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

                                  Form 10-KSB/A-1
 
         (Mark One)
              [X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
                   SECURITIES EXCHANGE ACT OF 1934 
 
                        For the fiscal year ended       June 30, 1997
                                                        -------------
 
             [ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
                   THE SECURITIES EXCHANGE ACT OF 1934 
 
                        For the transition period from _________ to ______
 
                       Commission file number    0-14068
                                              ----------------------------

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

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

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

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

Check if no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.  [ ]
<PAGE>
 
Consolidated revenues of the issuer from continuing operations for the fiscal
year ended June 30, 1997 were $13,533,000.

The aggregate market value of voting stock held by non-affiliates of the
registrant was approximately $21,357,000 on August 1, 1997 based upon the
average of the bid and asked prices on that date.

The number of shares of Common Stock outstanding as of June 30, 1997:
17,005,474.

Documents Incorporated by Reference.  None.
-----------------------------------                                           

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


                                Yes          NO  X
                                     ----       ----
<PAGE>
 
     This amendment to the Annual Report on Form 10-KSB of Memry Corporation
(the "Company") for the fiscal year ended June 30, 1997 (the "Original Form 10-
KSB") amends and modifies the Original Form 10-KSB as follows:

(1)  The cover page is amended to indicate that no documents are incorporated
     by reference in the Original Form 10-KSB, as amended hereby.

(2)  The sixth sentence of the second paragraph under the heading "Shape Memory
     Effect" and the seventh sentence under the heading "The Company's Operating
     Divisions - Memry West - Sales to Raychem" under "Item 1. Description of
     Business" are amended to correct typographical errors.

(3)  "Item 7.  Financial Statements" is amended as follows:

     (a)  The Company's Consolidated Statements of Stockholders' Equity are
          amended to add a new line item captioned "Direct stock offering
          costs."

     (b)  The table set forth under "Note 2.  Business Combination" regarding
          unaudited pro forma consolidated results of operations for the year
          ended June 30, 1996 is amended to correct a typographical error.

     (c)  "Note 5. Major Customers" is amended to correct a typographical error.

     (d)  The second paragraph under the heading "Common Stock" under "Note 6.
          Capital Stock" is amended to add a sentence regarding the offering of
          up to 3,550,650 shares of Common Stock.

     (e)  The tables regarding the status of the Company's stock option plan at
          June 30, 1997 and 1996 and the table regarding a further summary of
          options outstanding at June 30, 1997, along with related text, under
          the heading "Stock Option Plans" under "Note 6. Capital Stock" are
          amended to correct information regarding the number of options
          canceled, granted and exercisable.

     (f)  The table summarizing warrants outstanding at June 30, 1997 and 1996
          under the heading "Warrants" under "Note 6. Capital Stock" is amended
          to correct a typographical error as well as to correct the number of
          warrants canceled and granted since June 30, 1996.

     (g)  The first sentence of the second paragraph under "Note 7. Income
          Taxes" is amended to modify the disclosure regarding net operating
          loss carryforwards for income tax purposes.

     (h)  The table under "Note 8. Notes Payable" is amended to correct a
          typographical error.

     (i)  The last sentence under the heading "Litigation" under "Note 10.
          Contingencies" is amended to correct a typographical error.
<PAGE>
 
     (j)  The first sentence of "Note 11. Discontinued Operations" is amended to
          indicate that the Company's decision to discontinue operations of
          Wright occurred in April 1997.

(4)  "Item 9. Directors, Executive Officers, Promoters and Control Persons;
     Compliance with Section 16(a) of the Exchange Act" is amended to include
     such disclosure, rather than to incorporate by reference to the Company's
     Definitive Proxy Statement.

(5)  "Item 10. Executive Compensation" is amended to include such disclosure,
     rather than to incorporate by reference to the Company's Definitive Proxy
     Statement.

(6)  "Item 11. Security Ownership of Certain Beneficial Owners and Management"
     is amended to include such disclosure, rather than to incorporate by
     reference to the Company's Definitive Proxy Statement.

(7)  "Item 12. Certain Relationships and Related Transactions" is amended to
     include such disclosure, rather than to incorporate by reference to the
     Company's Definitive Proxy Statement.

(8)  The Exhibit Index is amended to correct certain typographical errors.

(9)  Exhibit 10.46 is re-filed, with certain portions being subject to a 
     confidential treatment request, to make a correction to Exhibit G thereto
     in response to a comment from the Securities and Exchange Commission.

<PAGE>
 
Item 1.                 DESCRIPTION OF BUSINESS

                              BUSINESS DEVELOPMENT

Memry Corporation (referred to herein as "Memry" or the "Company"), a Delaware
corporation incorporated in 1981, is engaged in the business of developing,
manufacturing and marketing materials, components and products utilizing the
properties exhibited by shape memory alloys for surgical instruments, cellular
telephone antenna, medical implants and a wide range of other industrial,
medical and consumer applications.  The Company conducts its operations from its
two operating facilities located in Brookfield, Connecticut and Menlo
Park, California.  The Company acquired its Menlo Park, California operations
from Raychem Corporation ("Raychem") on June 28, 1996, as part of a transaction
(the "Raychem Acquisition") in which the Company acquired certain assets
comprising Raychem's nickel-titanium product line.  The Company's principal
executive offices are located at 57 Commerce Drive, Brookfield, Connecticut
06804, and its telephone number at such address is (203) 740-7311.

In June of 1997 the Company ceased the operations of its Wright Machine
Corporation ("Wright") operating segment and commenced the orderly liquidation
of Wright's assets.  The closing of Wright, whose assets and income are now
reported on the Company's financial statements under the caption of
"Discontinued Operations," leaves the Company with only one operating segment
(which segment, prior to the closing of Wright, was formerly known as the "Memry
Segment").

                              SHAPE MEMORY EFFECT

Shape memory alloys ("SMAs") possess the ability to change their shape in
response to thermal and mechanical changes, as well as the ability to return to
their original shape following deformations from which conventional materials
cannot recover. This ability results 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 exhibited by conventional materials such as bi-metallic
elements.

The major defining properties of SMAs with which the Company works are "super-
elasticity" and "thermal shape memory." 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 "super-
elasticity" feature has applications for surgical instruments and devices,
cellular telephone antennae, orthodontic apparatus 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' "super-elastic"
properties.
<PAGE>
 


                       THE COMPANY'S OPERATING DIVISIONS

Since the Company's June 28, 1996 acquisition of Raychem's nickel-titanium
product line (referred to at times herein as the "Raychem Acquisition"), the
Company has conducted its SMA business through two operating divisions. "Memry
West," consisting of most of the business acquired from Raychem, manufactures
semi-finished materials utilizing SMAs and, mostly through Raychem but also
directly in the case of growing medical implant applications, sells such
materials into various industrial, electronic, automotive and medical markets.
"Memry East," which prior to the Raychem Acquisition constituted the Company's
entire SMA business, engages in the manufacture and sale of finished sub-
assemblies and products utilizing SMAs into the medical, industrial and consumer
markets, as well as performing funded application research.
 
MEMRY WEST

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 nickel-titanium.  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
finished 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 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 components 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 West (except that, as discussed below under "--
Memry East," Raychem's operations relating to the finishing of materials into
sub-assemblies for sales to United States Surgical Corporation were relocated to
Memry East in December, 1996, and are included within the discussion of Memry
East).

                                       2
<PAGE>
 
Memry West, located in Menlo Park, California, is engaged in the processing and
manufacture of SMAs, the vast majority of which result in the sale of custom
designed semi-finished materials and components used by OEMs. Memry West sells
semi-finished SMAs in three basic forms: wire, strip and tube. To a lesser
degree, Memry West also sells components to OEMs, including helical and strip
actuators, patented locking rings for electronic connectors, medical components,
cellular antennae materials, and sealing components. An "actuator" is a device
that causes action or motion.

A.   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. Sales by the
Company to certain customers, including United States Surgical Corporation (as
described below in "--Memry East"), were excluded from the scope of this
Agreement, as were any future sales for all medical implant and certain consumer
recreational applications. Therefore, at the present time, most of Memry West's
sales are made to Raychem. During the Company's fiscal year ended June 30, 1997,
for example, approximately $5.47 million of Memry West's approximately $5.98
million of sales (excluding sales to United States Surgical Corporation relating
to the finishing of materials into sub-assemblies prior to such operation being
relocated to Memry East in December of 1996) were made to Raychem. Raychem's
largest customers for the products sold to it are cellular telephone antennae
manufacturers who utilize the superelasticity of SMAs for a more durable
antenna. Raychem's other customers of Memry West's products include orthodontic
manufacturers, who use SMA wire for braces, medical products and instrument
companies, whose uses of Memry West's products include catheter and guidewires,
automotive manufacturers, who use SMA actuators to control coolant systems and
SMA plugs for high-pressure fuel injector sealant devices, and industrial
product manufacturers who use SMAs for a variety of other uses, including
electronic connectors. In addition, Raychem purchases some of Memry West's
components for its own use. The sales to Raychem under the agreement are
discounted from the ultimate resale price to OEMs in order to allow Raychem to
recover its sales and marketing expenses and to realize a profit upon resale of
such products to its customers (primarily OEMs). This arrangement with Raychem
permits Memry West to keep its internal sales force to a minimum. As of the end
of fiscal 1997, Memry West had only two sales and marketing employees.

B.   Other Sales. In addition to its sales to Raychem, Memry West supplies Memry
East with semi-finished materials for processing by Memry East into finished
products and sub-assemblies, much as Raychem sold these materials to Memry East
prior to the Raychem Acquisition. These sales include formed components used by
Memry East as components for products sold to United States Surgical
Corporation. These inter-company sales (including such formed components prior
to the relocation of the finishing operations to Memry East) accounted for
approximately $400,000 of Memry West's fiscal 1997 sales. In addition, the
Company has begun the sale of semi-finished materials and components for medical
implant applications, which applications are outside of the scope of Raychem's
distribution rights under the Amended and Restated Private Label/Distribution
Agreement, dated as of February 19, 1997 and effective as of December 20, 1996,
between the Company and Raychem (the "Private Label/Distribution Agreement").

                                       3
<PAGE>
 
MEMRY EAST

Memry East, located in the same facility as the Company's corporate headquarters
in Brookfield, Connecticut, is engaged in (i) the development and manufacture
(and, in the case of proprietary products, the marketing) of finished sub-
assemblies and products utilizing SMA materials, and (ii) the conduct of both
funded SMA application research and customer-sponsored development projects. 
Memry West also undertakes the latter work.

A.   Finished Assemblies and Components.  Memry East manufactures and sells
finished assemblies and components for OEMs and also manufactures, sells, and
markets proprietary finished products.  While prior to the Raychem Acquisition
the Company generated more revenues from the sale of its proprietary SMA
products than from the sale of semi-finished SMA materials, assemblies and
components to OEMs, both the consummation of the Raychem Acquisition and the
growth in sales of SMA assemblies to the medical industry have made the
materials, assemblies and components business the greater portion of both the
Company's sales and Memry East.

The single largest portion of Memry East's business is selling assemblies and
components to United States Surgical Corporation ("USSC") and other medical
industry OEMs.  The primary item sold by Memry to USSC is an SMA subassembly
used by USSC for 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.
While USSC was working with Memry on a number of projects at the time of the
Raychem Acquisition, the bulk of this business represents selling finished
medical sub-assemblies that Raychem manufactured at a separate Menlo Park
facility and sold to USSC prior to the Raychem Acquisition.  This operation was
relocated from Memry West to Memry East in December of 1996.

Products and devices being sold to other medical OEMs include stents, surgical
clips, catheter guidance forms and other products using plastic with shape
memory properties for orthoscopic procedures. All of the Company's major SMA
competitors compete with the Company in this market (see "-- Competition").

In 1992 the United States Golf Association ("USGA"), professional golf's
regulating body in the U.S., modified its rules to allow inserts to be used for
the hitting surface of golf clubs. Prior to that time, the Company had developed
an application of certain properties of SMAs for such purpose. The SMA alloy
allows the energy created when a club strikes a golf ball to be absorbed,
without deformation of the club's shape, to a far higher degree than other
materials used in the golf club industry. In fiscal 1996 the Company began
selling SMA inserts utilizing a alloy trade named ZEEMET/(TM)/ to a distributor
for resale to the Nicklaus Golf Equipment Company ("Nicklaus"). Nicklaus
inserted these ZEEMET/(TM)/ inserts into a new line of wedges and a putter,
where they constituted the hitting surface of such clubs. While the Company had
high hopes for this program, Nicklaus terminated it during fiscal 1997. Since
such termination, the Company has had conversations with a number of golfing
equipment manufacturers regarding their use of the ZEEMET/(TM)/ inserts, but

                                       4
<PAGE>
 
none has yet committed to the use of ZEEMET/TM/ and there can be no assurances
that any will.  In addition, the golfing equipment industry is highly
competitive and various manufacturers have in recent years been developing more
and more technical sophistication.  While the Company believes that the current
SMA application has several advantages over current competing technology, there
can be no assurances that it will continue to hold such advantages.

In addition to its sales of finished assemblies to OEMs, Memry East currently
manufactures and markets a number of consumer and industrial products utilizing
SMAs.  The Company's principal proprietary products are the MEMRYSAFE/R/ line
of temperature-actuated water flow reduction products.  In addition, the Company
manufactures and markets the ULTRAVALVE/TM/ electronic combination shower/tub
mixing valve and the FIRECHEK/(R)/ line of industrial fire safety valves.

The MEMRYSAFE/R/ products provide protection from accidental scalding in
showers, bathtubs and sinks by instantly restricting the flow at the point of
outlet prior to the onset of a scalding condition.  The Company sells this
product to distributors for sales as retrofit products into the retail market,
to OEMs as components and, through sales agents, to governmental authorities for
installation in governmental housing.  While the majority of sales of the
MEMRYSAFE/R/ products are being made in North America, distribution is also
underway in Canada, Australia and New Zealand.  Retail prices in the U.S. range
from $7.89 to $24.99. The Company is aware of only one directly competitive
product in the U.S. and another in Australia. However, the primary competition
for the product comes from major U.S. plumbing manufacturers who market and sell
conventional thermostatic and pressure balanced mixing valves. The Company
believes that alternative anti-scald products are more expensive to manufacture
and install and less effective in protecting the user from burns. Nonetheless,
sales to date of the Company's MEMRYSAFE/(R)/ products have fallen short of the
Company's expectations, presumably due to lack of consumer awareness of the
product and their price (when compared not to other types of anti-scalding
valves, which cost at least as much as Memry's products, but to valves without
an anti-scalding feature).

