<PAGE>
                                            The following items were the subject
                                            of a Form 12b-25 and are included
                                            herein: Item 6, Item 7 and
                                            consolidated revenues of the issuer
                                            set  forth on the cover page.
                                           




 
                    U.S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                Form 10-KSB/A-1
 
(Mark One)
[X]      ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
 
               For the fiscal year ended June 30, 1996
                                         ----------------------------
 
[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
         THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
 
For the transition period from                 to
                               ---------------    -------------------
Commission file number   0-14068
                         --------------------------------------------------

                               MEMRY CORPORATION
    -----------------------------------------------------------------------
                 (Name of small business issuer in its charter)
 
          Delaware                                  06-1084424
----------------------------------       ----------------------------------
(State or other jurisdiction of         (I.R.S. Employer Identification No.)
incorporation or organization)
 
57 Commerce Drive, Brookfield, CT                      06804
---------------------------------                  --------------
                                                     (Zip Code)
(Address of principal executive offices)
 
Issuer's telephone number            (203) 740-7311
                          ----------------------------------------
 
Securities registered under Section 12(b) of the Exchange Act:
 
     Title of each class             Name of each exchange on which registered
 
           None                                         None
--------------------------------     -----------------------------------------

Securities registered under Section 12(g) of the Exchange Act:

                    Common Stock, par value $.01 per share
          -----------------------------------------------------------
                               (Title of class)

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 
                                                               ----     --  

Check if no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.  [ ]
<PAGE>
 
Consolidated revenues of the issuer for the fiscal year ended June 30, 1996 were
$3,674,000.

The aggregate market value of voting stock held by non-affiliates of the
registrant was approximately $14,310,000 on        June 28, 1996 based upon the
average of the bid and asked prices on that date.

The number of shares of Common Stock outstanding as of June 30, 1996:
12,977,854.   All references to numbers of shares of Common Stock contained
herein with respect to periods prior to August 8, 1994 give effect to the one-
for-ten reverse stock split of the Company's Common Stock (the "Reverse Split")
effected on August 8, 1994.

Documents Incorporated by Reference.  Memry Corporation's 1996 Proxy Statement
-----------------------------------                                           
to be filed with the Commission within 120 days after June 30, 1996, is
incorporated by reference in Part III of this Form 10-KSB.

                 Transitional Small Business Disclosure Format
                 ---------------------------------------------


                             Yes          NO     X
                                  ----         -----
<PAGE>
 
          This amendment to the Annual Report on Form 10-KSB of Memry
Corporation (the "Company") for the fiscal year ended June 30, 1996 (the
"Original Form 10-KSB") amends and modifies the Original Form 10-KSB as follows:

     1.   The cover page is amended by the inclusion of the consolidated
          revenues of the Company for the fiscal year ended June 30, 1996.

     2.   Item 6 of Part II, "Management's Discussion and Analysis or Plan of
          Operation," is filed hereby.

     3.   Item 7 of Part II, "Financial Statements," is filed hereby.

     4.   Certain typographical errors in Paragraph (b) of Item 13 are corrected
          hereby.

     5.   Exhibits 10.49, 10.50. 10.51. 10.52, 10.53 and 11 are filed hereby and
          Exhibit 27 is submitted hereby.

                                       3
<PAGE>
 
Item 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

(a)  Results of Operations

REVENUES.
-------- 

Sales Overview.  Overall revenues decreased 22%, from $4,729,000 in fiscal 1995
--------------                                                                 
to $3,674,000 in fiscal 1996, or a $1,055,000 reduction in sales.  Revenues
relating to the Wright Segment were responsible for all of the decrease, and
were partially offset by a slight increase in Memry Segment sales.

Memry Sales.  Revenues relating to the Memry Segment increased to $1,136,000 in
fiscal 1996 from $1,013,000 in fiscal 1995, an increase of $123,000, or 12%.
Sales of the MEMRYSAFE(R) and ULTRAVALVE/TM/ product lines were $286,000 in
fiscal 1996 as compared with $462,000 in fiscal 1995.  Sales of SMA, shape
memory effect wire and wire shapes, shape memory polymers and FIRECHECK/TM/ were
approximately $371,000 in fiscal 1996 as compared with $186,000 in fiscal 1995.
Research and development revenues in fiscal 1996 increased $114,000, or 31%, to
$479,000, as compared to revenues of $365,000 in fiscal 1995.  The increase in
research and development revenues is due to the McDonnell Douglas contract work
which began in the third quarter of fiscal 1996.  The backlog of government-
sponsored contracts is approximately $502,000, in addition to back-log of
approximately $205,000 from a contract with McDonnell Douglas.

Wright Sales.  Wright Machine Segment sales decreased $1,178,000, or 31%, to
$2,538,000 in fiscal 1996 versus $3,716,000 in 1994, as a result of continued
liquidity constraints which interfered with the ability of Wright to make raw
material purchases.  Wright's inability from time to time to obtain raw
materials impacted on its ability to both attract and perform orders.  The
contract backlog decreased to approximately $650,000 at June 30, 1996 as
compared with $1,200,000 at June 30, 1995.

COSTS AND EXPENSES
------------------

Manufacturing Costs Overview.  Manufacturing costs for fiscal 1996 decreased to
----------------------------                                                   
$2,915,000 in fiscal 1996 from $3,850,000 in fiscal 1995, a decrease of
$935,000, or 24%.  The decrease was almost entirely due to the reduction in
gross revenues.  The overall gross profit margin in fiscal 1996 was 9%, as
compared to 12% in 1995.  The decrease in gross margin was primarily caused by
the decrease in the Wright Segment's profit margin described below.

Memry Manufacturing Costs.  Memry Segment manufacturing costs were $569,000 in
fiscal 1996 and $612,000 in fiscal 1995, a decrease of $43,000, or 7%, with
margins of 16% and 13%, respectively.  The increase in the Memry Segment's
margin is attributable to the increase in sales of the higher margin shape
memory effect wire.

Wright Manufacturing Costs.  Wright Machine Segment's manufacturing costs for
fiscal 1996 were $2,346,000 as compared with $3,238,000 in fiscal 1995.  The
reduction of $892,000 in costs, or 28%, is primarily

                                       4
<PAGE>
 
due to the 31% reduction in sales.  Wright's profit margin declined to 8% in
fiscal 1996 versus 14% in fiscal 1995 attributable to the increase in the ratio
of fixed costs to sales volume caused by the reduction in sales volume.

Research and Development Costs.  Research and development costs were $422,000 in
fiscal 1996 and $297,000 in fiscal 1995.  This increase of $125,000, or 42%, was
primarily due to the 31% increase in research and development revenues.

General, Selling, and Administrative Expense ("GS&A").  Overall GS&A was reduced
-----------------------------------------------------                           
in fiscal 1996 by $272,000, or 11%, to $2,102,000 from $2,374,000 in fiscal
1995.  The reduction is primarily due to a decrease in litigation expense and
professional fees.

Depreciation and Amortization Expense.  Depreciation expense was $90,000 in
-------------------------------------                                      
fiscal 1996 as compared with $240,000 in fiscal 1995.  The $150,000, or 63%,
decrease was caused by certain assets becoming fully depreciated during the last
quarter of fiscal 1995.

