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 28, 1996.

      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
     incorporation or organization)              Identification No.)


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


      Registrant's telephone number, including area code: (206) 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 December 20, 1996 was approximately $5,978,000.

The number of shares of the Registrant's common stock outstanding as of
December 20, 1996 was 1,309,786 shares.

                      DOCUMENTS INCORPORATED BY REFERENCE
                      -----------------------------------

Information from the Registrant's definitive proxy statement to be filed
pursuant to Regulation 14A for the 1997 Annual Meeting of Stockholders is
incorporated by reference into Part III, Items 10, 11, 12 and 13.


              The total number of pages in this Form 10-K is 41.
                       See Index to Exhibits on page 31.



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 negligible.

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. It has sales and service
facilities on the East and West coasts of the United States and in Sydney,
Australia. Sales of marine communication products, branded SEA, and marine
instrumentation products, branded Datamarine, are made worldwide through
approximately 300 dealers in the United States and dealers in 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 newest line of narrowband equipment
for use in the 220 MHz band in the fourth quarter of FY1993. Sales to the land
mobile radio market were 58% of consolidated sales in FY1996 compared to 45% in
1995 and 36% in 1994.

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. The FCC
intends to conduct an auction for new licenses, but specific rules and timing
for the auction have not been set. No new licenses will be issued until the
auction is completed. Until such time as new licenses are issued, demand for
the Company's higher margin base station products will be lower than in
previous years.

During FY1995 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 45 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 were negligible during the years ended
September 28, 1996 and September 30, 1995.

Foreign sales accounted for approximately 6% of the Company's consolidated
sales in FY1996, 8% in FY1995 and 14% in FY1994. Foreign sales are declining as
a 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>
                                  1996                   1995                   1994
                              ------------           ------------           ------------

<S>                           <C>            <C>     <C>            <C>     <C>             <C>
Land mobile communications    $  9,531,816    58%    $  6,642,984    45%    $  4,272,085     36%
Marine communications            5,011,520    30%       5,296,945    36%       4,234,524     36%
Marine instrumentation           2,046,666    12%       2,846,729    19%       3,322,828     28%
                              ------------------------------------------------------------------
      Total                   $ 16,590,002   100%    $ 14,786,658   100%    $ 11,829,437    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 of between $765 and $5,505. 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 Marine Distress and Safety
Radio 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 of between $400 and $3900. The
Datamarine products include depth sounders, knotmeters and water temperature
instruments, wind speed and direction instruments, integrated instruments, and
video chart displays.

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 $5,412,000 at September 28, 1996, compared to
$9,794,000 at September 30, 1995. Of the total September 28, 1996 backlog, land
mobile products represented $5,208,000. Land mobile orders are subject to
cancellation under certain conditions and the Company does not consider the
land mobile backlog to be firm. Sales expected to be realized by filling orders
comprising the land mobile backlog are highly dependent upon FCC actions as
described above.

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 FY 1996, FY1995
and FY1994 the Company spent approximately $1,235,000, $1,420,000 and
$1,414,000, 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 110 full-time employees on September 28, 1996.
This compares to 100 on September 30, 1995 and 135 on October 1, 1994. 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 28,500 square-foot building in Mountlake Terrace, Washington, pursuant to
a lease which expires in June 1998. During FY1995 the Company renegotiated its
lease at the Pocasset, Massachusetts facility through June 1997 where the
service facility for the marine instrumentation product line now occupies 5000
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, owns a 20,000 square-foot steel
and concrete industrial building, subject to mortgage, located in Sorup,
Denmark, which is leased under a twelve-year contract, including extensions,
expiring in 1998 to an unaffiliated tenant. All of the above-mentioned
facilities are well maintained and suitable and adequate for the present
activities therein.


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 at September 28, 1996.
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 seeks $6,000,000 - $9,000,000 in damages and unspecified
amounts for interest and other costs. The ultimate outcome of the litigation
cannot presently be determined. The Company is not aware of any other legal
proceedings or claims.


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

During the fourth quarter of the fiscal year ended September 28, 1996, 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 is traded Over-The-Counter and is quoted on the
NASDAQ National Market System under the ticker symbol "DMAR". As of December
20, 1996, there were approximately 1000 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>        <S>      <C>       <C>       <C>       <C>
            FY 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
            FY 1995:   High     17        13 3/8    11 1/4     9 3/4
                       Low       9 1/4     7 3/4     8 1/4     7 1/2
</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>
                                                September 28,   September 30,    October 1,      October 2,     October 3, 
Income Statement Data for the Year Ended            1996            1995            1994            1993           1992
                                                -------------   -------------   ------------    ------------   ------------

