SECURITIES AND EXCHANGE COMMISSION

                           Washington, D.C. 20549
                                  FORM 10-K

X  Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange 
   Act of 1934

For the fiscal year ended September 27, 1997.  Commission file number 0-8936.

                       DATAMARINE  INTERNATIONAL, INC.
           (Exact name of registrant as specified in its charter)

         Massachusetts                                  04-2454559
(State or other jurisdiction of           (I.R.S. Employer Identification No.)
 incorporation or organization)

7030 220th S.W., Mountlake Terrace, Washington                98043
   (Address of principal executive offices)                (Zip Code)

   Registrant's telephone number, including area code:      (425) 771-2182

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

Securities registered pursuant to Section 12(g) of the Act:

                               Title of Class
                    Common Stock, with par value of $.01

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 for such shorter periods 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.

The aggregate market value of the voting stock held by non-affiliates of the 
Registrant as of January 6, 1998 was approximately $3,408,000.

The number of shares of the Registrant's common stock outstanding as of 
January 6, 1998 was 1,329,912 shares.


             The total number of pages in this Form 10-K is 62.
                      See Index to Exhibits on page 40


PART  I
ITEM 1.  BUSINESS

Introduction

Datamarine International, Inc. and its subsidiaries (collectively the 
"Company") manufacture radio communications and navigation instrumentation 
products.  Presently, the Company's primary operations are in a single 
industry segment, namely electronics.  The Company also owns and manages 
specialized mobile radio ("SMR") licenses in the 220 MHz radio service, 
although such operations to date have been immaterial.

Datamarine International, Inc. was incorporated in Massachusetts on April 
23, 1969.  All of the Company's product development and manufacturing 
facilities are at its Mountlake Terrace, Washington location.  The Company 
has sales and service facilities on the East and West coasts of the United 
States and in Sydney, Australia.  Marine communication products, branded SEA,
and marine instrumentation products, branded Datamarine, are sold worldwide
through approximately 300 dealers in the United States and approximately 20 
foreign countries.

Sales of narrowband communications products for the land mobile radio market 
are made through the Company's wholly-owned subsidiary, SEA, Inc. ("SEA"), 
to business users nationwide.  SEA has developed and marketed narrowband 
radio equipment since 1984 and began selling its current line of narrowband 
equipment for use in the 220 MHz band in the fourth quarter of fiscal 1993. 
Sales to the land mobile radio market were 38% of consolidated sales in 
fiscal 1997 compared to 58% in 1996 and 45% in 1995.

On October 19,1992, the Federal Communications Commission ("FCC") conducted 
a lottery which has led to the issuance of approximately 3,500 licenses for 
a new land mobile service in the 220-222 MHz band.  The FCC adopted 
challenging technical parameters for the equipment to be used in the 220 MHz 
radio service.  By establishing these parameters the FCC intended to 
encourage the development of new spectrum-efficient technologies for land 
mobile applications.  This service is mandated to use narrowband 
technologies which will result in a fivefold increase in the number of 
communications channels as compared to conventional technologies.  SEA was 
the first manufacturer to receive FCC type acceptance for 220 MHz radio 
equipment.  SEA shipped its first 220 MHz radios in July 1993.

As of September 30, 1996 ownership of licenses for locations which had not 
met regulatory build-out requirements reverted to the Federal government.  
Until such time as new licenses are issued, demand for the Company's higher 
margin base station products is greatly reduced.  The FCC has announced that 
an auction for new 220 MHz licenses will commence on May 19, 1998.  The 
auction will be for licenses covering "Economic Areas", "Regions" and 
"Nationwide" areas as defined by the FCC.

During fiscal 1995 Narrowband Network Systems, Inc. ("NNS") was incorporated 
in the state of Washington as a subsidiary of SEA, and SEA owns 97.5% of NNS's
outstanding stock.  NNS was formed to participate in the business of 
providing SMR services.  NNS has entered into both "Management Agreements" 
and "Operator Agreements" with the holders of 220 MHz licenses granted by 
the FCC related to SMR services in approximately 47 market areas across the 
United States.  Management Agreements require NNS to construct, develop and 
operate SMR systems in certain markets.  Operator Agreements require NNS to 
provide licenses, system facilities and "SMR Operators" in certain markets.  
The Management Agreements typically allow NNS to acquire the license 
holder's interest in exchange for a percentage of gross receipts from the 
system and a percentage of any profit realized by NNS upon the system's 
ultimate disposition.  The Operator Agreements typically give NNS a 
contractual percentage of system revenue based on the level of support 
provided to each system.  The Company has met all regulatory build-out 
requirements related to its licenses.  Because NNS commenced only limited 
operations at the end of 1995, revenues and associated expenses have been 
immaterial since inception.

Foreign sales accounted for approximately 5% of the Company's consolidated 
sales in fiscal 1997, 6% in fiscal 1996 and 8% in fiscal 1995.  In recent 
years, foreign sales have represented a smaller percentage of total sales 
because narrowband products are only sold domestically.

Products and Marketing

The composition of the Company's sales by product line was as follows:

<TABLE>
<CAPTION>

                                  1997               1996               1995
                            ----------------   ----------------   ----------------

<S>                         <C>           <C>  <C>           <C>  <C>           <C>
Land mobile communications  $ 4,603,161   38%  $ 9,531,816   58%  $ 6,642,984   45%
Marine communications         5,118,578   42%    5,011,520   30%    5,296,945   36%
Marine instrumentation        2,368,939   20%    2,046,666   12%    2,846,729   19%
                            -------------------------------------------------------
   Total                    $12,090,678  100%  $16,590,002  100%  $14,786,658  100%
                            =======================================================

</TABLE>

Land Mobile Communications -- The Company's narrowband land mobile radio 
system products have been type accepted by the FCC for use in the 220 MHz 
radio service.  These products consist of hand held, mobile and base station 
components, utilizing the narrowband technology, an enhanced form of single 
sideband that is ideal for the 5 KHz channel width used in the 220 MHz radio 
service, and were developed for sale to business users of private land 
mobile radio services.  The narrowband technology helps solve the problem of 
frequency congestion by allowing five narrowband channels to be operated 
within the same spectrum as would presently be utilized by one 25 KHz FM 
channel.

Marine Communications -- The SEA marine communications products are high 
performance radios used on commercial vessels, fishing vessels and ocean-
going yachts.  The product line currently consists of 28 products with 
suggested list prices between $765 and $40,000.  The SEA products include 
HF/SSB and VHF/FM radios, Satcom C, Weather fax, Emergency distress radio 
beacons (EPIRBS), Search and rescue transponders (SARTS) and Global Maritime 
Distress and Safety Systems (GMDSS).

Marine Instrumentation -- Marine instrumentation products are sold primarily 
to the recreational boating market.  The products are well established in 
the marketplace with up-to-date instruments for each type of pleasure craft: 
small boats and yachts; sail and power; inshore and offshore. The Datamarine 
product line currently consists of 15 products sold under the DART, LINK, 
Corinthian and ChartLINK names, with suggested list prices between $400 
and $3,900. The Datamarine products include depth sounders, knotmeters and 
water temperature instruments, wind speed and direction instruments, 
integrated instruments, and electronic chart plotters.

Competition and Markets

Datamarine and its subsidiary, SEA, are generally considered to be leading 
suppliers of marine instruments and radio communication products to the 
marine markets.  Approximately 20 electronics manufacturers have competing 
models in their product lines and are considered competitors.

SEA has at this time one competitor supplying narrowband equipment for the 
220 MHz radio service.  Approximately 25 competitors offer alternative FM 
land mobile products for use in other radio services and could become 
competitive suppliers of equipment in the 220 MHz radio service market.

Several of the Company's competitors in the various markets have 
substantially greater financial, technical and marketing resources.

The Company's business does not depend on any single customer, the loss of 
whom would have a materially adverse impact on the Company's business.  No 
portion of the Company's business is subject to renegotiation of profits or 
termination of contracts or sub-contracts at the election of the government.  
The markets for the Company's products are generally not considered to be 
seasonal.

Sales order backlogs stood at $985,000 at September 27, 1997, compared to 
$5,412,000 at September 28, 1996.  Of the total September 27, 1997 backlog, 
marine products represented $770,000 and land mobile products represented 
$215,000.  The land mobile backlog related to base station equipment 
declined substantially when the FCC mandated September 30, 1996 build-out 
deadline expired.  The Company's land mobile backlog at September 27, 1997 
was comprised of items not subject to any FCC deadline.

Suppliers

Certain components in the Company's products, such as printed circuits and 
injection molded plastic parts, are provided by local vendors using tooling 
and designs owned by the Company.  The Company believes that adequate 
alternative sources of supply are available for these purchased components 
along with other supplies and raw materials.  The Company and its 
subsidiaries maintain sufficient inventory to continue production for a 
reasonable period if new material sources are required.

Warranty

Depending upon the product, they are sold with either a one-year or two-year 
parts and labor limited warranty.

Research and Development

The Company is committed to a continuing program of designing new products 
and improving the product designs presently in production.  During fiscal 
1997, fiscal 1996 and fiscal 1995 the Company spent approximately $1,301,000,
$1,235,000 and $1,420,000, respectively, on Company-sponsored research and 
development for continuing operations and had approximately 16 full-time 
employees engaged in such activities.

Patents

The Company has two United States patents related to its radio products.  
The Company views its patents as valuable assets, but believes that its 
position in the market is not dependent upon the protection offered thereby.

Employees

The Company had approximately 106 full-time employees on September 27, 1997.  
This compares to 110 on September 28, 1996 and 100 on September 30, 1995.  
The Company has no collective bargaining agreements and believes relations 
with its employees are good.

Environmental

The Company knows of no statutory requirements with respect to environmental 
quality which can be expected to have a material effect upon the Company's 
capital expenditures, earnings or competitive position.

ITEM 2.  PROPERTIES

The manufacturing and general administrative offices of the Company are 
located in a 32,500 square-foot building in Mountlake Terrace, Washington, 
pursuant to a lease which expires in June 1998. During fiscal 1997 the Company
renegotiated its lease at the Pocasset, Massachusetts facility through June, 
1999 where the service facility for the marine instrumentation product line 
now occupies 3,800 square-feet.  The sales and warehousing operation of a 
majority-owned subsidiary, Datamarine International Australia, PTY, LTD., is 
located in a leased 2,500 square-foot masonry steel building in Artarmon, 
New South Wales, Australia.  A subsidiary, Nautical Realty A/S, owned a 
20,000 square-foot steel and concrete industrial building located in Sorup, 
Denmark, which was sold to an unaffiliated tenant in December 1996.

ITEM 3.  LEGAL PROCEEDINGS

On December 12, 1996 the Company filed a collection action against one of 
its customers for accounts totaling approximately $132,000.  On December 23, 
1996 the same customer filed suit against the Company alleging breach of 
certain express and implied warranty and contractual obligations, and 
negligent representation with respect to sales of the Company's narrowband 
products.  The suit originally sought $6,000,000 - $9,000,000 in damages and 
unspecified amounts for interest and other costs.  Discovery is ongoing and 
the claims of both parties have been consolidated into one case.  The 
ultimate outcome of the litigation cannot presently be determined, 
accordingly no provision for any liability that may result upon adjudication 
has been made in the accompanying financial statements.

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

During the fourth quarter of the fiscal year ended September 27, 1997, no 
matter was submitted to a vote of security holders through the solicitation 
of proxies or otherwise.

PART II

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

The Company's Common Stock trades on the Nasdaq(tm) Stock Market under the 
symbol "DMAR".  As of January 6, 1998, there were approximately 850 
stockholders of record.

The accompanying table shows the range of trading prices for the past two 
years by fiscal quarter:

<TABLE>
<CAPTION>

                                    1st       2nd      3rd      4th
                                   ------    ------   ------   ------

        <S>                <C>     <C>       <C>      <C>      <C>
        Fiscal 1997:       High     9 3/4     9 3/4    8 1/4    7
                           Low      4 3/4     5 1/2    5 3/4    4 3/8
        Fiscal 1996:       High    11 1/4    11 1/4   13 3/4   11 3/4
                           Low      5 7/8     7 7/8    9 1/4    9

</TABLE>

No dividends have been declared or paid by the Company.  The Company 
currently intends to retain its earnings to fund the development and growth 
of its business.

ITEM 6.  SELECTED FINANCIAL DATA

All of the historical selected financial data set forth below has been 
derived from audited financial statements of the Company.

