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 DECEMBER 31, 1996
                                       OR
              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                   OF THE SECURITIES EXCHANGE ACT OF 1934 FOR
          THE TRANSITION PERIOD FROM _______________ TO _______________

                           COMMISSION FILE NO. 0-22166

                              AETRIUM INCORPORATED
             (Exact name of registrant as specified in its charter)

                         MINNESOTA                           41-1439182
              (State or other jurisdiction of             (I.R.S. Employer
              incorporation or organization)             Identification No.)

                                2350 HELEN STREET
                         NORTH ST. PAUL, MINNESOTA 55109
               (Address of principal executive offices) (Zip code)

       Registrant's telephone number, including area code: (612) 770-2000
        Securities registered pursuant to Section 12(b) of the Act: NONE
           Securities registered pursuant to Section 12(g) of the Act:
                                                   COMMON STOCK, $.001 PAR VALUE

       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 period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES _X_ NO___

       Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of 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 [ ].

       As of March 18, 1997, 8,471,904 shares of Common Stock of the Registrant
were outstanding, and the aggregate market value of the Common Stock of the
Registrant as of that date (based upon the last reported sale price of the
Common Stock on that date as reported by the Nasdaq National Market), excluding
outstanding shares beneficially owned by directors and executive officers, was
approximately $126,374,005.

                       DOCUMENTS INCORPORATED BY REFERENCE

       Part II of this Annual Report on Form 10-K incorporates by reference
information (to the extent specific pages are referred to herein) from the
registrant's Annual Report to Shareholders for the year ended December 31, 1996
(the "1996 Annual Report"). Part III of this Annual Report on Form 10-K
incorporates by reference information (to the extent specific sections are
referred to herein) from the registrant's Proxy Statement for its 1997 Annual
Meeting to be held May 20, 1997 (the "1997 Proxy Statement").


                                     PART I

         This Form 10-K contains certain forward-looking statements. For this
purpose, any statements contained in this Form 10-K that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, words such as "may," "will," "expect," "believe," "anticipate,"
"estimate" or "continue" or comparable terminology are intended to identify
forward-looking statements. These statements by their nature involve substantial
risks and uncertainties, and actual results may differ materially depending on a
variety of factors, including those set forth in the section below entitled
"Certain Important Factors."

ITEM 1.           BUSINESS.

         Aetrium Incorporated ("Aetrium" or the "Company") designs, manufactures
and markets a variety of electromechanical equipment used in the handling and
testing of semiconductor devices known as integrated circuits ("ICs"). The
Company's primary focus is on high volume IC types and on the latest package
designs associated with "surface mount" technology. Aetrium's products are
purchased primarily by semiconductor manufacturers and are used in the
"back-end" of semiconductor manufacturing processes. The Company's products
automate critical functions to improve manufacturing yield, raise IC quality
levels, reduce manufacturing costs and increase product reliability.

         The Company's principal revenue base is its broad line of test
handlers, which incorporate thermal conditioning, contactor and automated
handling technologies to provide automated handling of ICs during production
test cycles. Change kits to adapt the Company's test handlers to different IC
package configurations and to upgrade installed equipment for enhanced
performance also represent a significant part of the Company's revenue. The
Company also offers its Versatus product line of IC handling modules to original
equipment manufacturers ("OEMs") to incorporate as the automated handling
components of such OEM's own proprietary equipment for a variety of other IC
processing requirements, such as marking, lead scanning and lead trim and form.
The Company's product lines also include reliability test systems, which provide
IC manufacturers with IC performance data to aid in the evaluation and
improvement of IC designs and manufacturing processes to increase IC yield and
reliability, and its environmental test equipment products for burn-in testing
of ICs.

         The Company's strategy has focused on revenue growth through product
expansion and customer satisfaction. Company sales have increased at an average
annual compounded growth rate of approximately 37% during the period from 1986
through 1996. Currently, the Company has an installed base of over 6,000 test
handlers, which the Company believes is the second largest installed base among
all test handler manufacturers.

         The Company's revenue growth and expansion of its product lines have
resulted from both internal product development and the acquisition of
complementary businesses, product lines and technologies. Examples of the
Company's internally developed products are the Company's Versatus handling
modules, introduced in 1991, and the Model 900A pick-and-place test handler.

         The Company acquired the core products of its 5050 series of gravity
feed test handlers, produced in North St. Paul, through its acquisition of
Electro-Mechanical Systems, Inc. ("EMS") in 1988. Since then, the Company has
expanded this series of products through internal development to include a full
range of thermal conditioning capabilities, contactor change kits for a wide
range of package types in the largest segment of surface mount ICs, high
performance contactors, dual test site capability, quad test site capability,
and more recently, micro small outline package ("MSOP") test capability.
Currently the Company's 5050 series represents its highest revenue product
series.

         The Company acquired its reliability test systems product line,
produced in North St. Paul, through the purchase of the assets of Sienna
Technologies, Inc. ("Sienna Technologies") in December 1993. At the time of the
acquisition, Sienna Technologies' revenue was declining and customer confidence
was eroding due in part to product performance and customer service issues.
Since the acquisition, this product line has been improved to address
performance issues, customer service has improved, customer confidence has been
substantially restored, and gross profit margins have increased. These
improvements in product performance and customer service have led to substantial
revenue growth for this product line since the date of acquisition.

         Aetrium acquired the products produced by its San Diego Division by
purchasing the assets of Sym-Tek Systems, Inc. ("SymTek") in November 1994. The
San Diego Division's products allowed Aetrium to enter the memory segment of the
IC market with both high volume multisite pick-and-place and extensive multisite
gravity feed test handler lines. The SymTek acquisition also extended Aetrium's
line of gravity feed test handlers for the non-memory IC market segment. The San
Diego Division's products, with an installed base of approximately 5,000 units,
also present opportunities for recurring change kit and spare parts revenues,
and increase Aetrium's test handler customer base to include companies such as
International Business Machines Corporation ("IBM") and Micron Electronics, Inc.

         In January 1996, Aetrium acquired the environmental test products
produced by its Lawrence Division by purchasing the assets of E.J. Systems, Inc.
("EJ Systems"). The Lawrence Division is engaged in the business of the
manufacture and distribution of environmental conditioning chambers for burn-in
testing of ICs, and providing board assembly and burn-in testing services for
third parties. Since the acquisition, the Company has substantially increased
marketing and product distribution, increased average selling prices, and
improved manufacturing efficiencies.