Interest Expense.  Interest expense decreased to $250,000 in fiscal 1996 from
----------------                                                             
$360,000 in fiscal 1995, a decrease of 31%.  The decrease is primarily due to
approximately $711,000 of payments on Wright's debt to Fleet Bank during fiscal
1996, which debt accrued interest at a rate of prime plus 4%. 

NET LOSS
--------

Overview.  Net loss for fiscal 1996 was $2,105,000, as compared to a loss of
--------                                                                    
$2,392,000 in fiscal 1995, an improvement of $287,000, or 12%.  The improvement
was caused by a $532,000 aggregate reduction in GS&A, interest and amortization
and depreciation expenses, offset by a reduction in gross profit of $245,000.

Memry Segment.  Memry Segment's net loss for fiscal 1996 was $1,718,000 as
compared with fiscal 1995's loss of $1,981,000.  The improvement of $263,000, or
13%, is the result of a reduction in GS&A, depreciation and amortization and
interest expenses of $220,000 and an improvement in gross profit of $45,000.

Wright Segment.  Wright Machine Segment's net loss was relatively flat in fiscal
1996 at $387,000 as compared to $411,000 in fiscal 1995.  Wright's $24,000
improvement is the result of a reduction in GS&A, depreciation and amortization
and interest expenses of $494,000 offset by a reduction of $472,000 in gross
profit.

In November 1992, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 112 "Accounting for Postemployment Benefits,"
which was required to be implemented by the Company in fiscal 1995.  Because the
Company generally does not provide such benefits, the adoption of this statement
did not have a material effect on the Company's financial position.

                                       5
<PAGE>
 
(b)  Liquidity and Capital Resources

The Company's primary capital requirements to date have been to fund losses from
operations.  In addition, from time to time the Company has required capital to
effect acquisitions and to fund increases in inventory for certain products
necessary to allow the Company to increase sales for those products.  The
Company has historically satisfied its capital requirements from sales of equity
securities and borrowings.  During fiscal 1996, net cash used by operating
activities was approximately $2.4 million, net cash used for acquisitions
(primarily the Raychem Acqusition) was approximately $4.1 million and net cash
provided by financing activities (which included a reduction in borrowings of
approximately $700,000) was approximately $5.4 million.  As a result of the
foregoing, the Company held cash and cash equivalents at June 30, 1996 of
approximately $57,000, down from approximately $1.1 million at the start of
fiscal 1996.  As a result, at the close of fiscal 1996 the Company was in a cash
impaired position and had negative working capital (current liabilities less 
current assets) of approximately $900,000(down from negative working capital of 
approximately $2.3 million on June 30, 1995).

Subsequent to the close of the Company's 1996 fiscal year, on August 9, 1996,
the Company entered into a term and revolving loan agreement with Affiliated
Business Credit Corporation ("ABCC"), a commercial financing subsidiary of
Center Financial Corporation, allowing up to $2.635 million of aggregate
borrowings. The term loan is a five year $1.135 million loan, with principal
payable in monthly installments of approximately $19,000. An additional $135,000
of principal is due (i) on or prior to December 31, 1996 if, prior to December
31, 1996, the Company raises additional equity (excluding equity raised to
purchase intellectual property, medical patents and other assets related thereto
from Raychem), and (ii) on or before June 30, 1997 if the Company does not raise
such additional equity prior to December 31, 1996. The entire unpaid balance, if
not earlier demanded, is due and payable on July 31, 2001; provided, however,
that ABCC has the right to accelerate the loan and require full payment upon
demand. Interest on the term loan accrues at the rate of prime plus 2.25%. The
revolving credit facility provides for borrowings at the lesser of $1.5 million
or the sum of (a) 80% of eligible accounts receivable plus (b) the lesser of
$500,000 or 25% of eligible inventory. Borrowings pursuant to the revolving loan
agreement are due upon demand and bear interest, payable monthly, at prime plus
2%. The terms with ABCC generally are more favorable than the terms that the
Company's Wright subsidiary had with Fleet Bank, the Company's prior lender. The
loan documents contain standard covenants, including security interests in
substantially all of the Company's consolidated assets, commitment fees and
negative covenants (including restrictions on dividends and other payments),
which the Company does not expect to materially impact operations. At the August
9, 1996 closing, Wright's debt to Fleet Bank was repaid with a $140,000, or 16%,
discount.

The Company's only currently contemplated material capital expenditure for
fiscal 1997 is the move of the medical assemblies portion of the business
purchased from Raychem from Menlo Park, California to the Company's headquarters
in Brookfield, Connecticut, in the second quarter of fiscal 1997.  The Company
anticipates that the cost of such move will be slightly greater than $100,000.
In addition, the Company anticipates making substantial improvements to certain
machinery and equipment located at Memry West and used to manufacture tinel-lock
product for

                                       6
<PAGE>
 
Raychem.  However, as a result of an agreement entered into at the time of the
Raychem Acquisition, it is anticipated that Raychem will bear substantially all
the costs of such improvements.

The Company has in the past grown through acquisitions (including both the
Raychem Acquisition and the Company's earlier acquisition of Wright) and, as
part of its continuing growth strategy, the Company expects to continue to
evaluate and pursue opportunities to acquire other companies, assets and product
lines that either complement or expand the Company's existing businesses.  The
Company intends to use available cash from operations, when and if available,
and sales of equity to finance any such acquisitions that may be sought in the
future.

In connection with a December 1994 subordinated debt financing, the Company
granted Connecticut Innovations Incorporated ("CII"), currently the holder of
both common stock and warrants of the Company, a "put" right if:  (i) at any
time before the earlier of June 28, 2006 and the date on which CII ceases to
hold at least 35% of the common stock underlying the convertible securities
originally issued to it, the Company ceases to (a) maintain its corporate
headquarters and all of its product business operations in the State of
Connecticut (including, after January 1, 1997, the assembly of all products to
be sold to U.S. Surgical Corporation, most of which are currently being
manufactured at Memry West), excluding business operations relating to Wright's
production of screw machine products and taper pins and the Company's components
and sub-assembly business acquired from Raychem, (b) base its president and
chief executive officer, a majority of its senior executives, and all of its
administrative, financial, research and development, marketing and customer
service staff relating to its product business (subject to the same inclusions
and exclusions as clause (a)) in the State of Connecticut, (c) conduct all of
its operations relating to its product business directly or through
subcontractors and through licensed operations in the State of Connecticut
(subject to the same inclusions and exclusions as clause (a)), and (d) maintain
its principal bank accounts with banks located in the State of Connecticut,
excluding all banks associated with Wright; or (ii) the Company fails (a) to
file by October 31, 1996 a registration statement under the Securities Act of
1933, as amended (the "Registration Statement"), covering, inter alia, the
                                                           ----- ----     
resale by CII of the shares of the Company's Common Stock owned by CII and
underlying warrants owned by CII (the "Registrable Securities") or to effect
such Registration Statement by January 31, 1997, or (b) to keep the Registration
Statement in effect for an aggregate of 120 days during any rolling twelve month
period during the three years which the Company is required to maintain the
effectiveness of the Registration Statement.  Upon CII's exercise of its put,
the Company shall be obligated to purchase from CII all the Registrable
Securities then held by CII at a price equal to the greater of the then current
market price of the Company's common stock or $2.00 per share, less, in either
event, the aggregate amount of unpaid exercise prices of all warrants put to the
Company.  Using $2.00 per share as the put price per share, the aggregate put
price that would have to be paid by the Company if the put were exercised would
be approximately $4,085,500.  If CII were to have the right to put its
securities and were to choose to exercise that right, it would have a serious
adverse effect on the Company's liquidity

                                       7
<PAGE>
 
and the Company would most likely have to seek equity financing to be able to
meet its obligations to CII.  However, the Company believes that it has the
ability to insure that its operations do not move from Connecticut in a manner
that would trigger CII's put, and intends to cause the Registration Statement to
be filed and maintained in a manner that would prevent CII's put from being
operative.