<TABLE>
<CAPTION>

Income Statement Data for       September 27,  September 8,  September 30,   October 1,   October 2,
the Year Ended                      1997           1996          1995           1994         1993
                                -------------  ------------  -------------   ----------   ----------

<S>                              <C>           <C>            <C>           <C>           <C>
Net sales                        $12,090,678   $16,590,002    $14,786,658   $11,829,437   $ 7,948,840
Cost of products sold              8,243,556     9,555,599      9,128,693     7,049,898     5,252,053
Operating expenses, excluding
 restructuring charge              5,284,103     5,627,499      5,584,954     5,159,848     4,697,510
Restructuring charge                      --            --        686,458            --            --
                                 --------------------------------------------------------------------
Operating income (loss)           (1,436,981)    1,406,904       (613,447)     (380,309)   (2,000,723)
                                 --------------------------------------------------------------------
Interest expense                     563,617       380,564        193,037        62,258        13,174
Other (income) expense                29,824      (112,724)       (39,719)      (46,619)       19,008
Income tax expense (benefit)         737,909       388,083     (1,083,640)           --      (132,506)
                                 --------------------------------------------------------------------
Income (loss) from continuing
 operations                       (2,768,331)      750,981        316,875      (395,948)   (1,900,399)
Discontinued operations:
  Net income                              --            --             --            --       129,026
  Net gain on sale                        --            --             --            --       239,553
                                 --------------------------------------------------------------------
Net income (loss)                $(2,768,331)  $   750,981    $   316,875   $  (395,948)  $(1,531,820)
                                 ====================================================================
Income (loss) Per Share:
  Continuing operations          $     (2.11)  $       .49    $       .23   $     (0.33)  $     (1.59)
  Discontinued operation                  --            --             --            --           .31
                                 --------------------------------------------------------------------
  Net income (loss)              $     (2.11)  $       .49    $       .23   $     (0.33)  $     (1.28)
                                 ====================================================================
</TABLE>

<TABLE>
<CAPTION>

                                September 27,  September 28,  September 30,  October 1,    October 2,
Balance Sheet Data                  1997           1996           1995          1994          1993
                                -------------  -------------  -------------  -----------   -----------

<S>                              <C>            <C>            <C>           <C>           <C>
Total assets                     $10,139,922    $12,649,846    $ 9,323,581   $ 7,862,611   $ 6,359,826
Notes payable to bank              1,367,561      1,750,000      1,325,353       795,353       400,000
Notes payable to related
 parties and others                  850,887             --         30,000            --            --
Long-term debt, including
 current portion                   1,948,979      2,022,978        642,800       439,819       274,337
Stockholders' equity               3,898,836      6,536,934      5,198,391     4,331,293     4,624,006

</TABLE>

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

Results of Operations

The following tables set forth certain items (expressed as a percentage of 
net sales) included in Selected Financial Data and should be read in 
connection with the Consolidated Financial Statements of the Company 
including the Notes to such Statements, presented elsewhere in this report.

<TABLE>
<CAPTION>

Income and Expense Items                                      Percentage
As a Percentage of Net Sales                              Increase (Decrease)
----------------------------                              -------------------
                                                             1996     1995
                                                              to       to
 1997    1996    1995                                        1997     1996

 <S>     <C>     <C>      <C>                                 <C>      <C>
 100%    100%    100%     Net sales                           (27)%    12%
  68      58      62      Cost of products sold               (14)      5
  32      42      38      Gross profit                        (45)     24
  11       7      10      Research and development              5     (13)
  21      16      16      Selling                              (5)      9
  12      11      12      General and administrative          (16)      1
  --      --       4      Restructuring charge                 --     n.m.
  44      34      42      Operating expenses                   (6)    (10)
 (12)      9      (4)     Operating income (loss)             n.m.    n.m.
   5       2       1      Interest expense                     48      97
  --      --      --      Other (income) expense, net         n.m.    183
 (17)      7      (5)     Income (loss) before income taxes   n.m.    n.m.
   6       2      (7)     Income tax expense (benefit)         90     n.m.
 (23)%     5%      2%     Net income (loss)                   n.m.    137

</TABLE>

Fiscal 1997 compared to 1996

Net sales decreased by $4,499,324 or 27%, to $12,090,678 for 1997 from 
$16,590,002 in 1996.  Net sales of the Company's narrowband products 
decreased by $4,928,655, or 52%, to $4,603,161 for 1997 from $9,531,816 in 
1996.  Net sales of the Company's marine radio systems increased by 
$107,058, or 2%, to $5,118,578 for 1997 from $5,011,520 in 1996.  Net sales 
of the Company's recreational marine instrumentation systems increased by 
$322,273, or 16%, to $2,368,939 for 1997 from $2,046,666 in 1996.

Sales of narrowband products are greatly influenced by the regulatory 
environment, principally license and operating rules issued by the FCC.  
Sales of narrowband base station equipment declined sharply after the FCC 
build-out deadline of September 30, 1996.  Although the Company cannot 
control, nor reliably predict which rules the FCC will issue and the 
effective dates thereof, the FCC has announced that the auction of new 220 
MHz licenses will commence May 19, 1998.  Management expects that the FCC's 
issuance of new licenses will provide an opportunity for significant revenue 
growth in the narrowband product line.  Management anticipates that persons 
obtaining licenses in the auction will purchase the base station repeater 
equipment needed to operate the radio service, followed by the purchase of 
mobile radios used by subscribers to the service.  Sales of marine radio 
systems are expected to increase as the Company continues to introduce new 
products and obtains regulatory type acceptance of its marine radio products 
in the United States and foreign countries.  Sales of marine instrumentation 
systems increased, reversing a four year decline.  Marine instrumentation 
sales are expected to continue improving as the Company introduces new 
products and begins shipping higher volumes of products introduced in 1997.

Gross profit for 1997 was $3,847,122 (32% of net sales), as compared to 
$7,034,403 (42% of net sales) in 1996, a decrease of $3,187,281 or 45%.  The 
gross profit on narrowband products for 1997 was $715,515 (16% of such 
sales), as compared to $3,718,826 (39% of such sales) in 1996, a decrease of 
$3,003,311 or 81%.  Margins on narrowband products fluctuate based on 
product mix, and are generally much higher on base station products than on 
mobile radios.  The FCC build-out deadline caused base station revenues to 
decline sharply, so the majority of land mobile revenue came from the sale 
of lower margin mobile radios.  Until such time as new 220 MHz licenses are
available, narrowband sales will continue to be comprised of a greater 
proportion of mobile radios rather than base stations, and thus will achieve
a lower overall percentage margin than was acheived for 1996.  The gross 
profit on marine radio systems for 1997 was $2,233,710 (44% of such sales), 
as compared to $2,221,079 (44% of such sales), an increase of $12,631 or 1%. 
The overall gross margin percentage on marine communications products was 
similar in 1997 and 1996.  Slight declines in margins on established products 
were offset by continued sales growth in newer, higher margin, Global 
Maritime Distress and Safety System (GMDSS) products.  The gross profit on 
marine instrumentation systems for 1997 was $897,897 (38% of such sales), as 
compared to $1,094,498 (53% of such sales), a decrease of $196,601 or 18%.  
Although sales of marine instrumentation products increased from 1996, gross 
margin was lower due to manufacturing costs increasing faster than selling 
prices, and a greater portion of sales coming from lower margin products.

Operating expenses were $5,284,103 (44% of net sales) in 1997, as compared 
to $5,627,499 (34% of net sales) in 1996, a decrease of $343,396 or 6%.  
Selling expenses decreased $131,801 or 5%.  Sales commissions declined 
approximately 32% due to decreased sales, while sales related salaries 
increased approximately 14%.  Other selling expenses including warranty and 
promotional expenses also declined from 1996.  Administrative expenses 
decreased $278,036 or 16%.  Administrative salaries declined approximately 
24% due to the elimination of profit sharing, and business tax expense 
decreased 68% due to a refund of previously paid taxes and new state tax 
credits.  Research and development expenses increased $66,441 or 5%. 
Engineering related salaries increased approximately 12%, engineering 
consulting fees increased 47%, while consumable supplies and other engineering
expenses declined approximately 39%.

Interest expense for 1997 was $563,617 as compared to $380,564 for 1996.  
Interest expense increased primarily as a result of higher loan balances on 
bank borrowings, increases in bank borrowing rates, and interest, amortization
of discount and issuance costs related to the convertible debenture.  Other 
income and expense was a net expense of $29,824 in 1997 compared to a net 
income of $112,724 in 1996.  Other expense increased due to NNS site rental 
expenses and a loss on the sale of the building by Nautical Realty A/S.

Income tax expense for 1997 was $737,909 compared to $388,083 in 1996.  The 
entire 1997 income tax expense was attributable to an increase in the deferred
tax asset valuation allowance.

Net loss for 1997 was $2,768,331 compared to 1996 net income of $750,981.

Fiscal 1996 compared to 1995

Net sales increased by $1,803,344 or 12%, to $16,590,002 for 1996 from 
$14,786,658 in 1995.  Net sales of the Company's narrowband products 
increased by $2,888,832, or 43%, to $9,531,816 for 1996 from $6,642,984 in 
1995.  Net sales of the Company's marine radio systems decreased by 
$285,425, or 5%, to $5,011,520 for 1996 from $5,296,945 in 1995.  Net sales 
of the Company's recreational marine instrumentation systems declined by 
$800,063, or 28%, to $2,046,666 for 1996 from $2,846,729 in 1995.

Gross profit for 1996 was $7,034,403 (42% of net sales), as compared to 
$5,657,965 (38% of net sales) in 1995, an increase of $1,376,438 or 24%.  
The gross profit on narrowband products for 1996 was $3,718,826 (39% of such 
sales), as compared to $3,003,527 (45% of such sales) in 1995, an increase 
of $715,299 or 24%.  Margins on narrowband products fluctuate based on 
product mix, and generally are higher on base station products than on 
mobile radios. The gross profit on marine radio systems for 1996 was 
$2,221,079 (44% of such sales), as compared to $2,156,023 (41% of such 
sales), an increase of $65,056 or 3%.  Margins on marine communications 
products were slightly higher in 1996 due to sales of the new GMDSS 
products.  The gross profit on marine instrumentation systems for 1996 was 
$1,094,498 (53% of such sales), as compared to $498,415 (18% of such sales), 
an increase of $596,083 or 120%.  Margins on marine instrumentation products 
were higher due to lower production costs realized by the move of marine 
instrumentation production to the Mountlake Terrace, Washington facility.

Operating expenses were $5,627,499 (34% of net sales) in 1996, as compared 
to $6,271,412 (42% of net sales) in 1995, a decrease of $643,913 or 10%.  
1995 operating expenses included a restructuring charge of $686,458.  
Comparable operating expenses excluding the 1995 restructuring charge 
increased $42,545.  Selling expenses increased $218,336, due mainly to sales 
commissions on higher sales volume.  Administrative expenses increased 
$9,099.  Lower professional fees and savings from the consolidation of 
administrative operations in Mountlake Terrace were offset by depreciation 
expense in NNS.

During 1995 the Company established a special charge of $686,458 in 
connection with a restructuring program designed to improve productivity and 
permanently reduce costs.  The Company moved corporate administrative 
functions and production of its Datamarine product line to its facility in 
Mountlake Terrace, Washington.  Costs associated with the restructuring 
included the write down of leasehold improvements, product tooling and 
equipment to net realizable values, the phase out of certain products, 
employee termination benefits, and the costs to settle the long-term lease 
of the Massachusetts facility.

The restructuring was announced in January 1995 and was substantially 
completed by December 31, 1995.  The program resulted in the permanent 
reduction of approximately 30 employees and 35,000 square feet of 
manufacturing and office space.

The restructuring charges were comprised of $346,524 in write downs of 
production equipment and leasehold improvements, $94,630 in write downs of 
inventory related to discontinued products, $147,748 in employee termination 
benefits, and $97,556 in lease settlement costs.

Interest expense for 1996 was $380,564 as compared to $193,037 for 1995.  
Interest expense increased primarily as a result of interest, amortization 
of discount and issuance costs related to the convertible debenture.  Other 
income, net, increased due to revenue from non-recurring equipment design 
project. 

Income tax expense for 1996 was $388,083 compared to an income tax benefit 
of $1,083,640 in 1995.  The 1995 income tax benefit included a $702,000 
reduction in the valuation allowance.

Net income for 1996 was $750,981 compared to $316,875 in 1995.

Capital Expenditures

Capital expenditures were $395,000 (including capital lease additions of 
$217,000), $959,000 and $699,000 in fiscal years 1997, 1996 and 1995, 
respectively.  Planned capital expenditures in fiscal year 1998 are 
$275,000, primarily for production and engineering equipment.  Higher levels
of capital spending in 1996 and 1995 are attributable to build-out of NNS 
licenses.