         Aetrium emphasizes both product quality and customer service to achieve
customer satisfaction, which is reflected in the certification of its Minnesota
facility in March 1995 as the first test handler company certified under the ISO
9001 program. The Company has since successfully completed recertification
audits, including two in 1996.

         The Company was incorporated in Minnesota in December 1982. The
Company's executive offices are located at 2350 Helen Street, North St. Paul,
Minnesota 55109, and its telephone number is (612) 770-2000.

TEST HANDLER PRODUCTS

         Test handlers are electromechanical systems interfaced with a tester to
form a test system designed to handle, thermally condition, contact and sort ICs
automatically during the testing process. IC devices are loaded into the handler
from tubes or trays and then typically transported to a temperature chamber
within the test handler where they are thermally conditioned to the required
testing temperature. The IC is then positioned against the test handler
contactor, which provides an electrical connection between the IC and the
tester. After testing, the test handler sorts the IC devices according to test
performance.

         Traditionally, test handlers used gravity to move ICs through the
handler system. In order to accommodate more fragile IC package families,
gravity feed systems have incorporated various velocity limiting techniques to
reduce the speed of IC packages and minimize IC damage upon impact with other
ICs or other stopping mechanisms. More recently, pick-and-place test handler
systems have been introduced for IC package families most easily damaged in
handling, such as quad flatpack families ("QFPs") and some small outline
packages ("SOPs"). Pick-and-place systems move ICs electromechanically, and thus
can avoid jarring stops and resulting lead damage. Pick-and-place systems are
typically slower and more costly than gravity feed handlers.

         Test handlers are designed for either memory or nonmemory ICs. Memory
ICs require relatively long test times. In order to achieve acceptable
throughput rates, memory IC test handlers have been designed to test up to 64
devices at a time. Nonmemory ICs require relatively short test times, and
traditionally test times have not been a limiting factor for throughput rates.
However, test times have increased as nonmemory ICs have become more complex,
and IC manufacturers have also sought to fully utilize the capacity of their
testers. Accordingly, multisite test handlers, with as many as eight test sites,
are now available for appropriate nonmemory IC applications.

         Test handlers must meet industry criteria for thermal conditioning,
contactor integrity and minimization of lead damage. Test handlers compete on
the basis of cost, throughput, versatility, reliability and the specific
application requirements of the IC manufacturer. The combination of these
factors measures the cost of ownership of the test handler per device tested.
Aetrium believes its broad line of test handlers competes favorably on the basis
of cost of ownership for a wide range of IC manufacturer applications.

         The Company's primary focus continues to be on the newer generation ICs
referred to as surface mount devices ("SMD") which represent the largest
volumes, the newest IC device types, and the fastest growing market segments.
The Company offers the broadest line of test handling products to the
semiconductor industry and, with the combination of Aetrium's North St. Paul and
San Diego designed products, it can now address all market segments of the
industry. Aetrium's test handler products are complementary in nature with
minimal overlap of application and can be distributed and serviced through a
common organization for efficiency.

         GRAVITY FEED HANDLERS

         5050 SERIES. Aetrium's 5050 series of gravity feed test handlers for
nonmemory IC applications, produced in North St. Paul, Minnesota, addresses a
wide range of SOP package types, which constitute the largest segment of all
surface mount ICs. These handlers compete most favorably in high-volume
applications and their high throughput rates are an added advantage in
relatively short test time applications. Models within this series vary on
adaptability to different IC package sizes and configurations and the
temperature range available for thermal conditioning in order to provide cost
effective solutions to a wide range of customer requirements. The Company also
offers dual test site and quad test site capability within its 5050 Series of
handlers to increase productivity and reduce testing costs in certain
applications.

         MODEL 4098. The Model 4098, produced in North St. Paul, was first sold
by the Company in 1988 and is a gravity feed handler used for dual in line
("DIP") packages, the highest volume through-hole package type. In addition, it
serves as the base handler for a number of custom handler designs. It is
designed for high volume handling and provides ambient and hot temperature
capability.

         MODEL 300. The Model 300, produced in San Diego, is a gravity feed test
handler which handles a wide variety of DIP devices. It provides hot and cold
thermal conditioning with a temperature range of -60oC to +150oC with +/-2oC
control capabilities. A menu driven CRT display allows the operator to set up
the handler's operational parameters as well as continually monitor the handler
status. The handler can be programmed to sort devices into user-defined
categories. This model also features electro-static discharge protection
throughout.

         MODEL SO3058. The Model SO3058 handler, produced in San Diego, is
designed for 300 mil and wider SOP packages. It provides parallel testing of up
to 16 memory devices simultaneously. This model offers a dual channel
temperature controller that monitors both the storage chamber and test site air
temperature. It provides cold and hot thermal conditioning with a temperature
range of -60oC to +150oC.

         MP SERIES. The MP Series of handlers, produced in San Diego, provide
parallel testing of up to 16 memory devices on models MP3050, MP4030 and MP4050,
and up to 32 memory devices on model M4300. The quick load spool design reduces
the number of moving parts in the test environment, eliminating multiple test
site adjustments common to other systems. MP Series systems are equipped with
two separate environmental chambers, independently controlled with a cold and
hot temperature range of -60oC to +150oC.

         PICK-AND-PLACE HANDLERS

         MODEL 900A. Aetrium's Model 900A pick-and-place handler, produced in
North St. Paul, provides gentle handling required for QFPs and the most
difficult to handle SOPs. This model also provides the stringent contact
integrity required for the highest performance ICs. The 900A can be quickly
adapted to accept different package types and configurations, and is well suited
for low volume engineering, preproduction and production applications. It also
competes for high volume nonmemory production applications where long test times
reduce the cost effectiveness of higher priced production based handlers.
Aetrium believes the 900A's unique "plunge to board" testing technique, which
utilizes temperature controlled thermal nests, gives it a special advantage in
the testing of high performance ICs most sensitive to signal degradation.
Through this technique, the 900A can place the IC under test directly against a
replicated PC board contact site, thus eliminating the test contactor and the
potential for signal degradation resulting from the contactor's physical and
electrical attributes. This plunge to board technique is made possible by the
900A's patented thermal conditioning nest that eliminates the need for a thermal
conditioning chamber and the resulting insulation the contactor must accommodate
between the tester and the IC under test. The 900A can be modified with change
kits to accommodate nearly every IC package configuration being manufactured in
volume today. On average, the 900A is used with seven change kits.

