SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                               AMENDMENT NO. 1 TO
                                  FORM 10-KSB/A

[X]      Annual Report pursuant to Section 13 or 15(d) of the
         Securities Act of 1934 (fee required)

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 (no fee required)

For the transition period from ____________ to ______________.

Commission File No. 0-12575

                         ARIZONA INSTRUMENT CORPORATION
--------------------------------------------------------------------------------
           (Name of small business issuer as specified in its charter)

           Delaware                                              86-0410138
--------------------------------------------------------------------------------
(State or other jurisdiction of                              (IRS Employer
 incorporation or organization)                              Identification No.)

4114 East Wood Street, Phoenix, AZ                                       85040
--------------------------------------------------------------------------------
(Address of principal executive offices)                              (Zip Code)

Issuer's telephone number, including area code:  (602) 470-1414

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

Securities registered pursuant to Section 12(g) of the Act: 
                                                    Common Stock, $.01 par value

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.

                              [X] Yes     [ ] No

As of April 25,  1997,  the  aggregate  market value of the voting stock held by
non-affiliates of the registrant was $12,824,150.  The aggregate market value is
computed with  reference to the average bid and asked price of $2.00 as reported
on the Nasdaq SmallCap Market for April 25, 1997. Shares of Common Stock held by
each  officer  and  director  and by each  person  who  owns  10% or more of the
outstanding  Common Stock have been  excluded in that such persons may be deemed
to be affiliates.  This  determination  of affiliate  status is not  necessarily
conclusive.

[ ]      Check if  disclosure  of  delinquent  filers in response to Item 405 of
         Regulation S-B 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-KSB or
         any amendment to this Form 10-KSB.
<PAGE>
As of April 25,  1997,  6,710,894  shares of Common  Stock ($.01 par value) were
outstanding.
<PAGE>
         Arizona Instrument Corporation (the "Company") hereby amends its Report
on Form 10-KSB for the year ended  December 31, 1996 by adding  thereto Items 9,
10, 11, and 12, as set forth below, and by amending Item 13 thereto.


Item 9.  Directors, Executive Officers, Promoters and Control Persons.

         The  names of the  directors  and  certain  executive  officers  of the
Company, and certain information about them, are set forth below.
<TABLE>
<CAPTION>
Name                                       Age          Principal Occupation
----                                       ---          --------------------

<S>                                        <C>          <C>
Walfred R. Raisanen                        62           Chairman of the Board, Vice President-Research and
                                                        Development, and Treasurer of the Company

S. Thomas Emerson                          56           Chairman of Xantel Corporation

John P. Hudnall                            46           President and Chief Executive Officer of the Company

Quinn Johnson                              52           President of Timberline Engineering and Testing, Inc.

Richard Long                               68           Marketing and Management Consultant

Patricia Onderdonk                         46           Marketing Consultant

Stanley H. Weiss                           54           Director and President of Terrell, Weiss & Sugar, Ltd.

Steven G. Zylstra                          43           Director of Business Development, Simula Technologies,
                                                        Inc.

George G. Hays                             41           Vice President of Finance, Chief Financial Officer, and
                                                        Vice President of Manufacturing of the Company

Susan Berry                                48           Secretary of the Company

Michael Grant                              47           Vice President of Services of the Company

Allen D. Porter                            39           Vice President of Marketing of the Company
</TABLE>

         Walfred R.  Raisanen  has been the  Chairman of the Board of  Directors
since the Company's  inception in January 1981.  From 1981 until 1986 he was the
President and Treasurer of the Company. Mr. Raisanen was re-elected Treasurer in
1991 and also serves as Vice  President of Research and  Development.  From June
1976 until  January  1981 he was  President  and a Director of Motorola  Process
Control, Inc., the predecessor to the Company.

         S. Thomas  Emerson,  Ph.D.  has been a Director since 1989. He has been
Chairman  of  Xantel   Corporation,   a  private  company  engaged  in  computer
communications,  since August 1992. Dr. Emerson was Chief  Executive  Officer of
Syntellect Incorporated,  a manufacturer of voice response systems, from 1984 to
April 1992.  Prior to founding  Syntellect in 1984, Dr. Emerson was a founder of
Periphonics  Corporation  of  Bohemia,  New York where he served for 14 years in
various executive capacities.

