<PAGE>
                                   FORM 10-QSB


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


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

                   For the quarterly period ended November 30, 1995

                                       OR

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

                          For the transition period from

                         Commission file number 01-10076

                          APPLIED RESEARCH CORPORATION
                          ----------------------------
        (Exact name of small business issuer as specified in its charter)


    Colorado                                                    86-0585693
-------------------                                    -------------------------
(State or other jurisdiction                                    (I.R.S. Employer
of incorporation or organization)                         Identification Number)


    8201 Corporate Drive, Suite 1120, Landover, Maryland               20785
    ------------------------------------------------------------------------
                  (Address of principal executive offices) (Zip Code)


                                 (301) 459-8442
                                 --------------
              (Registrant's telephone number, including area code)

 ------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)


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

As of January 20, 1996, the Company had 6,311,083 shares of its $.01 par value
common stock outstanding.

Transitional Small Business Disclosure Format (check one):
      Yes _______   No _______

<PAGE>

                                   FORM 10-QSB

                          APPLIED RESEARCH CORPORATION

                                      INDEX



     Part I:        FINANCIAL INFORMATION                               Page No.
     -------        ---------------------                               --------
     Item 1         Financial Statements

                    Condensed Consolidated Balance Sheets -
                       November 30, 1995 and May 31, 1995                 3-4

                    Condensed Consolidated Statements of Operations -
                       Three months ended November 30, 1995 and 1994        5

                    Condensed Consolidated Statements of Operations -
                       Six months ended November 30, 1995 and 1994          6

                    Condensed Consolidated Statements of Cash Flows -
                       Six months ended November 30, 1995 and 1994        7-8

                    Notes to Condensed Consolidated Financial Statements 9-12

     Item 2         Management's Discussion and Analysis of Financial
                       Condition and Results of Operations              13-19

     Part II:       OTHER INFORMATION
     --------       -----------------
     Item 1         Legal Proceedings                                      20

     Item 2         Changes in Securities                                  20

     Item 3         Defaults Upon Senior Securities                        20

     Item 4         Submission of Matters to a Vote of Security Holders    20

     Item 5         Other Information                                      20

     Item 6         Exhibits and Reports on Form 8-K                       20

     Signatures                                                            21


                                       -2-

<PAGE>

                  APPLIED RESEARCH CORPORATION AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                November 30,         May 31,
                                                    1995              1995
                                                (Unaudited)         (Audited)
                                                -----------         ---------

ASSETS
------
<S>                                             <C>                <C>
CURRENT ASSETS
  Cash                                          $    11,813        $    15,028
  Accounts receivable, net                        1,549,595          1,792,853
  Inventory, at cost                                  2,100              3,709
  Other current assets                               58,209             60,819
                                                -----------        -----------

TOTAL CURRENT ASSETS                              1,621,717          1,872,409

PROPERTY AND EQUIPMENT, AT COST
  Furniture and equipment                           203,072            192,880
  Computer equipment                                488,707            464,557
  Laboratory equipment                              258,678            246,365
  Leasehold improvements                             22,322             22,322
                                                -----------        -----------
                                                    972,779            926,124
  Less accumulated depreciation and
    amortization                                    815,808            776,807
                                                -----------        -----------


NET PROPERTY AND EQUIPMENT                          156,971            149,317

INTANGIBLE ASSETS, NET OF AMORTIZATION               47,901             57,357

OTHER                                                43,575             41,075
                                                -----------        -----------

TOTAL ASSETS                                    $ 1,870,164        $ 2,120,158
                                                -----------        -----------
                                                -----------        -----------
</TABLE>


                         See accompanying notes to the
                   condensed consolidated financial statements


                                       -3-

<PAGE>

                  APPLIED RESEARCH CORPORATION AND SUBSIDIARIES

                CONDENSED CONSOLIDATED BALANCE SHEETS - Continued


<TABLE>
<CAPTION>
                                                November 30,        May 31,
                                                   1995              1995
                                                (Unaudited)        (Audited)
                                                -----------       -----------

LIABILITIES
-----------
<S>                                             <C>               <C>
CURRENT LIABILITIES
  Notes payable, current maturities             $   651,491         $  911,681
  Accounts payable                                  637,998            549,295
  Accrued salaries and benefits                   1,197,118          1,185,641
  Accrued payroll taxes and withholdings            725,674            481,576
  Other accrued liabilities                         438,023            392,223
  Billings in excess of costs and
    anticipated profits                              18,612             59,594
  Deferred revenue                                   20,424             14,444
  Income taxes payable                                8,550             19,860
  Provision for contract losses                      40,000             40,000
                                                -----------        -----------

TOTAL CURRENT LIABILITIES                         3,737,890          3,654,314

NOTES PAYABLE, NET OF CURRENT MATURITIES                  -             25,000
                                                -----------        -----------

TOTAL LIABILITIES                                 3,737,890          3,679,314
                                                -----------        -----------

STOCKHOLDERS' DEFICIT
---------------------
Preferred Stock, $.10 par value,
  40,000,000 shares authorized, none
  issued                                                  -                  -
Common Stock, $.0005 par value,
  60,000,000 shares authorized, 6,811,083
  shares issued and 6,311,083
  shares outstanding                                  3,155              2,972
Capital in excess of par value                    1,140,529          1,026,649
Accumulated deficit                              (3,011,410)        (2,588,777)
                                                -----------        -----------

TOTAL STOCKHOLDERS' DEFICIT                      (1,867,726)        (1,559,156)
                                                -----------        -----------

TOTAL LIABILITIES AND STOCKHOLDERS'
  DEFICIT                                       $ 1,870,164        $ 2,120,158
                                                -----------        -----------
                                                -----------        -----------
</TABLE>

                         See accompanying notes to the
                   condensed consolidated financial statements


                                       -4-

<PAGE>

                  APPLIED RESEARCH CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                  THREE MONTHS ENDED NOVEMBER 30, 1995 AND 1994


