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

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                 ___________

                                  FORM 10-K

                           FOR ANNUAL AND TRANSITION
                         REPORTS PURSUANT TO SECTIONS
                        13 OR 15(d) OF THE SECURITIES
                            EXCHANGE ACT OF 1934

            [x]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                 OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
                      FISCAL YEAR ENDED MARCH 31, 1997,
                                       OR
            [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                 OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
                 TRANSITION PERIOD FROM  __________ TO _______.
                           COMMISSION FILE NUMBER 0-26924

                                AMX CORPORATION
             (Exact name of registrant as specified in its charter)

              TEXAS                                   75-1815822
  (State or other jurisdiction of                 (I.R.S. Employer
   incorporation or organization)                 Identification no.)
 11995 FORESTGATE DRIVE, DALLAS, TEXAS                  75243
(Address of principal executive offices)             (Zip Code)

Registrant's telephone number, including area code: (972) 644-3048

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to
 Section 12(g) of the Act:                      COMMON STOCK, $0.01 PAR VALUE
                                                       (Title of Class)

    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or 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
                                        ---     ---
    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  [X]

    The aggregate market value of the voting stock (which consists solely of
shares of Common Stock) held by non-affiliates of the registrant as of May 31,
1997, computed by reference to the closing sales price of the registrant's
Common Stock on the Nasdaq National Market on such date, was approximately
$14,143,833.

    The number of shares of the registrant's Common Stock outstanding as of
June 20, 1997 was 7,830,226.

                       DOCUMENTS INCORPORATED BY REFERENCE

    Portions of the registrant's Proxy Statement for the 1997 Annual Meeting of
Shareholders are incorporated by reference into Part III hereof.

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                                   PART I

ITEM 1.  BUSINESS.
OVERVIEW

    AMX Corporation, a Texas corporation ("AMX" or the "Company" or the
"Registrant"), which was incorporated in March 1982, is a leading designer,
developer, manufacturer and marketer of integrated remote control systems that
enable end users to operate as a single system a broad range of electronic and
programmable equipment in a variety of corporate, educational, industrial,
entertainment, governmental, and residential settings. The Company's hardware
and software products provide the operating system, machine control, and user
interface necessary to operate as an integrated network electronic devices from
different manufacturers through easy-to-use control panels. The Company's
systems provide centralized control of a wide range of video systems, audio
systems, teleconferencing equipment, educational media, lighting equipment,
environmental control systems, security systems, and other electronic devices.
The Company maintains a proprietary database of control and communication
protocols for over 10,000 different electronic devices containing information
gathered and developed by the Company. The architecture of this database,
together with the Company's experience in gathering this information,
facilitates the integration of new devices as they are introduced. The Company's
systems can readily accommodate evolving technologies because the Company's
AXCESS software allows systems to be customized and upgraded to control new
electronic devices using a broad variety of control formats. Since its
incorporation in March 1982, the Company has sold over 25,000 integrated remote
control systems.

    Applications in the COMMERCIAL MARKET for the Company's remote control
systems include: use for presentations in corporate board rooms and business
training centers; audio-visual controls for hotel, meeting and convention
facilities; security camera control, video distribution, and public address
systems for stadiums and theme parks; multimedia and teleconferencing support
for government and military facilities; and decision support centers for
industrial applications. The Company has developed hardware and software
products specifically for the EDUCATION MARKET designed to enhance the
educational experience and improve productivity of teachers and administrators.
These products are used to manage, schedule, and control media retrieval and
distribution, distance learning, and interactive education for schools. In the
RESIDENTIAL MARKET, the Company's products enable individuals to create an
integrated home automation system which can control such items as audio, video
and home theater systems, lighting, motorized drapes, heating and air
conditioning units, closed circuit cameras, security systems, and other home
electronic equipment.

    The Company's system sales are made through dealers and distributors who
are supported by a network of independent manufacturers' representatives. The
Company principally relies on over 1,600 specialized third-party dealers of
electronic and audio-visual equipment to sell, install, support, and service its
products in the United States. Internationally, the Company relies on a network
of 20 exclusive distributors serving 24 countries and over 51 dealers serving an
additional 22 countries to distribute its products. Dealers and distributors can
use the AMX software to tailor the Company's control system for each
installation. The Company also sells various customized products, primarily user
interface devices, to OEMs and other large customers.

    The Company believes that the market for its products has grown due to the
greater affordability, increased functionality, and more widespread use of a
diverse array of electronic devices, particularly sophisticated audio, video,
and presentation equipment, many of which now employ microprocessors and other
electronic features. Many of these devices have separate control systems that
are incompatible due to the absence of any one widely accepted control standard.
In many settings, devices from several manufacturers are used, resulting in the
presence of multiple control units that can be confusing and cumbersome to the
user. This creates a need for products such as those produced by the Company.

    The Company's strategy is to take advantage of the growth in the market for
its products by bringing the power and flexibility of remote control technology
to a wide variety of settings. Elements of the Company's strategy include:

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    -    leveraging distribution channels by introducing new products, entering
         into strategic alliances, and acquiring complementary products and
         technologies;

    -    developing new software to target specific vertical markets and to
         simplify system programming in order to expand system sales;

    -    continuing to emphasize customer support and service in order to
         maintain and enhance market share;

    -    expanding international distribution;

    -    targeting the development of OEM relationships and custom product
         sales to large customers; and

    -    providing flexible systems to accommodate emerging technologies.

MARKET AND INDUSTRY OVERVIEW

    One of the first widespread uses of wireless remote control technology was
garage door openers. From this particular application in the 1970s, a number of
companies developed technologies for the wireless operation of slide projectors.
In the 1980s, the widespread adoption of microprocessors enabled the development
of embedded systems that were easier to use and made possible the operation of
sophisticated electronic devices using a control command system. The widespread
adoption of products using microprocessors has also increased the availability
and the use of other electronic and programmable equipment over the past decade.
This growth has been fueled by increased affordability and performance of this
equipment and has created a demand for integrated remote control systems in the
commercial, education, and residential markets.

    The Company's products are designed to simplify the user's control of
complex and sophisticated electronic devices. The Company's products are
suitable for use in a wide variety of settings and vertical markets. The
Company's products are currently used most commonly in the following settings:

COMMERCIAL

     CORPORATE.  In the corporate setting, the Company's systems are used in
board rooms, conference and meeting rooms, convention centers, auditoriums,
training centers, and teleconferencing facilities. Typical applications include
integrated control of a wide variety of audio and visual presentation equipment,
such as video projectors, VCRs, laser disc players, computers, and sound
systems, as well as lighting and temperature controls and window coverings. The
Company believes that an increasing portion of the board, conference, meeting,
and training rooms constructed or remodeled are being designed to include
integrated remote control systems. The Company believes that it is one of the
largest providers of integrated control systems to this market and that this
market represents a significant opportunity for its products. AMX control
systems are used in the facilities of over 70% of the Fortune 500 companies,
including Electronic Data Systems ("EDS"), Intel, Enron, AT&T, Sony, American
Airlines, Exxon, Coca Cola, and Motorola.

     SPORTS.  The Company's systems are currently being used in stadiums and
other sports facilities across the United States, including Camden Yards, The
Ballpark in Arlington, the Georgia Dome, and the United Center in Chicago.
Applications typically include controlling audio and video systems, switchers
and routers, and surveillance cameras.

     ENTERTAINMENT.  The Company's systems are used in various museums and
amusement parks across the United States, including EPCOT Center, Sea World,
Virginia Air and Space Museum, JFK Museum, Universal Studios, Busch Gardens, and
the Rock and Roll Hall of Fame. Applications typically include

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controlling audio and visual systems and electronic and mechanical equipment
used in exhibits and special effects.

     INDUSTRIAL.  The Company's systems are currently being used in decision
support centers in industrial settings such as the Network Emergency Response
Assistance Center of Bell South Services, Inc., the Decision Command Center of
Burlington Northern Railroad, and the Network Operations Center of EDS. Typical
applications include control of large screen video displays and video routing
equipment.

     GOVERNMENT.  The Company's systems are being used by federal, state, and
local government entities such as the State of Maryland Intelligent Highway
Vehicle Control System, the California Senate, the Louisiana House of
Representatives, the Library of Congress in Washington, D.C., and war rooms at
the U.S. Army War College. Typical applications include audio visual equipment
control, video routing and distribution, video teleconferencing, and voting and
request-to-speak systems.

EDUCATION

    Consistent with its business strategy of developing software for specific
vertical markets, the Company has developed an array of products targeted at
schools, colleges, and universities. In this market, the Company provides a
media retrieval and distance learning system, as well as audio-visual and
multimedia controls for lecture halls and auditoriums. According to a market
research firm, there are over 105,000 primary and secondary schools and 8,900
colleges and universities in the United States. The Company's media retrieval
systems have been installed in over 220 educational institutions, including the
Singapore American School, the University of Notre Dame, the University of Texas
at Dallas, the Dallas Independent School District, and the Edina School District
of Minnesota located in the Minneapolis metropolitan area. The Company believes
that the education market represents a significant market opportunity.

RESIDENTIAL

    The Company interfaces its products with various electronic and
programmable equipment that are currently utilized in homes. The Company's
products enable individuals to create an integrated home automation system which
can control such items as audio, video and home theater systems, lighting,
motorized drapes, heating and air conditioning units, closed circuit cameras,
security systems, and other home electronic equipment. The Company, through its
majority owned subsidiary PHAST, has developed standardized control products
designed to increase its penetration of the residential market. Additionally,
the Company is now designing, manufacturing and marketing additional products
for upscale home systems through its recently acquired subsidiary, AudioEase.
The Company believes that the residential market for its products is
significant. According to Parks Associates, a market research firm, there are
approximately 40,000 new homes constructed in the United States each year having
a value greater than one million dollars. Of these homes, Parks Associates
estimates that approximately 80% are installing some form of intelligent
electronic control system.

BUSINESS STRATEGY

    The Company's strategy is to take advantage of the growth in the markets
for its main products by bringing the power and flexibility of remote control
technology to a wide variety of settings. Elements of the Company's strategy
include:

    -    LEVERAGING DISTRIBUTION CHANNELS BY INTRODUCING NEW PRODUCTS, ENTERING
         INTO STRATEGIC ALLIANCES AND ACQUIRING COMPLEMENTARY PRODUCTS AND
         TECHNOLOGIES. The Company believes that the AMX brand name and
         reputation for quality are well established in its primary
         distribution channels. The Company believes that it can take advantage
         of this strong reputation by marketing additional products or product
         applications through its existing distribution channels. The Company
         regularly evaluates opportunities to acquire complementary products
         and technologies and enter into strategic alliances, such as the

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         Company's acquisition of AudioEase and the recently announced
         agreement with IBM to utilize its Synergy software as a front end to
         their ATM products.

    -    DEVELOPING NEW SOFTWARE TO TARGET SPECIFIC VERTICAL MARKETS AND TO
         SIMPLIFY SYSTEM PROGRAMMING IN ORDER TO EXPAND SALES. The Company
         believes that many of its sales in certain end markets, such as
         lighting controls for the industrial market, have been made on an
         accommodation basis, without specific targeting of the application
         involved or of the end market itself. In contrast, the Company has
         dedicated substantial engineering resources to the development of
         proprietary software applications specifically tailored to the
         requirements of the education market. The Company believes that by
         investing in the development of software for certain targeted markets
         for which it does not now offer specific solutions, it can expand its
         penetration of these markets. In addition, the Company believes that
         enhanced software investment can increase system sales by simplifying
         programming requirements for its dealers. For example, the Company
         began distributing tools to enable dealers to more easily program the
         Company's systems by employing graphical user interfaces. The Company
         believes that these enhancements can provide its dealers with
         simplified customization techniques, reduce programming time, and
         enhance sales of the Company's products.

    -    CONTINUING TO EMPHASIZE CUSTOMER SUPPORT, SERVICE, AND TRAINING IN
         ORDER TO MAINTAIN AND ENHANCE MARKET SHARE. The Company believes that
         the support, service and training it provides to its customers are key
         competitive advantages. The Company provides technical support,
         on-site repair and support, as needed, and on-line software support to
         its dealers and end users, as well as extensive training for its
         dealers and distributors. The Company intends to continue its emphasis
         in this key area of competitive strength.

    -    EXPANDING INTERNATIONAL DISTRIBUTION. The Company currently markets
         its products outside the United States through a network of
         international distributors with exclusive rights to sell AMX products.
         The Company believes that the international market is relatively
         underpenetrated and that, by expanding its distribution presence
         overseas, it can expand international sales. In June 1993, the Company
         purchased AXCESS Technology, Ltd., a distributor of electronic
         equipment based in the United Kingdom. In August 1995 the Company
         formed its subsidiary AMX Control Systems, Ltd. Pte. in Singapore to
         provide technical support and training for Asia and the Pacific Rim.
         The Company also has a representative in Canada.

    -    TARGETING THE DEVELOPMENT OF OEM RELATIONSHIPS AND CUSTOM PRODUCT
         SALES TO LARGE CUSTOMERS. The Company currently manufactures products
         on a private label basis and designs specific solutions for certain
         OEMs such as Compression Labs, VTEL, and CBCI Telecom. In addition,
         the Company designs custom products for large customers such as
         Blockbuster Music and the Ritz-Carlton hotels. The Company believes
         that by targeting the further development of similar opportunities, it
         can increase the universe of applications for and sales of its
         products.

    -    PROVIDING FLEXIBLE SYSTEMS TO ACCOMMODATE EMERGING TECHNOLOGIES. The
         Company believes that an important competitive advantage is the
         flexible, modular design of its systems, which are expandable and
         which can accommodate a wide variety of control formats. This design
         maximizes the ability of the Company's products to accommodate new
         technologies in electronic devices as they are developed. The Company
         intends to expand this flexibility in order to continue to take
         advantage of the evolution and development of new and innovative
         technologies in the devices which its products control.

PRODUCT BENEFITS

    The Company believes that its products provide several key benefits that
have led to their adoption and use:

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EASE OF USE

    The Company's control panels enable users who do not have prior computer or
technical training to control a variety of complex and sophisticated electronic
devices. For example, the Company's TiltScreen and other touch panels facilitate
use of the Company's systems by providing a convenient, intuitive user
interface. The Company's systems enable users to efficiently and easily control
a number of audio-visual devices with the touch of a finger, facilitating
corporate presentations in the board room or the training center.