         MODEL M3200. The Model M3200 Series test handlers, produced in San
Diego, are pick-and-place high volume production application test handlers for
memory ICs. The M3200 Series addresses a wide range of IC package types that
cannot be processed on gravity feed test handlers without special carriers, and
provides hot, ambient and cold parallel testing with up to 32 test sites. Its
horizontal tray based system design provides package protection with input and
output modules capable of automatically loading and unloading tubes or trays.

         MODEL 6400. The Model 6400 pick-and-place handler is designed for
testing 64 memory devices at a time by presenting two trays of 32 devices each
to the tester. The Model 6400 can accommodate 128 devices. The Model 6400 is
produced by the San Diego Division in a joint development and manufacturing
program with a German technology partner.

         CHANGE KITS, UPGRADES AND SPARE PARTS

         The Company has ongoing demand for IC package change kits for its
installed test handler equipment, including test handlers no longer included in
its active product line, to accommodate the growing variety of IC packages used
by the IC industry. The demand for change kits is driven by introduction of new
IC package types and production volume changes experienced by the Company's end
customers. Also included in change kits are upgrade kits to enhance performance
of installed equipment.

VERSATUS AUTOMATION SYSTEMS

         The Company believes that the growing number and volume of fine pitch
and other delicate IC packages is driving a demand for automated equipment for
all IC manufacturing processes. Existing processing equipment often will not
accommodate these package types or the numerous tray configurations used to
transport them. Aetrium believes that its Versatus product line offers the most
effective handling technology to automate these manufacturing processes for
increasingly difficult to handle, newer generation ICs.

         The Company began the development of the Versatus product line in 1990.
This product line currently consists of a series of robotic electromechanical
handling modules, each designed to perform a specific handling function.
Together these modules perform nearly all of the handling functions necessary
for the various IC manufacturing processes. Each handling module has a
microprocessor that directs the handling module's function and communicates with
other modules through a proprietary software protocol that enables transfer of
ICs between modules in a logical and efficient manner.

         The Versatus handling modules can be readily assembled into systems
configured to provide nearly any IC routing pattern required by an IC processing
application, and can be readily integrated as a component of the processing
equipment. This generic nature of the Versatus handling modules allows Aetrium
to provide a versatile, cost effective automation solution to IC processing
equipment OEMs that overcomes the handling automation challenges presented by
more fragile IC package types. The Versatus modules can also be adapted to
provide an automated linkage between IC manufacturing processes, thus offering
the potential for seamless automated handling of ICs from trim and form to
packaging for shipment.

         Following are the principal automation modules in the Versatus product
line:

         PICK-AND-PLACE MODULE. The pick-and-place module provides the means to
pick, transport and place IC packages on an individual basis. The pick-and-place
module adapts to various Versatus end effectors that perform the actual picking
and releasing of the IC package as the end effectors are moved along a
horizontal axis between fixed or user programmable locations. The pick-and-place
module can transport most IC packages from or to tray, tube or other transport
media to or from the IC process site. Standard Versatus end effectors are
commonly purchased with the pick-and-place module, although the module can
easily accommodate customer designed end effectors. The pick-and-place module is
currently in use by the Company's OEM customers in lead inspection, mark
inspection, mark curing, trim and form, taping, lead conditioning, media
transfer and prom programming equipment.

         TRAY TRANSPORT MODULE. The tray transport module is a user programmable
IC tray handler that precisely indexes a tray of ICs row by row through a
process site. The tray transport module can accommodate a wide variety of IC
trays and tray matrix configurations including all industry standard trays.
Other customer trays can also be accommodated with the addition of appropriate
adapter kits. This module, together with the Company's pick-and-place module, is
used by the Company's OEM customers in lead inspection, mark inspection, taping,
lead conditioning, marking, media transfer and prom programming equipment.

         CONVEYOR BELT MODULE. The conveyor belt module is designed to transport
and index IC trays through a process. The transport speeds and the number and
size of the index steps are user programmable, providing a versatile transport
mechanism for those applications that require continuous, single directional
flow of IC trays to, through and from manufacturing processes. The conveyor belt
module is commonly used in conjunction with the tray stacker/unstacker modules
as an automation subsystem to provide a continuous supply of trays with minimal
operator intervention, and is currently in use by the Company's OEM customers in
lead inspection, mark inspection, trim and form, media transfer, marking and
mark curing equipment.

         TRAY STACKER/UNSTACKER MODULE. The tray stacker/unstacker module
separates a single tray from a stack of up to 30 IC trays for individual
processing with no operator intervention, and operates in reverse sequence to
stack trays after processes are complete. This module, in conjunction with the
conveyor, is user programmable and precisely positions trays for further
processing and/or transport. Tray stacker/unstacker modules are currently in use
by the Company's OEM customers in lead inspection, mark inspection, marking,
mark curing, burn-in board loading, trim and form, media transfer and prom
programming equipment.

         INVERTING END EFFECTOR. One of several end effector configurations,
this end effector inverts an IC 180 degrees from its previous position. This
capability is required, for example, in some inspection processes where the IC
is transported with the leads pointing down but must be inspected with the leads
pointing up and returned to the transport media with the leads pointing down.
The inverter module is used in conjunction with a programmable pick-and-place
module by the Company's OEM customers in lead inspection and mark inspection
equipment.

         TAPING MODULE. The taping module provides an automated means for
indexing tape media to a position for placement of devices commonly transferred
with the pick-and-place module. A reel of tape is a medium often used to ship
ICs to customers. This module is currently used by the Company's OEM customers
in lead inspection, mark inspection and taping equipment.

         Versatus modules have been incorporated in trim and form, marking, mark
curing, lead inspection, mark inspection, lead conditioning, media transfer and
prom programming equipment to accomodate various device characteristics and
media packaging.

RELIABILITY TEST EQUIPMENT

         Sienna Technologies was formed in 1987 to meet the growing demand for
commercially available, accurate testing of ICs at the wafer and package level
of fabrication. In December 1993, the Company acquired the assets of Sienna
Technologies.

         The IC industry's demand for higher performance devices with smaller
circuit geometries has led to significant technological changes in the materials
and processes used to manufacture ICs. These changes in technology, along with
IC user demand for increased reliability, have created a need for increasingly
sophisticated reliability testing of IC designs and manufacturing processes. The
reliability test equipment product line includes a variety of systems with which
IC manufacturers can force precision levels of voltage and current through ICs,
collect and analyze relevant data, and predict lifetime performance of ICs. This
equipment can be utilized to perform reliability testing of packaged and
unpackaged ICs.