The Company believes that the combination of its improved borrowing facility,
its ability to raise equity capital in the past and, as a result of the Raychem
Acquisition, revenues from Memry West will be sufficient to meet the Company's
capital requirements (assuming both that ABCC does not demand immediate
repayment of the term loan and that CII's put rights are not triggered and
exercised (and, as stated above, the Company intends not to cause said put
rights to become exercisable).

The Company does not expect that any of the matters discussed in Note 10 to the
Company's Consolidated Financial Statements will have a material impact on the
Company's financial condition, future operating results and/or liquidity.

                                       8
<PAGE>
 
Item 7.    FINANCIAL STATEMENTS

Index to Financial Statements
-----------------------------
 
INDEPENDENT AUDITOR'S REPORT                       F-1
 
FINANCIAL STATEMENTS:
 
Consolidated Balance Sheets -                      F-2
  As of June 30, 1996
 
Consolidated Statements of Operations -            F-3
  For years ended June 30, 1996 and 1995
 
Consolidated Statements of Stockholders' Equity    F-4
  For years ended June 30, 1996 and 1995
 
Consolidated Statements of Cash Flows -            F-5
  For years ended June 30, 1996 and 1995
 
Notes to Consolidated Financial Statements         F-6

                                       9
<PAGE>
 
                            McGladrey & Pullen, LLP
                            -----------------------
                 Certified Public Accountants and Consultants

INDEPENDENT AUDITOR'S REPORT


To the Stockholders and Board of Directors
Memry Corporation and Subsidiary
Brookfield, Connecticut


We have audited the accompanying consolidated balance sheets of Memry
Corporation and subsidiary as of June 30, 1996 and 1995, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Memry Corporation
and subsidiary as of June 30, 1996 and 1995, and the results of their operations
and their cash flows for the years then ended in conformity with generally
accepted accounting principles.


                                        /s/ McGladrey & Pullen, LLP


New Haven, Connecticut
September 24, 1996

                                      F-1
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY  

CONSOLIDATED BALANCE SHEETS
June 30, 1996                            
--------------------------------------------------------------------------------

<TABLE> 
<CAPTION> 
                                 
ASSETS (Note 8)                                                                         1996              1995
                                                                                -----------------------------------  
<S>                                                                             <C>               <C> 
Current Assets                                                                                    
  Cash and cash equivalents (Note 5)                                            $       57,000    $       1,145,000 
  Accounts receivable, less allowance for doubtful accounts 1996 $29,000;                         
   1995 $53,000                                                                        568,000              691,000 
  Inventories (Note 3)                                                               2,044,000              849,000 
  Prepaid expenses and other                                                            63,000               24,000 
                                                                                --------------    -----------------   
            Total current assets                                                     2,732,000            2,709,000 
                                                                                --------------    -----------------   
                                                                                                  
Property, Plant and Equipment, at cost, net (Notes 4 and 9)                          3,881,000            1,233,000
                                                                                --------------    -----------------   
Other Assets                                                                                      
  Patents and patent rights, less accumulated amortization 1996 $60,000;                          
   1995 $57,000                                                                     2,002,000                5,000
Goodwill                                                                              989,000              -
Deferred financing costs                                                               36,000              -
Deposits                                                                               39,000               32,000 
                                                                                --------------    -----------------   
                                                                                    3,066,000               37,000
                                                                                --------------    -----------------   
            Total assets                                                        $   9,679,000     $      3,979,000 
                                                                                ==============    =================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                                    
                                                                                                  
Current Liabilities                                                                               
  Accounts payable and accrued expenses                                         $   1,733,000     $      2,189,000 
  Notes payable (Note 8)                                                            1,698,000            2,810,000 
  Unearned revenue (Note 2)                                                           150,000              -
  Current maturities of capital lease obligations (Note 9)                              3,000                4,000
                                                                                --------------    -----------------  
            Total current liabilities                                               3,584,000            5,003,000 
                                                                                --------------    -----------------  
Capital Lease Obligations, less maturities (Note 9)                                     4,000                7,000 
                                                                                --------------    ----------------- 
Commitments and Contingencies (Notes 9 and 10)                                                    
                                                                                                  
Stockholders' Equity                                                                              
  Preferred stock (Note 6)                                                             36,000               19,000 
  Common stock  (Note 6)                                                              130,000               80,000 
  Additional paid-in capital                                                       39,034,000           29,874,000 
  Accumulated deficit                                                             (33,109,000)        ( 31,004,000) 
                                                                                --------------    ----------------- 
            Total stockholders' equity (deficit)                                    6,091,000           (1,031,000) 
                                                                                --------------    ----------------- 
            Total liabilities and stockholders' equity                          $   9,679,000     $      3,979,000 
                                                                                ==============    ================= 
</TABLE> 

See Notes to Consolidated Financial Statements. 

                                      F-2
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY  

CONSOLIDATED STATEMENTS OF OPERATIONS 
Years Ended June 30, 1996 and 1995
--------------------------------------------------------------------------------
                                
<TABLE> 
<CAPTION> 
                                                               1996            1995
                                                           ------------    ------------
<S>                                                        <C>             <C> 
Revenues                                              
  Product sales                                            $  3,195,000    $  4,364,000 
  Research and Development revenues                             479,000         365,000 
                                                           ------------    ------------
                                                              3,674,000       4,729,000 
                                                           ------------    ------------
Cost of Revenues                                                
  Manufacturing                                               2,915,000       3,850,000 
  Research and development                                      422,000         297,000 
                                                           ------------    ------------
                                                              3,337,000       4,147,000 
                                                           ------------    ------------
                                                      
          Gross profit                                          337,000         582,000 
                                                           ------------    ------------ 
Operating Expenses                                         
  General, selling and administrative (Note 9)                2,102,000       2,374,000 
  Depreciation and amortization                                  90,000         240,000 
                                                           ------------    ------------ 
                                                              2,192,000       2,614,000 
                                                           ------------    ------------ 
                                                      
          Operating loss                                     (1,855,000)     (2,032,000) 
                                                      
Interest Expense (Note 8)                                       250,000         360,000 
                                                      
          Net loss                                         $ (2,105,000)   $ (2,392,000) 
                                                           ============    ============  

Weighted average number of common shares outstanding          8,357,118       5,353,222 
                                                           ============    ============  
Net loss per common share                                  $      (0.25)   $      (0.45) 
                                                           ============    ============  
</TABLE> 

See Notes to Consolidated Financial Statements.  