FLEXIBLE AND SCALABLE ARCHITECTURE

    The software and hardware components of the Company's systems are designed
to provide users with the flexibility and scalability to modify and expand their
systems as needs change. The Company's software allows the control panels to be
easily adapted to control additional products. The Company's hardware has a
modular design that enables users to install additional control cards or modules
as their systems expand or controlled devices are replaced. The Company's
systems are capable of communicating among devices using standard control
formats, including relays, IR, serial, RS-232/422/485, Musical Instrument
Digital Interface ("MIDI"), audio volume, Society of Motion Picture and
Television Engineers ("SMPTE"), as well as others. The Company has developed a
proprietary database of control and communication protocols for over 10,000
different electronic devices that contains information gathered and developed by
the Company to facilitate efficient system configuration.

CURRENT PRODUCTS

    The Company's current systems and products are offered in a variety of
configurations designed to meet the changing needs of individual end users. A
typical AMX system consists of a central controller, a series of device
interfaces, and one or more control panels or other user interfaces that enable
the user to manipulate those devices. Prices for a complete system vary
substantially depending upon the configuration of the system. The Company also
develops software to operate its systems, to serve as dealer development tools,
to simplify system design and programming, and to provide specific applications
for maintenance needs the Company has identified.

CENTRAL CONTROLLERS

    Each AMX system is driven by a central controller that employs a 32-bit
Motorola 68340 microprocessor. The Company offers four types of controllers
depending on system requirements.

 AXCESS CARDFRAME.  The AXCESS CardFrame is the Company's primary central
controller, which allows the highest degree of functionality and expandability
within the AXCESS family. Utilizing plug-in control cards, the AXCESS CardFrame
is fully modular in design and can be configured to meet the precise
specifications of a particular system. The AXCESS CardFrame system can control
virtually any electrical or programmable equipment, regardless of the control
format. The AXCESS CardFrame has slots for one or two enhanced master cards
(which control system operation), one server card (which manages communication
within the AXCESS CardFrame), and 16 control cards (which communicate with the
devices being controlled). By linking multiple AXCESS CardFrames, each system
can incorporate up to 255 device interfaces and, if necessary, multiple systems
can be combined.

 AXCENT.  AXCENT is an integrated controller that incorporates the most popular
features of the Company's full-sized AXCESS CardFrame but is specifically
designed for small to mid-sized control applications (typically installations
with 12 or fewer devices). This system offers all the power, programmability,
and reliability of the larger AXCESS CardFrame within a smaller enclosure.
AXCENT includes eight IR/serial ports, two RS-232 ports, two RS-232/422 ports,
12 relays, and six solid-state input/output ports. The AXCENT system can be
expanded by additional CardFrames and AXlink bus devices.

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MINI CARDFRAME.  The AXCESS Mini CardFrame is used when control of only a 
small number of devices is required (typically three or less). With a 
built-in server card and slots for an enhanced master card and three control 
cards, the Mini CardFrame can act as a self-contained control system or be 
used to expand the capabilities of the Company's other central controllers. 

AXB-EM232.  The AXB-EM232 controller contains the processing and memory 
capability of an Enhanced Master Card combined with one RS-232 port and one 
RS-232/422/485 port in a single compact package. Fully compatible with the 
Company's AXCESS programming language, the AXB-EM232 can also be expanded 
with additional CardFrames and AXlink bus devices. The AXB-EM232 is designed 
primarily to be used to connect one or more of the Company's control panels 
to an RS-232 controlled device. 

USER INTERFACES

    The Company provides a wide variety of user interfaces as described below: 

TOUCH PANELS

TILTSCREEN.  The Company's TiltScreen Touch Panels are table-top consoles 
with touch sensitive displays. Their angle-adjustable displays provide 
personal viewing convenience and help eliminate glare from overhead lights. 
Simple commands and pull-down menus allow screens to be customized for any 
application. Each model includes options for button shapes and borders, text 
size with standard, outline, and shadow fonts, typewriter-style text editor, 
and multiple text and symbol layers for each button. The following three 
display options are currently available: color LCD (256 color display, 
640x480 pixels); electroluminescent (amber on black display, 640x400 pixels); 
and monochrome LCD (black on white display, 640x480 pixels). 

UNIMOUNT.  The UniMount Touch Panels are generally mounted in lecterns, 
walls, and countertops and offer the same menu-driven software features as 
the Company's TiltScreen Touch Panels. In addition, up to 16 external buttons 
may be added to the panels. UniMount Touch Panels are also available in 
standard 19-inch rack-mount panels. 

MINITILT.  The MiniTilt Touch Panel offers the same functionality as the 
larger TiltScreen. The following two display options are currently available: 
color LCD (256 color display, 320x240 pixels) and monochrome LCD (black on 
white display, 320x240 pixels). 

VIDEO WINDOWING

    The TiltScreen, the UniMount and the MiniTilt Touch Panels are now being 
ordered in models that support display of television quality video directly 
on the control panel. This new feature, which is called video windowing, 
displays on the touch panel the image being viewed by the audience on the 
screen controlled by the touch panel. Video windowing, however, is not 
available in the Company's wireless touch panels. 

  WIRELESS TOUCH PANELS

    The Company recently introduced its WAVE (Wireless AXlink Virtual 
Emulation) technology that allows the Company's touch panels to have 
interactive, two-way communications with AXCESS systems via a wireless spread 
spectrum radio frequency connection. The Company believes this technology, by 
eliminating the need for the AXlink cable and power at the touch panel, 
offers a significant advantage over previously available technology. The 
Company further believes that its WAVE technology will make the installation 
process substantially easier and create sales opportunities in applications 
previously not available to the Company. 


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  WIRELESS TRANSMITTERS

RF AND IR TRANSMITTERS.  The Company's wireless transmitters feature a 
microprocessor-based design for responsive, reliable transmission of either 
RF or IR signals. The TX series of wireless transmitters offers a 
cost-effective approach to system operation and is available in 16-, 32-, 
48-, and 64-button configurations to meet virtually any remote control 
requirement. The Mini-LCD wireless transmitter incorporates a programmable 
two-line, 16-character LCD display with 20 pushbuttons. The SoftKey wireless 
transmitter has a programmable, back-lit LCD display with multiple control 
screens, ten user-defined function keys, and a rechargeable battery pack. 

WALL PANELS

WIRED LCD PANELS.  The Company's wired LCD panels generally feature 
easy-to-read text displays and well-defined pushbutton layouts within a 
single, convenient package. System status and control options are clearly 
delineated on the programmable two-line, 16-character back-lit LCD display. 
The key pads of the mini-LCD panels incorporate a matrix of 20 buttons 
beneath a protective faceplate. Three wired LCD panels are available: the 
mini-LCD panel, the UniMount mini-LCD panel, and the four button UniMount 
softwire LCD panel. 

SOFTWIRE PANELS.  The Company's softwire series of wired panels may be 
configured to suit any type of installation. The standard softwire panel 
includes up to 64 pushbuttons with light-emitting diodes ("LEDs") to provide 
feedback to the user and up to three bargraphs for display of volume or 
lighting levels. Mini-softwire panels are smaller but offer a full range of 
custom options for simple pushbutton control of any electronic environment. 
The softwire panels are available in either UniMount or rack-mount versions. 

PERSONAL COMPUTERS

PCTOUCH AND PCCOM.  The Company's PCTouch Software, used in conjunction with 
its PCCOM hardware interface, allows a personal computer to serve as the user 
interface in an AMX system. When used with other Windows-Registered 
Trademark--based programs, PCTouch can integrate and control full motion 
video, audio, and other multimedia applications and equipment. PCTouch 
control screens can be operated using the computer's mouse or a 
touch-sensitive monitor. The client/server version of this application 
provides transparent connection to an AXCESS system from anywhere on a 
computer network. 

DEVICE INTERFACES

    The Company makes a wide variety of control cards and AXlink bus devices 
to communicate with the controlled equipment. Control cards are device 
interfaces that reside within the AXCESS CardFrame or Mini CardFrame whereas 
bus devices are stand alone device interfaces that can be remotely located. 
The following are the principal device interfaces manufactured by the 
Company: 

CONTROL CARDS.  The Company currently manufactures 31 different control 
cards. Each card is designed to interface with a specific type of equipment 
or protocol, including relays, infrared, serial, RS-232/422, MIDI, audio 
volume, SMPTE, and others. 

AXLINK BUS DEVICES.  The Company currently manufactures 15 different bus 
devices. Each bus device is designed to interface with a specific type of 
equipment or protocol, including relays, infrared, serial, RS-232/422/485, 
audio volume, and others. 

OTHER PRODUCTS

    The Company offers a variety of other products as described below: 

SYNERGY ELECTRONIC CLASSROOM SYSTEM.  The Company's Synergy Electronic 
Classroom System provides media management and scheduling, primarily in 
education facilities. The Synergy Windows-Registered Trademark--based 
software, when used with an AXCESS system, allows all electronic media to be 
centrally located and distributed via 

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broadband or baseband video to individual classroom television monitors as 
required. A wireless remote gives teachers control of the media selected. 
Client/Server software design permits remote scheduling and media control 
over the school's or the entire district's computer network. Built-in 
distance learning capabilities broaden Synergy's applications so that it can 
be used for corporate training facilities. 

SOFTWARE.  The Company is engaged in a range of software development 
activities. The Company continually updates and enhances its AXCESS operating 
system. Additionally, the Company's tools such as TPDesign (for the Company's 
Touch Panels), OLDesign (for the Company's Softwire panels and wireless 
transmitters), SKDesign (for the Company's SoftKey wireless transmitters), 
and PCDesign (for implementation of a personal computer as a user interface), 
facilitate design and programming of the Company's systems. Finally, the 
Company develops and sells application software for specific market needs. 

    The Company recently began distributing its new AXDesign software 
product, which will allow the Company's dealers to configure and program the 
Company's systems using simplified graphical interfaces, such as the 
Windows-Registered Trademark- "drag and drop" technique. The Company has made 
this available to its dealers free of charge. 

LIGHTING SYSTEMS.  The Company's Radia Lighting System is a fully automated 
digital lighting system designed for intelligent control and maximum user 
flexibility. Designed for use in corporate, commercial, or residential 
lighting applications, the Radia Lighting System can accommodate a wide 
variety of dimming loads, including incandescent, low-voltage, neon, cold 
cathode, most fluorescent ballasts, and switched loads up to 277 VAC. The 
Radia Lighting System can be an integrated part of the Company's AXCESS 
Control System or operated as a stand-alone dimming system. 

SLIDE PROJECTOR CONTROLLERS.  The Company's MX series of radio-frequency 
wireless slide projector controllers includes nine different models, ranging 
from simple forward/reverse control of a single projector to complete control 
of two projectors. 

CUSTOMER SUPPORT AND SERVICE

    The Company believes that the support and service it provides to its 
customers are key competitive advantages and, as part of its strategy, will 
continue to focus on the development of such support and service. The Company 
has established a customer service and support organization that provides 
order processing, technical and engineering support, and hardware repair to 
dealers, distributors, and end users of its products. Within this 
organization, the Company has created sales support teams focused on specific 
geographic regions or customer categories and supported by dedicated, trained 
technicians at the Company's facilities in Dallas, Texas. The Company 
believes that the establishment of sales support teams with specific 
geographic responsibility enhances the development of personal relationships 
between the Company's dealers and distributors and specific sales and support 
personnel. The Company's customer technical support team is staffed 12 hours 
a day, Monday through Friday, with emergency service available at all other 
times as needed. The Company will, if necessary, send technical support to a 
job site to provide individual attention as such needs arise. The Company's 
sales support teams can provide operating software updates, modifications, 
and new device interface codes online through the use of modems. In addition, 
the Company provides technical support to customers from its office in  
Singapore, as well as through its international distributors. 

    The Company has a fully-staffed training facility in Dallas, Texas, where 
dealers and distributors are provided free training to program, install, and 
service the Company's systems. The Company has begun to provide training at 
regional sites, selected to accommodate clusters of its dealers, thereby 
reducing the dealer's cost of travel to Dallas. Additionally, the Company is 
utilizing its recently opened Philadelphia office to provide training to its 
dealers located in the northeast. The Company has increased the number of 
persons trained from 1,200 in 1996 to 2,200 in 1997.

    The Company provides either a one-year or three-year warranty on all of 
its products, both software and hardware. Although the Company has 
experienced limited product warranty claims in the past, there can be no 
assurance that such claims will not increase in the future. 

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SALES, DISTRIBUTION, AND MARKETING

    The Company markets and sells its systems products worldwide through
various distribution channels that include dealers, manufacturers'
representatives, and distributors, as well as OEM and custom product
arrangements. Since the market for integrated remote control systems products is
relatively new, the Company believes that market awareness of the capabilities
and features of such products is currently low. The Company relies primarily on
third parties to sell, install, support, and service its integrated remote
control systems, a strategy that it believes is best suited for broad market
coverage, including international coverage.

DOMESTIC MARKETS

    U.S. Dealers. The Company has established relationships with many of the
leading United States audio-visual system integrators and has over 1,600 dealers
in the United States alone. Of these, approximately 900 are systems dealers that
sell a wide range of the Company's products, approximately 200 are dealers
authorized by the Company to sell only AMX slide projector controllers,
approximately 55 dealers are authorized to sell the Company's Synergy electronic
classroom systems, and approximately 460 are dealers primarily focused on the
residential market.

    The Company's dealers generally sell a wide range of electronic products,
including those of competitors of the Company. The Company believes that
utilizing the sales force of dealers that are already selling audio-visual
systems integration services to potential purchasers of electronic presentation
equipment is the most effective way to reach a broad range of customers. The
Company believes that the inclusion of an AMX system in the package of
electronic equipment sold to customers of electronic dealers enhances the
profitability of systems sales to dealers. The Company's agreements with its
dealers involve non-exclusive arrangements that may be canceled by either party
at will and contain no minimum purchase requirements on the part of the dealers.
The Company's agreements with its distributors grant exclusive distribution
rights as to a specific geographic area. The distributorship agreements can be
terminated by the Company or the distributors under certain circumstances, and
there can be no assurance that any of such dealers and distributors will
continue to offer the Company's products. Furthermore, while the Company's
international distributors generally assume certain support and minimum
performance obligations, there are no obligations on the part of the Company's
dealers, distributors, or manufacturers' representatives to provide any
specified level of support to the Company's products or to devote any specific
time, resources, or efforts in marketing of the Company's products. The
Company's dealers, distributors and manufacturers' representatives generally
offer products of several different companies, including products competitive
with the Company's products. Accordingly, there is a risk that these dealers,
distributors and manufacturers' representatives of the Company may give higher
priority to products of other suppliers and may reduce their efforts to sell the
Company's products. A reduction in the sales efforts by certain of the Company's
current dealers, distributors, or manufacturers' representatives or the loss of
certain or all of such relationships could have a material adverse effect on the
Company's results of operations.