         Aetrium recently completed development of the Model 1164, a
fundamentally improved design from previous reliability test products. The Model
1164 features a modular design that allows for great flexibility in performing
reliability tests, and can test up to 4096 devices at a time or perform numerous
simultaneous tests on smaller batches of ICs.

ENVIRONMENTAL TEST EQUIPMENT

         The Company acquired substantially all of the assets of EJ Systems in
December 1995. The present environmental test equipment product line was
developed in response to a trend in increased power dissipation in ICs. This
increase in power dissipation resulted from increased device complexity (more
circuits) within smaller geometries. This phenomenon is especially evident in
high-end microprocessors. This power dissipation led to unique thermal
conditioning problems in the testing of such devices. EJ Systems developed
environmental test equipment that permitted individual IC temperature control
and used the conduction (direct contact) method rather than the traditional
convection (forced hot air) method to thermally condition devices. This
equipment also provides for the placement of ICs being tested in close proximity
to the test circuitry. "BAKPAK" was the trademarked name given to this patented
new approach to thermal conditioning.

         The BAKPAK technology has been designed into a series of modules
("QUBEPAK") and can be mounted in equipment cabinets to provide for up to 64
devices to be burned-in and tested in parallel. Each device is under individual
thermal control and BAKPAK designs can accommodate up to 100 watts power
dissipation per device under test.

         The Company believes the BAKPAK technology will meet the needs of the
sophisticated IC requirements for environmental test applications of the future.
The Company is adapting this thermal conditioning technology into a test handler
that is currently under development.

COMPETITION

         The test handler market is highly competitive. Aetrium competes with a
number of companies ranging from very small businesses to large companies, some
of which have substantially greater financial, manufacturing, marketing and
product development resources than the Company. Some of these companies
manufacture and sell both testers and test handlers. The Company believes its
test handlers are compatible with all major testers, including those
manufactured by companies that sell both testers and test handlers. In general,
the particular companies with which the Company competes vary with the Company's
different markets, with no one company dominating the overall test handler
market. The companies with which the Company competes most directly in the
surface mount IC test handler market include Advantest Corporation, Aseco
Corporation, Cohu, Inc., Multitest Electronic Systems GmbH and Micro Component
Technology, Inc.

         The Company competes for test handler sales primarily on the basis of
effective handler throughput, cost of ownership, temperature accuracy, contactor
integrity and other performance characteristics of its products, the breadth of
its product lines, the effectiveness of its sales and distribution channels and
its customer service. The Company believes that its products compete favorably
on these factors.

         Aetrium believes that the market for its Versatus products is emerging,
with no clearly defined competition offering similar automated handling modules
to the IC industry. Historically, OEMs supplying equipment for IC manufacturing
processes have developed custom or semi-custom handling components. Many of
these OEMs have internal development capability for automated handling, and many
engineering companies have automated handling development capability. The
Company believes, however, that its Versatus product line of generic automation
modules offers OEMs the only existing, developed solution for their new
automated handling requirements. In addition, the Company believes it minimizes
competition by offering standard generic handling modules to its OEM customers
at a price difficult for its OEM customers to achieve otherwise, because of the
greater product volumes the Company can reach through multiple customers and
applications. The Company believes the economic justification, current
availability and effectiveness of its Versatus products provide strong
incentives to the Company's OEM customers to forego new product development and
to use Versatus handling modules.

         The market for the Company's reliability test systems is also
competitive. Companies with which the Company competes include QualiTau, Ltd.
and Micro Instruments, Inc.

         There are a number of companies that manufacture and sell conventional
burn-in equipment in the United States which compete with the environmental test
equipment product line, including Aehr Test Systems, Inc. and Reliability, Inc.
The Company is not aware of any companies that provide burn-in equipment which
addresses the combined needs of high-power dissipation and high-performance
while maintaining sufficiently accurate thermal conditioning.

MANUFACTURING AND SUPPLIES

         Aetrium manufactures certain of its test handler products at its
facility in San Diego, California, its environmental test equipment in Lawrence,
Massachusetts, and the remainder of its products at its facility in North St.
Paul, Minnesota. The Company's manufacturing operations consist of procurement
and inspection of components and subassemblies, assembly and extensive testing
of finished products. Quality and reliability are emphasized in both the design
and manufacture of the Company's products. This emphasis is reflected in the
certification of the Company's North St. Paul facility in March 1995 under the
ISO 9001 certification criteria established by the European Community for the
standardization of manufacturing documentation and processes. The Company has
also commenced a program to become ISO 9001 certified at its San Diego facility,
acquired in the fourth quarter of 1994 as a part of the SymTek Systems
acquisition.

         All components and subassemblies are inspected for mechanical and
electrical compliance to Company specifications. All finished products are
tested against Company and customer specifications, and fully assembled test
handler products are tested at all temperatures for which they are designed and
with all the IC packages to be accommodated. Where appropriate the Company's
handler products are shipped in custom engineered protective packaging to
minimize potential damage during shipment.

         A significant portion of the components and subassemblies of the
Company's products, including PC boards, refrigeration systems, vacuum pumps and
contactor elements, are manufactured by third parties on a subcontract basis. As
a part of Aetrium's total quality management program, the Company has an ongoing
supplier quality program under which it selects, monitors and rates its
suppliers, and recognizes its suppliers for outstanding performance.

         Certain components, including certain contactors for the 900A test
handler, temperature sensors and controllers for a number of the Company's test
handlers, certain flexible circuits for contactors, and certain heating elements
for temperature conditioning, are currently available only from sole sources,
and certain other components are available from only a limited number of
sources. Aetrium believes it can replace any of its suppliers within a time
period consistent with its business requirements. The Company also attempts to
keep an adequate supply of critical components in its inventory to minimize any
significant impact the loss of a supplier may cause.

SALES AND MARKETING

         The Company markets its test handler products, environmental test
equipment and reliability test systems through a combination of direct
salespeople and independent manufacturers' representatives and distributors.
Aetrium sells its Versatus handling modules directly to OEM customers through
its internal sales force. As of December 31, 1996, the Company had 12 United
States manufacturers' representatives with an average of 3 salespeople each
located throughout the U.S. and Canada in areas critical to the Company's
success. International distributors are located in the United Kingdom, France,
Germany, India, Italy, Holland, Sweden, Japan, Taiwan, Thailand, Malaysia,
Korea, Singapore, Hong Kong, China and the Philippines.