<S>                                             <C>             <C>             <C>             <C>            <C>
Net sales                                       $ 16,590,002    $ 14,786,658    $ 11,829,437    $  7,948,840   $  9,304,961
Cost of products sold                              9,555,599       9,128,693       7,049,898       5,252,053      5,626,136
Operating expenses, excluding restructuring
 charge                                            5,627,499       5,584,954       5,159,848       4,697,510      4,591,994
Restructuring charge                                       -         686,458               -               -              -
                                                ---------------------------------------------------------------------------
Operating income (loss)                            1,406,904        (613,447)       (380,309)     (2,000,723)      (913,169)
                                                ---------------------------------------------------------------------------
Interest expense                                     316,564         193,037          62,258          13,174         61,171
Other (income) expense                               (48,724)        (39,719)        (46,619)         19,008         (1,873)
Income tax expense (benefit)                         388,083      (1,083,640)              -        (132,506)      (243,000)
                                                ---------------------------------------------------------------------------
Income (loss) from continuing operations             750,981         316,875        (395,948)     (1,900,399)      (729,467)
Discontinued operations:                                   -               -               -               -              -
  Net income                                               -               -               -         129,026        282,211
  Net gain on sale                                         -               -               -         239,553              -
                                                ---------------------------------------------------------------------------
Net income (loss)                               $    750,981    $    316,875    $   (395,948)   $ (1,531,820)  $   (447,256)
                                                ===========================================================================

Income (loss) Per Share:
Continuing operations                           $        .49    $        .23    $      (0.33)   $      (1.59)  $      (0.62)
Discontinued operation                                     -               -               -             .31            .24
                                                ---------------------------------------------------------------------------
Net income (loss)                               $        .49    $        .23    $      (0.33)   $      (1.28)  $      (0.38)
                                                ===========================================================================

<CAPTION>
                                                September 28,   September 30,    October 1,      October 2,     October 3, 
Balance Sheet Data                                  1996            1995            1994            1993           1992
                                                -------------   -------------   ------------    ------------   ------------

<S>                                             <C>             <C>             <C>             <C>            <C>
Total assets                                    $ 12,649,846    $  9,323,581    $  7,862,611    $  6,359,826   $  8,717,397
Notes payable to banks                             1,750,000       1,325,353         795,353         400,000        700,000
Long-term debt                                     2,022,978         642,800         439,819         274,337        783,676
Stockholders' equity                               6,536,934       5,198,391       4,331,293       4,624,006      6,026,633
</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
  As a Percentage of Net Sales                                            Percentage
      Increase (Decrease)                                             Increase (Decrease)
  -----------------------------                                       -------------------

                                                                        1995      1994
                                                                         to        to
   1996      1995      1994                                             1996      1995

   <C>       <C>       <C>       <S>                                    <C>       <C>
   100%      100%      100%      Net sales                               12%       25%
    58        62        60       Cost of products sold                    5        29
    42        38        40       Gross profit                            24        18
     7        10        12       Research and development               (13)        -
    16        16        19       Selling                                  9        10
    11        12        13       General and administrative               1        13
     -         4         -       Restructuring charge                   n.m.      n.m.
    34        42        43       Operating expenses                     (10)       22
     9        (4)       (3)      Operating income (loss)                n.m.      n.m.
     2         1         1       Interest expense                        49       210
     -         -        (1)      Other (income) expense, net             21       (15)
     7        (5)       (3)      Income (loss) before income taxes      n.m.       93
     2        (7)        -       Income tax expense (benefit)           n.m.      n.m.
     5%        2%       (3)%     Net income (loss)                      137       n.m.
</TABLE>

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.

Sales of narrowband products are greatly influenced by the regulatory
environment, principally license and operating rules issued by the FCC. The
Company cannot control, nor reliably predict which rules the FCC will issue and
the effective dates thereof, although management expects future revenue growth
from this product line. Sales of marine radio systems and are expected to
improve slightly in the upcoming year due to higher sales of existing products
and sales of new products. Sales of marine instrumentation systems have
declined over the last four years and are expected to improve as the Company
introduces new products in 1997.

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. In the
coming years, narrowband sales will likely be comprised of a greater proportion
of mobile radios rather than base stations, and thus will likely achieve a
lower overall percentage margin than was achieved for 1996. 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 $1,094,978 (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 effective 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 $316,564 as compared to $193,037 for 1995.
Interest expense increased primarily as a result of interest and issuance costs
related to the convertible debenture. Other income, net, was approximately the
same in 1996 and 1995.

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.

Fiscal 1995 compared to 1994

Net sales for 1995 increased by $2,957,221 or 25%, to $14,786,658 from
$11,829,437 in 1994. Increased sales of narrowband and marine communication
products were partially offset by lower sales in marine instrumentation.

Gross profit for 1995 was $5,657,965 (38% of net sales), as compared to
$4,779,539 (40% of net sales) in 1994, an increase of $878,426 or 18%.
Increased sales of higher margin narrowband products, and improved margins on
marine communications products accounted for most of the increase.

Operating expenses were $6,271,412 (42% of net sales) in 1995, as compared to
$5,159,848 (43% of net sales) in 1994, an increase of $1,111,564 or 22%. The
increase in operating expenses included $686,458 of restructuring charges,
increased selling expenses due to commissions on higher sales, and increased
administrative expenses, primarily professional fees, insurance, rent and taxes
other than income.

Interest expense for 1995 was $193,037, as compared to $62,258 in 1994. The
increase was due to increased prime based lending rates and larger balances
outstanding.