The Company has been selling the micro-processor controlled ULTRAVALVE/TM/
shower and bath valve since June of 1990. Because it combines the safety and
comfort of a thermostatic mixing valve with the ease and accuracy of a computer-
controlled temperature setting, the Company believes that its ULTRAVALVE/TM/
systems have clear performance advantages over the other premium competing
products on the market today. In addition, the ULTRAVALVE/TM/ system
incorporates the Company's patented anti-scald protection. The ULTRAVALVE/TM/
system is assembled at Memry East with certain components purchased from outside
vendors. In May 1995, the Company entered into a three year agreement with
American Standard, Inc., whereby American Standard became the exclusive marketer
and distributor of the ULTRAVALVE/TM/ product line in the United States. The
Company has retained the right to market these products outside of the United
States. American Standard markets the products in the U.S. under both the
American Standard and the Ideal Standard brand names. Unfortunately, sales of
ULTRAVALVE/TM/ products to American Standard have fallen short of the
contractually mandated minimum purchase requirements

                                       5
<PAGE>
 
for American Standard and product sales still have not achieved a substantial
volume. As the Company is not convinced that sales of ULTRAVALVE/TM/ products,
even if improved, will ever be material to the Company's business, and as the
Company's business focus has shifted away from plumbing products generally to
medical products and industrial and leisure industry uses, the Company is
looking to sell the ULTRAVALVE/TM/ product line. However, while the Company has
discussed a possible sale with a small number of potential buyers, no agreement
for the sale of ULTRAVALVE/TM/ yet exists.

The Company also manufactures and markets the FIRECHEK/(R)/ line of industrial
fire safety valves.  While sales of FIRECHEK/(R)/ have been increasing, it does
not appear that this product line will be material to the Company's overall
results of operation in the foreseeable future.

B.  Customer Sponsored Development Projects and Funded Product Research.  In
addition to the manufacture and sale of commercialized components and products,
Memry East is also engaged in both sponsored development projects in which the
Company designs, manufactures and sells prototype components and products to
customers, and funded product research.

Memry East 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.
The largest such project that Memry East is currently working on is the
development of a shape-memory controlled micro-tab on the trailing edge of the
blades of a helicopter rotor for McDonnell Douglas Helicopter Systems.  Such a
device, if technically and commercially proven, would permit the pilot of a
helicopter to tune the attitude of each of the rotor blades from the cockpit and
eliminate the need for ground mechanics presently required to perform this
function.  In addition, the Company has previously completed projects such as
the development of a three-way line valve for a Canadian utility company
intended for use in an off-peak residential electric water heater system.

Because the decision as to when a program is complete and ready for
commercialization belongs to the customer, and not to the Company, the Company
is not able to accurately predict if or when any products developed in this type
of program will come to market.  The Company has worked on these type of
development projects for a number of years and, with the exception of the sales
that are now being made by Memry West to Raychem for components for a
proprietary sealing system for high pressure fuel injectors that were developed
by Memry East and the customer in such a program, the Company has been generally
disappointed with the lack of sales of commercialized products or assemblies
that

                                       6
<PAGE>
 
have arisen from these programs.  The one successful development, however, led
to $400,000 of component sales in fiscal 1997, and the Company believes that
these sales will be greater in upcoming fiscal years.

Memry East is also involved in various customer and government sponsored
research programs in which the Company gets paid not for the sale of products
but for performing the research.  The Company will continue to pursue funded
development programs which advance the Company's knowledge of shape memory
materials and/or demonstrate clear potential for commercialization.  Projects
undertaken by the Company in recent years include a National Institute of Health
program to study the use of super-elastic titanium-based alloys as a replacement
for the current nickel-based alloys used in orthodontic procedures, a United
States Air Force program for the development of SMA-based reusable lock nuts,
and a program with the National Aeronautical and Space Administration for the
development of shroud rings in the compressor sections of small jet turbines.
The largest ongoing development program is, as previously described, with
McDonnell Douglas for the development of SMA actuated control surfaces on
advanced helicopter blades.  Research contracts with the U.S. Government are
subject to termination or renegotiation by the U.S. Government pursuant to
standard government procurement contract terms.

                                   SUPPLIERS

The principal raw material used by the Company is SMA alloys.  The Company
obtains its SMA alloys 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 SMA
from these suppliers, the Company believes that other sources exist that would
be able to supply the Company with sufficient quantities of SMA alloys.

While the Company also relies on outside suppliers for its non-SMA components of
finished 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.

                               MATERIAL CUSTOMERS

The Company's two largest customers, Raychem and United States Surgical
Corporation, represented 47% and 30%, respectively, of the Company's total sales
(excluding sales from discontinued operations) during fiscal 1997. Obviously,
the loss of either such customer could have a material adverse effect on the
Company. This risk, however, is lessened by the Company's relationship with
these customers. The Company and Raychem are party to the Private
Label/Distribution Agreement, which requires Raychem to purchase certain
products and materials solely from the Company until June 30, 2001. Furthermore,
while there can be no assurances that Raychem will continue to purchase products
at its current rate, Raychem distributes the components its purchases from Memry
to over two hundred customers.

                                       7
<PAGE>
 
worldwide, lessening the risk that the loss of any one customer will have a
material adverse effect on Raychem's purchases from Memry.  In addition, in
April 1997 the Company received a two-year exclusive blanket purchase order from
United States Surgical Corporation for the supply of medical instrument
assemblies, commencing April 1, 1997.  The estimated value of such shipments is
expected to exceed $7 million over such two-year period.  The sub-assembly
covered by this agreement was acquired by the Company as part of the Raychem
Acquisition.

                                  COMPETITION

The Company has competition on two levels: technological competition by other
SMA processors, who compete with the Company mostly in the sale of semi-
finished materials (i.e., mostly with Memry West) and components (i.e., with
both Memry East and Memry West), and end product competitors who compete with
the Company in the sale of the Company's finished products (i.e., who compete
with Memry East). Technologically, there are several major U.S., Japanese and
European 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 alloy suppliers to both the Company and the industry as a whole are Teledyne
Wahchang 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 Memry West for semi-finished wire and strip
materials. Japanese competitors include Furakawa Electric Co., Sumitomo Co.,
Tokin Co. and Daido, all of which produce SMAs and sell to users in Japan and
internationally. The principal European competitors are AMT, a unit of the
SwissMetal group of companies, and G. Rau/EuroFlex, a German company. Within
North America, the Company believes that it is the largest single processor of
SMAs, accounting for approximately 35% of all SMA usage. The Company believes
that Johnson and Johnson, and its recently-acquired subsidiary Nitinol Devices
and Components Company, are the next largest, followed by Flexmedics, SMA
Applications, Inc., and Nitinol Medical Technology.

Memry East is, pursuant to a purchase order running through March 31, 1999, the
exclusive supplier to United States Surgical Corporation of Memry East's single
most important product line, the Endocatch subassembly.  Competition with
respect to Memry East's two major finished product lines and other component
lines and major component lines are discussed above.  See "-- Operating
Divisions --  Memry East."

The Company intends to compete, and advance its position, based upon its
worldwide sales and distribution alliance with Raychem Corporation, its
proprietary alloy positions, and its knowledge of the processing parameters of
the alloys and unique design and assembly capabilities, particularly in the
medical instrument and valving fields.  While price and production capability
are obviously important, the Company believes that it competes mostly on
technological capabilities.

                                       8
<PAGE>
 
                            PATENTS AND TRADEMARKS

As part of the Raychem Acquisition, the Company controls five U.S. patents, as
well as a variety of foreign patents and domestic and foreign patent
applications, relating primarily to the production and utilization of nickel-
titanium alloys having super-elasticity and shape memory effect.  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 will be required to license the acquired intellectual
property back to Raychem for specified uses.  For example, (i) upon the
termination of the private/label distribution agreement between the Company and
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 may have
been transferred to Medtronics, Inc., a medical products manufacturer (and a
customer of the Company), when Medtronics purchased this "excluded" (from the
Raychem Acquisition) intellectual property from Raychem during fiscal 1997.

With respect to specific products, the Company has a patent pending for the use
of SMA in the hitting surface of golf clubs. The Company owns two patents
relating to the SMA scald-protection valves, the last of which expires in the
year 2010. The Company also holds a variety of other patents relating to both
SMA technology generally and specific products.

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 having a two-way shape memory effect, 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 (medical instruments,
plumbing products, etc.).  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 SMA alloys 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

                                       9
<PAGE>
 
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 has trademark registrations for the MEMRYSAFE/(R)/, SHOWER
GARD/(R)/, SHOWER SAFE/(R)/ (and design) and FLOW GARD/(R)/ (and design)
valves, as well as for the FIRECHEK/(R)/ line of industrial safety valves and 
for M/MEMRY/(R)/ (and design) for a variety of products.  In addition, the 
Company has an allowed trademark registration application for ZEEMET/TM/ for 
metal alloys.

                            RESEARCH AND DEVELOPMENT

During fiscal 1997, the Company spent approximately $125,000 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 addition, the Company
spent approximately $212,000 on research and development contributing to the
development of SMA components pursuant to customer and government-sponsored
development arrangements.  These research and development costs are borne
directly by the federal government and customers of the Company, as applicable,
and, for purposes of the Company's financial statements, are part of "costs of
goods sold," rather than research and development.  By comparison, the Company
spent approximately $420,000 on funded research and development in fiscal 1996,
which amount was accounted for as "costs of goods sold" and the Company spent no
material amounts during fiscal 1996 on "pure" research and development.  The
amount of funded research and development that the Company will undertake in the
future will depend upon its customer's needs, but the Company anticipates it
increasing over time as the use of SMAs for various purposes increases.  The
Company also anticipates modest increases in the amount of "pure" research and
development that it undertakes as the Company's growth continues and scientific
personnel are added.

                                   EMPLOYEES

As of June 30, 1997, the Company and its subsidiary had 75 full-time and 4
part-time employees.  Of the full-time employees, 10 were executive or
management personnel and 17 were science and research personnel.  Seven of the
full-time employees and none of the part-time employees were employed by Wright
in order to complete Wright's orderly liquidation.  It is anticipated that all
but one of Wright's remaining employees will be terminated by the end of the
first quarter of the Company's 1998 Fiscal Year (which one remaining employee
will be maintained as a part-time employee until the sale of Wright's real
property).  None of the employees is represented by collective bargaining units.
The Company believes that its relationship with its employees is generally good.

In addition, as of June 30, 1997, the Company had approximately 20 "temporary"
employees (i.e., employees of temporary manpower companies) working for the
Company.

                            DISCONTINUED OPERATIONS

The Company's former Wright Machine Segment consisted of Wright Machine
Corporation ("Wright"), a wholly-owned subsidiary of the Company with a 120-year
history as a New England manufacturer of screw machine and

                                       10
<PAGE>
 
taper pin products.  Wright provided these products to OEMs in the plumbing,
electrical, electronic, fire protection, valve, appliance and automotive markets
through both direct sales accounts and three manufacturers' representatives.
Within the overall activity of Wright, there were three basic business segments:
(i) the manufacture of threaded rings for the plumbing industry; (ii) the
manufacture of predominantly brass parts on screw machines ranging in size
between 1.5 inches to 2.5 inches; and (iii) the manufacture of custom and
standard taper pins, most of which were made of various grades of stainless and
carbon steel.

After a prolonged period of declining sales and ongoing operating losses, the
Company's Board of Directors voted to cease operation at Wright, and proceed
with Wright's orderly liquidation, in April, 1997. Wright proceeded to cease
manufacturing operations, and sell its machinery and equipment, in June of 1997.
The Company recorded a loss of $211,000 on Wright's sales and liquidation.
Wright's assets have at this point been substantially liquidated, except that
Wright's real property, while currently listed for sale, has not yet been sold.
Wright's assets and results from operations are now shown on Memry's financial
statements under the captions of "Assets of Discontinued Segment, Net" and
"Discontinued Operations." See "Item 7 -- Financial Statements"


                                       11
<PAGE>
 
Item 7.    FINANCIAL STATEMENTS

Index to Financial Statements
-----------------------------
 
INDEPENDENT AUDITOR'S REPORT                                            F-1
                                                                           
FINANCIAL STATEMENTS:                                                      
                                                                           
Consolidated Balance Sheets -                                           F-2
  As of June 30, 1997 and 1996
                                                                           
Consolidated Statements of Operations -                                 F-3
  For years ended June 30, 1997 and 1996                                   
                                                                           
Consolidated Statements of Stockholders' Equity                         F-4
  For years ended June 30, 1997 and 1996                                   
                                                                           
Consolidated Statements of Cash Flows -                                 F-5
  For years ended June 30, 1997 and 1996                                   
                                                                           
Notes to Consolidated Financial Statements                              F-6 

                                       12
<PAGE>
 
                          INDEPENDENT AUDITOR'S REPORT


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


We have audited the accompanying consolidated balance sheets of Memry
Corporation and subsidiary as of June 30, 1997 and 1996, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years then ended.  These financial statements are the responsibility of the
Company's management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Memry Corporation
and subsidiary as of June 30, 1997 and 1996, and the results of their operations
and their cash flows for the years then ended in conformity with generally
accepted accounting principles.


