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                     U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-K/A

                                Amendment No. 1

 ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                    For the fiscal year ended: June 30, 2001

                         Commission file number 0-14068

                                Memry Corporation

                       (Name of Registrant in its charter)

              Delaware                                         06-1084424
    (State or other jurisdiction                            (I.R.S. Employer
 of incorporation or organization)                        Identification No.)

     3 Berkshire Blvd., Bethel, CT                                06801
(Address of principal executive offices)                        Zip Code)

                    Issuer's telephone number (203) 739-1100

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

                                                       Name of each exchange on
            Title of each class                           which registered
                                                          ----------------
  Common Stock, par value $.01 per share               American Stock Exchange

       Securities registered under Section 12(g) of the Exchange Act: None

     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-K 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-K or any
amendment to this Form 10-K. |_|

     Consolidated revenues of the issuer for the fiscal year ended June 30, 2001
were $29,913,000.

     The aggregate market value of voting stock held by non-affiliates of the
registrant was approximately $21.2 million on September 26, 2001 based upon the
closing trade price on that date. The number of shares of Common Stock
outstanding as of September 26, 2001 was 23,709,488.

                      Documents Incorporated by Reference:

     The registrant's Proxy Statement for its Annual Meeting of Stockholders to
be held in December, 2001, is incorporated by reference into Part III of this
Annual Report on Form 10-K.

     Transitional Small Business Disclosure Format (Check one): Yes |_| No |X|

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                                Memry Corporation
                        For The Year Ended June 30, 2001

                                      Index
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                                                                                                                  Page
                                                                                                                   ----

Part I.
<S>  <C>                                                                                                           <C>
Item 1     Business...............................................................................................  1
Item 2.    Description of Property................................................................................  8
Item 3.    Legal Proceedings......................................................................................  8
Item 4.    Submission of Matters to a Vote of Security Holders....................................................  8


Part II.

Item 5.    Market for Registrant's Common Equity and Related Stockholder Matters..................................  9
Item 6.    Selected Financial Data................................................................................  9
Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations.................. 10
Item 8.    Financial Statements................................................................................... 15
Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure................... 16

Part III.

Item 10.   Directors and Executive Officers of the Registrant..................................................... 16
Item 11.   Executive Compensation................................................................................. 16
Item 12.   Security Ownership of Certain Beneficial Owners and Management......................................... 16
Item 13.   Certain Relationships and Related Transactions......................................................... 16

Part IV.

Item 14.   Exhibits, Financial Statement Schedules, and Reports on Form 8K........................................ 17

Signatures........................................................................................................ 19

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                                EXPLANATORY NOTE

     This Amendment No. 1 to the Annual Report on Form 10-K of Memry Corporation
(referred to herein as "Memry" or the "Company") for the fiscal year ended June
30, 2001 is being filed to amend and restate in its entirety the Form 10-K filed
on September 28, 2001 (the "Original Filing") to provide certain additional
disclosures in response to comments received from the staff of the Securities
and Exchange Commission (the "Staff") in connection with Staff's review of the
Company's registration statement on Form S-3 filed on March 12, 2002.

     This Amendment No. 1 makes certain changes to Business (Item 1), Selected
Financial Data (Item 6), Management's Discussion and Analysis of Financial
Condition and Results of Operations (Item 7), the notes to the financial
statements included in Financial Statements (Item 8) and Exhibits 10.39 and
10.40. There have been no changes to the Company's financial statements
themselves.

     This report continues to speak as of the date of the Original Filing and
the Company has not updated the disclosures in this report to speak of any later
date. While this report primarily relates to the historical period covered,
events may have taken place since the date of the Original Filing that might
have been reflected in this report if they had taken place prior to the Original
Filing. All information contained in this Amendment No. 1 is subject to updating
and supplementing as provided in the Company's periodic reports filed with the
Securities and Exchange Commission subsequent to the date of such reports.

                                     PART I.

ITEM 1.  BUSINESS

                                  INTRODUCTION

     Memry Corporation, a Delaware corporation incorporated in 1981, is an
advanced materials company engaged in the business of developing, manufacturing
and marketing semi-finished materials, formed components, and value-added
sub-assembled products utilizing the properties exhibited by shape memory
alloys, primarily those composed of Nickel Titanium ("nitinol"). The Company
also provides engineering services to assist customers in the development of
products based on the properties of shape memory alloys. The Company sells its
products and services primarily to the medical device, telecommunications,
aerospace and automotive industries.

     The Company conducts its operations from its two operating facilities
located in Bethel, Connecticut, and Menlo Park, California. The Company acquired
its Menlo Park, California operations and certain assets therein from Raychem
Corporation ("Raychem") in June 1996. The Company's principal executive offices
are located at 3 Berkshire Blvd., Bethel, Connecticut 06801, and its telephone
number at such address is (203) 739-1100.

                                   TECHNOLOGY

     Shape memory alloys ("SMAs") are advanced materials which possess the
ability to change their shape in response to thermal and mechanical changes, and
the ability to return to their original shape following deformations from which
conventional materials cannot recover. These abilities result from the
transformation of the crystalline structure of the SMA in reaction to thermal
and mechanical changes. As a result of the crystalline structure changes, SMAs
are also able to produce forces many times greater than those produced by
conventional materials.

     The major defining properties of the SMAs with which the Company works are
"superelasticity" and "thermal shape memory." The mechanical properties that can
be engineered into nitinol-based devices permit innovative product designs that
presently would be difficult or impossible to replicate with other materials.
Unlike ordinary metal, certain SMAs are capable of fully recovering their shape
after being deformed as much as six to eight percent, and of performing this
recovery on a repeated basis. This is more than ten times the recovery ability
of ordinary metals. This "superelasticity" feature has applications for surgical
instruments and devices, orthodontic apparatus, cellular telephone antennae, and
other devices. Thermal recovery applications typically involve instances where a
device is controlled or actuated in response to a pre-determined thermal change.
Examples of such uses include heat activated coupling or sealing devices, valve
actuation systems, and thermally-actuated mechanical systems. The majority of
today's commercial applications involve the use of the materials' "superelastic"
properties.

                                     MARKETS

     Medical Device Industry. Although the Company has expertise in a variety of
shape memory alloys, the Company utilizes primarily the superelastic
characteristic of nitinol for medical device applications. The value of
nitinol's superelastic characteristics in the medical device sector is its
ability to provide ease of access and delivery of sophisticated medical devices.
In addition, nitinol is kink resistant, exerts a constancy of force, is
biocompatible (non-toxic) and is non-ferromagnetic, thereby allowing the use of
magnetic resonance imaging (MRI) on patients with nitinol-based implants.
Because of these unique characteristics, nitinol is becoming integral to the
design of a variety of new medical products, notably for peripheral vascular and
non-vascular stents, guidewires and catheters.

     Guidewires and/or catheters, in this context, refer to tubes or wires
inserted into a vessel for diagnostic or therapeutic purposes. The guidewires
and/or catheters can be used in the delivery of medical devices, drugs or
stents. Because of the superelastic characteristic, together with other
attributes of nitinol described above, nitinol is replacing stainless steel as
the material of choice in many of these instruments.

     Stents are small tubes that hold open arteries, veins and other passageways
in the body that have become obstructed as a result of disease, trauma or aging.
Stents are placed in the body using catheter-based delivery systems in minimally
invasive procedures. Once deployed, stents exert a radial force against the
walls of the vessel to enable these passageways to remain open and functional. A
number of different stent designs, materials and delivery systems, with varying
characteristics, are currently available. The three most prevalent stent designs
are lattice tubes made via laser cutting, coiled stents and wire mesh stents.

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Stents, especially those used in the treatment of coronary artery disease, have
emerged as one of the fastest growing segments of the medical device market.
Stents are used increasingly as adjuncts or alternatives to a variety of medical
procedures because it is believed they are beneficial to overall patient outcome
and may, over time, reduce total treatment costs. From its infancy in 1990, the
stent market has grown to estimated worldwide sales of approximately $2.5
billion in 2000.

     Approximately 85% of the coronary stents currently manufactured are
stainless steel and require deployment through the expansion of a balloon on a
catheter-based delivery system with a second balloon frequently used to further
expand the stent. However, the majority of stents currently in clinical
development for peripheral applications, such as abdominal aortic aneuryism
stent grafts and carotid, vascular and illiac stents, employ nitinol. The
physical properties of nitinol allow placement of stents manufactured with this
metal to be self-expanding and avoid balloon occlusion of the vessel during
placement.

     Memry currently produces both the wire and tubing that is used to fabricate
guidewires, catheters and stents, and increasingly provides completed stent
structures to medical device companies, as well as other surgical and diagnostic
instrument assemblies. In fiscal 2001, sales to medical device companies
accounted for approximately 88% of revenue.

     Non-Medical Markets. The non-medical industry sectors served by the Company
include primarily the telecommunications, aerospace/defense and automotive
industries. While the success of nitinol products in the medical device industry
is typically derived from the superelastic characteristics of nitinol,
applications in these industrial sectors employ both the superelastic and the
shape memory characteristics of nitinol. Although the development cycles in
these industries, particularly aerospace/defense and automotive, are longer than
those of the medical device sector, once the product is adopted it typically
provides for larger volume demand, is more easily leveraged into other
customers, and does not suffer from strict regulatory requirements.

     Examples of such products the Company currently provides to these markets
include sealing devices, actuators, fasteners and cellular phone antennae. Memry
currently sells heat actuated sealing devices used in diesel engine fuel
injection systems to maintain air pressure. Fasteners are products that also
employ the characteristics of shape memory to hold or couple two pieces of wire
and/or metal together. A superelastic nitinol wire is sold as the element wire
in retractable antennae for portable cellular telephones. It has superior
durability and quickly recovers its straight shape when bending stresses are
removed. The superelasticity effect helps to avoid kinking and deformation. Most
recently the Company has begun shipping formed, superelastic nitinol wires for
undergarment support. Non-medical sector sales accounted for approximately 12%
of fiscal 2001 revenues.

                                   OPERATIONS

     The Company conducts its business through two manufacturing locations. The
California facility consisting of most of the business acquired from Raychem
(the "Raychem Acquisition") in June, 1996, and the Bethel facility which prior
to the Raychem Acquisition constituted the Company's entire SMA business. During
fiscal 2001, the Company sold its Belgium facility, comprised of the Belgian
corporation formerly known as Advanced Materials and Technologies, N.V., which
was acquired by Memry in October, 1998.

     United States. On June 28, 1996, the Company acquired Raychem's
nickel-titanium product line. This business utilized inventory, leasehold
improvements, machinery and equipment and patent and other intellectual property
rights to manufacture and sell SMAs primarily composed of nitinol. Prior to the
Raychem Acquisition, Raychem was both a supplier of nickel-titanium SMAs to the
Company and a competitor in certain markets (particularly in the medical market
for formed, non-implant components). The acquired business differed from the SMA
business of the Company, however, in that where the Company had historically
specialized in the manufacture of finished products and formed components,
Raychem specialized more in the manufacture of semi-finished materials used by
original equipment manufacturers ("OEMs"). Not surprisingly, therefore, the
point at which Memry and Raychem most competed was at the level of formed
component sales to OEMs, particularly in the medical products industry. The
leased facility, inventory, machinery and equipment, leasehold improvements and
know-how purchased from Raychem now constitute Memry's western facility, except
that Raychem's operations relating to the finishing of materials into
sub-assembled products for sales to United States Surgical Corporation were
relocated to Memry's eastern facility in December, 1996.

     Located in Menlo Park, California, the western facility produces
semi-finished SMAs in three basic forms: wire, strip and tube. This facility
also provides added value to its tubular product through laser processing, shape
setting and polishing procedures resulting in the delivery of finished stent
components, as well as certain other value-added activities.

     Memry's Connecticut manufacturing operations, located in the same facility
as the Company's corporate headquarters in Bethel, Connecticut, are engaged in
the production of formed components and of value-added sub-assemblies,
predominantly based on wire and strip-based SMAs. In 1999, the eastern operatons
became involved in the fabrication and supply of microcoil

                                        2

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and guidewire components utilized in medical procedures through the Company's
acquisition of the assets of Wire Solutions, Inc. of Wrentham, MA in March,
1999. These assets have been integrated with the Company's eastern facility.
During May, 2001, the Company moved its headquarters and eastern manufacturing
operations from Brookfield, CT to Bethel, CT, into a facility described in Item
2 below.

     Europe. On October 31, 1998, the Company acquired all of the outstanding
shares of Advanced Materials and Technologies, N.V. ("AMT"), located in
Herk-de-Stad, Belgium. Founded in 1989, AMT, renamed Memry Europe, n.v.,
specialized in the development and supply of both Nickel Titanium and other
shape memory alloy semi-finished products, principally wire products used in the
commercial and industrial markets served by the Company's U.S. operations. On
February 8, 2001, following a thorough business and strategic review, the
Company sold Memry Europe in a transaction described in "Liquidity and Capital
Resources" below.

                              PRODUCTS AND SERVICES

     Engineering Services. Memry is engaged in sponsored development projects in
which the Company designs, manufactures and sells prototype components and
products to customers. Memry is currently working on a number of programs to
develop SMA components for OEM customer's products. The Company will accept
customer-sponsored development contracts when management believes that the
customer is likely to order a successfully developed component or product in
sufficient quantity to justify the allocation of the engineering resources
necessary. Generally under such programs, the identity of the customer is
confidential; the data, inventions, patents and intellectual property rights
which specifically relate to the SMA component are either owned by the customer,
or, in several instances, shared between the Company and the customer; and data,
inventions, patents, and intellectual property rights pertaining to the SMA
technology that do not specifically relate to the customer's product are owned
by the Company.

     Semi-Finished Materials. Raw nitinol material from specialty alloy
suppliers is processed into various shapes and sizes and referred to as
"semi-finished" materials. These materials, characterized generally as wire,
strip or tubing, are sold to customers in standard configurations, processed
further to meet specific customer specifications, or serve as the starting
material for the formed components produced by the Company.

     Wire. Memry's nitinol wire products are sold as standard products,
available in a variety of sizes, and produced in non-standard sizes, to meet
specific customer requirements, and are used as the precursor to a formed
component. Memry produces wire with a diameter ranging from .004 to .250 inches.
In addition, the Company may apply a variety of finishing techniques, depending
on customer specifications, including such steps as polishing or coating.
Applications for the Company's wire products include cellular phone antennae,
guidewires, endodontic files and needles, and undergarment support wires.

     Strip. The Company's nitinol strip is sold in standard dimensions, as well
as custom sizes as specified by the customer. Memry produces strip with a
thickness ranging from .001 to .01 inches and a width ranging from five to
twenty times the thickness. The majority of the strip product, however, serves
as the starting material for formed components made by Memry. Example
applications include the strip sold to OEMs for wrapping around catheters for
reinforcement of drainage catheters and biopsy forceps.

     Tube. Nitinol tubing, or micro-tubing as it is sometimes called, is
likewise sold in standard or customized sizes. Memry produces tubes with an
outside diameter ranging from .012 to .205 inches and an outside diameter to
internal diameter ratio from 1.15 to 1.70. Tubes are typically used in
applications requiring flexible shafts, pushability and torqueability. Examples
of such applications include stents, catheters, delivery guides, needles, MRI
instruments and surgical instruments.

     Formed Components. Formed components are typically non-standard products.
Formed components are made by taking the semi-finished materials and further
processing by bending, kinking, stamping, crimping, laser cutting,
electropolishing, etc., into specific forms as specified by customers. Examples
of applications for formed components include the bending or arching of wire for
use as orthodontic braces, helical and strip actuators, micro coils, patented
locking rings for electronic connectors, enabling components of medical
instruments (particularly stent structures), and sealing components.

     Sub-Assemblies. Memry manufactures and sells value-added sub-assemblies to
OEMs, principally in the medical device field. This comprises taking the
semi-finished materials and/or formed components produced by Memry and combining
or assembling them with other products that have been outsourced by Memry to
form a larger component or "sub-assembly" of the OEMs' finished product. Memry
combines its SMA expertise with additional manufacturing and process knowledge
and third-party supply chain management to cost-effectively produce a
sub-assembled product for OEMs. The single largest portion of Memry's eastern
business is selling assemblies and components to United States Surgical ("USS"),
a division of Tyco Medical, and other medical industry OEMs. The primary item
sold by Memry to USS is an SMA sub-assembly used by USS for

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endoscopic instruments. The use of superelastic SMAs allows the instruments to
be constrained outside the body, inserted into the body in its constrained form
through small passages, to then take a different shape while inside the body,
and then to return to its constrained shape for removal. The primary value-added
product produced by the Company's Menlo Park operations are finished stent rings
utilized by Medtronic AVE in their AneuRx AAA stent graft product.