Liquidity and Capital Resources

Net cash used in operating activities for 1997 decreased by $769,994 to
$101,155 from net cash used in operating activities of $871,149 in 1996. The
reduction was due mostly to decreases in inventories and accounts receivable.
At the end of 1997 the sales order backlogs stood at $985,000, compared to
$5,412,000 at September 28, 1996. Of the total September 27, 1997 backlog,
marine products represented $770,000 and land mobile products represented
$215,000. During 1997 the Company issued $550,000 in short-term subordinated
notes, originally due in March 1998, the proceeds of which were available for
working capital requirements. The maximum amount available on the Company's
bank line was decreased from $2,500,000 to $2,000,000 in June 1997. The amount
available to the Company under the line is based upon a formula that considers
the Company's trade receivables and finished goods inventory. The Company's
1997 borrowings under the line did not exceed $1,750,000. At September 27, 1997
the amount outstanding on the line was $1,367,561 which was the maximum amount
supported by the borrowing base at that time. The line of credit is subject to
debt covenants which allow the Company to have maximum quarterly losses of
$350,000, and require the Company to maintain a tangible net worth as defined
by the bank of $5,500,000, a minimum current ratio of 1.50 and a maximum debt
to net worth ratio of 1.25. The Company also has a $400,000 line of credit in
the form of a subordinated loan from an officer of the Company, expiring July
1998. At September 27, 1997 the amount outstanding on the loan was $344,697,
leaving $55,303 available.

Subsequent to year end, the Company renegotiated the terms of its Subordinated
Convertible Debentures (the "Debentures") and subordinated short term notes
(the "Notes"). As a result of those modifications, originally scheduled
interest payments on the Debentures were extended to February 1999, and the
originally scheduled $2,000,000 principal payment on the Debentures was changed
from December 2000 to February 1999. The originally scheduled principal and
interest payments on the Notes were extended to March 1999.

In connection with modifying the terms of the Debentures and the Notes, and in
order to manage the Company's working capital requirements through fiscal 1998,
the Company and the bank agreed to extend the maturity date of the variable
bank line from June 1998 to February 1999.

Based on its current operating plans, the Company believes its cash flow from
operations, available bank lines of credit and other committed financing
sources are sufficient to meet its working capital and other capital
requirements at least through October 3, 1998. In order to redeem its
obligations as scheduled in 1999, and meet its operating and capital
requirements into fiscal 1999, the Company will require additional funding. The
Company is considering various sources of funding including additional private
or publicly placed debt or equity, mergers, or the sale of assets. No such
funding is committed at this time, and there is no assurance that the Company
will be able to obtain additional financing on acceptable terms.

Other Matters

Accounting Pronouncements

In February 1997, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share." This
statement specifies the computation, presentation and disclosure requirements
for earnings per share ("EPS"), to simplify the existing computational
guidelines and increase comparability on an international basis. The statement
will be effective for interim and annual reporting periods ending after
December 15, 1997. This statement will replace "primary" EPS with "basic" EPS,
the principal difference being the exclusion of common stock equivalents in the
computation of basic EPS. In addition, this statement will require the dual
presentation of basic and diluted EPS on the face of the consolidated
statements of operations. The impact is expected to result in an increase to
primary earnings per share for the years ended September 28, 1996 and September
30, 1995 of $.09 and $.02 respectively. Diluted EPS computed pursuant to this
statement is not expected to be materially different from the historical net
income (loss) per share previously presented.

In June 1997, the FASB issued Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income." This statement requires that changes in
comprehensive income be shown in a financial statement that is displayed with
the same prominence as other financial statements. The statement will be
effective for fiscal years beginning after December 15, 1997. Reclassification
for earlier periods is required for comparative purposes. The Company does not
expect the statement to have a material impact on its consolidated financial
position or results of operations.

In June 1997, the FASB issued Statement of Financial Accounting Standards No.
131, "Disclosures About Segments of an Enterprise and Related Information."
This statement supersedes Statement of Financial Accounting Standards No. 14,
"Financial Reporting for Segments of a Business Enterprise." This statement
includes requirements to report selected segment information quarterly, and
entity-wide disclosures about products and services, major customers, and the
material countries in which the entity holds assets and reports revenues. The
statement will be effective for fiscal years beginning after December 15, 1997.
Reclassification for earlier periods is required, unless impracticable, for
comparative purposes. Management has not yet determined the effects, if any, of
SFAS 131 on the consolidated financial statements.

Year 2000

The Company has implemented a program to identify and resolve the effect of 
Year 2000 software issues on the integrity and reliability of its financial 
and operational systems.  In addition, the Company is also communicating with 
its principal customers, suppliers and service providers to ensure Year 2000
issues will not have an adverse impact on the Company.  The costs of 
achieving Year 2000 compliance are not expected to have a material impact on 
the Company's business, operations or financial condition.

Impact of Inflation

The Company's results are affected by the impact of inflation on 
manufacturing and operating costs. Historically, the Company has used 
selling price adjustments, cost containment programs and improved operating 
efficiencies to offset the negative impact of inflation on its operations.

Forward-looking Statements

This report contains forward-looking statements that involve risks and 
uncertainties.  Statements included in this report which are not historical 
in nature are forward-looking statements within the meaning of Section 27A 
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act 
of 1934, and are made pursuant to the safe harbor provisions of the Private 
Securities Litigation Reform Act of 1995, including without limitation 
statements regarding the Company's expectations, beliefs, intentions or 
strategies regarding the future.  All forward-looking statements included in 
this document are based on information available to the Company on the date 
hereof, and the Company assumes no obligation to update any such forward-
looking statements.  This Annual Report on Form 10-K and Quarterly Reports 
on Form 10-Q contain certain detailed factors that could cause the Company's 
actual results to materially differ from forward-looking statements made 
by the Company.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

               DATAMARINE INTERNATIONAL, INC. AND SUBSIDIARIES
                      Consolidated Financial Statements
                             September 27, 1997

                                    INDEX
<TABLE>
<CAPTION>
                                                            Page(s)
                                                            -------

<S>                                                           <C>
Report of Independent Accountants                             14

Consolidated Balance Sheets, September 27, 1997 and
 September 28, 1996                                           15

Consolidated Statements of Operations for the years
 ended September 27, 1997, September 28, 1996
 and September 30, 1995                                       16

Consolidated Statements of Stockholders' Equity for
 the years ended September 27, 1997, September 28, 1996
 and September 30, 1995                                       17

Consolidated Statements of Cash Flows for the years
 ended September 27, 1997, September 28, 1996 and
 September 30, 1995                                           18

Notes to Consolidated Financial Statements                    19 - 35

</TABLE>

Report of Independent Accountants

To the Stockholders and Board of Directors of
Datamarine International, Inc.

We have audited the accompanying consolidated balance sheets of Datamarine 
International, Inc. and Subsidiaries as of September 27, 1997 and September 
28, 1996 and the related consolidated statements of operations, 
stockholders' equity and cash flows for the years ended September 27, 1997, 
September 28, 1996 and September 30, 1995.  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 financial statements referred to above present fairly, 
in all material respects, the consolidated financial position of Datamarine 
International, Inc. and Subsidiaries as of September 27, 1997 and September 
28, 1996, and the consolidated results of their operations and their cash 
flows for the years ended September 27, 1997, September 28, 1996 and 
September 30, 1995 in conformity with generally accepted accounting 
principles. 


/s/ COOPERS & LYBRAND L.L.P.

Seattle, Washington
December 11, 1997, except for the fourth and fifth paragraphs of Note 1, the 
last sentence in the first paragraph of Note 6, the last sentence of Note 7,
the last sentence in the third paragraph of Note 8, and Note 14 to the 
financial statements as to which the date is March 2, 1998.


DATAMARINE INTERNATIONAL, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

<TABLE>
<CAPTION>

                ASSETS                                         September 27,   September 28,
                                                                   1997            1996
                                                               -------------   -------------
<S>                                                             <C>             <C> 
Current assets:
  Cash and cash equivalents                                     $   532,896     $   330,076
  Accounts receivable, less allowance for doubtful
   accounts of $234,973 and $171,990, respectively                2,030,641       3,335,052
  Inventories                                                     4,867,708       5,230,705
  Prepaid expenses and other current assets                         243,081         202,067
  Deferred income taxes, current                                         --         332,825
                                                                ---------------------------
    Total current assets                                          7,674,326       9,430,725

Property, plant and equipment                                     5,032,823       5,169,121
Less accumulated depreciation                                     3,062,703       2,889,267
                                                                ---------------------------
    Property, plant and equipment, net                            1,970,120       2,279,854

Deferred income taxes, non-current                                       --         405,084
Other assets, net                                                   495,476         534,183
                                                                ---------------------------
    Total assets                                                $10,139,922     $12,649,846
                                                                ===========================

                    LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Note payable to bank                                          $ 1,367,561     $ 1,750,000
  Notes payable to related parties and others                       850,887              --
  Current maturities of capital lease obligations                    88,480          48,439
  Current maturities of long-term debt                               44,806         124,854
  Accounts payable                                                  556,416         718,240
  Accrued expenses                                                1,517,243       1,621,694
                                                                ---------------------------
    Total current liabilities                                     4,425,393       4,263,227

Capital lease obligations, less current maturities                   83,992              --
Long-term debt, less current maturities                           1,731,701       1,849,685
                                                                ---------------------------
    Total liabilities                                             6,241,086       6,112,912
                                                                ---------------------------

Commitments and contingencies

Redeemable preferred stock, $1 par value; none issued                    --              --

Stockholders' equity:
  Convertible preferred stock, $1 par value - authorized
   1,000,000 shares, including redeemable preferred stock;
   none issued                                                           --              --
  Common stock, $.01 par value - authorized 3,000,000 shares;
   1,320,473 and 1,309,411 shares issued and
   outstanding, respectively                                         13,205          13,094
  Capital in excess of par value                                  3,815,415       3,644,662
  Unearned compensation                                             (53,052)        (12,421)
  Retained earnings                                                 123,268       2,891,599
                                                                ---------------------------
    Total stockholders' equity                                    3,898,836       6,536,934
                                                                ---------------------------
      Total liabilities and stockholders' equity                $10,139,922     $12,649,846
                                                                ===========================
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

DATAMARINE INTERNATIONAL, INC. AND SUBSIDIARIES

Consolidated Statements Of Operations
for the years ended September 27, 1997, September 28, 1996
and September 30, 1995

<TABLE>
<CAPTION>

                                            September 27,   September 28,   September 30,
                                                1997            1996            1995
                                            -------------   -------------   -------------

<S>                                          <C>             <C>             <C>
Net sales                                    $12,090,678     $16,590,002     $14,786,658
Cost of products sold                          8,243,556       9,555,599       9,128,693
                                             -------------------------------------------
    Gross profit                               3,847,122       7,034,403       5,657,965

Operating expenses:
  Research and development                     1,301,455       1,235,014       1,419,904
  Selling                                      2,505,621       2,637,422       2,419,086
  General and administrative                   1,477,027       1,755,063       1,745,964
  Restructuring charge                                --              --         686,458
                                             -------------------------------------------
    Operating expenses                         5,284,103       5,627,499       6,271,412
                                             -------------------------------------------

Operating income (loss)                       (1,436,981)      1,406,904        (613,447)

Interest expense                                 563,617         380,564         193,037
Other (income) expense, net                       29,824        (112,724)        (39,719)
                                             -------------------------------------------

Income (loss) before income taxes             (2,030,422)      1,139,064        (766,765)
Income tax expense (benefit)                     737,909         388,083      (1,083,640)
                                             -------------------------------------------
Net income (loss)                            $(2,768,331)    $   750,981     $   316,875
                                             ===========================================

Net income (loss) per share:
  Primary                                    $     (2.11)    $       .49     $      0.23
  Fully diluted                              $     (2.11)    $       .49     $      0.23

Weighted average number of common shares:
  Primary                                      1,313,520       1,519,985       1,358,099
  Fully diluted                                1,313,520       1,525,590       1,358,099

</TABLE>

The accompanying notes are an integral part of the consolidated financial 
statements.