         John P. Hudnall came to the Company in 1985 as Chief Financial Officer.
He became President and Chief Executive  Officer in 1986 and has been a Director
since 1988. Mr. Hudnall's background spans 22 years in industry,  with positions
in  production,  sales,  finance  and  systems,  including  a position  as Chief
Financial Officer for Inter-Tel, Inc., an independent telephone company.
<PAGE>
         Quinn  Johnson  has been a Director  since  1992.  Mr.  Johnson  became
President of Horizon Engineering & Testing,  Inc., a wholly-owned  subsidiary of
the Company  ("Horizon"),  in September 1992 upon the acquisition by the Company
of Horizon's predecessor. Mr. Johnson resigned from his position as President of
Horizon in September 1996 and still serves as a director of the Company.  He has
been President of Timberline  Engineering and Testing, Inc., a civil engineering
firm in Mesa,  Arizona,  since  September  1996. Mr. Johnson  founded  Horizon's
predecessor in 1990. Prior to forming Horizon's predecessor, Mr. Johnson founded
and served since 1983 as president of a company engaged in general construction,
paving and civil engineering. Previously, Mr. Johnson was a construction manager
for Northern Industries of Eagar, Arizona; a project manager for the U.S. Forest
Service; and a structural engineer for Fluor Corp. of Los Angeles, California.

         Richard Long has been a Director  since 1987.  He has been  involved in
the private  sector of the  telecommunications  industry for over 20 years.  Mr.
Long is  currently  a  marketing  and  management  consultant.  He has been both
President  and  Chairman  of  the  trade  association   representing  suppliers,
contractors and manufacturers in the private sector and has acted as a spokesman
before Congress and regulatory bodies during that time.

         Patricia  Onderdonk has been a Director  since 1992.  Ms.  Onderdonk is
currently a marketing  consultant.  From mid-1994 to May 1996,  she was the Vice
President  of  Marketing  for  Optical  Disc  Corporation  of Santa Fe  Springs,
California,  a company engaged in developing and  manufacturing  high-density CD
ROMs. Previously, she co-founded Onderdonk & Haynes, Inc. in 1986 and had become
President  of  the  marketing  and  communication  consulting  firm  focused  on
technology-based  customers.  Ms.  Onderdonk's  background  spans  19  years  of
marketing and  communications  experience  with positions in account and general
management,  including the position of Vice  President  and General  Manager for
Regis McKenna, Inc., a high-technology marketing and public relations firm.

         Stanley H. Weiss has been a Director  since 1993. He has been President
and Director of Terrell,  Weiss & Sugar,  Ltd., an  accounting  firm in Chicago,
Illinois,   since   September   1990.   Mr.   Weiss   served   as   the   firm's
secretary-treasurer  from  October  1981  until  September  1990  and has been a
principal of the firm since  December  1978.  As a practicing  certified  public
accountant  since 1974, Mr. Weiss has been actively  involved in consulting with
entrepreneurs  and  managers in the areas of income  taxes,  business  planning,
financial controls and employee incentives.

         Steven G.  Zylstra  has been a  Director  since  1996.  He has been the
Director  of  Business  Development  for  Simula  Technologies,  Inc.,  (as  new
subsidiary, formerly a division of Simula Government Products, Inc.) of Phoenix,
Arizona,  since 1995. The company  specializes in the development and production
of high-tech transportation seating and safety systems,  composite technologies,
and ballistic  armor  systems.  From 1984 to 1995, Mr. Zylstra served as General
Manager  of  General  Pneumatics   Corporation,   Western  Research  Center,  of
Scottsdale,  Arizona.  He is a Co-Founder and Member of the  Governor's  Arizona
Science  and  Technology  Council,   Co-Founder  and  Director  of  the  Arizona
Innovation Network and Director of the Arizona Technology Incubator, among other
outside activities.

         George G. Hays  joined the Company in March 1997 as Vice  President  of
Finance, Chief Financial Officer, and Vice President of Manufacturing.  Prior to
his  position  with the  Company,  Mr.  Hays was  president  and founder of Hays
Financial Group, Inc., an investment banking firm, since 1986.