The Company adopted FAS 109, "Accounting for Income Taxes" effective October 3,
1993. Upon adoption and at October 1, 1994, full valuation allowances were
recorded with respect to the Company's deferred tax asset balances due to
uncertainty of future taxable income estimates. During fiscal 1995, the
valuation allowance was reduced by $702,000 to reflect management's assessment
of the amount of deferred tax assets which were more likely realizable than
not. This assessment was based upon management's estimates of future taxable
income and reflected the substantial growth realized in sales of and order
backlog for narrowband land mobile products, as well as the administrative cost
reductions and manufacturing efficiencies achieved as a result of the 1995
restructuring activities. Based upon this assessment, the Company recognized a
deferred federal income tax benefit of $1,083,640 in the year ended September
30, 1995.

Net income for 1995 was $316,875 compared to a loss of $395,948 in 1994.

Capital Expenditures

Capital expenditures were $959,000, $699,000 and $538,000 in fiscal years 1996,
1995 and 1994, respectively. Planned capital expenditures in fiscal year 1997
are $286,000, primarily for production and engineering equipment.

Liquidity and Capital Resources

Net cash used in operating activities for 1996 increased by $780,984 to
$871,149 from net cash used in operating activities of $90,255 in 1995. The
increase was due mostly to build-up of land mobile inventories and accounts
receivable. At the end of 1996, the sales order backlog for the Company's
narrowband products stood at $5,208,000 (although not considered firm) and the
total backlog was $5,412,000. During 1996 one of the Company's bank lines was
increased from $2,000,000 to $2,500,000. A second $1,000,000 line related
specifically to NNS was not renewed and the balance of $166,526 outstanding at
that time was converted to a term loan. The Company's line of credit is subject
to debt covenants which require the Company to be profitable, maintain a
tangible net worth of $5,400,000, a minimum current ratio of 1.50, a maximum
debt to net worth ratio of 1.25 and a minimum debt service ratio of 1.50.

During 1996 the Company issued $2,000,000 in private placement Convertible
Debentures due December 19, 2000, bearing interest at increasing rates from
10-15% per annum. The proceeds have been used for normal working capital
requirements, and to develop NNS.

The Company believes its cash flow from operations, available bank lines of
credit and other financing sources are sufficient to meet its working capital
and other capital requirements for at least the next two years.

Other Matters

In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" ("FAS 121"). FAS
121 requires that long-lived assets and certain intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of the asset may not be recoverable. If impairment has
occurred, an impairment loss must be recognized. Implementation of FAS 121 is
required in fiscal year 1997. The impact of the adoption of this standard is
not expected to be material to the financial position, results of operations,
or liquidity of the Company.

In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock Based
Compensation", which will be effective for the Company's fiscal year 1997. The
Company has not decided which of the alternatives provided under that statement
will be applied and, therefore, its impact on the Company's future financial
statements cannot be currently determined.

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.

Statements included in this report which are not historical in nature are
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. 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 28, 1996

                                   INDEX

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

   <S>                                                            <C>
   Report of Independent Accountants                              13

   Consolidated Balance Sheets, September 28, 1996 and 
    September 30, 1995                                            14

   Consolidated Statements of Operations for the years 
    ended September 28, 1996, September 30, 1995 and 
    October 1, 1994                                               15

   Consolidated Statements of Stockholders' Equity for
    the years ended September 28, 1996, September 30, 
    1995 and October 1, 1994                                      16

   Consolidated Statements of Cash Flows for the years 
    ended September 28, 1996, September 30, 1995 and 
    October 1, 1994                                               17

   Notes to Consolidated Financial Statements                     18-29
</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 28, 1996 and September 30,
1995 and the related consolidated statements of operations, stockholders'
equity and cash flows for the years ended September 28, 1996, September 30,
1995 and October 1, 1994. 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 28, 1996 and September 30,
1995, and the consolidated results of their operations and their cash flows for
the years ended September 28, 1996, September 30, 1995 and October 1, 1994 in
conformity with generally accepted accounting principles.


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

Seattle, Washington
December 20, 1996, except for Note 13 to the financial
statements as to which the date is January 8, 1997.


DATAMARINE INTERNATIONAL, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

<TABLE>
<CAPTION>

ASSETS                                                         September 28,    September 30,
                                                                   1996             1995
                                                               -------------    -------------

<S>                                                            <C>              <C>
Current assets:
  Cash and cash equivalents                                    $    330,076     $    252,843
  Accounts receivable, less allowance for doubtful accounts 
   of $171,990 and $158,193, respectively                         3,335,052        2,337,607
  Inventories                                                     5,230,705        3,371,976
  Prepaid expenses and other current assets                         202,067          242,148
  Deferred income taxes, current                                    332,825          340,000
                                                               -----------------------------
      Total current assets                                        9,430,725        6,544,574

Property, plant and equipment                                     5,169,121        4,210,085
Less accumulated depreciation                                     2,889,267        2,472,871
                                                               -----------------------------
      Property, plant and equipment, net                          2,279,854        1,737,214

Deferred income taxes, non-current                                  405,084          785,992
Other assets, net                                                   534,183          255,801
                                                               -----------------------------
      Total assets                                             $ 12,649,846     $  9,323,581
                                                               =============================