         Aetrium's direct sales organization, comprised of 12 salespeople,
coordinates the activities of the Company's manufacturers' representatives and
distributors and actively participates with them in selling efforts. This
enables the Company to establish strong direct ties with its customers. The
Company provides sales and technical support to its manufacturers'
representatives and distributors through the Company's sales and service
locations in North St. Paul, Minnesota; San Diego, California; Santa Clara,
California; Austin, Texas and Warwick, Rhode Island.

         Aetrium's marketing efforts include advertising in trade and business
publications, participation in industry trade shows and production of product
literature and sales support tools. These efforts are designed to generate sales
leads for the Company's manufacturers' representatives, distributors and direct
salespeople.

         International shipments accounted for 44%, 47% and 28% of the Company's
net sales in 1994, 1995 and 1996, respectively. In addition, it is not uncommon
for U.S. customers to take delivery of products in the U.S. for immediate
shipment to international sites. While many of the Company's international
shipments are made to international sites of U.S. IC manufacturers, there is a
growing foreign customer base included in the Company's international sales.

         All of Aetrium's international sales are invoiced in U.S. dollars and,
accordingly, have not historically been subject to fluctuating currency exchange
rates. Credit limits have been established from time to time on the Company's
international distributors, who purchase test handlers from the Company and
resell to end users. Irrevocable letters of credit are often used to minimize
credit risk and to simplify the purchasing/payment cycle.

RESEARCH AND DEVELOPMENT

         Aetrium believes it must continue to enhance, broaden and modify its
existing product line to meet the constantly evolving needs of the IC handler
market. To date the Company has relied both on internal development and also
technology acquisition and product line acquisition, to extend its product
lines, increase its customer base, avoid reliance on any single IC test handler
market segment, and develop its Versatus generic handling modules. The Versatus
product line required development of a software protocol that plays an important
role in the success of that product. Software is a critical element in the
Company's reliability test equipment and software development continues to play
an increasingly important role in test handling products. The Company intends to
bring additional resources to this area as required.

         Product development expenses are typically split approximately 50% for
new product development and 50% for continuation engineering. New product
development efforts in 1995 included the completion of a quad test site 5050
Series test handler and a 5050 Series test handler with automated input and
output from and to industry standard trays. In 1996 Aetrium completed
development of the 5050MSOP which handles a small, new package type called the
MSOP. Other new products include the 1164 Reliability Test System and a version
of the 900A tester handler that features mechanical refrigeration. The Company
completed the development of the model 6400 to prototype stage and installed its
first unit at a customer location. In addition, a series of enhancements/options
are being developed for the Versatus product line which will allow the Company's
OEM customers to leverage their efforts on their primary value-added
technology/integration skills. The Company's continuing engineering efforts
include development of additional change kits to meet the expanding families of
IC package types, advancement of contactor technologies to meet the challenges
of high performance ICs, enhancement of the M3200 to increase throughput and
user interface capabilities, and enhancement of the command and control features
of the 5050 product line. Developing efforts continue on a pick-and-place
handler that incorporates the conductive thermal conditioning technology
received in the 1995 acquisition of EJ Systems. This development project has
replaced the development of the Model 8801, which product the Company is no
longer developing.

         The Company expenses all research and development costs, including for
software development, in the year in which incurred. In 1994, 1995 and 1996, the
Company's expenses relating to research and development were approximately $3.2
million, $5.0 million and $7.6 million, respectively. The Company's objective is
to invest approximately 12% of its net sales in research and development each
year, although it is currently spending more than 12% of net sales due to
reduced shipments in the second half of 1996. The Company employed 78
engineering personnel as of December 31, 1996.

INTELLECTUAL PROPERTY RIGHTS

         Aetrium attempts to protect the proprietary aspects of its products
with patents, copyrights, trade secret law and internal nondisclosure
safeguards. The Company currently holds several U.S. patents covering certain
features of its handling systems and Versatus modules and the contactor elements
incorporated in certain of its test handlers and for elements of its
environmental conditioning chambers. The source code for the software contained
in the Company's products is considered proprietary and is not furnished to
customers. Some OEM customers have signed noncompete agreements with the Company
that deter them from direct competition with the Versatus product line. The
Company has also entered into confidentiality agreements with each of its key
employees. Despite these restrictions, it may be possible for competitors or
users to copy aspects of the Company's products or to obtain information that
the Company regards as a trade secret.

         Because of the rapid pace of technological changes in the IC industry,
the Company believes that patent, trade secret and copyright protection are less
significant to its competitive position than factors such as the knowledge,
ability and experience of the Company's personnel, new product development,
frequent product enhancements, name recognition and ongoing, reliable product
maintenance and support.

BACKLOG

         The Company's backlog, which consists of customer purchase orders that
the Company expects to fill within the next 12 months from December 31, 1996,
was approximately $17.7 million as of such date. Because all purchase orders are
subject to cancellation or delay by customers with limited or no penalty, the
Company's backlog is not necessarily indicative of future revenue or earnings.

EMPLOYEES

         As of December 31, 1996 the Company had 320 employees, including 156 in
manufacturing, 78 in engineering and product development, 54 in sales, marketing
and customer service and 32 in general administration and finance. None of the
Company's employees is represented by a labor union or is subject to any
collective bargaining agreement. The Company has never experienced a work
stoppage and believes that its employee relations are satisfactory.

CERTAIN IMPORTANT FACTORS

         In addition to the factors identified above, there are several
important factors that could cause the Company's actual results to differ
materially from those anticipated by the Company or which are reflected in any
forward-looking statements of the Company. These factors, and their impact on
the success of the Company's operations and its ability to achieve its goals,
include the following:

         1.       the Company's dependence on the IC market and the capital
                  expenditures of IC manufacturers;

         2.       the ability of the Company to manage its growth and to
                  integrate and assimilate recent and future acquisitions;

         3.       new product development cycles and market acceptance of new
                  products;

         4.       potential fluctuations in the Company's operating results
                  based on factors such as cancellation or rescheduling of
                  orders, seasonal fluctuations in business activity, and
                  product announcements by the Company or by competitors;

         5.       the impact of competition in the test handler, reliability
                  test equipment and environmental test equipment markets;

         6.       the effect of customer concentration and the loss of any
                  significant customer on the Company's sales; and

         7.       volatility of the Company's stock price based on factors
                  including developments in the IC industry and high-technology
                  industries generally, as well as fluctuations in the Company's
                  quarterly operating results.

ITEM 2.           PROPERTIES.