                                                     /s/ McGladrey & Pullen, LLP
New Haven, Connecticut
September 18, 1997

                                      F-1

<PAGE>
 
<TABLE>  
<CAPTION> 
          
MEMRY CORPORATION AND SUBSIDIARY
 
CONSOLIDATED BALANCE SHEETS
June 30, 1997 and 1996
-----------------------------------------------------------------------------------------------------------------
ASSETS (Note 8)                                                                         1997            1996
                                                                                 --------------------------------  
Current Assets
<S>                                                                              <C>              <C>
 Cash and cash equivalents (Note 5)                                              $       25,000   $        57,000
 Accounts receivable, less allowance for doubtful accounts of                                                                
   $29,000 in 1996                                                                    2,419,000           568,000            
 Inventories (Note 3)                                                                 1,664,000         2,044,000            
 Prepaid expenses and other current assets                                              369,000            63,000            
 Assets of discontinued segment, net (Note 11)                                          936,000              -
                                                                                 -------------------------------- 
       Total current assets                                                           5,413,000         2,732,000            
                                                                                 -------------------------------- 
                                                                                                                             
Property, Plant and Equipment, at cost, net (Notes 4 and 9)                           2,765,000         3,881,000 
                                                                                 --------------------------------            
                                                                                                                             
Other Assets                                                                                                                 
 Patents and patent rights, less accumulated amortization of $194,000                                                        
   in 1997 and $60,000 in 1996                                                        1,868,000         2,002,000            
 Goodwill, less accumulated amortization of $70,000 in 1997                             974,000           989,000            
 Deferred financing costs                                                               103,000            36,000            
 Deposits                                                                                29,000            39,000            
                                                                                 -------------------------------- 
                                                                                      2,974,000         3,066,000            
                                                                                 -------------------------------- 
                                                                                                                             
       Total assets                                                              $   11,152,000   $     9,679,000            
                                                                                 ================================ 
                                                                                                                             
LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                         
                                                                                                                             
Current Liabilities                                                                                                          
 Accounts payable and accrued expenses                                           $    3,144,000   $     1,733,000            
 Notes payable (Note 8)                                                               2,255,000         1,698,000            
 Unearned revenue                                                                          -              150,000            
 Current maturities of capital lease obligations (Note 9)                                29,000             3,000
                                                                                 -------------------------------- 
       Total current liabilities                                                      5,428,000         3,584,000            
                                                                                 -------------------------------- 
                                                                                                                             
Capital Lease Obligations, less current maturities (Note 9)                              43,000             4,000            
                                                                                 -------------------------------- 
                                                                                                                             
Commitments and Contingencies (Notes 9 and 10)                                                                               
                                                                                                                             
Stockholders' Equity                                                                                                         
 Preferred stock (Note 6)                                                                  -               36,000            
 Common stock  (Note 6)                                                                 170,000           130,000            
 Additional paid-in capital                                                          39,631,000        39,034,000            
 Accumulated deficit                                                                (34,120,000)      (33,109,000)           
                                                                                 -------------------------------- 
       Total stockholders' equity                                                     5,681,000         6,091,000            
                                                                                 -------------------------------- 
                                                                                                                             
       Total liabilities and stockholders' equity                                $   11,152,000   $     9,679,000            
                                                                                 ================================
</TABLE> 
See Notes to Consolidated Financial Statements.

                                      F-2
<PAGE>
 
<TABLE>
<CAPTION>
MEMRY CORPORATION AND SUBSIDIARY
 
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended June 30, 1997 and 1996
-----------------------------------------------------------------------------------------------------------
 
                                                                                1997              1996
                                                                         ----------------------------------  
<S>                                                                      <C>               <C>    
Revenues
 Product sales                                                           $    11,290,000      $     657,000   
 Research and Development                                                        255,000            479,000   
                                                                         ----------------------------------  
                                                                              11,545,000          1,136,000   
                                                                         ----------------------------------  
Cost of Revenues                                                                                              
 Manufacturing                                                                 6,305,000            573,000   
 Research and development                                                        212,000            422,000   
                                                                         ----------------------------------  
                                                                               6,517,000            995,000   
                                                                         ----------------------------------  
       Gross profit                                                            5,028,000            141,000  
                                                                         ----------------------------------   
                                                                                                              
Operating Expenses                                                                                            
 General, selling and administrative (Note 9)                                  4,795,000          1,766,000   
 Depreciation and amortization                                                   228,000             38,000   
                                                                         ----------------------------------  
                                                                               5,023,000          1,804,000   
                                                                                                              
       Operating income (loss)                                                     5,000         (1,663,000)  
                                                                                                              
Other Income (Expense)                                                                                        
 Interest expense (Note 8)                                                      (275,000)          (250,000)  
 Gain on disposition of assets                                                    10,000                -
                                                                         ----------------------------------  
                                                                                (265,000)          (250,000)
                                                                         ----------------------------------    
       Loss from continuing operations                                   $      (260,000)     $  (1,913,000)  
                                                                         ----------------------------------  
                                                                                                              
Discontinued operations (Note 11)                                                                             
 Loss from operations of  discontinued segment                                  (680,000)          (192,000)  
 Loss on disposal of  discontinued segment                                      (211,000)               -     
 Extraordinary gain on early retirement of debt (Note 8)                         140,000                -     
                                                                         ----------------------------------  
                                                                                (751,000)          (192,000)  
                                                                         ----------------------------------  
                                                                                                              
       Net loss                                                          $    (1,011,000)     $  (2,105,000)  
                                                                         ==================================   
                                                                                                              
Weighted average number of common shares outstanding                          16,229,093          8,357,118   
                                                                         ==================================   
                                                                                                              
Net loss per common share                                                                                     
 Loss from continuing operations                                         $         (0.02)     $       (0.21)  
 Loss from discontinued operations                                                 (0.04)             (0.04)  
                                                                         ----------------------------------   
       Total                                                             $         (0.06)     $       (0.25)  
                                                                         ===================================   
</TABLE> 

See Notes to Consolidated Financial Statements.

                                      F-3
<PAGE>
 
<TABLE>
<CAPTION>
MEMRY CORPORATION AND SUBSIDIARY
 
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended June 30, 1997 and 1996
---------------------------------------------------------------------------------------------------------------------------------- 
 
                                                  Preferred Stock             Common Stock
                                              ----------------------   --------------------------
                                                                                                     Additional
                                                Shares         Par          Shares          Par       Paid-in        Accumulated
                                                Issued        Value         Issued         Value      Capital          Deficit
                                              ------------------------------------------------------------------------------------ 
<S>                                             <C>        <C>             <C>          <C>         <C>            <C> 
Balance, June 30, 1995                              193    $  19,000        8,009,997   $  80,000   $ 29,874,000   $ (31,004,000)
 
 Issuance of common stock                             -          -          3,363,329      33,000      4,570,000           -
 Series G preferred stock converted                (127)     (13,000)       1,269,000      13,000        -                 -
 Series G preferred stock issued                    231       23,000          -               -        1,478,000           -
 Conversion of debenture
  to Series H preferred stock                        67        7,000          285,528       3,000        753,000           -
 Conversion of debt                                -             -             50,000       1,000         49,000           -
 Issuance of warrants                              -             -            -               -        2,310,000           -
 Net loss                                          -             -            -               -          -            (2,105,000)
                                              ------------------------------------------------------------------------------------ 
 
Balance, June 30, 1996                              364    $  36,000       12,977,854   $ 130,000   $ 39,034,000   $ (33,109,000)
 
 Issuance of common stock                             -          -            388,620       3,000        495,000          -
 Series G preferred stock converted                (297)     (29,000)       2,971,000      30,000        -                -
 Series H preferred stock converted                 (67)      (7,000)         668,000       7,000        -                -
 Issuance of warrants                                 -          -            -               -          152,000          -
 Direct stock offering costs                          -          -            -               -          (50,000)         -
 Net loss                                             -          -            -               -          -            (1,011,000)
                                              ------------------------------------------------------------------------------------ 
                                        
Balance, June 30, 1997                       $        -          -         17,005,474   $ 170,000   $ 39,631,000   $ (34,120,000)
                                              ==================================================================================== 
</TABLE> 
 
See Notes to Consolidated Financial Statements.

                                      F-4
<PAGE>
 
<TABLE>
<CAPTION>
MEMRY CORPORATION AND SUBSIDIARY
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended June 30, 1997 and 1996
------------------------------------------------------------------------------------------------------------------------
 
                                                                                                1997            1996
                                                                                         -------------------------------  
<S>                                                                                        <C>              <C>  
Cash Flows From Operating Activities
 Net loss                                                                                  $  (1,011,000)   $ (2,105,000)
 Adjustments to reconcile net loss to net cash used in operating activities
  Depreciation and amortization                                                                   723,000          90,000
  Gain on early retirement of debt                                                              (140,000)         -
  Gain on disposal of assets                                                                  (1,071,000)         -
  Writedown of assets of discontinued segment                                                     470,000         -
  Compensation paid by issuance of common stock                                                   229,000         -
  Change in operating assets and liabilities, net of assets acquired in
    business combination:
     (Increase) decrease in accounts receivable                                               (2,069,000)         123,000
     (Increase) decrease in inventories                                                          (48,000)          98,000
     (Increase) decrease in prepaid expenses and other current assets                            (96,000)           7,000
     Increase in other assets                                                                    (80,000)        (82,000)
     Increase (decrease) in accounts payable and accrued expenses                               1,622,000       (556,000)
     Decrease in unearned revenue                                                               (150,000)         -
                                                                                         --------------------------------  
       Net cash used in operating activities                                                  (1,621,000)     (2,425,000)
                                                                                         -------------------------------- 
 
Cash Flows From Investing Activities
 Purchase of shape memory metals operation                                                       (56,000)     (4,022,000)
 Purchases of property, plant and equipment                                                     (202,000)        (38,000)
 Proceeds from sales of property, plant and equipment                                           1,096,000         -
                                                                                         -------------------------------- 
       Net cash provided by (used in) investing activities                                        838,000     (4,060,000)
                                                                                         -------------------------------- 
 
Cash Flows From Financing Activities
 Proceeds from sale of preferred stock, net                                                      -              1,502,000
 Proceeds from sale of common stock, net                                                           72,000       4,603,000
 Proceeds from notes payable                                                                    1,146,000         104,000
 Net increase in revolving loans payable                                                          972,000         -
 Principal payments on notes payable                                                          (1,421,000)       (808,000)
 Principal payments on capital lease obligations                                                 (18,000)         (4,000)
                                                                                         -------------------------------- 
       Net cash provided by financing activities                                                  751,000       5,397,000
                                                                                         -------------------------------- 
 
       Decrease in cash and cash equivalents                                                     (32,000)     (1,088,000)
 
Cash and cash equivalents, beginning of year                                                       57,000       1,145,000
                                                                                         -------------------------------- 
 
Cash and cash equivalents, end of year                                                    $        25,000   $      57,000
                                                                                         ================================ 
 
Supplemental Disclosure of Cash Flow Information
 Cash payments for interest                                                               $       257,000   $     314,000
                                                                                         ================================ 

Supplemental Schedule of Noncash Investing and Financing Activities
 Acquisition of shape memory metals division:
  Cash purchase price                                                                     $     -           $   4,022,000
                                                                                         ================================ 

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

 Issuance of common stock in settlement of debt                                           $     -           $     813,000
                                                                                         ================================ 
 
 Capital lease obligation incurred for equipment                                          $       83,000    $    -
                                                                                         ================================ 
</TABLE> 

See Notes to Consolidated Financial Statements.

                                      F-5
<PAGE>
 
                       MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997 and 1996
--------------------------------------------------------------------------------


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Memry Corporation, a Delaware corporation incorporated in 1981, is engaged in
the businesses of developing, manufacturing and marketing products and
components utilizing the properties exhibited by shape memory alloys, and
manufacturing and marketing metal parts and components machined on screw
machines and smaller metal working machines.  As described in Note 11, the
Company ceased the operations of the metal parts and components operations on
June 5, 1997.  The Company's sales are primarily to customers located throughout
the United States.  The Company extends credit to its customers all on an
unsecured basis on terms that it establishes for individual customers.

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

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

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

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

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

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

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

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

                                      F-6
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
--------------------------------------------------------------------------------

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

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

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

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

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

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

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

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

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

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

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

                                      F-7
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
--------------------------------------------------------------------------------


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

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

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

Reclassifications
-----------------

Certain 1996 financial statement amounts have been reclassified to conform with
the 1997 financial statement presentation, primarily relating to the
presentation of Wright's operations as discontinued operations.  These
reclassifications had no effect on the 1996 net loss.

Note 2. BUSINESS COMBINATION

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

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

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



                                      F-8
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
--------------------------------------------------------------------------------

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

<TABLE>
                <S>                                     <C> 
                Patent rights                           $  2,000,000
                Goodwill                                     989,000
                Machinery and equipment                    2,700,000
                Inventory                                  1,293,000
                                                        ------------
                                                        $  6,982,000
                                                        ============ 
</TABLE>

During the year ended June 30, 1997, as a result of certain adjustments to the
purchase price, the Company paid an additional $56,000 to Raychem which was
allocated to goodwill.

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

<TABLE>
            <S>                                         <C>     
            Sales                                       $ 9,518,000
            Net income                                  $   122,000
            Net income per common share                 $     0.01
</TABLE>

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

Additionally, concurrent with the acquisition, a private label/distribution
agreement was executed between Raychem and the Company, wherein Raychem became
the exclusive distributor, for an initial term of five years, for non-implant
applications of products to certain customers which comprised approximately 70%
of the Raychem division's fiscal 1996 revenues.  Sales to Raychem under the
private label/distribution agreement are discounted to allow Raychem to recover
its sales and marketing expenses and to realize a profit upon resale of such
products to its customers.  The unaudited proforma consolidated results of
operations set forth above give effect to such discount.

Note 3.  INVENTORIES

Inventories at June 30, 1997 and 1996, are summarized as follows:


<TABLE>
<CAPTION>
                                                                    1997           1996
                                                             ------------------------------- 
            <S>                                               <C>              <C>   
            Raw materials and supplies                        $      398,000   $   1,370,000
            Work-in-process                                        1,478,000       1,522,000
            Finished goods                                           478,000         254,000
            Allowance for slow-moving and obsolete inventory       (690,000)     (1,102,000)
                                                             ------------------------------- 
                                                              $    1,664,000   $   2,044,000
                                                             =============================== 
</TABLE>


                                       F-9
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
--------------------------------------------------------------------------------

Note 4.  PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment at June 30, 1997 and 1996, is summarized as
follows:

<TABLE>
<CAPTION>
                                                                  1997               1996
                                                         ------------------------------------ 
         <S>                                             <C>                   <C>
         Land                                            $            -        $      166,000
         Buildings and improvements                                   -               942,000
         Tooling and equipment                                   3,971,000          4,750,000
         Leasehold improvements                                    138,000            100,000
                                                         ------------------------------------
                                                                 4,109,000          5,958,000
         Less accumulated depreciation and amortization          1,344,000          2,077,000
                                                         ------------------------------------
                                                         $       2,765,000    $     3,881,000
                                                         ====================================
</TABLE>

Note 5.  MAJOR CUSTOMERS

Product sales revenue for the year ended June 30, 1997, include sales to two
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 year ended
June 30, 1997, and accounts receivable from these customers at June 30, 1997, is
as follows:

<TABLE>
<CAPTION>
                                            Accounts
         Customer          Sales           Receivable
        -------------  ----------------  ------------- 
         <S>           <C>               <C> 
         Company A     $    5,491,000    $    948,000
         Company B          3,429,000         878,000
                       ----------------  ------------- 
                       $    8,920,000    $  1,826,000
                       ================  ============= 
</TABLE>


                                     F-10
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
--------------------------------------------------------------------------------

Note 6.  CAPITAL STOCK

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

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

<TABLE>
<CAPTION>
                                          Number of Shares
                                     --------------------------
                           Preferred                Issued and     Par
                             Stock    Authorized   Outstanding    value
                           --------------------------------------------
                           <S>        <C>          <C>            <C>
                           Series G       800         297.10      $100
                           Series H       800          66.85      $100
</TABLE>

During the year ended June 30, 1996, a holder of the Series G preferred stock
converted 126.9 shares to 1,269,000 shares of common stock.  During the year
ended June 30, 1997, all preferred stock outstanding was converted to common
stock.