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Notes payable to banks                                       $  1,750,000     $  1,325,353
  Notes payable, other                                                    -           30,000
  Current maturities of long-term debt and capital lease
   obligations                                                      173,293          265,389
  Accounts payable                                                  718,240          814,437
  Accrued expenses                                                1,621,694        1,312,600
                                                               -----------------------------
      Total current liabilities                                   4,263,227        3,747,779

Long-term debt and capital lease obligations, less current 
 maturities                                                       1,849,685          377,411
                                                               -----------------------------

      Total liabilities                                           6,112,912        4,125,190
                                                               -----------------------------

Commitments and contingencies

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

Stockholders' equity:
  Convertible preferred stock, $1 par value - authorized 
   1,000,000 shares; including redeemable preferred stock,
   issued, none                                                           -                -
  Common stock, $.01 par value - authorized 3,000,000 
   shares; 1,309,411 and 1,296,684 shares issued and 
   outstanding, respectively                                         13,094           12,967
  Capital in excess of par value                                  3,644,662        3,078,182
  Unearned compensation                                             (12,421)         (33,376)
  Retained earnings                                               2,891,599        2,140,618
                                                               -----------------------------
      Total stockholders' equity                                  6,536,934        5,198,391
                                                               -----------------------------

      Total liabilities and stockholders' equity               $ 12,649,846     $  9,323,581
                                                               =============================
</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 28, 1996, September 30, 1995 and October 1, 1994


<TABLE>
<CAPTION>
                                             September 28,    September 30,     October 1,
                                                 1996             1995             1994
                                             -------------    -------------    ------------

<S>                                          <C>              <C>              <C>
Net sales                                    $ 16,590,002     $ 14,786,658     $ 11,829,437
Cost of products sold                           9,555,599        9,128,693        7,049,898
                                             ----------------------------------------------
      Gross profit                              7,034,403        5,657,965        4,779,539

Operating expenses:
  Research and development                      1,235,014        1,419,904        1,414,353
  Selling                                       2,637,422        2,419,086        2,202,055
  General and administrative                    1,755,063        1,745,964        1,543,440
  Restructuring charge                                  -          686,458                -
                                             ----------------------------------------------
      Operating expenses                        5,627,499        6,271,412        5,159,848
                                             ----------------------------------------------
Operating income (loss)                         1,406,904         (613,447)        (380,309)

Interest expense                                  316,564          193,037           62,258
Other (income), net                               (48,724)         (39,719)         (46,619)
                                             ----------------------------------------------

Income (loss) before income taxes               1,139,064         (766,765)        (395,948)
Income tax expense (benefit)                      388,083       (1,083,640)               -
                                             ----------------------------------------------
Net income (loss)                            $    750,981     $    316,875     $   (395,948)
                                             ==============================================
Net income (loss) per share:
  Primary                                    $        .49     $       0.23     $      (0.33)
  Fully diluted                              $        .49     $       0.23     $      (0.33)

Weighted average number of common shares:
  Primary                                       1,519,985        1,358,099        1,212,953
  Fully diluted                                 1,525,590        1,358,099        1,212,953
</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 28, 1996, September 30, 1995 and October 1, 1994


<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 2, 1993               1,205,934   $ 12,059   $ 2,492,748   $ (100,492)    $ 2,219,691    $ 4,624,006

Net loss for 1994                                -          -             -            -        (395,948)      (395,948)
Issuance of shares under Employee 
 Investment Plan and Employee Stock 
 Purchase Plan                              13,959        140        57,867            -               -         58,007
Amortization of unearned compensation            -          -             -       45,228               -         45,228
                                         ------------------------------------------------------------------------------
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
                                         ==============================================================================
</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 28, 1996, September 30, 1995 and October 1, 1994

<TABLE>
<CAPTION>
                                                           September 28,    September 30,     October 1,
                                                               1996             1995             1994
                                                           -------------    -------------    -------------

<S>                                                        <C>              <C>              <C>
Operating activities:
  Net income (loss)                                        $    750,981     $    316,875     $   (395,948)
  Adjustments to reconcile net income (loss) to net 
   cash used in operating activities:
  Depreciation and amortization                                 441,467          406,831          497,976
  Gain on asset dispositions                                          -                -          (49,776)
  Non-cash portion of loss from restructuring charge                  -          441,154                -
  Amortization of debenture discount and issue costs             93,624                -                -
  Provision for losses on accounts receivable                    81,615           59,725          (42,048)
  Employee investment plan expense                               36,937           42,216           52,596
  Amortization of unearned compensation                          20,955           41,388           45,228
  Provision for (benefit of) deferred income taxes              388,083       (1,083,640)               -
  Changes in operating assets and liabilities:
    Accounts receivable                                      (1,079,060)         (78,967)      (1,455,322)
    Inventories, prepaid expenses and other current 
     assets                                                  (1,818,648)        (246,730)          55,735
    Accounts payable and accrued expenses                       212,897           10,893        1,234,663
                                                           ----------------------------------------------