DATAMARINE INTERNATIONAL, INC. AND SUBSIDIARIES

Consolidated Statements Of Stockholders' Equity
for the years ended September 27, 1997, September 28, 1996
and September 30, 1995

<TABLE>
<CAPTION>

                                          Common Stock       Capital in                                    Total
                                       -------------------    Excess of     Unearned      Retained     Stockholders'
                                        Shares     Amount     Par Value   Compensation    Earnings        Equity
                                       -------------------   ----------   ------------   ----------    -------------

<S>                                    <C>         <C>       <C>           <C>           <C>            <C>
Balance at October 1, 1994             1,219,893   $12,199   $2,550,615    $ (55,264)    $ 1,823,743    $ 4,331,293
Net income for 1995                           --        --           --           --         316,875        316,875
Issuance of shares under
 Employee Investment Plan and
 Employee Stock Purchase Plan              5,871        59       50,159           --              --         50,218
Issuance of shares under lease
 settlement agreement                     22,000       220      179,780           --              --        180,000
Exercise of stock options                 48,920       489      235,776           --              --        236,265
Compensation element of stock
 options granted                              --        --       19,500      (19,500)             --             --
Tax benefit of options exercised              --        --       42,352           --              --         42,352
Amortization of unearned
 compensation                                 --        --           --       41,388              --         41,388
                                       ----------------------------------------------------------------------------
Balance at September 30, 1995          1,296,684    12,967    3,078,182      (33,376)      2,140,618      5,198,391

Net income for 1996                           --        --           --           --         750,981        750,981
Issuance of shares under
 Employee Investment Plan and
 Employee Stock Purchase Plan              4,577        46       42,776           --              --         42,822
Finalization of shares under
 lease settlement agreement               (2,000)      (20)          20           --              --             --
Exercise of stock options                 10,150       101       43,684           --              --         43,785
Proceeds of convertible debt
 attributable to conversion rights            --        --      480,000           --              --        480,000
Amortization of unearned
compensation                                  --        --           --       20,955              --         20,955
                                       ----------------------------------------------------------------------------
Balance at September 28, 1996          1,309,411    13,094    3,644,662      (12,421)      2,891,599      6,536,934

Net loss for 1997                             --        --           --           --      (2,768,331)    (2,768,331)
Issuance of shares under
 Employee Investment Plan and
 Employee Stock Purchase Plan              5,430        54       42,816           --              --         42,870
Unamortized compensation
 on forfeited stock options                   --        --       (1,161)       1,161              --             --
Exercise of stock options                  5,632        57       25,288           --              --         25,345
Compensation element of stock
 options granted                              --        --       60,000      (60,000)             --             --
Proceeds of notes payable to related
 parties and others attributable to
 stock warrants                               --        --       43,810           --              --         43,810
Amortization of unearned
compensation                                  --        --           --       18,208              --         18,208
                                       ----------------------------------------------------------------------------
Balance at September 27, 1997          1,320,473   $13,205   $3,815,415    $ (53,052)    $   123,268    $ 3,898,836
                                       ============================================================================
</TABLE>

The accompanying notes are an integral part of the consolidated financial 
statements.

DATAMARINE INTERNATIONAL, INC. AND SUBSIDIARIES

Consolidated Statements Of Cash Flows
for the years ended September 27, 1997, September 28, 1996
and September 30, 1995

<TABLE>
<CAPTION>

                                                        September 27,   September 28,   September 30,
                                                            1997            1996            1995
                                                        -------------   -------------   -------------
                                                        
<S>                                                      <C>             <C>             <C> 
Operating activities:
  Net  income (loss)                                     $(2,768,331)    $   750,981     $   316,875
  Adjustments to reconcile net income (loss) to
   net cash used in operating activities:
    Depreciation and amortization                            445,623         441,467         406,831
    Loss on asset dispositions                                12,848              --              --
    Non-cash portion of loss from restructuring charge            --              --         441,154
    Amortization of debenture discount and issue costs       119,128          93,624              --
    Provision for losses on accounts receivable               89,691          81,615          59,725
    Employee investment plan expense                          36,287          36,937          42,216 
    Amortization of unearned compensation                     18,208          20,955          41,388
    Provision for (benefit of) deferred income taxes         737,909         388,083      (1,083,640)
    Changes in operating assets and liabilities:
      Accounts receivable                                  1,214,720      (1,079,060)        (78,967)
      Inventories, prepaid expenses and other
       current assets                                        321,983      (1,818,648)       (246,730)
      Accounts payable and accrued expenses                 (329,221)        212,897          10,893
                                                         -------------------------------------------
Net cash used in operating activities                       (101,155)       (871,149)        (90,255)
                                                         -------------------------------------------

Investing activities:
  Net proceeds from asset dispositions                       346,862              --              --
  Purchases of property, plant and equipment,
   including self-constructed equipment                     (177,585)       (959,036)       (699,125)
  Other                                                      (31,287)       (135,569)       (145,951)
                                                         -------------------------------------------
Net cash provided by (used in) investing activities          137,990      (1,094,605)       (845,076) 
                                                         -------------------------------------------
Financing activities:
  Proceeds from sale of common stock                          31,928          49,670         244,267
  Proceeds from notes payable to related parties
   and others                                                894,697              --          30,000
  Proceeds from bank and other borrowings                         --       3,750,000       1,054,843
  Deferred financing costs                                        --        (197,508)             --
  Principal payments on note payable to bank, capital
   lease obligations and long-term debt                     (760,640)     (1,559,175)       (321,862)
                                                         -------------------------------------------
Net cash provided by financing activities                    165,985       2,042,987       1,007,248
                                                         -------------------------------------------

Increase in cash and equivalents during year                 202,820          77,233          71,917
Cash and equivalents at beginning of year                    330,076         252,843         180,926
                                                         -------------------------------------------
Cash and equivalents at end of year                      $   532,896     $   330,076     $   252,843
                                                         ===========================================
Supplementary Cash Flow Information
  Interest paid                                          $   278,400     $   110,500     $   207,000
  Capital lease obligations incurred to acquire
   equipment                                                 217,472              --              --

</TABLE>

The accompanying notes are an integral part of the consolidated financial 
statements.


DATAMARINE INTERNATIONAL, INC. AND SUBSIDIARIES

Notes To Consolidated Financial Statements

1.    Business Activities:

      Datamarine International, Inc. and subsidiaries (the "Company") 
      manufactures and markets electronics including radio/telephone systems 
      for land and marine applications and marine depth sounders and related 
      instrumentation.  Narrowband products consist of hand held, mobile and 
      base station components for use in the 220 MHz radio service, and are 
      sold primarily to business users of private radio services.  Marine 
      communications products are high performance radios used on commercial 
      vessels, fishing vessels and ocean-going yachts.  Marine 
      instrumentation products are up-to-date instruments for pleasure 
      craft; small boats and yachts; sail and power; inshore and offshore.  
      Marine communication and marine instrumentation products are sold 
      worldwide through approximately 300 dealers.

      In July 1993, the Company launched its current land mobile 
      product line which represents 38%, 58% and 45% of net sales in fiscal 
      1997, 1996 and 1995, respectively.  In addition, the Company has 
      entered into agreements for the construction and operation of 
      narrowband land mobile systems (see Note 10).

      As of September 30, 1996 ownership of licenses for locations 
      which had not met regulatory build-out requirements reverted to the 
      Federal government.  The Federal Communications Commission ("FCC") has 
      announced that an auction for new 220 MHz licenses will commence on 
      May 19, 1998.  The auction will be for licenses covering "Economic 
      Areas", "Regions" and "Nationwide" areas as defined by the FCC. 
      Until such time as new licenses are issued, demand for the Company's
      higher margin base station products is greatly reduced.

      Subsequent to year end, the Company renegotiated the terms of its
      Subordinated Convertible Debentures (the "Debentures") and subordinated
      short term notes (the "Notes") (see Note 14). As a result of those
      modifications, originally scheduled interest payments on the Debentures
      were extended to February 1999, and the originally scheduled $2,000,000
      principal payment on the Debentures was changed from December 2000 to
      February 1999. The originally scheduled principal and interest payments
      on the Notes were extended to March 1999. In connection with modifying
      the terms of the Debentures and the Notes, and in order to manage the
      Company's working capital requirements through fiscal 1998, the Company
      and the bank agreed to extend the maturity date of the variable bank line
      from June 1998 to February 1999.

      Based on its current operating plans, the Company believes its cash flow
      from operations, available bank lines of credit and other committed
      financing sources are sufficient to meet its working capital and other
      capital requirements at least through October 3, 1998. In order to 
      redeem its obligations as scheduled in 1999, and meet its operating and 
      capital requirements into fiscal 1999, the Company will require 
      additional funding. The Company is considering various sources of funding
      including additional private or publicly placed debt or equity, mergers,
      or the sale of assets. No such funding is committed at this time, and 
      there is no assurance that the Company will be able to obtain additional
      financing on acceptable terms. In the event that the Company fails to 
      obtain such financing when required, such failure could result in the 
      delay or modification of some or all of the Company's debt redemption, 
      development and expansion plans, which in turn could have a material 
      adverse effect on the Company.

2.    Significant Accounting Policies:

      Consolidation

      The consolidated financial statements include the accounts of 
      the Company and its wholly-owned subsidiaries, SEA, Inc. ("SEA"), and 
      Nautical Realty A/S; the Company's 97.5% owned subsidiary, Narrowband 
      Network Systems, Inc. ("NNS") and its 60% owned subsidiary, Datamarine 
      International Australia PTY, LTD.  The Company has recognized the 
      losses attributable to the minority owner's interest in Datamarine 
      International Australia PTY, LTD. in excess of the minority owner's 
      investment.  Upon consolidation, all intercompany accounts, 
      transactions and profits have been eliminated.
 
      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 reported amounts of assets 
      and liabilities and disclosure of contingent assets and liabilities at 
      the date of the financial statements and the reported amounts of 
      revenues and expenses during the reporting period.  Actual results 
      could differ from those estimates.

      Fiscal Year

      The Company's fiscal year ends on the Saturday nearest September 30.

      Revenue Recognition

      Revenue from the sale of products and services is recognized in 
      the consolidated statements of operations as services are rendered or 
      deliveries made.

      Cash and Cash Equivalents

      The Company considers all highly liquid investments, with an 
      original maturity of three months or less when purchased, to be cash 
      equivalents.

      Concentration of Credit Risk

      The concentration of credit risk with respect to trade 
      receivables is, in management's opinion, considered minimal due to the 
      Company's diverse customer base.  The customers for the marine 
      products are primarily distributors and dealers who resell to both 
      recreational and commercial boaters.  The customers for the land 
      mobile communication products consist primarily of industrial users of 
      private land mobile radio services.  The Company sells to customers 
      located throughout the United States as well as in Australia and other 
      countries.  The Company had no significant foreign operations but had 
      export sales of approximately $618,000 in 1997, $975,000 in 1996, and 
      $1,161,000 in 1995.  Credit evaluations of its customers' financial 
      condition are performed periodically, and the Company generally does 
      not require collateral from its customers.  Land mobile customers 
      account for approximately 47% of the accounts receivable balance as of 
      September 27, 1997, compared to 67% at September 28, 1996.

      Inventories

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

      Property, Plant and Equipment

      Property, plant and equipment, including self constructed 
      assets, are stated at cost.  Depreciation is based on the straight-
      line method over the useful lives of the assets (see Note 4).  Upon  
      disposition of property, plant and equipment, the cost and related 
      depreciation are removed from the accounts, and any gain or loss is 
      reflected in the consolidated statement of operations.

      FCC License Costs

      Costs associated with acquiring and developing 220 MHz licenses 
      are amortized on a straight-line basis over ten years and are included 
      in other assets.

      Deferred Financing Costs

      Deferred financing costs of $135,487 at September 27, 1997 
      represent the direct costs of issuing the convertible debentures and 
      are included in other assets.  These costs are amortized by the 
      effective interest method over the term of the related debt.

      Research and Development

      Expenditures for research and development are charged to expense 
      as incurred.

      Warranty Costs

      The Company provides, by a current charge to income, an amount 
      it estimates will be needed to cover future warranty obligations for 
      products sold during the year.

      Income Taxes

      The Company uses the liability method of accounting for income 
      taxes whereby deferred tax balances are recognized at the currently 
      enacted tax rates for all temporary differences between the book and 
      tax bases of assets and liabilities, net of a valuation allowance as 
      appropriate.

      Stock Based Compensation

      The Company applies APB Opinion No. 25, Accounting for Stock 
      Issued to Employees and related Interpretations in measuring 
      compensation cost for its stock option plans.  The Company discloses 
      pro forma net income (loss) and net income (loss) per share as if 
      compensation cost had been determined consistent with Statement of 
      Financial Accounting Standards (FAS) No. 123, Accounting for Stock 
      Based Compensation.

      Earnings Per Share

      Net income (loss) per common share is based on the weighted 
      average number of common shares and common stock equivalents 
      outstanding.  Common stock equivalents include shares issuable upon 
      exercise of the Company's stock options and the Company's convertible 
      preferred stock.  Fully diluted earnings per share is computed based 
      on the weighted average number of shares of common stock and common 
      stock equivalents outstanding during the period taking into 
      consideration maximum potential dilution.  Common stock equivalents 
      are excluded from the calculation when they are antidilutive.

      Reclassifications

      Certain reclassifications have been made to the prior years' financial 
      statements in order to conform to the 1997 presentation, with no 
      impact on previously reported net income (loss) or stockholders' 
      equity.