         Susan Berry was named  Secretary of the Company in 1989. She has served
as Human  Resources  Manager for the Company  since 1985.  Prior to her position
with the Company, Ms. Berry was in corporate administration for Inter-Tel, Inc.

         Michael Grant became Vice President of Services in 1996. Prior to that,
he was Vice President of  Manufacturing  since 1993. He started with the Company
in 1988, first serving as National Service Manager, then as Director of Customer
Service,  and as  Director  of  Operations.  Mr.  Grant  has  over 25  years  of
experience in manufacturing.
                                       -4-
<PAGE>
         Allen D. Porter was named Vice  President  of  Marketing  in 1996.  Mr.
Porter has been with the Company since 1985,  working in sales, sales management
and product  management.  Prior to his position with the Company, he was program
director for an Arizona-based behavioral health agency.


Compliance With Section 16(a) Reporting Requirements

         Under  the  securities  laws  of  the  United  States,   the  Company's
directors,  its executive officers, and any persons holding more than 10% of the
Company's  Common Stock are required to report  their  initial  ownership of the
Company's  Common  Stock and any  subsequent  changes in that  ownership  to the
Securities  and Exchange  Commission.  Specific due dates for these reports have
been  established and the Company is required to disclose any failure to file by
these dates.  All of these filing  requirements  were satisfied  during the year
ended December 31, 1996,  except: (i) John P. Hudnall reported on a Form 5 dated
February  10,  1997 a  November  1996  option  exercise;  (ii)  Stanley H. Weiss
reported on a Form 5 dated February 10, 1997 two November 1996 option exercises;
and (iii) Michael Grant  reported on a Form 5 dated February 10, 1997 a December
1996 option exercise.

Additionally,  the Company has not received copies of ownership reports due from
Bridge Capital Investors II, which formerly  beneficially owned greater than 10%
of the Company's outstanding Common Stock, and thus has no information regarding
whether  such  reports  have  been  filed or filed  on a timely  basis  with the
Commission.  In making  these  disclosures,  the  Company  has relied  solely on
written  representations  of its directors and executive  officers and copies of
the reports that they have filed with the Commission.


Item 10.  Executive Compensation

                           SUMMARY COMPENSATION TABLE

The  following  table sets forth,  with respect to the years ended  December 31,
1994, 1995 and 1996, compensation awarded to, earned by or paid to the Company's
Chief Executive  Officer and each of the Company's other executive  officers who
were serving as an  executive  officer at December 31, 1996 and whose salary and
bonus  aggregated at least $100,000 for services  rendered to the Company during
fiscal 1996.
                                       -5-
<PAGE>
<TABLE>
<CAPTION>
                                         Annual Compensation                 Long-Term Compensation
                                     ---------------------------------  ----------------------------------

                                                                                                      Pay-
                                                                                                      ----
                                                                               Awards                 outs
                                                                        --------------------------    ----

                                                            Other       Re-             Securities
                                                            Annual      stricted        Underlying     LTIP
                                                            Compen-     Stock            Options/      Pay-    All Other
                                                            sation      Awards             SARs        outs    Compen-
Name and Principal Position   Year   Salary($)   Bonus        ($)          (#)            (#)(2)       ($)     sation($)
---------------------------   ----   ---------   -----    ------------  ------------     --------     -----    ---------



<S>                           <C>    <C>         <C>        <C>              <C>        <C>              <C>    <C>     
John P. Hudnall, Chief        1996   161,666     56,000     5,400(1)         0               0           0      1,603(4)
Executive Officer             1995   154,400         0      5,400(1)         0          120,000(3)       0      1,518(4)
                              1994   153,226         0      5,400(1)         0               0           0      1,425(4)

Walfred R. Raisanen,          1996   153,622     42,000        0             0               0           0      4,309(4)
Chairman                      1995   147,262         0         0             0          100,000(3)       0      3,771(4)
                              1994   135,009     26,460        0             0               0           0      3,329(4)

Scott M. Carter, Chief        1996   110,484     25,000        0             0               0           0        431(4)
Financial Officer (5)         1995    89,897         0         0             0           75,000(3)       0        405(4)
                              1994    91,855         0         0             0               0           0        390(4)

Michael Grant, Vice           1996   122,039     20,000        0             0               0           0        625(4)
President of Services         1995    94,989         0         0             0           75,000          0        584(4)
                              1994    96,708         0         0             0               0           0        549(4)

Allen D. Porter               1996   105,762         0         0             0           55,000          0          0
Vice President of             1995    87,040         0         0             0           15,000          0          0
Marketing                     1994    72,365         0         0             0               0           0          0
</TABLE>

(1)      Automobile allowance.