                                    STRATEGY

     The Company's strategy has three components: to further Memry's leadership
position in the provision and processing of SMAs; to expand vertically in the
medical device industry by providing additional engineering, component and
sub-assembly services; and to leverage the Company's strong customer base by
offering additional complementary advanced material technology expertise and
products. This strategy is complemented by increased emphasis being placed on
advancing the Company's technological base through development of new
intellectual property associated with both superelastic alloys and unique
methods of processing for specific applications.

     Shape Memory Alloys. Memry's core business remains focused on its expertise
in shape memory alloys, specifically nitinol, with the objective of sustaining
growth in both the medical and non-medical markets. Because of the innovative
nature of the medical device industry, however, the Company has found the return
on invested development resources to be most attractive in the medical device
sector. The Company therefore focuses the majority of its engineering and
manufacturing expertise on the development of products for the medical device
markets, where the properties provided by SMAs provide significant performance
advantages or, in many cases, represent the enabling component of the medical
device.

     In cases where non-medical customers support the engineering and process
development expense and there is strategic interest on the part of Memry,
however, the Company will also undertake the development of non-medical
applications. In addition, the Company has in the past applied, and anticipates
in the future to apply, advancements made in the development of medical devices
to applications in the lower margin, higher volume non-medical sectors where
customers are not supporting development activities.

     In order to continue to advance the Company's leadership position in SMAs
the Company is implementing the following initiatives:

          Continued Advancements in Processing Expertise and Quality Assurance.
     Nitinol is a non-linear material, which makes it a very difficult material
     to process. Memry believes that one of its competitive advantages is its
     ability to effectively process this material. One of these processes is the
     production of tubes used primarily in the production of stents. The Company
     believes that this process, proprietary to the Company, will provide Memry
     with an advantage over competitors with regard to product quality and cost
     for selected products when it is fully implemented. Memry has underway a
     number of process enhancement initiatives designed to enhance both the
     current manufacturing processes and Memry's competitive position, some of
     which will result in new patent applications. Because many of the materials
     produced by Memry are used in medical devices, the product quality
     requirements placed on Memry by its customers are high. Both of Memry's
     U.S. manufacturing facilities are ISO 9001 certified.

          Increase in Manufacturing Capacity. To meet growing demand,
     particularly in the medical device market for the production of nitinol
     stents and other components, the Company has committed to optimizing the
     manufacturing efficiency of its current facilities and expects to invest
     between $1.5 million and $2.5 million in capital equipment and facility
     improvements in fiscal 2002.

          Restructuring of Manufacturing Operations. To accommodate the growing
     capacity requirements of the Company's core medical OEM customer business,
     and to increase the efficiency of operation, the Company will continue to
     reallocate certain manufacturing activities, including coordinating all
     critical technology development from the corporation's new Office of
     Technology, based in Connecticut.

     Vertical Integration. The medical device industry has been undergoing
significant change over the last few years. As part of that change, many of the
larger participants have recognized that their competitive differentiation comes
from two key elements: device design and product marketing. These are the core
competencies in which successful medical device companies excel and on which
many medical device companies are focusing their resources. As a result,
industry participants are looking to outsource to other companies with
specialized expertise some of the other essential parts of the business;
especially engineering incorporating advanced material technologies and
manufacturing processes. These factors have resulted in a growing trend towards
outsourcing in the medical device industry, impacting the full breadth of the
manufacturing cycle from material engineering to final product assembly. The
market drivers for the outsourcing trend include:

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          Increased Competitive Pressures. Increased penetration by managed care
     companies and a continued focus on the cost of publicly sponsored
     healthcare programs, such as Medicare and Medicaid, have resulted in
     increasing pressure for lower priced procedures. This pricing pressure is
     forcing medical device companies to reduce their manufacturing costs in
     order to maintain margins.

          Need to Shorten Device Development Cycles. To shorten the time
     required to market a new product, medical device companies are seeking to
     outsource certain supply responsibilities to third parties that are able to
     quickly develop cost effective solutions to address engineering and
     manufacturing issues.

         Efficient Use of Resources. Many medical device companies are
     reevaluating their business models with a focus on device design and sales
     and marketing. As a result, medical device companies are increasingly
     outsourcing many of the activities that traditionally were performed
     in-house, including various aspects of the engineering, prototyping and
     pre-production processes, as well as the manufacturing of finished products
     and/or sub-assemblies thereof.

     Memry recognizes these changes in the medical device industry and believes
that it can address this market opportunity. By combining a strong advanced
materials technological capability to assist medical device companies with
engineering skills that address issues involving the characteristics of SMAs, as
well as developing cost effective, high quality manufacturing processes and
supply chain relationships, Memry believes that it can alleviate these issues
for its OEM customers.

     In order to expand on this "fully-integrated" service concept, the Company
has implemented the following:

     Increase in Engineering Service Capabilities. Memry possesses significant
expertise in the characterization and performance of various SMAs. This
expertise is often critical in the design of medical devices. Although Memry has
in the past actively participated in the design of OEM customer products, the
Company has begun a program to clearly characterize and communicate to customers
both the Company's capabilities and the terms and conditions under which the
Company will contract to assist existing and potential customers through these
services.

     Processing of Additional Formed Components. Over the past several years,
the Company has taken advantage of additional opportunities in the market to
increase its business of processing semi-finished material into formed
components. While the Company will continue to seek out new opportunities for
such formed components, in FY2002 the Company anticipates that it will focus its
resources to a somewhat greater extent on seeking additional customers for
existing component concepts and new opportunities for its semi-finished
material.

                               MARKETING AND SALES

     Sales to Raychem. In connection with the Raychem Acquisition, Memry and
Raychem entered into a Private Label/Distribution Agreement pursuant to which
Raychem was made Memry's exclusive distributor for the acquired product line in
certain specified fields of use for an initial term of five years (the "Private
Label/Distribution Agreement"). Sales by the Company to certain customers,
including United States Surgical Corporation, were excluded from the scope of
this Agreement, as were any future sales for all medical implant and certain
consumer recreational applications. In February 2000, Memry and the Raychem
division of Tyco International entered into a Sales Agency Agreement in order to
replace the original agreement between the two parties. Under the revised
agreement, all medical applications are marketed and sold directly by Memry's
internal sales and marketing organization. At the same time, Memry retained
Raychem to be its exclusive sales agent for all industrial and commercial
applications served by the Company, including sales to the orthodentia and
endodentia markets. Unlike the former agreement, industrial and commercial sales
are now invoiced directly by Memry to the end customer. Customers for these
industrial and commercial products include cellular telephone antennae
manufacturers, who utilize the superelasticity of SMAs for a more durable
antennae, orthodontic manufacturers, who use SMA wire for braces, automotive
manufacturers, who use SMA plugs for high-pressure fuel injector sealant
devices, and industrial product manufacturers, who use SMAs for a wide variety
of other uses (including electronic connectors). In addition, Raychem purchases
some of Memry's components for its own use. Industrial and commercial sales
handled by Raychem under the agreement are reported as gross sales, with
commission due Raychem treated as ordinary sales expense.

     Sales to Memry Europe. In connection with the sale of Memry Europe to
Wilfried Van Moorleghem, Memry entered into a License and Supply Agreement with
Memry Europe (which has been renamed AMT). Pursuant to the License and Supply
Agreement, Memry agreed to supply to Memry Europe certain alloys and tubing
products. In addition, conditional upon Memry being granted certain patents,
Memry agreed to grant to Memry Europe a right and royalty-bearing license to
such patents and a right and royalty-bearing license to certain electropolishing
technology and tubing technology.

                                       5

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     Personnel The Company currently has 9 sales and marketing personnel, of
which 6 operate primarily from headquarters, 2 operate primarily from
California, and 1 is the manager for the overall activity.

     Material Customers The Company's largest customers are Medtronic, United
States Surgical and Guidant, accounting for approximately 45%, 23% and 11% of
the Corporation's total revenue in fiscal 2001. No other customer accounted for
more than 10% of total revenue.

                                SOURCES OF SUPPLY

     The principal raw material used by the Company is SMAs. The Company obtains
its SMAs from two principal sources: Teledyne Wah Chang, of Albany, Oregon and
Special Metals Corporation, of New Hartford, New York. The Company expects to be
able to continue to acquire shape memory alloys in sufficient quantities for its
needs from these suppliers. In addition, if the Company was for whatever reason
not able to secure an adequate supply of SMAs from these suppliers, the Company
believes that other sources exist that would be able to supply the Company with
sufficient quantities of SMAs, although the Company could suffer some
transitional difficulties if it had to switch to such alternative sources.

     While the Company also relies on outside suppliers for its non-SMA
components of sub-assembled products, the Company does not anticipate any
difficulty in continuing to obtain non-SMA raw materials and components
necessary for the continuation of the Company's business.

                                   COMPETITION

     The Company faces competition from other SMA processors, who compete with
the Company in the sale of semi-finished materials (i.e. mostly with the
Company's California operation) and formed components (with Memry's Connecticut
and California operations). There are several major U.S., European and Japanese
companies engaged in the supply or use of SMAs, some of which have substantially
greater resources than the Company. Within the U.S., the two major SMA suppliers
to both the Company and the industry as a whole are Teledyne Wah Chang and
Special Metals Corporation. Each of these companies has substantially greater
resources than the Company and could determine that it wishes to compete with
the Company in the Company's markets. Special Metals has in fact become a
competitor of the Company for semi-finished wire and strip materials. Japanese
competitors include Furakawa Electric Co. and Daido, both of which produce SMAs
and sell to users in Japan and internationally. The principal European
competitors are Memometal, a private French company, Minitubes SA, a private
French Nitinol tube supplier, and G. Rau/EuroFlex, a German company with ties to
NDC (see below). In addition, AMT (formerly Memry Europe) is a competitor.
However, pursuant to the License and Supply Agreement between Memry and Memry
Europe, the parties agreed that Memry Europe has the rights to use certain of
our technology only in Europe and Asia, while we have retained such rights
elsewhere. The Company believes that Cordis/Johnson and Johnson, through its
subsidiary Nitinol Devices and Components Company (NDC), is the next largest,
followed by Shape Memory Alloy Applications, Inc., recently acquired by Johnson
Matthey Inc.

     The Company intends to compete, and advance its position, based primarily
on its manufacturing capabilities, its proprietary intellectual property
positions, its knowledge of the processing parameter of the alloys, and unique
design and assembly capabilities, particularly in the medical device field.
While price and production capability are obviously important, the Company
believes that it competes principally on its technological and production
capabilities.

                             PATENTS AND TRADEMARKS

In the last decade, the Company has received nine issuances of U.S. patents in
fields of medical devices, automotive, valving mechanisms, sporting goods, and
consumer products using shape memory alloys and related effects. These include
recently issued U.S. patents on shape memory alloy sealing components for
automotive and hydraulic applications as well as on pseudoelastic beta Ti alloys
for eyewear, orthopedic, orthodontic and medical uses. There are an additional
six applications in either pending or provisional status covering potential
protection in eyewear, medical and oilfield related applications. The Company
has foreign patents in force in various foreign countries covering some of its
U.S. patents where the Company does business or where the Company otherwise
determined to seek foreign patent coverage. The Company has also applied for
patent protection in several foreign countries.

As part of the Raychem Acquisition, the Company controls an additional seven
U.S. patents, as well as a variety of foreign patents and domestic and foreign
patent applications, relating primarily to alloy compositions, the production of
semi-finished materials such as tubing, and the utilization of nickel-titanium
alloys having superelasticity and shape memory effect. Also included in the
Acquisition, the Company was assigned a non-exclusive license to use NiTiNb
alloys and related processing technologies for coupling, connectors, and sealing
devices in fields other than fluid fitting products for uses in marine,
aerospace or nuclear markets. While these acquired patents in no way dominate
the entire field of shape memory metals, they do provide the Company with some
competitive advantages in the covered uses. In addition, notwithstanding the
Company's acquisition of these patents and patent applications as part of the
Raychem Acquisition, under certain circumstances the Company is required to
license the acquired intellectual property back to Raychem for specified uses.
For example, (i) upon the termination of the Company's Sales Agency Agreement
with Raychem, Raychem will have a non-exclusive perpetual license to utilize
these patents to sell products within specified fields of uses for a specified
royalty, and (ii) Raychem has a non-exclusive, transferable perpetual license to
utilize these patents in connection with certain intellectual property relating
to the medical products market that was not acquired by the Company as part of
the Raychem Acquisition. The Company believes that this latter license has been
transferred to Medtronic, Inc., a medical products manufacturer (and a customer
of the Company), when Medtronic purchased this "excluded" (from the Raychem
Acquisition) intellectual property from Raychem during fiscal 1997. The Company
also has various other patents and trademarks which, while useful, are not
individually material to the Company's operations.

The Company's patent rights do not dominate the field of SMA utilization,
although the patents acquired from Raychem do dominate the use of
nickel-titanium alloys in certain areas, although not in the medical instrument
and in-body applications fields. The Company does not, however, have specific
patent protection for its most important present products or product components.
The Company's patent rights obviously do not dominate any specific fields in
which the Company sells products. The Company does believe, however, that
various patents provide it with advantages in the manufacture and sale of
different products, and that its know-how relating to various SMAs provides the
Company with a competitive advantage.

While a U.S. patent is presumed valid, the presumption of validity is not
conclusive, and the scope of a patent's claim coverage, even if valid, may be
less than needed to secure a significant market advantage. Gaining effective
market advantage through patents can require the expense, uncertainty and delay
of litigation. Although the Company's technical staff is generally familiar with
the SMA patent environment and has reviewed patent searches when considered
relevant, the Company has not requested any legal opinion to determine whether
any of its current or contemplated products would infringe any existing patents.

The Company cannot assure you that any patent will be issued as a result of its
pending applications in any foreign country or any future applications in any
foreign country or that, if issued, these patents will be sufficient to protect
the Company's technology. The patent laws and laws concerning proprietary rights
of some foreign countries may not protect the Company's patents or proprietary
rights to the same extent as do the laws of the United States. This may make the
possibility of piracy of the Company's technology and products more likely.

The Company cannot assure you that the steps it has taken to protect its patents
will be adequate to prevent misappropriation of its technology. In addition, the
Company cannot assure you that any existing or future United States or foreign
patents will not be challenged, invalidated or circumvented, or that any patent
granted will provide us with adequate protection or any competitive advantages.


                                        6

<PAGE>

                            RESEARCH AND DEVELOPMENT

During fiscal 2001, the Company spent approximately $1,699,000 on "pure"
research and development (i.e., research and development done by the Company at
its own cost for purposes of developing future products). In comparison, the
Company spent approximately $1,498,000 and $1,013,000 during fiscal years 2000
and 1999 respectfully on "pure" research and development. The Company
anticipates modest increases in the amount of "pure" research and development
that it undertakes as the Company's growth continues.

In addition, the Company spent approximately $676,000 during fiscal 2001 on
"funded" research contributing to the development of SMA components pursuant to
customer and government-sponsored development arrangements. These "funded"
research and development costs are borne directly by the European Union, the
Flemish regional government (Belgium) and customers of the Company, as
applicable, and, for purposes of the Company's financial statements, are part of
"cost of revenues," rather than research and development. By comparison, the
Company spent approximately $498,000 and $ $473,000 on "funded" research and
development in fiscal 2000 and 1999 respectively, which amounts were accounted
for as "cost of revenues". In fiscal year 2002 and beyond, following the sale of
the Company's European subsidiary, "funded" research will refer only to customer
sponsored research. The amount of "funded" research and development that the
Company will undertake in the future will depend upon its customer's needs.

                                    EMPLOYEES

As of June 30, 2001, the Company had 173 full-time employees and two part-time
employees. Of the full-time employees, 18 were executive or management personnel
and 23 were science and research personnel.

None of the employees are represented by collective bargaining units. The
Company believes that its relationship with its employees is generally good.

In addition, as of June 30, 2001, the Company had approximately 38 "temporary"
employees (i.e., employees of temporary manpower companies) working for the
Company.