                                      F-3
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY  

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 
Years Ended June 30, 1996 and 1995         
--------------------------------------------------------------------------------
                                                                                
<TABLE> 
<CAPTION>                                                                                          

                                                Preferred Stock          Common Stock
                                              -------------------     --------------------
                                                                                                 Additional  
                                               Shares      Par         Shares        Par          Paid-in        Accumulated
                                               Issued      Value       Issued        Value        Capital          Deficit  
                                              --------------------------------------------------------------------------------
<S>                                           <C>       <C>          <C>           <C>         <C>              <C> 
Balance, June 30, 1994                            854   $  85,000     46,606,450   $ 46,000    $ 26,869,000     $ (28,612,000) 
  Reverse stock split                             -           -      (41,945,805)        -           -                 -
  Issuance of common stock                        -           -        1,384,926     15,000       1,106,000            -
  Series A preferred stock converted             (124)    (12,000)       424,426      4,000           8,000            -
  Series B preferred stock converted             (250)    (25,000)       312,500      3,000          22,000            -
  Series F preferred stock converted             (480)    (48,000)       480,000      5,000          43,000            -
  Conversion of Dividend on Series A & B          -           -          747,500      7,000         591,000            -
  Series G preferred stock issued                 193      19,000         -              -        1,235,000            -
  Net loss                                        -           -           -              -           -             (2,392,000)
                                              --------  ---------    -----------   ---------   ------------     -------------- 

Balance, June 30, 1995                            193   $  19,000      8,009,997   $ 80,000    $ 29,874,000     $ (31,004,000)
                                                                                            
  Issuance of common stock                        -           -        3,363,329     33,000       4,570,000            -
  Series G preferred stock converted             (127)    (13,000)     1,269,000     13,000          -                 - 
  Series G preferred stock issued                 231      23,000         -              -        1,478,000            -
  Conversion of debenture                          67       7,000        285,528      3,000         753,000            -
  Conversion of debt                              -           -           50,000      1,000          49,000            -
  Issuance of warrants                            -           -           -              -        2,310,000            -   
  Net loss                                        -           -           -              -           -             (2,105,000) 
                                              --------  ---------    -----------   ---------   ------------     -------------- 

Balance as of June 30, 1996                       364   $  36,000     12,977,854   $ 130,000   $ 39,034,000     $ (33,109,000)
                                              ========  =========    ===========   =========   ============     ============== 
</TABLE> 

See Notes to Consolidated Financial Statements.
                         

                                      F-4
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY  

CONSOLIDATED STATEMENTS OF
CASH FLOWS Years Ended June 30, 1996 and 1995                            
--------------------------------------------------------------------------------
                                 
<TABLE> 
<CAPTION> 
                                                                                         1996            1995  
                                                                                   -------------    ------------ 
<S>                                                                                <C>              <C> 
Cash Flows From Operating Activities                                    
  Net loss                                                                         $  (2,105,000)   $ (2,392,000) 
  Adjustments to reconcile net loss to net cash used in operating activities 
    Depreciation and amortization                                                         90,000         240,000
    Change in operating assets and liabilities, net of assets acquired in                          
     business combination:                                        
       Decrease (increase) in accounts receivable                                        123,000          (9,000) 
       Decrease in inventories                                                            98,000         132,000 
       Increase in prepaid expenses and other                                              7,000          12,000 
       (Decrease) increase in accounts payable and accrued expenses                     (556,000)        142,000 
       (Increase) decrease in other asset                                                (82,000)          6,000 
                                                                                   -------------    ------------ 
          Net cash used in operating activities                                       (2,425,000)     (1,869,000) 
                                                                                   -------------    ------------  
Cash Flows From Investing Activities                             
  Purchase of shape memory metals operation                                           (4,022,000)         -     
  Purchases of property, plant and equipment                                             (38,000)       (109,000) 
                                                                                   -------------    ------------  
          Net cash used in investing activities                                       (4,060,000)       (109,000) 
                                                                                   -------------    ------------  
Cash Flows From Financing Activities                             
  Proceeds from sale of preferred stock, net                                           1,502,000       1,254,000 
  Proceeds from sale of common stock, net                                              4,603,000       1,119,000 
  Proceeds from short-term borrowings                                                    104,000         856,000 
  Principal payments on notes payable                                                   (808,000)       (291,000) 
  Payments on capital lease obligations                                                   (4,000)         (7,000) 
  Payments on deferred lease                                                              -               (9,000) 
                                                                                   -------------    ------------  
          Net cash provided by financing activities                                    5,397,000       2,922,000 
                                                                                   -------------    ------------   
                                                         
          (Decrease) increase in cash and cash equivalents                            (1,088,000)        944,000

Cash and cash equivalents, beginning of year                                           1,145,000         201,000 
                                                                                   -------------    ------------   
Cash and cash equivalents, end of year                                             $      57,000    $  1,145,000

Supplemental Disclosure of Cash Flow Information                                 
  Cash payments for interest                                                       $     314,000    $    283,000

Supplemental Schedule of Noncash Investing and Financing Activities    

Acquisition of shape memory metals division:                             
  Cash purchase price                                                              $   4,022,000    $     -

  Fair value of assets acquired
    Property and equipment                                                         $   2,700,000    $     -
    Patents                                                                            2,000,000          -      
    Inventory                                                                          1,293,000          -      
    Goodwill                                                                             989,000          -
                                                                                   -------------    ------------   
                                                                                       6,982,000          -
                                                                                   -------------    ------------   
Less                             
  Warrants issued                                                                     (2,310,000)         -
  Note payable issued                                                                   (350,000)         -
  Liabilities assumed                                                                   (300,000)         -
                                                                                   -------------    ------------   
                                                                                   $   4,022,000    $     -   
                                                                                   =============    ============    

Issuance of common stock in settlement of debt                                     $     813,000    $     -
                                                                                   =============    ============    
</TABLE> 

See Notes to Consolidated Financial Statements.  

                                      F-5
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996 and 1995
--------------------------------------------------------------------------------

Note 1. Summary of Significant Accounting Policies

Nature of business
------------------

Memry Corporation, a Delaware corporation incorporated in 1981, is engaged in
the businesses of developing, manufacturing and marketing products and
components utilizing the properties exhibited by shape memory alloys, and
manufacturing and marketing metal parts and components machined on screw
machines and smaller metal working machines. The Company's sales are primarily
to customers located throughout the United States. The Company extends credit to
its customers all on an unsecured basis on terms that it establishes for
individual customers.

Accounting estimates
--------------------

The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

Principles of  consolidation
----------------------------

The financial statements include the accounts of Memry Corporation ("Memry") and
Wright Machine Corporation ("Wright"), its wholly-owned subsidiary
(collectively, the "Company"). All significant intercompany transactions have
been eliminated in consolidation.