(2)      Consists entirely of stock options.

(3)      Represents  24,520,  52,760 and  48,520  new  option  grants to Messrs.
         Hudnall,  Raisanen and Johnson,  respectively,  in 1995.  All remaining
         options shown in this table as granted in 1995  represent  repricing of
         options granted in prior years.

(4)      Life insurance premium payments.

(5)      Mr.  Carter  terminated  his  employment  with the Company on March 21,
         1997.

                                       -6-
<PAGE>
                    OPTION/SAR GRANTS IN LAST FISCAL YEAR (1)

         The following  table sets forth  information  about stock option grants
during the last  fiscal  year to the  executive  officers  named in the  Summary
Compensation Table.
<TABLE>
<CAPTION>
                                                                   Individual Grants
                                      -------------------------------------------------------------------------

                                       Number of          % of Total
                                       Securities         Option/SARs
                                       Underlying          Granted
                                      Options/SARs      to Employees in      Exercise or Base        Expiration
     Name                              Granted (#)        Fiscal Year          Pricing ($/Sh)           Date
-------------                         ------------        -----------        -----------------       ----------
<S>                                    <C>                    <C>                    <C>              <C>  
John P. Hudnall                            0                  0%                        0                  0
 
Walfred R. Raisanen                        0                  0%                        0                  0

Scott M. Carter (4)                        0                  0%                        0                  0

Michael Grant                              0                  0%                        0                  0

Allen D. Porter                        30,000(2)             37%                    $2.62            4/16/2006
                                       25,000(3)             31%                    $2.60            11/1/2006
</TABLE>

(1)      Consists entirely of stock options.

(2)      Vest in 5 equal annual installments beginning April 16, 1996.

(3)      Vest in 5 equal annual installments beginning November 1, 1996.

(4)      Mr.  Carter  terminated  his  employment  with the Company on March 21,
         1997.
                                       -7-
<PAGE>
                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                     AND FISCAL YEAR-END OPTION VALUE TABLE

         The  following  table  sets  forth  information  with  respect  to  the
executive  officers named in the Summary  Compensation  Table concerning  option
exercises during 1996 and the number and value of options outstanding at the end
of the last fiscal year.
<TABLE>
<CAPTION>
                                                     Number of Unexercised          Value of Unexercised in-the-
                                                     Options/SARs at FY-End            Money Options/SARs at
                                                 -----------------------------             FY End ($)(3)
                                                             (#)(1)               ------------------------------
                                                             ------
                         Shares                  Exercisable     Unexercisable    Exercisable      Unexercisable
                        Acquired       Value     -----------     -------------    -----------      -------------
                           on        Realized
       Name             Exercise        (2)
-------------------     --------     --------

<S>                      <C>          <C>          <C>              <C>             <C>              <C>     
John P. Hudnall          24,000       $37,920         0            96,000             0              $139,680

Walfred R. Raisanen         0            0         20,000          80,000          $29,100           $116,400

Scott M. Carter (4)         0            0         15,000          60,000          $21,825           $ 87,300

Michael Grant            15,000       $21,825         0            60,000             0              $ 87,300

Allen D. Porter             0            0          3,000          55,000          $ 4,365           $   0
</TABLE>

(1)      No SARs are outstanding.

(2)      Calculated  based  on the  closing  price  as  reported  on the  Nasdaq
         SmallCap  Market for the date of  exercise  minus the  exercise  price,
         multiplied by the number of shares acquired on exercise.

(3)      Value as of  December  31, 1996 is based upon the average bid and asked
         price of $2.375 as reported on the Nasdaq  SmallCap Market for December
         31, 1996, minus the exercise price,  multiplied by the number of shares
         underlying the options.

(4)      Mr.  Carter  terminated  his  employment  with the Company on March 21,
         1997.

