------------- ------------------ ------------------- -----------------
                         $          -       $     3,053         $          -
======================= ================== =================== =================

    Net deferred tax assets consist of the following components as of November
30, 2002 and 2001, respectively:

Deferred tax assets:
   Allowance for doubtful accounts                $     7,711    $   32,385
   Inventory valuation reserves                        18,891        31,614
   Net operating loss carryforward                  1,865,039     1,506,143
   General business credit carryforwards               45,367        48,420
   Other                                               11,939         2,208
Deferred tax liabilities:
   Depreciation                                       (13,839)      (11,079)
   Other                                               (3,855)         (612)
----------------------------------------------------------------------------
                                                  $ 1,931,253    $1,609,079

   Less valuation allowance                         1,931,253     1,609,079
----------------------------------------------------------------------------

   Net deferred taxes                             $         -    $        -
============================================================================

The changes in the valuation allowance for the years ended November 30, 2002,
2001 and 2000 were $322,174, $(269,738) and $269,388, respectively. The
valuation reserve is the result of management's determination that the Company
may not be able to generate sufficient future taxable income to realize the
recorded deferred tax assets.

    A reconciliation of the statutory income tax to the income tax expense
included in the Statements of Operations is as follows:

<TABLE>
<CAPTION>

                                                                 Years Ended November 30,
                                               2002                        2001                       2000
----------------------------------------------------------------------------------------------------------------------
                                                     % of                        % of                        % of
                                        Dollar       Pre-tax       Dollar        Pre-tax       Dollar        Pre-tax
                                        Amount       Income        Amount        Income        Amount        Income
----------------------------------------------------------------------------------------------------------------------
Statutory federal income
<S>                                  <C>             <C>        <C>             <C>         <C>                <C>
  tax (benefit)                      $  (93,878)     (34.0)     $ 198,516       34.0        $  (253,288)       (34.0)
Increase (decrease) in
taxes resulting from:
State income taxes                      (13,806)     ( 5.0)        29,194        5.0            (37,248)        (5.0)
Changes in valuation allowance          322,174      116.6       (269,738)     (46.2)           269,388         36.2
Other                                  (214,490)     (77.6)        45,081        7.7             21,148          2.8
----------------------------------------------------------------------------------------------------------------------
                                     $        -          -      $   3,053         .5        $         -            -
======================================================================================================================
</TABLE>

                                       22

<PAGE>


                          NOTES TO FINANCIAL STATEMENTS

================================================================================

Note 7.   401(k) Profit Sharing Plan

    The Company has a profit sharing plan through a human resource firm which
administers the Company's employees benefits, the contributions to which are
discretionary.

    The 401(k) profit sharing plan allows both the Company and eligible
employees to contribute. The Company may, at its discretion, match 50% of the
participant's contribution, up to a maximum of 6% of the employee's salary or
the maximum allowed by the IRS. The Company's contribution for the years ended
November 30, 2002, 2001 and 2000 amounted to $14,749, $23,742, and $14,525
respectively.

Note 8.   Related Party Transactions

    Until June 6, 2001, the Company was related to NDC, Netzler & Dahlgren Co.
AB (Netzler & Dahlgren) through common ownership. Netzler & Dahlgren is the
Company's largest supplier of AGVS control technology. Netzler & dahlgren sold
its Company shares to two of the Company's officers in 2001.

       On November 30, 1995, the Company signed a ten (10) year Master License
Agreement with Netzler & Dahlgren to purchase certain products at stipulated
prices. During the fourth quarter of 2000 the Company renegotiated its license
agreement with Netzler & Dahlgren now owed by Danaher corporation. The new
agreement, dated November 30, 2000, is for ten years and expands the Charlotte
based Company's territory to sell to end-users worldwide and to continue to
sub-license the technology in North America but on a non-exclusive basis. In
addition, a note payable to Netzler & Dahlgren of $606,046 ( see Note 4) was
restructured with the interest lowered from 16% to 9%. Under the new agreement,
Netzler & Dahlgren extended its existing Letter of Credit to NDCA's bank and the
bank extended the Company's line of credit of $450,000 to April 30, 2001. The
License Agreement provides for certain royalty payments based on 10% of revenues
on license fee contracts entered into after November 30, 2000.

       Netzler & Dahlgren indicated to the Company that Netzler & Dahlgren's
financial exposure to the Company had to be reduced. To do this within the time
frame required by Netzler & Dahlgren, the Company entered into a contract to
sell its building (see Note 11). Proceeds from the sale of the building were
used to retire the debt from the mortgage and the Company's bank credit line.
The pay off of the credit line permitted the termination of the Netzler &
Dahlgren Letter of Credit to the bank. The Company also paid approximately
$80,000 from the proceeds against current payables to Netzler & Dahlgren.
Further, the Company's receivables were pledged to Netzler and Dahlgren to
secure its note receivable from the Company in exchange for security it had in
the building until its note was paid in full in December 2002. There can be no
assurances that the Company can continue to operate as a going concern if it
does not meet its remaining financial obligations to Netzler & Dahlgren .