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

On December 5, 1996, the Company amended its Certificate of Incorporation to
increase the number of authorized shares of its common stock, par value $0.01
per share, from 25,000,000 to 30,000,000 shares, of which there are 17,005,474
and 12,977,854 shares issued and outstanding at June 30, 1997 and 1996,
respectively.

On January 31, 1997, the Company filed a Registration Statement on Form S-2
covering the offer and sale by certain of the Company's stockholders of up to
3,550,650 shares of the Company's common stock. The Company received no proceeds
from this offering, and $50,000 of direct costs relating to the offering were 
charged to additional paid-in capital.

During the year ended June 30, 1997, the Company began a private placement of
its common stock for an aggregate offering of $570,000, or 380,000 shares, at a
price of $1.50 per share. As of June 30, 1997, $420,000 was raised through the
sale of 280,000 shares of such stock.

Also during the year ended June 30, 1997, 40,000 shares of stock at an aggregate
price of $65,000 were issued to Company directors as compensation, and 8,125
shares at an aggregate price of $12,188 were issued as compensation to an
outside consultant.  In addition, 60,000 

                                     F-11
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
--------------------------------------------------------------------------------

shares were issued at an aggregate price of $1,000 upon conversion of 60,000
warrants by certain employees.Common stock reserved for issuance at June 30,
1997, is as follows:

<TABLE>
<CAPTION>
                                                            Number of  
                                                             Shares        
                                                           -----------     
         <S>                                               <C>             
         For exercise of outstanding warrants                5,321,732     
         For exercise of stock options                       1,100,000     
                                                           -----------     
                                                             6,421,732     
                                                           ===========      
</TABLE>

On June 28, 1996, a convertible, subordinated debenture held by an investor in
the principal amount of $763,208 was converted to 285,528 common shares and
66.85 Series H preferred shares.  The investor also holds approximately
2,088,000 warrants to purchase common shares of the Company, exercisable at an
average price of $0.96 per share.  These warrants were originally issued in
connection with the issuance of the convertible, subordinated debenture,
referred to above.  The agreement with the investor provides, upon the
occurrence of specified events, primarily should the Company cease to maintain
its principal offices within the State of Connecticut or fail to maintain a
registration statement covering the resale of its securities, the investor the
right to put all securities of the Company held by the investor at that time for
a price equal to the greater of the then current market price per share of such
securities (on an as-converted basis) or $2 per share, less, in either event,
the aggregate amount of unpaid exercise prices of all warrants put to the
Company.  Using $2.00 per share as the put price per share, the aggregate put
price that would have to be paid by the Company if the put were exercised would
be approximately $4,085,500.  If the investor were to have the right to put its
securities and were to choose to exercise that right, such an event would have a
serious adverse effect on the Company's liquidity and the Company would most
likely have to seek equity financing to be able to meet its obligations to the
investor.  However, the Company has the ability to insure that its operations do
not move from Connecticut and intends to cause its current registration
statement to be maintained in a manner that would prevent the put from being
operative.

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

Pursuant to the Company's stock option plan, incentive stock options are granted
at prices equal to or greater than the fair market value of the Company's stock
at the date of grant, and are exercisable at the date of grant unless otherwise
stated.  In addition, non-qualified options are granted at a price determined by
the Company's compensation committee, which may be less than market value, in
which case an expense equal to the difference between the option price and


                                     F-12
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
--------------------------------------------------------------------------------

market value is recognized.  The exercise period for both the incentive and non-
qualified stock options generally cannot exceed ten years.

The Company adopted Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS No. 123"), on July 1, 1996.
SFAS No. 123 established new 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 established a fair
value based method of expense recognition for stock-based compensation plans and
encouraged, but did not require, entities to adopt that method in place of
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 statements of operations for grants
under the option plan.  Had compensation cost for the stock option plan been
recognized based on the grant date fair values of awards, the method described
in SFAS No. 123, the reported net loss would have been increased to the pro
forma amounts shown below:

<TABLE>
<CAPTION>
                                        1997                1996
                                   -----------------------------------
              <S>                  <C>                 <C>
              Net loss:
                As reported        $   (1,011,000)     $   (2,105,000)
                                   ===================================

                Pro forma          $   (1,355,000)     $   (2,242,000)
                                   ===================================

              Earnings per share:
                As reported        $        (0.06)     $        (0.25)
                                   ===================================
 
                Pro forma          $        (0.08)     $        (0.27)
                                   ===================================
</TABLE>



                                     F-13
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
--------------------------------------------------------------------------------

The fair value of each grant, used to determine the proforma net loss 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, 1997 and 1996, respectively:

<TABLE>
<CAPTION>
                                                         1997     1996       
                                                      -----------------     
         <S>                                            <C>      <C>         
         Dividend rate                                    -       -          
         Risk free interest rate                        6.19%    6.27%
         Weighted average expected lives, in years      5.75     6.25       
         Price volatility                              30.0%    30.0%      
</TABLE>


A summary of the status of the Company's stock option plan at June 30, 1997 and
1996, and changes during the years ended on those dates, is as follows:

<TABLE>
<CAPTION>
                                                                            Weighted   
                                                                            Average    
                                             Shares       Options           Exercise   
                                            Reserved     Outstanding         Price     
                                          -------------------------------------------- 
         <S>                                <C>           <C>            <C>           
         Balance, June 30, 1995                600,000        436,500    $        3.47 
           Canceled                                  -      (436,500)    $        3.47 
           Granted                                   -        492,500    $        1.35 
           Exercised                                 -              -                - 
                                          -------------------------------------------- 
                                                                                       
         Balance, June 30, 1996                600,000        492,500    $        1.35 
           Canceled                                  -         62,500    $        1.51 
           Granted                                   -        467,000    $        1.75 
           Exercised                                 -              -                - 
                                          -------------------------------------------- 
                                                                                       
         Balance, June 30, 1997              1,100,000        897,000    $        1.54 
                                          ============================================  
</TABLE>

At June 30, 1997 and 1996, 246,500 and 223,500 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, 1997 and 1996 were $ .74 and
$ .28, respectively.

                                     F-14
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
--------------------------------------------------------------------------------

A further summary of options outstanding at June 30, 1997, 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 $1.87        897,000           8.8           $1.54         246,500       $1.45
</TABLE>


Warrants
--------

The Company has also issued stock warrants to employees and other parties.  The
compensation cost charged to operations for warrants granted to employees was
$152,000 during the year ended June 30, 1997.

The following table summarizes warrants outstanding at June 30, 1997 and 1996,
and the changes in warrants during the years then ended:

<TABLE>
<CAPTION>
                                                                                    Weighted-    
                                                                                     Average     
                                                        Shares       Number of       Exercise    
                                                       Reserved       Shares           Price     
                                                     ------------------------------------------- 
               <S>                                     <C>           <C>            <C>          
               Balance, June 30, 1995                   6,088,891     6,088,891         $2.31    
                 Canceled                                   -        (3,085,704)        $1.40    
                 Granted                                    -         2,586,181         $1.05    
                 Exercised                                  -             -                 -    
                                                     ------------------------------------------- 
                                                                                                 
               Balance, June 30, 1996                   5,709,368     5,589,368         $1.77    
                 Canceled                                   -           363,636         $7.39    
                 Granted                                    -           156,000         $ .40    
                 Exercised                                  -           (60,000)        $ .01    
                                                     ------------------------------------------- 
                                                                                                 
               Balance, June 30, 1997                   5,321,732     5,321,732         $1.37    
                                                     =========================================== 
</TABLE>




                                       F-15
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
--------------------------------------------------------------------------------

A further summary of warrants outstanding at June 30, 1997, 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>
 $ .01 to $5.00       5,321,732           4.11           $1.37       5,261,732       $1.38
</TABLE>


Note 7.  INCOME TAXES

Deferred income taxes reflect the net effects of temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes.  For financial reporting purposes,
a valuation allowance of $13.5 million has been recognized at June 30, 1997 and
1996, to reflect the estimated amount of operating loss carryforwards and
temporary differences which may not be realized.  The approximate effect of
carryforwards and temporary differences that give rise to deferred tax assets
and liabilities at June 30, 1997 and 1996, are as follows:

<TABLE>
<CAPTION>
                                                            1997                     1996
                                                       ---------------------------------------- 
       <S>                                              <C>                     <C>
       Deferred tax assets:                                                                    
         Allowance for doubtful accounts                $     13,000            $       12,000      
         Inventory reserves                                   89,000                   172,000      
         Capitalization of inventory costs                    29,000                    31,000      
         Vacation accruals                                    41,000                    41,000      
         Depreciation and amortization                      (330,000)                  (13,000)     
         Research and development credit carryforwards       160,000                   160,000      
         Net operating loss carryforwards                 13,500,000                13,100,000      
                                                       ---------------------------------------- 
                Total deferred tax assets                 13,502,000                13,503,000      
         Valuation allowance                             (13,502,000)              (13,503,000)     
                                                       ---------------------------------------- 
                Net deferred tax assets                 $          -            $            -
                                                       ======================================== 
</TABLE>

At June 30, 1997, the Company has net operating loss carryforwards for income
tax purposes of approximately $34 million, which expire ratably in 1998 through
2012. In addition, the Company has tax credit carryforwards available to offset
future taxable income aggregating approximately $160,000 which expire in various
amounts from 1998 through 2008. As a result of numerous equity transactions, the
net operating loss carryforwards and the unused tax credits may be significantly
limited as to ultimate amounts of these tax attributes which may be utilized and
the periods for which they will apply.

                                     F-16
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
--------------------------------------------------------------------------------

Note 8.  NOTES PAYABLE

Notes payable consist of the following at June 30, 1997 and 1996:

<TABLE>
<CAPTION>
                                                                            1997                 1996
                                                                   ------------------------------------- 
      <S>                                                          <C>                  <C>
      Revolving loan payable to bank, repaid in full,
        August 1996.                                               $               -    $        381,000
 
      Term note payable to bank, repaid in full,
        August 1996.                                                               -              83,000
 
      Mortgage note payable to bank, repaid in full
        August 1996.                                                               -             471,000
  
      Unsecured note payable to Raychem Corporation,
        repaid in full, August 1996.                                               -             350,000
  
      Revolving loan payable to a bank pursuant to
        August 9, 1996 credit facility, due upon demand,
        interest payable monthly at the prime rate plus
        2% (10.5% at June 30, 1997).                                       1,353,000                   -
 
      Term note payable to a bank pursuant to
        August 9, 1996 credit facility, due in monthly
        installments of $19,000, plus interest at the prime
        rate plus 2.25% (10.75% at June 30, 1997), also
        due on demand                                                        475,000                   -
 
      Unsecured notes payable to a company affiliated with a 
        stockholder, interest payable at 6%, due on demand.                  364,000             344,000
 
      Unsecured note payable to officer/stockholder, interest
        payable at 12%, due on demand.                                        60,000              60,000
 
      Unsecured notes payable to a company affiliated with a 
        stockholder, interest at prime plus 4%, payable on                     3,000               9,000
        demand.                                                    ------------------------------------- 
 
                                                                   $       2,255,000    $      1,698,000
                                                                   ===================================== 
</TABLE>

                                     F-17
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
--------------------------------------------------------------------------------


At June 30, 1996, the Company was in default with respect to its revolving loan,
term note and mortgage note.  Accordingly, at June 30, 1996, the term and
mortgage loans were classified as current obligations in the accompanying
consolidated balance sheet.  On August 9, 1996, the Company entered into a new
credit facility with a different lender, at which time, all amounts under the
prior facility were repaid, except for $140,000 which was forgiven by the
lender.  The $140,000 forgiveness of debt is recognized as an extraordinary item
within discontinued operations in the consolidated statement of operations.

The credit facility entered into on August 9, 1996, provides both a revolving
and term loan.  The revolving loan provides for borrowings up to the lesser of
$1,500,000 or the sum of a) 80% of eligible accounts receivable and b) the
lesser of $500,000 or 25% of eligible inventory.  These loans are cross-
collateralized by substantially all the assets of the Company and the personal
guarantee of the Company's president.

In addition, the credit facility contains various restrictive covenants
including limitations on additional debt, the payment of dividends, management
and ownership changes, and capital expenditures, all of which were complied with
at June 30, 1997.

Note 9.  LEASES

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


                                     F-18
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
--------------------------------------------------------------------------------

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, 1997:

<TABLE>
<CAPTION>
                                                                     Capital       Operating
                                                                     Leases         Leases
                                                                  -------------  ------------  
      <S>                                                         <C>             <C>               
      1998                                                         $    36,000    $   395,000
      1999                                                              32,000        200,000       
      2000                                                              15,000        135,000       
      2001                                                               -             79,000       
                                                                  -------------  ------------ 
                                                                        83,000    $   809,000        
                                                                                 ============ 
      Less amount representing interest                                 11,000
                                                                  -------------
      Present value of future minimum lease payments                    72,000
      Less current maturities                                           29,000
                                                                  -------------
                                                                   $    43,000
                                                                  =============
</TABLE>


Rent expense under operating leases for the years ended June 30, 1997 and 1996
approximated $392,000 and $130,000, respectively.

Note 10.  CONTINGENCIES

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

The Company maintains defined contribution plans (401K) which cover
substantially all of its employees.  Contributions are based on specific
percentages of employee voluntary contributions.  Employees vest immediately.
During the year ended June 30, 1997, $36,000 of expenses were recognized
relating to these plans.  There were no expenses recognized for these plans
during the year ended June 30, 1996 as no employees were participating.