         The Company's primary administrative, manufacturing, product
development, sales, marketing and field service operations are located in North
St. Paul, Minnesota, where the Company currently occupies approximately 45,000
square feet under a lease which expires in March 2006, with an annual rent of
approximately $240,000. The lease includes an option to the Company, exercisable
at any time during the initial lease term, to require construction of an
additional approximately 45,000 square feet for lease at the same rental rate.

         The Company's manufacturing, product development and certain sales and
marketing activities for its San Diego Division are conducted in facilities with
approximately 42,000 square feet located in San Diego, California under a lease
that expires in July 1999, with an annual rent of approximately $275,000. The
Company also leases and occupies approximately 3,000 square feet of space in
Santa Clara, California under a lease that expires in April 1997, with an annual
rent of approximately $32,000. The Company uses this space for sales and field
service operations. The Company is currently negotiating a renewal of this
lease.

         The Company's Lawrence Division is located in Lawrence, Massachusetts,
and conducts its manufacturing and product development activities for its line
of environmental test equipment in facilities with approximately 61,500 square
feet under a sublease that expires in December 1999, at an annual rent of
approximately $332,000.

ITEM 3.           LEGAL PROCEEDINGS.

         There are no material pending legal, governmental, administrative or
other proceedings to which the Company is a party or of which any of its
property is the subject.


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

         No matter was submitted to a vote of security holders during the fourth
quarter of fiscal 1996.

ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT.

         The executive officers of the Company, their ages and the offices held,
as of February 21, 1997 are as follows:

<TABLE>
<CAPTION>

NAME                       AGE      POSITION
----                       ---      --------

<S>                        <C>      <C>
Joseph C. Levesque         52       Chairman   of  the   Board,   President   and   Chief Executive Officer

Darnell L. Boehm           48       Chief Financial Officer, Secretary and Director

Douglas L. Hemer           50       President - San Diego Division

Daniel M. Koch             43       Vice President - Worldwide Sales

Gerald C. Clemens          45       Vice President - Reliability Test Products

James E. Serley            50       Vice  President  and  General  Manager  - IC Handling Products

Paul H. Askegaard          45       Treasurer
</TABLE>


         Mr. Levesque has served as President, Chief Executive Officer and
Chairman of the Board of Directors of the Company since 1986. From 1973 to 1986,
Mr. Levesque served in various capacities and most recently as Executive Vice
President of Micro Component Technology, Inc., a manufacturer of integrated
circuit testers and test handlers. Mr. Levesque is also a director of Arden
Industrial Products, Inc., a public company, and served on its compensation
committee during 1996.

         Mr. Boehm has served as Chief Financial Officer, Secretary and as a
director of the Company since 1986. From December 1994 until July 1995, Mr.
Boehm had also assumed executive management responsibilities for the Company's
San Diego Division. Mr. Boehm is also the principal of Darnell L. Boehm &
Associates, a management consulting firm. From October 1988 to March 1993, Mr.
Boehm served as the Acting President of Genesis Labs, Inc., a manufacturer of
medical diagnostic products. Mr. Boehm is also a director of Rochester Medical
Corporation, a public company.

         Mr. Hemer has served as a director of the Company since 1986, and
served as the Chief Administrative Officer of the Company from May 1, 1996 until
February 1, 1997, at which time he was named the President of the San Diego
Division. Mr. Hemer was a partner in the law firm of Oppenheimer Wolff &
Donnelly for over 15 years before joining the Company. Oppenheimer Wolff &
Donnelly has provided and is expected to continue to provide legal services to
the Company.

         Mr. Koch has served as the Company's Vice President-Worldwide Sales
since March 1991. From March 1990 to March 1991, Mr. Koch served as the Vice
President of Sales of Summation, Inc., a company involved with the testing of
integrated circuit boards. From December 1973 to March 1990, Mr. Koch served in
various sales positions and most recently as Vice President of Sales of Micro
Component Technology, Inc.

         Mr. Clemens has served as the Company's Vice President-Reliability Test
Products since July 1995. From September 1993 to July 1995, Mr. Clemens served
as Vice President-Engineering. Mr. Clemens is also the principal of Clemens
Associates, a consulting firm. From August 1991 to September 1992, Mr. Clemens
was a Vice President at Vectorvision, Inc., a software company. From June 1990
to April 1991, Mr. Clemens was a Vice President at Elke Corporation, a software
company.

         Mr. Serley has served as the Company's Vice President and General
Manager, IC Handling Products since April 1996. From June 1995 to April 1996,
Mr. Serley served as Vice President-Versatus Business Unit. From July 1990 to
January 1995, Mr. Serley was Vice President of Operations at Rosemount Aerospace
Inc., a supplier of measurement/instrumentation products to the aerospace
industry.

         Mr. Askegaard has served as the Company's Treasurer since February
1992. From October 1986 to February 1992, Mr. Askegaard served as the Company's
Corporate Controller.


                                     PART II

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

         The information under the caption "Price Range of the Company's Common
Stock" on page 27 of the Company's 1996 Annual Report is incorporated herein by
reference. The prices reflected in the table presented in the 1996 Annual Report
do not include adjustments for retail mark-ups, mark-downs or commissions.

         The Company did not have any unregistered sales of equity securities
during the fourth quarter of 1996.


ITEM 6.           SELECTED FINANCIAL DATA.

         The information under the caption "Selected Financial Data" on page 27
of the 1996 Annual Report is incorporated herein by reference.

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

         The information under the caption "Management's Discussion and
Analysis" on pages 12 through 15 of the Company's 1996 Annual Report is
incorporated herein by reference.

ITEM 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         The following Consolidated Financial Statements of the Company and the
Independent Auditor's Report thereon are incorporated herein by reference from
the pages indicated in the Company's 1996 Annual Report:

         Report of Independent Accountants--page 15.

         Consolidated Statements of Income for the years ended December 31,
         1996, 1995 and 1994--page 16.

         Consolidated Balance Sheets as of December 31, 1996 and 1995--page 17.

         Consolidated Statements of Changes in Shareholders' Equity for the
         years ended December 31, 1996, 1995 and 1994--page 18.

         Consolidated Statements of Cash Flows for the years ended December 31,
         1996, 1995 and 1994--page 19.

         Notes to Consolidated Financial Statements--pages 20 to 26.


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

         None.


                                    PART III

ITEM 10.          DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         The information under the captions "Election of Directors--Information
About Nominees" and "Election of Directors--Other Information About Nominees" in
the Company's 1997 Proxy Statement is incorporated herein by reference.