                                       7

<PAGE>

ITEM 2.  DESCRIPTION OF PROPERTY

     Effective May 31, 2001, the Company relocated its headquarters and eastern
manufacturing operations from Brookfield, CT to a new facility located
approximately 5 miles away in Bethel, CT. The Company signed a lease effective
May 25, 2001, to expire on June 17, 2011, for office and manufacturing space
located at 3 Berkshire Blvd., Bethel, CT 06801. The building is a single story,
brick and block construction facility located in Berkshire Corporate Park, a
suburban office center. The premises have a floor area of approximately 37,500
square feet, of which approximately 6,500 square feet is used by the Company for
general administrative, executive, and sales purposes, and approximately 17,850
square feet is used for engineering, manufacturing, research and development
operations and an environmentally controlled area ("clean room"). The lease
provides for an average monthly base rental of approximately $28,000.

     On March 26, 1998, the Company, as sublessee, and Raychem, as sublessor,
amended the sublease relating to office and manufacturing space located at 4065
Campbell Avenue, Menlo Park, California 94025 to extend the term of such
sublease to September 30, 2001. These premises, formerly used by Raychem, are
the principal site of the Company's west coast operations. These premises have a
floor area of approximately 28,032 square feet, which is used by the Company for
manufacturing, warehousing, general administrative and research and development
operations. The lease originally provided for a monthly base rental of
approximately $20,740, which amount was raised in October of 1998 to
approximately $43,500, due to an adjustment for increases in the fair market
value of the premises. On August 27, 2001, the Company signed a lease, effective
October 1, 2001, with 4065 Associates, L.P., the landlord of the facilities
located at 5065 Campbell Avenue, Menlo Park, for a lease which ends on March 31,
2003. This lease is for the exact same premises where the Company has previously
been a sublessee of Raychem. The lease provides for a monthly base rental of
approximately $49,000.

To accommodate growth in the Company's medical device components business, on
March 15, 2000, the Company subleased approximately 10,000 of additional light
manufacturing and office space at 4020 Campbell Avenue, Menlo Park, California.
The sublease is scheduled to expire on September 30, 2002, and provides for an
average monthly base rental of approximately $11,000.

     On October 31, 1998, as part of its acquisition of AMT, the Company,
through a subsidiary, acquired an approximately 15,200 square foot facility
located at Daelemveld 1113, B-3540 Herk-de-Stad, Belgium. This facility and the
accompanying land were among the assets sold by the Company on February 8, 2001,
to Wilfried Van Moorleghan.

     Management believes that the existing facilities of the Company are
suitable and adequate for the Company's present needs and that the properties
are adequately covered by insurance. If the Company is going to be able to meet
projected growth requirements, it is likely that the Company will require
additional manufacturing and office space over the next several years.
Management is analyzing the facility requirements and reviewing options to
determine how to best meet these requirements.

ITEM 3.  LEGAL PROCEEDINGS

On August 22, 2001, Robert J. Thatcher, a Director of the Company and formerly
the Company's President and Chief Operating Officer, filed a Complaint to Compel
Arbitration against the Company in the Connecticut Superior Court, Judicial
District of Danbury. In the complaint, Mr. Thatcher has sought to force the
Company to arbitrate a dispute arising out of Thatcher's termination as an
employee and officer of the Company. Thatcher alleges that he and the Company
had reached a binding and enforceable verbal agreement to pay him consideration
upon his termination in excess of that which he would be entitled to under his
then-existing employment agreement, and that such verbal agreement included an
agreement to arbitrate any dispute. The Company does not believe that it had a
binding agreement of any type with Mr. Thatcher in connection with his
termination, and intends to defend both the Complaint to Compel Arbitration, as
well as any subsequent claim for monetary damages and/or equitable relief,
vigorously. It is too early in the proceedings for the Company to further
analyze any potential liabilities.

     The Company is involved in various legal proceedings, none of which are
believed to involve a claim for damages exceeding 10% of the current assets of
the Company. Although it is not feasible to predict the outcome of any such
proceedings, or any claims made against the Company, the Company does not
anticipate that the ultimate liability, if any, will materially affect the
Company's financial position, results of operation or liquidity/cash flows.

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

     Not applicable.



                                       8

<PAGE>

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Effective July 13, 2000, The Company's Common Stock began trading on the
American Stock Exchange under the symbol MRY. During the period July 1, 1998
through July 12, 2000, the Company's Common Stock traded on the OTC Bulletin
Board under the symbol MRMY. On June 30, 2001, there were approximately 1,122
holders of record of the Company's Common Stock.

     The following table sets forth the quarterly high and low closing prices
for the common stock over the past two years. The prices for FY 2000 are as
reported by the National Quotations Bureau. OTC Bulletin Board prices are
interdealer prices and may not represent actual transactions. The common stock
price beginning July 13, 2000, are closing prices as reported on the American
Stock Exchange.

                                             2001                     2000
                                             ----                     ----
Fiscal year ended June 30            High         Low          High         Low
-------------------------           -----        -----        -----        -----
1st Quarter ................        $4.12        $1.94        $2.06        $1.69
2nd Quarter ................         2.00          .88         2.00         1.25
3rd Quarter ................         1.38          .80         3.31         1.75
4th Quarter ................         1.15          .60         3.47         2.50

     The Company has never paid a cash dividend on its Common Stock and the
Company does not contemplate paying any cash dividends on its Common Stock in
the near future.

     Pursuant to the Company's June 30, 1998 loan agreement with its principal
lender, the Company is prohibited from declaring or paying any dividends, or
making a distribution to its stockholders, until the termination of such
agreement and the repayment of all amounts due to such lender.

ITEM 6.  SELECTED FINANCIAL DATA

(a)  The following table sets forth selected consolidated financial data with
     respect to the Company for the five years ended on June 30, 2001, which
     were derived from the audited consolidated financial statements and notes
     of the Company and should be read in conjunction with them.

<TABLE>
<CAPTION>

Years Ended                                       2001            2000            1999           1998           1997
-----------                                       ----            ----            ----           ----           ----
<S>                                            <C>             <C>            <C>            <C>            <C>
In thousands, except per share data
Revenues                                        29,913          26,996          18,886         19,077         11,545
Net income (loss)                              (4,689)           1,109         (1,349)          2,925        (1,011)
Earnings (loss) per share:
    Basic                                       (0.21)            0.05          (0.07)           0.16         (0.06)
    Diluted                                     (0.21)            0.05          (0.07)           0.14         (0.06)
Total Assets                                    19,053          22,543          18,182         13,085         11,152
Long-term debt                                   1,215           2,049             898            599             43
Stockholders' equity                            11,130          12,100          10,966         10,125          5,681
</TABLE>

(b)  The following table sets forth the quarterly unaudited financial data for
     the years ended June 30, 2001 and June 30, 2000.


SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA
-------------------------------------------

                             FIRST      SECOND     THIRD     FOURTH    FISCAL
                             QUARTER    QUARTER    QUARTER   QUARTER   YEAR
NET SALES
           FY2001 .........   6,465      6,519      8,781     8,148    29,913
           FY2000 .........   4,891      6,134      7,237     8,735    26,996

GROSS PROFIT
           FY2001 .........   1,201      2,132      4,171     3,999    11,503
           FY2000 .........   1,665      2,194      3,000     4,041    10,899

NET INCOME (LOSS)
           FY2001 .........  (1,797)   (5,203) (a)  1,147     1,164    (4,689)
           FY2000 .........    (482)       154        603       834     1,109

BASIC EARNINGS (LOSS) PER SHARE
           FY2001 .........   (0.08)     (0.24)      0.05      0.05     (0.21)
           FY2000 .........   (0.02)      0.01       0.03      0.04      0.05

DILUTED EARNINGS (LOSS) PER SHARE
           FY2001 .........   (0.08)     (0.24)      0.05      0.05     (0.21)
           FY2000 .........   (0.02)      0.01       0.03      0.04      0.05

-----------------
(a) = Includes the impairment charge for the sale of Europe which is more fully
described in the 10-Q for the quarter ended December 31, 2001.


                                        9

<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS


                              RESULTS OF OPERATIONS

Years ended June 30, 2001 and June 30, 2000

     Revenues. In the past several years, the Company has focused on increasing
the amount of value-added products it provides to the marketplace, i.e.,
products where additional processing is performed on basic nitinol wire, strip,
or tube before it is shipped to the customer. Currently, medical device
applications represent some of the best opportunities for increasing the amount
of value-added business. The kink-resistant and self-expanding properties of
nitinol have made peripheral stenting an area of special interest, and stent
components manufactured for Abdominal Aortic Aneurysms (AAA) in particular have
become a significant driver of the Company's revenue. The market for stent
components is very dynamic and rapidly changing, however, and the Company has
found it difficult to accurately forecast demand for its stent components.
Delays in product launches, uncertain timing on regulatory approvals, inventory
adjustments by our customers, market share shifts between competing stent
platforms and the introduction of next-generation products have all contributed
to the variability in revenue generated by shipments of medical stent
components.

     Revenues increased 10.8% for the fiscal year ended June 30, 2001, to
$29,913,000 from $26,996,000 for the fiscal year ended June 30, 2000, a net
increase of $2,917,000. For the past several years the Company has focused on
increasing the amount of value-added products it provides to the marketplace, ie
products where additional processing is performed on basic nitinol wire, strip,
or tube before it is shipped to the customer. Currently, medical device
applications represent some of the best opportunities for increasing the amount
of value added business. The kink-resistant and self-expanding properties of
nitinol have made peripheral stenting a particular attractive market for the
Company at this time, and the increase in revenue of approximately $4,600,000
from sales of medical stent components from fiscal 2000 to fiscal 2001 was a
result of that focus. Increased sales of tube-based stent components accounted
for the majority of the increase noted above, although revenue from sales of
wire-based stent components also increased.

     Revenue from sales of superelastic tube, utilized primarily for medical
applications, increased by approximately $2,500,000 from fiscal 2000 to fiscal
2001. These revenue increases were partially offset by a decrease of
approximately $1,000,000 in revenue from sales of medical components utilized in
applications other than stents and a decrease of approximately $2,500,000 in
revenue from sales of antenna wire and bra wire. Other commercial and industrial
applications, including actuators, decreased approximately $970,000.

     In August 2000, the Company announced that Medtronic AVE, one of its major
customers, had temporarily suspended orders for stent components. This
suspension had the effect of reducing revenue in the first half of fiscal 2001
by approximately $1,000,000 from the anticipated level prior to the suspension.
Shipments resumed in the months immediately following the resumption of orders
at a higher rate than prior to the suspension in order to allow the customer to
rebuild its inventory position.

     In looking forward to fiscal year 2002, the Company has found that the
market for stent components is very dynamic and rapidly changing, and it is
difficult to accurately forecast demand for these products. Delays in product
launches, uncertain timing of regulatory approvals, inventory adjustments by our
customers, market share shifts between competing stent platforms and the
introduction of next-generation products have all contributed to the variability
in revenue generated by shipments of medical stent components.

     Costs and Expenses. Manufacturing costs increased from $15,599,000 in
fiscal 2000 to $17,734,000 in fiscal 2001, an increase of $2,135,000, or 13.7%.
This increase was largely attributable to the increase in revenues. In addition,
one of the Company's most significant medical device component customers
temporarily suspended shipments of its product in the first half of FY2001, and
because the Company believed the suspension to be temporary in nature and
decided to retain much of its skilled labor during the period of reduced
shipments, it had a negative effect on the gross margin of the Company. The
Company's gross margin from sales decreased to 38.5% in fiscal year 2001 from
40.4% in fiscal year 2000.

     General, selling and administrative ("GSA") expenses increased to
$11,138,000 in fiscal 2001 from $8,695,000 in fiscal 2000, an increase of
$2,443,000 or 28.1%. GSA in fiscal 2001 includes a one-time charge of
approximately $522,000 for severance payments and associated legal fees accrued
in the fourth quarter. During FY2001, there was increased spending on Sales and
Marketing of approximately $560,000 versus FY2000 levels to support expansion of
customer service and marketing analysis capabilities and increased internal R&D
expenditures for product development of approximately $200,000 vs. FY2000.
Depreciation and amortization expenses decreased to $512,000 in fiscal 2001 from
$592,000 in fiscal 2000, a decrease of $80,000. Following a review of its
European operation, during the third quarter of fiscal 2001 the Company sold its
European subsidiary and incurred a loss of $4,232,000 (See Note 14 to
Consolidated Financial Statements). Other expenses decreased from $378,000 in
fiscal 2000 to $358,000, a decrease of $20,000.

     Income Taxes. The provision (benefit) for income taxes is minimal for the
fiscal year ended June 30, 2001 due to the net loss incurred. The provision for
income taxes for the fiscal year ended June 30, 2000, consists solely of state
taxes. The Company has significant operating loss carryforwards for federal
income tax purposes.

     Net Income/Loss. As a result of the Company's 10.8% increase in revenues,
along with the 13.7% increase in manufacturing costs and 28.1% increase in GSA
expenses, the Company had a net loss of $4,689,000 during fiscal 2001, due
primarily to the loss incurred upon the sale of its European subsidiary (See
Note 14 to Consolidated Financial Statements), as compared to net income of
$1,109,000, during fiscal 2000. Excluding the loss of $4,232,000 attributable to
the sale of its European subsidiary, the Company's net loss would have been
$457,000.

Years ended June 30, 2000 and June 30, 1999

     Revenues. Revenues from continuing operations increased 42.9% for the
fiscal year ended June 30, 2000, to $26,996,000 from $18,886,000 for the fiscal
year ended June 30, 1999, a net increase of $8,110,000. The overall increase in
revenue was driven primarily by increased sales of the Company's products to the
medical device industry, particularly higher sales of components used in the
assembly of medical stents. Revenue from sales to the medical device industry
was approximately $19,000,000 in fiscal year 2000, an increase of approximately
$7,500,000 over fiscal year 1999 revenue. Revenues include $500,000 received in
June, 2000, from United Stenting, Inc. for assistance associated with the
development of United Stenting, Inc.'s proprietary Bilflex(TM) stent technology.
Approximately $875,000 of the total increase in revenue is attributable to the
acquisition of Memry Europe, which was acquired in October of 1998.

     Costs and Expenses. Manufacturing costs increased from $11,135,000 in
fiscal 1999 to $15,599,000 in fiscal 2000, an increase of $4,464,000, or 40.1%.
Of this increase, approximately $520,000 was attributable to the additional
sales contributed by

                                       10

<PAGE>

the Memry Europe acquisition. The Company's gross margin from sales increased to
40.4% in fiscal year 2000 from 38.5% in fiscal year 1999. This increase was
primarily attributable to the increase in sales of higher margin stent
components and other medical device components.

     General, selling and administrative ("GSA") expenses increased to
$8,695,000 in fiscal 2000 from $7,780,000 in fiscal 1999, an increase of
$915,000 or 11.8%. GSA in fiscal 1999 included a one-time charge of
approximately $800,000 for severance payments. The increase in GSA is primarily
attributable to the 42.9% increase in sales. Depreciation and amortization
expenses decreased to $592,000 in fiscal 2000 from $595,000 in fiscal 1999, a
decrease of $3,000. Other expense increased from $27,000 in fiscal 1999 to
$378,000 in fiscal 2000, an increase of $351,000. The increase is primarily due
to an increase in interest expense of approximately $231,000 which is
attributable to the higher level of borrowing during the fiscal year ended June
30, 2000 as compared to the fiscal year ended June 30, 1999.

     Income Taxes. The provision for income taxes consists solely of currently
payable state taxes for the fiscal years ended June 30, 2000 and 1999. The
Company has significant operating loss carryforwards for federal income tax
purposes in which the Company utilized a portion of these carryforwards in
fiscal 2000.

     Net Income/Loss. As a result of the Company's 42.9% increase in revenues,
along with the 40.1% increase in manufacturing costs and 11.8% increase in GSA
expenses, and a 136% increase in interest expense, the Company had net income of
$1,109,000 during fiscal 2000, as compared to a net loss of $1,349,000, during
fiscal 1999. The Company expects net income to increase in future fiscal years
as sales increase.