                                     F-19
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
--------------------------------------------------------------------------------

Litigation
----------

There are various lawsuits and claims, arising in the ordinary course of 
business, pending against the Company. In the opinion of management, the 
ultimate resolution of these matters will not have a material adverse effect on 
the results of operations or the financial position of the Company.


Note 11.  DISCONTINUED OPERATIONS

In April 1997, the Company decided to discontinue the operations of Wright, and
on June 5, 1997, the Company ceased the operations of Wright. As of June 30,
1997, the Company had sold substantially all of the machinery and equipment of
Wright, and expects to complete the disposal of Wright through the liquidation
of its remaining assets within one year. The estimated loss on disposal is as
follows:

                                     F-20
<PAGE>
 
MEMRY CORPORATION AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
June 30, 1997 and 1996
--------------------------------------------------------------------------------

<TABLE>
          <S>                                                          <C>
          Gain from sales and writedown of assets, net                 $      456,000
          Operating losses from measurement date to June 30, 1997            (366,000)
          Estimated operating losses from July 1, 1997 to completion
            of disposal                                                      (301,000)
                                                                       ---------------
                                                                        $    (211,000)
                                                                       ===============
</TABLE>

Sales of Wright were $1,988,000 and $2,538,000 for the years ended June 30, 1997
and 1996, respectively.

At June 30, 1997, the assets and liabilities of Wright consisted of the
following:

<TABLE>
<CAPTION>
       <S>                                             <C>  
       Assets
         Accounts receivable                           $     236,000
         Inventories                                         539,000
         Property and equipment                              879,000
         Other assets                                         72,000
         Less adjustment for write-down to
           estimated realizable value                       (579,000)
                                                      --------------- 
                                                           1,147,000
                                                      --------------- 
       Liabilities
         Estimated losses from disposal of segment           211,000
                                                      --------------- 
       Net assets of Wright                            $     936,000
                                                      =============== 
</TABLE>

The foregoing net assets have been classified as current at June 30, 1997, since
the disposal of the assets is expected to be completed within one year.

Discontinued operations include management's best estimate of the amounts
expected to be realized on the disposal of its remaining assets.  The amounts
the Company will ultimately realize could differ materially in the near term
from the amounts assumed in arriving at the loss on disposal of the discontinued
operations.

Note 12.  EMERGING ACCOUNTING STANDARDS

The Financial Accounting Standards Board has issued Statement of Financial 
Accounting No. 128, "Earnings Per Share," ("SFAS No. 128") which becomes 
effective for the Company's year ending June 30, 1998. SFAS No. 128 establishes 
standards for computing and presenting earnings per share, and requires 
restatement of all prior period earnings per share data presented.  The Company 
does not anticipate that the adoption of this standard will have a significant 
impact on earnings per share presented in the financial statements.


                                     F-21
<PAGE>
 
                                    PART III

Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
        COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

DIRECTORS

The following table lists the names and ages of the five members of the Board of
Directors of the Company, their positions with the Company and the year in which
each director was first elected or appointed as a director of the Company.

                                        Positions with          Director
       Name                 Age           the Company            Since
       ----                 ---           -----------            -----    

   James G. Binch            50  President, CEO, Treasurer and      1989
                                 Chairman of the Board
   Nicholas J. Grant         82  Director                           1986
   John A. Morgan            51  Director                           1989
   W. Andrew Krusen, Jr.     49  Director                           1994
   Jack H. Halperin          51  Director                           1994

Certain information regarding the directors is set forth below. Directors are
elected until the next annual meeting of stockholders and until their successors
are duly elected and qualified.

JAMES G. BINCH has been President and Chief Executive Officer of the Company
since December 11, 1991, Chairman of the Board since September 24, 1993 and
Treasurer since July 19, 1994.  He was the President and a director of Trinity
Capital Corporation, a merchant banking firm, from its inception in June of 1987
to August 1994.  He has been the President, Chief Executive Officer and the sole
shareholder of Harbour Investment Corporation, the general partner of Harbour
Holdings Limited Partnership, an investment management company, since its
inception in June 1992.  From 1985 to 1987 he served as President and Chief
Operating Officer of Lummus Crest, Inc., the principal engineering subsidiary of
Combustion Engineering, Inc., with annual revenues of $300,000,000 and
approximately 4,000 employees.  From 1980 to 1985, Mr. Binch served as Vice
President, Corporate Strategic Planning for Combustion Engineering, Inc., a
manufacturing and engineering firm.  Mr. Binch is a graduate engineer from
Princeton University.  He also holds an M.B.A. from the Wharton School of the
University of Pennsylvania.

NICHOLAS J. GRANT was a Director of the Massachusetts Institute of Technology's
Center for Materials Science and Engineering from 1968 to 1976, and has been its
Abex Professor in Advanced Materials since 1976.  Dr. Grant is a Fellow of the
American Society for Metals, a Fellow of the American Institute of Mining and
Metallurgy, a Fellow of the American Academy of Arts, a Member of the National
Academy of Arts and Sciences, and a member of the National Academy of
Engineering.  He has published over 380 technical and scientific articles,
including several books.  He is a director of Instron Corp., a producer of
instruments and systems for worldwide materials testing; CGM Corp. and Capital
Development Funds, both mutual funds; and National Forge Co., a producer of high
alloy steel and related components.  He is also a director of Engineered
Precision Casting Corp., Kimball Physics Corp. and Capital Growth Management.

JACK H. HALPERIN, ESQ., has practiced corporate and securities law in New York
for more than 20 years.  Since 1987 he has been in private practice,
concentrating on international financing transactions.  Mr. Halperin holds

                                       13
<PAGE>
 
a B.A. degree (summa cum laude) from Columbia College and a J.D. from New York
University School of Law, where he was Note-and-Comment Editor of the Law
Review.  Mr. Halperin is a director of AccuMed International, Inc., Biosciences,
Inc., I-Flow Corporation and Pacific Pharmaceuticals, Inc.

W. ANDREW KRUSEN, JR., is a graduate of Princeton University with a Bachelor's
Degree in Geology.  Since 1989 he has been President (as well as a principal
shareholder) of Dominion Financial Group, Inc., a family-controlled corporation
in real estate development, construction, leasing and manufacturing, and which
is also the managing general partner of Dominion Partners as well as Dominion
Capital Partners.  In addition, he is Chairman of the Board of Directors and a
principal shareholder of Dominion Energy and Minerals Corporation, an oil and
gas concern.  Mr. Krusen is also the chairman of the Executive Committee of
Dominion Financial Group International, LDC, a principal shareholder of 169855
Canada Inc. and the General Partner of Krusen-Vogt & Co.  He is a director of
Raymond James Trust Company, Northstar Energy Corporation, Florida Education
Fund, and First National Bank of Tampa.

JOHN A. MORGAN has been a Vice President of Smith Barney, an investment banking
firm, since 1992.  Prior to that, Mr. Morgan was a Vice President of Kidder
Peabody & Co. since 1982.


EXECUTIVE OFFICERS OF THE COMPANY

The following table lists the names and ages of each of the executive officers
of the Company.

     Name                                   Position                     Age
     ----                                   --------                     ---

James G. Binch            President, Chief Executive Officer,             50
                          Treasurer & Chairman

William H. Morton, Jr.    Senior Vice President and Chief Operating       52
                          Officer

James Proft               Vice President and General Manager - Western    39
                          Operations

 
Executive officers are elected until the next annual meeting of the Board of
Directors and until their respective successors are elected and qualified.
Information with respect to Mr. Binch is set forth above.

WILLIAM H. MORTON, JR. was employed by the Company on November 7, 1995 as Senior
Vice President and Chief Operating Officer.  In addition, since 1985, Mr. Morton
has been Vice President, Aircraft Sales, of Coastal Aviation, Inc. in Stamford,
Connecticut, a general aviation marketing firm, and since 1986, Mr. Morton has
been the sole stockholder and President of The Risor Corporation in Stamford,
Connecticut, a merchant banking firm.  Mr. Morton was a registered
representative for First Hanover Securities, Inc., a securities firm, from 1982
to 1997.  During fiscal year 1995, Mr. Morton also acted as a consultant to the
Company.  Mr. Morton holds a B.A. degree from Middlebury College.

JAMES L. PROFT was employed by the Company on July 23, 1996 as Vice President
and General Manager -Western Operations.  From July 1984 through March 1989, Mr.
Proft served as Research Metallurgist with Raychem Corporation's Metals
Division.  From April 1989 through July 1992, Mr. Proft served as Area Sales
Manager for Raychem Corporation's Electronics Group.  From August 1992 through
January of 1993, Mr. Proft was the Vice President of Sales and Marketing of
Shape Memory Applications, Inc., followed by a return to Raychem Corporation as
Marketing Manager for its Medical Division.  Prior to joining the Company, from
January 1996 to July 1996, Mr. Proft was Regional Sales Manager of Planar
America, an electroluminescent flat panel display company located in Beaverton,
Oregon.  Mr. Proft holds a B.S. degree in materials engineering from the
University of Wisconsin-Milwaukee and a Masters degree in material science and
engineering from Stanford University.

                                       14
<PAGE>
 
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
directors, executive officers and 10% beneficial owners of the Company's Common
Stock to file certain reports concerning their ownership of the Company's equity
securities.  Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company during its most recently completed fiscal year, and
Forms 5 and amendments thereto furnished to the Company with respect to its most
recently completed fiscal year, the directors, officers and beneficial owners of
10% or more of the Registrant's Common Stock which failed to make the requisite
filings on a timely basis are set forth below.

James Proft failed to timely file a Form 3 to report his becoming an executive
officer on July 23, 1996, although a Form 3 was subsequently filed by Mr. Proft.

Nicholas Grant failed to timely file a Form 4 to report his acquisition of 6,024
shares of Common Stock of the Company on July 14, 1997, although a Form 4 was
subsequently filed by Dr. Grant.

                                       15
<PAGE>
 
Item 10.  EXECUTIVE COMPENSATION

The following table sets forth for the fiscal years ended June 30, 1997, 1996
and 1995, certain information regarding the total remuneration paid to the
Company's chief executive officer and its next three most highly compensated
executive officers.


                           Summary Compensation Table
                           --------------------------
<TABLE>
<CAPTION>
 
 
                                       Annual Compensation              Long Term Compensation Awards
                               -----------------------------------  -------------------------------------
(a)                              (b)        (c)                            (g)                (i)
                                                                    Shares of Common
                                                                    -----------------
Name & Principal               Fiscal                               Stock Underlying       All Other
   Position                     Year     Salary $       Bonus ($)    Options/SARs(#)    Compensation ($)
-----------------              -------  ------------  ------------  -----------------  ------------------
<S>                            <C>      <C>           <C>           <C>                <C>
James G. Binch, President,       1997    $167,500(1)   $  -0-            20,000/0 (2)         $  - 0 -
  Chief Executive Officer,       1996    $150,000(1)   $  -0-           200,000/0 (3)         $  - 0 -
  Treasurer & Chairman           1995    $150,000(1)   $  -0-           240,000/0 (3)         $  - 0 -
 
William H. Morton, Jr.,          1997    $161,666      $  -0-             5,000/0 (2)         $  - 0 -
 Senior Vice President and       1996    $150,000      $95,000 (4)      125,000/0 (5)         $  - 0 -
 Chief Operating Officer         1995    $  - 0 -      $  -0-                  - 0 -          $  - 0 -
 
James Proft, Vice President      1997    $135,404      $10,000           45,000/0 (6)         $ 92,548(7)
  and General Manager -          1996    $  - 0 -      $  -0-                  - 0 -          $  - 0 -
  Western Operations             1995    $  - 0 -      $  -0-                  - 0 -          $  - 0 -
                                                                   
Wendy A. Gavaghan                1997    $ 81,250      $  -0-            12,000 (8)           $175,257(9)
  Former Corporate               1996    $ 82,400      $  -0-            24,500 (10)          $  - 0 -
  Controller and Secretary       1995    $ 81,917      $  -0-            24,500 (10)          $  - 0 -
</TABLE>  
----------

   (1) Does not include any amounts which may be deemed to be paid to Mr. Binch
       by Harbour Investment Corporation for serving as President of the
       Company. See discussion following.

   (2) These options are exercisable in three equal annual installments,
       commencing December 5, 1997.

   (3) In April 1996 Mr. Binch agreed to the termination (for no value, except
       as provided in the following sentence) of 40,000 of the 240,000 options
       previously granted to him, which options had been exercisable in five
       equal annual installments, commencing on September 24, 1994. With respect
       to the remaining 200,000 options, the exercise price was repriced from
       $4.40 per share to $1.50 per share simultaneously with the repricing in
       April 1996 of all of the Company's outstanding incentive stock options
       with exercise prices above $1.50 to $1.50. The 144,000 of such options
       which had not vested as of April 1996 are exercisable in three equal
       annual installments, with the last installment vesting on September 24,
       1998.

   (4) Includes payment of $50,000 to The Risor Corporation, of which Mr. Morton
       is President and the sole stockholder, for consulting services.

   (5) These options are exercisable in five equal annual installments,
       commencing November 7, 1996.

                                       16
<PAGE>
 
   (6) With respect to 20,000 of such options, such options are exercisable in
       three equal annual installments, commencing July 1, 1997, and with
       respect to 25,000 of such options, such options are exercisable in three
       equal annual installments, commencing December 5, 1997.

   (7) Pursuant to the terms of an agreement between the Company and Mr. Proft
       dated as of June 26, 1996, as hereinafter described, the Company issued
       to Mr. Proft on September 19, 1996 warrants exercisable to purchase
       40,000 shares of Common Stock, as to which warrants exercisable to
       purchase 20,000 shares of Common Stock were immediately exercisable. As
       of September 19, 1996, these warrants were valued at $1.59 per warrant,
       being $31,800 total. In addition, also pursuant to the agreement between
       the Company and Mr. Proft, the Company paid $60,748 for expenses related
       to the relocation of Mr. Proft and his family from the Portland, Oregon
       area to the San Francisco, California area, including the moving of
       household effects, brokerage fees and closing costs, and also for
       expenses related to an earlier move to the Portland, Oregon area.

   (8) These options, originally exercisable in three equal annual installments
       commencing December 5, 1996, were cancelled as of July 30, 1997, pursuant
       to the terms of an agreement, dated as of June 5, 1997, among the
       Company, Wright Machine Corporation, the Company's wholly-owned
       subsidiary ("Wright"), and Ms. Gavaghan.