      Future Effects of New Accounting Standards


      In February 1997, the Financial Accounting Standards Board (the "FASB")
      issued Statement of Financial Accounting Standards No. 128, "Earnings Per
      Share." This statement specifies the computation, presentation and
      disclosure requirements for earnings per share ("EPS"), to simplify the
      existing computational guidelines and increase comparability on an
      international basis. The statement will be effective for interim and
      annual reporting periods ending after December 15, 1997. This statement
      will replace "primary" EPS with "basic" EPS, the principal difference
      being the exclusion of common stock equivalents in the computation of
      basic EPS. In addition, this statement will require the dual presentation
      of basic and diluted EPS on the face of the consolidated statements of
      operations. The impact is expected to result in an increase to primary
      earnings per share for the years ended September 28, 1996 and September
      30, 1995 of $.09 and $.02 respectively. Diluted EPS computed pursuant to
      this statement is not expected to be materially different from the
      historical net income (loss) per share previously presented.

      In June 1997, the FASB issued Statement of Financial Accounting Standards
      No. 130, "Reporting Comprehensive Income." This statement requires that
      changes in comprehensive income be shown in a financial statement that is
      displayed with the same prominence as other financial statements. The
      statement will be effective for fiscal years beginning after December 15,
      1997. Reclassification for earlier periods is required for comparative
      purposes. The Company does not expect the statement to have a material
      impact on its consolidated financial position or results of operations.

      In June 1997, the FASB issued Statement of Financial Accounting Standards
      No. 131, "Disclosures About Segments of an Enterprise and Related
      Information." This statement supersedes Statement of Financial Accounting
      Standards No. 14, "Financial Reporting for Segments of a Business
      Enterprise." This statement includes requirements to report selected
      segment information quarterly, and entity-wide disclosures about products
      and services, major customers, and the material countries in which the
      entity holds assets and reports revenues. The statement will be effective
      for fiscal years beginning after December 15, 1997. Reclassification for
      earlier periods is required, unless impracticable, for comparative
      purposes. Management has not yet determined the effects, if any, of SFAS
      131 on the consolidated financial statements.

3.    Inventories:

      Inventories consist of the following:

<TABLE>
<CAPTION>

                                                 1997          1996
                                              ----------    ----------

          <S>                                 <C>           <C>
          Finished goods and subassemblies    $1,797,292    $1,603,671
          Work-in-process                        178,948        96,887
          Purchased parts and materials        2,891,468     3,530,147
                                              ------------------------
                                              $4,867,708    $5,230,705
                                              ========================
</TABLE>

      As of September 27, 1997, inventories include approximately 
      $397,000 related to land mobile base station equipment.  The timing of 
      sales of such equipment is largely dependent upon the issuance of 
      additional licenses pursuant to an auction to be held by the FCC (see 
      Note 1).  Management does not anticipate any loss on the ultimate 
      disposition of this equipment.

4.    Property, Plant and Equipment:

      Property, plant and equipment consist of the following:

<TABLE>
<CAPTION>

                                                                           Estimated
                                                   1997         1996      Useful Lives
                                                ----------   ----------	  ------------

      <S>                                       <C>          <C>          <C>
      Design, test and manufacturing equipment  $2,710,071   $2,606,559   5 years
      Narrowband network equipment               1,541,840    1,500,024   10 years
      Office furniture and general equipment       536,087      503,854   3 - 5 years
      Buildings and improvements                   136,247      450,106   10 - 25 years
      Leasehold improvements                       101,178      101,178   3 - 10 years
      Delivery vehicles                              7,400        7,400   5 years
                                                -----------------------
                                                $5,032,823   $5,169,121
                                                =======================
</TABLE>

      Design, test and manufacturing equipment includes equipment 
      under capital leases with an original cost of $241,273 and accumulated 
      depreciation of $25,421 as of September 27, 1997.

5.    Accrued Expenses:

      Accrued expenses consist of the following:

<TABLE>
<CAPTION>

                                                        1997         1996
                                                     ----------   ----------

      <S>                                            <C>          <C>
      Accrued payroll and related fringe benefits    $  544,268   $  711,249
      Accrued warranty costs                            140,463      235,497
      Accrued co-op advertising                         258,293      222,752
      Accrued interest                                  355,546      189,421
      Other accrued expenses                            218,673      262,775
                                                     -----------------------
                                                     $1,517,243   $1,621,694
                                                     =======================
</TABLE>

6.  Note Payable to Bank:

      The Company has a variable bank line of credit for up to 
      $2,000,000 with interest payable monthly at 1.5% over prime (10.0% at 
      September 27, 1997).  The amount available to the Company under the 
      line is based upon a formula that considers the Company's trade 
      receivables and finished goods inventory.  At September 27, 1997 the 
      amount outstanding on the line was $1,367,561 which was the maximum 
      amount supported by the borrowing base at that time.  The line was 
      renewed in June 1997 and matures in June 1998.  As a condition of the 
      June 1997 renewal the Company was required to raise a minimum of 
      $350,000 in additional equity or subordinated debt by July 15, 1997.  
      The Company raised the required amount in the form of a subordinated 
      bank loan made to an officer of the Company, the proceeds of which 
      were used to reduce the amount outstanding on the Company's bank line 
      (see Note 7).  At September 28, 1996 the outstanding balance on the 
      line was $1,750,000 with interest payable monthly at .75% over prime 
      (9.0% at September 28, 1996).  The line of credit is collateralized by 
      essentially all of the assets of the Company.  The line of credit is 
      also subject to debt covenants which allow the Company to have maximum 
      quarterly losses of $350,000, and require the Company to maintain a 
      tangible net worth as defined by the bank of $5,500,000, a minimum 
      current ratio of 1.50 and a maximum debt to net worth ratio of 1.25.
      The terms of the bank line were modified subsequent to year end (see 
      Note 14).

      The weighted-average interest rate on short-term borrowings was 9.4% 
      and 9.2% for fiscal years 1997 and 1996, respectively.

7.    Notes Payable to Related Parties and Others:

      Notes payable to related parties and others at September 27, 
      1997 consists of a subordinated loan from an officer (see Note 6) and 
      subordinated short term notes payable to individuals including a 
      director and an officer of the Company.  At September 27, 1997 the 
      amount due on the subordinated loan from an officer was $344,697.  
      Interest on the loan is payable monthly at 1.0% over prime (9.5% at 
      September 27, 1997) and the loan is due on July 15, 1998.  The 
      subordinated short term notes are for a six month term due March 1998, 
      with a six month renewal option by the Company.  Of the $550,000 
      principal value, $250,000 is payable to directors and officers of the 
      Company.  Interest is payable quarterly at 10% per annum.  The notes 
      include detachable warrants to purchase 9,240 shares of common stock, 
      exercisable for $0.10 per share.  The proceeds from the borrowing were 
      allocated to the carrying value of the notes and additional paid in 
      capital based on the relative fair values of the notes and the common 
      stock warrants.  The related discount of $43,810 on the notes is 
      accreted by periodic charges to earnings over the initial six month term
      of the notes.  The terms of the subordinated short term notes were
      modified subsequent to year end (see Note 14).

8.    Long-Term Debt:

      Long-term debt consists of the following:

<TABLE>
<CAPTION>

                                                                      1997         1996
                                                                   ----------   ----------
      <S>                                                          <C>          <C>
      Subordinated Convertible Debentures, principal and 
       interest due February 1999 (see Note 14)                    $2,000,000   $2,000,000
      Less discount, net of accumulated amortization of
       $150,730 and $64,000 respectively, related to
       allocation of debt proceeds to stock conversion rights.       (329,270)    (416,000)
                                                                   -----------------------
                                                                    1,670,730    1,584,000
      Foreign denominated mortgage notes payable (DKK 1,017,424
       at September 28, 1996)                                              --      173,775
      Mortgage note, monthly payments of $866, including
       interest at 10.75% adjustable annually, due
       July 2003, collateralized by the underlying
       building                                                        64,605       70,082
      Collateralized equipment loan, monthly payments of $4,168,
       plus interest at prime plus 1.25%, due October 1997              4,167       54,167
      Collateralized equipment loan, monthly payments of $4,626,
       plus interest at prime plus 1.25%, due April 1998.              37,005       92,515
                                                                   -----------------------
                                                                    1,776,507    1,974,539
      Less current maturities                                          44,806      124,854
                                                                   -----------------------
                                                                   $1,731,701   $1,849,685
                                                                   =======================
</TABLE>

      Maturities of long-term debt are as follows:

<TABLE>

          <S>                        <C>
          Fiscal
          1998                       $   44,806
          1999                        2,004,044
          2000                            4,501
          2001                            5,010
          2002                            5,575
          Thereafter                     41,841

</TABLE>

      On December 19, 1995 the Company completed a private placement 
      issuance of $2,000,000 in Subordinated Convertible Debentures (the 
      "Debentures"), orginally due December 19, 2000.  The Debentures bear
      interest at increasing rates from 10-15% per annum, and may be prepaid
      at any time, subject to the lender's rights of conversion.  On May 8,
      1997 the lender agreed to extend the due date of interest payments to 
      February 28, 1998, with regularly scheduled quarterly payments 
      resuming in March 1998.  Accrued interest payable on the Debentures 
      was $321,575 at September 27, 1997.  The lender may convert the 
      Debentures after December 19, 1998 into 2,000 shares of redeemable 
      preferred stock and 2,000 shares of convertible preferred stock.  The 
      Company may convert at its option after December 19, 1997.  The 
      $2,000,000 proceeds from the Debentures were allocated to the 
      Debentures' carrying value and additional paid in capital based on the 
      relative fair values of the Debentures and the 163,967 shares of 
      common stock obtainable upon conversion.  The related discount of 
      $480,000 on the Debentures is accreted by periodic charges to earnings 
      over the life of the issue.


      Due to the unique terms and conditions of the Debentures, there 
      are no quoted market prices for similar instruments.  At the date of 
      issuance, the Company estimated the fair value of the debt component 
      of the Debentures to be approximately $2,185,000 based upon then 
      current interest rates for straight bonds of companies with similar 
      creditworthiness.  Based upon interest rates through September 27, 
      1997, management believes that the fair value of the debt component of 
      the Debentures (carrying value of $ 1,670,730 as of September 27,1997) 
      has not changed materially from the date of issuance.

      On November 24, 1997, the lenders notified the Company that it 
      had violated certain covenants in the form of actions taken by the 
      Company, specifically related to incurring additional debt.  The 
      alleged covenant violations relate to financial and reporting 
      covenants and are not payment related defaults.  The Company and the
      lenders have resolved the matter by agreeing to modify the terms of
      the original Debenture Agreement (see Note 14).

      The estimated fair value of the note payable to bank, notes payable to
      related parties and others, and long-term debt at September 27, 1997 
      approximates the carrying value of such debt in the financial 
      statements, based on current interest rates for similar obligations 
      with like maturities.

9.    Commitments and Contingencies:

      The Company is the lessee of equipment under capital leases 
      expiring in the year 2000.  At the time of acquisition, the assets and 
      liabilities under capital leases are recorded at the lower of the 
      present value of the minimum lease payments or the fair value of the 
      assets.  The Company leases manufacturing, warehouse and office 
      facilities under various operating leases.  Rental expense for these 
      leases, excluding real estate taxes paid by the Company for a leased 
      building, was $207,000 in 1997, $196,000 in 1996, and $207,000 in 
      1995.  During 1995, the Company renegotiated the terms of its 
      Pocasset, Massachusetts facility lease.  The expenses of settlement 
      were included in the restructuring charge (see Note 13).

      Approximate future minimum lease payments, by year and in the 
      aggregate, under capital and noncancelable operating leases, were as 
      follows at September 27, 1997:

<TABLE>
<CAPTION>

                                                          Capital    Operating
                                                          --------   ---------
         <S>                                              <C>        <C>
         1998                                             $103,186   $137,702
         1999                                               52,863     17,293
         2000                                               39,454         --
                                                          -------------------
         Total future minimum lease payments               195,503   $154,995
                                                                     ========
         Less amounts representing interest                (23,031)
                                                         ---------
         Present value of future minimum lease payments    172,472
         Current portion                                    88,480
                                                         ---------
         Non current                                        83,992
                                                         =========
</TABLE>

      On December 12, 1996 the Company filed a collection action 
      against one of its customers for accounts totaling approximately 
      $132,000.  On December 23, 1996 the same customer filed suit against 
      the Company alleging breach of certain express and implied warranty 
      and contractual obligations, and negligent representation with respect 
      to sales of the Company's narrowband products.  The suit originally 
      sought $6,000,000 - $9,000,000 in damages and unspecified amounts for 
      interest and other costs.  Discovery is ongoing and the claims of both 
      parties have been consolidated into one case.  The ultimate outcome of 
      the litigation cannot presently be determined, accordingly no 
      provision for any liability that may result upon adjudication has been 
      made in the accompanying financial statements.

10.   Narrowband Network Systems, Inc. ("NNS"):

      On November 18, 1994, NNS was incorporated in the State of 
      Washington as a subsidiary of SEA to participate in the business of 
      providing specialized mobile radio ("SMR") services.