    The Company provides training to educate dealers on the necessary
programming and other service techniques required to install and service the
Company's systems. The Company believes that its commitment to dealer training
has resulted in a growing, increasingly well-trained group of dealers who are
serving a range of discrete vertical markets. In addition, the Company reviews
the capabilities and performance of its dealers on an annual basis.

 MANUFACTURERS' REPRESENTATIVES.  The management of the Company's dealers is
supported by a network of 23 independent manufacturers' representative
organizations serving specific geographic regions. The Company believes that by
utilizing representatives that carry other lines of audio-visual electronic
equipment, the Company and its dealers are made aware of systems sales of which
they would not have otherwise known. These representative organizations are paid
on a commission basis for all systems sales shipped into their region regardless
of whether the order was placed by or through the representative.

 OEM AND CUSTOM PRODUCTS ARRANGEMENTS.  The Company currently makes and custom
designs systems for


                                      10

<PAGE>

OEMs and other large customers such as VTEL/Compression Labs, British
Telecom, Tech Electronics, Tektronix, Bang & Olufsen, and IBM. The Company
believes that its expertise in simplifying user interfaces and integration of
disparate electronic equipment will enable it to forge additional OEM
relationships, and intends to seek such relationships. In the fiscal years
ended March 31, 1995, 1996, and 1997, OEM and Custom Products Sales
represented approximately 14%, 8% and 8% of total sales, respectively. The
failure of OEM and custom product customers to purchase products as
anticipated may result in the Company holding inventories that are not
salable to other customers, and inventory writedowns may result. The loss of,
or reduction in sales to, any of the Company's key customers could have a
material adverse effect on the Company's results of operations.

INTERNATIONAL MARKETS

    The Company relies on a network of 20 exclusive distributors serving 24
countries and over 51 dealers serving an additional 22 countries to distribute
its product internationally. Outside the United States, independent distributors
with exclusive distribution rights market the Company's custom products. In June
1993 the Company purchased AXCESS Technology, Ltd., a distributor of electronic
equipment based in the United Kingdom. AXCESS distributes the Company's products
as well as products of six other manufacturers. Sales outside of the United
States, consisting substantially of products sold in Europe, Canada, Asia and
the Pacific Rim, and Australia, represented approximately $6.6 million, $8.9
million, and $10.6 million, or 24%, 27%, and 26% of the Company's total sales
during the fiscal years ended March 31, 1995, 1996, and 1997, respectively. See
Note 13 to the Company's Consolidated Financial Statements. Since the Company's
international sales are primarily denominated in U.S. dollars, the Company does
not currently engage in hedging activities with respect to fluctuations in
currency values but may elect to do so in the future. These sales are subject to
a number of risks generally associated with international sales, including: the
effect of a strengthening or weakening U.S. dollar on demand for the Company's
products in international markets; other currency fluctuation risks; greater
difficulty in accounts receivable collections and increased credit risk;
logistical difficulties of managing international operations; unexpected
restrictions on the repatriation of funds; and unpredicted changes in regulatory
requirements, tariffs, and other trade barriers. The loss of, or reduction in,
international sales would have a material adverse effect on the Company's
results of operations.

    The Company believes that the international market represents a significant
opportunity with the increased adoption of sophisticated electronic equipment
and as the Company establishes distribution in markets currently not served by
the Company's distribution network. The Company maintains an office in Singapore
and is increasing its efforts to establish distribution in new international
markets.

RESEARCH AND DEVELOPMENT

    The Company believes that timely development and introduction of new
products are essential to maintaining its competitive position. The Company
devotes most of its internal research and development resources to making
advances in audio/video software and controller technology, firmware and
software, and mechanical design. The Company is committed to soliciting and
understanding customer requirements. Accordingly, its dealers and distributors
are a principal source of ideas for new products, product refinement ideas, and
new market applications for the Company's products. The Company also works with
component suppliers to keep abreast of technological advances and to incorporate
new features as they are developed.

    The Company is continuously involved in the refinement, enhancement, and
expansion of its operating and application software capabilities. With the
continued improvement of microprocessor capability, the Company believes that
this ongoing software research and development is a key means of increasing the
number of applications for its products and of extending the life of its
hardware systems. As a result, the Company is investing an increasing proportion
of its research and development effort in software development activities.

    When an order is placed, dealers describe the specifications for the system
and the Company or its dealers program the system to meet the user's
requirements. On average, this typically requires five to 50 hours


                                      11

<PAGE>

of programming for each order placed and requires the programmers to use
AXCESS, the Company's DOS-based text editor, which is similar in structure to
the "C" programming language. The Company has recently begun to distribute
AXDesign, which is a Windows-Registered Trademark--based graphical user
interface programming environment for the Company's systems. The Company
believes that the key benefit of AXDesign is that it will reduce the
technical skill required to program the Company's systems, speed programming
time, and thereby simplify the process of customizing the Company's systems
to meet the end user's requirements. The Company believes that the
streamlining of the programming process resulting from AXDesign will expand
the universe of dealers capable of programming the Company's systems, and
will increase the number of systems capable of being sold by any given
dealer.

    In August 1995, the Company, together with several individual shareholders
(including two former employees of the Company), organized PHAST Corporation
("PHAST"). PHAST has its principal place of business in Salt Lake City, Utah and
has been organized to design, manufacture, market, and distribute automation
control systems and products for the residential market. The Company owns 51% of
the outstanding capital stock of PHAST with an option to purchase an additional
29% of the outstanding capital stock. The Company has made commitments to loan
up to $4,815,000 to PHAST for the development of home automation hardware and
software products, of which $2,589,000 has been advanced at March 31, 1997.

    Research and development expenses were approximately $730,000, $1,475,000,
and $2,834,000 in the fiscal years ended March 31, 1995, 1996 and 1997, which
represented 2.7%, 4.5%, and 6.8% of net sales in those periods, respectively.
The engineering department of the Company is involved in both research and
development and customer support and service. Additionally, the Company has
created sales support teams, which are focused on specific geographic regions or
customer categories. These teams include sales personnel, system designers, and
technical support personnel, all of whom indirectly participate in research and
development activities by establishing close relationships with the Company's
customers and by creatively responding to customer-expressed needs.

    In May 1996, the Company acquired 100% of SPS International, Inc., doing
business as AudioEase ("AudioEase"). AudioEase designs, manufactures, and
markets hardware and software products for upscale home theater systems,
whole-home audio/video control and distribution systems, as well as other
electronic home systems. The acquisition was completed at a total purchase price
of $1.76 million paid in cash and 181,818 shares of the Company's common stock.
The Company engaged an independent appraisal company to allocate the purchase
price of AudioEase. Of the total purchase price, $980,000 was allocated to
acquired research and development, which was immediately expensed in accordance
with generally accepted accounting principles.

MANUFACTURING

    The Company's manufacturing and assembly operations for its systems and 
related products are conducted in Dallas, Texas, Denver, Colorado and Salt 
Lake City, Utah. The Company's manufacturing operations consist primarily of 
design, final assembly and testing of products, quality control, and 
materials procurement functions. In order to reduce problems with component 
supply, the Company retains responsibility for component sourcing. The 
Company establishes relationships with qualified component vendors and 
distributors, receives and inspects all components directly, and packages 
necessary components for assembly by third parties. Products go through 
several levels of testing prior to shipment.

    The principal components of the Company's products are printed circuit
boards, electronic components (including microprocessors), displays, and metal,
plastic, or wood housings, substantially all of which are purchased from outside
vendors. The Company generally buys components under purchase orders and does
not have long-term agreements with its suppliers. Although alternate suppliers
are available for most of these components, qualifying a replacement supplier
and receiving components for certain other products could take up to several
months. Certain components, including the microprocessors manufactured by
Motorola, are currently available only from sole sources and embody such
parties' proprietary technology.


                                      12

<PAGE>

There can be no assurance that Motorola or any other sole source supplier
will continue to provide required components in sufficient quantities or at
acceptable prices. In addition, no back-up tooling exists for many of the
Company's molded plastic components. Should a mold break or become unusable,
repair or replacement could take several months. The Company does not always
maintain sufficient inventory to allow it to fill customer orders without
interruption during the time that would be required to obtain an adequate
supply of replacement components. Any shortage or discontinuation of supply
in these components would materially adversely affect the Company's results
of operations. The Company also depends on its suppliers to deliver products
that are free from defects, competitive in functionality and cost, and in
compliance with the Company's specifications and delivery schedules.
Disruption in supply, a significant increase in cost of one or more
components, failure of a third party supplier to remain competitive in
functionality or price, or the failure of a supplier to comply with any of
the Company's procurement needs could delay or interrupt the Company's
manufacture and delivery of products and thereby materially adversely affect
the Company's results of operations.

    Many of the components used in the Company's products are procured from
outside the United States. There is no assurance that trading policies adopted
by the United States or foreign governments will not restrict the availability
of components or increase the Company's cost of obtaining components. Any
significant increase in component prices, whether due to fluctuations in
currency exchange rates or other foreign disruptions, would have a material
adverse effect on the Company's results of operations.

BACKLOG

    The Company generally ships its standard products promptly following
receipt of an order. The Company's backlog of orders for its standard products
has generally been less than 45 days at any given time. While the Company's OEM
and other large customers typically place orders for products several months
prior to the scheduled shipment date, these orders are subject to rescheduling
and cancellation. As a result, the Company does not consider its backlog to be a
meaningful indicator of future sales.

COMPETITION

    The markets for the Company's remote control systems are highly
competitive. The Company's principal direct competitors based in North America
include Crestron in all its markets, and Dynacom Inc., Dukane Corp., and
Rauland-Borg Corp. in the education market. Of these competitors, Crestron is
the Company's principal competitor. In addition, the Company assumes that there
are other companies with substantial financial, technical, manufacturing, and
marketing resources currently engaged in the development and marketing of
products similar to those of the Company and that such companies may enter one
or more of the Company's markets at any time. Although some of the Company's
competitors are smaller in annual revenues and in capitalization, most of the
Company's competitors are focused on a single vertical market and may therefore
devote more resources to products that may be directly competitive with, and
that may adversely impact sales of, the Company's products in such markets.
Moreover, as the Company pursues new markets, it is likely that AMX will
encounter new competitors.

    The Company believes its ability to compete depends on such factors as
reputation, quality, customer support and service, price, features and functions
of products, ease of use, software and hardware innovation, reliability, and
marketing and distribution channels. Although the Company believes that it
competes favorably with respect to these factors, there can be no assurance that
the Company will be able to compete successfully in the future.

    The Company's products fill a need created by the absence of industry-wide
standard communication and control protocols and formats for electronic devices.
In the event manufacturers were to adopt such standards for various electronic
devices, the Company's results of operations could be adversely affected. There
can be no assurance that standard communication and control protocols will not
be adopted in the future.


                                      13

<PAGE>

PROPRIETARY RIGHTS

    The Company has no patents for its products and relies primarily on a
combination of copyright and trade secret protection to establish and protect
its proprietary rights. There can be no assurance that the Company's measures to
protect its proprietary rights will deter or prevent unauthorized use of the
Company's technology. In addition, the laws of certain foreign countries may not
protect the Company's proprietary rights to the same extent as do the laws of
the United States. If the Company is unable to protect its proprietary rights in
its intellectual property, it could have a material adverse effect upon the
Company's results of operations.

    From time to time, certain companies have asserted patent, copyright, and
other intellectual property rights relevant to the Company's business, and the
Company expects that this will continue. The Company evaluates each claim
relating to its products and, if appropriate, would seek a license. If the
Company or its suppliers were unable to license from others protected technology
used in the Company's products, the Company could be prohibited from marketing
such products. The Company could also incur substantial costs to redesign its
products or defend any legal action taken against the Company. If, in any legal
action that might arise, the Company's products should be found to infringe upon
intellectual proprietary rights, the Company could be enjoined from further
infringement and required to pay damages. In the event a third party were to
sustain a valid claim against the Company and in the event any required license
were not available on commercially reasonable terms, the Company's results of
operations could be materially and adversely affected. Litigation, which could
result in substantial cost to and diversion of resources of the Company, may
also be necessary to enforce intellectual property rights of the Company or to
defend the Company against claimed infringement of the rights of others.

GOVERNMENT REGULATION

    The Company's domestic business operations are subject to certain federal,
state, and local laws and regulations relating to RF and IR emissions generated
by the Company's products. Certain of the Company's products must comply with
FCC regulations before the products may be marketed in the United States. There
can be no assurance that its products will comply with such regulations or that
FCC regulations will remain constant with respect to the Company's current or
future products. Failure to comply with FCC regulations for products under
development or a change in existing regulations by the FCC that would make
products non-compliant could have a material adverse effect on the Company's
results of operations. Because the requirements imposed by such laws and
regulations are frequently changed, the Company is unable to predict its ability
to comply with, or the ultimate cost of compliance with, such requirements.

    European Community ("EC") regulations relating to electromagnetic emissions
and immunity testing became effective January 1, 1996. Although many of the
Company's products comply with applicable EC regulations, some of the Company's
products do not yet comply with applicable EC regulations and will not be sold
in EC member countries until they comply. Accordingly, failure to comply with
applicable EC regulations may limit or eliminate the Company's ability to sell
its products in EC member countries and would have a material adverse effect on
the Company's results of operations.

EMPLOYEES

    As of March 31, 1997, the Company employed 266 people, including 66 in
manufacturing, 119 in selling and marketing activities, 49 in engineering and
programming, and 33 in management, administration and finance. None of the
Company's employees is represented by a labor union or is subject to a
collective bargaining agreement. The Company believes that its relations with
its employees are good.

    The Company is dependent in large part on its ability to attract and retain
management, engineering, marketing, and other technical personnel. Competition
for engineering and other technical personnel is intense, and the inability to
attract and retain highly qualified technical personnel to coordinate the
Company's operations could adversely affect the Company's results of operation.
There can be no assurance that the Company will be able to attract and retain
the qualified personnel necessary for its business.


                                      14

<PAGE>

ITEM 2.  PROPERTIES

    The Company occupies buildings that contain approximately 88,485 square
feet of floor space. All of this space is leased under agreements that expire at
various dates through May 2012. The principal facilities are located as follows:

<TABLE>
                         APPROXIMATE
   LOCATION              SQUARE FEET                                   DESCRIPTION
   --------              -----------                                   -----------
<S>                      <C>                                           <C>
Dallas, Texas                 50,000       Offices, engineering, research and development, and production
Salt Lake City, Utah          16,400       Offices, engineering, research and development, and production
York, England U K              8,845       Offices, engineering, research and development, and warehouse
Englewood, Colorado            6,240       Offices, engineering, research and development, and production
Singapore                      5,000       Offices
Philadelphia, Pennsylvania     2,000       Offices
</TABLE>

    All facilities are suitable for the Company's business and are fully
utilized. All furniture and equipment owned and leased by the Company is well
maintained and suitable for the Company's operations.