<TABLE>
<CAPTION>

                                              1995                1994
                                           (Unaudited)         (Unaudited)
                                           -----------         -----------
<S>                                        <C>                 <C>
Revenue                                     $2,275,852          $2,361,402

Operating costs and expenses:
  Direct cost of services                    1,383,235           1,451,667
  Indirect operating cost                      512,828             637,655
  General & administrative expenses            417,032             395,129
                                            ----------          ----------

Total operating costs and expenses           2,313,095           2,484,451
                                            ----------          ----------

Operating income (loss)                        (37,243)           (123,049)

Other expense:
  Interest expense                             104,504              79,809
  Compensation expense associated
     with stock awards                          59,375                   -
  Other, net                                    27,031              46,477
                                            ----------          ----------

Total other expense                            190,910             126,286
                                            ----------          ----------

Loss before income taxes                      (228,153)           (249,335)

Income taxes                                         -                   -
                                            ----------          ----------

Net loss                                    $ (228,153)         $ (249,335)
                                            ----------          ----------
                                            ----------          ----------



Net loss per share                          $    (0.04)         $    (0.04)
                                            ----------          ----------
                                            ----------          ----------

Weighted average number of shares
  outstanding                                6,294,599           5,944,416
                                            ----------          ----------
                                            ----------          ----------
</TABLE>

                          See accompanying notes to the
                   condensed consolidated financial statements


                                       -5-

<PAGE>

                  APPLIED RESEARCH CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                   SIX MONTHS ENDED NOVEMBER 30, 1995 AND 1994


<TABLE>
<CAPTION>
                                              1995                1994
                                           (Unaudited)         (Unaudited)
                                           -----------         -----------
<S>                                        <C>                 <C>
Revenue                                     $4,593,698          $4,873,917

Operating costs and expenses:
  Direct cost of services                    2,824,276           2,999,259
  Indirect operating cost                    1,046,340           1,216,723
  General & administrative expenses            798,511             755,342
                                            ----------          ----------

Total operating costs and expenses           4,669,127           4,971,324
                                            ----------          ----------

Operating income (loss)                        (75,429)            (97,407)

Other expense:
  Interest expense                             185,494             158,908
  Compensation expense associated
     with stock awards                          89,063                   -
  Other, net                                    72,647              65,174
                                            ----------          ----------

Total other expense                            347,204             224,082
                                            ----------          ----------

Loss before income taxes                      (422,633)           (321,489)

Income taxes                                         -                   -
                                            ----------          ----------

Net loss                                    $ (422,633)         $ (321,489)
                                            ----------          ----------
                                            ----------          ----------



Net loss per share                          $     (0.07)        $    (0.05)
                                            ----------          ----------
                                            ----------          ----------

Weighted average number of shares
  outstanding                                6,118,551           5,944,416
                                            ----------          ----------
                                            ----------          ----------
</TABLE>


                         See accompanying notes to the
                   condensed consolidated financial statements


                                       -6-

<PAGE>

                  APPLIED RESEARCH CORPORATION AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                   SIX MONTHS ENDED NOVEMBER 30, 1995 AND 1994


<TABLE>
<CAPTION>
                                                      1995           1994
                                                   (Unaudited)    (Unaudited)
                                                   -----------    -----------
<S>                                               <C>            <C>
Cash flows from operating activities:
Net loss                                          $  (422,633)   $  (321,489)

Adjustments to reconcile net loss to net cash
  provided (used) in operating activities:
  Depreciation                                         39,001         31,978
  Amortization                                         10,151         39,490
  Increase in provision for contract losses                 -         40,000
  Compensation expense associated with
     common stock awards                               89,063              -
  Changes in assets and liabilities:
     Decrease in accounts receivable                  243,258        383,764
     Decrease in inventory                              1,609          2,532
     Decrease in other current assets                   2,610         29,957
     Increase in intangible assets                       (695)       (16,980)
     Increase in other assets                          (2,500)       (12,955)
     Increase (decrease) in accounts payable           88,703       (128,039)
     Increase in accrued salaries and benefits         11,477        203,088
     Increase in accrued payroll
       taxes and withholdings                         244,098        158,020
     Increase in other accrued liabilities             45,800         23,791
     Decrease in billings in excess of
       costs and anticipated profits                  (40,982)       (75,387)
     Increase in deferred revenue                       5,980              -
     Decrease in income taxes payable                 (11,310)             -
                                                  -----------    -----------
  Total adjustments                                   726,263        679,259
                                                  -----------    -----------
Net cash provided in operating activities             303,630        357,770
                                                  -----------    -----------
</TABLE>


                                    CONTINUED



                         See accompanying notes to the
                   condensed consolidated financial statements


                                       -7-

<PAGE>

                  APPLIED RESEARCH CORPORATION AND SUBSIDIARIES

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued

                   SIX MONTHS ENDED NOVEMBER 30, 1995 AND 1994


<TABLE>
<CAPTION>
                                                      1995           1994
                                                   (Unaudited)    (Unaudited)
                                                   -----------    -----------
<S>                                               <C>            <C>
Cash flows from investing activities:
  Capital expenditures                                (46,655)       (70,848)
                                                  -----------    -----------
Net cash used in investing activities                 (46,655)       (70,848)
                                                  -----------    -----------
Cash flows from financing activities:
  Proceeds from equipment loan                              -         50,515
  Proceeds of loans from receivables assignment     3,374,384      3,691,371
  Repayment of loans from receivables assignment   (3,627,022)    (4,003,281)
  Repayment of notes payable to bank                        -        (25,000)
  Repayment of equipment loan                          (7,552)        (1,846)
                                                  -----------    -----------

Net cash used in financing activities                (260,190)      (288,241)
                                                  -----------    -----------

Net decrease in cash                                   (3,215)        (1,319)

Cash at the beginning of period                        15,028         32,804
                                                  -----------    -----------

Cash at the end of period                         $    11,813    $    31,485
                                                  -----------    -----------
                                                  -----------    -----------
Supplemental disclosure of cash flow
  information:

Cash paid during the quarter for interest         $   160,046    $   148,432
                                                  -----------    -----------
                                                  -----------    -----------
</TABLE>

During the quarter ended November 30, 1995, the holder of a $25,000 note
converted the note into 66,667 shares of common stock of the Company.