      NNS has entered into management agreements ("Management 
      Agreements") with the holders of 220 MHz licenses granted by the FCC 
      in approximately 47 markets across the United States (the "Managed 
      Markets").  Under the Management Agreements, NNS is required to 
      construct and develop the SMR systems in the Managed Markets.  NNS 
      retains the revenues generated by the systems, after remitting a fixed 
      percentage to the license holders.

      Under each of the Management Agreements, NNS has an option after 
      construction to acquire the license holder's interest in their 
      respective SMR system in exchange for (i) a fixed percentage of the 
      gross receipts from the system for as long as it continues to be 
      operated by NNS and (ii) a fixed percentage of any profit realized by 
      NNS upon the system's ultimate disposition.  In certain cases, NNS has 
      guaranteed a minimum dollar amount to be remitted to the license 
      holder upon system disposition.

      In April 1995, NNS entered into an agreement with Incom 
      Communications Corporation ("ICC") for the operation of the SMR 
      systems in certain of the Managed Markets.  Under the terms of this 
      agreement, NNS is obligated to provide the licenses and certain 
      backbone equipment for each system and ICC is required to provide 
      either all  or partial operational support.  Revenues from system 
      operations are split between NNS and ICC using contractual percentages 
      based upon the level of support provided by each.

      In addition, the Company has contracted with other third parties 
      ("SMR Operators") for operation of the systems in certain of the 
      Managed Markets.  Under the terms of these agreements, NNS is to 
      provide the system facilities and the SMR Operators agree to provide 
      essentially all other operational support in exchange for a fixed 
      percentage of the gross revenues from each system and an equity 
      interest in the systems, including the related licenses.

      At September 27, 1997 and September 28, 1996 respectively, 
      fixed assets include $1,541,840 and $1,500,024 (less accumulated 
      depreciation of $243,800 and $90,619) of facilities related to the SMR 
      systems and other assets include $396,716 and $360,760 (less 
      accumulated amortization of $61,339 and $23,743) representing legal 
      and other costs associated with the acquisition of license interests 
      in the Managed Markets.  Because only limited operations have 
      commenced, revenues from NNS's operations were immaterial through 
      September 27, 1997.

      The recoverability of narrowband network equipment and related 
      capitalized legal and acquisition costs of FCC licenses is dependent 
      upon the successful development of systems in each of the respective 
      markets, or through the sale of such assets.  Management estimates 
      that it will recover the carrying amounts of those assets from cash 
      flow generated by the systems once they have been developed.  However, 
      it is possible that such estimates could change as a result of 
      technological, regulatory or other changes.

11.   Stockholders' Equity:

      Stock Option Plans

      The 1992 Stock Option Plan for Non-Employee Directors provides 
      for annual grants of nonqualified options to purchase 1,500 common 
      shares to each non-employee Director. The exercise price for options 
      granted is equal to the fair market value at the date of grant.  
      Options granted under this Plan are immediately vested and exercisable 
      for a period of ten years from the date of grant so long as the holder  
      remains a Director.  The Plan was terminated by the Board of Directors 
      on December 12, 1995 and no new awards will be made under the 1992 
      Plan.

      Information regarding activity in the 1992 Stock Option Plan for Non-
      Employee Directors is as follows:

<TABLE>
<CAPTION>
                                                                     Weighted
                                                                      Average
                                                                     Exercise
                                                           Shares      Price
                                                           ------    --------

      <S>                                                  <C>         <C>
      Outstanding at October 1, 1994                        6,000      $4.56
      Granted                                               3,000       8.62
                                                           -----------------
      Outstanding at September 30, 1995                     9,000       5.91
      Exercised                                            (4,500)      5.91
                                                           -----------------
        
      Outstanding and exercisable at September 28, 1996
       and September 27, 1997                               4,500      $5.91
                                                           =================
</TABLE>

      The 1995 Stock Option Plan for Non-Employee Directors was 
      approved by the stockholders at the special meeting held in 1996.  The 
      Plan provides for annual grants of nonqualified options to purchase 
      2,000 common shares to each non-employee Director. The exercise price 
      for options granted is equal to the fair market value at the date of 
      grant.  Options granted under this Plan are immediately vested and 
      exercisable for a period of ten years from the date of grant so long 
      as the holder remains a Director.

      Information regarding activity in the 1995 Stock Option Plan for 
      Non-Employee Directors is as follows:

<TABLE>
<CAPTION>

                                                                     Weighted
                                                                      Average
                                                                     Exercise
                                                           Shares      Price
                                                           ------    --------

      <S>                                                  <C>         <C>
      Granted in fiscal 1996                                8,000      $9.00
                                                           -----------------

      Outstanding and exercisable at September 28, 1996     8,000       9.00
      Granted in fiscal 1997                                6,000       7.00
      Forfeited in fiscal 1997                             (2,000)      9.00
                                                           -----------------
      Outstanding and exercisable at September 27, 1997    12,000      $8.00
                                                           =================

      Weighted average fair value of options granted
       during the year ended September 27, 1997                        $3.59
</TABLE>

      The 1991 Stock Option Plan authorized grants of incentive and 
      nonqualified stock options for 350,000 common shares, of which 200,000 
      shares are reserved for issuance of options at an exercise price equal 
      to the fair market value at the date of grant and vest equally over 
      time, generally four years (the "Qualified Options"), 100,000 shares 
      are reserved for issuance of options which vest equally over time but 
      do not meet the requirements of the Qualified Options (the 
      "Nonqualified Options"), and 50,000 shares are reserved for issuance 
      of options which also do not meet such requirements, but are subject 
      to an accelerated vesting schedule (the "Piggy-Back Options").  
 
      Qualified Options and Nonqualified Options expire not more than 
      ten years from the date of grant and Piggy-Back Options expire twenty 
      years and six months from the date of grant.  The Piggy-Back Options 
      are to be granted in conjunction with the grant of Nonqualified 
      Options.  The Piggy-Back Options shall not be exercised prior to 
      twenty years from the date of the grant, except that if, within five 
      years from the date of grant, the trading price exceeds a specified 
      price, such Piggy-Back Options shall become subject to a five-year 
      vesting schedule with respect to the number of shares equal to 50% of 
      the unexercised portion of Nonqualified Options granted to the 
      employee.  All Piggy-Back Options outstanding at September 27, 1997 
      commenced five year vesting on September 9, 1994.

      Proceeds received from the exercise of options are credited 
      to the capital accounts.  Compensation cost is recorded based upon the 
      difference between market prices and exercise prices at the date of 
      grant and amortized to expense over the vesting period pursuant to APB 
      Opinion No. 25, Accounting for Stock Issued to Employees.

      Information regarding activity in the 1991 Stock Option Plan is as 
      follows:

<TABLE>
<CAPTION>
                                                  Qualified Options    Nonqualified Options   Piggy-Back Options
                                                  ------------------   --------------------   ------------------

                                                            Weighted               Weighted             Weighted
                                                            Average                Average              Average
                                                            Exercise               Exercise             Exercise
                                                  Shares     Price     Shares       Price     Shares     Price
                                                  -------   --------   ------      --------   ------    --------

      <S>                                         <C>         <C>      <C>           <C>      <C>         <C>
      Outstanding at October 1, 1994               93,508     $4.47    51,500        $1.50    25,750      $4.50

      Exercised                                   (20,670)     4.46    (7,500)        1.50      (750)      4.50
      Granted                                      21,500      9.00     6,500         6.00        --         --
      Canceled                                         --        --        --           --    (3,000)      4.50
                                                  -------------------------------------------------------------
      Outstanding at September 30, 1995            94,338      5.50    50,500         2.08    22,000       4.50

      Exercised                                    (2,525)     4.72    (3,125)        1.68        --         --
      Canceled                                       (875)     9.00      (375)        6.00        --         --
                                                  -------------------------------------------------------------
      Outstanding at September 28, 1996            90,938      5.49    47,000         2.07    22,000       4.50

      Granted                                       2,500      9.00    10,000         1.00        --         --
      Exercised                                    (5,632)     4.50        --           --        --         --
      Canceled                                       (782)     7.38      (500)        6.00        --         --
                                                  -------------------------------------------------------------
      Outstanding at September 27, 1997            87,024      5.63    56,500         1.85    22,000       4.50

      Exercisable at September 27, 1997            74,524      5.07    46,250         1.74    17,600       4.50
      Available for grant at September 27, 1997    84,149        --    27,125           --    27,250         --

      Exercisable at September 28, 1996            75,563      4.77    42,500         1.66    13,200       4.50
      Exercisable at September 30, 1995            72,838      4.47    44,000         1.50     8,800       4.50

      Weighted average fair value of options
       granted during the year ended
       September 27, 1997:
        Exercise price equal to market at grant (2,500 options)         $5.39
        Exercise price less than market at grant (10,000 options)       $6.32
</TABLE>

      The following is a summary of stock options outstanding under 
      the 1991, 1992 and 1995 plans at September 27, 1997:

<TABLE>
<CAPTION>
                                 Options Outstanding                      Options Exercisable
                   -----------------------------------------------   ----------------------------
       Range of                  Weighted Average      Weighted                       Weighted
       Exercise       Number        Remaining          Average          Number         Average
        Prices     Outstanding   Contractual Life   Exercise Price   Exercisable   Exercise Price
      ---------    -----------   ----------------   --------------   -----------   --------------

      <C>             <C>              <C>              <C>             <C>            <C>
      $1.00-1.50      51,000            .46             $1.40           43,500         $1.47
      $4.00-6.00      95,024            .32             $4.56           87,874         $4.52
      $7.00-9.00      36,000           1.08             $8.65           23,500         $8.47
</TABLE>

      The total compensation cost recognized in income for stock-based 
      compensation was $18,208 in 1997 and $20,995 in 1996.  Had the 
      compensation cost for the Company's option plans been determined 
      consistent with FAS 123, the Company's pro forma net income (loss) and 
      net income (loss) per share would have been as follows:

<TABLE>
<CAPTION>
                                           1997         1996
                                       ------------   --------

        <S>                            <C>            <C>
        Net income (loss):
          As reported                  $(2,768,331)   $750,981
          Pro forma                     (2,811,304)    713,701

        Net income (loss) per share:
          As reported                  $     (2.11)   $    .49
          Pro forma                          (2.14)        .47
</TABLE>

      The fair value of each option grant has been estimated on the 
      date of the grant using the Black-Scholes option pricing model with 
      the following assumptions:

<TABLE>
<CAPTION>
                                             1997         1996
                                        ------------      ----

        <S>                             <C>               <C>
        Dividend yield                        0%            0%
        Volatility                       70.4 - 71.8      73.9
        Risk free interest rate         5.54% - 6.36%     5.29%
        Expected option term (years)        3 - 6           3
</TABLE>

      Employee Stock Purchase Plan

      The Company has an employee stock purchase plan for full-time 
      employees who have attained certain length-of-service requirements and 
      who do not own 5% or more of the Company's outstanding stock.  Under 
      the terms of the plan, eligible employees are granted the right on a 
      semiannual basis to purchase shares of the Company's common stock.  
      The purchase price is equal to 90% of the fair market value of the 
      Company's common stock during certain predetermined periods, and 
      employees may purchase shares having an aggregate value of up to 10% 
      of basic compensation.  The Company issued 838 shares in 1997, 843 
      shares in 1996 and 1,272 shares in 1995 in connection with the 
      Employee Stock Purchase Plan.

      Employee Investment Plan

      The Company maintains the Datamarine Employee Investment Plan (a 
      401(k) Plan).  All full-time employees who have reached age 21 and 
      have one year of service are eligible for participation.  Employees 
      can contribute up to 15% of their base salary with the Company 
      matching 50% of the first 6% of base salary contributed.  The Company 
      issued 4,592 shares in 1997, 3,734 in 1996 and 4,599 shares in 1995 
      under the Employee Investment Plan.

      Shares Reserved for Future Issue

      At September 27, 1997, the Company had reserved the following 
      shares of its common stock for future issue:

<TABLE>

      <S>                                                 <C>
      Employee Stock Purchase Plan                          5,990
      1991 Stock Option Plan:
        Qualified Options                                 171,173
        Nonqualified Options                               83,625
        Piggy-Back Options                                 49,250
      1992 Stock Option Plan for Non-employee Directors     4,500
      1995 Stock Option Plan for Non-employee Directors    48,000
      Convertible Debentures                              163,967
      Subordinated Notes                                    9,240
                                                          -------
                                                          535,745
                                                          =======
</TABLE>

      Preferred Stock

      In connection with the issuance of the Subordinated Convertible 
      Debentures in fiscal 1996, the Company also authorized 1,000,000 shares
      of preferred stock, $1 par.  Under certain conditions, the Debentures 
      are convertible into 2,000 shares of redeemable preferred stock and 
      2,000 shares of convertible preferred stock.