    The Company considers its current facilities adequate and believes that
suitable additional space will be available, as needed, to accommodate further
physical expansion of corporate operations and for additional sales and service.

ITEM 3.  LEGAL PROCEEDINGS

LITIGATION

    On August 19, 1994, Ford Audio-Video Systems, Inc. ("FAV"), a
privately-held company located in Oklahoma, filed suit in state district court
in Oklahoma County, Oklahoma against the Company. FAV asserted claims against
the Company for fraud, tortious interference with business relations, fraudulent
inducement, retaliation for exercise of constitutional right to access to the
court and retaliatory termination, tortious breach of an oral contract,
anti-trust violations for predatory and discriminatory pricing, violation of the
Oklahoma Deceptive Trade Practices Act and tortious conversion. On April 14,
1997, the Company and FAV entered into to a settlement agreement regarding all
claims asserted in this action. As of March 31, 1997, the Company had reserved
all costs associated with the settlement of this claim.

    Additionally, the Company is party to ordinary litigation incidental to its
business, none of which is expected to have a material adverse effect on the
results of operations, financial position or liquidity of the Company.

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

    None.



                                      15

<PAGE>

                                  PART II

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

STOCK PRICES

    In November 1995, the Company's common stock, par value $0.01 per share
(the "Common Stock"), was admitted for trading on the Nasdaq National Market
under the symbol "AMXX."

    The following table sets forth, for the periods indicated, the high and low
closing sale prices for the Common Stock for the fiscal years ended March 31,
1996 and 1997.

FISCAL 1996                              HIGH      LOW
-----------                              -----    -----
Third Quarter (from November 1995)       9 3/4    6 1/2
Fourth Quarter                           9 3/4    7 3/4
FISCAL 1997
-----------
First Quarter                            9 1/2    7
Second Quarter                           7 3/4    5 3/4
Third Quarter                            6 5/8    5 1/8
Fourth Quarter                           7 1/4    5 3/4

    As of June 20, 1997, there were approximately 1,700 holders of record or 
through nominee or street name accounts with brokers of the Common
Stock.

DIVIDEND POLICY

    The Company has never paid dividends on its Common Stock and does not
anticipate paying dividends on the Common Stock in the foreseeable future in
order to retain all available earnings generated by the Company's operations for
the development and growth of its business. In addition, under the terms of the
Company's $5.0 million line of credit, the Company may not pay dividends without
the prior consent of the lending bank. Any future determination as to the
payment of dividends will be at the discretion of the Board of Directors of the
Company and will depend upon the Company's operating results, financial
condition, capital requirements, general business conditions, and such other
factors that the Board of Directors deems relevant.

RECENT SALES OF UNREGISTERED SECURITIES

    The following sets forth information as of March 31, 1997, regarding all
securities sold by the Company that were not registered under the Securities Act
of 1933, as amended (the "Securities Act"), from April 1, 1996 through March 31,
1997.  All such shares were issued in reliance upon an exemption from
registration under the Securities Act by reason of Section 4(2) or 3(b) of the
Securities Act and/or the rules and regulations promulgated thereunder.  In
connection with each of these transactions, the shares were sold to a very
limited number of persons, such persons were provided access to all relevant
information regarding the Company or represented to the Company that they were
"sophisticated" investors, and such persons represented to the Company that the
shares were purchased for investment purposes only and with no view toward
distribution.

    Effective May 16, 1996, the Company completed a merger pursuant to which
AudioEase, Inc. was merged into a subsidiary of the Company, with AudioEase,
Inc. being the surviving corporation, as a result of which the Company acquired
all of the outstanding capital stock of AudioEase, Inc.  In connection
therewith, the Company issued shares of its Common Stock to the shareholders of
AudioEase, Inc. in exchange for their shares of AudioEase, Inc. common stock,
with the shares of Company Common Stock having an agreed-upon value of $8.25 per
share for purposes of determining the amount of merger consideration payable to
such

                                      16
<PAGE>

shareholders as follows:

                            Number of Shares of
    Shareholder             Company Common Stock   Aggregate Consideration
    -----------             --------------------   -----------------------
John P. Sundquist and
Sandra P. Sundquist                 118,234              $975,430.50
Donald J. Heiskell and
Janice T. Heiskell                   18,129              $149,564.35
Bruce R. Munroe                      18,129              $149,564.25
David A. Daniels                     13,663              $112,719.75
Thomas J. Gleason                    13,663              $112,719.75

ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

                        (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
                                                 FISCAL YEARS ENDED MARCH 31,
                                       -----------------------------------------------
                                         1993      1994    1995(1)     1996     1997
                                         ----      ----    ----        ----     ----
<S>                                      <C>       <C>     <C>         <C>      <C>
INCOME STATEMENT DATA:
System sales                           $13,947   $17,378   $23,387   $30,274   $38,302
OEM and custom product sales             2,876     2,225     3,896     2,457     3,155
                                       -------   -------   -------   -------   -------
  Net sales                             16,823    19,603    27,283    32,731    41,456
Cost of sales                            6,463     7,652    10,570    12,370    17,243
                                       -------   -------   -------   -------   -------
Gross profit                            10,360    11,951    16,713    20,361    24,213
Selling and marketing expenses           5,904     7,712     9,598    10,945    15,061
Research and development                   347       645       730     1,475     2,834
Acquired research and development            -         -         -         -     1,230
General and administrative expenses      1,571     1,620     2,512     2,717     4,361
                                       -------   -------   -------   -------   -------
Operating income                         2,538     1,974     3,873     5,224       727
Interest expense                            58        36        42       535        13
Other income (expense), net               (237)      134       134       117       288
                                       -------   -------   -------   -------   -------
Income before income taxes               2,243     2,072     3,965     4,806     1,002
Income tax provision                       778       805     1,269     1,792     1,371
                                       -------   -------   -------   -------   -------
Net income                             $ 1,465   $ 1,267   $ 2,696     3,014   $  (369)
                                       =======   =======   =======             =======
Preferred stock dividends, including
  accretion and redemption (1)                                        (3,153)
                                                                     -------
Net loss applicable to common
  shareholders (1)                                                   $  (139)
                                                                     =======

Earnings (loss) per common share       $   .29   $   .25   $   .50   $  (.02)  $  (.05)
                                       =======   =======   =======   =======   =======

Common and common equivalent shares
  outstanding                            5,021     5,128     5,434     6,654     7,769
                                       =======   =======   =======   =======   =======
</TABLE>

                                      17
<PAGE>

<TABLE>
                                                                   AT MARCH 31,
                                                ---------------------------------------------
                                                 1993     1994     1995       1996     1997
                                                 ----     ----     ----       ----     ----
<S>                                              <C>      <C>      <C>        <C>      <C>
BALANCE SHEET DATA:
Working capital                                 $2,424   $3,390  $  5,229   $ 8,564   $ 8,182
Total assets                                     6,519    8,503    10,317    14,652    19,741
Long term debt, including current portion          636      483     7,334        54        92
Redeemable preferred stock, net of discount (1)     --       --     9,474        --        --
Shareholders' equity (deficit) (1)               4,447    5,718   (11,927)   10,714    11,996
</TABLE>

-----------
(1) On March 31, 1995, an individual and entities including certain investment
    funds ("New Shareholders"), purchased $7.0 million of Debentures, 120,000
    shares of Series A Preferred Stock for $12.0 million, and 3,240,000
    shares of Common Stock for $150,000. These proceeds, along with $1.25
    million of the Company's cash, were used to redeem 3,240,000 shares of
    Common Stock from the Company's co-founder and Chairman of the Board and
    from a charitable remainder trust established by him. For financial
    reporting purposes, the proceeds of $19,150,000 from the sale of the
    Debentures, the Series A Preferred Stock and the Common Stock to the New
    Shareholders were allocated based on the relative fair market values of such
    securities as determined by an independent valuation commissioned by the
    Company.  Such fair market values were: Debentures, $7.0 million (effective
    yield of 12.8%); Series A Preferred Stock, $9,474,000 (effective yield of
    13%); and Common Stock, $2,676,000 (or $.83 per share). This transaction
    did not affect the Company's income statement for the year ended March 31,
    1995. Earnings per common share is based on net income after Series A
    Preferred Stock dividend requirements, accretion of the discount, and
    redemption of Series A Preferred Stock.  On November 21, 1995, the Company
    completed its initial public offering and utilized a portion of the proceeds
    thereof to repay outstanding subordinated debentures and the redeemable
    preferred stock (See Note 2 of Notes to Consolidated Financial Statements
    contained elsewhere herein).

                                      18

<PAGE>

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

    The following discussion and analysis should be read in conjunction with
the Consolidated Financial Statements and Notes thereto included in the
Company's 1997 Annual Report to Shareholders.

OVERVIEW

    AMX designs, develops, manufactures and markets integrated control systems
that enable end users to operate as a single system a broad range of electronic
and programmable equipment in a variety of corporate, educational, industrial,
entertainment, governmental, and residential settings. The Company's hardware
and software products provide the operating system, machine control, and user
interface necessary to operate, as an integrated network, electronic devices
from different manufacturers through easy-to-use control panels. The Company's
systems are available in a variety of configurations and provide centralized
control of a wide range of video systems, audio systems, teleconferencing
equipment, educational media, lighting equipment, environmental control systems,
security systems, and other electronic devices. The Company has recently
introduced several Windows-Registered Trademark--based software applications
that handle design functions, permit scheduling control, and enable a personal
computer to operate on the Company's AXlink bus as a control panel.

    While annual growth rates of the Company's net sales have ranged from 17%
to 42% since 1991, the Company's quarterly operating results have varied
significantly in the past, and can be expected to vary in the future. These
quarterly fluctuations have been the result of a number of factors, including
the volume and timing of orders received during the period, particularly from
international distributors, OEMs, and other large customers; sales and marketing
expenses related to entering new markets; the Company's reliance upon dealers
and distributors; the timing of new product introductions by the Company and its
competitors; fluctuations in commercial and residential construction and
remodeling activity; and changes in product or distribution channel mix. In
addition, the Company generally experiences higher selling and marketing
expenses during the first fiscal quarter of each year due to costs associated
with the Company's largest trade show (occurring in June) and experiences higher
sales in the education market during the second fiscal quarter of each year due
to the buying cycles of educational institutions.

    The Company's system sales are made through dealers and distributors. The
Company principally relies on over 1,600 specialized third-party dealers of
electronic and audiovisual equipment to sell, install, support and service its
products in the United States. Internationally, the Company relies on a network
of 20 exclusive distributors serving 24 countries and over 51 dealers serving an
additional 22 countries to distribute its products.

    OEM and Custom Product Sales have been made only to a few customers and
have generally been large and sporadic transactions. During fiscal 1995, 1996,
and 1997, 45%, 56%, and 39%, respectively, of the Company's OEM and Custom
Product Sales have been with one customer whose orders have fluctuated
significantly based on their own sales volumes. While the Company's OEM
customers typically place orders for products several months before the
scheduled shipment date, these orders are subject to rescheduling and
cancellation. Also, OEM customers can redesign their products without the AMX
equipment in them resulting in reduced or eliminated sales to such customers.
One of the Company's strategies for growth is to increase OEM and Custom Product
Sales to large customers that typically carry lower gross margins, but also have
lower selling expenses.

    The Company's U. S. dealers pursue a wide variety of projects that can
range from small conference rooms/boardrooms to very large projects in a
university, government facility, amusement park, or corporate training facility.
The Company's international distributors tend to order in large quantities to
take advantage of volume discounts the Company offers and to economize on
shipping costs. These international orders are not received at the same time
each year. Notwithstanding the difficulty in forecasting future sales and the
relatively small level of backlog at any given time, the Company generally must
plan production, order

                                      19
<PAGE>

components, and undertake its development, selling and marketing activities,
and other commitments months in advance. Accordingly, any shortfall in
revenues in a given quarter may impact the Company's results of operations
because the Company generally does not plan to adjust expenditure levels in
response to fluctuations in quarterly revenues.

    The Company purchases components that comprise approximately 28% to 32% of
its cost of sales from foreign vendors. The primary components purchased are
standard power supplies and displays for touch panels. Historically, the Company
has not had any significant cost issues related to price changes due to
purchasing from foreign vendors. However, there can be no assurance that this
will be the case in the future. The Company has experienced delays of up to
three weeks in receiving materials from foreign vendors. However, the Company
takes this issue into consideration when orders are placed and, therefore, this
concern has not, in the past, significantly impacted the Company's ability to
meet production and customer delivery deadlines. However, a significant shortage
of or interruption in the supply of foreign components could have a material
adverse affect on the Company's results of operations.

    The Company's selling and marketing expenses category also includes
customer service and support, and engineering. The engineering department of the
Company is involved in both research and development as well as customer support
and service. Additionally, the Company has created sales support teams, focused
on specific geographic regions or customer categories. These teams include sales
personnel, system designers, and technical support personnel, all of whom
indirectly participate in research and development activities by establishing
close relationships with the Company's customers and by individually responding
to customer-expressed needs.

    The Company intends to commit resources to develop new software for
specific vertical markets to expand system sales and build for the future. An
example of this is the Synergy Electronic Classroom System ("Synergy"). In
fiscal 1994, the Company invested $1,040,000 in engineering development,
marketing, and sales efforts to develop the Synergy Windows-Registered
Trademark--based software and introduce it to the education market. The Company
continues to invest money each year in Synergy to continue the development and
enhancement of the product and the Company's position in the marketplace. Sales
of Synergy are increasing, and the Company expects the education market to be an
opportunity for future growth. A similar commitment is the Company's investment
in PHAST Corporation which commenced in August 1995. This subsidiary designed
and has recently begun shipments of control systems and products for home
automation. The Company has advanced $2,589,000 to PHAST as of March 31, 1997,
and has recorded losses of $2,311,000 and $445,000 for the years ending March
31, 1997 and March 31, 1996, respectively. Although management believes that
significant investments such as these are appropriate, such investments can and
have had a negative impact on the Company's results of operations.