Net cash used in operating activities                          (871,149)         (90,255)         (56,896)
                                                           ----------------------------------------------

Investing activities:
  Net proceeds from asset dispositions                                -                -           95,104
  Purchases of property, plant and equipment, including 
   self-constructed equipment                                  (959,036)        (699,125)        (538,745)
  Other                                                        (135,569)        (145,951)         (89,672)
                                                           ----------------------------------------------

Net cash used in investing activities                        (1,094,605)        (845,076)        (533,313)
                                                           ----------------------------------------------

Financing activities:
  Proceeds from sale of common stock                             49,670          244,267            5,411
  Proceeds from bank and other borrowings                     3,750,000        1,084,843          560,352
  Deferred financing costs                                     (197,508)               -                -
  Principal payments on revolving line of credit and 
   long-term debt                                            (1,559,175)        (321,862)        (177,600)
                                                           ----------------------------------------------

Net cash provided by financing activities                     2,042,987        1,007,248          388,163
                                                           ----------------------------------------------

Increase (decrease) in cash and equivalents during year          77,233           71,917         (202,046)
Cash and equivalents at beginning of year                       252,843          180,926          382,972
                                                           ----------------------------------------------
Cash and equivalents at end of year                        $    330,076     $    252,843     $    180,926
                                                           ==============================================

Supplementary Cash Flow Information
  Interest paid                                            $    110,500     $    207,000     $     42,500
  Income taxes paid, net                                              -                -     $      6,000
</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
      320 dealers.

      In July 1993, the Company launched its newest land mobile product line
      which represents 58%, 45% and 36% of net sales in fiscal 1996, 1995 and
      1994, respectively. In addition, the Company has entered into agreements
      for the construction and operation of narrowband land mobile systems (see
      Note 9). As of September 28, 1996, the Company had a significant backlog
      related to these narrowband products, although such orders are not
      considered firm, and management expects continued growth of the product
      line in fiscal 1997.

      The Federal Communications Commission ("FCC") intends to conduct an
      auction for new 220 MHz licenses, but specific rules and timing for the
      auction have not been set. No new 220 MHz licenses will be issued until
      the auction is completed. Until such time as new licenses are issued,
      demand for the Company's higher margin base station products will be
      lower than in previous years.

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 $975,000 in
      1996, $1,161,000 in 1995, and $1,068,000 in 1994. 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 67% of the accounts receivable
      balance as of 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.

      Deferred Financing Costs

      Deferred financing costs of $167,884 at September 28, 1996 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 five year 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.

      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.

      Reclassifications

      Certain reclassifications have been made to the prior years' financial
      statements in order to conform to the 1996 presentation, with no impact
      on previously reported net income (loss) or stockholders' equity.

      Future Effects of New Accounting Standards

      In March 1995, the Financial Accounting Standards Board issued Statement
      of Financial Accounting Standards No. 121, "Accounting for the Impairment
      of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" ("FAS
      121"). FAS 121 requires that long-lived assets and certain intangibles be
      reviewed for impairment whenever events or changes in circumstances
      indicate that the carrying amount of the asset may not be recoverable. If
      impairment has occurred, an impairment loss must be recognized.
      Implementation of FAS 121 is required in fiscal year 1997. The impact of
      the adoption of this standard is not expected to be material to the
      financial position, results of operations, or liquidity of the Company.

      In October 1995, the Financial Accounting Standards Board issued
      Statement of Financial Accounting Standards No. 123, "Accounting for
      Stock Based Compensation", which will be effective for the Company's
      fiscal year ending September 27, 1997. The Company has not decided which
      of the alternatives provided under that statement will be applied and,
      therefore, its impact on the Company's future financial statements cannot
      be currently determined.

3.    Inventories:

      Inventories consist of the following:

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

      <S>                                   <C>            <C>
      Finished goods and subassemblies      $ 1,700,558    $ 1,445,715
      Purchased parts and materials         $ 3,530,147      1,926,261
                                            --------------------------
                                            $ 5,230,705    $ 3,371,976
                                            ==========================
</TABLE>

      As of September 28, 1996, inventories include approximately $486,000
      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 yet to be scheduled 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
                                                       1996          1995       Useful Lives
                                                    -----------   -----------   -------------

      <S>                                           <C>           <C>           <C>
      Design, test and manufacturing equipment      $ 2,606,559   $ 2,528,204   5 years
      Narrowband network equipment                    1,500,024       615,013   10 years
      Office furniture and general equipment            503,854       489,441   3 - 5 years
      Buildings and improvements                        450,106       468,849   10 - 25 years
      Leasehold improvements                            101,178       101,178   3 - 10 years
      Delivery vehicles                                   7,400         7,400   5 years
                                                    -------------------------
                                                    $ 5,169,121   $ 4,210,085
                                                    =========================
</TABLE>

      Design, test and manufacturing equipment includes equipment under capital
      leases with an original cost of $178,000 and accumulated depreciation of
      $73,000 as of September 28, 1996.