                         LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2001, the Company's cash and cash equivalents balance was
$1,075,000, a decrease of $459,000 from $1,534,000 at the end of fiscal year
2000. Cash provided by operations was $1,278,000 for the twelve months ended
June 30, 2001. Cash used in investing activities was $1,860,000, representing
funds invested in property, plant and equipment, net of cash generated from the
sale of the Company's European subsidiary. During the twelve months ended June
30, 2001, cash provided by financing activities totaled $176,000, consisting
primarily of private equity placement capital totaling $2,395,000 offset by the
repayment of notes payable and the revolver loan payable. Working capital at
June 30, 2001, was $2,442,000, an increase of $1,374,000 from $1,068,000 at June
30, 2000.

In fiscal 2000 and fiscal 2001, the primary capital requirements were to fund
additions to property, plant, and equipment.

On February 8, 2001, the Company completed the sale of the stock of its European
Subsidiary, Memry Europe, to Mr. Wilfried Van Moorleghem, for a cash
consideration of $1,000,000. As part of the transaction, the Company entered
into a supply and license agreement with Memry Europe, pursuant to which Memry
granted to Memry Europe a royalty-bearing license to certain technologies and
agreed to supply Memry Europe with certain alloys and tubing.

On January 31, 2001, the Company completed a private equity placement and raised
$2,395,000. Proceeds were raised through the sale of units, each of which
consisted of one share of Common Stock and a warrant to purchase one share of
Common Stock. Each unit was priced at $1.00. The warrants are exercisable at
$2.25 per share, valid for a period of three years from the date of issuance.
Notwithstanding the foregoing, if the fair market value of one share of Common
Stock of the Company is equal to or greater than $3.50 for twenty (20)
consecutive days during the term of the warrant, the Company has the right to
demand that the holder exercise the warrant within a 30-day period. Failure of
the holder to exercise the warrant within thirty (30) days would cause the
warrant to become void and the holder would lose all rights that it has with
respect to the warrant. In accordance with the Securities Act of 1933, as
amended (the "Securities Act"), the Company filed a registration statement for
the registration of the sale by the investors of their Company securities on
April 12, 2001. The registration is not yet effective. Other terms and
conditions were set forth in the definitive documents.

Under the terms of the transaction whereby the Company purchased Memry Europe,
the Company was obligated to pay an additional $1,046,000 in cash to the
shareholders of Memry Europe on October 30, 1999. On September 16, 1999, the
Company signed an agreement to convert approximately $455,000 of the obligation
to a term loan that matured and was subsequently paid on June 30, 2000. On
October 29, 1999, the Company paid approximately $258,000 to other former
shareholders of Memry Europe. On December 17, 1999, the Company signed an
agreement with the holder of approximately $333,000 of such obligation to
convert the obligation to a combination of common stock and warrants.

                                       11

<PAGE>

On June 30, 1998, the Company and Webster Bank entered into a Commercial
Revolving Loan, Term Loan, Line of Credit and Security Agreement and related
financing documents and agreements (the "Webster Facility"). Upon entering into
the Webster Facility, the Company paid off all amounts outstanding under its
prior credit facility with First Union National Bank. The Webster Facility
(prior to the amendment described below) included a revolving loan, an equipment
loan line of credit and a $500,000 term loan. The term loan is to be repaid in
equal monthly installments of principal over its five-year term. The revolving
loan provided for borrowings up to the lesser of (a) $3,000,000 or (b) an amount
equal to the aggregate of (1) 80% of eligible accounts receivable and (2) the
lesser of $1,000,000 or 35% of eligible inventory. The revolving loan requires
the payment of a commitment fee equal to 0.25% per annum of the daily-unused
portion of the revolving loan. The equipment loan line of credit provides for
equipment financing up to the lesser of $750,000 or 75% of the purchase price
for eligible equipment each year through June 30, 2001. On June 30, 2000, the
Company converted $1,250,000 from the equipment line of credit into a term loan.
The Company has the remaining option of converting amounts borrowed under the
equipment line of credit to term loans on July 1, 2001.

On November 30, 1999, the Company and Webster Bank reached agreement on an
amendment to the Webster Facility. Under the terms of the agreement, the
revolving loan now provides for borrowings up to the lesser of (a) $5,000,000 or
(b) an amount equal to the aggregate of (1) 80% of eligible accounts receivable
and (2) the lesser of $1,000,000 or 35% of eligible inventory. The equipment
loan is amended to provide for equipment financing up to the lesser of
$1,250,000 or 75% of the purchase price for eligible equipment each year through
June 30, 2001. A new term loan in the amount of $1,000,000 was provided with the
requirement that not less than $500,000 of the term loan be used to finance new
machinery and equipment purchases. The Company has since satisfied said
requirement. Pursuant to a verbal request from Webster Bank during the third
quarter of fiscal year 2001, the Company refrained from borrowing under the
equipment line until June, 2001, when it borrowed $250,000. The other major
provisions of the agreement remain unchanged.

On June 30, 2001, the Company and Webster Bank reached agreement on a second
amendment to the Webster Facility. Under the terms of the agreement, the
revolving loan now provides for borrowings up to the lesser of (a) if the
Availability Test is satisfied, an amount equal to the lesser of (i) $5,000,000
or (ii) an amount equal to the aggregate of (1) 80% of eligible accounts
receivable and (2) the lesser of $1,000,000 or 35% of eligible inventory or (b)
if the Availability Test is not satisfied, an amount equal to the lesser of (i)
$5,000,000 or (ii) an amount equal to the aggregate of (1) 80% of eligible
accounts receivable plus (2) the lesser of $1,000,000 or 35% of eligible
inventory, multiplied by (3) 75%. The Availability Test means that the Company
has raised additional equity and long term debt on terms satisfactory to
Webster. There is no provision for equipment loans under the revised agreement.
The other major provisions of the agreement remain unchanged. At June 30, 2001,
an aggregate amount of approximately $3,100,000 was outstanding under the
Webster Facility. The Webster Facility is secured by substantially all of the
Company's domestic assets.

Interest on the revolving loan and equipment line of credit is variable based on
either LIBOR or the Prime Rate as published in the Wall Street Journal, as
elected by the Company. Interest on the term loan and converted equipment loans
is either fixed, at a rate based on the U.S. Treasury yield, or variable based
on the Prime Rate, as elected by the Company. The Company has the ability to
convert between the different rates from time to time subject to certain
conditions.

In addition, the credit facility contains various restrictive covenants,
including, among others, limitations on encumbrances and additional debt,
prohibition on the payment of dividends or redemption of stock (except in
connection with certain existing put rights), restrictions on
management/ownership changes and required compliance with specified financial
ratios.

On January 15, 2001, the Company and Medtronic AVE signed an Advance Payment
Agreement whereby the customer advanced the Company $1,000,000 to be repaid in
ten equal installments of $100,000 beginning in March, 2001. At the customer's
option, the installments may be repaid in immediately payable funds or by
offsetting such installments against payables owed by the customer or its
affiliates. No interest is due on these funds as long as the Company does not
default on its obligations. Other terms and conditions apply. Amounts due the
customer under the advance are withheld by Webster Bank from the eligible
accounts receivable used in calculating the size of the Company's credit
facility.

The Company has in the past grown through acquisitions (including the
acquisition of Wire Solutions, Memry Europe (which was subsequently sold when
the Company decided to direct resources away from the commercial and industrial
markets, for which Memry Europe manufactured products, and instead refocused the
Company's assets and efforts on medical markets) and Raychem Corporation's
nickel titanium product line). 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 and authorized but unissued common stock to finance any such
acquisitions. The Company does not currently, however, contemplate any material
acquisitions for fiscal 2002.

The Company has substantial requirements to fund plant and equipment projects to
support the expected increased sales volume of SMA and superelastic materials
during the fiscal year ending June 30, 2002 and beyond. The Company expects that
it will be able to pay for these expenditures through a combination of cash flow
generated through operations, increased borrowings, and sale of stock.

                                       12

<PAGE>

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 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
the assembly of all products to be sold to U.S. Surgical Corporation), excluding
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 (provided, however, that assets, revenues, employees, operations and
bank accounts attributable to any entity acquired by the Company shall not be
considered when determining if the Company has satisfied such requirements so
long as such entity (1) was acquired in an arm's length transaction, (2) was not
an affiliate of the Company and was not controlled by an affiliate of the
Company prior to such acquisition, and (3) had been in existence and operating
as a business for at least one year at the time of the acquisition). Upon CII's
exercise of its put, the Company shall be obligated to purchase from CII all the
Company's Common Stock then owned by CII and underlying warrants then owned 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 by CII.
Using $2.00 per share, which was above the market price for the Company's common
stock on September 10, 2001 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 $4.32 million. To the extent that the current market value of the
Company's common stock exceeds $2.00 per share at any time, the put price would
be greater. 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 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 ensure that its operations do not move from
Connecticut in a manner that would trigger CII's put.

In addition to funding normal operations, the Company may be required to secure
new facilities to house its west coast operations during fiscal year 2002. The
cost of this move and associated relocation expenses would be substantial,
however the Company believes that the combination of its borrowing facility and
cash flow generated through operations will be sufficient to meet the Company's
total capital requirements. If funds available through these sources are not
sufficient, then the Company would likely be forced to raise equity capital
which could have a material adverse effect on the per share market price of the
Company's common stock.

During the fourth fiscal quarter of 2001, the Company relocated to a facility
located at 3 Berkshire Blvd., Bethel, CT 06801, to house the Company's corporate
headquarters and east coast manufacturing and assembly operation. The leased
facility consists of approximately 37,500 square feet of manufacturing and
office space located in a suburban industrial park. The total cost of leasehold
improvements, furnishings, and moving expenses associated with the new facility
was approximately $2,600,000. The annual rent for the facility is approximately
$336,000 versus the rent at the prior Brookfield location of approximately
$170,000 for 24,000 square feet.

NEW ACCOUNTING PRONOUNCEMENTS AND INTERPRETATIONS

In December 1999 the staff of the Securities and Exchange Commission issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements". SAB No. 101 summarizes some of the staff's interpretations of the
application of generally accepted accounting principles to revenue recognition.
The Company adopted SAB No. 101, as required, in the fourth quarter of fiscal
2001 with no significant effect on its financial statements.

In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141, "Business Combinations" (SFAS 141). The
Statement is effective for all business combinations initiated after June 30,
2001 and for all Business Combinations accounted for by the purchase method that
are completed after June 30, 2001. SFAS 141 prohibits the pooling of interest
method of accounting for business combinations and prescribes the initial
recognition and measurement of goodwill and other intangible assets, accounting
for negative goodwill and the required disclosures related to business
combinations.

In July 2001, the Financial Accounting Standards Board also issued Statement of
Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets"
(SFAS 142). The Statement is effective for fiscal years beginning after December
15, 2001 and may not be retroactively applied to financial statements of prior
periods. SFAS 142 requires that goodwill, including previously existing
goodwill, and intangible assets with indefinite useful lives, should not be
amortized but should be tested for impairment annually. Goodwill and intangible
assets with indefinite useful lives will no longer be tested for impairment
under

                                       13

<PAGE>

Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
(SFAS 121).

The Company is required to adopt the provisions of SFAS 141 immediately and SFAS
142 no later than July 1, 2002. The Company has elected to early adopt SFAS 142.
Therefore, effective July 1, 2001, all goodwill and intangible assets determined
to have an indefinite useful life acquired in a purchase business combination
will no longer be amortized and will be evaluated for impairment under SFAS 142.

As of the date of adoption, the Company expects to have unamortized goodwill of
$1,038,000, which will be subject to the transition provisions of SFAS 141 and
142. Amortization expense related to goodwill was approximately $168,000,
$260,000 and $248,000 for the years ended June 30, 2001, 2000, and 1999,
respectively. Because of the extensive effort needed to comply with adopting
SFAS 141 and 142, it is not practicable to reasonably estimate the impact of
adopting these Statements on the Company's financial statements at the date of
this report, including whether any transitional impairment losses will require
to be recognized as the cumulative effect of a change in accounting principles.

EURO CONVERSION

The Company conducts business in multiple currencies, including the currencies
of various European countries in the European Union which began participating in
the single European currency by adopting the euro as their common currency as of
January 1, 1999. During the period January 1, 1999 to January 1, 2002, the
existing currencies of the member countries will remain legal tender and
customers and vendors of the Company may continue to use these currencies when
conducting business. Currency rates during this period, however, will no longer
be computed from one legacy currency to another but instead will first be
converted into the euro. The Company continues to evaluate the euro conversion
and the impact on its business, both strategically and operationally. At this
time, the conversion to the euro has not had, nor is expected to have, a
material adverse effect on the financial condition or results of operations of
the Company.

FORWARD-LOOKING INFORMATION

     Certain statements in this Annual Report on Form 10-K that are not
historical fact, as well as certain information incorporated herein by
reference, constitute "forward-looking statements" made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements involve risks and uncertainties and often depend on
assumptions, data or methods that may be incorrect or imprecise. The Company's
future operating results may differ materially from the results discussed in, or
implied by, forward-looking statements made by the Company. Factors that may
cause such differences include, but are not limited to, those discussed below
and the other risks detailed in the Company's other reports filed with the
Securities and Exchange Commission.

     Forward-looking statements give our current expectations or forecasts of
future events. You can usually identify these statements by the fact that they
do not relate strictly to historical or current facts. They often use words such
as "anticipate", "estimate", "expect", "project", "intend", "plan", "believe,"
and other words and terms of similar meaning in connection with any discussion
of future operating or financial performance. In particular, these include
statements relating to future actions, prospective products or product
approvals, future performance or results of current and anticipated products,
sales efforts, expenses, the outcome of contingencies such as legal proceedings,
and financial results.

     Any or all of our forward-looking statements in this Annual Report on
Form 10-K and information incorporated by reference may turn out to be wrong.
They can be affected by inaccurate assumptions we might make or by known or
unknown risks and uncertainties. Many factors mentioned in this discussion--for
example, product competition and the competitive environment--will be important
in determining future results. Consequently, no forward-looking statement can be
guaranteed. Actual future results may vary materially. The Company undertakes no
obligation to revise any of these forward-looking statements to reflect events
or circumstances after the date hereof.

Other Factors That May Affect Future Results

-trends toward managed care, healthcare cost containment and other changes in
government and private sector initiatives, in the U.S. and other countries in
which we do business, that are placing increased emphasis on the delivery of
more cost-effective medical therapies

-the trend of consolidation in the medical device industry as well as among
customers of medical device manufacturers, resulting in more significant,
complex and long-term contracts than in the past and potentially greater pricing
pressures

-efficacy or safety concerns with respect to marketed products, whether
scientifically justified or not, that may lead to product recalls, withdrawals
or declining sales

-changes in governmental laws, regulations and accounting standards and the
enforcement thereof that may be adverse to us

-other legal factors including environmental concerns

-agency or government actions or investigations affecting the industry in
general or us in particular

-risks associated with maintaining and expanding international operations

-changes in business strategy or development plans

-business acquisitions, dispositions, discontinuations or restructurings

-the integration of businesses acquired by us

-availability, terms and deployment of capital

-economic factors over which we have no control, including changes in inflation
and interest rates

-the developing nature of the market for our products and technological change

-intensifying competition in the SMA field

-success of operating initiatives

-operating costs

-advertising and promotional efforts

-the existence or absence of adverse publicity

-our potential inability to obtain and maintain patent protection for our
alloys, processes and applications thereof, to preserve our trade secrets and to
operate without infringing on the proprietary rights of third parties

-the possibility that adequate insurance coverage and reimbursement levels for
our products will not be available

-our dependence on outside suppliers and manufacturers

-our exposure to potential product liability risks which are inherent in the
testing, manufacturing, marketing and sale of medical products

-the ability to retain management

-business abilities and judgment of personnel

-availability of qualified personnel

-labor and employee benefit costs

                                       14

<PAGE>

ITEM 8. FINANCIAL STATEMENTS

     The consolidated financial statements of the Company and the report of
independent certified public accountants thereon are set forth on pages F-1
through F-22 hereof.