                                      20
<PAGE>

RESULTS OF OPERATIONS

    The following table contains certain amounts, expressed as a percentage of
net sales, reflected in the Company's consolidated statements of income for each
of the three years in the period ended March 31, 1997:

                                             FISCAL YEAR ENDED MARCH 31,
                                             ---------------------------
                                              1995      1996      1997
                                             ------    ------    -------
  System sales                                85.7%     92.5%     92.4 %
  OEM and custom product sales                14.3       7.5       7.6
                                             -----     -----     -----
    Net sales                                100.0     100.0     100.0
  Cost of sales                               38.7      37.8      41.6
                                             -----     -----     -----
  Gross profit                                61.3      62.2      58.4
  Selling and marketing expenses              35.2      33.4      36.3
  Research and development expenses            2.7       4.5       6.9
  Acquired research and development             --        --       3.0
  General and administrative expenses          9.2       8.3      10.5
                                             -----     -----     -----
    Operating income                          14.2      16.0       1.7
  Interest expense                             0.2       1.6        --
  Other income (expense), net                  0.5       0.3       0.7
                                             -----     -----     -----
  Income before income taxes                  14.5      14.7       2.4
  Income taxes                                 4.6       5.5       3.3
                                             -----     -----     -----
  Net income (loss)                            9.9%      9.2%      (.9)%
                                             =====     =====     =====

1997 RESULTS COMPARED TO 1996

    SYSTEM SALES were $38.3 million for fiscal 1997, up 26.5% over the prior
year and OEM AND CUSTOM PRODUCT SALES were $3.2 million for fiscal 1997, up
28.4% from the prior year. NET SALES for fiscal 1997 were $41.5 million, up
26.7% compared to $32.7 million for the prior year. The increase in sales
represented the Company's continued growth in each of its markets, led by its
expansion into the residential market. This expansion is the result of the
acquisition of AudioEase in May of 1996, and the continued development of PHAST,
which began shipment of its home automation products in February 1997. As a
result, residential sales increased 193% over the prior year. International
sales accounted for $10.6 million in revenue during the year.

    COST OF SALES consists of material, labor, and manufacturing overhead, and
was $17.2 million or 41.6% of net sales in fiscal 1997 as compared to $12.4
million or 37.8% of net sales in fiscal 1996. The decrease in margins is a
result of the increase in residential sales which have a higher cost of sales
than the Company's commercial products. AudioEase recorded costs of sales of 56%
against its revenues. This cost of sales is higher than its historical
performance due to inventory write-offs taken at the end of the fiscal year.
Additionally, to date, PHAST's systems have a higher cost of sales than the
Company has achieved with its systems.

    SELLING AND MARKETING EXPENSES increased from $10.9 million, or 33.4% of
net sales in fiscal 1996, to $15.1 million, or 36.3% of net sales for fiscal
1997. This increase again is primarily related to the acquisition of AudioEase
and the emergence of sales and marketing efforts in PHAST, which combined for
$1.6 million in selling and marketing costs during the year. The remaining
selling and marketing expenses remained consistent as a percentage of net sales.
The Company has restated its selling and marketing costs from previous years to
separately reflect its research and development costs, which are discussed
below.

    RESEARCH AND DEVELOPMENT EXPENSES were $2.8 million, or 6.9% of net sales
for fiscal 1997, compared to $1.5 million, or 4.5% of net sales during fiscal
1996. The increase is a direct result of the development efforts of PHAST, which
accounted for $900,000 of the increase in expenses. This increase is

                                      21
<PAGE>

reflective of the Company's business strategies which emphasize developing
new software products into vertical markets and leveraging distribution
channels.

    ACQUIRED RESEARCH AND DEVELOPMENT was $1.2 million for fiscal 1997,
compared to none for fiscal 1996. This expense is a result of the allocation of
costs associated with the acquisitions of AudioEase and Camrobotics, which
occurred in May and June of 1996, respectively.

    GENERAL AND ADMINISTRATIVE EXPENSES increased from $2.7 million in fiscal
1996, or 8.3% of net sales to $4.4 million in fiscal 1997, or 10.5% of net
sales. Fiscal 1997 included expenses from AudioEase and PHAST which were not
incurred in fiscal 1996. Additionally, the Company incurred legal and
settlement expenses of approximately $900,000 associated with the FAV
litigation, which is discussed in the Contingencies section below, during the
current fiscal year.

    INTEREST EXPENSE decreased from $535,000 in fiscal 1996 to $13,000 in
fiscal 1997, which reflects the repayment in November of 1995 of the
subordinated debentures and the bank term note with the proceeds of the
Company's initial public offering.

    OTHER INCOME, NET is comprised primarily of interest income. In fiscal
1996, interest income was offset by the write-off of the unamortized balance
of deferred debt charges of $120,000 upon repayment of the subordinated
debentures and bank term note.

    The Company's EFFECTIVE TAX RATE was 37.3% in fiscal 1996 as compared to
136.8% in fiscal 1997. The increase in the effective tax rate for fiscal 1997
is because the net operating losses of PHAST cannot presently be included in
the Company's consolidated tax return and the non-recurring acquired research
and development expense arising from the AudioEase acquisition cannot be 
deducted for tax purposes. The PHAST losses will be carried forward against 
any future profits of PHAST before any tax expense will be incurred by this 
subsidiary.

1996 RESULTS COMPARED TO 1995

     SYSTEM SALES were $30.3 million for fiscal 1996, up 29.5% over the prior
year and OEM AND CUSTOM PRODUCT SALES were $2.4 million for fiscal 1996, down
37.0% from the prior year. NET SALES for fiscal 1996 were $32.7 million, up
20.0% compared to $27.3 million for the comparable period of the prior year.
System sales and OEM and custom product sales represented 92.5% and 7.5%,
respectively, of net sales for fiscal 1996, and 85.7%, and 14.3%, respectively,
of net sales for fiscal 1995. The increase in System sales in fiscal 1996 over
the prior year represented the Company's continued growth in a wide variety of
markets through its dealers and distributors. The Company's Synergy sales, which
are part of the System sales, almost doubled from $1.4 million in fiscal 1995 to
$2.7 million in fiscal 1996. OEM and custom product sales were down
significantly during fiscal 1996, reflecting the fact that the Company's largest
OEM customer, Compression Labs, Inc., had reduced its orders to the Company over
the same period of the prior year, and that a one-time custom product order that
resulted in sales of $1.2 million during fiscal 1995 only resulted in additional
sales of approximately $100,000 in fiscal 1996.

    COST OF SALES consists of material, labor, and manufacturing overhead, and
was $12.4 million or 37.8% of net sales in fiscal 1996 as compared to $10.6
million or 38.7% of net sales in fiscal 1995. The improvement in fiscal 1996 is
due to positive purchase price variances.

    SELLING AND MARKETING EXPENSES increased from $9.6 million, or 35.2% of net
sales in fiscal 1995, to $10.9 million, or 33.4% of net sales for fiscal 1996.
The increase is related to the increased sales volume and the selling activities
and commissions associated with that increase.

    RESEARCH AND DEVELOPMENT EXPENSES increased from $730,000 in fiscal 1995,
or 2.7% of net sales to $1.5 million or 4.5% of net sales for fiscal 1996. The
increase is a result of $445,000 of expenses recorded at PHAST, and of the
Company's continued emphasis on product development.

                                      22

<PAGE>

    GENERAL AND ADMINISTRATIVE EXPENSES increased from $2.5 million in fiscal
1995, or 9.2% of net sales to $2.7 million in fiscal 1996, or 8.3% of net
sales. Fiscal 1995 included bonuses and costs associated with the venture
investment closed on March 31, 1995, which were not incurred in fiscal 1996.
This decrease was offset in fiscal 1996 by increased legal costs associated
with the FAV litigation discussed below.

    INTEREST EXPENSE increased from $42,000 in fiscal 1995 to $535,000 in
fiscal 1996, which reflects the issuance on March 31, 1995, of $7 million of
subordinated debentures at an interest rate of 12.8%. One-half of the
subordinated debentures was refinanced in June 1995 with a bank term note
that had an interest rate of 8.67%. All of the subordinated debentures and
the bank term note were repaid in November 1995 with the proceeds from the
Company's initial public offering.

    OTHER INCOME, NET is comprised primarily of interest income. In fiscal
1996, interest income is offset by the write-off of the unamortized balance
of deferred debt charges of $120,000 upon repayment of the subordinated
debentures and bank term note.

    The Company's EFFECTIVE TAX RATE was 32.0% in fiscal 1995 as compared to
37.3% in fiscal 1996. The effective tax rate for fiscal 1996 increased over
the effective tax rate for fiscal 1995 because the U.K. subsidiary is in a
tax paying position and the net operating losses of PHAST cannot be included
in the Company's consolidated tax return. The PHAST losses will be carried
forward against any future profits of PHAST before any tax expense will be
incurred by this subsidiary.

LIQUIDITY AND CAPITAL RESOURCES

    For the past three fiscal years, the Company has satisfied its operating
cash requirements principally through cash flow from operations. In fiscal
1997, the Company used $690,000 of cash in its operations. Investing
activities used $2.2 million of cash primarily for the purchase of
$3.2 million of property and equipment comprised principally of tooling and
design costs of its new products. Investing activities were offset by the
issuance of preferred stock by PHAST.

    In June 1995, the Company refinanced $3.5 million of its subordinated
debentures and $315,000 of its notes payable with a bank term loan which
provided for interest at 8.67%. The Company raised net proceeds of $20 million
from its initial public offering in November 1995. These proceeds were used to
retire $3.5 million of subordinated debentures, and $3.8 million of a bank term
loan and redeem the $12.6 million of Series A Preferred Stock (including
accrued dividends).

    Additionally, the Company has a revolving loan agreement for $5.0 million
which expires on July 15, 1998, which provides for interest at the bank's
contract rate which is expected to approximate prime. At March 31, 1996 and
1997, no amounts were outstanding under the revolving loan agreement.

    The Company expects to spend approximately $1.1 million for capital
expenditures in fiscal 1998. Additionally, the Company has committed $2.2
million to PHAST Corporation in addition to the amounts advanced prior to
March 31, 1997.

    In February 1997, the Financial Accounting Standards Board issued Statement
No. 128 (FAS 128), "Earnings Per Share," which is effective for financial
statements for periods ending after December 15, 1997.  Early adoption of the
new standard is not permitted.  The new standard eliminates primary and fully
diluted earnings per share and requires presentation of basic and diluted
earnings per share together with disclosure of how the per share amounts were
computed.  Because the application of SAB 83 under FAS 128 is presently
uncertain, the Company is unable to determine the effect of this standard on
historical per share amounts.  See Note 1 to the accompanying audited financial
statements for discussion.

    The Company believes that cash flow from operations, the Company's existing
cash resources and

                                      23
<PAGE>

funds available under its revolving loan facility will be adequate to fund
its working capital and capital expenditure requirements for at least the
next 12 months. An important element of the Company's business strategy has
been, and continues to be, the acquisition of similar businesses and
complementary products and technology and the integration of such businesses
and products and technology into the Company's existing operations. Such
future acquisitions, if they occur, may require that the Company seek
additional funds.

CONTINGENCIES

    In August 1994, one of the Company's dealers filed a lawsuit against the
Company claiming fraud, breach of contract, and a violation of the Oklahoma
Deceptive Trade Practices Act. On April 14, 1997, the Company entered into a
settlement agreement with the plaintiff. The Company reserved an additional
$550,000 as of March 31, 1997, to reflect the amount of the settlement and
estimated legal costs.

    In addition, the Company is party to ordinary litigation incidental to its
business, none of which is expected to have a material adverse effect on the
results of operations, financial position or liquidity of the Company. See
"Item 3 -- Legal Proceedings."

ITEM 8.  FINANCIAL STATEMENTS.

    Information called for by this item is set forth in the Company's
Consolidated Financial Statements contained in this report. The Company's
Consolidated Financial Statements begin at page F-1 hereunder.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

    None.

                                      24
<PAGE>

                                   PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

    The presentation of Directors and Executive Officers of the Registrant
appears in the Registrant's Proxy Statement for the 1997 Annual Meeting of
Shareholders ("Proxy Statement") which is incorporated by reference herein.

ITEM 11.  EXECUTIVE COMPENSATION.

    The presentation of Executive Compensation of the Registrant appears in the
Proxy Statement which is incorporated by reference herein.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

    The presentation of the Security Ownership of Certain Beneficial Owners and
Management of the Registrant appears in the Proxy Statement which is
incorporated by reference herein.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

    The presentation of Certain Relationships and Related Transactions of the
Registrant appears in the Proxy Statement which is incorporated by reference
herein.

                                      25
<PAGE>

                                    PART IV

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

    (a)  (1) Financial Statements.

         The financial statements filed as a part of this Annual Report on Form
    10-K are listed in the "Index to Consolidated Financial Statements" on page
    F-1 hereof.

         (2)  Financial Statement Schedules.

         The financial statement schedules for which provision is made in the
    applicable accounting regulations of the Securities and Exchange Commission
    are not required under the related instructions or are inapplicable and
    therefore have been omitted.

         (3)  Exhibits.

         The following exhibits are filed as a part of this Annual Report on
    Form 10-K.