Cash and cash equivalents
-------------------------

For purposes of the consolidated statements of cash flows, the Company considers
all highly liquid investments with a maturity of three months or less, when
purchased, to be cash equivalents. The carrying amount of these financial
instruments approximates fair value because of the short maturity of these
instruments.

Inventories
-----------

Inventories consist principally of various metal alloy rod, plumbing products
and shape memory alloys. Inventories are stated at the lower of cost, determined
on the first-in, first-out method, or market.

                                      F-6
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1996 and 1995
--------------------------------------------------------------------------------


Impairment of assets
--------------------

The Company reviews its long-lived assets and certain identifiable intangible
assets for impairment whenever events or circumstances indicate that the
carrying amount of the assets may not be recoverable.

Revenue recognition
-------------------

Revenues from product sales are recognized when the related products are
shipped. Certain revenues are earned in connection with research and development
contracts which are principally with the U.S. Government. Such revenues are
recognized when services are rendered. Some of the Company's research and
development projects are customer-sponsored and typically provide the Company
with the production rights or pay a royalty to the Company if a commercially
viable product results.

Depreciation and amortization
-----------------------------

Depreciation of property, plant and equipment is computed using the straight-
line method over the estimated useful lives of the respective assets, ranging
from three to thirty years. Leasehold improvements are amortized over the life
of the lease, or the improvements' estimated useful life, if shorter.

Costs of obtaining patents and patent rights are amortized using the straight-
line method over the patents' expected period of benefit which ranges from
thirteen to sixteen years.

Goodwill represents the cost of acquired assets in excess of values ascribed to
net tangible assets and is being amortized using the straight-line method over
15 years.

Costs incurred in obtaining financing are capitalized and are being amortized
over the term of the related debt.

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

The Company files a consolidated federal income tax return. Taxes are calculated
on a separate company basis.

Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss and tax
credit carryforwards and deferred tax 

                                      F-7
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1996 and 1995
--------------------------------------------------------------------------------


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
on the date of enactment.

Net loss per common share
-------------------------

The net loss per common share is based on the net loss from operations and the
weighted average number of shares of Common Stock outstanding during each year.
Common stock equivalents have been excluded from the computation of the net loss
per common share because inclusion of such equivalents is antidilutive.

Note 2. Business Combination

On June 28, 1996, the Company purchased certain assets used in conjunction with
the shape memory metals operation of Raychem Corporation ("Raychem"). Details of
the transaction, which was accounted for as a purchase, are as follows:

A summary of the purchase payments in connection with the acquisition follows:

        Cash paid to seller at closing                        $ 3,700,000 
        Note payable to seller                                    350,000 
        1,130,000 warrants issued to seller, at $0.01           2,285,000 
        1,250,000 warrants issued to seller, at $2.00              25,000 
        Obligations assumed                                       300,000 
        Acquisition costs                                         322,000 
                                                              -----------
                                                              $ 6,982,000 
                                                              ===========

A summary of the assets acquired in connection with the acquisition of the shape
memory metals division is as follows:

        Patent rights                                         $ 2,000,000 
        Goodwill                                                  989,000 
        Machinery and equipment                                 2,700,000 
        Inventory                                               1,293,000 
                                                              -----------
                                                              $ 6,982,000 
                                                              ===========

                                      F-8
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY  

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1996 and 1995
--------------------------------------------------------------------------------


Unaudited pro forma consolidated results of operations for the years ended June
30, 1996 and 1995, as though the division had been acquired as of July 1, 1994,
follows:

                                                    1996          1995
                                                               
                                                ------------   -----------
        Sales                                   $ 12,056,000   $ 9,699,000 
        Net (loss)                                   (70,000)   (3,319,000) 
        Net (loss) per common 
        share                                   $      (0.01)  $     (0.45)

The above amounts reflect adjustments for amortization of goodwill, additional
depreciation on revalued purchased assets, and certain production and general
and administrative costs.

In addition, pursuant to a private label/distribution agreement entered into
between Raychem and the Company, concurrent with the acquisition, Raychem will
be the exclusive distributor for an initial term of five years for non-implant
applications of products in the product line to certain customers which
comprised approximately 70% of the Raychem division's fiscal 1996 revenues.
Sales to Raychem under the private label/distribution agreement will be
discounted to allow Raychem to recover its sales and marketing expenses and to
realize a profit upon resale of such products to its customers. The unaudited 
pro forma consolidated results of operations set forth above give effect to such
discount.

Note 3. Inventories

Inventories at June 30, 1996 and 1995, are summarized as follows:


                                               1996       1995    
                                            ---------------------- 
        Raw materials and supplies          $   665,000  $ 109,000 
        Work-in-process                       1,372,000    217,000 
        Finished goods                            7,000    523,000 
                                            -----------  ---------
                                            $ 2,044,000  $ 849,000
                                            ===========  ========= 

                                      F-9
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1996 and 1995
--------------------------------------------------------------------------------


Note 4. Property, Plant and Equipment

Property, plant and equipment at June 30, 1996 and 1995, is summarized as
follows:

<TABLE> 
<CAPTION> 
                                                               1996          1995
                                                           -----------   ----------- 
<S>                                                        <C>           <C> 
        Land                                               $   166,000   $   166,000 
        Buildings and improvements                             942,000       942,000 
        Tooling and equipment                                4,750,000     2,013,000
        Leasehold improvements                                 100,000        98,000 
                                                           -----------   ----------- 
                                                             5,958,000     3,219,000 
        Less accumulated depreciation and amortization       2,077,000     1,986,000 
                                                           -----------   -----------
                                                           $ 3,881,000   $ 1,233,000 
                                                           ===========   =========== 
</TABLE> 



Note 5. Concentrations

Financial instruments which potentially subject the Company to concentration of
credit risk consist principally of cash and cash equivalents.

The Company places its deposits with quality financial institutions. At times,
cash and cash equivalents exceed the amount insured by the Federal Deposit
Insurance Corporation.

Note 6. Capital Stock


Preferred stock
---------------

The Company has two series of preferred stock outstanding at June 30, 1996. Both
series carry voting rights. Information regarding the shares authorized, issued
and outstanding, and conversion rates follows:


                       Number of Shares        
                   ---------------------------
        Preferred                  Issued and      Par
          Stock     Authorized     Outstanding    value 
       -------------------------------------------------
        Series G        800          297.10       $100 
        Series H        800          66.85        $100 

                                      F-10
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1996 and 1995
--------------------------------------------------------------------------------


Each share of preferred stock may, at the option of the holder, be converted
into 10,000 shares of common stock (subject to adjustment pursuant to anti-
dilution provisions). On June 25, 1996, a holder of the Series G preferred stock
converted 126.9 shares to 1,269,000 shares of common stock.

In addition, each share of preferred stock was automatically convertible into
10,000 shares of common stock (which number was subject to adjustment pursuant
to anti-dilution provisions) upon the first to occur of (i) the closing bid
price per share of common stock exceeding $1.50 for 30 consecutive business
days, and (ii) the conversion of a specified number of shares of Series G and
Series H preferred stock into common stock. Accordingly, subsequent to June 30,
1996 all preferred stock was converted to common stock.