   (9) Pursuant to the terms of an agreement among the Company, Wright and Ms.
       Gavaghan dated as of June 5, 1997, as hereinafter described, Ms.
       Gavaghan's employment with the Company terminated as of March 15, 1997.
       With respect to the fiscal year ended June 30, 1997, salary payments in
       the amount of $36,458 were paid to Ms. Gavaghan as part of severance
       arrangements from March 15 through June 30 pursuant to such agreement,
       and $5,000 was paid to Ms. Gavaghan as partial payment of accrued
       vacation pay. In addition, the Company accrued with respect to Ms.
       Gavaghan $88,542 in salary payments to be paid between July 1, 1997 and
       March 15, 1998, $12,232 with respect to remaining accrued vacation pay to
       be paid on March 15, 1998, $1,275 with respect to health and medical
       benefits, and $36,750 as a severance payment to be paid on or before May
       31, 1998.

  (10) Simultaneously with the repricing in April 1996 of all of the Company's
       outstanding incentive stock options with exercise prices above $1.50 to
       $1.50, these options, originally issued in July 1994, were repriced from
       $2.34 per share to $1.50 per share in April 1996.

                              ____________________

                                       17
<PAGE>
 
                     Option/SAR Grants in Last Fiscal Year

                               Individual Grants
                               -----------------
<TABLE>
<CAPTION>
 
(a)                                     (b)                (c)               (d)                (e)
                                  Number of Shares    % of Total
                                  of Common Stock     Options/SARs
                                  Underlying          Granted to
                                  Options/SARs        Employees in      Exercise or Base      Expiration
Name                              Granted (#)         Fiscal Year(1)    Price($/Share)           Date
------                            ----------------    ---------------   -----------------  -----------------
<S>                               <C>                 <C>               <C>                 <C>
 
James G. Binch                    20,000/0 (2)           4.3%               $1.78          December 5, 2006
 
William H. Morton, Jr.             5,000/0 (2)           1.1%               $1.78          December 5, 2006
 
James Proft                       20,000/0 (3)(4)        4.3%               $1.59          July 1, 2006
                                  25,000/0 (2)           5.4%               $1.78          December 5, 2006
 
Wendy A. Gavaghan                 12,000/0 (5)           2.6%               $1.78                 (5)
 
---------------------------
</TABLE>
 (1)  Assumes full vesting of options.

 (2)  These options are exercisable in three equal annual installments,
      commencing December 5, 1997.

 (3)  These options are exercisable in three equal annual installments,
      commencing July 1, 1997.

 (4)  The Company has agreed to pay to Mr. Proft 35% of the difference between
      (i) the actual closing price per share of the Common Stock on the date of
      exercise of all or a portion of such options, and (ii) $1.59, times the
      number of options exercised, as reimbursement for the tax liability to Mr.
      Proft with respect to the exercise of such options. See discussion of same
      following.

 (5)  These options originally were exercisable in three equal annual
      installments, commencing December 5, 1997, and had an expiration date of
      December 5, 2006. However, pursuant to the terms of an agreement, dated as
      of June 5, 1997, among the Company, Wright and Ms. Gavaghan, these options
      expired July 30, 1997.

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

                                       18
<PAGE>
 
                    Aggregated Option/SAR Exercises in Last
                    Fiscal Year and FY-End Option/SAR Values
                    ----------------------------------------
<TABLE>
<CAPTION>
 
 
            (a)                                 (d)                               (e)

 
                                      Number of Shares
                                      of Common Stock
                                      Underlying                         Value of Unexercised
                                      Unexercised Options/               In-the-Money Options/
                                      SARs at FY-end (#)                 SARs at FY-End (#)
            Name                      Exercisable/Unexercisable          Exercisable/Unexercisable(1)
            ----                      -------------------------          ----------------------------
<S>                                   <C>                                <C> 
            James G. Binch            104,000 Options Exercisable/       $16,640/$15,360
                                      116,000 Options Unexercisable
 
            William H. Morton, Jr.    25,000 Options Exercisable/        $19,000/$76,000
                                      105,000 Options Unexercisable
 
            James Proft               0 Options Exercisable/             $     0/$ 1,400
                                      45,000 Options Unexercisable
 
            Wendy A. Gavaghan         24,500 Options Exercisable/        $ 3,920/$     0
                                      12,000 Options Unexercisable
                                      1,500 SARs Exercisable/            $   240/$     0
                                      0 SARs Unexercisable
</TABLE>

            ---------------------------
        (1) Based on average of bid and asked prices per share of the Company's
            Common Stock on June 30, 1997, being $1.66.
                                 ----------------------

Effective September 24, 1993, the Company and James G. Binch entered into a two-
year employment agreement, which automatically renews for successive one-year
periods unless or until Mr. Binch or the Company gives notice of its intention
not to renew.  Pursuant to said renewal provision, this agreement automatically
renewed for a one-year period effective September 24, 1997.  The agreement
entitled Mr. Binch to an annual salary of $150,000 from and after January 1,
1993, which salary was increased in November 1996 to $180,000.  The agreement
also entitled Mr. Binch to (i) $20,000 as compensation for services rendered
from October 1, 1992 to December 31, 1992, (ii) a bonus of $50,000 and 80,000
shares of the Company's Common Stock as inducement to enter into the contract,
and (iii) an option to purchase up to 240,000 shares of the Company's Common
Stock at an exercise price of $4.40 per share under and pursuant to the Memry
Corporation Stock Option Plan, subject to the approval of such Plan by the
Company's stockholders (which approval was obtained in the first quarter of
fiscal 1995).  The options are exercisable in five equal installments,
commencing on September 24, 1994, and will expire on September 24, 2003.  The
Agreement also provides that if Mr. Binch's employment is terminated due to
either the failure by the Company to observe or comply with any of the
provisions of such agreement (if such failure has not been cured within 10 days
after written notice of same to the Company), or, at the election of Mr. Binch,
upon a change in control of the Company (and within 6 months of such change in
control), Mr. Binch will be entitled to a lump-sum payment equal to two times
his annual salary at the rate in effect immediately prior to the date of
termination.  During the fiscal year ended June 30, 1996, Mr. Binch and the
Company agreed to the termination of 40,000 of his options (for no value) and
the repricing of his remaining options from $4.40 per share to $1.50 per share
simultaneously with the repricing of all of the Company's outstanding incentive
stock options with exercises above $1.50 to $1.50.

Mr. Binch is President, the sole director and the sole stockholder of Harbour
Investment Corporation, a Delaware corporation ("HIC").  HIC is managing general
partner of Harbour Holdings Limited Partnership, a Connecticut limited

                                       19
<PAGE>
 
partnership ("Harbour") and a significant shareholder of the Company.  (See
"Security Ownership of Certain Beneficial Owners and Management").  Pursuant to
Harbour's amended and restated Agreement of Limited Partnership, Harbour
retained HIC to act as its managing general partner, and to perform investment
manager, custodial and administrative services, in consideration of custodial
fees of (i) $465,000 for the period commencing on February 24, 1993, and
continuing through December 31, 1993, and (ii) $350,000 for each of calendar
years 1994 and 1995.  HIC's retention was extended for calendar 1996 on January
1, 1996, for an additional $350,000 custodial fee.  Although HIC has continued
to serve as Harbour's managing general partner and to perform such services
since the expiration of such extension, there is currently no agreement in place
regarding payment by Harbour of a custodial fee.  One of a number of services
performed by HIC for Harbour is providing the services of Mr. Binch in the
capacity of the Company's President.  Because (i) there is no allocation of the
annual fee paid by Harbour to HIC as between providing the services of Mr. Binch
as the Company's President and other services, (ii) HIC does not pay Mr. Binch a
salary, and (iii) HIC incurs numerous expenses in fulfilling its duties to
Harbour that must be paid before it pays either salary or dividends to Mr.
Binch, it is impossible to quantify the amount, if any, that Harbour or HIC
could be deemed to be paying Mr. Binch for serving as President of the Company.
Therefore, Mr. Binch's compensation as set forth in the foregoing compensation
table does not include any such amounts.

On November 7, 1995, William H. Morton, Jr. joined the Company as Senior Vice
President and Chief Operating Officer.  Mr. Morton's employment agreement
provides for a two-year term of employment, which term automatically renews for
successive one-year periods unless either Mr. Morton or the Company gives the
other notice of his or its intention not to renew such contract.  This agreement
entitles Mr. Morton to an annual salary of $150,000, which salary was increased
to $170,000 in November 1996.  In addition, as consideration for past services
rendered by either Mr. Morton individually or through The Risor Corporation,
this agreement entitles Mr. Morton to 50,000 shares of Common Stock of the
Company as well as payment of $50,000 to The Risor Corporation.  This agreement
also grants to Mr. Morton options under and pursuant to the Memry Corporation
Stock Option Plan exercisable to purchase 125,000 shares of Common Stock for an
exercise price of $0.90, exercisable in five equal annual installments,
commencing on November 7, 1996 and terminating on November 7, 2005.  In the
event of a change in control of the Company, these options will become
immediately exercisable.

On July 23, 1996, James Proft joined the Company as Vice President and General
Manager - Western Operations.  A letter agreement, dated June 26, 1996, between
the Company and Mr. Proft entitles Mr. Proft to an annual salary of $140,000.
In addition, as inducement to Mr. Proft to enter into such employment agreement,
this agreement entitles Mr. Proft to:  (i) warrants exercisable to purchase
40,000 shares of Common Stock at an exercise price of $0.01 per share, of which
warrants exercisable to purchase 20,000 shares of Common Stock became
exercisable on September 19, 1996, with one-half of the remaining warrants
becoming exercisable on each of September 19, 1997 and 1998; (ii) non-qualified
stock options, pursuant to the Company's Stock Option Plan, to purchase 20,000
shares of Common Stock at $1.59 per share (representing a discount of 25% from
market price on June 28, 1996), which options were granted on July 1, 1996 and
which are exercisable in three equal annual installments commencing July 1997,
and which expire July 2006; (iii) a cash bonus of $25,000 on March 31, 1997 to
be applied to any tax liability arising from the grant of warrants if Mr. Proft
remains in the employ of the Company on such date; (iv) cash compensation from
February 1, 1997 and March 31, 1997 equal to an aggregate of $3,710 (35% of the
difference between the actual closing price per share of the Common Stock on
June 28, 1996 of $2 1/8 and $1.59, times 20,000 options) to cover the tax effect
of such option grant; (v) incentive stock options exercisable to purchase 25,000
shares of Common Stock, which options were granted on December 5, 1996 and which
are exercisable in three installments commencing on the first anniversary of the
date of grant; (vi) reimbursement of certain relocation expenses (including
those associated with an earlier move to another entity); (vii) a mortgage
assistance loan of $25,000 at an annual interest rate of 6.75%, secured by a
second mortgage on Mr. Proft's residence (with only interest due for the first
two years, principal being due in five annual installments thereafter, with the
entire balance being payable within thirty days of the termination of Mr.
Proft's employment with the Company); and  (viii) a cash signing bonus of
$10,000 payable in equal installments on July 31, 1996 and August 31, 1996.  The
issuance of the 20,000 shares of Common Stock to Mr. Proft upon exercise of
20,000 of the above-described warrants was subject to the right of the Company
to repurchase any or all of such shares at a price of $0.01 per share if Mr.
Proft did not remain an employee of the Company as of September 19, 1997.

The provisions in Mr. Proft's letter agreement regarding payments related to tax
liability were modified by an oral agreement between the Company and Mr. Proft,
which the parties intend to memorialize in a written agreement. Pursuant to such
letter agreement, Mr. Proft and the Company have agreed to defer the

                                       20
<PAGE>
 
payment of such amount with respect to the grant of 20,000 options, being 35%
of the difference between (i) the actual closing price per share of the Common
Stock on the date of exercise of all or a portion of the 20,000 options, and
(ii) $1.59, times the number of options exercised, until 30 days after the date
on which Mr. Proft actually incurs taxable income with respect to such options.
In addition, with respect to the payment to be made to Mr. Proft by the Company
with respect to 30,000 of the warrants, the parties have agreed that $24,057
will be paid to Mr. Proft within 30 days after the end of calendar year 1997.
With respect to the payment to be made to Mr. Proft by the Company with respect
to the remaining 10,000 warrants, the parties have agreed that the Company will
pay to Mr. Proft 33% of the difference between (i) the actual closing price per
share of the Common Stock on September 19, 1998, and (ii) $0.01, times 10,000,
within 30 days after the end of calendar year 1998, for a maximum payment with
respect to such 10,000 warrants of $20,943. As of October 1, 1997, Mr. Proft had
exercised 20,000 of his warrants and none of his options.

Wendy A. Gavaghan's employment with the Company and Wright terminated as of
March 15, 1997.  Ms. Gavaghan had been Corporate Controller and Secretary of the
Company and Secretary and a director of Wright.  Pursuant to an agreement dated
as of June 5, 1997 among the Company, Wright and Ms. Gavaghan, the Company
agreed to pay to Ms. Gavaghan $19,232 as payment in full of all accrued vacation
owed to Ms. Gavaghan, and agreed to pay her base salary then in effect, being
$125,000, semi-monthly until March 15, 1998 (the "First Anniversary").  In
addition, the Company agreed to provide Ms. Gavaghan with health and medical
benefits at the Company's cost until the First Anniversary.  The Company also
agreed to pay to Ms. Gavaghan, on or prior to May 31, 1998, a severance payment
in the amount of $36,750.  Ms. Gavaghan and the Company agreed to the
cancellation, effective as of July 30, 1997, of incentive stock options
exercisable to purchase 12,000 shares of Common Stock at an exercise price of
$1.78 previously issued to Ms. Gavaghan as of December 5, 1996 and 1,500 share
appreciation rights previously issued to Ms. Gavaghan as of July 19, 1994.
Finally, Ms. Gavaghan agreed that on or prior to May 31, 1998, she will exercise
in full options granted to her by the Company as of April 30, 1996, being
incentive stock options exercisable to purchase 24,500 shares of Common Stock at
an exercise price of $1.50 per share.