Employment/Change of Control Arrangements

         Effective  November  5, 1992,  the  Company  entered  into a  five-year
employment  agreement  with Walfred R. Raisanen  pursuant to which Mr.  Raisanen
agreed to serve as Vice President of Research and  Development for a base annual
salary  of  $120,000,  which  is  to be  adjusted  annually  for  cost-of-living
increases.  Mr.  Raisanen  is  also  entitled  to  participate  in  any  benefit
arrangements available to executive officers of the Company. Upon termination of
the employment  agreement by the Company without cause, Mr. Raisanen is entitled
to receive a cash payment equal to the  compensation due him over the balance of
the term of the employment  agreement,  and to participate in applicable benefit
programs for the balance of the term of the employment agreement.

         Effective  June  3,  1996,  the  Company   entered  into  a  three-year
employment  agreement with its President and Chief  Executive  Officer,  John P.
Hudnall.  The agreement provides for a base annual salary of $165,542,  which is
to be  adjusted  annually  for  cost-of-living  increases.  Mr.  Hudnall is also
entitled to  participate  in any benefit  arrangements  available  to  executive
officers of the Company.  Upon  termination of the  employment  agreement by the
Company without cause, Mr. Hudnall is entitled to receive an amount equal to the
compensation due him over
                                       -8-
<PAGE>
the  balance of the term of the  employment  agreement,  and to  participate  in
applicable  benefit  programs  for the  balance  of the  term of the  employment
agreement.

         The Company's  1991 Option Plan  provides  that options  granted to any
executive officer or director of the Company will become immediately exercisable
and vested in full upon the occurrence,  before the expiration or termination of
such option,  of (a) delivery of written  notice of a  stockholders'  meeting at
which the stockholders will consider a proposed merger,  sale of assets or other
reorganization  of the Company,  (b) the acquisition by any person of securities
representing  25% or more of the total  number of votes  entitled to be case for
the election of directors of the Company, (c) commencement of a tender offer for
the stock of the Company,  or (d) failure,  at any annual or special  meeting of
stockholders  following an election contest,  of any of the persons nominated by
the Company to win election seats on the board of directors.

         The  Company's  1991 Option Plan further  provides  that subject to the
above  provisions,  in the event a merger  or  similar  reorganization  that the
Company does not survive,  a sale of all or  substantially  all of the assets of
the Company,  or the  dissolution  and  liquidation of the Company,  shall cause
every option outstanding under the 1991 Option Plan to terminate,  to the extent
not then  exercised,  except to the extent that any  surviving  entity agrees to
assume the 1991 Option Plan and/or the obligations under any such option.

Compensation of Directors

         Outside  directors are currently paid $1,000 plus expenses per Board or
committee meeting attended. Pursuant to the 1991 Stock Option Plan, non-employee
directors are automatically  granted options exercisable for 2,500 shares at the
market  price on the date of grant upon  joining the Board and on each January 1
thereafter. The options become exercisable six months after grant and expire two
years after  termination of Board service.  Directors who are employees are only
paid their expenses (if any) for attendance at meetings.


Item 11.          Security Ownership of Certain Beneficial Owners and Management

         The following  table sets forth  information  regarding the  beneficial
ownership  of the  Company's  Common Stock at April 25, 1997 with respect to (i)
each director and director nominee of the Company,  (ii) each executive  officer
named in the Summary  Compensation  Table set forth herein,  (iii) all directors
and executive  officers as a group, and (iv) each person known by the Company to
be the  beneficial  owner  of more  than  5% of the  outstanding  shares  of the
Company's Common Stock:

                    Shares of Common Stock Beneficially Owned
                    -----------------------------------------


                                    Number                Percent
Name and Address (1)               of Shares              of Total
--------------------               ---------              --------

Walfred R. Raisanen (2)            196,400                  2.9%

S. Thomas Emerson (2)               35,000                   (3)

John P. Hudnall (2)                 27,521                   (3)

Quinn Johnson (2)                   50,001                   (3)

Richard Long (2)                    32,000                   (3)

Patricia Onderdonk (2)              16,000                   (3)

Stanley H. Weiss (2)                35,000                   (3)

Steven G. Zylstra (2)                3,100                   (3)

Scott M. Carter (2)(5)              17,000                   (3)

Michael Grant (2)                   17,100                   (3)

Allen D. Porter (2)                 21,671                   (3)
                                       -9-
<PAGE>
All directors and executive        478,819                  7.1%
officers as a group (2) (4)
(12 persons)

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

(1)      Unless otherwise indicated, the beneficial owner's address is:
         c/o the Company, 4114 East Wood Street, Phoenix, Arizona 85040.