                         See accompanying notes to the
                   condensed consolidated financial statements


                                       -8-

<PAGE>

                  APPLIED RESEARCH CORPORATION AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.   BASIS OF PRESENTATION

The condensed consolidated balance sheet as of November 30, 1995, the condensed
consolidated statements of operations for the three and six months ended
November 30, 1995 and 1994, and the condensed consolidated statements of cash
flows for the six months ended November 30, 1995 and 1994, have been prepared by
the Company and are unaudited.  In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows at November 30,
1995, and for all periods presented, have been made.

The Company owns 95% of ARInternet which was formed during November, 1994.
However, because the minority interest in net losses of ARInternet exceeded the
carrying value of the minority interest amount at November 30, 1995, no minority
interest has been provided.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted.  It is suggested that these condensed consolidated financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's annual report on Form 10-K for the fiscal year
ended May 31, 1995.  The results of operations for the period ended November 30,
1995, are not necessarily indicative of the operating results for the full year.

2.   LOSS PER COMMON SHARE

Loss per share of common stock has been computed by dividing the net income by
the weighted average number of shares of common stock outstanding during each of
the periods presented.  Common stock equivalent shares relating to stock options
and warrants are included in the weighted average only when the effect is
dilutive.

3.   RECLASSIFICATIONS

Certain amounts in the condensed consolidated balance sheet as of May 31, 1995,
the condensed consolidated statements of operations for the three and six months
ended November 30, 1994, and the condensed consolidated statements of cash flows
for the six months then ended have been reclassified to conform to the November
30, 1995, presentation.

4.   NOTES PAYABLE

At November 30, 1995, the Company was in default of its loan agreement with its
Lender ("PrinCap") pursuant to a provision requiring it to remit all federal
payroll withholding taxes as they become due.  As disclosed in Note 6, the
Company was delinquent on its federal payroll withholding taxes in the
approximate amount of $675,600 as of November 30, 1995.  The IRS filed a lien
against the Company on November 7, 1995, and on November 14, 1995, PrinCap
issued a notice of default.  PrinCap suspended all borrowings and applied all
payments received from customers against the outstanding loan balance.


                                       -9-

<PAGE>

                  APPLIED RESEARCH CORPORATION AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued


On November 17, 1995, the Company entered into an agreement with a new lender
("CFC"), and on December 4, 1995, CFC paid off the remaining outstanding PrinCap
loan balance of $651,491, plus $18,288 of accrued interest and other charges.
The agreement with CFC allows the Company to borrow 90% against billed
receivables on all assigned contracts.  Since the new financing agreement did
not allow the Company to borrow against unbilled receivables, the Company was
required to pay off the $250,000 unbilled loan advance and the approximate
$35,000 equipment loan due to PrinCap at the time of closing the new loan.  To
accommodate this, CFC allowed the Company a one-time advance of approximately
97% against eligible billed receivables.  The new financing agreement provides
an interest rate of prime plus 4%, calculated on the mid-month and end-of-month
balances.  There is also a 0.65% service charge for each 15 day period on
outstanding invoices.

The IRS has agreed to give CFC a priority security interest with regards to its
loans against billed receivables.  This interim agreement was agreed to by the
IRS on December 1, 1995, and has continued through December 29, 1995, while the
Company has applied for a formal subordination from the IRS.  On January 2,
1996, the IRS notified the Company that the Subordination Application had been
approved and that the Certificate of Subordination would be issued on or about
January 15, 1996.  Additionally, as part of a new installment agreement entered
into with the IRS on December 1, 1995, CFC has agreed to deduct the monthly
installment payment due to the IRS from the amounts the Company borrows against
its current billings, and remit this directly to the IRS (See Note 6 for
additional information).

5.   RETIREMENT PLAN

At November 30, 1995, the Company had not remitted employee contributions of
$317,968.  During 1995, the Company had an agreement with its previous Lender
("PrinCap"), pursuant to which PrinCap had been authorized to, and had remitted
the 1995 employee contributions when they become due.  Under this agreement,
PrinCap deducted the current employee contribution amount due to the plan from
the Company's borrowings against billed receivables.  PrinCap stopped deducting
and remitting these payments upon issuance of the default letter.  As a result
of PrinCap applying all residual payments it received to the outstanding loan
balance, the Company did not have sufficient cash flow to remit the employee
contributions and as a result, had not remitted any since November 8, 1995.  As
of November 30, 1995, the Company was delinquent in remitting 1995 employee
contributions totaling $10,952.  As of January 20, 1996, the delinquent 1995
contributions totaled $52,743.  The Company has informed its employees that it
intends to pay interest at the rate of 15% per annum on the unpaid employee
withholdings.  At November 30, 1995, the Company had accrued interest payable of
approximately $74,300.

At November 30, 1995, the Company had not remitted employer contributions of
$185,334.  The Company has informed its employees that it intends to pay
interest on these amounts at the prevailing statutory rates (approximately 5%).
At November 30, 1995, the Company had accrued interest payable of approximately
$4,200.

During July, 1995, the Company agreed to and signed contract modifications on
its two largest contracts with NASA.  The contract modifications require the
Company to remit an increasing portion of its fee earned on these two contracts
directly to the 401(k) plan in order to reduce the past due amounts owed.


                                      -10-

<PAGE>

                  APPLIED RESEARCH CORPORATION AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Continued


The portion of the fees applied to the plan was 25% for the fees earned
beginning January 1, 1995 and increased to 75% during calendar year 1995.
Effective January 1, 1996, the percentage increased to 100%.  The contract
modifications will remain in effect until all past due amounts owed the 401(k)
plan have been repaid.  Through November 30, 1995, $48,916 of fees earned under
these contracts had been remitted to the 401(k) plan in accordance with the
contract modifications.  Although the fees generated by these contracts will
ultimately liquidate the past due amounts owed to the 401(k) plan, these
modifications have and will continue to reduce the cash flow available to meet
the Company's remaining obligations.  Based on the current level of work being
performed on these two contracts, both contracts together generate approximately
$150,000 in fees per year.  As of November 30, 1995, the Company was in
compliance with the terms of these contracts, as modified.