      The Company's Executive Vice President, Tommy Hessler, owns 50% of NDC
Technologies Australia PTY Ltd ("NDCTA") which is the Netzler & Dahlgren
representative for Australia. In 2001 revenues from sales to NDCTA were $2,654
and purchases from NDCTA were $252,378. Prior to June 6, 2001, NDCTA was not
related to the Company. In 2002 no business was transacted with NDCTA.

    The Company had the following transactions with Netzler & Dahlgren for the
years ended November 30, 2002, 2001, and 2000, respectively:

<TABLE>
<CAPTION>
                                                          2002             2001            2000
-------------------------------------------------------------------------------------------------------
<S>                                                                         <C>            <C>
Revenues                                                            *       $   89,899     $    27,538
=======================================================================================================
Purchases of hardware, software & engineering services              *      $   599,119     $   551,901
=======================================================================================================
Interest expense                                                    *       $   22,177     $    48,137
=======================================================================================================
* not related
</TABLE>

There was no royalty expense for the three years ended November 30, 2002.

                                       23

<PAGE>

                          NOTES TO FINANCIAL STATEMENTS

================================================================================

Note 9.  Commitments

    At November 30, 2002, the Company had no outstanding forward exchange
contracts. These contracts are purchased as needed from time to time to hedge
identifiable foreign currency commitments.

    The Company leases property and equipment under long-term operating leases
expiring on various dates through March, 2006 and on a month-to-month basis.
Rental expense was $167,998, $206,226, and $137,383 for the years ended November
30, 2002, 2001, and 2000 respectively.

    Minimum rental commitments under long-term operating leases at November 30,
2002 were as follows:

2004                  $       159,830
2005                          158,534
2006                          147,302
2006                           62,375
                      ---------------
                      $       528,041
                      ===============

    The Company has an employment contract with the President which provides for
a minimum annual base salary of $115,000. The base salary is subject to annual
reviews. The contract renews on March 1, 2003 for a one year extensions unless
terminated in advance.

                                       24

<PAGE>

                          NOTES TO FINANCIAL STATEMENTS

================================================================================

Note 10.  Stock Option Plans

    The Company has adopted Statement of Financial Accounting Standards (`SFAS')
No. 123, Accounting for Stock-Based Compensation. FASB Statement No.123,
requires that the Company account for its stock based compensation plans using a
fair value based method which measures compensation cost at the grant date based
upon the value of the awards, which is then recognized over the vesting period.
The accounting requirements of the statement apply to awards to employees
entered into fiscal years that begin after December 15, 1995 and to transactions
with non-employees entered into after December 15, 1995. The Statement allows
and the Company has elected to continue to use APB Opinion No. 25 Accounting for
Stock Issued to Employees to measure compensation cost, but is required to
disclose the pro forma effect on net income and earnings per share to reflect
the difference between the compensation cost from applying APB Opinion No. 25
and the related cost measured by the fair value method defined in the statement
for all awards granted in years beginning after December 15, 1994. The Statement
did not change the reporting required for the Plans discussed below.

1990 and 1993 Stock Option Plans:

    On October 10, 1990, the Compensation Committee of the Board of Directors
adopted the NDC Automation, Inc. 1990 Stock Option Plan ("the 90 Plan"), the
adoption of which was ratified by the shareholders at the annual meeting held on
April 10, 1991. In September 1992, the Company registered up to 178,613 shares
of common stock for issuance. On October 23, 1993, the Compensation Committee of
the Board of Directors adopted the NDC Automation, Inc. 1993 Stock Option Plan
("the 93 Plan"), the adoption of which was ratified by the shareholders at the
annual meeting held on May 5, 1994.

    Options to purchase 174,375 shares of common stock were granted pursuant to
the 90 Plan and are available for exercise upon achievement by the Company of
certain financial performance targets set by the Board of Directors on an annual
basis. The options will be exercisable for a term of ten years, commencing on
the date of the grant at an exercise price of $.7917 to $1.56 for new employees.
The 93 Plan authorized 100,000 options to purchase common stock, of which
100,000 were granted and are available for exercise upon achievement by the
Company of certain financial performance targets set by the Board of Directors
on an annual basis. On October 24, 1994, the 93 Plan options were repriced with
approval by the Compensation Committee at an exercise price of $1.56.