(2)      Includes  shares  issuable upon exercise of options which are currently
         exercisable or become  exercisable  within 60 days of April 25, 1997 as
         applicable for each of the following individuals:

                         Raisanen            40,000 shares
                         Emerson             15,000 shares
                         Hudnall             24,000 shares
                         Long                15,000 shares
                         Onderdonk           12,500 shares
                         Weiss                5,000 shares
                         Zylstra              2,500 shares
                         Carter              15,000 shares
                         Grant               15,000 shares
                         Porter              12,000 shares

(3)      Less than one percent.

(4)      Includes  24,000 shares  issuable upon exercise of options (in addition
         to shares issuable upon exercise of options indicated in note 2).

(5)      Mr.  Carter  terminated  his  employment  with the Company on March 21,
         1997.


Item 12.      Certain Relationships and Related Transactions

         Bridge  Agreements.  On July  6,  1989,  the  Company  entered  into an
agreement (the "Note Agreement") with Bridge Capital Investors II ("Bridge II"),
a former owner of greater than 5% of the Company's Common Stock. Pursuant to the
Note  Agreement  as  amended  through  September  2,  1992,  Bridge  II held 12%
convertible  subordinated  notes in the principal  amount of  $3,000,000  with a
maturity date of June 30, 1996 and a warrant to purchase up to 115,000 shares of
the Company's  Common Stock at an exercise price of $1.00 per share. As a result
of common  stock  issued in  conjunction  with the  acquisition  of  Horizon  on
September  30,  1992 and related  financing  and other  transactions,  the notes
became  convertible  into 847,937 shares of common stock at $3.54 per share. The
Note Agreement  further provided that the Company would have the right to prepay
the notes at any time if prepayment were accompanied by the issuance of warrants
to purchase Common Stock at the rate of 200,000  warrants for each $1,000,000 of
principal which is prepaid.

         In November 1995, the Company prepaid the remaining  principal  balance
of the notes payable to Bridge II. In connection with the prepayment,  Bridge II
waived all rights to receive any  additional  warrants  under its loan agreement
with the  Company.  The Company had also made a scheduled  principal  payment of
$375,000 on April 30, 1995 and a $616,667 principal payment on October 31, 1995.

         Merger  Agreement.  On September  30,  1992,  Horizon  Engineering  and
Testing,  Inc. was merged (the "Merger")  into a wholly-owned  subsidiary of the
Company   pursuant  to  an  Agreement   of  Merger  (the  "Merger   Agreement").
Shareholders of Horizon  received cash  consideration  of $190,000 and shares of
the Company's Common Stock.  Quinn Johnson held 90% of the outstanding  stock of
Horizon at the time of the Merger and received 529,328 shares of Common Stock in
connection  with the Merger.  The Company  agreed to register  the shares of the
Company's  Common Stock issued pursuant to the Merger Agreement under applicable
federal and state
                                      -10-
<PAGE>
securities  laws at any time after  April 1, 1993 upon the request of holders of
25% of such shares and to keep such registration effective through September 30,
1995.  Mr.  Johnson has agreed to  indemnify  Horizon  and the  Company  against
certain liabilities in connection with the Company's acquisition of Horizon, and
has placed 49,030  shares of the Company's  Common Stock in escrow in connection
therewith.

         Non-Competition  Agreement.  Pursuant  to a  Non-Competition  Agreement
dated  September 30, 1993, and in  consideration  of a cash payment of $350,000,
Mr.  Johnson  agreed to refrain from  competing  with Horizon until the later of
September 30, 1998 or two years after leaving the employment of Horizon, subject
to earlier termination under certain circumstances.