 ***2.1   Agreement of Merger and Plan of Reorganization dated as of May 16,
          1996, among Registrant, AMX Acquisition Corporation, SPS
          International, Inc. (now known as AudioEase, Inc.), John P. Sundquist
          and Sandra P. Sundquist, Donald J. Heiskell and Janice T. Heiskell,
          Bruce R. Munroe, David A. Daniels, and Thomas J. Gleason.
   *3.1   Amended and Restated Articles of Incorporation of the Registrant.
  **3.2   Amended and Restated Bylaws of the Registrant, as amended.
  **4.1   Specimen Certificate for Common Stock of Registrant.
  **4.2   Registration Rights Agreement dated as of March 30, 1995 by and among
          Registrant, the persons listed on Schedule 1.1 thereto, Scott D.
          Miller, Peter D. York, Joe Hardt and Billie I. Williamson.
  **4.3   First Amendment dated September 12, 1995 to Registration Rights
          Agreement dated as of March 30, 1995 by and among Registrant, the
          persons listed on Schedule 1.1 thereto, Scott D. Miller, Peter D.
          York, Joe Hardt, and Billie I. Williamson.
****4.4   Registration Rights Agreement dated as of May 16, 1996, by and among
          Registrant, John P. Sundquist and Sandra P. Sundquist, Donald J.
          Heiskell and Janice T. Heiskell, Bruce R. Munroe, David A. Daniels,
          and Thomas J. Gleason.
 **10.1   AMX Corporation 1993 Stock Option Plan, accompanied by forms of
          Incentive Stock Option and Non-qualified Stock Option Agreements.
 **10.2   AMX Corporation 1995 Stock Option Plan, accompanied by form of Stock
          Option Agreement and form of Exercise Notice.
 **10.3   1995 Director Stock Option Plan, accompanied by form of Director
          Stock Option Agreement and form of Exercise Notice.
 **10.4   1997 Employee Stock Purchase Plan, accompanied by forms of
          Enrollment/Change Form, Section 16b Participation Form and Stock
          Purchase Agreement.
 **10.5   Commercial Lease Agreement dated January 2, 1992 between Registrant
          and New England Mutual Life Insurance Company, as amended.
 **10.6   Employment Agreement dated March 30, 1995 between Registrant and
          Scott D. Miller.
 **10.7   Employment Agreement dated March 30, 1995 between Registrant and Joe
          Hardt.
 **10.8   Employment Agreement dated March 30, 1995 between Registrant and
          Peter D. York.
 **10.9   Employment Agreement dated March 30, 1995 between Registrant and
          Billie I. Williamson.
 **10.10  First Amendment dated September 12, 1995 to Employment Agreement
          dated March 30, 1995 between Registrant and Scott D. Miller.
 **10.11  First Amendment dated September 12, 1995 to Employment Agreement
          dated March 30, 1995 between Registrant and Joe Hardt.
 **10.12  First Amendment dated September 12, 1995 to Employment Agreement
          dated March 30, 1995 between

                                      26
<PAGE>

          Registrant and Peter D. York.
 **10.13  First Amendment dated September 12, 1995 to Employment Agreement
          dated March 30, 1995 between Registrant and Billie I. Williamson.
 **10.14  Promissory Note dated June 15, 1995, from Peter D. York to Registrant
          in the original principal amount of $77,298.
 **10.15  Promissory Note dated May 1, 1995, from Joe Hardt to Registrant in
          the original principal amount of $44,500.
 **10.16  Promissory Note dated August 15, 1995, from Billie I. Williamson to
          Registrant in the original principal amount of $52,250.
  +10.17  Second Amendment to Lease dated February 12, 1997 between the 
          Registrant and Merit Industrial Properties Limited Partnership.
  +10.18  Third Amendment to Lease dated May 1, 1997 between the Registrant 
          and Merit Industrial Properties Limited Partnership.
  +10.19  Promissory Note dated January 2, 1997, from Joe Hardt to Registrant 
          in the original principal amount of $22,125.00.
  +10.20  Promissory Note dated July 2, 1996, from Joe Hardt to Registrant 
          in the original principal amount of $22,125.00.
  +11.1   Computation of Earnings per Share.
  +23.1   Consent of Independent Auditors.
  +27.1   Financial Data Schedule.

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

   + Filed herewith.

  *  Incorporated by reference from the exhibit of the same number in the
     Company's Form S-8 filed March 11, 1996, file no. 333-2202.

 **  Incorporated by reference from the exhibit of the same number in the
     Company's Form S-1 filed September 13, 1995, as amended, file
     no. 33-96886.

***  Incorporated by reference from the exhibit of the same number in the
     Company's Form 8-K, dated as of May 16, 1996, filed May 31, 1996, file
     no. 0-26924.

**** Incorporated by reference from the exhibit of the same number in the
     Company's Form 10-K, as amended, for the fiscal year ended March 31, 1996,
     filed August 29, 1996, file no. 0-26924.

     (b)  Reports on Form 8-K.

         Current report on Form 8-K dated as of January 2, 1997, and filed
     January 6, 1997, regarding the election of J. Otis Winters as a member of
     the Company's board of directors.

                                      27

<PAGE>

SIGNATURES

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

                                       AMX CORPORATION

                                       By:  /s/  JOE HARDT
                                          ---------------------------------
                                          Joe Hardt, President
                                          June 26, 1997

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

             SIGNATURE                        TITLE                    DATE
             ---------                        -----                    ----
   /s/ SCOTT D. MILLER       Chairman of the Board and Director   June 26, 1997
---------------------------
     Scott D. Miller

      /s/ JOE HARDT          President and Director               June 26, 1997
---------------------------  (Principal Executive Officer)
        Joe Hardt

    /s/ PETER D. YORK        Senior Vice President,               June 26, 1997
---------------------------  Secretary, and Director
     Peter D. York

   /s/ DAVID E. CHISUM       Chief Financial Officer and          June 26, 1997
---------------------------  Treasurer (Principal Financial
     David E. Chisum         and Accounting Officer)

   /s/ THOMAS S. ROBERTS     Director                             June 26, 1997
---------------------------
    Thomas S. Roberts

    /s/ HARVEY B. CASH       Director                             June 26, 1997
---------------------------
      Harvey B. Cash

    /s/ J. OTIS WINTERS      Director                             June 26, 1997
---------------------------
    J. Otis Winters

     /s/ F. H. MOELLER       Director                             June 26, 1997
---------------------------
      F. H. Moeller

                                     28
<PAGE>

                                   AMX CORPORATION
                      INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                           PAGE
                                                                           ----
Report of Independent Auditors                                              F-2
Consolidated Balance Sheets at March 31, 1996 and 1997                      F-3
Consolidated Statements of Operations for the years ended March 31,
 1995, 1996 and 1997                                                        F-5
Consolidated Statements of Shareholders' Equity (Deficit) for the
 years ended March 31, 1995, 1996 and 1997                                  F-6
Consolidated Statements of Cash Flows for the years ended March 31,
 1995, 1996 and 1997                                                        F-7
Notes to Consolidated Financial Statements                                  F-8

                                     F-1
<PAGE>

                        REPORT OF INDEPENDENT AUDITORS

Board of Directors
AMX Corporation

    We have audited the accompanying consolidated balance sheets of AMX
Corporation as of March 31, 1996 and 1997, and the related consolidated
statements of operations, shareholders' equity (deficit), and cash flows for
each of the three years in the period ended March 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
AMX Corporation at March 31, 1996 and 1997, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
March 31, 1997, in conformity with generally accepted accounting principles.

                                               ERNST & YOUNG LLP


May 1, 1997
Dallas, Texas

                                     F-2
<PAGE>

                               AMX CORPORATION
                         CONSOLIDATED BALANCE SHEETS

                                    ASSETS

                                                          MARCH 31,
                                                 --------------------------
                                                     1996           1997
                                                 -----------    -----------
Current assets:
  Cash and cash equivalents                      $ 4,858,759    $ 2,091,819
  Receivables - trade and other, less allowance
   for doubtful accounts of $125,000 for 1996
   and $94,000 for 1997 (NOTE 5)                   4,260,090      6,670,390
  Inventories (NOTES 3 AND 5)                      2,865,735      4,960,191
  Prepaid expenses                                   175,617        471,932
  Deferred income tax (NOTE 8)                       217,922         97,611
  Income taxes recoverable                             --            41,917
                                                 -----------    -----------
Total current assets                              12,378,123     14,333,860
Property and equipment, at cost, net
 (NOTES 4 AND 5)                                   1,612,863      4,030,149
Other:
  Capitalized software                               123,101        376,162
  Deposits and other                                 361,668        802,175
  Deferred income tax (NOTE 8)                         --             5,987
  Goodwill, less accumulated amortization of
   $29,073 for 1996 and $48,488 for 1997             176,583        192,314
                                                 -----------    -----------
Total assets                                     $14,652,338    $19,740,647
                                                 ===========    ===========

                                     F-3

<PAGE>

                                   AMX CORPORATION
                             CONSOLIDATED BALANCE SHEETS

                         LIABILITIES AND SHAREHOLDERS' EQUITY

                                                             MARCH 31,
                                                    ---------------------------
                                                        1996            1997
                                                    -----------     -----------
Current liabilities:
   Accounts payable                                 $ 1,472,563     $ 3,259,070
   Accrued compensation                                 834,580       1,035,072
   Accrued sales commissions                            386,861         437,413
   Reserve for litigation (NOTE 7)                      200,000         750,000
   Accrued dealer incentives                            298,428         283,904
   Other accrued expenses                               271,021         198,811
   Notes payable                                           --           187,760
   Income taxes payable                                 350,172            --
                                                    -----------     -----------
Total current liabilities                             3,813,625       6,152,030
Long-term debt                                           54,489          91,731
Deferred income tax (NOTE 8)                             69,238            --
Commitments and contingencies (NOTE 7)
Minority interest in subsidiary (NOTE 14)                   490       1,500,490
Shareholders' equity (NOTES 5, 10, 11 AND 12):
   Preferred Stock, $.01 par value
      Authorized shares - 10,000,000
      Issued shares - none                                 --              --
   Common Stock, $.01 par value:
      Authorized shares -- 40,000,000
      Issued shares -- 7,552,120 for 1996 
       and 7,832,791 for 1997                            75,521          78,328
   Additional paid-in capital                           131,498       1,826,453
   Retained earnings                                 10,507,477      10,138,487
   Less treasury stock (5,208 shares)                      --           (46,872)
                                                    -----------     -----------
Total shareholders' equity                           10,714,496      11,996,396
                                                    -----------     -----------
Total liabilities and shareholders' equity          $14,652,338     $19,740,647
                                                    ===========     ===========

                             See accompanying notes.





                                       F-4

<PAGE>

                                 AMX CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
                                                               YEAR ENDED MARCH 31,
                                                    -----------------------------------------
                                                        1995           1996           1997
                                                    -----------    -----------    -----------
<S>                                                 <C>            <C>            <C>
System sales                                        $23,386,572    $30,274,007    $38,302,054
OEM and custom product sales                          3,896,645      2,456,507      3,154,488
                                                    -----------    -----------    -----------
  Net sales                                          27,283,217     32,730,514     41,456,542
Cost of sales                                        10,569,917     12,369,272     17,243,292
                                                    -----------    -----------    -----------
  Gross profit                                       16,713,300     20,361,242     24,213,250
Selling and marketing expenses                        9,597,948     10,945,296     15,060,987
Research and development expenses                       730,047      1,475,073      2,834,185
Acquired research and development                          --             --        1,230,000
General and administrative expenses (including
 $896,000 relating to settled litigation in 1997) 
 (NOTE 7)                                             2,512,347      2,716,522      4,360,605
                                                    -----------    -----------    -----------
  Operating income                                    3,872,958      5,224,351        727,473
Interest expense                                        (42,184)      (534,655)       (13,219)
Other income, net                                       134,354        116,872        288,238
                                                    -----------    -----------    -----------
Income before income taxes                            3,965,128      4,806,568      1,002,492
Income tax provision (NOTE 8)                         1,269,534      1,792,454      1,371,046
                                                    -----------    -----------    -----------
Net income (loss)                                   $ 2,695,594      3,014,114    $  (368,554)
                                                    ===========                   ===========
Preferred stock dividends (NOTES 10 AND 12)                           (626,667)
Accretion of preferred stock (NOTES 10 AND 12)                        (170,000)
Redemption of preferred stock (NOTES 10 AND 12)                     (2,356,000)
                                                                   -----------
Net loss applicable to common shareholders                         $  (138,553)
                                                                   ===========
Earnings (loss) per common share                           $.50          $(.02)         $(.05)
                                                    ===========    ===========    ===========
Common and common equivalent shares outstanding       5,434,404      6,653,980      7,768,547
                                                    ===========    ===========    ===========
</TABLE>

                             See accompanying notes.

                                     F-5

<PAGE>

                                   AMX CORPORATION
              CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

<TABLE>
                               COMMON STOCK                                                    TREASURY STOCK
                               ------------                                                    --------------
                                                                                COMMON                                    TOTAL
                                                  ADDITIONAL                     STOCK                                SHAREHOLDERS'
                            NUMBER OF               PAID-IN      RETAINED     SUBJECT TO   NUMBER OF                     EQUITY
                             SHARES     AMOUNT      CAPITAL      EARNINGS     REDEMPTION     SHARES        AMOUNT       (DEFICIT)
                           ----------   -------   -----------   -----------   -----------  ----------   ------------   ------------
<S>                        <C>          <C>       <C>           <C>           <C>          <C>          <C>            <C>
Balance at March 31, 1994   4,348,000   $43,480   $    14,243   $ 5,660,610   $      --          --     $       --     $  5,718,333
Net income                       --        --            --       2,695,594          --          --             --        2,695,594
Equity adjustment from
 foreign currency
 translation                     --        --            --          34,277          --          --             --           34,277
Exercise of stock options     483,120     4,831       225,110          --            --          --             --          229,941
Sale of stock               3,240,000    32,400     2,643,600          --            --          --             --        2,676,000
Value of common stock
 subject to redemption           --        --            --            --      (2,676,000)       --             --       (2,676,000)
Fees associated with sale
 of preferred stock              --        --        (204,750)         --            --          --             --         (204,750)
Purchase of treasury stock       --        --            --            --            --    (3,240,000)   (20,400,000)   (20,400,000)
                           ----------   -------   -----------   -----------   -----------  ----------   ------------   ------------
Balance at March 31, 1995   8,071,120    80,711     2,678,203     8,390,481    (2,676,000) (3,240,000)   (20,400,000)   (11,926,605)
Net income                       --        --            --       3,014,114          --          --             --        3,014,114
Equity adjustment from
 foreign currency
 translation                     --        --            --         (28,830)         --          --             --          (28,830)
Exercise of stock options
 including tax benefit
 of $63,000                   221,000     2,210       280,788          --            --          --             --          282,998
IPO shares issued out
 of treasury stock               --        --         532,400          --            --     2,500,000     20,392,600     20,925,000
IPO expenses                     --        --        (833,893)     (241,621)         --          --             --       (1,075,514)
Cancellation of remaining
 treasury stock              (740,000)   (7,400)         --            --            --       740,000          7,400           --
Release of redemption
 requirement                     --        --            --            --       2,676,000        --             --        2,676,000
Dividends on preferred
 stock (Note 12)                 --        --            --        (626,667)         --          --             --         (626,667)
Accretion and write-off
 of discount on preferred
 stock (Note 12)                 --        --      (2,526,000)         --            --          --             --       (2,526,000)
                           ----------   -------   -----------   -----------   -----------  ----------   ------------   ------------
Balance at March 31, 1996   7,552,120    75,521       131,498    10,507,477          --          --             --       10,714,496
Net loss                         --        --            --        (368,554)         --          --             --         (368,554)
Equity adjustment from
 foreign currency
 translation                     --        --            --            (436)         --          --             --             (436)
Purchase of treasury stock       --        --            --            --            --        (5,208)       (46,872)       (46,872)
Exercise of stock options
 including tax benefit
 of $43,660                    91,000       910       151,175          --            --          --             --          152,085
Stock issued to purchase
 AudioEase                    181,818     1,818     1,498,182          --            --          --             --        1,500,000
Sale of stock                   7,853        79        45,598          --            --          --             --           45,677
                           ----------   -------   -----------   -----------   -----------  ----------   ------------   ------------
Balance at March 31, 1997   7,832,791   $78,328   $ 1,826,453   $10,138,487   $      --        (5,208)  $    (46,872)  $ 11,996,396
                           ==========   =======   ===========   ===========   ===========  ==========   ============   ============
</TABLE>

                           See accompanying notes.