                                       15

<PAGE>

                          INDEX TO FINANCIAL STATEMENTS

                                                                  Page
                                                                  ----

Independent Auditor's Report....................................  F-1
Financial Statements
     Consolidated balance sheets................................  F-2
     Consolidated statements of operations......................  F-3
     Consolidated statements of stockholders' equity............  F-4
     Consolidated statements of cash flows......................  F-5
     Notes to consolidated financial statements.................  F-7

<PAGE>





                          INDEPENDENT AUDITOR'S REPORT

To the Stockholders and Board of Directors
Memry Corporation and Subsidiaries
Bethel, Connecticut

We have audited the accompanying consolidated balance sheets of Memry
Corporation and subsidiaries as of June 30, 2001 and 2000, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended June 30, 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Memry Corporation
and subsidiaries as of June 30, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
June 30, 2001 in conformity with accounting principles generally accepted in the
United States of America.

                                                /s/ McGLADREY & PULLEN, LLP

New Haven, Connecticut
August 16, 2001


                                      F-1

<PAGE>

MEMRY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
June 30, 2001 and 2000
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                   2001               2000
                                                                              ----------------------------------
<S>                                                                            <C>                <C>
ASSETS

Current Assets
  Cash and cash equivalents                                                    $  1,075,000       $  1,534,000
  Accounts receivable, less allowance for doubtful accounts
   of $173,000 in 2001 and $166,000 in 2000 (Note 9)                              4,159,000          4,192,000
  Inventories (Note 3)                                                            3,680,000          3,700,000
  Prepaid expenses and other current assets                                          96,000             36,000
  Note receivable - related party (Note 4)                                          140,000                 --
                                                                              ----------------------------------
         Total current assets                                                     9,150,000          9,462,000
                                                                              ----------------------------------

Property, Plant and Equipment, net (Notes 5 and 11)                               7,260,000          7,504,000
                                                                              ----------------------------------

Other Assets
  Patents and patent rights, less accumulated amortization
   of $731,000 in 2001 and $598,000 in 2000                                       1,333,000          1,466,000
Goodwill, less accumulated amortization of $279,000 in 2001
   and $646,000 in 2000                                                           1,038,000          3,823,000
Deferred financing costs                                                                 --             15,000
Deposits                                                                            272,000            273,000
                                                                              ----------------------------------
                                                                                  2,643,000          5,577,000
                                                                              ----------------------------------

                                                                               $ 19,053,000       $ 22,543,000
                                                                              ==================================

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
  Accounts payable and accrued expenses (Notes 6 and 16)                       $  4,124,000       $  4,649,000
  Notes payable (Note 7)                                                          1,909,000          3,617,000
  Current maturities of capital lease obligations (Note 11)                           4,000             24,000
  Advances payable                                                                  600,000                 --
  Income taxes payable                                                               71,000            104,000
                                                                              ----------------------------------
         Total current liabilities                                                6,708,000          8,394,000
                                                                              ----------------------------------

Notes Payable, less current maturities (Note 7)                                   1,210,000          1,992,000
Capital Lease Obligations, less current maturities (Note 11)                          5,000             57,000
                                                                              ----------------------------------
                                                                                  1,215,000          2,049,000
                                                                              ----------------------------------

Commitments and Contingencies (Notes 8, 11 and 13)

Stockholders' Equity (Notes 7 and 8)
  Common stock, $.01 par value, 40,000,000 shares authorized;
    23,634,583 shares issued and oustanding in 2001 and 21,130,476 shares
    issued and outstanding in 2000                                                  236,000            211,000
  Additional paid-in capital                                                     47,018,000         44,386,000
  Accumulated deficit                                                           (36,124,000)       (31,435,000)
  Accumulated other comprehensive loss                                                   --         (1,062,000)
                                                                              ----------------------------------
                                                                                 11,130,000         12,100,000
                                                                              ----------------------------------
                                                                               $ 19,053,000       $ 22,543,000
                                                                              ==================================
</TABLE>

See Notes to Consolidated Financial Statements.


                                                         F-2

<PAGE>

MEMRY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended June 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                 2001            2000            1999
                                                            --------------------------------------------

<S>                                                         <C>             <C>             <C>
Revenues
  Product sales (Note 9)                                    $ 28,937,000    $ 26,064,000    $ 18,164,000
  Research and Development                                       976,000         932,000         722,000
                                                            --------------------------------------------
                                                              29,913,000      26,996,000      18,886,000
                                                            --------------------------------------------
Cost of Revenues
  Manufacturing (Note 10)                                     17,734,000      15,599,000      11,135,000
  Research and development                                       676,000         498,000         473,000
                                                            --------------------------------------------
                                                              18,410,000      16,097,000      11,608,000
                                                            --------------------------------------------

    Gross profit                                              11,503,000      10,899,000       7,278,000
                                                            --------------------------------------------

Operating Expenses
  General, selling and administrative (Notes 11, 13 and 16)   11,138,000       8,695,000       7,780,000
  Depreciation and amortization                                  512,000         592,000         595,000
  Loss on disposal of subsidiary (Note 14)                     4,232,000            --              --
                                                            --------------------------------------------
                                                              15,882,000       9,287,000       8,375,000
                                                            --------------------------------------------

    Operating income (loss)                                   (4,379,000)      1,612,000      (1,097,000)
                                                            --------------------------------------------

Other Income (Expense)
  Interest expense (Note 7)                                     (393,000)       (401,000)       (170,000)
  Interest income                                                 35,000          23,000          78,000
  Other income                                                      --              --            65,000
                                                            --------------------------------------------
                                                                (358,000)       (378,000)        (27,000)
                                                            --------------------------------------------

    Income (loss) before income taxes                         (4,737,000)      1,234,000      (1,124,000)

Provision (benefit) for income taxes (Note 12)                   (48,000)        125,000         225,000
                                                            --------------------------------------------

    Net income (loss)                                       $ (4,689,000)   $  1,109,000    $ (1,349,000)
                                                            ============================================

Basic earnings (loss) per share                                    (0.21)           0.05           (0.07)
                                                            ============================================

Diluted earnings (loss) per share                                  (0.21)           0.05           (0.07)
                                                            ============================================

See Notes to Consolidated Financial Statements.
</TABLE>


                                      F-3



<PAGE>

MEMRY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended June 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                                      Accumulated
                                             Common  Stock            Additional                      Other Comp-
                                          Shares          Par          Paid-in        Accumulated      rehensive
                                          Issued         Value         Capital          Deficit          Loss            Total
                                        ------------------------------------------------------------------------------------------

<S>                                     <C>              <C>          <C>            <C>              <C>            <C>
Balance, June 30, 1998                  19,949,169     $  199,000     $41,121,000    $(31,195,000)    $      --      $ 10,125,000

  Issuance of common
    stock                                  877,164          9,000       2,711,000            --              --         2,720,000

Comprehensive loss:
  Net loss                                    --             --              --        (1,349,000)           --        (1,349,000)
  Foreign currency
    translation adjustments                   --             --              --              --          (530,000)       (530,000)
  Total comprehensive
    loss                                      --             --              --              --              --        (1,879,000)
                                        ------------------------------------------------------------------------------------------

Balance, June 30, 1999                  20,826,333         208,000     43,832,000     (32,544,000)       (530,000)     10,966,000

  Issuance of common
    stock and warrants                     304,143          3,000         554,000            --              --           557,000

Comprehensive income:
  Net income                                  --             --              --         1,109,000            --         1,109,000
  Foreign currency
    translation adjustments                   --             --              --              --          (532,000)       (532,000)
                                                                                                                     ------------
  Total comprehensive
    income                                    --             --              --              --              --           577,000
                                        ------------------------------------------------------------------------------------------

Balance, June 30, 2000                  21,130,476        211,000      44,386,000     (31,435,000)     (1,062,000)     12,100,000

  Issuance of common
    stock and warrants                   2,504,107         25,000       2,632,000            --              --         2,657,000

Comprehensive income (loss):
    Net loss                                  --             --              --        (4,689,000)           --        (4,689,000)
    Foreign currency
      translation adjustments                 --             --              --              --         1,062,000       1,062,000
    Total comprehensive
      loss                                    --             --              --              --              --        (3,627,000)
                                        ------------------------------------------------------------------------------------------

Balance, June 30, 2001                  23,634,583     $  236,000     $47,018,000    $(36,124,000)    $      --      $ 11,130,000
                                        ==========================================================================================
</TABLE>

See Notes to Consolidated Financial Statements.



                                       F-4


<PAGE>

MEMRY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended June 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                            2001           2000            1999
                                                                        ------------------------------------------
<S>                                                                      <C>            <C>            <C>
Cash Flows from Operating Activities
  Net income (loss)                                                     $(4,689,000)   $ 1,109,000    $(1,349,000)
  Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
     Provision for loss on note receivable                                     --             --          325,000
     Depreciation and amortization                                        2,141,000      1,748,000      1,217,000
     Gain (loss) on disposal of assets                                         --            6,000         (7,000)
     Compensation paid by issuance of common stock and warrants             235,000        151,000        103,000
     Warrants issued related to settlement of acquisition liability            --           39,000           --
     Loss on sale of European subsidiary                                  4,232,000           --             --
     Change in operating assets and liabilities:
       (Increase) decrease in accounts receivable                           (83,000)    (1,998,000)     1,588,000
       Increase in inventories                                             (599,000)      (564,000)      (683,000)
       (Increase) decrease in prepaid expenses and other
         current assets                                                     (45,000)      (273,000)        30,000
       (Increase) decrease in other assets                                  (24,000)       (10,000)        56,000
       Increase (decrease) in income taxes payable/receivable               (34,000)       193,000        (89,000)
       Increase in note receivable                                         (140,000)          --             --
       Increase (decrease) in accounts payable and accrued expenses        (316,000)     2,049,000        133,000
       Increase in advances payable                                         600,000           --             --
                                                                        ------------------------------------------
         Net cash provided by operating activities                        1,278,000      2,450,000      1,324,000
                                                                        ------------------------------------------

Cash Flows from Investing Activities
  Net proceeds from sale of European subsidiary                             933,000           --             --
  Purchases of equipment                                                 (2,793,000)    (3,528,000)    (1,632,000)
  Cash paid related to settlement of acquisition liability                     --         (713,000)          --
  Purchase of AMT and Wire Solutions                                           --             --       (1,533,000)
  Proceeds from sales of equipment                                             --             --          310,000
                                                                        ------------------------------------------
         Net cash used in investing activities                           (1,860,000)    (4,241,000)    (2,855,000)
                                                                        ------------------------------------------

Cash Flows from Financing Activities
  Proceeds from sale of common stock, net                                 2,422,000         34,000        133,000
  Proceeds from notes payable                                                  --        1,000,000           --
  Net (decrease) increase in revolving loans payable                     (1,228,000)     1,817,000      2,288,000
  Principal payments on notes payable                                      (985,000)      (607,000)      (304,000)
  Principal payments on capital lease obligations                           (33,000)       (45,000)       (35,000)
                                                                        ------------------------------------------
         Net cash provided by financing activities                          176,000      2,199,000      2,082,000
                                                                        ------------------------------------------

Effect of foreign currency exchange rate changes on cash
  and cash equivalents                                                      (53,000)       (65,000)      (549,000)
                                                                        ------------------------------------------

         Increase (decrease) in cash and cash equivalents                  (459,000)       343,000          2,000

Cash and cash equivalents, beginning of year                              1,534,000      1,191,000      1,189,000
                                                                        ------------------------------------------

Cash and cash equivalents, end of year $                                  1,075,000    $ 1,534,000    $ 1,191,000
                                                                        ==========================================

Supplemental Disclosures of Cash Flow Information
  Cash payments for interest                                            $   373,000    $   374,000    $   155,000
                                                                        ==========================================

  Cash payments (refunds) for income taxes                              $    (9,000)   $   (68,000)   $   145,000
                                                                        ==========================================
</TABLE>

                                      F-5



<PAGE>

MEMRY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued
Years Ended June 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                            2001         2000            1999
                                                                         ---------------------------------------
<S>                                                                      <C>            <C>          <C>
Supplemental Schedule of Noncash Investing
  and Financing Activities
    Acquisition of AMT:
      Cash purchase price                                                $  --          $    --      $ 1,298,000
                                                                         =======================================

      Fair value of assets acquired
        Accounts receivable                                                                  --          575,000
        Notes receivable                                                                     --          525,000
        Inventory                                                                            --          187,000
        Goodwill                                                                             --        3,743,000
        Property and equipment                                                               --        2,012,000
        Other                                                                                --           22,000
                                                                         ---------------------------------------
                                                                            --               --        7,064,000
     Less
        Common stock issued                                                                  --       (2,363,000)
        Acquisition liability                                                                --       (1,046,000)
        Liabilities assumed                                                                  --       (2,357,000)
                                                                         ---------------------------------------
                                                                         $  --          $    --      $ 1,298,000
                                                                         =======================================

    Acquisition of Wire Solutions, Inc.:
      Cash purchase price                                                $  --          $    --      $   235,000
                                                                         =======================================

      Fair value of assets acquired
        Accounts receivable                                              $  --          $    --      $    26,000
        Goodwill                                                            --               --          353,000
        Property, plant and equipment                                       --               --            1,000
                                                                         ---------------------------------------
                                                                            --               --          380,000

     Less
        Common stock issued                                                 --               --         (121,000)
        Liabilities assumed                                                 --               --          (24,000)
                                                                         ---------------------------------------
                                                                         $  --          $    --      $   235,000
                                                                         =======================================

Common stock issued in connection with
  settlement of acquisition liability                                    $  --          $  333,000   $      --
                                                                         =======================================

Capital lease obligation incurred for equipment                          $  --          $   61,000   $    21,000
                                                                         =======================================

Conversion of revolving loans payable to equipment term loan             $250,000       $1,250,000   $   668,000
                                                                         =======================================
</TABLE>

See Notes to Consolidated Financial Statements.

                                      F-6




<PAGE>


MEMRY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------


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. The
Company's sales are primarily to customers in the medical device industry
located throughout the United States and Europe. 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
its wholly owned subsidiary, Memry Holdings, S.A. and its wholly-owned
subsidiary, Memry Europe, N.V. (collectively, the "Company"). Memry Holdings,
S.A. is a holding company whose principal asset consisted of an investment in
its wholly owned subsidiary, Memry Europe, N.V., which was sold on February 8,
2001 (see Note 14). All significant intercompany accounts and 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 and shape memory
alloys. Inventories are stated at the lower of cost, determined on the first-in,
first-out method, or market.

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. The Company measures
impairment by comparing the asset's estimated fair value to its carrying amount.
The estimated fair value of these assets is based on estimated future cash flows
to be generated by the assets, discounted at a market rate of interest.

Foreign Currency Exchange and Translation
-----------------------------------------

The financial statements of foreign subsidiaries have been translated into U.S.
dollars in accordance with Statement of Financial Accounting Standards No. 52,
"Foreign Currency Translation". All balance sheet accounts have been translated
using the exchange rates in effect at the balance sheet date. Income statement
amounts have been translated using the average exchange rate for the year. Gains
and losses resulting from changes in exchange rates from year to year have been
reported in comprehensive income (loss). The effect on the consolidated
statements of operations of foreign currency transaction gains and losses is
insignificant.


                                      F-7

<PAGE>

MEMRY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------


Effective January 1, 1999, the European Economic and Monetary Union (the "EMU")
created a single Eurocurrency (the "Euro") for its member countries, including
Belgium, which is a member of the EMU and where the Company's European
operations are conducted. On January 1, 1999, Belgium irreversibly established
fixed conversion rates between their existing sovereign currency, the Belgian
Franc, and the Euro, and adopted the Euro as its common legal currency on that
date. On January 1, 1999, the exchange rate between the Belgian Franc and Euro
was 40.34 to 1.

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

Revenues from product sales are recognized when the related products are
shipped. Certain revenues are earned in connection with research and development
grants and contracts which are principally with various governmental agencies.
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.

Included in product sales for the year ended June 30, 2000 is approximately
$500,000 in royalties earned in connection with an agreement with an unrelated
party. The provisions of the agreement stipulate that Memry is to receive a
royalty on sales of products which use certain technology. The maximum royalties
to be earned under the agreement totals $2.5 million. This agreement terminated
on February 8, 2001 upon the sale of Memry Europe, N.V.

In December 1999, the staff of the Securities and Exchange Commission issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements". SAB No. 101 summarizes some of the staff's interpretations of the
application of generally accepted accounting principles to revenue recognition.
The Company adopted SAB No. 101, as required, in the fourth quarter of fiscal
year 2001 with no significant effect on its financial statements.

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

Depreciation of equipment is computed using the straight-line method over the
estimated useful lives of the respective assets. Leasehold improvements are
amortized over the life of the lease, or the improvements' estimated useful
life, if shorter.