    Of the 274,375 total shares of common stock options granted, the
Compensation Committee granted to the Company's current and former executive
officers options to purchase 120,375 shares of common stock at an exercise price
of $.7917 for the 90 Plan, and 18,000 shares of common stock for the 93 Plan at
an exercise price of $1.56. The exercise price of the options granted is based
on the average fair market value of the common stock for the five business days
preceding the date of the grant.

1997 Stock Option Plan:

    On December 7, 1996 , the Compensation Committee of the Board of Directors
adopted The NDC Automation, Inc. 1997 Stock Option Plan ("the 97 Plan"), the
adoption of which was ratified by the shareholders at the annual meeting held
April 25, 1997. The 97 Plan authorized 225,000 options to all officers and
employees in the form of incentive stock options, of which 210,000 were granted
in January 1997 at an exercise price of $0.50 per share upon achievement by the
Company of certain financial performance targets set by the Board of Directors
on an annual basis. No pro forma compensation expense has been disclosed due to
financial performance targets not being obtained in 1998 or 1997 and due to
uncertainty of financial performance targets being obtained prospectively.

                                       25

<PAGE>

                          NOTES TO FINANCIAL STATEMENTS

================================================================================

Note 10.  Stock Option Plans ( continued)

2001 Stock Option Plan:

    On May 10, 2001 , the Compensation Committee of the Board of Directors
adopted The NDC Automation, Inc. 2001 Stock Option Plan ("the 01 Plan"), the
adoption of which was ratified by the shareholders at the annual meeting held
May 10, 2002. The 01 Plan authorized 225,000 options to all officers and
employees in the form of incentive stock options, of which 225,000 were granted
in May 2001 at an exercise price of $0.195 per share upon achievement by the
Company of certain financial performance targets set by the Board of Directors
on an annual basis. The performance target for 2001 was that the Company had to
be profitable.

    Transactions involving these plans for the years ended November 30, 2002,
2001 and 2000 respectively, are summarized as follows:


<TABLE>
<CAPTION>
STOCK OPTIONS                          2002*                                         2001*
------------------------ ------- ------------------ ----------------------------------------------
                         93 Plan 97 Plan   01 Plan    Total     90 Plan  93 Plan  97 Plan  Total
                         ------- -------- --------- --------    -------- -------- -------- -------

<S>                   <C>         <C>                <C>         <C>      <C>      <C>     <C>
Outstanding, December 1  49,000   44,500         -   93,500      13,567   49,800   81,750  145,117

Granted                       -        -   225,000  225,000           -        -        -
Canceled                   (500)  (8,000)            (8,500)    (13,567)    (800) (37,250) (51,617)
Exercised                     -        -         -        -           -        -        -        -
------------------------ ------- -------- --------- --------    -------- -------- -------- -------

Outstanding, November 30 48,500   36,500   225,000  310,000           -   49,000   44,500   93,500
======================== ======= ======== ========= ========    ======== ======== ======== =======
Exercisable, November 30 48,500   36,500    33,500  118,500           -   49,000   44,500   93,500
======================== ======= ======== ========= ========    ======== ======== ======== =======
</TABLE>


STOCK OPTIONS                          2000*
------------------------ ------- ------------------ --------
                         90 Plan 93 Plan  97 Plan    Total
                         ------- -------- --------- --------

Outstanding, December 1  29,542   51,800   158,250  239,592

Granted                       -        -         -        -
Canceled                (15,975)  (2,000)  (76,500) (94,475)
Exercised                     -        -         -        -
------------------------ ------- -------- --------- --------
Outstanding, November 30 13,567   49,800    81,750  145,117
======================== ======= ======== ========= ========
Exercisable, November 30 13,567   49,800    27,250   90,617
======================== ======= ======== ========= ========

* The weighted average exercise price per share of options outstanding, granted,
canceled, exercised, or exercisable for the 90 Plan was $0.7917, for the 93 Plan
is $1.56 , for the 97 Plan is $0.50 and for the 01 Plan is $0.195.

                                       26

<PAGE>

                          NOTES TO FINANCIAL STATEMENTS

================================================================================

Note 11.  Sale of land and building

     The Company closed on the sale of the land and building in March 2001 for
$1,600,000 and realized a gain of $581,023 after deducting approximately
$100,000 of closing costs and moving expenses of approximately $30,000. Proceeds
from the sale were used to retire the the mortgage debt and the Company's bank
credit line. The pay off of the credit line permitted the termination of Netzler
& Dahlgren Letter of Credit to the bank. The Company also applied approximately
$80,000 from the sale proceeds against current payables to Netzler & Dahlgren.
Further, the Company receivables were pledged to Netzler and Dahlgren to secure
its note receivable from the Company until its note is paid in full in December
2002.