      Each $1,000 principal value of the Debentures is convertible 
      into one share of redeemable preferred stock.  The redeemable 
      preferred stock is entitled to dividends in an amount equal to the 
      interest that would otherwise be payable on the Debentures, and is 
      subject to mandatory redemption in December 2000.  The redeemable 
      preferred stock has no voting rights.  The Company has the option any 
      time after December 19, 1997 of redeeming all, but not less than all, 
      of the redeemable preferred stock then outstanding at a price of 
      $1,000 per share.

      Each share of convertible preferred stock is convertible into 
      approximately 82 shares of the Company's common stock.  Convertible 
      preferred shares have voting rights equal to common shares, and are 
      entitled to such number of votes per share as equals the number of 
      shares of common stock into which each share of convertible preferred 
      is then convertible.  The Company has the option any time after 
      December 19, 2000 of converting the convertible preferred stock to 
      common stock, or redeeming the shares at fair value.  In accordance 
      with the Debenture Agreement, the Company has reserved for future 
      issue 4,000 shares of preferred stock.

12.   Income Taxes:

      The components of income tax expense (benefit) consists of the 
      following:

<TABLE>
<CAPTION>
                                                   1997        1996         1995
                                                ---------    --------    -----------

      <S>                                       <C>          <C>         <C>
      Deferred (benefit) provision - Federal    $737,909     $388,083    $(1,083,640)
                                                ====================================
</TABLE>

      The tax effects of temporary differences that give rise to deferred 
      tax assets are as follows:

<TABLE>
<CAPTION>
                                                                      1997          1996
                                                                   ----------    ----------

      <S>                                                          <C>           <C>
      Net federal and state operating loss carryforwards           $1,331,000    $  622,000
      Accrued expenses not currently deductible for tax purposes      185,000       206,000
      General business tax credit carryforwards                       128,000       128,000
      Property and equipment                                           (9,000)       12,000
      Allowance for doubtful accounts                                  75,000        58,000
      Inventory, principally due to valuation differences and
       overhead application                                           148,000       148,000
      Other, individually less than 5% of deferred tax asset            7,775           909
                                                                   ------------------------
                                                                    1,865,775     1,174,909
      Less valuation allowance                                     (1,865,775)     (437,000)
                                                                   ------------------------
      Net deferred tax assets                                      $       --    $  737,909
                                                                   ========================
</TABLE>

      At October 1, 1994, a valuation allowance was recorded equal to the
      Company's deferred tax asset balance of $1,142,000 due to the uncertainty
      of future taxable income. During fiscal 1995, the valuation allowance was
      reduced by $702,000 to reflect management's then current assessment of
      the amount of deferred federal tax assets which were more likely
      realizable than not. The valuation allowance balance at September 28,
      1996 relates primarily to deferred state tax benefits of net operating
      loss carryforwards and future deductible temporary differences which are
      not expected to be realized on a separate company return basis. Although
      the Company had losses for each of the first three quarters of fiscal
      1997, the Company continued to recognize a deferred tax benefit because
      management believed is was more likely than not that that all of the
      federal deferred tax asset would be realized from taxable income in
      future years. Management's assumptions were based in part upon
      information from industry sources and the FCC indicating that the auction
      of new 220 MHz licenses could take place in November 1997, in which case
      the Company projected it would have taxable income in fiscal 1998.
      Subsequent to year end the FCC announced that the auction of 220 MHz
      licenses would commence May 19, 1998, later than management had
      originally anticipated. In addition, expenses related to the amortization
      of the deferred financing costs and discount on the Subordinated
      Convertible Debentures will increase due to the revised earlier maturity
      date (see Note 14). Based on these factors, management expects the
      Company will incur operating losses in fiscal 1998. Generally Accepted
      Accounting Principles ("GAAP") provide guidance as to when a deferred tax
      valuation allowance may be required. Management considered the fiscal
      1997 loss, the expected fiscal 1998 loss, and the inability to predict
      with certainty what land mobile sales will be in the post FCC auction
      period. Based on the information available, management concluded that a
      valuation allowance equal to 100% of the deferred tax asset should be
      established at year end.

      The reconciliation of income taxes at the federal statutory rate 
      of 34% to the income tax provision  (benefit) presented in the 
      consolidated statement of operations is presented below:
 
<TABLE>
<CAPTION>
                                                          1997         1996         1995 
                                                       -----------   --------   ------------

      <S>                                              <C>           <C>        <C>
      Income tax expense (benefit) at statutory rate   $ (690,000)   $387,000   $  (261,000)
      State income taxes, net of federal tax benefit       (6,000)      4,000       (99,000)
      Other                                                 5,134          83       (21,640)
      Change in valuation allowance                     1,428,775      (3,000)     (702,000)
                                                       -----------------------------------
      Income tax expense (benefit)                     $  737,909    $388,083   $(1,083,640)
                                                       ===================================
</TABLE>

      As of September 27, 1997, the Company has net federal operating loss 
      carryforwards of $2,880,000 which are available to reduce future 
      federal taxable income ($71,000 of which expire in fiscal 2008, 
      $513,000 in fiscal 2009, $225,000 in fiscal 2010 and the remainder in 
      2012).  The Company also has general business tax credit carryforwards 
      of $128,000, of which $54,000 expire between 2006 and 2111, and the 
      balance of $74,000 can be carried forward indefinitely.

13.   Restructuring Charge:

      During fiscal 1995, the Company recognized a special charge of 
      $686,458 in connection with a restructuring program designed to 
      improve productivity and permanently reduce costs.  The Company moved 
      its corporate administrative functions and production of its 
      instrumentation product line from Pocasset, Massachusetts to its 
      facility in Mountlake Terrace, Washington.  The restructuring was 
      announced in January 1995 and was substantially completed by 
      December 31, 1995.  The program resulted in the permanent reduction of 
      approximately 30 employees and 35,000 square feet of manufacturing and 
      office space.  The restructuring charge was comprised of $346,524 in 
      writedowns of production equipment and leasehold improvements, $94,630 
      in writedowns of inventory related to discontinued products, $147,748 
      in employee termination benefits, and $97,556 in lease settlement 
      costs.   The lease was settled for $210,000, including $112,444 
      related to past due rental amounts, comprised of $30,000 in cash and 
      the issuance of 22,000 shares of the Company's common stock having a 
      fair market value of $180,000.  Upon final pricing 2,000 of the 
      settlement shares were returned to the Company.

14.   Subsequent Events:

      On February 24, 1998 the Company and Alta Subordinated Debt Partners III,
      L.P. ("ASDP III") agreed to modify certain provisions of the Subordinated
      Convertible Debentures (the "Debentures"). The agreement was reached in
      order to resolve ASDP III's claim that the Company had violated certain
      financial and reporting covenants. Significant terms of the revised
      agreement are:

      1)    Changing the maturity date of the Debentures from December 19, 2000
            to February 19, 1999.

      2)    Deferral of all interest payments on the Debentures until February
            19, 1999.

      3)    Issuing the common shares of the Company which are attached to the
            Debentures (approximately 164,000) on February 19, 1999.

      4)    Release of collateral and subordination of rights by the holders of
            the subordinated short term notes. Deferral of principal and
            interest payments on the subordinated short term notes until the
            Debentures are paid in full.

      5)    Payment by the Company of expenses related to the modification.

      In connection with modifying the terms of the Debentures as described
      above, the Company and holders of the subordinated short term notes
      agreed to modify the terms of those notes. Significant terms of the
      revised notes are:

      1)    Release of collateral and subordination of rights by the holders of
            the subordinated short term notes.

      2)    Deferral of principal and interest payments on the subordinated 
            short term notes until the Debentures are paid in full.

      3)    Granting the Company an option to extend the due date one year
            (to March 1999).  Upon the Company's exercise of the option the 
            holders will receive warrants to purchase a total of 32,500 shares 
            of common stock, exercisable for $0.10 per share.

      In connection with modifying the terms of the Debentures and the
      subordinated short term notes, and in order to manage the Company's
      working capital requirements through fiscal 1998, the Company renewed 
      its variable bank line on essentially the same terms, except for the 
      following:

      1)    The due date of the line is February 28, 1999.

      2)    The maximum quarterly loss provision was replaced with a minimum
            quarterly revenue requirement.

      3)    The minimum tangible net worth as defined by the bank is 
            $3,800,000.

      4)    The interest rate has been increased to prime plus 2%. However, the
            Company has the option to decrease the interest rate to prime plus
            .5% if, by March 10, 1998, the Company agrees to issue to the bank
            10,000 warrants to purchase common stock at market (at the time of
            issuance).

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

None

                                  PART  III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Certain information as of Janaury 6, 1998 regarding the nominee and each
director is set forth below, including such individual's age and principal
occupation, a brief account of business experience during at least the last
five years, and directorships held at other publicly-held companies.

Nominated for a term ending in 2001:

<TABLE>
<CAPTION>
                                 Director          Position with Company or Principal
        Name             Age      Since           Occupation During the Past Five Years
--------------------     ---     --------     ---------------------------------------------

<S>                      <C>       <C>        <C>
David C. Thompson        68        1987       President and CEO of the Company since
                                              October 1997. Secretary and Treasurer of the
                                              Company since March 1996. Principal
                                              Financial and Accounting Officer of the
                                              Company from 1995 to October 1997. President
                                              and CEO of SEA Inc., a wholly owned
                                              subsidiary of the Company. Previously
                                              President and CEO of Stephens Engineering
                                              Associates, Inc., which was acquired by the
                                              Company in 1986.
</TABLE>

Serving for a term ending in 2000:

<TABLE>
<CAPTION>
                                 Director          Position with Company or Principal
        Name             Age      Since           Occupation During the Past Five Years
--------------------     ---     --------     ---------------------------------------------

<S>                      <C>       <C>        <C>
Peter D. Brown           50        1991       President and CEO of the Company from
                                              September 1991 through October 1997.
                                              Chairman of the Board of the Company since
                                              December 1995. CEO of the South Beach
                                              Company, a management company, since 1990.
                                              Currently, Vice President and Treasurer of
                                              Gordon & Ferguson, a manufacturer of men's
                                              and boy's outerwear. From 1974 through 1990,
                                              CEO of Heather Hill Sportswear Co., an
                                              apparel company.
</TABLE>

Serving for a term ending in 1999:

<TABLE>
<CAPTION>
                                 Director          Position with Company or Principal
        Name             Age      Since           Occupation During the Past Five Years
--------------------     ---     --------     ---------------------------------------------

<S>                      <C>       <C>        <C>
Stephen W. Frankel       51        1997       Since 1996, self employed private investor.
                                              From 1988 through 1995, served in various
                                              capacities including President, COO,
                                              Chairman and CEO of RETIX, a manufacturer of
                                              networking products.
</TABLE>

The names of the executive officers of the Company, their positions and offices
with the Company, and their ages are set forth below.

<TABLE>
<CAPTION>
      Name                  Age    Office

      <S>                   <C>    <C>
      David C. Thompson     68     President and Chief Executive Officer
                                    (Since October 1997)
      Peter D. Brown        50     Chairman of the Board (President and
                                    CEO to October 1997)
      Jan Kallshian         43     Chief Financial Officer
</TABLE>

David C. Thompson was named President and CEO of the Company in October 1997.
Mr. Thompson has been Secretary and Treasurer of the Company since March 1996,
and served as the Company's Principal Financial and Accounting Officer from
1995 to October 1997. Mr. Thompson is also President and CEO of SEA Inc., a
wholly owned subsidiary of the Company. Mr. Thompson was previously President
and CEO of Stephens Engineering Associates, Inc., which was acquired by the
Company in 1986.

Peter D. Brown served as President and CEO of the Company from September 1991
through October 1997, and has served as Chairman of the Board of the Company
since December 1995.

Jan Kallshian was named Chief Financial Officer of the Company in October 1997.
Since April 1995 Mr. Kallshian has served as a consultant to the Company which
included performing the duties of the Chief Financial Officer. Mr. Kallshian
has over 15 years experience in the high technology manufacturing industry and 
has held positions in finance and general management. Mr. Kallshian is a CPA 
and was previously with the accounting firm of Coopers & Lybrand.

ITEM 11.  EXECUTIVE COMPENSATION

The following table sets forth all compensation awarded to, earned by, or paid
to the Company's Chief Executive Officer and each of the Company's executive
officers (other than the Chief Executive Officer) who served during the most
recent fiscal year (the "Named Executive Officers") for all services rendered
in all capacities to the Company and its subsidiaries for the Company's fiscal
years ended September 27, 1997, September 28, 1996 and September 30, 1995.