The estimated useful lives of the assets are as follows:

               Building                                          20 years
               Furniture and fixtures                          5-10 years
               Tooling and equipment                           3-10 years
               Leasehold improvements                          3-10 years

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.


                                      F-8

<PAGE>

MEMRY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------


401(k) plan
-----------

The Company maintains a 401(k) profit sharing and savings plan for the benefit
of substantially all its employees. The plan provides for contributions by the
Company in such amounts as the Board of Directors may annually determine.

Research and development expense
--------------------------------

The Company incurred research and development expense relating to its own
internal products as well as the development of future products for the years
ended June 30, 2001, 2000 and 1999 aggregating approximately $1,699,000,
$1,498,000 and $1,013,000, respectively.

Advances payable
----------------

Advances payable consists of advance payments received from a customer in
connection with an agreement entered into during the year ended June 30, 2001.

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

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 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.

Earnings per share
------------------

Basic earnings (loss) per share amounts are computed by dividing net income
(loss) by the weighted-average number of common shares outstanding. Diluted per
share amounts assume exercise of all potential common stock instruments unless
the effect is to reduce the loss or increase the income per common share.

For the periods presented, there were no items which changed net income (loss)
as presented in the consolidated statements of operations and the amounts used
to compute basic and diluted earnings (loss) per share. The following is
information about the computation of weighted-average shares utilized in the
computation of basic and diluted earnings (loss) per share. For the years ended
June 30, 2001 and 1999, common stock equivalents have been excluded from the
computation of the net loss per share because inclusion of such equivalents is
anti-dilutive.
<TABLE>
<CAPTION>

                                                                    2001             2000            1999
                                                               -------------------------------------------------
<S>                                                               <C>              <C>             <C>
           Weighted average number of basic shares
             outstanding                                          22,616,343       20,993,850      20,297,134
           Effect of dilutive securities:
             Warrants                                                 -               666,953          -
             Options                                                  -               339,644          -
                                                               -------------------------------------------------

           Weighted average number of fully diluted
             shares outstanding                                   22,616,343       22,000,447      20,297,134
                                                               =================================================

</TABLE>


                                      F-9

<PAGE>

MEMRY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------



Note 2.  Business Combinations

The Company purchased Advanced Materials and Technologies, n.v. ("AMT") and the
assets of Wire Solutions, Inc. on October 30, 1998 and March 19, 1999,
respectively. Details of the transactions, which were accounted for as
purchases, are as follows:

A summary of the purchase payments in connection with the acquisitions is as
follows:
<TABLE>
<CAPTION>
                                                                                                  Wire
                                                                                                Solutions,
                                                                              AMT                  Inc.
                                                                         ----------------------------------
<S>                                                                           <C>                <C>
               Cash paid to sellers at closing                              $ 1,040,000        $ 209,000
               Issuance of 675,000 shares of common
                 stock to sellers                                             2,363,000               --
               Issuance of 62,500 shares of common
                 stock to sellers                                                    --          121,000
               Acquisition liability                                          1,046,000               --
               Acquisition costs                                                258,000           26,000
                                                                         ----------------------------------
                                                                            $ 4,707,000        $ 356,000
                                                                         ==================================
</TABLE>


A summary of the net assets acquired in connection with the acquisitions is as
follows:
<TABLE>
<CAPTION>

                                                                                               Wire
                                                                                            Solutions,
                                                                              AMT              Inc.
                                                                         ----------------------------------
<S>                                                                             <C>               <C>
               Assets acquired
                 Accounts receivable                                        $   575,000        $  26,000
                 Notes receivable                                               525,000               --
                 Inventory                                                      187,000               --
                 Goodwill                                                     3,743,000          353,000
                 Property, plant and equipment                                2,012,000            1,000
                 Other                                                           22,000               --
               Liabilities assumed                                           (2,357,000)         (24,000)
                                                                         ----------------------------------
                                                                            $ 4,707,000        $ 356,000
                                                                         ==================================

</TABLE>

On February 8, 2001, the Company sold AMT (see Note 14).


                                      F-10

<PAGE>

MEMRY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------


Note 3.  Inventories

Inventories at June 30, 2001 and 2000, are summarized as follows:

<TABLE>
<CAPTION>
                                                                                     2001            2000
                                                                             ---------------------------------

<S>                                                                               <C>             <C>
                    Raw materials and supplies                                  $ 1,168,000     $ 1,109,000
                    Work-in-process                                               1,788,000       1,517,000
                    Finished goods                                                1,250,000       1,509,000
                    Allowance for slow-moving and obsolete inventory               (526,000)       (435,000)
                                                                             ---------------------------------
                                                                                $ 3,680,000     $ 3,700,000
                                                                             =================================
</TABLE>


Note 4.  Note Receivable - Related Party

On August 29, 2000, the Company made a loan to an executive officer which has
been collateralized by his personal residence. The loan was part of the
executive officer's overall compensation package and was to be forgiven,
providing certain conditions were met, over a four year period. During 2001, the
executive officer was terminated and the note became currently due (see Note
17).

Note 5.  Property, Plant and Equipment

Property, plant and equipment at June 30, 2001 and 2000, is summarized as
follows:
<TABLE>
<CAPTION>

                                                                                     2001            2000
                                                                             ---------------------------------

<S>                                                                             <C>                 <C>
                    Land and building                                          $         --    $    483,000
                    Furniture and fixtures                                        1,034,000       2,196,000
                    Tooling and equipment                                         8,824,000       8,145,000
                    Leasehold improvements                                        2,221,000         588,000
                                                                             ---------------------------------
                                                                                 12,079,000      11,412,000
                    Less accumulated depreciation and amortization                4,819,000       3,908,000
                                                                             ---------------------------------
                                                                               $  7,260,000    $  7,504,000
                                                                             =================================
</TABLE>

Note 6.  Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses at June 30, 2001 and 2000 are summarized
as follows:

<TABLE>
<CAPTION>
                                                                                     2001            2000
                                                                             ---------------------------------

<S>                                                                              <C>           <C>
                    Accounts payable                                            $   985,000    $  1,604,000
                    Accrued expenses - other                                      1,625,000       2,069,000
                    Accrued Bonuses                                                 550,000         636,000
                    Accrued Vacation Pay                                            377,000         340,000
                    Accrued Severence                                               587,000         319,000
                                                                             ---------------------------------
                                                                                $ 4,124,000    $  4,649,000
                                                                             =================================
</TABLE>



                                      F-11

<PAGE>

MEMRY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------


Note 7.  Notes Payable

Notes payable consist of the following at June 30, 2001 and 2000:

<TABLE>
<CAPTION>
                                                                                           2001             2000
                                                                                    ---------------------------------
<S>                                                                                       <C>            <C>
      Revolving loan payable pursuant to amended June 30, 1998 credit facility,
        interest payable monthly at the prime rate plus .75% (7.5% and 10.25%
        at June 30, 2001 and 2000, respectively), due September 30, 2002.            $    887,000     $  2,367,000

      Term note payable to a bank pursuant to amended June 30, 1998 credit
        facility, due in monthly installments of $8,333, plus interest at 8.75%

        per annum, due June 30, 2003.                                                     208,000          308,000

      Equipment loan payable pursuant to amended June 30, 1998 credit facility,
        due in monthly installments of $18,555, plus interest at prime plus .75%
        (7.5% and 10.25% at June 30, 2001 and 2000, respectively), due

        June 30, 2002.                                                                    241,000          464,000

      Equipment loan payable pursuant to amended June 30, 1998 credit facility,
        due in monthly installments of $16,667, plus interest at prime plus .75%
        (7.5% and 10.25% at June 30, 2001 and 2000, respectively), due

        January 1, 2005.                                                                  700,000          900,000

      Equipment loan payable pursuant to amended June 30, 1998 credit facility,
        due in monthly installments of $34,722, plus interest at prime plus .75%
        (7.5% and 10.25% at June 30, 2001 and 2000, respectively), due

        June 30, 2003.                                                                    833,000        1,250,000

      Equipment loan payable pursuant to amended June 30, 1998 credit facility,
        due in monthly installments of $6,944, plus interest at prime plus .75%

        (7.5% at June 30, 2001), due June 30, 2004.                                       250,000           -

      Mortgage note payable to a bank, due July 14, 2000 plus accrued interest
        at 4.88% per annum.                                                                -               237,000

      Term note payable to a bank, due in annual installments including
        interest at 9.75%, due February 21, 2001.                                          -                45,000

      Term note payable to a bank due in monthly installments plus interest at
        5.70%, due October 10, 2001                                                        -                38,000
                                                                                    ---------------------------------
                                                                                        3,119,000        5,609,000
      Less current maturities                                                           1,909,000        3,617,000
                                                                                    ---------------------------------

                                                                                     $  1,210,000     $  1,992,000
                                                                                    =================================
</TABLE>




                                      F-12

<PAGE>

MEMRY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------


Future maturities of notes payable at June 30, 2001 are as follows:

       2002                                      1,909,000
       2003                                        818,000
       2004                                        292,000
       2005                                        100,000
                                             ----------------
                                                 3,119,000
                                             ================

The credit facility entered into on June 30, 1998 includes a revolving loan, a
line of credit and a $500,000 term loan. During the year ended June 30, 2000,
the credit facility was amended to provide for revolving loan borrowings up to
the lesser of $5,000,000 or the sum of (a) 80% of eligible accounts receivable
and (b) the lesser of $1,000,000 or 35% of eligible inventory; and for the
payment of a commitment fee equal to .25% per annum of the daily unused portion
of the revolving loan. In addition, the amended agreement provides for an
additional term loan up to $1,000,000 to be used for the purchase of eligible
equipment. The line of credit was also amended to provide for equipment
financing up to the lesser of $1,250,000 or 75% of the purchase price for
eligible equipment each year through June 30, 2001. The Company, on July 1 of
each year through 2001, has the option of converting amounts borrowed under the
line of credit to term loans. On June 30, 2001 and 2000, the Company converted
$250,000 and $1,250,000, respectively, from the equipment line of credit into a
term loan. This credit facility is secured by substantially all the assets of
the Company.

On June 30, 2001, the Company reached agreement on a second amendment to the
credit facility. Under the terms of the agreement, the revolving loan now
provides for borrowings up to the lesser of (a) if the Availability Test is
satisfied, an amount equal to the lesser of (i) $5,000,000 or (ii) an amount
equal to the aggregate of (1) 80% of eligible accounts receivable and (2) the
lesser of $1,000,000 or 35% of eligible inventory or (b) if the Availability
Test is not satisfied, an amount equal to the lesser of (i) $5,000,000 or (ii)
an amount equal to the aggregate of (1) 80% of eligible accounts receivable plus
(2) the lesser of $1,000,000 or 35% of eligible inventory, multiplied by (3)
75%. The Availability Test means that the Company has raised additional equity
and long-term debt on terms satisfactory to the bank. There is no provision for
equipment loans under the revised agreement. The other major provisions of the
agreement remain unchanged.

Interest on the revolving loan and line of credit loan is variable based on
either LIBOR or the Prime Rate as published in the Wall Street Journal, as
elected by the Company. Interest on the term loan and converted equipment loans
is either fixed, at a rate based on the U.S. Treasury yield, or variable based
on the Prime Rate, as elected by the Company. The Company has the ability to
convert between the different rates from time to time subject to certain
conditions.

In addition, the credit facility contains various restrictive covenants
including, among others, limitations on additional debt, payment of dividends,
management and ownership changes and compliance with specified financial ratios.

The carrying amounts of these financial instruments approximates fair value. The
fair value of the Company's long-term debt is estimated based on the current
rates offered to the Company for debt of the same remaining maturities with
similar collateral requirements.

Note 8.  Capital Stock

Common stock

During the years ended June 30, 2001, 2000 and 1999, 91,000, 61,000 and 38,000
shares of common stock at an aggregate price of $126,000, $123,000 and $99,000,
respectively were issued to Company directors as compensation. In addition,
during the years ended June 30, 2001, 2000 and 1999, 18,000, 32,000 and 102,000
shares of common stock were issued at an aggregate price of $27,000, $34,000 and
$133,000, respectively, through the exercise of options and warrants. During the
year ended June 30, 2000, 15,000 shares at an aggregate price of $28,000 were
issued as compensation to an outside consultant. Also during the year ended June
30, 2000, the




                                      F-13

<PAGE>

MEMRY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------


Company issued 196,000 shares of common stock and 39,000 warrants at an
aggregate price of $372,000 in connection with the settlement of a contingent
liability related to the purchase of AMT. Compensation expense recognized for
the issuance of shares of common stock was calculated utilizing the fair market
value of the common stock at the date of issuance. The value of the common stock
issued in connection with the settlement of the contingent liability was
calculated utilizing the fair market value of the common stock at the date of
issuance. Also, the value of the warrants related to this transaction were
calculated utilizing the Black-Scholes pricing model.

On January 31, 2001 the Company completed a private equity placement and raised
$2,395,000. Proceeds were raised through the sale of units, each of which
consisted of one share of common stock and a warrant to purchase one share of
common stock. Each unit was priced at $1.00. The warrants are exercisable at
$2.25 per share, valid for a period of three years from the date of issuance.
Notwithstanding the foregoing term of the warrant, if the fair market value of
one share of common stock of the Company is equal to or greater than $3.50 for
twenty consecutive days during the term of the warrant, the Company has the
right to demand that the holder exercise the warrant within a 30-day period.
Failure of the holder to exercise the warrant within thirty days would cause the
warrant to become void and the holder would lose all rights that it has with
respect to the warrant.

Common stock reserved for issuance at June 30, 2001, is as follows:

                                                  Number of
                                                    Shares
                                               ---------------

For exercise of outstanding warrants              4,918,772
For exercise of stock options                     2,969,834
                                               ---------------
                                                  7,888,606
                                               ===============

Various agreements with a certain investor provide that upon the occurrence of
specified events, primarily should the Company cease to maintain its principal
offices within the State of Connecticut, the investor would have 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 or $2 per share, less, if warrants are being held by such investor at
such time, the aggregate amount of the unpaid exercise prices of all such
warrants. Using $2.00 per share, which was above the market price for the
Company's stock at June 30, 2001, 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 $4,320,000. This put option expires on the date the investor
ceases to hold at least 35% of the common stock underlying the convertible
securities originally issued to it. 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.

In accordance with Statement of Financial Accounting Standards No. 123
"Accounting for Stock-Based Compensation", transactions involving the issue of
equity instruments to other than employees are accounted for based on the fair
value of the consideration received or the fair value of the equity instruments
issued, whichever is more reliably measurable. If the fair value of the equity
instruments is more reliably measurable, that value is calculated using the fair
value option-pricing model.

Incentive Plans
---------------

In 1994, the Company adopted the Memry Corporation Stock Option Plan (the "1994
Plan"). Pursuant to this plan, incentive stock options were granted at prices
equal to or greater than the fair market value of the Company's common stock at
the date of grant, and were exercisable at the date of grant unless otherwise
stated. In addition, non-qualified options were granted at prices determined by
the Company's compensation committee, which may have been less than the fair
market value of the Company's common stock at date of grant, in which case an
expense equal to the difference between the option price and fair market value
was recognized. The exercise period for both the incentive and non-qualified
stock options generally could not exceed ten years. The Plan also allowed the
granting of Stock Appreciation Rights, however, only a minimal amount of such
rights were granted.



                                      F-14

<PAGE>

MEMRY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------


During the year ended June 30, 1998, the Company adopted the Memry Corporation
Long-term Incentive Plan (the "1997 Plan"). Under the 1997 Plan, incentive and
non-qualified options may be granted to employees and non-employee directors
under terms similar to the 1994 Plan. Also, under the 1997 Plan, Stock
Appreciation Rights ("SARs"), Limited Stock Appreciation Rights ("Limited
SARs"), restricted stock, and performance shares may be granted to employees.
With respect to SARs, upon exercise, the Company must pay to the employee the
difference between the current market value of the Company's common stock and
the exercise price of the SARs. The SARs terms are determined at the time of
each individual grant. However, if SARs are granted which are related to an
incentive stock option, then the SARs will contain similar terms to the related
option. Limited SARs may be granted in relation to any option or SARs granted.
Upon exercise, the Company must pay to the employee the difference between the
current market value of the Company's common stock and the exercise price of the
related options or SARs. Upon the exercise of SARs or Limited SARs, any related
option or SARs outstanding will no longer be exercisable.