5.    Accrued Expenses:

      Accrued expenses consist of the following:

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

      <S>                                            <C>            <C>
      Accrued payroll and related fringe benefits    $   711,249    $   628,746
      Accrued warranty costs                             235,497        237,469
      Accrued marketing costs                            222,752        194,810
      Other accrued expenses                             452,196        251,575
                                                     --------------------------
                                                     $ 1,621,694    $ 1,312,600
                                                     ==========================
</TABLE>

6.    Notes Payable to Banks:

      The Company has a bank line of credit of $2,500,000 with interest payable
      monthly at .75% over prime (9.0% and 9.5% at September 28, 1996 and
      September 30, 1995 respectively). The outstanding balance on this line
      was $1,750,000 at September 28, 1996, and $1,325,353 at September 30,
      1995. 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 require the Company to be profitable, maintain a tangible
      net worth of $5,400,000, a minimum current ratio of 1.50, a maximum debt
      to net worth ratio of 1.25 and a minimum debt service ratio of 1.50.

      A second $1,000,000 line of credit related specifically to NNS was not
      renewed and the outstanding balance of $166,526 at the time was converted
      to a collateralized equipment term loan due April 30, 1998.

      The weighted-average interest rate on short-term borrowings was 9.2% and
      9.8% for fiscal years 1996 and 1995, respectively.

7.    Long-Term Debt:

      Long-term debt consists of the following:

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

      <S>                                                          <C>            <C>
      Subordinated Convertible Debentures, due December 2000, 
       interest payable quarterly commencing March 1997            $ 2,000,000    $       -
        Less discount, net of accumulated amortization of 
         $64,000 related to allocation of debt proceeds to 
         stock conversion rights                                      (416,000)           -
                                                                   ------------------------
                                                                     1,584,000            -

      Foreign denominated mortgage notes payable (DKK 1,017,424 
       and DKK 1,061,064 at September 28, 1996 and September 30,
       1995, respectively) total monthly payments of $2,433 
       (DKK 14,247), varying interest rates from 9% to 10.5%,
       due 2005 through 2011, collateralized by the underlying 
       building                                                        173,775      192,053 

      Mortgage note, monthly payments of $1,220, including 
       interest at prime plus 2.5%, adjustable annually, due 
       July 2003, collateralized by the underlying building             70,082       88,954

      Collateralized equipment loan, monthly payments of $4,168, 
       plus interest at prime plus 1.75%, due October 1997              54,167      104,167

      Collateralized equipment loan, monthly payments of $4,626, 
       plus interest at prime plus 1.25%, due April 30, 1998            92,515      143,397
                                                                   ------------------------
                                                                     1,974,539      528,571
      Less current maturities                                          124,854      204,960
                                                                   ------------------------
                                                                   $ 1,849,685    $ 323,611
                                                                   ========================
</TABLE>

      Maturities of long-term debt are as follows:

<TABLE>

                  <S>                <C>
                  Fiscal
                  1997               $   124,854
                  1998                    62,652
                  1999                    23,849
                  2000                    26,481
                  2001                 2,029,403
                  Thereafter             123,300
</TABLE>

      On December 19, 1995 the Company completed a private placement issuance
      of $2,000,000 in Subordinated Convertible Debentures (the "Debentures")
      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. 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 five year 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 28, 1996,
      management believes that the fair value of the debt component of the
      Debentures (carrying value of $1,584,000 as of September 28,1996) has not
      changed materially from the date of issuance.

      The estimated fair value of notes payable to banks and other long-term
      debt at September 28, 1996 approximates the carrying value of such debt
      in the financial statements, based on current interest rates for similar
      obligations with like maturities.

8.    Commitments and Contingencies:

      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 $196,000 in
      1996, $207,000 in 1995, and $260,000 in 1994. 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 12).

      Approximate future minimum lease payments, by year and in the aggregate,
      under capital and noncancelable operating leases, were as follows at
      September 28, 1996:

<TABLE>
<CAPTION>
                                                                      Capital     Operating
      Fiscal                                                           Leases      Leases
      ------                                                          --------    ---------

      <C>                                                             <C>         <C>
      1997                                                            $ 56,726    $ 178,536
      1998                                                                   -      114,210
                                                                      ---------------------
      Total future minimum lease payments                               56,726    $ 292,746
                                                                                  =========
      Less amounts representing interest                                (8,287)
                                                                      --------
      Present value of future minimum lease payments, all current     $ 48,439
                                                                      ========
</TABLE>

      The Company is subject to legal proceedings and claims which arise in the
      ordinary course of its business. While the ultimate results of such
      matters cannot be determined, management does not expect that they will
      have a material adverse effect on the Company's consolidated results of
      operations, financial position or liquidity.

9.    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 Federal Communications
      Commission ("FCC") in approximately 45 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.

      As of September 30, 1996 ownership of licenses for locations which had
      not met regulatory build-out requirements reverted to the Federal
      government. The Company has met all regulatory build-out requirements
      related to its licenses.

      At September 28, 1996 and September 30, 1995, fixed assets include
      $1,500,024 and $615,013 (less accumulated depreciation of $90,619 and $0)
      respectively, of facilities related to the SMR systems. Other assets
      include $360,760 and $235,695 (less accumulated amortization of $23,743
      and $0) respectively, 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
      negligible through September 28, 1996.