6.   WITHHOLDING TAXES

As of November 30, 1995, the Company had not remitted federal payroll tax
withholdings totaling approximately $607,800 relating to the fourth calendar
quarter of 1994 and the second calendar quarter of 1995.  The Company has
accrued penalties and interest on those delinquent amounts totaling
approximately $200,000 through November 30, 1995.  During September, 1995, the
Company remitted a $50,000 payment to the IRS.  The IRS had demanded a $250,000
payment be made on October 27, 1995, with the balance due by November 30, 1995.
The Company was unable to meet the October, 1995, payment, and as a result, the
IRS filed a lien against the Company on November 7, 1995.

On December 1, 1995, the Company entered into a new installment agreement with
the IRS which specifies a $75,000 monthly payment to be made by the 15th of each
month starting with December, 1995, and continuing until the total liability has
been paid.  As part of this agreement, the IRS has agreed to give the Company's
new lender ("CFC") a priority security interest with regards to its loans
against billed receivables.  This interim agreement has continued through
December 29, 1995, while the Company has applied for a formal subordination from
the IRS.  On January 2, 1996, the IRS notified the Company that the
Subordination Application had been approved and that the Certificate of
Subordination would be issued on or about January 15, 1996.  As a condition of
the new installment agreement, CFC is required to deduct the monthly payment
from the Company's borrowings against billed receivables and remit this directly
to the IRS.  CFC remitted the first installment payment to the IRS on December
4, 1995, and the second payment on January 17, 1996.  However, because the
Company's previous lender retained all receipts from the period between the
issuance of the default letter and November 30, 1995, the Company fell behind on
its current federal payroll taxes due.  As of November 30, 1995, the Company
owed an additional $66,800 to the IRS for the fourth calendar quarter of 1995.
Due to the shortage of cash caused by the refinancing, as of January 20, 1996,
the Company owes a total of $268,400 for the fourth calendar quarter of 1995.
As a result, the Company is in default of the new installment agreement.  Unless
the Company can pay the 4th calendar quarter taxes due immediately, all or a
portion of the Company's assets are subject to immediate seizure and possible
sale by the IRS.

As of December 31, 1995, the Company was also delinquent in remitting $30,945 of
November, 1995, state withholding taxes.  As of January 20, 1996, $27,898 of
this amount remained unremitted.


                                      -11-

<PAGE>

                  APPLIED RESEARCH CORPORATION AND SUBSIDIARIES

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Concluded


7.   COMMON STOCK ISSUED

During August, 1995, the Company entered into two (2) agreements with New York-
based companies to provide public relations services for the Company and to find
and attract market makers for the Company's common stock.  As compensation, the
Companies will each receive up to a total of 400,000 shares of the Company's
common stock.  The Company has registered with the Securities and Exchange
Commission the stock issued pursuant to these agreements.  Both agreements can
be canceled by the Company at any time.  All of the stock represented by these
two agreements (800,000 shares) has been issued and is being held in escrow
pending its release, as specified in the agreements.  Upon the release of the
stock, the Company records compensation expense equal to the average of the bid
and asked prices (approximately $0.30 a share) on the date the agreements were
signed.  Through November 30, 1995, a total of 150,000 shares had been released
to each of these Companies.

8.   SUPPLEMENTAL SEGMENT INFORMATION

The Company's operations have been classified into three business segments:

Sales to unaffiliated customers:
<TABLE>
<CAPTION>

                               ARM          ARS         ARI    Consolidated
                               ---          ---         ---    ------------
   Quarter ended:
   --------------
   <S>                     <C>          <C>          <C>        <C>
   November 30, 1995       $2,145,034    $ 64,684    $66,134    $2,275,852
   November 30, 1994       $2,261,206    $100,196          -    $2,361,402

   Six months ended:
   -----------------
   November 30, 1995       $4,297,550    $187,070   $109,078    $4,593,698
   November 30, 1994       $4,649,766    $224,151          -    $4,873,917

Operating income (loss) from
continuing operations before other
(income) expense and income taxes:

   Quarter ended:
   --------------
   November 30, 1995          $68,898   $(39,966)   $(66,175)    $ (37,243)
   November 30, 1994          $ 4,520   $(94,110)   $(33,459)    $(123,049)

   Six months ended:
   -----------------
   November 30, 1995         $141,172  $ (66,486)  $(150,115)     $(75,429)
   November 30, 1994         $103,165  $(167,113)  $ (33,459)     $(97,407)

</TABLE>

Operating income (loss) equals total net revenues less operating expenses.


                                      -12-

<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS FROM OPERATIONS



OVERVIEW

Applied Research Corporation ("the Company") is comprised of two wholly owned
subsidiaries, Applied Research of Maryland, Inc. ("ARM") and ARSoftware
Corporation ("ARS"), and a majority owned subsidiary, ARInternet Corporation
("ARInternet").  ARM currently consists of three unincorporated divisions:
Technical Services Division, Instruments Division and ARInstruments Division
("ARInstruments").  Management's discussion and analysis of financial condition
and results of operations takes into consideration the activities of the Company
as a whole and each individual operating entity where necessary.  Management's
discussion and analysis should be read in conjunction with the Selected
Financial Information, and the Company's Condensed Consolidated Financial
Statements, including the footnotes thereto.

RESULTS FROM OPERATIONS - THREE MONTHS ENDED NOVEMBER 30, 1995 COMPARED TO 1994

The Company's revenues for the quarter ended November 30, 1995, were $2,275,852,
or (4)% below revenues of $2,361,402 for the same period during 1994.  The
decrease in revenues during the quarter ended November 30, 1995, of $85,550 is
primarily attributable to the decrease in ARM's revenues of $116,172 or 5% when
compared with revenues of $2,261,206 generated during the same period in 1994.
ARM's revenues decreased as a result of a decrease in the number of contracts,
and therefore, the number of direct employees generating revenue during the
current fiscal quarter compared to the quarter ended November 30, 1994.  Also
contributing to the overall decease in revenues was a decrease in product sales
by ARS of $35,512 or 35%, from revenues of $100,196 generated during the same
period in 1994.  ARInternet's revenues were $66,134, and partially offset the
declines experienced by ARM and ARS.