         The information under the caption "Section 16(a) Beneficial Ownership
Reporting Compliance" in the Company's 1997 Proxy Statement is incorporated
herein by reference.


ITEM 11.          EXECUTIVE COMPENSATION.

         The information under the captions "Election of Directors--Compensation
of Directors" and "Executive Compensation and Other Benefits" in the Company's
1997 Proxy Statement is incorporated herein by reference.

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

         The information under the caption "Principal Shareholders and
Beneficial Ownership of Management" in the Company's 1997 Proxy Statement is
incorporated herein by reference.


ITEM 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         None.


                                     PART IV

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

         (a) 1.   FINANCIAL STATEMENTS OF REGISTRANT.

         The following Consolidated Financial Statements of the Company and the
Independent Auditor's Report thereon are incorporated herein by reference from
the pages indicated in the Company's 1996 Annual Report:

         Report of Independent Accountants--page 15.

         Consolidated Statements of Income for the years ended December 31,
         1996, 1995 and 1994--page 16.

         Consolidated Balance Sheets as of December 31, 1996 and 1995--page 17.

         Consolidated Statements of Changes in Shareholders' Equity for the
         years ended December 31, 1996, 1995 and 1994--page 18.

         Consolidated Statements of Cash Flows for the years ended December 31,
         1996, 1995 and 1994--page 19.

         Notes to Consolidated Financial Statements--pages 20 to 26.

         (a) 2.   FINANCIAL STATEMENT SCHEDULES OF REGISTRANT.

         The following financial statement schedule is included herein and
should be read in conjunction with the financial statements referred to above:

         Financial Statement Schedule:

                  II. Valuation and Qualifying Accounts

         All other schedules are omitted as the required information is
inapplicable or the information is presented in the financial statements or
related notes.

                      Report of Independent Accountants on
                          Financial Statement Schedules

To the Board of Directors
of Aetrium Incorporated

Our audits of the consolidated financial statements referred to in our report
dated January 31, 1997, appearing on page 15 of the 1996 Annual Report to
Shareholders of Aetrium Incorporated (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the Financial Statement Schedule listed in Item 14(a)
of this Form 10-K. In our opinion, such Financial Statement Schedule presents
fairly, in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.

                            /s/ Price Waterhouse LLP

Minneapolis, Minnesota
January 31, 1997



                                   Schedule II

                              AETRIUM INCORPORATED

                        VALUATION AND QUALIFYING ACCOUNTS

                  YEARS ENDED DECEMBER 31, 1994, 1995, AND 1996

<TABLE>
<CAPTION>
                                                               ADDITIONS
                                                     -------------------------------
                                       BALANCE AT      CHARGED TO
                                      BEGINNING OF     COSTS AND      ACQUISITION                       BALANCE AT
  DESCRIPTION                            PERIOD         EXPENSES      RELATED (1)      DEDUCTIONS     END OF PERIOD
----------------- ------------------ --------------- --------------- --------------- ---------------- ---------------

<S>                     <C>             <C>              <C>             <C>            <C>              <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
                        1994              65,162          20,000         150,538              0          235,700
                        1995             235,700          45,337          25,668        (19,505)         287,200
                        1996             287,200         515,467               0         (3,267)         799,400

INVENTORY OBSOLESCENCE RESERVE:
                        1994             307,298         226,147       2,378,000       (208,445)       2,703,000
                        1995           2,703,000         429,000         726,457       (550,713)       3,307,744
                        1996           3,307,744         488,000               0     (1,780,611)       2,015,133

WARRANTY RESERVE:
                        1994              97,556         163,135         756,000       (213,691)         803,000
                        1995             803,000         361,781          25,000       (604,781)         585,000
                        1996             585,000         631,535               0       (605,959)         610,576
</TABLE>

(1) Reserve increases related to the inclusion of newly acquired businesses.


         (a) 3.   EXHIBITS.

                  The exhibits to this Report are listed in the Exhibit Index
attached hereto.

         A copy of any of the exhibits listed or referred to above will be
furnished at a reasonable cost to any person who was a shareholder of the
Company as of April 4, 1997, upon receipt from any such person of a written
request for any such exhibit. Such request should be sent to Aetrium
Incorporated, 2350 Helen Street, North St.
Paul, Minnesota 55109; Attn.:  Shareholder Relations.

         The following is a list of each management contract or compensatory
plan or arrangement required to be filed as an exhibit to this Annual Report on
Form 10-K pursuant to Item 14(a)(3):

         1.       Form of Incentive Stock Option Agreement (incorporated by
                  reference to Exhibit 10.6 to the Company's Form 10-KSB for the
                  year ended December 31, 1993). (File No. 0-22166).

         2.       Form of Non-Statutory Stock Option Agreement (incorporated by
                  reference to Exhibit 10.7 to the Company's Form 10-KSB for the
                  year ended December 31, 1993) (File No. 0-22166).

         3.       1993 Stock Incentive Plan (incorporated by reference to
                  Exhibit 10.2 to the Company's Form 10-KSB for the year ended
                  December 31, 1995) (File No. 0-22166).

         4.       Salary Savings Plan (incorporated by reference to Exhibit 10.3
                  to the Company's Registration Statement on Form SB-2 (File No.
                  33-64962C)).

         5.       Employee Stock Purchase Plan (incorporated by reference to
                  Exhibit 99.1 to the Company's Registration Statement on Form
                  S-8 (File No. 33-74616)).

         6.       Employment Agreement dated April 1, 1986 between Joseph C.
                  Levesque and the Company (incorporated by reference to Exhibit
                  10.6 to the Company's Registration Statement on Form SB-2
                  (File No. 33-64962C)).

                  (b)      REPORTS ON FORM 8-K.

                           The Company did not file any Current Reports on Form
                  8-K during the fourth quarter of 1996.


                                   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.

                                     AETRIUM INCORPORATED


Date:  March 28, 1997                 By:  /s/ Joseph C. Levesque
                                          -----------------------
                                          Joseph C. Levesque
                                          Chief Executive Officer and President
                                          (principal executive officer)


                                     By: /s/ Darnell L. Boehm
                                         --------------------
                                         Darnell L. Boehm
                                         Chief Financial Officer and Secretary
                                         (principal financial and accounting
                                         officer)

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below on March 28, 1997 by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.