                          Summary Compensation Table

<TABLE>
<CAPTION>
                                                                                     Long Term
                                                                                    Compensation
                                               Annual Compensation                    Awards
                                 ------------------------------------------------   ------------
                                                                  Other Annual         Stock          All Other
Name and Principal Position(s)   Year   Salary($)   Bonus($)   Compensation($)(1)    Options(#)    Compensation($)
------------------------------   ----   ---------   --------   ------------------   ------------   ---------------

<S>                              <C>    <C>           <C>         <C>                  <C>             <C> 
Peter D. Brown                   1997   $     --      $ --        $ 4,000(2)           2,000           $   --
  President/CEO Chairman         1996         --        --          4,300(2)           2,000               --
  of the Board                   1995         --        --          2,800(2)           1,500               --

David C. Thompson                1997    113,329        --             --                 --            3,283(3)
  President/CEO of SEA, Inc.     1996    102,935        --             --                 --              828(3)
                                 1995     92,657        --             --              7,000               --
<FN>
-------------------
<F1>  In accordance with rules of the SEC the Company is not required to report
      the value of personal benefits for any year unless the aggregate dollar
      value exceeds the lesser of ten percent of the executive officer's salary
      and bonus or $50,000.

<F2>  Consists of directors fees.

<F3>  Represents amounts contributed by the Company under its 401(k) Plan.
</FN>
</TABLE>

                       Option Grants in Last Fiscal Year

The following table sets forth certain information regarding the grants of
stock options to each of the Named Executive Officers during the fiscal year
ended September 27, 1997.

<TABLE>
<CAPTION>
                 Number of
                 Securities   Percent of Total
                 Underlying   Options Granted                       Market Price
                  Options     to Employees in       Exercise or      at Date of    Expiration
     Name        Granted(#)     Fiscal Year      Base Price($/Sh)       Grant         Date
--------------   ----------   ----------------   ----------------   ------------   ----------

<S>              <C>               <C>                <C>              <C>          <C>
Peter D. Brown   2,000 (1)         13.5%              $ 7.00           $ 7.00       2/4/2007

<FN>
-------------------
<F1>  Options granted under the 1995 Stock Option Plan for Non-employee
      Directors
</FN>
</TABLE>

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
 Values

The following table sets forth information on option exercises by the Named
Executive Officers during the fiscal year ended September 27, 1997, and the
value of unexercised options held by the Named Executive Officers on 
September 27, 1997.

<TABLE>
<CAPTION>
                                                   Number of Shares Underlying
                                                     Unexercised Options at      Value of Unexercised Options
                                                     September 27, 1997 (#)      at September 27, 1997($)(1)
                     Shares Acquired    Value      ---------------------------   ----------------------------
       Name          On Exercise       Realized    Exercisable   Unexercisable   Exercisable   Unexercisable
------------------   ---------------   ---------   -----------   -------------   -----------   --------------

<S>                       <C>            <C>         <C>             <C>           <C>              <C>
Peter D. Brown            None           None         8,500             --         $ 1,215          $ --
David C. Thompson         None           None        40,132          4,500          43,856           310

<FN>
-------------------
<F1>  Value of unexercised options represents the difference between the
      exercise prices of the stock options and the closing price ($4.81 per
      share) of the Company's common stock on September 25, 1997, the last 
      trading day of the Company's fiscal year. Only in-the-money options 
      are considered in the calculation.
</FN>
</TABLE>

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding the beneficial ownership
(determined in accordance with Rule 13d-3 under the Securities Exchange Act of
1934, as amended) of the Company's common stock as of January 6, 1998 (unless
otherwise indicated) by (a) each person known by the Company to beneficially
own more than five percent of the outstanding shares of common stock, (b) each
director of the Company who beneficially owns any shares,(c) each Named Officer
(see "Executive Compensation"), and (d) all directors and officers as a group:

<TABLE>
<CAPTION>
                             Name and Address               Amount and Nature of        Percent
Title of Class              of Beneficial Owner             Beneficial Ownership(1)     of Class
--------------     ------------------------------------     -----------------------     --------

<S>                <C>                                            <C>                    <C>
Common Stock       Peter D. Brown                                 278,323(2)             20.8%
                   545 Cedar Lane
                   Teaneck NJ  07666

Common Stock       David C. Thompson                              146,925(3)             10.7%
                   SEA Inc.
                   7030 - 220th Street S.W.
                   Mountlake Terrace WA  98043

Common Stock       Steven T. Newby                                130,000(4)              9.8%
                   6116 Executive Blvd., Ste. 701
                   Rockville MD  20852

Common Stock       Stephen W. Frankel                              66,820(5)              5.0%
                   7030 - 220th Street S.W.
                   Mountlake Terrace WA  98043

Common Stock       Jan Kallshian                                    2,180(6)               *
                   7030 - 220th Street S.W.
                   Mountlake Terrace WA  98043

Common Stock       All Directors and Executive Officers           442,576                32.0%
                    as a group (4 persons)

<FN>
-------------------
<F*>  Less than 1%

<F1>  Includes common shares which may be acquired upon exercise of options to
      purchase shares from the Company exercisable on or within 60 days of
      January 6, 1998.

<F2>  Represents 169,937 shares held of record, 8,500 shares subject to
      presently exercisable stock options, 21,050 shares held in trust for Mr.
      Brown's minor child, 27,164 shares held by a Retirement Plan Trust for
      Mr. Brown, and 51,672 shares held in trust for the Company's Employee
      Investment Plan for which Mr. Brown serves as a co-trustee. Mr. Brown
      disclaims beneficial ownership of the 27,164 shares held by his
      Retirement Plan Trust.

<F3>  Represents 55,121 shares held of record, 40,132 shares subject to
      presently exercisable stock options, and 51,672 shares held in trust for
      the Company's Employee Investment Plan for which Mr. Thompson serves as a
      co-trustee.

<F4>  Based upon the Schedule 13D filed with the SEC by the beneficial owner on
      March 25, 1997 and subsequent communication with the beneficial owner as
      of December 14, 1997.

<F5>  Represents 64,300 shares held of record and 2,520 shares subject to
      presently exercisable common stock warrants.

<F6>  Represents 500 shares held of record and 1,680 shares subject to
      presently exercisable common stock warrants. Mr. Kallshian was named
      Chief Financial Officer of the Company in October 1997.
</FN>
</TABLE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During fiscal 1997, Mr. Thompson made a subordinated loan to the Company in the
amount of $344,697.

During fiscal 1997, Mr. Frankel made a subordinated short term loan to the
Company in the amount of $150,000.

During fiscal 1997, Mr. Kallshian and members of his family (as defined by SEC
rules) made subordinated short term loans to the Company in the amount of
$300,000.


                                  PART IV

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

(a)   Financial Statements and Financial Statement Schedules
      The financial statements as set forth under Item 8 are filed as part 
      of this report.

      Schedule II - Valuation and Qualifying Accounts

      Report of Independent Accountants on above listed financial statement 
      schedule.

      Schedules not listed above have been omitted since they are either not 
      required, not applicable, or the information is included in the 
      consolidated financial statements or notes thereto.

(b)   Reports on Form 8-K.
      The following reports on Form 8-K were filed during the quarter ended 
      September 27, 1997:
          Form 8-K dated July 24, 1997.  Resignation of a director.
          Form 8-K dated September 22, 1997.  Issuance of short-term 
          subordinated notes.

(c)   List of Exhibits.  The following exhibits are filed as a part of, or 
      incorporated by reference into, this     report on Form 10-K.

Exhibit
 Number                Description
-------                -----------

3.1      Articles of Organization, as amended, incorporated by reference 
         to Annual Report on Form 10-K for the Fiscal Year Ended September 30, 
         1995.

3.2      Bylaws, incorporated by reference to Registration Statement 0-8936 on 
         Form 10.

4        Debenture Purchase Agreement with exhibits, incorporated by reference 
         to Annual Report on Form10-K for the Fiscal Year Ended September 30, 
         1995.

4.1      Subordinated Notes Agreement with exhibits.

4.2      Terms for Amendment of December 19, 1995 Debenture Agreement

10.1     Datamarine International, Inc. 1991 Stock Option Plan, incorporated 
         by reference to Registration Statement 33-48532 on Form S-8.

10.2     1992 Stock Option Plan for Non-employee Directors, incorporated by 
         reference to Annual Report on Form 10-K for the Fiscal Year Ended
         October 1, 1994.

10.3     Debenture Purchase Agreement with exhibits, same as 4 above.

10.4     1995 Stock Option Plan for Non-employee Directors, incorporated by 
         reference to Annual Report on Form10-K for the Fiscal Year Ended 
         September 28, 1996.

11       Computation of Earnings Per Share

21       Subsidiaries

23       Consent of Independent Accountants

27       Financial Data Schedule

                                 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.

DATAMARINE INTERNATIONAL, INC.

By:/s/ DAVID C. THOMPSON
       -----------------
David C. Thompson
President, Chief Executive Officer and Director

By:/s/ JAN KALLSHIAN
       -------------
Jan Kallshian
Chief Financial Officer

Date: March 2, 1998

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 and on the dates indicated.

By:/s/ PETER D. BROWN
       --------------
Peter D. Brown, Chairman of the Board
March 2, 1998

By:/s/ STEPHEN W. FRANKEL
       ------------------
Stephen W. Frankel, Director
March 2, 1998


               SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
               DATAMARINE INTERNATIONAL, INC. AND SUBSIDIARIES

<TABLE>
<CAPTION>

   COL. A                                          COL. B              COL. C                 COL. D         COL. E
-----------                                     ------------   --------------------------   ----------   -------------

                                                                      Additions        
                                                 Balance at    -------------------------   
                                                Beginning of   Charged to    Charged to     Deductions     Balance at
DESCRIPTION                                        Period       Expenses       Other        (describe)   End of Period
-----------                                     ------------   ----------   ------------    ----------   -------------
     
<S>                                              <C>             <C>        <C>             <C>             <C>
Year ended September 27, 1997
  Deducted from asset accounts:
    Allowance for doubtful accounts              $  171,990       89,691                     26,708(1)    $  234,973
    Allowance for slow moving inventory             187,129       48,384                     12,335(2)       223,178
    Valuation allowance for deferred tax asset      437,000                 1,428,775(4)                   1,865,775
                                                 -------------------------------------------------------------------
      Totals                                     $  796,119      138,075    1,428,775        39,043       $2,323,926
                                                 ===================================================================

Product warranty liability                       $  235,497       75,496                    170,530(3)    $  140,463
                                                 ===================================================================

Year ended September 28, 1996
  Deducted from asset accounts:
    Allowance for doubtful accounts              $  158,193       81,615                     67,818(1)    $  171,990
    Allowance for slow moving inventory             273,624       58,056                    144,551(2)       187,129
    Valuation allowance for deferred tax asset      440,000                                   3,000(4)       437,000
                                                 -------------------------------------------------------------------
      Totals                                     $  871,817      139,671                    215,369       $  796,119
                                                 ===================================================================
                            
Product warranty liability                       $  237,469      117,608                    119,580(3)    $  235,497
                                                 ===================================================================

Year ended September 30, 1995
  Deducted from asset accounts:
    Allowance for doubtful accounts              $  142,292       59,725                     43,824(1)    $  158,193
    Allowance for slow moving inventory             183,502      104,417                     14,295(2)       273,624
    Valuation allowance for deferred tax asset    1,142,000                                 702,000(4)       440,000
                                                 -------------------------------------------------------------------
      Totals                                     $1,467,794      164,142                    760,119       $  871,817
                                                 ===================================================================

Product warranty liability                       $  197,524      120,819                     80,874(3)    $  237,469
                                                 ===================================================================

<FN>
--------------------
<F1>   Uncollectible accounts written off, net of recoveries.
<F2>   Obsolete material written off.
<F3>   Warranty claims honored during the year.
<F4>   Change in deferred tax asset valuation account, charged or credited to
       income tax expense.
</FN>
</TABLE>

Report Of Independent Accountants


To the Stockholders and Board of Directors of
Datamarine International, Inc.

Our report on the consolidated financial statements of Datamarine 
International, Inc. and Subsidiaries as of September 27, 1997 and September 
28, 1996 and for the years ended September 27, 1997, September 28, 1996 and 
September 30, 1995 is included in this Annual Report on Form 10-K.  In 
connection with our audits of such financial statements, we have also 
audited the related consolidated financial statement schedule for the years 
ended September 27, 1997, September 28, 1996 and September 30, 1995, listed 
in Item 14(a) of this Form 10-K.

In our opinion, the consolidated financial statement schedule referred to 
above, when considered in relation to the basic financial statements taken 
as a whole, presents fairly, in all material respects, the information 
required to be included therein.


/s/:COOPERS & LYBRAND L.L.P


Seattle, Washington
December 11, 1997, except for the fourth and fifth paragraphs of Note 1, the
last sentence in the first paragraph of Note 6, the last sentence of Note 7,
the last sentence in the third paragraph of Note 8, and Note 14 to the 
financial statements as to which the date is March 2, 1998.