Common stock
------------

On December 19, 1995, the Company amended its Certificate of Incorporation to
increase the number of authorized shares of its common stock, par value $0.01
per share, from 10,000,000 to 25,000,000 shares, of which there are 12,977,854
and 8,009,997 shares issued and outstanding at June 30, 1996 and 1995,
respectively.

Common stock reserved for issuance at June 30, 1996, is as follows:

                                                Number of 
                                                 Shares 
                                                --------- 
For exercise of outstanding warrants            5,709,368 
For exercise of stock options                     600,000 
For conversion of Series G preferred stock      2,971,000 
For conversion of Series H preferred stock        668,500 
                                                --------- 
                                                9,948,868 
                                                ========= 

On June 28, 1996, a convertible, subordinated debenture held by an investor in
the principal amount of $763,208 was converted to 285,528 common shares and
66.85 Series H preferred shares. The investor also holds approximately 2,088,000
warrants to purchase common shares of the Company, exercisable at an average
price of $0.96 per share. These warrants were originally issued in connection
with the issuance of the convertible, subordinated debenture, referred to above.
The agreement with the investor provides, upon the occurrence of specified
events, primarily should the Company cease to maintain its principal offices
within the State of Connecticut or fail to file a registration statement
covering the resale of its securities by 

                                      F-11
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1996 and 1995
--------------------------------------------------------------------------------


October 31, 1996, or effect such registration statement by January 31, 1997, the
investor the right to put all securities of the Company held by the investor at
that time for a price equal to the greater of the then current market price per
share of such securities (on an as-converted basis) or $2 per share, less, in
either event, the aggregate amount of unpaid exercise prices of all warrants put
to the Company. Using $2.00 per share as the put price per share, the aggregate
put price that would have to be paid by the Company if the put were exercised
would be approximately $4,085,500. If the investor were to have the right to put
its securities and were to choose to exercise that right, such an event would
have a serious adverse effect on the Company's liquidity and the Company would
most likely have to seek equity financing to be able to meet its obligations to
the investor. However, the Company has the ability to insure that its operations
do not move from Connecticut. Also, the Company intends to cause the
registration statement to be filed by October 31, 1996 and maintained in a
manner that would prevent the put from being operative.

Stock Option Plans
------------------

Pursuant to the Company's stock option plan, incentive stock options are granted
at prices equal to or greater than the fair market value of the Company's stock
at the date of grant, and are exercisable at the date of grant unless otherwise
stated. In addition, non-qualified options are granted at a price determined by
the compensation committee, which may be less than market value in which case
expense is recognized. Other pertinent information related to the plan during
fiscal years 1996 and 1995, is as follows:

<TABLE> 
<CAPTION> 
                                                                            Average 
                                            Shares           Options       Price Per
                                           Reserved        Outstanding       Share   
                                           --------        -----------     ---------
<S>                                        <C>             <C>             <C> 
        Balance, June 30, 1994                   -                -        $    -
          Canceled                               -                -             -
          Granted                          600,000             436,500        3.47 
          Exercised                              -                -             -
                                           --------        -----------     --------- 
        Balance, June 30, 1995             600,000             436,500     $  3.47 
          Canceled                               -             (69,000)      (3.53) 
          Granted                                -             125,000        0.90 
          Exercised                              -                -             -
                                           --------        -----------     --------- 
        Balance, June 30, 1996             600,000             492,500     $  1.35 
                                           ========        ===========     =========
</TABLE> 

At June 30, 1996, 223,500 of the outstanding options were exercisable.

                                      F-12
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1996 and 1995
--------------------------------------------------------------------------------


Warrants
--------


The following table summarizes warrants outstanding at June 30, 1996 and 1995:

<TABLE> 
<CAPTION> 
                                                               Shares          Number of          Exercise 
                                                              Reserved          Shares              Price  
                                                            ------------      -----------      --------------- 
<S>                                                         <C>               <C>              <C> 
        Balance, June 30, 1994                               19,991,257        19,991,257      $  .20 - $10.00 
          Adjustment for reverse stock split                (17,992,131)      (17,992,131)            -
          Canceled                                             (212,948)         (212,948)     $  .20 - $10.00 
          Granted                                             4,302,713         4,302,713      $ 1.00 - $ 5.00 
          Exercised                                                -                 -                - 
                                                            ------------      -----------      --------------- 
        Balance, June 30, 1995                                6,088,891         6,088,891       $1.00 - $ 7.40 
          Canceled                                           (3,085,704)       (3,085,704)           $1.40 
          Granted                                             2,706,181         2,586,181       $0.01 - $ 2.75 
          Exercised                                                -                 -                - 
                                                            ------------      -----------      --------------- 
        Balance, June 30, 1996                                5,709,368         5,589,368       $0.01 - $ 7.40 
                                                            ============      ===========      =============== 
</TABLE> 

Note 7. Income Taxes

Deferred income taxes reflect the net effects of temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. For financial reporting purposes,
a valuation allowance of $13.5 million and $12.3 million has been recognized as
of June 30, 1996 and 1995, respectively, to reflect the estimated amount of
operating loss carryforwards and temporary differences which may not be
realized. The approximate effect of carryforwards and temporary differences that
give rise to deferred tax assets and liabilities as of June 30, 1996 and 1995,
are as follows:

<TABLE> 
<CAPTION> 
                                                                         1996                1995
                                                                --------------     -------------- 
<S>                                                                     <C>             <C> 
        Deferred tax assets:                                       
          Allowance for doubtful accounts                   $          12,000         $    21,000 
          Inventory reserves                                          172,000             304,000 
          Capitalization of inventory costs                            31,000              39,000 
          Vacation accruals                                            41,000              21,000 
          Depreciation and amortization                               (13,000)             46,000 
          Research and development credit carryforwards               160,000             160,000 
          Net operating loss carryforwards                         13,100,000          11,679,000 
                                                                --------------     -------------- 
            Total deferred tax assets                             13,503,000           12,270,000 
        Valuation allowance                                      (13,503,000)        ( 12,270,000) 
                                                                --------------     -------------- 
            Net deferred tax assets                             $         -        $         -
                                                                ==============     ============== 
</TABLE> 

                                      F-13
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1996 and 1995
--------------------------------------------------------------------------------


As of June 30, 1996, the Company has net operating loss carryforwards for income
tax purposes of approximately $33 million, which expire beginning in 1998. In
addition, the Company has tax credit carryforwards available to offset future
taxable income aggregating approximately $160,000 which expire in various
amounts from 1998 through 2008. As a result of numerous equity transactions, the
net operating loss carryforwards and the unused tax credits are significantly
limited as to ultimate amounts of these tax attributes which may be utilized and
the periods for which they will apply.