The Company's direct cost of services decreased $68,432 or 5%, from $1,451,667
during the quarter ended November 30, 1994, to $1,383,235 during the same period
in 1995.  Of this amount, ARM and ARS contributed decreases of $46,347 and
$45,521, respectively, while ARInternet's cost of services increased $23,436.
ARM's decrease in direct costs consisted of a $18,065 decrease in direct labor
and a $28,282 decrease in subcontract, material and equipment charges.  The
decrease in direct labor related primarily to a decrease in the number of
contracts being performed at the Company's headquarters.  The decrease in direct
costs of ARS was primarily related to a $23,021 decrease in the cost of goods
sold associated with lower sales for the quarter and a decrease in the amount of
amortization of previously capitalized software development costs, which were
$16,397 less in the quarter ended November 30, 1995 than the same period in
1994.

Indirect operating costs decreased $124,827 or 20%, from $637,655 during the
quarter ended November 30, 1994, to $512,828 during the quarter ended November
30, 1995.  Of this amount, ARM's indirect operating costs decreased $114,189 or
19%, while ARS's decreased $10,638 or 43%.  ARM's decrease is directly related
to a decrease in the amount of indirect labor being charged to overhead, as well
as a decrease in fringe benefit costs incurred as a result of fewer staff.
ARS's decrease was directly related to a decrease in technical staff which
occurred during the second half of the previous fiscal year and a reduction in
salaries of existing staff during the current fiscal quarter.

General and administrative ("G&A") expenses increased $21,903 or 6%, from
$395,129 in 1994, to $417,032 during 1995.  Most notably, the G&A expenses
associated with ARInternet increased $75,414 during the


                                      -13-

<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS FROM OPERATIONS


quarter.  Offset against this increase were decreases in ARM's and ARS's G&A
expenses of $20,016 or 7% and $33,495 or 38%, respectively.  ARM's decrease
related primarily to an decrease in bids and proposal and research and
development costs incurred during the quarter ended November 30, 1995 when
compared to the quarter ended November 30, 1994.  The decrease in ARS's G&A
expenses was predominantly attributable to a reduction in marketing related
expenses during the period.

As a result of the foregoing, the Company realized an operating loss for the
quarter ended November 30, 1995, of $(37,243) compared to an operating loss of
$(123,049) for the same period during 1994.  ARM posted an operating profit of
$68,898 in 1995 compared to $4,520 during the same period in 1994.  The increase
in ARM's 1995 operating margin was primarily related to a $75,000 decrease in
ARM's 1994 operating margin which was the result of a $40,000 reduction to
previously recorded revenues resulting from the routine Government audit of its
FY 90 costs and a cost overrun of approximately $35,000 on one of its five year
Government contracts which expired during the November 30, 1994, quarter.  ARS
posted an operating loss of $(39,966) for the quarter ended November 30, 1995,
which loss represented an improvement of $54,144 or 58% from the operating loss
of $(94,110) during the same period in 1994.  This net improvement for ARS is
directly attributable to a decrease in salary and related fringe benefit
expenses and reductions in marketing and other expenses.  ARInternet's net
operating loss of $(66,175) during the quarter ended November 30, 1995, also
decreased the Company's operating margins.

Interest and other expenses increased $64,624 or 54%, from $126,286 the quarter
ended November 30, 1994, to $190,910 during the quarter ended November 30, 1995.
Net interest expense increased $24,695 or 31% from 1994.  The increase in
interest costs was the result of increased interest on unremitted employee
401(k) contributions and unpaid federal withholding taxes during the quarter
ended November 30, 1995 when compared to the same period in 1994.  Other
expenses also decreased $19,446 during the quarter ended November 30, 1995.
This was primarily due to the amount of penalties accrued as a result of the
late payment of federal withholding taxes during September, 1995.  (See Notes 5
and 6 to the Condensed Consolidated Financial Statements).  Until such time as
the Company is able to increase its working capital, either through increased
income from operations, or through additional equity financing, the likelihood
of which is extremely uncertain, it is anticipated that interest and other
expenses will continue to exert significant pressure on the Company's ability to
generate positive earnings and cash flow.  In addition, during the quarter ended
November 30, 1995, the Company recorded $59,375 of compensation expense
associated with stock released in conjunction with agreements with two New York
based companies.  (See Note 7 to the Condensed Consolidated Financial
Statements).

The Company sustained a net loss of $(228,153) for the quarter ended November
30, 1995, compared to a net loss of $(249,335) during the same period last year.
This loss reflects an increase in ARM's operating margins of $64,378, an
increase in ARS's operating margin of $54,144, and the decrease in the net
operating loss associated with ARInternet of $(32,716), which, in addition to
the increase in interest and other costs of $64,624, impacted overall margins by
$21,182 when compared to same quarter in 1994.

Loss per common share was unchanged for the current fiscal quarter compared to
the same period in 1994.


                                      -14-

<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS FROM OPERATIONS

RESULTS FROM OPERATIONS - SIX MONTHS ENDED NOVEMBER 30, 1995 COMPARED TO 1994

The Company's revenues for the six months ended November 30, 1995, were
$4,593,698, or (6)% below revenues of $4,873,917 for the same period during
1994.  The decrease in revenues during the six months ended November 30, 1995,
of $280,219 is primarily attributable to the decrease in ARM's revenues of
$352,216 or 8% over revenues of $4,649,766 during the same period in 1994.
ARM's revenues decreased as a result of a decrease in the number of contracts,
and therefore, the number of direct employees generating revenue during the
current fiscal period compared to the six months ended November 30, 1994.  Also
contributing to the overall decease in revenues was a decrease in product sales
by ARS of $37,081 or 17%, from revenues of $224,151 during the same period in
1994.  ARInternet's revenues were $109,078, and partially offset the declines
experienced by ARM and ARS.