                                     F-6

<PAGE>

                                   AMX CORPORATION
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    MARCH 31, 1997

<TABLE>
                                                                                     YEAR ENDED MARCH 31,
                                                                        ---------------------------------------------
                                                                            1995             1996             1997
                                                                        ------------     ------------     -----------
<S>                                                                          <C>             <C>               <C>
OPERATING ACTIVITIES
Net income (loss)                                                       $  2,695,594     $  3,014,114     $  (368,554)
Adjustments to reconcile net income (loss) to net cash provided by 
 (used in) operating activities:
    Depreciation and amortization                                            636,742          871,066         984,780
    Provision (credit) for losses on receivables                                --             10,000         (30,708)
    Provision (credit) for inventory obsolescence                             20,500           36,000         (38,698)
    (Gain) loss on sale of property and equipment                            (17,835)           1,537            --
    Acquired research and development                                           --               --           980,000
    Deferred income tax                                                      111,731           50,885          45,086
    Changes in operating assets and liabilities:
      Receivables                                                           (487,861)      (1,110,510)     (2,024,683)
      Inventories                                                           (592,219)        (977,425)     (1,467,749)
      Prepaid expenses                                                         6,998           14,135        (219,986)
      Other                                                                 (257,140)         156,302            --
      Accounts payable                                                       (41,405)         537,609       1,235,009
      Accrued expenses                                                       672,728          166,434         631,281
      Income taxes recoverable/payable                                      (322,348)         498,673        (416,968)
                                                                        ------------     ------------     -----------
Net cash provided by (used in) operating activities                        2,425,485        3,268,820        (691,190)
INVESTING ACTIVITIES
Purchase of property and equipment                                          (575,397)        (840,266)     (3,150,408)
Proceeds from sale of property and equipment                                  22,410            9,400            --
Payments received on note receivable from shareholder                        273,934             --              --
Decrease in note receivable from affiliate                                   203,832             --              --
Investment in capitalized software                                              --           (123,101)       (253,061)
Decrease (increase) in other assets                                           43,042          (65,570)       (118,979)
Payment to former owner of AudioEase                                            --               --          (180,000)
Minority interest in PHAST                                                      --                490       1,500,000
                                                                        ------------     ------------     -----------
Net cash used in investing activities                                        (32,179)      (1,019,047)     (2,202,448)
FINANCING ACTIVITIES
Sale of securities -- net of expenses                                     18,825,000       19,849,486          45,677
Exercise of stock options                                                    229,941          155,048         152,085
Purchase of treasury stock                                               (20,400,000)            --           (46,872)
Proceeds from long-term debt and notes payable                                26,500        3,815,402         187,762
Repayments of long-term debt and notes payable                              (175,201)     (11,095,304)       (211,518)
Redemption of preferred stock                                                   --        (12,000,000)           --
Preferred stock dividends                                                       --           (626,667)           --
                                                                        ------------     ------------     -----------
Net cash provided by (used in) financing activities                       (1,493,760)          97,965         127,134
Effect of exchange rate changes on cash                                       34,277          (28,830)           (436)
                                                                        ------------     ------------     -----------
Net increase (decrease) in cash and cash equivalents                         933,823        2,318,908      (2,766,940)
Cash and cash equivalents at beginning of period                           1,606,028        2,539,851       4,858,759
                                                                        ------------     ------------     -----------
Cash and cash equivalents at end of period                              $  2,539,851     $  4,858,759     $ 2,091,819
                                                                        ============     ============     ===========
</TABLE>

                                                       See accompanying notes. 


                                                                  F-7

<PAGE>

                               AMX CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                MARCH 31, 1997

1.  DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

    AMX Corporation (the "Company") was organized in March 1982 and operates in
a single industry. The Company designs and manufactures integrated control
systems found in corporate boardrooms, business training centers,
teleconferencing centers, educational institutions, the television and
communications industry, amusement parks, theme parks, stadiums, and luxury
residences. The Company sells primarily to dealers and distributors in the
United States, Europe, Australia, Middle East, and the Far East.

PRINCIPLES OF CONSOLIDATION

    The Company's financial statements include the accounts of AXCESS
Technology Ltd., a wholly owned foreign subsidiary, AMX International Sales
Corporation, a wholly owned foreign sales corporation,  AudioEase, Inc., a
wholly owned subsidiary, PHAST Corporation, a 51% owned subsidiary, and AMX
Control Systems PTE, Ltd., a wholly owned foreign subsidiary. All significant
intercompany balances have been eliminated.

CASH EQUIVALENTS

    Cash equivalents include any temporary investments with an initial maturity
of less than three months. Cash equivalents currently include bank repurchase
obligations with maturities generally of seven days or less.

INVENTORIES

    Inventories are stated at the lower of cost (first-in, first-out method) or
market.

DEPRECIATION

    Depreciation of property and equipment is provided in amounts sufficient to
relate the cost of depreciable assets to operations over their estimated service
lives, principally using an accelerated depreciation method in early years and
switching to the straight-line method in later years. The estimated lives used
in determining depreciation range from 5 to 10 years for equipment and 31.5
years for leasehold improvements.

LONG-LIVED ASSETS

    In 1997, the Company adopted Statement of Financial Accounting Standards
No. 121 (SFAS 121), "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of."  SFAS 121 requires that long-lived assets
and identifiable intangibles to be held and used be reported at the lower of
carrying amount or fair value. Assets to be disposed of and assets not expected
to provide any future service potential to the Company are recorded at the lower
of carrying amount or fair value less cost to sell. The adoption of SFAS 121 did
not effect the Company's financial position or results of operations.

CONCENTRATION OF CREDIT RISK

    During the years ended March 31, 1995, 1996, and 1997, the Company realized
approximately 24%, 27%, and 27%, respectively, of total revenues from foreign
sales and had approximately 35% and 30%, respectively, of trade receivables due
from foreign customers at March 31, 1996 and 1997.

                                     F-8
<PAGE>

    The Company provides credit in the normal course of business to its dealers
and distributors. The Company performs ongoing credit evaluations of its
customers and maintains allowances for possible credit losses, which, when
realized, have been within the range of management's expectations.

USE OF ESTIMATES

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

REVENUE RECOGNITION

    Revenue is recognized upon shipment of the product.

CAPITALIZED SOFTWARE

    The cost (including coding and testing) of producing software is
capitalized once technological feasibility is established. Capitalized software
costs will be amortized on a product-by-product basis using the greater of the
amounts computed on the straight-line method over the remaining estimated
economic life of the product or using the ratio that current gross revenues bear
to the total of current and anticipated future gross revenues for the product.
Amortization of capitalized software will begin when the products are available
for general release to customers.

FOREIGN CURRENCY TRANSLATION

    In accordance with Statement of Financial Accounting Standards No. 52,
"Foreign Currency Translation," the assets and liabilities denominated in
foreign currency are translated into U.S. dollars at the current rate of
exchange existing at year-end and historical rates, as applicable, and revenues
and expenses are translated at the average monthly exchange rates.

    The following are the cumulative foreign currency translation adjustments
(recorded through retained earnings) which represent the effect of translating
the original intercompany advances made to the Company's foreign subsidiary, as
these advances are of a long-term nature:

                                           YEAR ENDED MARCH 31,
                                       ----------------------------
                                         1995       1996      1997
                                       -------   --------   -------
Balance at beginning of period         $ 4,558   $ 38,835   $10,005
Gain (loss) on translation of
 intercompany advances                  34,277    (28,830)     (436)
                                       -------   --------   -------
Balance at end of period included
 in retained earnings                  $38,835   $ 10,005   $ 9,569
                                       =======   ========   =======

    The translation gains and losses included in income are immaterial and
result from translating all accounts other than the original intercompany
advances to U.S. dollars.

EARNINGS PER COMMON SHARE

    Earnings per common share is based on net income after preferred stock 
dividend requirements and accretion of preferred stock discount determined by 
the interest yield method at 13% divided by the weighted average number of 
common shares outstanding during each year after giving effect to stock 
options considered to be dilutive common stock equivalents (using the 
treasury stock method for all periods presented). Fully diluted earnings per 
common share is not materially different. Loss per share for 1997 is 
calculated based on weighted average shares outstanding.

                                     F-9
<PAGE>

    The Company has computed common and common equivalent shares in determining
the number of shares used in calculating earnings per share through 1996
pursuant to the Securities and Exchange Commission Staff Accounting Bulletin No.
83 (SAB 83).  SAB 83 requires the Company to include all common shares and all
common share equivalents issued in the 12 month period preceding the filing date
of its initial public offering in its calculation of the number of shares used
to determine earnings per share as if the shares had been outstanding for all
periods presented.

    In February 1997, the Financial Accounting Standards Board issued Statement
No. 128 (FAS 128), "Earnings Per Share," which is effective for financial
statements for periods ending after December 15, 1997. Early adoption of the new
standard is not permitted. The new standard eliminates primary and fully diluted
earnings per share and requires presentation of basic and diluted earnings per
share together with disclosure of how the per share amounts were computed.
Because the application of SAB 83 under FAS 128 is presently uncertain, the
Company is unable to determine the effect of this standard on historical per
share amounts.

SUPPLEMENTAL EARNINGS PER COMMON SHARE

    Supplemental earnings per common share for the year ended March 31, 1996,
were $.41, assuming (i) the issuance of the Common Stock offered by the Company
in its initial public offering and use of the proceeds to repay the bank term
note and subordinated debentures and redeem the preferred stock as of April 1,
1995, and (ii) weighted average common shares outstanding were 8,229,393 for the
year ended March 31, 1996.

COMMON STOCK SPLIT

    In September 1995, the Company effected a two-for-one split of its common
stock. Share and per share amounts for all periods presented have been adjusted
to reflect this stock split.

STOCK BASED EMPLOYEE COMPENSATION

    Pursuant to Statement of Financial Accounting Standards No. 123 (SFAS 123)
"Accounting for Stock-Based Compensation," the Company accounts for stock-based
compensation utilizing the provisions of Accounting Principles Board Opinion No.
25, because, as discussed in Note 11, the alternative fair value accounting
provided for under SFAS 123 requires use of option valuation models that were
not developed for use involving employee stock options.

ADVERTISING

    The Company expenses the costs of all advertising when incurred.
Advertising costs were $354,000, $174,000 and $492,000 for the years ended March
31, 1995, 1996, and 1997, respectively.

RECLASSIFICATIONS

    Certain prior year amounts have been reclassified to conform to the current
year presentations.

2.  INITIAL PUBLIC OFFERING

    On November 21, 1995, the Company closed its initial public offering under
the Securities Act of 1933 under which the Company registered and sold 2,500,000
shares of its common stock for $9 per share. The net proceeds (net of
underwriters' commissions) of $20,925,000 were used to repay the Company's
subordinated debentures of $3,500,000 and accrued interest thereon, bank debt of
$3,815,402 and accrued interest thereon, and redeem the Series A Redeemable
Preferred Stock for $12,000,000 and pay accrued dividends thereon.

                                     F-10
<PAGE>

3.  INVENTORIES

    The components of inventories are as follows:

                                           MARCH 31,
                                  -------------------------
                                      1996          1997
                                  ----------     ----------
Raw materials                     $1,705,108     $2,512,648
Work in progress                     229,566        446,976
Finished goods                     1,030,061      2,060,870
Reserve for obsolescence             (99,000)       (60,302)
                                  ----------     ----------
                                  $2,865,735     $4,960,191
                                  ==========     ==========

4.  PROPERTY AND EQUIPMENT

    The general classes of property and equipment are as follows:

                                          MARCH 31,
                                  -------------------------
                                     1996           1997
                                  ----------     ----------
Equipment, including computers    $2,590,987     $4,948,717
Furniture and fixtures               917,607      1,710,282
Leasehold improvements               102,389        194,965
Vehicles                              71,673        104,769
                                  ----------     ----------
                                   3,682,656      6,958,733
Less accumulated depreciation      2,069,793      2,928,584
                                  ----------     ----------
                                  $1,612,863     $4,030,149
                                  ==========     ==========

5.  DEBT

    The Company has a revolving loan agreement for $5,000,000 expiring July 15,
1998. At March 31, 1996 and 1997, no amounts were outstanding under the loan
agreement. At March 31, 1997, $4,600,000 was available under this agreement. The
loan agreement provides for a borrowing base computation based on accounts
receivable and inventories.  Advances under the line bear interest at the bank's
contract rate set at the time of the borrowing, which is expected to be
comparable to prime. Collateral for the loan consists of a security interest in
accounts receivable, inventories, and property and equipment. The agreement
requires the maintenance of certain financial ratios and equity levels and
restricts payment of dividends.

    Interest paid amounted to approximately $37,000, $535,000, and $39,000 for
the years ended March 31, 1995, 1996, and 1997, respectively.

6.  EMPLOYEE BENEFIT PLANS

    The Company has a noncontributory profit sharing plan that is available to
all U.S. employees who are at least 21 years of age and meet certain service
requirements. The amount of any contributions to the plan is determined by the
Board of Directors and is based on the level of Company earnings before income
taxes. Contributions to the plan are allocated among the eligible participants
based on the percentage each participant's salary bears to total salaries of all
participants. Contributions to the plan for the years ended March 31, 1995,
1996, and 1997, were $228,000, $240,000 and $240,000 respectively.

    The Company has a 401(k) plan available to all U.S. employees who are at 
least 21 years of age and meet certain service requirements. Employees can 
contribute up to 15% of their salary subject to statutory limitations. The 
Company matches the employees' contributions at 25 cents on every dollar to a 
maximum of 1% of compensation. Company contributions for the years ended 
March 31, 1995, 1996 and 1997, respectively, were $5,800, $32,200 and $39,300 
respectively.

                                     F-11

<PAGE>

    The Company's 1996 Employee Stock Purchase Plan permits eligible employees
to purchase common stock through payroll deductions. The price of the common
stock purchased under the 1996 Employee Stock Purchase Plan is 85% of the lower
of the fair market value of the common stock at the beginning or at the end of
each offering period. The Plan provides for two six-month offering periods each
year beginning on the first trading day on or after January 1 and July 1,
respectively.  For the year ended March 31, 1997, 7,853 shares were issued under
this plan.

7.  COMMITMENTS AND CONTINGENCIES

    The Company leases various real property and equipment. Under certain
leases, the Company is required to pay costs, such as taxes, insurance, and
operating expenses in addition to the rental payments. Rental expense under
these operating leases for the years ended March 31, 1995, 1996, and 1997, was
$234,000, $287,000, and $470,000 respectively.