Note 8. Notes Payable




Notes payable consist of the following at June 30, 1996 and 1995:

<TABLE> 
<CAPTION> 
                                                                                 1996               1995 
                                                                              -----------        -----------
<S>                                                                           <C>                <C>              
        Revolving loan payable to bank, interest payable                                   
          monthly at the bank's base rate plus 4% (12.25%                                   
          at June 30, 1996), due July 1, 1996. (A)                            $   381,000        $   570,000 
                                                                                           
        Term note payable to bank, due in monthly installments                             
          of $7,000, plus interest at the bank's base rate plus 4%                         
          (12.25% at June 30, 1996), due July 1, 1996. (A)                         83,000            167,000 
                                                                                           
        Mortgage note payable to bank, due in monthly                                      
          installments of $3,700, plus interest at the bank's                              
          base rate plus 4% (12.25% at June 30, 1996),                                     
          due July 1, 1996. (A)                                                   471,000            910,000 
                                                                                           
        Convertible, subordinated debenture note, payable to                               
          investor, interest at 5% payable semiannually, due                               
          December 1999. (B)                                                         -               763,000 
                                                                                           
        Unsecured note payable to Raychem Corporation,                                     
          interest payable at 10%, due on demand. (C)                             350,000               -
                                                                                           
        Unsecured notes payable to affiliated company, interest                            
          payable at 6%, due on demand.                                           344,000            240,000

</TABLE> 

                                      F-14
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1996 and 1995
--------------------------------------------------------------------------------

<TABLE> 
<CAPTION> 
                                                                             1996                1995    
                                                                          ------------       ------------
<S>                                                                       <C>                <C>              
                                                                                            
        Unsecured note payable to officer/stockholder, interest                             
          payable at 12%, due on demand.                                        60,000             60,000 
                                                                                            
        Unsecured notes payable to affiliated company, interest                             
          at prime plus 4%, payable on demand.                                   9,000            100,000 
                                                                          ------------       ------------
                                                                          $  1,698,000       $  2,810,000 
                                                                          ============       ============
</TABLE> 
                                       

(A)     At June 30, 1996 and 1995, the Company was in default with respect to
        its revolving loan, term note and mortgage note. Accordingly, at June
        30, 1996 and 1995, the term and mortgage loans were classified as
        current obligations in the accompanying consolidated balance sheet. At
        June 30, 1996, the Company expected to refinance the above debt and on
        August 9, 1996, the Company entered into a new credit facility with a
        different lender.
                                                
        The credit facility entered into on August 9, 1996, provides both a
        revolving and term loan. The revolving loan provides for borrowings up
        to the lesser of $1,500,000 or the sum of a) 80% of eligible accounts
        receivable and b) the lesser of $500,000 or 25% of eligible inventory.
        Borrowings pursuant to the revolving loan are due upon demand and bear
        interest, payable monthly, at prime plus 2%. The term loan is in the
        amount of $1,135,000 and is payable in monthly principal installments of
        $18,917, plus interest at prime plus 2.25%, through July 2001. The term
        loan is due upon demand. These loans are cross-collateralized by
        substantially all the assets of the Company.

        The term loan is subject to a mandatory prepayment in the amount of
        $135,000 (i) on or prior to December 31, 1996 if, prior to December 31,
        1996, the Company raises additional equity (excluding equity raised to
        purchase intellectual property, medical patents and other assets related
        thereto from Raychem), and (ii) on or before June 30, 1997 if the
        Company does not raise such additional equity prior to December 31,
        1996.

(B)     This note was converted to common and preferred stock during the year
        ended June 30, 1996 (see Note 6).

(C)     The obligation was incurred in connection with the acquisition of the
        shape memory metals operation of Raychem (see Note 2) and was repaid
        subsequent to June 30, 1996, in connection with the new credit facility
        described above.

                                      F-15
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1996 and 1995
--------------------------------------------------------------------------------

Note 9. Leases

The Company leases telephone equipment and a copier under noncancelable leases.
These leases have been recorded as capital leases and are included in the
accompanying consolidated balance sheets under the caption "Property, Plant and
Equipment". The Company also leases its Connecticut and California warehouse and
office facilities under operating leases. The lease on the Connecticut facility
expires in September 2001 and the lease on the California facility expires in
September 1998.

Future minimum lease payments under capital leases and significant noncancelable
operating leases, with remaining terms of one year or more, are as follows at
June 30, 1996:

                                           Capital      Operating
                                            Leases       Leases 
                                           -------    ----------- 
1997                                       $ 4,000    $   386,000 
1998                                         4,000        386,000 
1999                                            -         197,000 
2000                                            -         134,000 
2001                                            -          33,000 
                                           -------    ----------- 
                                             8,000    $ 1,136,000 
                                                      ===========
Less amount representing interest            1,000
                                           -------
Present value of future minimum lease        7,000
Less current maturities                      4,000
                                           -------
                                           $ 3,000
                                           =======

Rent expense under operating leases for the years ended June 30, 1996 and 1995
amounted to $130,000 and $114,000, respectively.

Note 10. Contingencies

401(K) Plan
-----------

The Company maintains defined contribution plans (401K) which cover
substantially all of its employees. Contributions are based on specific
percentages of employee voluntary contributions. Employees vest immediately.
There were no expenses recognized for this plan in fiscal 1996 and 1995 as no
employees were participating.

                                      F-16
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1996 and 1995
--------------------------------------------------------------------------------


Data Switch Corporation v. Memry Corporation, et al.
----------------------------------------------------


Verdon Corporation owns property located at 83 Keeler Avenue, Norwalk,
Connecticut (the "Property") which it leased to New Dimensions in Education,
Inc. ("New Dimensions"). New Dimensions subleased the Property to Data Switch
Corporation, which in turn subleased the Property to the Company. On December
18, 1990, Data Switch commenced an action against Verdon, New Dimensions and the
Company seeking a declaratory judgment that the lease was not renewed on June
12, 1990, for an additional five-year term. The Company supports this request;
however, Verdon and New Dimensions have taken the position that the lease was
renewed by the Company. On October 28, 1992, David O'Toole, successor to Verdon
Corporation, filed a cross-complaint against the Company alleging that the
Company intentionally and/or negligently damaged the Property during the period
of its tenancy. Similar allegations were also made against New Dimensions and
Data Switch. O'Toole's allegations fail to include any specific itemization of
the nature or scope of the injuries alleged. No formal discovery has taken place
to date. The Company intends to defend this action vigorously and believes that
the possibility of a negative outcome would be remote.

Catizone v. Memry Corporation
-----------------------------

The Company was a defendant in an action entitled Catizone v. Memry Corporation,
                                                  ----------------------------- 
et al. During 1996, this case was dismissed.
-----
Neil E. Rogen v. Memry Corporation
----------------------------------

In September 1992, Neil E. Rogen, formerly an officer and director of the
Company, brought an action against the Company for the alleged breach of an
employment agreement between Mr. Rogen and the Company and for indemnification
for legal expenses incurred by Mr. Rogen in connection with an investigation of
and subsequent lawsuit against Mr. Rogen by the Securities and Exchange
Commission and certain related and unrelated lawsuits. During 1996, this case
was settled for $30,200 which was paid during fiscal 1996.