The Company's direct cost of services decreased $174,983 or 6%, from $2,999,259
during the six moths ended November 30, 1994, to $2,824,276 during the same
period in 1995.  Of this amount, ARM and ARS contributed decreases of $172,151
and $48,313, respectively, while ARInternet's cost of services increased
$45,482.  ARM's decrease in direct costs consisted of a $63,348 decrease in
direct labor and a $108,803 decrease in subcontract, material and equipment
charges.  The decrease in direct labor related primarily to a decrease in the
number of contracts being performed at the Company's headquarters.  The decrease
in direct costs of ARS was primarily due to a decrease in the amount of
amortization of previously capitalized software development costs, which were
$29,984 less during the six months ended November 30, 1995 than during the same
period in 1994, in addition to a $5,826 decrease in the cost of goods sold
resulting  from the reduced sales level.

Indirect operating costs decreased $170,383 or 14%, from $1,216,723 during the
six months ended November 30, 1994, to $1,046,340 during the same period in
1995.  Of this amount, ARM's indirect operating costs decreased $154,899 or 13%,
while ARS's decreased $15,484 or 34%.  ARM's decrease is directly related to a
decrease in the amount of indirect labor being charged to overhead, as well as a
decrease in fringe benefit costs incurred as a result of fewer staff.  ARS's
decrease was directly related to a decrease in technical staff which occurred
during the second half of the previous fiscal year and a reduction in salaries
of existing staff during the current fiscal quarter.

General and administrative ("G&A") expenses increased $43,169 or 6%, from
$755,342 during the six months ended November 30, 1994, to $798,511 during the
same period in 1995.  Most notably, the G&A expenses associated with ARInternet
increased $180,253.  Offset against this increase were decreases in ARM's and
ARS's G&A expenses of $63,175 or 12% and $73,909 or 40%, respectively.  ARM's
decrease related primarily to a decrease in bids and proposal and research and
development costs incurred during the six months ended November 30, 1995 when
compared to the same six-month period in 1994.  The decrease in ARS's G&A
expenses was predominantly attributable to a reduction in marketing related
expenses during the period.

As a result of the foregoing, the Company realized an operating loss for the six
months ended November 30, 1995, of $(75,429) compared to an operating loss of
$(97,407) for the same period during 1994.  ARM posted an operating profit of
$141,172 during the six months ended November 30, 1995 compared to $103,165
during the same period in 1994.  The increase in ARM's operating margin was
primarily related to a $75,000 decrease in ARM's 1994 operating margin which was
the result of a $40,000 reduction to


                                      -15-

<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS FROM OPERATIONS


previously recorded revenues resulting from the routine Government audit of its
FY 90 costs, and a cost overrun of approximately $35,000 on one of its five year
Government contracts which expired during the November 30, 1994, quarter.  This
was offset by a decrease in the amount of net profit being realized on the
contracts during the current fiscal year, primarily due to the reduced level of
sales.  ARS posted an operating loss of $(66,486) for the six months ended
November 30, 1995, which loss represented an improvement of $100,627 or 60% from
the operating loss of $(167,113) during the same period in 1994.  This net
improvement for ARS is directly attributable to a decrease in salary and related
fringe benefit expenses and reductions in marketing and other expenses.
ARInternet's net operating loss of $(150,115) during the six months ended
November 30, 1995, a decrease of $116,656 from the previous year, also decreased
the Company's operating margins.

Interest and other expenses increased $123,122 or 55%, from $224,082 during the
six months ended November 30, 1994, to $347,204 during the six months ended
November 30, 1995.  Net interest expense increased $26,586 or 17%.  The increase
in interest costs was the result of increased interest on unremitted employee
401(k) contributions and unpaid federal withholding taxes during the six months
ended November 30, 1995 when compared to the same period in 1994.  Other
expenses also increased $7,473 during the same six-month period in 1995.  This
was primarily due to the amount of penalties accrued as a result of the late
payment of federal withholding taxes during the six months ended November 30,
1995, compared to the same period in 1994.  In addition, during the six months
ended November 30, 1995, the Company recorded $89,063 of compensation expense
associated with stock released in conjunction with agreements with two New York
based companies.  (See Note 7 to the Condensed Consolidated Financial
Statements).

The Company sustained a net loss of $(422,633) for the six months November 30,
1995, compared to a net loss of $(321,489) during the same period last year.
This loss reflects an increase in ARM's operating margins of $38,007, an
increase in ARS's operating margin of $100,627, and the decrease in the net
operating loss associated with ARInternet of $(116,656), which, in addition to
the increase in interest and other costs of $123,122, negatively impacted
overall margins by $(101,144) when compared to same six-month period in 1994.

Loss per common share increased to $(0.07) during the six months ended November
30, 1995 compared to $(0.05) during the same period in 1994, as a direct result
of the increase in net loss during 1995.

LIQUIDITY AND CAPITAL RESOURCES - 1995 COMPARED TO 1994

Total assets decreased $249,994 or 12%, from $2,120,158 at May 31, 1995, to
$1,870,164 at November 30, 1995.  Total liabilities on the other hand increased
from $3,679,314 to $3,737,890 over the same period, an increase of $58,576.