         Employment  Agreement.  Mr.  Johnson  served as  President  of  Horizon
pursuant to an  Employment  Agreement  dated  September  30, 1992.  Mr.  Johnson
resigned  from his position as  President  of Horizon in September  1996 and now
serves as a director of the Company.  The  Employment  Agreement  provided for a
base salary of $125,000 over its four-year term, with annual adjustments tied to
increases in the Consumer Price Index.  The  Employment  Agreement also provided
for an annual  bonus equal to (i) 15% of  Horizon's  pretax  profit (as defined)
with  respect  to  pretax  profit  representing  up to  15% of  Horizon's  gross
revenues;  and (ii) 20% of Horizon's pretax profit on that portion of the pretax
profit in excess of 15% of gross revenues, with a maximum bonus over the term of
the four-year  agreement  equal to $700,000.  In the event of termination of the
Employment  Agreement by the Company without cause,  Mr. Johnson was entitled to
receive  (i) the  difference  between  $700,000  and  bonus  payments  prior  to
termination;  plus  (ii) an  amount  equal to the  then-applicable  annual  base
salary.

         Stock Registration. Pursuant to registration rights previously granted,
the  Company  filed a shelf  registration  statement  with  the  Securities  and
Exchange  Commission  ("SEC")  relating to 3,781,003  shares of its Common Stock
issued in connection with private placements in September 1992 and November 1993
and in  connection  with the  acquisition  of Horizon in  September  1992.  Also
included in the  registration  are 209,000  shares of Common Stock issuable upon
the exercise of warrants issued to Cruttenden & Co., Inc. ("Cruttenden") and its
assignees in connection with Cruttenden's  activities as placement agent for the
November  1993  private  placement.  The  registration  statement  was  declared
effective  by the SEC in  February  1994.  The  Company  has agreed that it will
maintain the  effectiveness  of the  registration  statement (i) until  November
1996, with respect to the shares issued in the November 1993 private  placement;
(ii) until  September  1995,  with respect to the shares issued in the September
1992 private  placement and the Horizon  acquisition;  and (iii) until two years
after  exercise,  with respect to shares  issuable upon exercise of the warrants
referred to above.  The  registration  statement as  originally  filed  included
465,001 shares  beneficially  owned by Quinn  Johnson,  a director and executive
officer of the Company,  which shares were acquired by Mr. Johnson in connection
with the  acquisition of Horizon by the Company in September 1992. In connection
with the registration, Mr. Johnson agreed that his registered and other sales of
the Company's Common Stock shall not exceed the volume  limitations set forth in
Rule 144 under the  Securities  Act of 1933,  as  amended,  subject  to  certain
exceptions.  The  registration  statement also includes 20,000 shares and 20,000
shares  beneficially owned by S. Thomas Emerson and Stanley Weiss,  directors of
the Company,  which shares were acquired in the November 1993 private placement.
The  Company  and the  holders of the  shares of Common  Stock  included  in the
registration have agreed to indemnify each other against certain liabilities.

         Other.  During September 1993, the Company loaned $45,000 to Walfred R.
Raisanen,  a  director  and  executive  officer of the  Company.  The loan bears
interest at 10% per annum, is collateralized by a pledge of 15,000 shares of the
Company's  Common Stock and $30,000 of the cash value of a life insurance policy
covering Mr.  Raisanen.  Mr.  Raisanen has paid the principal on the loan to the
Company,  and currently owes $5,367 in interest,  which is to be paid by the end
of 1997.
                                      -11-
<PAGE>
Item 13.      Exhibits and Reports on Form 8-K.

Financial  Statements.  The  following is a list of the  consolidated  financial
statements of Arizona  Instrument  Corporation and its subsidiaries  included in
Item 8 of Part II of the Company's Form 10-KSB filed on March 31, 1997.

Independent auditors' report.

Consolidated balance sheets - December 31, 1996 and 1995.

Consolidated  statements of operations - Years ended December 31, 1996, 1995 and
1994

Consolidated statements of shareholders' equity - Years ended December 31, 1996,
1995 and 1994

Consolidated  statements of cash flows - Years ended December 31, 1996, 1995 and
1994

Notes to consolidated financial statements



(a) The following  exhibits are incorporated by reference or are filed with this
Form 10-KSB.

3.1      Composite Certificate of Incorporation of Registrant as amended through
         July 5, 1994. Incorporated by reference from the Form 8-A filed on June
         26, 1996.

3.2      Bylaws of Registrant. Incorporated by reference from the Form 8-A filed
         on June 26, 1996.

10.1     United States Patent No. 4,165,633 issued August 28, 1979. Incorporated
         by reference from the Form S-8 filed on July 27, 1983.