COMPENSATION OF DIRECTORS

Effective for the fiscal year ended June 30, 1997, non-employee directors became
entitled to receive compensation comprised of such number of shares of Common
Stock as shall have a fair market value equal to $10,000, such fee to be paid in
arrears within thirty days of the last day of fiscal year 1997.  For each fiscal
year thereafter, all non-employee directors who remain as such as of the last
day of any given fiscal quarter shall be issued quarterly, in arrears, within
sixty days of the last day of each fiscal quarter, such number of shares of
Common Stock as shall have a fair market value equal to $2,500.  Directors are
reimbursed for expenses reasonably incurred in connection with the performance
of their duties.

                                       21
<PAGE>
 
Item 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following tables set forth, as of October 1, 1997, information regarding
beneficial ownership of the Company's Common Stock by (i) each person who is
known by the Company to own beneficially more than 5% of the outstanding Common
Stock (based on information furnished to the Company on behalf of such persons
or otherwise known to the Company), (ii) each of the directors of the Company,
(iii) each of the executive officers named in the Annual Compensation table set
forth under "Executive Compensation" below, and (iii) all directors and
executive officers as a group.

                                  COMMON STOCK
<TABLE>
<CAPTION>
                                                                        Percentage of
Name and Address                         Amount and Nature of           Common Stock
of Beneficial Owner                      Beneficial Ownership           Outstanding  (1)
-------------------                      --------------------           ----------------
<S>                                      <C>                   <C>      <C>
Harbour Holdings Limited Partnership                1,964,765                      11.5%
1281 Main Street
Stamford, Connecticut  06902

Harbour Investment Corporation                      1,964,765   (2)                11.5%
1281 Main Street
Stamford, Connecticut  06902

Raychem Corporation                                 2,380,000   (3)                12.2%
300 Constitution Drive
Menlo Park, CA   94025

Connecticut Innovations,                            3,041,963   (4)                15.8%
Incorporated ("CII")
40 Cold Spring Road
Rocky Hill, CT  06067

FirstInvest Holding Ltd Inc.                        4,230,000                      24.7%
Ch. des Primeveres 45
1701 Fribourg, Switzerland

Conoreq S.A.                                        1,413,236                       8.3%
Ch. des Primeveres 45
1701 Fribourg, Switzerland

James G. Binch                                      2,187,997   (5)(6)             12.7%
362 Canoe Hill Road
New Canaan, CT  06840

Nicholas J. Grant                                      47,708                      *
Materials Sciences and                                                  
  Engineering Department
Massachusetts Institute of Technology
Cambridge, Massachusetts  02139
 
Jack H. Halperin, Esq.                                 28,524                      *
361 Silver Court
Woodmere, New York  11598
</TABLE> 

                                       22
<PAGE>
 
<TABLE> 
<CAPTION> 

Name and Address                         Amount and Nature of           Common Stock
of Beneficial Owner                      Beneficial Ownership           Outstanding  (1)
-------------------                      --------------------           ----------------
<S>                                      <C>                   <C>      <C>

W. Andrew Krusen, Jr.                           333,352        (7)             1.9%
Dominion Financial Group
 Incorporated
2909 Bay-to-Bay Blvd., Suite 200
Tampa, Florida  33629

John A. Morgan                                   68,208        (8)              *
121 Elderwood Avenue
Pelham, New York  10803

William H. Morton, Jr.                          122,000        (9)              *
Memry Corporation
57 Commerce Drive
Brookfield, Connecticut  06804

James Proft                                      36,667        (10)             *
Memry Corporation
4065 Campbell Avenue
Menlo Park, California  94025

Wendy A. Gavaghan                                30,383        (11)             *
312 Popes Island Road
Milford, Connecticut  06460

All directors and                             2,814,456        (12)           16.2%
executive officers as
a group (7 persons)
</TABLE>
________________________________
*    Less than one percent.

(1)  In each case where shares subject to warrants or options are included as
     beneficially owned by an individual or group, the percentage of all shares
     owned by such individual or group is calculated as if all such warrants or
     options had been exercised prior to such calculation.

(2)  Comprised of the 1,964,765 shares of Common Stock beneficially owned by
     Harbour Holdings Limited Partnership. Harbour Investment Corporation is the
     sole general partner of Harbour Holdings Limited Partnership.

(3)  Comprised of 1,250,000 shares of Common Stock for which warrants owned by
     Raychem Corporation may be exercised at an exercise price of $2.00 per
     share, and 1,130,000 shares of Common Stock for which warrants owned by
     Raychem Corporation may be exercised at an exercise price of $0.01 per
     share, all of which warrants expire on June 28, 2003.

(4)  Includes (i) 1,282,450 shares of Common Stock for which Class I warrants
     issued by the Company to CII may be exercised at $0.853 per share, which
     warrants expire on April 25, 2002, (ii) 705,485 shares of Common Stock for
     which Class II warrants issued by the Company to CII may be exercised at
     $1.19 per share, which warrants expire on April 25, 2002, and (iii) 100,000
     shares of Common Stock for which Class III warrants issued by the Company
     to CII may be exercised at $1.00 per share, which warrants expire on May 5,
     2008. The expiration dates of these warrants are subject to extension under
     certain circumstances.

(5)  Includes currently exercisable options to purchase 152,000 shares of the
     Common Stock at $1.50 per share. Additional options granted to Mr. Binch to
     purchase 48,000 shares of Common Stock at $1.50 per share are not

                                       23
<PAGE>
 
     yet exercisable.  Also includes 232 shares of Common Stock owned by Mr.
     Binch's daughter.  Mr. Binch disclaims beneficial ownership of such shares
     owned by his daughter.

(6)  Mr. Binch is the President, Chief Executive Officer and sole shareholder of
     Harbour Investment Corporation, the sole general partner of Harbour
     Holdings Limited Partnership. He is also individually a limited partner of
     Harbour Holdings Limited Partnership, with a limited partnership interest
     of less than one percent.
 
(7)  Includes 71,328 shares of Common Stock owned by Dominion Partners, 20,000
     shares of Common Stock owned by 169855 Canada Inc., 8,000 shares of Common
     Stock owned by Krusen-Vogt & Co, 200,000 shares of Common Stock owned by
     Dominion Financial Group International LDC ("LDC") and 18,000 shares of
     Common Stock for which warrants issued by the Company to LDC may be
     exercised at $1.50 per share, which warrants expire on July 15, 1999.  Mr.
     Krusen is the President and a principal shareholder of Dominion Financial
     Group, Inc. which is the managing General Partner of Dominion Partners,
     President of 169855 Canada Inc., and a General Partner of Krusen-Vogt & Co.
     In addition, Mr. Krusen is the chairman of the Executive Committee of LDC,
     and also indirectly beneficially owns certain outstanding securities of LDC
     through Dominion Partners and through Dominion Financial Group, Inc.
 
(8)  1,307 of such shares of Common Stock are owned jointly by Mr. Morgan and
     his wife, Deborah Morgan. Another 120 of such shares of Common Stock are
     owned solely by Mrs. Morgan, and Mr. Morgan disclaims beneficial ownership
     of such 120 shares. Another 10,000 of such shares are owned by a trust for
     Annette Morgan for which Mr. Morgan is the trustee.

(9)  Includes options to purchase 50,000 shares of the Company's Common Stock at
     $0.90 per share, 25,000 of which become exercisable November 7, 1997 as
     well as warrants issued to Mr. Morton's wife, Dawn Morton, to purchase
     18,000 shares of Common Stock at a purchase price of $1.50 per share, which
     warrants expire on July 16, 1999. Additional options granted to Mr. Morton
     to purchase 75,000 shares of Common Stock at $0.90 per share are not yet
     exercisable.

(10) Includes options to purchase 6,667 shares of the Company's Common Stock at
     $1.59 per share which became exercisable July 1, 1997 as well as warrants
     to purchase 10,000 shares of Common Stock at a purchase price of $0.01 per
     share, which warrants expire on September 30, 2003.

(11) Includes options to purchase 24,500 shares of the Company's Common Stock at
     $1.50 per share.

(12) See preceding footnotes.  Excludes securities of the Company beneficially
     owned by Wendy A. Gavaghan, whose employment with the Company terminated as
     of March 15, 1997.
                              ___________________

                                       24
<PAGE>
 
Item 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Pursuant to a Convertible Subordinated Debenture Purchase Agreement, dated as of
December 22, 1994 (the "Purchase Agreement"), the Company issued to CII the
following securities (the "CII Securities") for an aggregate consideration
(comprised of cash and forgiveness of indebtedness) of $750,000:  (i) a
Convertible Subordinated Debenture dated December 22, 1994 from the Company to
CII in the principal amount of $763,208 (the "Debenture"), (ii) a warrant dated
December 22, 1994 to purchase 508,805 shares of Common Stock at an initial
exercise price of $2.15 per share (the "Class I Warrants"), (iii) a warrant
dated December 22, 1994 to purchase 305,283 shares of Common Stock at an initial
exercise price of $2.75 per share (the "Class II Warrants"), and (iv) a warrant
dated December 22, 1994 to purchase 100,000 shares of Common Stock at an initial
exercise price of $1.00, such warrant being an amendment and restatement of a
warrant previously held by CII to purchase 10,000 shares of Common Stock at an
exercise price of $10.00 per share.  On October 12, 1995, the Purchase Agreement
and the CII Securities were modified, such that the Debenture became convertible
into 954,010 shares of Common Stock, and due to anti-dilution provisions, the
Class I Warrants became exercisable for 1,176,269 shares of Common Stock at an
exercise price of $0.93  per share and the Class II Warrants became exercisable
for 705,485 shares of Common Stock at an exercise price of $1.19 per share.  The
number of shares of Common Stock for which the Class III Warrants were
exercisable remained the same, but the exercise price per share was adjusted to
$0.65.  On June 24, 1996, the parties agreed that in order to help the Company
market the Common Stock sold to fund the acquisition of Raychem Corporation's
nickel-titanium product line, CII would convert the Debenture into equity, and a
further amendment to the Purchase Agreement was executed by CII and the Company,
which amendment became effective on June 28, 1996.  Pursuant to such further
amendment, on June 28, 1996, the Debenture was converted into 285,528 shares of
Common Stock and 66.85 shares of Series H Preferred Stock (the "Series H
Shares").  The parties agreed that additional shares of Common Stock which were
issuable to CII due to a penalty adjustment provision of the Debenture would be
folded into the Class I Warrants.  Accordingly, the number of shares of Common
Stock for which the Class I Warrants are exercisable was increased to 1,282,450,
with the exercise price per share of such Class I Warrants being adjusted to
$0.853 per share.  The Class II and Class III Warrants were not adjusted.  As of
the close of business on September 4, 1996, all of the Series H Shares
automatically were converted into 668,500 shares of Common Stock, pursuant to
the terms of the Certificate of Designations, Rights and Preferences of the
Series H Preferred Stock.  The Class I, II and III Warrants are subject to
certain antidilution rights.  CII also has been granted a "put" right if, among
other things, the Company ceases to maintain its principal offices and certain
operations within the State of Connecticut or fails to maintain the
effectiveness of a registration statement covering the resale of its securities.
Upon CII's exercise of its put, the Company would be obligated to purchase from
CII all CII Securities and Registrable Securities held at that time by CII for a
price equal to the greater of (x) the then current market price of such CII
Securities and Registrable Securities (on an as-converted basis) and (y) $2.00,
multiplied by the number of CII Securities and Registrable Securities (on an as-
converted basis), less in the case of Common Stock issued upon the exercise of
the Class I Warrants, the Class II Warrants or Class III Warrants, any exercise
price paid to acquire Common Stock.  As of October 1, 1997, CII beneficially
owned more than five percent of the Common Stock.

On June 26, 1995 and July 17, 1995, FirstInvest Holding Ltd. Inc.
("FirstInvest") purchased 193 shares and 230 shares, respectively, of Series G
Preferred Stock ("G Preferred") of the Company at a per share price of $6,500
for an aggregate purchase price of $2,749,500.  At the time of this transaction,
FirstInvest was not a holder of any securities of the Company, and such
transaction was negotiated on an arm's length basis.  On June 25, 1996,
FirstInvest voluntarily converted 126.9 shares of Series G Preferred Stock into
1,269,000 shares of Common Stock of the Company.  As of the close of business on
September 4, 1996, the remaining 296.1 shares of Series G Preferred Stock owned
by FirstInvest automatically were converted into 2,960,000 shares of Common
Stock.  As of October 1, 1997, FirstInvest beneficially owned more than five
percent of the Common Stock.

On November 7, 1995, William H. Morton, Jr. joined the Company as Senior Vice
President and Chief Operating Officer.  Pursuant to the terms of the employment
agreement between the Company and Mr. Morton, as consideration for past services
rendered by either Mr. Morton individually or through The Risor Corporation, the
Company granted to Mr. Morton 50,000 shares of Common Stock and agreed to pay
$50,000 to The Risor Corporation.  See "Item 10.  EXECUTIVE COMPENSATION."

                                       25
<PAGE>
 
On March 28, 1996, Conoreq S.A. purchased 295,118 shares of Common Stock for
$0.85 per share, for an aggregate purchase price of $250,850.30.  Subsequently,
on May 17, 1996, Conoreq S.A. purchased an additional 118,118 shares of Common
Stock for $0.85 per share, for an aggregate purchase price of $100,400.30, and
on June 28, 1996, purchased 1,000,000 shares of Common Stock for a purchase
price of $2,000,000.  As of October 1, 1997, Conoreq S.A. owned more than 5% of
the Common Stock.

On June 28, 1996, the Company consummated the purchase from Raychem Corporation,
a Delaware corporation ("Raychem"), of certain tangible assets (primarily
consisting of leasehold improvements, machinery and equipment and inventory) and
intangible assets (primarily consisting of patents, other intellectual property,
goodwill and certain contractual rights) constituting Raychem's shape memory
metals components business.  The purchase did not include Raychem's patents and
related intellectual property relating to the production of certain medical
instruments.  The purchase price paid by the Company to Raychem consisted of the
following:  (i) the payment of $3,650,000 in cash; (ii) a $350,000 promissory
note, accruing interest at the rate of 10% per annum and secured by a first lien
security interest in the tangible property being acquired by the Company from
Raychem; (iii) warrants to purchase 1,250,000 shares of the Company's common
stock, par value $0.01 per share ("Common Stock"), at an exercise price of $2.00
per share; (iv) warrants to purchase an additional 1,130,000 shares of Common
Stock at an exercise price of $0.01 per share; and (v) the assumption of certain
specified liabilities relating to the assets being acquired, including $200,000
in severance obligations being incurred by Raychem.  In addition, the Company
and Raychem entered into a number of agreements regarding the ongoing
relationship between Raychem and the Company, including an agreement under which
the Company will manufacture and sell shape memory alloy components to Raychem.
The latter agreement was amended and restated as of February 19, 1997, with an
effective date as of December 20, 1996.  The purchase price paid by the Company
to Raychem pursuant to the aforesaid transaction was determined by arms-length
bargaining between two non-affiliated parties.  No material relationship existed
between Raychem and the Company (including any of the Company's affiliates,
directors, officers or their associates) prior to the consummation of the
transaction.  The $350,000 promissory note from the Company to Raychem was
repaid in full on August 9, 1996.  As of October 1, 1997, Raychem owned more
than 5% of the Common Stock.