Signature                                              Title
---------                                              -----

/s/ Joseph C. Levesque                                 Chairman of the Board
----------------------------------------
Joseph C. Levesque

/s/ Darnell L. Boehm                                   Director
----------------------------------------
Darnell L. Boehm

/s/ Terrence W. Glarner                                Director
----------------------------------------
Terrence W. Glarner

/s/ Andrew J. Greenshields                             Director
----------------------------------------
Andrew J. Greenshields

/s/ Douglas L. Hemer                                   Director
----------------------------------------
Douglas L. Hemer

/s/ Terrance J. Nagel                                  Director
----------------------------------------
Terrance J. Nagel




<TABLE>
<CAPTION>
                              AETRIUM INCORPORATED
                   EXHIBIT INDEX TO ANNUAL REPORT ON FORM 10-K
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996

ITEM NO.                                     ITEM                                       METHOD OF FILING
--------                                     ----                                       ----------------

<S>                   <C>                                                   <C>
3.1                   The Company's  Restated Articles of Incorporation,    Incorporated  by  reference  to  Exhibit
                      as amended.                                           3.1   to  the   Company's   Registration
                                                                            Statement   on  Form   SB-2   (File  No.
                                                                            33-64962C).

3.2                   The Company's Bylaws, as amended.                     Incorporated  by  reference  to  Exhibit
                                                                            3.2   to  the   Company's   Registration
                                                                            Statement   on  Form   SB-2   (File  No.
                                                                            33-64962C).

4.1                   Specimen  Form  of  the  Company's   Common  Stock    Incorporated  by  reference  to  Exhibit
                      Certificate.                                          4.1   to  the   Company's   Registration
                                                                            Statement   on  Form   SB-2   (File  No.
                                                                            33-64962C).

10.1                  1987 Non-Statutory Stock Option Plan.                 Incorporated  by  reference  to  Exhibit
                                                                            10.1  to  the   Company's   Registration
                                                                            Statement   on  Form   SB-2   (File  No.
                                                                            33-64962C).

10.2                  1993 Stock Incentive Plan.                            Incorporated  by  reference  to  Exhibit
                                                                            10.2 to the  Company's  Annual Report on
                                                                            Form 10-KSB for year ended  December 31,
                                                                            1995 (File No. 0-22166).

10.3                  Salary Savings Plan.                                  Incorporated  by  reference  to  Exhibit
                                                                            10.3  to  the   Company's   Registration
                                                                            Statement   on  Form   SB-2   (File  No.
                                                                            33-64962C).

10.4                  Form of Incentive Stock Option Agreement.             Incorporated  by  reference  to  Exhibit
                                                                            10.6 to the  Company's  Annual Report on
                                                                            Form   10-KSB   for   the   year   ended
                                                                            December 31, 1993 (File No. 0-22166).

10.5                  Form of Non-Statutory Option Agreement.               Incorporated  by  reference  to  Exhibit
                                                                            10.7 to the  Company's  Annual Report on
                                                                            Form   10-KSB   for   the   year   ended
                                                                            December 31, 1993 (File No. 0-22166).

10.6                  Employment Agreement dated April 1,  1986, between    Incorporated  by  reference  to  Exhibit
                      the Company and Joseph C. Levesque.                   10.6  to  the   Company's   Registration
                                                                            Statement   on  Form   SB-2   (File  No.
                                                                            33-64962C).

10.7                  Credit  Agreement  dated August 11, 1989,  between    Incorporated  by  reference  to  Exhibit
                      Harris Bank and the Company.                          10.7  to  the   Company's   Registration
                                                                            Statement   on  Form   SB-2   (File  No.
                                                                            33-64962C).

10.8                  Lease  Agreement,  dated  July 19,  1995,  between    Incorporated  by  reference  to  Exhibit
                      KAMKO Investments and the Company                     10.12  to  the  Company's   Registration
                                                                            Statement   on  Form   SB-2   (File  No.
                                                                            33-98040).

10.9                  Amendment to Lease Agreement,  dated September 26,    Incorporated  by  reference  to  Exhibit
                      1995, between KAMKO Investments and the Company       10.13  to  the  Company's   Registration
                                                                            Statement   on  Form   SB-2   (File  No.
                                                                            33-98040).

10.10                 Industrial   Lease   Agreement    between   Parken    Incorporated  by  reference  to  Exhibit
                      Investment   Company  No.  One  N.V.  and  Sym-Tek    10.14  to  the  Company's   Registration
                      Systems, Inc., dated as of July 7, 1994               Statement   on  Form   SB-2   (File  No.
                                                                            33-98040).

10.11                 First Amendment to Industrial  Lease dated July 7,    Incorporated  by  reference  to  Exhibit
                      1994 by and between Parken  Investment Co. No. One    10.15  to  the  Company's   Registration
                      N.V.  c/o CBS  Investment  Realty Inc. and Aetrium    Statement   on  Form   SB-2   (File  No.
                      Incorporated                                          33-98040).

10.12                 Asset  Purchase  Agreement,  dated as of  December    Incorporated  by  reference  to  Exhibit
                      29, 1995,  between Aetrium  Incorporated  and E.J.    2.1 to the Company's  Current  Report on
                      Systems, Inc.                                         Form 8-K dated  January  16,  1996 (File
                                                                            No. 0-22166).

10.13                 Amendment  No.  1  to  Asset  Purchase  Agreement,    Incorporated  by  reference  to  Exhibit
                      dated as of December  29,  1995,  between  Aetrium    2.2 to the Company's  Current  Report on
                      Incorporated and E.J. Systems, Inc.                   Form 8-K dated  January  16,  1996 (File
                                                                            No. 0-22166).

10.14                 Employee Stock Purchase Plan.                         Incorporated  by  reference  to  Exhibit
                                                                            99.1  to  the   Company's   Registration
                                                                            Statement   on  Form   S-8   (File   No.
                                                                            33-74616).

10.15                 Agreement of Sublease,  dated January 16, 1990, by    Incorporated  by  reference  to  Exhibit
                      and between General Signal Technology  Corporation    10.19  to the  Company's  Annual  Report
                      and E.J. Systems, Inc.                                on Form  10-KSB for year ended  December
                                                                            31, 1995 (File No. 0-22166).

13.1                  Excerpts from Annual Report to 1996 Shareholders.     Filed herewith electronically.

21.1                  Subsidiaries of the Registrant.                       Incorporated  by  reference  to  Exhibit
                                                                            21.1 to the  Company's  Annual Report on
                                                                            Form 10-KSB for the year ended  December
                                                                            31, 1995 (File No. 0-22166).

23.1                  Independent Auditors' Consent.                        Filed herewith electronically.

27.1                  Financial Data Schedule.                              Filed herewith electronically.
</TABLE>