    At March 31, 1997, future minimum payments for noncancelable operating
leases are as follows:

YEAR ENDED MARCH 31:
    1998                               $384,305
    1999                                383,038
    2000                                107,012
                                       --------
                                       $874,355
                                       ========



    In August 1994, one of the Company's dealers filed a lawsuit against the
Company claiming fraud, breach of contract, and a violation of the Oklahoma
Deceptive Trade Practices Act. As of March 31, 1996 the Company had reserved
$200,000 related to this claim. On April 14, 1997, the Company entered into a
settlement agreement with the plaintiff to resolve all outstanding claims. The
Company reserved an additional $550,000 as of March 31, 1997 to reflect the
amount of the settlement and estimated legal costs.

    The Company is involved in certain legal activities and disputes arising in
the ordinary course of business. The Company believes that it has adequate legal
defenses and that the ultimate outcome of these matters will not have a material
adverse effect on the Company's consolidated financial position or results of
operations.

8.  INCOME TAXES


    The components of the Company's income tax provision were as follows:

                                     YEAR ENDED MARCH 31,
                           ----------------------------------------
                               1995          1996           1997
                           ----------     ----------     ----------

Federal income taxes:
  Current provision        $1,038,534     $1,450,400     $  981,085
  Deferred provision          125,000         92,000         45,086
State income taxes            106,000        153,000        126,000
Foreign income taxes           --             97,054        218,875
                           ----------     ----------     ----------
                           $1,269,534     $1,792,454     $1,371,046
                           ==========     ==========     ==========

    The income of foreign operations before income taxes for the years ended
March 31, 1996 and 1997 were $373,000 and $582,000 respectively.



                                    F-12

<PAGE>

    Income tax expense differs from amounts computed by applying the U.S.
federal statutory tax rate to income before income taxes as follows:


<TABLE>
                                                               YEAR ENDED MARCH 31,
                                                     -------------------------------------
                                                         1995           1996        1997
                                                         ----           ----        ----
<S>                                                  <C>            <C>           <C>
Federal income tax at statutory rate                 $1,348,143     $1,634,233    $  340,848
State income tax, net of federal tax benefit             80,095        108,439        77,265
Benefit of income reported through Foreign Sales
  Corporation                                          (172,818)      (183,079)     (232,078)
Unbenefited/(benefited) losses of foreign subsidiary
  and rate differences                                  (39,728)       (29,654)       21,164
Unbenefited losses of 51% owned subsidiary               --            151,314       785,846
Effect of non-deductible acquired research and
  development                                            --             --           333,200
Other                                                    53,842        111,201        44,801
                                                     ----------     ----------    ----------
                                                     $1,269,534     $1,792,454    $1,371,046
                                                     ==========     ==========    ==========
</TABLE>

    Significant components of deferred tax assets and liabilities are as
follows:

                                              MARCH 31,
                                       -------------------------
                                         1996            1997
                                         ----            ----
Deferred tax assets:
  Intangible assets                    $      --       $  87,875
  Inventories                             98,987          91,772
  Bad debts                               46,250          27,750
  Accrued expenses                        46,858          41,133
  Other, net                              76,412           6,959
                                       ---------       ---------
                                         268,507         255,489
Deferred tax liabilities:
  Transaction fees                       (70,300)        (70,300)
  Prepaid expenses                       (17,134)        (70,003)
  Other, net                             (32,389)        (11,588)
                                       ---------       ---------
                                        (119,823)       (151,891)
                                       ---------       ---------
Net deferred tax asset                 $ 148,684       $ 103,598
                                       =========       =========

    Net operating losses of $2,756,000 for the Company's 51% owned PHAST
Corporation subsidiary, which are not included in the tables above, can be
carried forward to 2012.

    Cash paid for federal income taxes was approximately $1,393,000,
$1,086,000, and $1,586,000 for the years ended March 31, 1995, 1996, and 1997,
respectively.

9.  ASSET ACQUISITION

    In May 1996, the Company acquired 100% of the outstanding stock of SPS
International, Inc. dba AudioEase in exchange for 181,818 shares (valued at
$1,500,000) of AMX Corporation common stock in a transaction accounted for as a
purchase. AudioEase designs, manufactures and markets hardware and software
products for upscale home theatre systems, and whole-home audio/video control
and distribution systems, as well as other electronic home systems. Including
acquisition costs, the total purchase price was $1,760,000. The purchase price
was allocated to the fair market value of assets acquired based on an
independent valuation commissioned by the Company. Purchased research and
development was valued based on an analysis of AudioEase's products under
development which resulted in a charge to expense of $980,000, with no related
tax benefit. Of the remaining purchase price, $500,000 was allocated to
intangibles, including goodwill, with the remainder allocated to the tangible
net assets of AudioEase. The intangibles, including goodwill, are being
amortized on a straight-line basis over useful lives ranging from 5 - 15 years.
The operations of AudioEase have been consolidated since the date of
acquisition.
                                    F-13
<PAGE>


    The Company's proforma information with the inclusion of AudioEase for the
years ending March 31, 1997 and 1996 is as follows (in thousands except per
share amounts):


                                         MARCH 31,
                                  ---------------------
                                     1996         1997
                                     ----         ----
Revenue                           $ 35,757     $ 41,819
Net income (loss)                    3,168         (398)
Earnings (loss) per share         $     --     $   (.05)

    In June 1996, the Company purchased all of the assets of Camrobotics, Inc.
for cash in a transaction accounted for as a purchase. Of the total purchase
price of $334,000, $250,000 was allocated to purchased research and development
expense, and the remainder was allocated to the net assets of Camrobotics, Inc.

10.  EQUITY TRANSACTIONS

    Effective March 31, 1995, a group of venture capital firms and an
individual (the "New Shareholders") invested $19,150,000 in the Company by
purchasing (i) 120,000 shares of $100 par value 8% Series A Redeemable Preferred
Stock for $12,000,000, (ii) 3,240,000 shares of common stock for $150,000, and
(iii) $7,000,000 of subordinated debentures. For financial reporting purposes,
the proceeds of $19,150,000 from the sale of the debentures, the Series A
Preferred Stock and the common stock to the New Shareholders were allocated
based on the relative fair market values of such securities as determined by an
independent valuation commissioned by the Company. Such fair market values were:
debentures, $7,000,000 (effective yield of 12.8%); Series A Preferred Stock,
$9,474,000 (effective yield of 13%); and common stock, $2,676,000 (or $.83 per
share). The expenses associated with this transaction were $325,000 and were
allocated between the subordinated debentures and redeemable preferred stock.
Under certain conditions, as defined, or at March 31, 2002, the New Shareholders
could have required the Company to redeem their common stock at its then fair
market value. Accordingly, $2,676,000 was reclassified from shareholders' equity
at March 31, 1995. This right expired upon consummation of the Company's initial
public offering. Additionally, upon consummation of the Company's initial public
offering, the Company was required to redeem the preferred stock and retire the
subordinated debentures.

    Also, on March 31, 1995, the Company purchased 3,240,000 shares of the
existing shareholders' common stock for $20,400,000.

11.  STOCK OPTIONS

    At March 31, 1997, the Company had three stock-based compensation plans
outstanding, which are described below. No compensation cost is recognized for
its fixed option plans because the exercise price of the Company's employee
stock options equals the market price of the underlying stock on the date of the
grant.

    The 1993 Stock Option Plan, as amended, authorized the granting of options
for up to 1,452,544 shares of common stock. All options have a term of ten
years and vest over a four year period.

    In September 1995, the Company approved the 1995 Stock Option Plan and the
1995 Director Stock Option Plan. Under the 1995 Stock Option Plan, the Company
may grant options for up to 1,000,000 shares. All options have a term of ten
years and vest over a four year period. The 1995 Director Stock Option Plan
authorized the granting of stock options for up to 250,000 shares to
non-employee directors. All options granted under this plan are fully vested and
have a term of ten years.


                                    F-14

<PAGE>

    A summary of the status of the Company's plans as of March 31, 1995, 1996,
and 1997, and changes during the years ending on those periods is presented
below:
                                                           WEIGHTED AVERAGE
                                               SHARES       EXERCISE PRICE
                                             ---------     ----------------
Outstanding at March 31, 1994                  448,180          $  .95
    Options granted                            141,700            1.68
    Options canceled                            (1,000)           1.05
                                             ---------        
Outstanding at March 31, 1995                  588,880            1.13
    Options granted                            600,000            3.64
    Options exercised                         (221,000)           1.00
    Options canceled                           (10,800)           7.00
                                             ---------        
Outstanding at March 31, 1996                  957,080            2.67
    Options granted                            153,250            6.58
    Options exercised                          (91,000)           1.19
    Options canceled                          (102,300)           3.30
                                             ---------        
Outstanding at March 31, 1997                  917,030         $  3.40
                                             =========        
Exercisable at March 31, 1997                  449,980
                                             =========
Available for granting in future periods     1,473,574
                                             =========

    The following table summarizes information about stock options outstanding
under the plans as of March 31, 1997:

<TABLE>
<CAPTION>

                       OPTIONS        WEIGHTED AVERAGE        WEIGHTED        OPTIONS
RANGE OF EXERCISE   OUTSTANDING AT       REMAINING        AVERAGE EXERCISE   EXERCISABLE   WEIGHTED AVERAGE
    PRICES             3/31/97        CONTRACTUAL LIFE          PRICE         AT 3/31/97    EXERCISE PRICE
-----------------   --------------    ----------------    ----------------   -----------   ----------------
<S>                 <C>               <C>                 <C>                <C>           <C>
$.895 to $2.07         601,880           7.4 years              $1.57          376,880          $1.38
$5.75 to $9.00         315,150           8.9 years               6.88           73,100           7.39
                       -------                                                 -------
$.895 to $9.00         917,030           7.9 years              $3.40          449,980          $2.36
                       =======                                                 =======
</TABLE>

    Under the 1996 Employee Stock Purchase Plan (ESPP), the Company is
authorized to issue up to 250,000 shares of common stock to employees of the
Company at a price equal to 85 percent of the market value at the end of each
purchase period. Common stock purchases are paid for through periodic payroll
deductions. Participants under the plan received 7,853 shares in 1997 at an
average price of $5.82.

    Pro forma information regarding net income (loss) and net income (loss) per
share is required by SFAS 123, and has been determined as if the Company had
accounted for its employee stock-based compensation plans and other stock
options under the fair value method of that SFAS. The fair value of each option
grant is estimated on the date of grant using the Black-Sholes option-pricing
model with the following weighted-average assumptions used for grants under the
fixed option plans in 1997 and 1996, respectively: dividend yield of 0% for both
periods; expected volatility of 54.2% for both periods (except for options
granted prior to the Company's initial public offering, for which the minimum
value method was used); risk free interest rate of 6.36% and 6.67%; and expected
lives of 6 years for both periods.

    The Black-Sholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics significantly
different from those of traded options,

                                     F-15
<PAGE>

and because changes in the subjective input assumptions can materially affect
the fair value estimate, in management's opinion, the existing models do not
necessarily provide a reliable single measure of the fair value of its
employee stock options.

    For purposes of pro forma disclosures the estimated fair value of
stock-based compensation plans and other options is amortized to expense over
the vesting period. The Company's pro forma net income (loss) and net income
(loss) per share is as follows:

<TABLE>
<CAPTION>
                                                              YEAR ENDED MARCH 31
                                                              -------------------
                                                               1996           1997
                                                               ----           ----
<S>                                         <C>            <C>           <C>
Net income (loss)                           As reported    $ 3,014,114   $  (368,554)
                                            Pro forma      $ 2,792,106   $  (592,966)
Net loss applicable to common shareholders  As reported    $  (138,553)  $        --
                                            Pro forma      $  (360,561)  $        --
Net loss per share                          As reported    $      (.02)  $      (.05)
                                            Pro forma      $      (.06)  $      (.08)
</TABLE>


    The effects of applying SFAS 123 for providing pro forma disclosures during
the initial phase-in period may not be representative of the effects on reported
net income for future years.

    The weighted-average fair market value of options granted under the options
plans during 1997 and 1996 was $3.86 and $1.21, respectively.

12.  PREFERRED STOCK

    In September 1995, the Company authorized 10,000,000 additional shares of
preferred stock, par value $.01 per share, of which none are issued. The Board
of Directors has the authority, without further action by the stockholders, to
issue these 10,000,000 shares in one or more series and to fix and determine as
to any series any and all of the relative rights and preferences of shares in
such series, including voting rights.

13.  EXPORT SALES

    Export sales from the Company's U.S. operations to unaffiliated customers
were as follows:

                                          YEAR ENDED MARCH 31,
                                ---------------------------------------
                                    1995          1996           1997
                                    ----          ----           ----
Asia and the Pacific Rim        $  629,000    $  951,000     $1,437,000
Australia                        1,122,000     1,346,000      1,122,000
Canada                             604,000       880,000        591,000
Europe                           2,039,000     2,705,000      4,797,000
Middle East                         --             --           313,000
Other                              113,000       273,000        389,000
                                ----------    ----------     ----------
                                $4,507,000    $6,155,000     $8,649,000
                                ==========    ==========     ==========

                                     F-16
<PAGE>

14.  PHAST CORPORATION

    In August 1995, the Company formed its 51% owned subsidiary, PHAST
Corporation ("PHAST"), a start-up company that designs and manufactures home
automation systems for the residential market, and provided PHAST $1,115,000 to
fund its first year of operations.

    In August 1996, the Company's chairman (a 16% shareholder) independently
purchased a 29% interest in the common stock of PHAST for $25,000 and purchased
$1,475,000 of PHAST's 8% Preferred Stock. Prior to August 1996, the Company had
recorded 100% of the losses of PHAST in its consolidated financial statements.
Subsequent to the minority ownership investment in August 1996, the Company
began allocating PHAST's losses to the minority interest in its 1997 interim
financial statements.

    In March 1997, at the request of the Company's Board of Directors and as a
condition precedent to further funding of PHAST by the Company, the chairman
granted the Company an option through March 1998 to purchase his PHAST
securities for $2,500,000, subject to an independent appraisal of at least an 
equal value.

    Based on the Company's assessment that it is more likely than not that the
Company will exercise this option, during the Company's fourth quarter, the
Company reversed the losses allocated to the minority interest in earlier
interim periods.

    As a result, the Company's consolidated financial statement for the fiscal
years ended March 31, 1996 and 1997 include $445,042 and $2,311,312
respectively, of losses from PHAST, representing 100% of PHAST's losses.

                                     F-17