Restricted shares of common stock may also be granted to employees for no
consideration. The terms of the restriction are determined at the time of each
individual grant. Generally, if employment is terminated during the restricted
period, the participant must forfeit any stock still subject to restriction.
Performance shares are granted to employees based on individual performance
goals, and may be paid in shares or cash determined based on the shares earned
and the market value of the Company's common stock at the end of certain defined
periods.

Also, under the 1997 Plan, each quarter, all non-employee directors are granted
shares of the Company's common stock with a value equal to $7,500, determined
based on the market value of the Company's stock at the end of each quarter.

Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS No. 123"), established standards for stock-based
compensation plans under which employees receive shares of stock or other equity
instruments, such as stock options or warrants, of the employer. This Statement
provides for a fair value based method of expense recognition for stock-based
compensation plans and encourages, but does not require, entities to adopt this
method in place of other existing generally accepted accounting principles. As
permitted by SFAS No. 123, for options granted where the exercise price at date
of grant is equal to or exceeds the fair market value of the Company's stock,
the Company has elected to continue under existing generally accepted accounting
principles and to account for the options granted under APB Opinion No. 25, and
accordingly, no compensation cost has been recognized in the consolidated
statements of operations for grants under the option plan. Had compensation cost
for the stock option plans been recognized based on the grant date fair values
of awards, the method described in SFAS No. 123, the reported net income (loss)
would have been increased/decreased to the pro forma amounts shown below:

<TABLE>
<CAPTION>

                                                                  2001            2001             1999
                                                            ---------------------------------------------------
<S>                                                          <C>               <C>             <C>
              Net income (loss):
                As reported                                  $   (4,689,000)   $  1,109,000    $  (1,349,000)
                                                            ===================================================

                Pro forma                                    $   (4,882,000)   $    843,000    $  (1,845,000)
                                                            ===================================================

              Basic earnings per share:
                As reported                                  $        (0.21)   $       0.05    $       (0.07)
                                                            ===================================================

                Pro forma                                    $        (0.22)   $       0.04    $       (0.09)
                                                            ===================================================

              Diluted earnings per share:
                As reported                                  $        (0.21)   $       0.05    $       (0.07)
                                                            ===================================================

                Pro forma                                    $        (0.22)   $       0.04    $       (0.09)
                                                            ===================================================
</TABLE>



                                      F-15

<PAGE>

MEMRY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------


The fair value of each grant, used to determine the proforma information above,
is estimated at the grant date using the fair value option-pricing model with
the following weighted average assumptions for grants awarded during the years
ended June 30, 2001, 2000 and 1999:

<TABLE>
<CAPTION>
                                                                       2001           2000          1999
                                                                  ---------------------------------------------

<S>                                                               <C>             <C>            <C>
              Dividend rate                                             -               -             -
              Risk free interest rate                                 4.73%           6.39%         5.82%
              Weighted average expected lives, in years                 4               4             4
              Price volatility                                        59.8%           35.9%        111.6%
</TABLE>

A summary of the status of the Company's stock option plans at June 30, 2001,
2000 and 1999, and changes during the years then ended, is as follows:

<TABLE>
<CAPTION>
                                                                                                     Weighted
                                                                                                     Average
                                                                    Shares        Options            Exercise
                                                                   Reserved     Outstanding           Price
                                                                  -----------------------------------------------

<S>                                                                <C>              <C>              <C>
              Balance, June 30, 1998                               3,056,000        1,543,000        $    2.63
                Canceled                                                              (83,290)       $    2.69
                Granted                                                               216,466        $    2.05
                Exercised                                                             (82,166)       $    1.60
                                                                  -----------------------------------------------

              Balance, June 30, 1999                               2,973,834        1,594,010        $    2.60
                Canceled                                                             (298,529)       $    3.48
                Granted                                                               996,772        $    2.25
                Exercised                                                              (4,000)       $    1.78
                                                                  -----------------------------------------------

              Balance, June 30, 2000                               2,969,834        2,288,253        $    2.34
                Canceled                                                             (318,867)       $    2.46
                Granted                                                               710,374        $    1.81
                Exercised                                                             -              $     -
                                                                  -----------------------------------------------
              Balance, June 30, 2001                               2,969,834        2,679,760        $    2.25
                                                                  ===============================================
</TABLE>


At June 30, 2001, 2000 and 1999, 1,299,182, 932,641 and 764,037 (weighted
average exercise price of $2.34, $2.06 and $2.12) of the outstanding options
were exercisable, respectively. The weighted-average grant date fair value per
option of options granted during the years ended June 30, 2001, 2000 and 1999
was $0.91, $0.85 and $1.31, respectively. For the years ended June 30, 2001,
2000 and 1999, all options granted carried an exercise price equal to the fair
market value of the Company's stock at the date of grant.



                                      F-16

<PAGE>

MEMRY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 2001, 2000 and 1999


A further summary of options outstanding at June 30, 2001, is as follows:

<TABLE>
<CAPTION>
                                        Options Outstanding                          Options Exercisable
                         ----------------------------------------------------     -----------------------------

                                             Weighted-
                                              Average          Weighted-                          Weighted-
                                             Remaining          Average                            Average
    Range of Exercise       Number          Contractual         Exercise             Number       Exercise
         Prices           Outstanding     Life (In Years)        Price            Exercisable       Price
   ------------------------------------------------------------------------------------------------------------

<S>                       <C>                <C>                <C>             <C>            <C>
      $.90 to $4.00        2,679,760            7.58               2.25            1,299,182      $   2.34
</TABLE>



Warrants
--------

The Company has also issued stock warrants to employees and others. The cost
charged to operations for warrants granted for professional fees incurred during
the year ended June 30, 2001 was $109,000. The cost charged to operations for
warrants granted in connection with the settlement of the contingent liability
relating to the purchase of AMT was $39,000 during the year ended June 30, 2000.
The compensation cost charged to operations for warrants granted to employees
was $5,000 during the year ended June 30, 1999.

The following table summarizes warrants outstanding at June 30, 2001, 2000 and
1999, and the changes in warrants during the years then ended:

<TABLE>
<CAPTION>
                                                                                     Weighted-
                                                                                      Average
                                                       Shares         Warrants        Exercise
                                                      Reserved       Outstanding       Price
                                                     ---------------------------------------------

<S>                                                    <C>               <C>           <C>
                   Balance, June 30, 1998              1,470,602         1,470,602     $   1.13
                     Canceled                                               -          $    -
                     Granted                                                -          $    -
                     Exercised                                             (20,000)    $   0.01
                                                     ---------------------------------------------

                   Balance, June 30, 1999              1,450,602         1,450,602     $   1.15
                     Canceled                                             (116,667)    $   2.00
                     Granted                                                39,170     $   2.00
                     Exercised                                             (28,000)    $   0.97
                                                     ---------------------------------------------

                   Balance, June 30, 2000              1,461,772         1,345,105     $   1.10
                     Canceled                                             (100,000)    $   1.25
                     Granted                                             2,735,167     $   2.22
                     Exercised                                             (18,000)    $   1.50
                                                     ---------------------------------------------

                   Balance, June 30, 2001              4,918,772         3,962,272     $   1.87
                                                     =============================================
</TABLE>




                                      F-17

<PAGE>

MEMRY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------


A further summary of warrants outstanding at June 30, 2001 is as follows:

<TABLE>
<CAPTION>

                                        Warrants Outstanding                     Warrants Exercisable
                            -----------------------------------------------   ------------------------------

                                              Weighted-
                                               Average         Weighted-                       Weighted-
                                              Remaining         Average                         Average
       Range of Exercise       Number        Contractual       Exercise           Number       Exercise
             Prices         Outstanding    Life (In Years)       Price          Exercisable      Price
       -----------------------------------------------------------------------------------------------------
<S>                          <C>                 <C>               <C>           <C>           <C>
         $.85 to $2.25       3,962,272           2.01              1.87          3,962,272     $   1.87

Note 9.  Major Customers
</TABLE>

Product sales revenue for the years ended June 30, 2001, 2000 and 1999, includes
sales to major customers, each of which accounted for greater than 10% of the
total sales of the Company. A summary of sales to these customers during the
years ended June 30, 2001, 2000 and 1999, and accounts receivable from these
customers at June 30, 2001, 2000 and 1999, is as follows:

<TABLE>
<CAPTION>
                                   2001                         2000                          1999
                        ---------------------------  ----------------------------   --------------------------
                                      Accounts                      Accounts                      Accounts
                          Sales      Receivable         Sales      Receivable          Sales      Receivable
                        ---------------------------  ----------------------------   --------------------------

<S>                     <C>           <C>              <C>           <C>             <C>           <C>
       Company A        $    -        $    -           $5,663,000    $ 117,000       $7,909,000    $ 817,000
       Company B         6,734,000     1,145,000        7,435,000     1,286,000       6,290,000      753,000
       Company C         13,378,000    1,860,000        4,538,000     1,022,000          23,000       11,000
       Company D         3,296,000       154,000           -             -                -            -
                       ----------------------------------------------------------------------------------------
                        $23,408,000   $3,159,000       $17,636,000   $2,425,000      $14,222,000   $1,581,000
                       ========================================================================================
</TABLE>

Sales to Company A through February 2000 were made under a private
label/distribution agreement wherein Company A was the exclusive distributor of
certain products. In February 2000, this agreement was replaced by a sales
agency agreement wherein Company A became the exclusive sales agent for certain
commercial industrial products for an initial term expiring on June 30, 2004.

Company A and B are divisions of the same parent company and controlled and
operated under common ownership.

Note 10. Major Suppliers

The Company currently purchases a significant portion of raw materials from two
suppliers. However, management believes that several other suppliers could
provide similar materials on comparable terms without significantly impacting
shipping or sales.

Note 11. Leases

The Company leases its Connecticut and California manufacturing and office
facilities under operating leases. The lease on the Connecticut facility expires
in June 2011 and the lease on the principal California facility expires in March
2003. The Company also leases certain equipment under noncancelable leases which
have been recorded as capital leases and are included in the accompanying
consolidated balance sheets under the caption "Property, Plant and Equipment".



                                      F-18

<PAGE>

MEMRY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------


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, 2001:

<TABLE>
<CAPTION>
                                                                           Capital          Operating
                                                                            Leases            Leases
                                                                         ---------------------------------
<S>          <C>                                                         <C>                <C>
             2002                                                        $      5,000       $   574,000
             2003                                                               5,000           568,000
             2004                                                                -              557,000
             2005                                                                -              496,000
             2006                                                                -              336,000
             Thereafter                                                          -            1,986,000
                                                                         ---------------   ---------------
                                                                               10,000       $ 4,517,000
             Less amount representing interest                                  1,000      ===============
                                                                         ---------------
             Present value of future minimum lease payments                     9,000
             Less current maturities                                            4,000
                                                                         ---------------
                                                                         $      5,000
                                                                         ===============
</TABLE>

Rent expense under operating leases for the years ended June 30, 2001, 2000 and
1999, approximated $1,413,000, $935,000 and $770,000, respectively.

Note 12. 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 $8.9 million and $11.0 million has been recognized at
June 30, 2001 and 2000, respectively, to reflect the estimated amount of
operating loss carryforwards and temporary differences which may not be realized
due to the absence of sustained profitability of the Company. The approximate
effect of carryforwards and temporary differences that give rise to deferred tax
assets and liabilities at June 30, 2001 and 2000, is as follows:

<TABLE>
<CAPTION>
                                                                              2001             2000
                                                                         -----------------------------------

<S>                                                                             <C>               <C>
            Deferred tax assets:
              Allowance for doubtful accounts                              $    224,000      $    185,000
              Inventory reserves                                                212,000           140,000
              Capitalization of inventory costs                                 690,000           512,000
              Vacation accruals                                                 152,000           137,000
              Tax credit carryforwards                                          138,000            81,000
              Charitable contributions                                            1,000           -
              Net operating loss carryforwards                                7,525,000         9,921,000
                                                                         -----------------------------------
                    Total deferred tax assets                                 8,942,000        10,976,000
              Valuation allowance                                            (8,942,000)      (10,976,000)
                                                                         -----------------------------------
                    Net deferred tax assets                                $       -         $       -
                                                                         ===================================
</TABLE>




                                      F-19

<PAGE>

MEMRY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------


The provision (benefit) for income taxes consists of the following:

<TABLE>
<CAPTION>

                                                       2001              2000            1999
                                               ---------------------------------------------------
<S>                                             <C>                  <C>             <C>
                Current:
                  State                         $    (48,000)        $  125,000      $  225,000
                                               ---------------------------------------------------
                                                $    (48,000)        $  125,000      $  225,000
                                               ===================================================
</TABLE>


Income (loss) before income taxes consists of:
<TABLE>
<CAPTION>

                                                       2001              2000             1999
                                               ---------------------------------------------------
<S>                                               <C>                 <C>              <C>
                Domestic                        $ (3,659,000)       $ 2,017,000    $   (444,000)
                Foreign                           (1,078,000)          (783,000)       (680,000)
                                               ---------------------------------------------------
                                                $ (4,737,000)       $ 1,234,000    $ (1,124,000)
                                               ===================================================
</TABLE>

A reconciliation of the anticipated income tax expense (benefit) (computed by
applying the Federal statutory income tax rate of 34% to the income (loss)
before taxes) to the provision (benefit) for income taxes as reported in the
consolidated statements of operations is as follows:


<TABLE>
<CAPTION>
                                                  2001                    2000                   1999
                                        -----------------------------------------------------------------------
<S>                                        <C>            <C>         <C>         <C>       <C>          <C>
Provision (benefit) for income taxes
   at statutory Federal rate             $ (1,611,000)    (34%)   $   420,000     34%     $ (382,000)    (34%)
Increase (decrease) resulting from:
   State corporation income tax,
     net of federal tax benefit                20,000        -         71,000      6%        148,000      13%
   (Decrease) increase in valuation
     allowance for deferred taxes            (271,000)     (9%)      (366,000)   (30%)       459,000      41%
   Foreign operations statutory tax
   rate

     differentials                            367,000       8%         -          -            -         -
   Nondeductible loss on sale of
     European subsidiary                    1,440,000      30%         -          -            -         -
   Permanent items and other                  181,000       4%         -          -            -         -
                                        ------------------------------------------------------------------------
        Provision (benefit) for
        income taxes                     $    (48,000)     (1%)   $   125,000     10%     $  225,000      20%
                                        ========================================================================
</TABLE>


The decrease in the valuation allowance for deferred taxes of $2,034,000 for
2001 is net of $1,763,000 of federal and state net operating loss carryforwards
that have expired during the year ended June 30, 2001.

At June 30, 2001, the Company has federal net operating loss carryforwards for
income tax purposes, which expire as follows:



       Year                                Amount
     -----------                  ------------------

       2004                       $     1,190,000
       2005                             2,842,000
       2006                             4,669,000
       2007                             3,237,000
       2008                             1,956,000
       2009                             3,120,000
       2010                             2,497,000
       2011                             2,619,000
                                  ------------------
                                  $    22,130,000
                                  ==================




                                      F-20

<PAGE>

MEMRY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------


In addition, the Company has tax credit carryforwards available to offset future
taxable income aggregating approximately $138,000 which expire in various
amounts from 2002 through 2010.

Note 13. Commitments

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

During the years ended June 30, 2001, 2000 and 1999, Company contributions to
its 401(k) profit sharing and savings plan approximated $180,000, $69,000, and
$74,000 respectively.

Bonus Plan
----------

The Company has a bonus plan under which its employees may earn a bonus based on
various earnings measures. The actual payment of bonuses is subject to annual
approval by the Board of Directors. Expenses recognized under this plan were
approximately $400,000, $600,000 and $60,000, for the years ended June 30, 2001,
2000 and 1999, respectively.

Note 14. Loss on Disposal of Subsidiary

On February 8, 2001, the Company sold the stock of its European subsidiary,
Memry Europe, N.V. ("Memry Europe"), for approximately $1,000,000. As part of
this transaction, the Company entered into a supply and license agreement with
Memry Europe, pursuant to which Memry granted to Memry Europe a royalty-bearing
license to certain technologies and agreed to supply Memry Europe with certain
alloys and tubing. The loss on disposal of this subsidiary reflected in the
consolidated statement of operations for the year ended June 30, 2001 aggregated
$4,232,000.