      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.

10.   Stockholders' Equity:

      1992 Stock Option Plan for Non-Employee Directors

      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.

<TABLE>
<CAPTION>
                                                           Shares        Price
                                                           ------    -------------

      <S>                                                   <C>      <C>
      Outstanding at October 2, 1993                        3,000    $ 4.00
      Granted                                               3,000      5.12
                                                            ----------------------
      Outstanding at October 1, 1994                        6,000      4.00 - 5.12
      Granted                                               3,000      8.62
                                                            ----------------------
      Outstanding at September 30, 1995                     9,000      4.00 - 8.62
      Exercised                                            (4,500)     4.00 - 8.62
                                                            ----------------------
      Outstanding and exercisable at September 28, 1996     4,500    $ 4.00 - 8.62
                                                            ======================
</TABLE>

      1995 Stock Option Plan for Non-Employee Directors

      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.

<TABLE>
<CAPTION>
                                                           Shares   Price
                                                           ------   ------

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

      Outstanding and exercisable at September 28, 1996    8,000    $ 9.00
                                                           ===============
</TABLE>

      1991 Stock Option Plan

      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
      28, 1996, 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.

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

      <S>                                                   <C>       <C>            <C>       <C>            <C>      <C>
      Outstanding at October 2, 1993 and October 1, 1994     93,508   $4.00 - 4.50   51,500    $1.50          25,750   $4.50
      Exercised                                             (20,670)   4.00 - 4.50   (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    4.00 - 9.00   50,500     1.50 - 6.00   22,000    4.50
      Exercised                                              (2,525)   4.50 - 9.00   (3,125)    1.50 - 6.00        -       -
      Canceled                                                 (875)   9.00            (375)    6.00               -       -
                                                             ---------------------------------------------------------------
      Outstanding at September 28, 1996                      90,938    4.00 - 9.00   47,000     1.50 - 6.00   22,000    4.50
      Exercisable at September 28, 1996                      75,563   $4.00 - 4.50   42,500    $1.50 - 6.00   13,200   $4.50
      Available for grant at September 28, 1996              85,867                  36,625                   27,250
</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 843 shares in 1996, 1,272 shares in 1995 and 1847 shares in 1994
      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
      12% of their base salary with the Company matching 50% of the first 6% of
      base salary contributed. The Company issued 3,734 shares in 1996, 4,599
      in 1995 and 12,112 shares in 1994 under the Employee Investment Plan.

      Shares Reserved for Future Issue

      At September 28, 1996, the Company had reserved the following shares of
      its common stock for future issue:

<TABLE>

      <S>                                                        <C>
      Employee Stock Purchase Plan                                 6,828
      1991 Stock Option Plan:
        Qualified Options                                        176,805
        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           40,000
      Convertible Debentures                                     163,967
                                                                 -------
                                                                 524,975
                                                                 =======
</TABLE>

      Preferred Stock

      In connection with the issuance of the 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.

11.   Income Taxes:

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

<TABLE>
<CAPTION>
                                                   1996          1995         1994
                                                 ---------   -------------   ------

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

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

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

      <S>                                              <C>            <C>
      Net operating loss carryforwards                 $   622,000    $   967,000
      Accrued expenses not currently deductible for 
       tax purposes                                        206,000        233,000
      General business tax credit carryforwards            128,000        127,000
      Property and equipment                                12,000         47,000
      Allowance for doubtful accounts                       58,000         53,000
      Inventory, principally due to valuation 
       differences and overhead application                148,000        138,000
      Other, individually less than 5% of deferred 
       tax asset                                               909            992
                                                       --------------------------
                                                         1,174,909      1,565,992
      Less valuation allowance                            (437,000)      (440,000)
                                                       --------------------------
      Net deferred tax assets                          $   737,909    $ 1,125,992
                                                       ==========================
</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 estimates. 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 and September 30, 1995 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.

      The Company has recorded a net deferred tax asset of $738,000 including
      the benefit of loss carryforwards, which expire in varying amounts
      between fiscal 2008 and 2010. Realization is dependent on generating
      sufficient taxable income prior to expiration of the loss carryforwards.
      Although realization is not assured, management believes it is more
      likely than not that all of the deferred tax asset will be realized. The
      amount of the deferred tax asset considered realizable, however, could be
      reduced in the near term if estimates of future taxable income during the
      carryforward period are reduced.

      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>
                                                           1996          1995           1994
                                                         ---------   ------------    ----------

      <S>                                                <C>         <C>             <C>
      Income tax expense (benefit) at statutory rate     $ 387,000   $   (261,000)   $ (135,000)
      State income taxes, net of federal tax benefit         4,000        (99,000)      (67,520)
      Unrecognized deferred income tax benefit                   -              -             -
      Unrecognized net operating loss benefit                    -              -             -
      Other                                                     83        (21,640)        2,520
      Change in valuation allowance                         (3,000)      (702,000)      200,000
                                                         --------------------------------------
      Income tax expense (benefit)                       $ 388,083   $ (1,083,640)   $        -
                                                         ======================================
</TABLE>

      As of September 28, 1996, the Company has net operating loss
      carryforwards of $811,000 which are available to reduce future federal
      taxable income ($71,000 of which expire in fiscal 2008, $513,000 in
      fiscal 2009 and the remainder in 2010). The Company also has general
      business tax credit carryforwards of $128,000.