The most significant reason for the decrease in total assets was a decrease in
billed and unbilled accounts receivable of $243,258.  At November 30, 1995, the
Company had $1,004,310 and $545,285 in billed and unbilled receivables,
respectively.  Billed receivables decreased $64,114 or 6% from May 31, 1995,
while unbilled receivables decreased $179,144 or 25% from May 31, 1995.  The
decrease in billed accounts receivable was primarily the result of: a) fewer
billings actually outstanding at November 30, 1995, when compared to May 31,
1995, b) a decrease in the average amount billed due to the decrease in
revenues, c) offset by an increase in the amount of closeout billings prepared
during November.  The decrease in unbilled


                                      -16-

<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS FROM OPERATIONS


accounts receivable related to preparing final invoices on 14 old contracts
during November, 1995, as a result of completing government audits for FY 1991
through FY 1993 during the quarter then ended.  This decrease was offset by an
increase in the amount of work that was unbilled (four days) at November 30,
1995, when compared to May 31, 1995 (only two days).  Consistent with the
decrease in billed accounts receivable, the Company decreased the current
maturities of notes payable by $260,190.  The majority of the decrease in notes
payable was caused by the Company's inability to borrow against its November 26,
1995, billings because of the notice of default received from its previous
lender, PrinCap as well as the lender applying all of the receipts from
customers during the later half of November, 1995 to reduce the outstanding
balance, rather than returning a portion of these payments to the Company.  The
default of its financing agreement related to unremitted federal withholding
taxes, as discussed below.

The Company's working capital deficit continued to grow during the six months
ended November 30, 1995, increasing from a deficit of $(1,781,905) to a deficit
of $(2,116,173).  Adding to the Company's working capital deficit during the six
months ended November 30, 1995, was an increase in unremitted payroll taxes
withheld of $244,098, from $481,576 at May 31 1995, to $725,674 at November 30,
1995.  Of the November 30, 1995, balance, approximately $675,600 of federal
withholding taxes were past due.  In addition, because the Company was not
receiving all of the cash that it would normally have been entitled to, accounts
payable increased by $88,703 during this period.

In addition, the following also impacted the Company's liquidity and capital
resources:

  -  During the six months ended November 30, 1995, the Company purchased
     approximately $46,700 of property and equipment.  Included in total
     purchases is approximately $23,000 of equipment for ARInternet,
     representing computer hardware and software required to provide ARInternet
     with the capability of offering Internet access and services.  The
     remaining $23,700 of purchases represented ARM purchases of additional
     computer hardware as well as a repair of its laser equipment.  The Company
     does not plan any major additional equipment purchases unless ARInternet's
     growth warrants them, and is also seeking alternate equipment financing to
     help finance ARInternet's equipment purchases.

  -  During July, 1995, the Company executed contract modifications on its two
     largest contracts with NASA.  The contract modifications require the
     Company to remit an increasing portion of its fees earned on these two
     contracts directly to its 401(k) plan ("the Plan") in order to reduce the
     past due amounts owed.  (See Note 5 to the Condensed Consolidated Financial
     Statements).  The portion of fees applied to the Plan was 25% for fees
     earned from January 1, 1995, and increased to 75% during calendar year
     1995.  Effective January 1, 1996, the percentage increased to 100%.  The
     contract modifications will remain in effect until all past due amounts
     owed the Plan have been repaid.  Through November 30, 1995, $48,916 of fees
     earned under these contracts had been remitted to the Plan in accordance
     with the contract modifications.  Although the fees generated by these
     contracts will ultimately liquidate the past due amounts owed to the Plan,
     these modifications will reduce the cash flow available to meet the
     Company's remaining obligations.  Based on the current level of work being
     performed on these two contracts (both contracts together generate
     approximately $150,000 in fees per year) it will take approximately 4.0
     years to bring all past due amounts owed the Plan current absent additional
     payments from other sources.


                                      -17-

<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS FROM OPERATIONS

  -  As discussed in Note 6 to the Condensed Consolidated Financial Statements,
     the Company has not remitted certain federal payroll tax withholdings.
     During September, 1995, the Company remitted a $50,000 payment to the IRS.
     The IRS had demanded a $250,000 payment be made on October 27, 1995, with
     the balance due by November 30, 1995.  The Company was unable to meet the
     October, 1995, payment, and as a result, the IRS filed a lien against the
     Company on November 7, 1995.  On December 1, 1995, the Company entered into
     a new installment agreement with the IRS which specifies a $75,000 monthly
     payment to be made starting with December, 1995, and continuing until the
     liability has been paid.  As a condition of this installment agreement, the
     Company's new lender is required to deduct the monthly payment from the
     Company's borrowings against billed receivables and remit this directly to
     the IRS.  The Company's lender remitted the first payment on December 4,
     1995, and the second payment on January 17, 1996.

During the next 12 months, the Company's anticipated cash expenditures include:
payment of federal withholding taxes which together with interest and penalties
total approximately $875,600 at November 30, 1995 ($926,200 at January 17,
1995), payment of past due employee and employer contributions, and accrued
interest, due to the Company's 401(k) plan totaling $571,000 at November 30,
1995 ($620,400 at January 17, 1995), and supplying the Company with operating
funds to cover losses.  Given the Company's current working capital deficit,
absent a significant improvement in the Company's operations or a large infusion
of capital or a sale of a significant component of the business, the Company may
not have sufficient capital to achieve its current business plan.  Additionally,
the continued increase in the Company's working capital deficit, together with
the Company's net capital deficit, raise substantial doubt as to the Company's
ability to continue as a going concern.

In order to reduce the Company's working capital deficit the Company has taken
the following actions:

  -  In January, 1995, the Company signed an agreement with a New York
     investment banking firm to raise between $1.0 - $5.0 Million in capital.
     Specifically, the Company is seeking to raise $1.5 Million immediately,
     followed by a second round of financing, perhaps twelve (12) to eighteen
     (18) months later.  As compensation, this firm would receive warrants or
     options to purchase Common Stock in the Company equal to between 5% and 10%
     of the amount raised, at approximately the same price that shares would be
     sold in the offering.  The agreement contemplates that money will be raised
     on a best efforts basis.  Because the Company continues to report
     substantial losses there can be no assurance that the firm will be able to
     raise any capital, or that in the event the firm is able to raise
     additional capital, that the money raised will be sufficient to materially
     improve the Company's operations.

  -  During fiscal 1995, the Company completed design of its BIO-UVB Meter
     instrument and was granted two (2) patents by the United States Patent and
     Trademark Office.  Since the patents sought by the Company were granted
     during 1995, the Company is now focusing on licensing or selling this
     product to a commercial company with established marketing and distribution
     channels.  During October, 1995, the Company further reduced the
     expenditures on this project by 75% from $45,000 to approximately $11,000 a
     quarter.