The funds that the Company used to pay Raychem the cash portion of the purchase
price were obtained through the sale by the Company on June 28, 1996 of
2,000,000 shares of Common Stock to three sophisticated European investors for a
purchase price of $2.00 per share, including sales to Conoreq S.A. (which, as
described above, purchased 1,000,000 of such shares) and Group Des Assurances
Nationales (which, as described above, purchased 250,000 of such shares).

On July 15 and 16, 1996, as part of bridge financing for working capital
purposes until financing could be obtained from Affiliated Business Credit
Corporation, the Company borrowed $100,000 from each of Dawn Morton and Dominion
Capital Partners (for an aggregate of $200,000), at an annual interest rate of
10%, such notes to be due on the earlier of August 15, 1996 and the date of
consummation of financing in the amount of at least $1,500,000 from Affiliated
Business Credit Corporation to the Company.  As additional consideration for
such loans, the Company issued to each of Ms. Morton and Dominion Capital
Partners warrants exercisable to purchase 18,000 shares of Common Stock at an
exercise price of $1.50 per share.  Each of Ms. Morton and DFG Management, Inc.
was also paid a facility fee of $5,000 in connection with such bridge financing.
These notes were paid in full by the Company on August 9, 1996.  Ms. Morton is
the wife of William H. Morton, Jr., the Company's Senior Vice President and
Chief Operating Officer.  The managing general partner of Dominion Partners is
Dominion Financial Group, Inc., of which W. Andrew Krusen, Jr. is a principal
shareholder and the President.  In addition, Mr. Krusen is the sole stockholder
of DFG Management, Inc.

On July 23, 1996, James Proft joined the Company as Vice President and General
Manager - Western Operations.  For the terms of Mr. Proft's employment
agreement, see "Item 10.  EXECUTIVE COMPENSATION."  In addition, on September
20, 1996, the Company loaned to Mr. Proft $45,000 at an annual interest rate of
6-3/4%, in connection with certain relocation expenses of Mr. Proft.  This loan
was repaid in full on October 16, 1996.  In addition, as of December 5, 1996,
the Company issued to Mr. Proft 20,000 shares of Common Stock, which represented
the exercise by Mr. Proft of warrants to purchase Common Stock at $0.01 per
share.

Wendy A. Gavaghan's employment with the Company and Wright terminated as of
March 15, 1997.  Ms. Gavaghan had been Corporate Controller and Secretary of the
Company and Secretary and a director of Wright.  The Company, Wright

                                       26
<PAGE>
 
and Ms. Gavaghan entered into an agreement, dated as of June 5, 1997, regarding
severance arrangements.  See "Item 10.  EXECUTIVE COMPENSATION."

On June 26, 1997, the Company sold 200,000 shares of its Common Stock, to
Dominion Financial Group International LDC, a Cayman Islands corporation
("LDC"), for total consideration of $300,000.  Such sale was part of an offering
of 380,000 shares of Common Stock at $1.50 per share from April 1997 through
July 1997.  The sale to LDC was exempt from registration pursuant to the terms
of Regulation S promulgated under the Securities Act of 1933, as amended.  W.
Andrew Krusen, Jr., a director of the Company, is the chairman of the executive
committee of LDC and also indirectly beneficially owns certain outstanding
securities of LDC through Dominion Partners, of which Dominion Financial Group,
Inc. (as to which Mr. Krusen is President and a principal shareholder) ("DFGI")
is the managing general partner and immediate family members of Mr. Krusen are
the remaining partners, and through DFGI itself.

                                       27
<PAGE>
 
Item 13.  EXHIBITS AND REPORTS ON FORM 8-K

  (a)   Exhibits 

        The Exhbits listed in the Index to Exhibits following the Signature 
        Page herein are filed as part of this Annual Report on Form 10-KSB.

  (b)   Reports on Form 8-K

        The company filed a Form 8-K on May 5, 1997 with respect to disclosure
        regarding "Item 5. Other Events," to file the Company's April 16, 1997
        press release regarding the Company's receipt of a two-year exclusive
        blanket purchase order from United States Surgical Corporation for the
        supply of medical instrument assemblies, commencing April 1, 1997. A
        Form 8-K was also filed on June 25, 1997 with respect to disclosure
        regarding "Item 2. Acquisition or Disposition of Assets" and "Item 7.
        Financial Statements and Exhibits," disclosing the execution of a
        Purchase Agreement between Wright and Thomas Industries Auction and
        Liquidation Corporation regarding the sale of substantially all of the
        machinery and equipment of Wright. In addition, on July 10, 1997 a Form
        8-K was filed with respect to disclosure regarding "Item 9. Sales of
        Equity Securities pursuant to Regulation S," disclosing the sale of
        200,000 shares of the Company's Common Stock to Dominion Financial Group
        International LDC pursuant to the terms of Regulation S promulgated
        under the Securities Act of 1933, as amended.


                                       28

<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:  October 28, 1997                     By:/s/James G. Binch
     ---------------------                     --------------------------------
                                                  James G. Binch
                                                  President, CEO,
                                                  Treasurer and
                                                  Chairman of the Board


                                       29
<PAGE>
 
                                 Exhibit Index


Exhibit
Number     Description of Exhibit
------     ----------------------
 
 
 3.1       Certificate of Incorporation of the Company, as amended   (9)
           
 3.2       By-Laws of the Company, as amended                        (8)
           
10.1       Lease Agreement, dated January 24, 1991,                  (1)
           between the Company and Brookfield Commerce,
           relating to 57 Commerce Drive, Brookfield, CT
           
10.2       Warrant Issued to Connecticut Innovations,                (2)
           Inc. ("CII") as of March 1, 1992
           
10.3       Employment Agreement, dated September 24,                 (3)
           1993, between the Company and James G. Binch
           
10.4       Agreement, dated January 25, 1993, between                (3)
           the Company and Sciatec, Inc.
 
10.5       SBIR Contract dated December 9, 1993 between              (4)
           the Company and NASA
 
10.6       Employee Non-Disclosure Agreement, dated as of            (4)
           October 18, 1994, between the Company and
           James G. Binch

                                       30
<PAGE>
 
Exhibit
Number     Description of Exhibit
------     ----------------------

10.7       Convertible Subordinated Debenture Purchase Agreement,   (8)
           dated as of December 22, 1994, between the Company and
           CII     
           
10.8       Escrow Agreement, dated as of December 22, 1994, among   (8)
           the Company, CII and Finn Dixon & Herling as escrow
           agent   
           
10.9       Form of Securities Purchase Agreement relating to sales   (5)
           of Series G Preferred Stock of the Company
           
10.10      First Amendment to Convertible Subordinated Debenture     (5)
           Purchase Agreement, dated October 11, 1995, between
           the Company and CII
           
10.11      First Addendum to Convertible Subordinated Debenture,     (5)
           dated October 11, 1995, made by the Company and agreed
           to by CII
 
10.12      First Addendum to Stock Subscription Warrant (re:         (5)
           Warrant No. 94-4), dated October 11, 1995, made by the
           Company and agreed to by CII
           
10.13      First Addendum to Stock Subscription Warrant (re:         (5)
           Warrant No. 94-5), dated October 11, 1995, made by the
           Company and agreed to by CII
           
10.14      First Addendum to Stock Subscription Warrant (re:         (5)
           Warrant No. 94-6), dated October 11, 1995, made by the
           Company and agreed to by CII
           
10.15      Amendment to Escrow Agreement, dated October 11, 1995,    (5)
           among the Company, CII and Finn Dixon & Herling as escrow
           agent
 
10.16      Employment Agreement, dated as of November 7, 1995,       (6)
           between the Company and William H. Morton, Jr.
           
10.17      Second Amendment to Convertible Subordinated Debenture    (8)
           Purchase Agreement, dated as of June 28, 1996, between
           the Company and CII
           
10.18      Second Amendment to Escrow Agreement, dated as of         (8)
           June 28, 1996, among the Company, CII and Finn
           Dixon & Herling as escrow agent

                                       31

<PAGE>
 
Exhibit
Number     Description of Exhibit
------     ----------------------

10.19      Amended and Restated Class I Warrant Certificate            (8)
           (Warrant Certificate No. 94-4A) issued by the
           Company to CII
 
10.20      Amended and Restated Class II Warrant Certificate           (8)
           (Warrant Certificate No. 94-5A) issued by the
           Company to CII
 
10.21      Second Addendum to Class III Warrants issued by the         (8)
           Company to CII
 
10.22      Sublease, dated as of June 28, 1996, between the Company    (7)
           and Raychem Corporation
           
10.23      Warrant Certificate exercisable for 1,130,000 shares of     (7)
           Common Stock, dated June 28, 1996, issued by the Company
           to Raychem Corporation,
           
10.24      Warrant Certificate exercisable for 1,250,000 shares of     (7)
           Common Stock, dated June 28, 1996, issued by the Company
           to Raychem Corporation,
           
10.25      Finders Fee Agreement, dated as of June 28, 1996, between   (7)
           the Company and Raychem Corporation,
           
10.26      Amended and Restated Asset Purchase Agreement               (7)
           between the Company and Raychem Corporation,
           dated May 10, 1996.
           
10.27      Letter Agreement, dated June 20, 1996, between              (7)
           the Company and Raychem Corporation.
           
10.28      Amendment No. 1 to Amended and Restated Purchase            (7)
           Agreement between the Company and Raychem
           Corporation, dated June 28, 1996.
           
10.29      Amendment No.2 to Amended and Restated Purchase Agreement   (8)
           between the Company and Raychem Corporation, dated
           August 11, 1996.
 
10.30      Amendment to Lease Agreement between the Company and        (8)
           Brookfield Commerce relating to 57 Commerce Drive,
           Brookfield, CT.
 
10.31      Warrant Cert. No. 96-4, dated as of July 16, 1996,          (8)
           issued to Dominion Capital Partners
           
10.32      Warrant Cert. No. 96-5, dated as of July 15, 1996,          (8)
           issued to Dawn M. Morton

                                       32

<PAGE>
 
Exhibit
Number     Description of Exhibit
------     ----------------------

10.33      Form of Securities Purchase Agreement relating to                (8)
           sales of Common Stock at $2.00 per share on
           June 28, 1996
                                                                              
10.34      Commercial Revolving Loan, Term Loan and Security                (8)
           Agreement, dated August 9, 1996, among the Company,
           Wright Machine Corporation and Affiliated Business
           Credit Corporation
           
10.35      Mortgage and Security Agreement dated as of August 9, 1996,      (8)
           from Wright Machine Corporation and Affiliated Business
           Credit Corporation
           
10.36      Letter Agreement, dated June 26, 1996, between the               (8)
           Company and James Proft
           
10.37      Letter Agreement, dated as of May 29, 1996, between Memry        (8)
           Corporation and Dominion Capital Partners re: stock issuance
 
10.38      Securities Purchase Agreement, dated as of December 9,           (8)
           1994, between Memry Corporation and Dominion Partners
 
10.39      Employee Agreement on Inventions and Patents, between            (8)
           the Company and James G. Binch
 
10.40      Memry Corporation Stock Option Plan, as amended                  (9)
 
10.41      Form of Nontransferable Incentive Stock Option Agreement         (9)
 
10.42      Form of Nontransferable Non-Qualified Stock Option               (9)
           Agreement
 
10.43      Warrant Certificate No. 96-7(A), dated as of January ___,       (11)
           1997, issued to James Proft
 
10.44      Purchase Agreement, dated as of May 12, 1997, between           (10)
           Wright and Thomas Industries Auction & Liquidation
           Corporation
 
10.45      Amended and Restated Tinel-Lock Supply Agreement,               (11)
           dated as of February 19, 1997, and effective as of
           December 20, 1996, between the Company and Raychem
           Corporation
 
10.46      Amended and Restated Private Label/Distribution                 (11)
           Agreement, dated as of February 19, 1997, and effective
           as of December 20, 1996, between the Company and
           Raychem Corporation*
 

                                       33

<PAGE>
 
Exhibit
Number     Description of Exhibit
------     ----------------------
 
10.47      Amendment No. 3 to Amended and Restated Purchase Agreement      (11)
           and Amendment No. 1 to Transitional Services Agreement
           between the Company and Raychem Corporation, dated as
           of February 19, 1997 and effective as of December 20, 1996
 
10.48      Agreement, dated as of June 5, 1997, between the Company        (11)
           and Wendy M. Gavaghan
 
10.49      Securities Purchase Agreement, dated as of June 26, 1997,       (11)
           between the Company and Dominion Financial Group
           International LDC

11         Statement re: Computation of Per Share Earnings                  (5)
 
21.1       Information regarding Wright Machine Corporation                (11)
 
27         Financial Data Schedule                                         (11)

-----------

(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 Quarterly Report on Form 10-Q
     for the fiscal quarter ended September 30, 1991.

(3)  Incorporated by reference to the Company's Annual Report on Form 10-KSB for
     the fiscal year ended June 30, 1993.

(4)  Incorporated by reference to the Company's Annual Report on Form
     10-KSB for the fiscal year ended June 30, 1994.

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

(6)  Incorporated by reference to the Company's Quarterly Report on Form 10-QSB
     for the fiscal quarter ended September 30, 1995.

(7)  Incorporated by reference to the Company's Current Report on Form 8-K filed
     July 15, 1996.

(8)  Incorporated by reference to the Company's Annual Report on Form 10-KSB for
     the fiscal year ended June 30, 1996, as amended.

                                       34

<PAGE>
 
(9)  Incorporated by reference to the Company's Quarterly Report on Form 10-QSB
     for the fiscal quarter ended December 31, 1996.

(10) Incorporated by reference to the Company's Current Report on Form 8-K filed
     June 25, 1997.

(11) Submitted herewith.


* Subject to a confidential treatment request.

                                       35