12.   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 effective 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.

13.   Subsequent Event:

      On December 12, 1996 the Company filed a collection action against one of
      its customers for accounts totaling approximately $132,000 at September
      28, 1996. 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 seeks $6,000,000 -
      $9,000,000 in damages and unspecified amounts for interest and other
      costs. 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 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

None


PART  III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The names, ages and offices of all executive officers of the Registrant are as
follows:

<TABLE>
<CAPTION>

  Name                Age   Office
  ----                ---   ------

  <S>                 <C>   <S>
  Peter D. Brown      49    Chairman of the Board, President and 
                            Chief Executive Officer of Registrant

  David C. Thompson   67    Director, Treasurer and Secretary of 
                            Registrant, President and Chief Executive 
                            Officer of SEA, Inc., a subsidiary
</TABLE>

The term of office of the executive officers of the Registrant is as set forth
in the Registrant's bylaws, namely: "until the next annual election to the
office which he holds and until his successor is chosen and qualified or until
he sooner dies, resigns, is removed or becomes disqualified." There is no
family relationship between the executive officers.

Mr. Brown was elected President of the Registrant in September 1991. Mr. Brown
is CEO of The South Beach Company, a management company, and Vice President and
Treasurer of Gordon & Ferguson, a manufacturer of mens' and boys' outerwear.
From 1974 through 1990, Mr. Brown was CEO of Heather Hill Sportswear Co., an
apparel company.

Mr. Thompson served as Acting Chief Executive Officer of the Registrant from
June 1990 until January 1991. Mr. Thompson served as Executive Vice President
and Chief Operating Officer of the Registrant from October 1989 until February
1992. Mr. Thompson has served as President and Chief Executive Officer of SEA,
Inc., a wholly-owned subsidiary of the Registrant, since its acquisition by the
Registrant in 1986. He had held the same position with SEA before the merger
since 1980. In 1996, he was named Treasurer and Secretary of the Registrant.
Mr. Thompson was previously President, Chief Executive Officer and a Director
of SBE, Inc., a public corporation involved in the manufacture of CB radios,
land mobile and marine VHF communication products.


ITEMS 10, 11, 12 and 13.

The information called for by Items 10, 11, 12 and 13 is hereby incorporated by
reference from the Registrant's definitive proxy statement to be filed pursuant
to Regulation 14A for the 1997 Annual Meeting of Stockholders.


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. None.

(c)   List of Exhibits

<TABLE>
<CAPTION>

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

  <C>       <S>
   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.

  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

  11        Computation of Earnings Per Share

  21        Subsidiaries

  23        Consent of Independent Accountants

  27        Financial Data Schedule
</TABLE>


                                  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/ PETER D. BROWN
-------------------------------------------
Peter D. Brown, President
Chief Executive Officer

By:/s/ DAVID C. THOMPSON
-------------------------------------------
David C. Thompson
Principal Financial and Accounting Officer

Date: December 23, 1996

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
December 23, 1996

By:/s/ DAVID C. THOMPSON
-------------------------------------------
David C. Thompson, Director
December 23, 1996

By:/s/ DALE N. HATFIELD
-------------------------------------------
Dale N. Hatfield, Director
December 23, 1996

By:/s/ ROBERT BENBOW
-------------------------------------------
Robert Benbow, Director
December 23, 1996



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    -------------------------                  Balance
                                                  Beginning      Charged to    Charged to   Deductions     at End
DESCRIPTION                                       of Period       Expenses       Other      (describe)    of Period
-----------                                      ------------   ------------   ----------   ----------   -----------

<S>                                              <C>            <C>            <C>          <C>          <C>
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
                                                 ===================================================================

Year ended October 1, 1994
  Deducted from asset accounts:
    Allowance for doubtful accounts              $   204,031      (42,048)                   19,691(1)   $   142,292
    Allowance for slow moving inventory              461,491       56,482                   334,471(2)       183,502
    Valuation allowance for deferred tax asset                  1,142,000(5)                               1,142,000
                                                 -------------------------------------------------------------------
      Totals                                     $   665,522    1,156,434                   354,162      $ 1,467,794
                                                 ===================================================================

Product warranty liability                       $   160,293      112,965                    75,734(3)   $   197,524
                                                 ===================================================================

<FN>
--------------------
<F1>  Uncollectible accounts written off, net of recoveries.
<F2>  Obsolete material written off.
<F3>  Warranty claims honored during the year.
<F4>  Reduction of deferred tax asset valuation account, credited to income 
      taxes expense (benefit).
<F5>  Includes cumulative effect of FAS 109 "Accounting for Income Taxes"
      adoption as of October 3, 1993.

</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 28, 1996 and September 30,
1995 and for the years ended September 28, 1996, September 30, 1995 and October
1, 1994 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 28,
1996, September 30, 1995 and October 1, 1994, 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 20, 1996