Chrysler Canada Claim.  By letter dated October 23, 1995, an attorney purporting
---------------------
to represent Chrysler Canada Limited and its pension funds made a demand for
payment of interest unpaid on a $1,500,000 10% note, originally due October 31,
1991, and demanded inspection of books and records of the Company. By letter
dated October 30, 1995, the Company, through its counsel, offered to pay
Chrysler Canada Limited and its pension funds $162,112 upon receipt of a duly
authorized release acknowledging that no further amounts were due and
acknowledging the termination of rights under certain warrants. Accordingly,
approximately $162,000 is included 

                                      F-17
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1996 and 1995
--------------------------------------------------------------------------------


in accounts payable and accrued expenses. Thereafter there has been a series of
communications between counsel for the parties regarding their interpretation of
the rights and responsibilities of the Company to pay additional interest and to
permit inspection of books and records. The Company has asserted that Chrysler
Canada Limited and its pension funds waived their rights to further interest and
that the Company is not obligated to permit the inspection of its books and
records absent disclosure of a valid corporate purpose which Chrysler Canada has
declined to provide as of this date. The last communication occurred in or about
April, 1996. Management does not anticipate that the Company will be liable for
any additional amounts which would be material to the Company.

The Company does not expect that any of the matters discussed above will have
a material impact on the Company's financial condition, future operating
results, and/or liquidity.

Note 11. Segment Information

The Company is principally engaged in two business segments: Memry Segment
("Memry") and Wright Machine Segment ("Wright"). All businesses are located
domestically. Wright includes the manufacturing and marketing of metal parts and
components machined on screw machines and smaller metal working machines. Memry
is engaged in developing, manufacturing and marketing subassemblies, products
and components utilizing the properties exhibited by shape memory alloys.
Memry's revenues include product development contracts for outside customers.
Memry expenses include internally funded research as well as all costs
associated with outside clients. There were no significant intersegment sales or
transfers.

Operating loss is total revenue less operating expenses, excluding interest.
Identifiable assets of each segment are the assets used by that segment in its
operations, excluding general corporate assets. General corporate assets are
principally cash, deposits and other receivables.

                                      F-18
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1996 and 1995
--------------------------------------------------------------------------------

<TABLE> 
<CAPTION> 
                                                      1996        1995
                                                   --------------------- 
                                                        (in thousands)
                                                   --------------------- 
<S>                                                <C>         <C> 
Revenues                                                 
  Wright                                           $  2,538    $  3,716 
  Memry                                               1,136       1,013 
                                                   --------    -------- 
        Total operating revenues                   $  3,674    $  4,729 
                                                   ========    ======== 
Operating loss                                           
  Wright                                           $   (194)   $   (136) 
  Memry                                              (1,661)     (1,896) 
                                                   --------    -------- 
                                                   $ (1,855)   $ (2,032) 
                                                   ========    ======== 

Interest                                               (250)       (360) 
                                                   --------    -------- 
        Net loss                                   $ (2,105)   $ (2,392) 
                                                   ========    ======== 
Assets                                           
  Wright                                           $  1,862    $  1,752 
  Memry                                               7,817       2,227 
                                                   --------    -------- 
        Total assets                               $  9,679    $  3,979 
                                                   ========    ======== 
Depreciation and Amortization                                            
  Wright                                           $     52    $    185 
  Memry                                                  38          55 
                                                   --------    --------  
                                                   $     90    $    240 
                                                   ========    ======== 
Capital Expenditures                                             
  Wright                                           $     19    $     15 
  Memry                                               2,722          94 
                                                   --------    --------
                                                   $  2,741    $    109 
                                                   ========    ======== 
</TABLE> 

Depreciation and amortization includes depreciation and amortization of capital
assets, including patents.

Note 12. Emerging Accounting Standards

The Financial Accounting Standards Board ("FASB") has issued Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets to be Disposed Of", which
becomes effective for the Company's year ending June 30, 1997. Statement No. 121
establishes accounting standards for the impairment of long-lived asset, certain
identifiable intangibles, and goodwill related to those assets to be held and
used, and for long-lived assets and certain 

                                      F-19
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1996 and 1995
--------------------------------------------------------------------------------


identifiable intangibles to be disposed of. The Company does not anticipate that
the adoption of this standard will have a significant impact on its financial
statements.

The FASB has also issued Statement No. 123, "Accounting for Stock-Based
Compensation." This statement establishes new standards, effective for the
Company's year ending June 30, 1997, for stock-based compensation plans under
which employees receive shares of stock or other equity instruments of the
employer. The Statement establishes a fair value-based method of accounting for
stock-based compensation plans and encourages, but does not require, entities to
adopt that method in place of existing generally accepted accounting principles.
Companies that elect to continue under existing generally accepted accounting
principles must disclose pro forma net income and earnings per share for all
years presented, as if Statement No. 123 had been adopted.

For its fiscal year ending June 30, 1997, management has elected to present pro
forma disclosure as if the expense recognition elements of the statement were
adopted. These pro forma adjustments will likely decrease pro forma net income
and earnings per share.

                                      F-20
<PAGE>
 
Item 13.  EXHIBITS AND REPORTS ON FORM 8-K


(a)  The exhibits listed in the Exhibit Index attached hereto are being
     supplementally filed herewith.


(b)  Reports on Form 8-K

     No Form 8-K was filed during the last quarter of the fiscal year ended June
     30, 1996.  However, a Form 8-K was filed on July 15, 1996 with respect to
     disclosure regarding "Item 2.  Acquisition or Disposition of Assets" and
     "Item 7.  Financial Statements and Exhibits, " disclosing the consummation
     of the Raychem Acquisition.  On September 13, 1996, the Company filed a
     Form 8-K/A containing the financial statements relating to the Raychem
     Acquisition.

                                       10
<PAGE>
 
                                   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 hereunto duly authorized.


                                         MEMRY CORPORATION



Date: October 14, 1996        By: /s/ James G. Binch
                                 ---------------------------------
                                        James G. Binch
                                        Title: President

                                       11
<PAGE>
 
                                 Exhibit Index

Exhibit                                                         Sequential
Number         Description of Exhibit                              Page
------         ----------------------                           ----------

10.49 Securities Purchase Agreement, dated as of December 9,       (9) 
      1994, between Memry Corporation and Dominion Partners             
                                                                       
10.50 Warrant Cert. No. 94-3, dated as of December 23, 1994,       (9) 
      issued to Banque Pour L'Industrie Francaise (ref: GAN)            
                                                                       
10.51 Securities Purchase Agreement, dated as of December 21,      (9) 
      1994, between Memry Corporation and Banque Pour                   
      L'Industrie Francaise (ref: GAN)                                  
                                                                       
10.52 Securities Purchase Agreement, dated as of May 22, 1995,     (9) 
      between Memry Corporation and Banque Pour L'Industrie             
      Francaise (ref: GAN)                                              
                                                                       
10.53 Securities Purchase Agreement, dated as of June 22,          (9) 
      1995, between Memry Corporation and Nicholas Grant                
                                                                       
10.54 Employee Agreement on Inventions and Patents, between        (9) 
      the Company and James G. Binch                                    
                                                                       
11    Statement re: Computation of Per Share Earnings              (7) 
                                                                       
27    Financial Data Schedule                                      (9) 


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

(7)  Incorporated by reference to the Company's Annual Report on Form 10-KSB for
     the fiscal year ended June 30, 1995.

(9)  Submitted separately, electronically.