Note 15. Operating Segments

The Company is engaged principally in one line of business, the development,
manufacturing and marketing of products utilizing properties exhibited by shape
memory alloys, which represents more than 95% of consolidated revenues. The
following table presents information about the Company by geographic area. There
were no material amounts of sales or transfers among geographic areas and no
material amounts of United States export sales.

<TABLE>
<CAPTION>
                                 2001             United States        Europe         Consolidated
                                 ----             ----------------------------------------------------
<S>                                                   <C>          <C>                   <C>
                     Total revenues                $  29,010,000     $     903,000     $ 29,913,000
                     Operating income (loss)         (3,342,000)        (1,037,000)     (4,379,000)
                     Identifiable assets              19,051,000             2,000       19,053,000

                                 2000             United States        Europe         Consolidated
                                 ----             ----------------------------------------------------

                     Total revenues                $  25,144,000     $   1,852,000     $ 26,996,000
                     Operating income (loss)           2,378,000          (766,000)       1,612,000
                     Identifiable assets              16,792,000         5,751,000       22,543,000

                                 1999             United States        Europe         Consolidated
                                 ----             ----------------------------------------------------

                     Total revenues                $  17,912,000     $     974,000     $ 18,886,000
                     Operating loss                     (366,000)         (731,000)      (1,097,000)
                     Identifiable assets              12,375,000         5,807,000       18,182,000
</TABLE>




                                      F-21


<PAGE>

MEMRY CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 2001, 2000 and 1999
--------------------------------------------------------------------------------


The operating loss of $3,342,000 attributed to U.S. operations in the year ended
June 30, 2001, includes the $4,232,000 loss on disposal of the Company's
European subsidiary described above.

Note 16. Severance

During the fourth quarter of the year ended June 30, 1999, the Company
terminated 6 employees and thereafter entered into various severance agreements
with such employees. These employees held management positions while employed at
the Company. For the year ended June 30, 1999, $784,000 was charged to
operations and is included in accrued expenses at June 30, 1999 in the
accompanying consolidated financial statements relating to these benefits.
Payments charged to this liability through June 30, 2001 total $698,000 leaving
a remaining obligation of $86,000.

During the fourth quarter of the year ended June 30, 2001, the Company announced
the termination of Robert J. Thatcher as president and chief operating officer.
In connection with Thatcher's termination, the Company has accrued severance and
related costs of $522,000 of which $21,000 was paid, leaving a remaining
obligation of $501,000 at June 30, 2001. The total severance liability at June
30, 2001 as presented in Note 6 is $587,000.

Note 17. Litigation

On August 22, 2001, a director and former officer of the Company filed two
lawsuits against the Company relating to his termination during the year ended
June 30, 2001, which seek significant damages. The Company does not believe
there is a basis for these claims and intends to defend against the claims
vigorously. Because the litigation is in its initial stages, management is not
able to predict the outcome of the litigation or the effects of the litigation
on the Company's financial position and results of operations.

Note 18. Pronouncements Issued Not Yet Adopted

In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141, "Business Combinations" (SFAS 141). The
Statement is effective for all business combinations initiated after June 30,
2001 and for all Business Combinations accounted for by the purchase method that
are completed after June 30, 2001. SFAS 141 prohibits the pooling of interest
method of accounting for business combinations and prescribes the initial
recognition and measurement of goodwill and other intangible assets, accounting
for negative goodwill and the required disclosures related to business
combinations.

In July 2001, the Financial Accounting Standards Board also issued Statement of
Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets"
(SFAS 142). The Statement is effective for fiscal years beginning after December
15, 2001 and may not be retroactively applied to financial statements of prior
periods. SFAS 142 requires that goodwill, including previously existing
goodwill, and intangible assets with indefinite useful lives, should not be
amortized but should be tested for impairment annually. Goodwill and intangible
assets with indefinite useful lives will no longer be tested for impairment
under Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
(SFAS 121).

The Company is required to adopt the provisions of SFAS 141 immediately and SFAS
142 no later than July 1, 2002. The Company has elected to early adopt SFAS 142.
Therefore, effective July 1, 2001, all goodwill and intangible assets determined
to have an indefinite useful life acquired in a purchase business combination
will no longer be amortized and will be evaluated for impairment under SFAS 142.

As of the date of adoption, the Company expects to have unamortized goodwill of
$1,038,000, which will be subject to the transition provisions of SFAS 141 and
142. Amortization expense related to goodwill was approximately $168,000,
$260,000 and $248,000 for the years ended June 30, 2001, 2000, and 1999,
respectively. Because of the extensive effort needed to comply with adopting
SFAS 141 and 142, it is not practicable to reasonably estimate the impact of
adopting these Statements on the Company's financial statements at the date of
this report, including whether any transitional impairment losses will require
to be recognized as the cumulative effect of a change in accounting principles.



                                      F-22

<PAGE>



ITEM 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure

     None.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information required by this Item is incorporated herein by reference
to the sections entitled "Proposal No. 1--Election of Directors," "--Executive
Officers of the Company" and "--Section 16(a) Beneficial Ownership Reporting
Compliance" of the Company's Definitive Proxy Statement to be filed with the
Commission within 120 days after June 30, 2001.

ITEM 11.  EXECUTIVE COMPENSATION

     The information required by this Item is incorporated herein by reference
to the sections entitled "Proposal No. 1--Election of Directors--Compensation of
Directors" and "--Executive Compensation" of the Company's Definitive Proxy
Statement to be filed with the Commission within 120 days after June 30, 2001.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information required by this Item is incorporated herein by reference
to the section entitled "Security Ownership of Certain Beneficial Owners and
Management" of the Company's Definitive Proxy Statement to be filed with the
Commission within 120 days after June 30, 2001.

ITEM 13.  CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS

     The information required by this Item is incorporated herein by reference
to the section entitled "Proposal No. 1--Election of Directors--Certain
Relationships and Transactions" of the Company's Definitive Proxy Statement to
be filed with the Commission within 120 days after June 30, 2001.



                                       16

<PAGE>

                                    PART IV.

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)      The following documents are filed as part of this report:

                  (1)      Financial Statements: Independent Auditor's Report;
                           Consolidated Balance Sheets as of June 30, 2001 and
                           2000; Consolidated Statements of Operations for the
                           Years Ended June 30, 2001, 2000, and 1999;
                           Consolidated Statements of Stockholders' Equity for
                           the Years Ended June 30, 2001, 2000, and 1999; and
                           Consolidated Statements of Cash Flows for the Years
                           Ended June 30, 2001, 2000 and 1999; Notes to the
                           Consolidated Financial Statements.

                  (2)      Financial Statement Schedules:  None

     (b)     Reports on Form 8-K

             None

     (c)     Exhibits

                                  EXHIBIT INDEX
<TABLE>
<CAPTION>

  Exhibit
   Number                                               Description of Exhibit
   ------                                               ----------------------
<S>   <C>                                                                                                                    <C>
      3.1   Certificate of Incorporation of the Company, as amended                                                          (13)
      3.2   By-Laws of the Company, as amended                                                                                (5)
      3.3   Amendment Number 1 to By-Laws of the Company, as amended                                                          (9)
      4.1   Form of Warrant to Purchase Common Stock for private equity
            placement completed on January 31, 2001                                                                          (14)
     10.1   Lease Agreement, dated January 24, 1991 between the Company and Brookfield Commerce
            relating to 57 Commerce Drive, Brookfield, CT                                                                     (1)
     10.2   Employee Non-Disclosure agreement, dated as of October 18, 1994, between the Company and
            James G. Binch                                                                                                    (2)
     10.3   Convertible Subordinated Debenture Purchase Agreement, dated as of December 22, 1994,
            between the Company and CII                                                                                       (5)
     10.4   First Amendment to Convertible Subordinated Debenture Purchase Agreement, dated October
            11, 1995, between the Company and CII                                                                             (3)
     10.5   First Addendum to Stock Subscription Warrant (re: Warrant No. 94-4), dated October 11, 1995,
            made by the Company and agreed to by CII                                                                          (3)
     10.6   First Addendum to Stock Subscription Warrant (re: Warrant No. 94-5), dated October 11, 1995,
            made by the Company and agreed to by CII                                                                          (3)
     10.7   Second Amendment to Convertible Subordinated Debenture Purchase Agreement, dated as of
            June 28, 1996, between the Company and CII                                                                        (5)
     10.8   Amended and Restated Class I Warrant Certificate (Warrant Certificate No. 94-4A) issued by
            the Company to CII                                                                                                (5)
     10.9   Amended and Restated Class II Warrant Certificate (Warrant Certificate No. 94-5A) issued by
            the Company to CII                                                                                                (5)
    10.10   Sublease, dated as of June 28, 1996, between the Company and Raychem Corporation                                  (4)
    10.11   Amendment to Lease Agreement between the Company and Brookfield Commerce relating to
            57 Commerce Drive, Brookfield, CT                                                                                 (5)
    10.12   Employee Agreement on Inventions and Patents, between the Company and James G. Binch                              (5)
    10.13   Memry Corporation Stock Option Plan, as amended                                                                   (6)
    10.14   Form of Nontransferable Incentive Stock Option Agreement under the 1994 Plan                                      (6)
    10.15   Form of Nontransferable Non-Qualified Stock Option Agreement under the 1994 Plan                                  (6)
    10.16   Amended and Restated Time-Lock Supply Agreement, dated as of February 19, 1997, and
            effective as of December 20, 1996, between the Company and Raychem Corporation                                    (7)
    10.17   Memry Corporation's 1997 Long Term Incentive Plan, as Amended                                                     (8)
    10.18   Form of Nontransferable Incentive Stock Option Agreement under the 1997 Plan                                      (8)
    10.19   Commercial Revolving Loan, Term Loan, Line of Credit and Security Agreement, dated June
            30, 1998, between the Company and Webster Bank                                                                    (9)
</TABLE>


                                       17

<PAGE>

<TABLE>
<CAPTION>

  Exhibit
   Number                                               Description of Exhibit
   ------                                               ----------------------
<S>        <C>                                                                                                           <C>
    10.20   Term Loan Note, dated June 30, 1998, by the Company in favor of Webster Bank in principal
            amount of $500,000                                                                                                (9)
    10.21   Amendment of Sublease, dated March 26, 1998, between Raychem Corporation and the
            Company                                                                                                           (9)
    10.22   Stock Purchase Agreement, dated October 30, 1998, by and among Memry Holdings, S.A. and
            the Shareholders of Advanced Metals and Technologies, N.V.                                                       (10)
    10.23   Separation Agreement dated as of August 17, 1999, between the Company and William H.
            Morton                                                                                                           (11)
    10.24   Letter Agreement, dated February 2, 1999, from the Company to James L. Proft                                     (11)
    10.25   Letter Agreement, dated July 12, 1999, from the Company to Tom Carey                                             (11)
    10.26   Loan Agreement, dated September 16, 1999, between Swissmetal and the Company                                     (12)
    10.27  Amendment Agreement, dated November 30, 1999, between the Company and Webster Bank                                (12)
    10.28  Amended and Restated Revolving Loan Note, dated November 30, 1999, by the Company in
           favor of Webster Bank                                                                                             (12)
    10.29  Amended and Restated Equipment Loan Note, dated November 30, 1999, by the Company in
           favor of Webster Bank                                                                                             (12)
    10.30  Agreement, dated as of December 17, 1999, among Memry Holdings, S.A., the Company and
           G.I.M.V.                                                                                                          (12)
    10.31  Employment Agreement, dated as of January 1, 2000, between the Company and Robert J.
           Thatcher                                                                                                          (13)
    10.32  Employment Agreement, dated as of January 1, 2000, between the Company and Robert P.
           Belcher                                                                                                           (13)
    10.33  Employment Agreement, dated as of January 1, 2000, between the Company and Joe
           Pasqualucci                                                                                                       (13)
    10.34  Employment Agreement, dated as of January 1, 2000, between the Company and James G.
           Binch                                                                                                             (13)
    10.35  Sales Agency Agreement, dated January 20, 2000, between the Company and Tyco
           Electronics                                                                                                       (13)
    10.36  Sublease, dated February 3, 2000, by and between the Company and Pacific Financial
           Printing                                                                                                          (13)
    10.37  Form of Securities Purchase Agreement for third party European investors used in private
           equity placement completed on January 31, 2001                                                                    (14)
    10.38  Form of Securities Purchase Agreement for officers and directors of Memry Corporation used
           in private equity placement completed on January 31, 2001                                                         (14)
    10.39  Lease, dated February 8, 2001, between Berkshire Industrial Corporation and the Company                           (15)
    10.40  Business Park Lease, dated August 27, 2001, between 4065 Associates, L.P. and the Company,
           together with Agreement to Defer Certain Work, dated August 27, 2001, by and between 4065
           Associates, L.P. and the Company                                                                                  (15)
    10.41  Second Amendment Agreement, dated as of June 30, 2001, between the Company and Webster Bank                       (16)
    10.42  Final Converted Equipment Loan Note, dated July 1, 2001, by the Company in favor of Webster Bank                  (16)
     21.2  Information regarding Subsidiaries                                                                                (16)
     23.1  Consent of McGladrey & Pullen, LLP                                                                                (15)
</TABLE>
----------
(1)  Incorporated by reference to the Company's Annual Report on Form 10-K for
     the fiscal year ended June 30, 1991.
(2)  Incorporated by reference to the Company's Annual Report on Form 10-KSB for
     the fiscal year ended June 30, 1994.
(3) Incorporated by reference to the Company's Annual Report on Form
     10-KSB for the fiscal year ended June 30, 1995.
(4)  Incorporated by reference to the Company's Current Report on Form 8-K filed
     July 15, 1996.
(5)  Incorporated by reference to the Company's Annual Report on Form 10-KSB for
     the fiscal year ended June 30, 1996, as amended.
(6)  Incorporated by reference to the Company's Quarterly Report on Form 10-QSB
     for the fiscal quarter ended December 31, 1996.
(7)  Incorporated by reference to the Company's Annual Report on Form 10-KSB for
     the fiscal year ended June 30, 1997, as amended.
(8)  Incorporated by reference to the Company's Quarterly Report on Form 10-QSB
     for the fiscal quarter ended December 31, 1997.
(9)  Incorporated by reference to the Company's Annual Report on Form 10-KSB for
     the fiscal year ended June 30, 1998.
(10) Incorporated by reference to the Company's Current Report on Form 8-K filed
     November 12, 1998.
(11) Incorporated by reference to the Company's Annual Report on Form 10-KSB for
     the fiscal year ended June 30, 1999.
(12) Incorporated by reference to the Company's Quarterly Report on Form 10-QSB
     for the fiscal quarter ended December 31, 1999.
(13) Incorporated by reference to the Company's Annual Report on Form 10-KSB for
     the fiscal year ended June 30, 2000.
(14) Incorporated by reference to the Company's Quarterly Report on Form 1O-Q
     for the fiscal quarter ended December 31, 2000.
(15) Filed herewith.
(16) Previously filed.

                                       18

<PAGE>

SIGNATURES

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

                                               MEMRY CORPORATION

Date: August 19, 2002

<TABLE>
<CAPTION>

<S>                                           <C>

                                                By:                /s/ JAMES G. BINCH
                                                       --------------------------------------------
                                                                     James G. Binch

                                                              CEO and Chairman of the Board

                                                              (Principal Executive Officer)

                                                By:               /s/ ROBERT P. BELCHER
                                                       --------------------------------------------
                                                                    Robert P. Belcher
                                                             (Principal Accounting Officer)
</TABLE>


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

<TABLE>
<CAPTION>


                        Signature                              Title                         Date
                        ---------                              -----                         ----
<S>                                                     <C>                      <C>
                 /s/ JAMES G. BINCH                           Director                   August 19, 2002
-----------------------------------------------------------
                   James G. Binch

              /s/ KEMPTON J. COADY, III                       Director                   August 19, 2002
-----------------------------------------------------------
                Kempton J. Coady, III

                  /s/ JACK HALPERIN                           Director                   August 19, 2002
-----------------------------------------------------------
                    Jack Halperin

              /s/ W. ANDREW KRUSEN, JR                        Director                   August 19, 2002
-----------------------------------------------------------
                W. Andrew Krusen, Jr.
</TABLE>


                                       19