  -  During August, 1995, the Company entered into two (2) agreements with New
     York-based companies to provide public relations services for the Company
     and to find and attract market


                                      -18-

<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS FROM OPERATIONS

makers for the Company's common stock.  Although the Company's common stock was
delisted from the Philadelphia Stock Exchange, the Company is listed on the
Over-the-Counter Electronic Bulletin Board system.  Accordingly, these
companies believes that they can find and attract market makers for the
Company's common stock.  As compensation, the Companies will each receive 50,000
shares of the Company's common stock each month for eight months.  The Company
has agreed to register with the Securities and Exchange Commission any stock
issued pursuant to these agreements.  Both agreements can be canceled by the
Company at any time.

  -  During the six months ended November 30, 1995, ARM funded approximately
     $49,000 of ARS expenses.  During December, 1995, ARM discontinued paying
     these expenses.  In addition, ARS through attrition, has reduced its staff
     in half to two as of December 15, 1995.

  -  During the quarter ended August 31, 1995, ARInternet began to pay for all
     of its non-payroll expenses.  During October, 1995, ARInternet began to pay
     for a portion of its payroll expenses, thus reducing its cash dependence on
     ARM.  These payments are projected to increase each month until ARInternet
     reaches cash flow breakeven, which is projected to occur during the latter
     half of the current fiscal year.

     In addition, to ease the cash burden currently being caused by ARInternet,
     during October, 1995, ARInternet reduced its salary expenses by 20% and the
     other expenses by approximately 10%, saving approximately $100,000 on an
     annual basis.  During January, 1996, ARInternet eliminated one member of
     its staff, which will save an additional $57,000 annually.

  -  During October, 1995, ARM reduced the salaries of all of its indirect staff
     by an average of 15%.  These reductions, although intended to be temporary,
     will save the Company approximately $100,000 on an annual basis.  During
     November, 1995, ARM also eliminated one of its indirect staff, which will
     save the Company an additional $45,900 annually.  Management is considering
     additional reductions in staff and/or salaries.

  -  During October, 1995, management started pursuing the possible sale of ARM,
     the Company's government contracting subsidiary.  The Company has enlisted
     a broker which has made contacts with several companies who appear to be
     interested.  While management has had meetings with several of these
     interested companies, as of January 20, 1996, no firm offers have been made
     by any of these companies, and there can be no guarantees or assurances
     that the Company's efforts to sell ARM will be successful.

While there can be no assurance, management believes that the foregoing actions
should positively impact the Company's financial condition, and in particular,
reduce the Company's working capital deficit in the short-term.  However, absent
a significant reduction in the Company's working capital deficit, together with
a marked improvement in the Company's operations, a large infusion of capital or
a sale of a significant component of the business, the likelihood of which
cannot be guaranteed, the Company's ability to continue as a going concern is
questionable.  This is particularly true given the Company's current federal
withholding tax deficit and apparent inability to bring this obligation current
within a reasonable time frame without a significant infusion of capital.  In
addition, because the Company is currently in default of its


                                      -19-

<PAGE>

                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS FROM OPERATIONS


installment agreement with the IRS, all or a portion of the Company's assets are
subject to immediate seizure and possible sale by the IRS.

INFLATION

The Company anticipates increases in costs associated with the operation of the
business and reflects this in the cost of living escalation factors proposed on
all new work.  In addition, the Company is continually researching areas to
minimize cost increases and strives for improved efficiencies in all aspects of
its business environment.


                                      -20-

<PAGE>

                           PART II - OTHER INFORMATION



ITEM 1:   LEGAL PROCEEDINGS    None


ITEM 2:   CHANGES IN SECURITIES    None


ITEM 3:   DEFAULTS UPON SENIOR SECURITIES    None


ITEM 4:   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


The Annual Meeting of Stockholders of Applied Research Corporation was held on
November 15, 1995, for the purpose of electing a board of directors and
approving the appointment of auditors.  Proxies for the meeting were solicited
pursuant to Section 14(a) of the Securities Exchange Act of 1934 and there were
no solicitation in opposition to management's solicitation.

All of management's nominees for directors as listed in the proxy statement were
elected with the following vote:

                            Shares                      Shares
                            Voted       Shares           Not
           Nominee          "FOR"     "WITHHELD"        Voted
           -------          -----     ----------        -----
       Dr. S.P.S. Anand   6,257,247       40,106       513,730
       Manjit Anand       6,257,847       39,506       513,730
       Dennis H. O'Brien  6,260,847       36,506       513,730

The appointment of Friedman & Fuller, P.C. as independent auditor for the next
fiscal year was approved by the following vote:

          Shares          Shares                        Shares
          Voted           Voted         Shares           Not
          "FOR"         "AGAINST"    "ABSTAINING"       Voted
          -----         ---------    ------------       -----

        6,265,132         21,381        10,340         513,730


ITEM 5:   OTHER INFORMATION    None


ITEM 6:   EXHIBITS AND REPORTS ON FORM 8-K    None


                                      -21-

<PAGE>

                  APPLIED RESEARCH CORPORATION AND SUBSIDIARIES

                                   SIGNATURES




Pursuant to the requirements 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.




                                             January 20, 1996
-------------------------------------        -----------------------------------
Dr. S.P.S. Anand                             Date
President and Chief Executive Officer




                                             January 20, 1996
-------------------------------------        -----------------------------------
Dennis H. O'Brien                            Date
Vice President and Chief Financial Officer


                                      -22-

<PAGE>

              APPLIED RESEARCH CORPORATION AND SUBSIDIARIES

                                   SIGNATURES




Pursuant to the requirements 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.




/s/  S.P.S. Anand                                 January 20, 1996
------------------------------------------        ------------------------------
Dr. S.P.S. Anand                                  Date
President and Chief Executive Officer




/s/  Dennis H. O'Brien                            January 20, 1996
------------------------------------------        ------------------------------
Dennis H. O'Brien                                 Date
Vice President and Chief Financial Officer


                                      -21-