Note 12.  FASB Statements And Proposed Regulations

     On June 15, 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities (FAS 133), and amended by Statement of
Financial Accounting Standards 138 (FAS 138). FAS 133 is effective for all
fiscal quarters of all fiscal years beginning after June 15, 1999. FAS 133
requires that all derivative instruments be recorded on the balance sheet at
their fair value. Changes in the fair value of derivatives are recorded each
period in current earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and, if it is, the type
of hedge transaction. FAS 138 does not leave any accounting or reporting
implications to the Company.

    The Company purchases foreign-currency exchange contracts to settle their
international debts. The Company will purchase and settle these contracts on the
same day. Any gains and losses on the foreign-currency-denominated debts are
recorded as transaction adjustments in current earnings. The Company had a gain
( loss) on foreign currency transactions of $(53,197), $(11,151), and $60,564
for the three years ended November 30, 2002.


Note 13.  Continued operations

    In the past years the Company has suffered operating losses. This has left
the Company with a poor equity position and negative working capital. Due to the
losses, lender contacts have indicated that the Company will need to show
consistent profitability for a year to reestablish a line of credit. This issue
raises substantial doubt about the Company's ability to continue as a going
concern. The Company's cash flow during the year ending 2002 did not improve
compared to prior years. Therefore the Company continues to pay vendors slower
than their normal terms. In the event Netzler & Dahlgren stops shipping to the
Company due to late payments, there would be even further doubt about the
Company's ability to continue as a going concern.

    Management has taken the following actions in an attempt to increase
revenues and minimize losses.

o Establish and develop strategic alliances with selected customers
o Pursue AGV system business in selected market niches
o Grow the distribution business by adding new supplementary products
o Expand the aftermarket sales business
o Reduce operating expenses

The Company continues to explore raising additional equity and/or debt as well
as possible business combinations to ensure the viability of its operations and
potential growth opportunities. The Company is also reviewing the possibility or
feasibility of going private to reduce its operating expenses. The Company's
current expenses relating to being public are approximately $175,000 annually.

There can be no assurance that the Company can successfully meet the objectives
of any such activities.

                                       27

<PAGE>

<TABLE>
<CAPTION>

                                                SHAREHOLDER INFORMATION

========================================================================================================================

<S>                                                         <C>
ANNUAL MEETING                                              DIRECTORS
   The annual meeting will be held at 10:00 am, Friday,
   May 9, 2003, at Transbotics Corporate offices            D.Bruce Wise
   in Charlotte, North Carolina.                            Chairman of the Board of Directors, Transbotics Corporation
                                                            Chief Executive Officer, Integrated Technologies Group
SHAREHOLDER RELATIONS
   A copy of Transbotics Annual Report and form 10-KSB,
   which is filed with the Securities and Exchange          Claude Imbleau
   Commission, will be sent to any shareholder upon         Director
   written request to Manager-Investor Relations
    Transbotics Corporation                                 Raymond O. Gibson
   3400 Latrobe Drive                                       Director
   Charlotte, North Carolina 28211
                                                            Richard D. Schofield
CORPORATE OFFICES                                           Director
   Transbotics Corporation
   3400 Latrobe Drive
   Charlotte, North Carolina 28211-4849

    (704) 362-1115 Telephone
    (704) 364-4039 Facsimile

STOCK EXCHANGE LISTINGS                                     OFFICERS
   Over the Counter: OTC Bulletin Board
   OTC Symbol: "TNSB"                                       Claude Imbleau
                                                            President
TRANSFER AGENT                                              Chief Financial Officer
   First Citizens Bank
   Raleigh, North Carolina
                                                            Tommy Hessler
LEGAL COUNSEL                                               Executive Vice President, Secretary
   Parker, Poe, Adams and Bernstein, LLP
   Charlotte, North Carolina

   Shumaker, Loop and Kendrick, LLP
   Charlotte, North Carolina

AUDITORS
   McGladrey & Pullen, LLP
   Charlotte, North Carolina

========================================================================================================================
</TABLE>



<TABLE>
<CAPTION>
COMMON STOCK DATA
                                                              Market Price Per Share
                                       ---------------------------------------------------------------------
                                                    2002                     -             2001
                                       --------------------------------        -----------------------------
Quarter Ended                                High            Low                    High           Low
                                         Bid     Ask      Bid     Ask            Bid     Ask   Bid    Ask
------------------------------------------------------------------------------------------------------------
<S>       <C>                             <C>     <C>      <C>    <C>             <C>    <C>   <C>     <C>
 February 28                              0.32    0.55     0.21   0.33            0.81   0.91  0.13    0.16
 May 31                                   0.30    0.52     0.20   0.24            0.47   0.63  0.15    0.20
 August 31                                0.21    0.35     0.10   0.12            0.37   0.45  0.21    0.30
 November 30                              0.21    0.30     0.04   0.05            0.34   0.51  0.21    0.25
============================================================================================================
</TABLE>

                                       28