10.2*    1983  Incentive  Stock  Option  Plan  of  Registrant.  Incorporated  by
         reference from the Form S-8 filed on July 17, 1983.

10.3*    1985 Stock  Purchase Plan, as amended.  Incorporated  by reference from
         the Form S-8 filed on August 5, 1996.

10.4*    1991 Stock Option Plan, as amended.  Incorporated by reference from the
         Form S-8 filed on June 28, 1996.

10.5     Amended and  Restated  Silicon  Valley Bank,  Export-Import  Guaranteed
         Business Loan Agreement,  February 1993. Incorporated by Reference from
         the Form 10-KSB filed in March 1993.

10.6     Loan  Modification  Agreement  with Silicon Valley Bank dated March 15,
         1994 to renew the lines of credit through March 15, 1995.  Incorporated
         by reference from the Form 10-QSB filed in March 1994.

10.7     Amended  and  Restated  Silicon  Valley Bank  Domestic  and Export Loan
         Agreements,  dated March 15, 1995 through March 15, 1996.  Incorporated
         by reference from the Form 10-KSB filed on April 28, 1995.

10.8     Warrant  Purchase  Agreement  dated as of  December  15,  1991  between
         Arizona Instrument Corporation and Silicon Valley Bank: Incorporated by
         reference from the Form 10-KSB filed in March 1992.

10.9*    Employment   Agreement   dated   September  30,  1992  between  Horizon
         Acquisition  Co. and Quinn Johnson.  Incorporated by reference from the
         Form 8-K dated September 30, 1992.
                                      -12-
<PAGE>
10.10    Noncompete   Agreement   dated   September  30,  1992  between  Horizon
         Acquisition  Co. and Quinn Johnson.  Incorporated by reference from the
         Form 8-K dated September 30, 1992.

10.11*   Employment Agreement between Walfred R. Raisanen and Arizona Instrument
         Corporation dated November 5, 1992.  Incorporated by reference from the
         Form 10-KSB filed in March 1993.

10.12*   Employment Agreement between the Company and John P. Hudnall dated June
         3, 1996. (filed herewith)

10.13    Lease Agreement between the Company and Wood Street Limited Partnership
         dated September 1, 1993. Incorporated by reference from the Form 10-QSB
         filed August 1993.

10.14    Amended and Restated License  Agreement  between the Company and Tracer
         Research Corporation dated October 27, 1993.  Incorporated by reference
         from the Form 10-QSB filed November 1993.

10.15    Warrant  Agreement between the Company and Cruttenden & Co., Inc. dated
         November 30, 1993. Incorporated by reference from the Form 10-QSB filed
         November 1993.

10.16    Amendment No. 7 to the Purchase  Agreement  between Arizona  Instrument
         Corporation  and  Bridge  Capital  Investors  II,  dated  July 1, 1994.
         Incorporated by reference from the Form 10-KSB filed April 28, 1995.

10.17    Amendment No. 8 to the Purchase  Agreement  between Arizona  Instrument
         Corporation  and Bridge  Capital  Investors  II,  dated March 30, 1995.
         Incorporated by reference from the Form 10-KSB filed April 28, 1995.

10.18    Promissory  Note between  Arizona  Instrument  Corporation  and Classic
         Syndicate,  Inc., dated April 15, 1996.  Incorporated by reference from
         the Form 10-KSB filed March 29, 1996.

10.19    Loan Modification  Agreement between Arizona Instrument Corporation and
         Silicon Valley Bank related to a new Promissory Note, dated November 7,
         1995.  Incorporated  by reference  from the Form 10-KSB filed March 29,
         1996.

10.20    Promissory  Note between  Arizona  Instrument  Corporation  and Silicon
         Valley Bank, dated November 7, 1995. Incorporated by reference from the
         Form 10-KSB filed March 29, 1996.

10.21    Agreement  between  Arizona  Instrument  Corporation and Bridge Capital
         Investors II,  regarding  the terms for  prepayment of the Bridge Note,
         dated November 27, 1995. Incorporated by reference from the Form 10-KSB
         filed March 29, 1996.

22.1     Subsidiaries:  Quintel  International,  Inc.,  incorporated  under  the
         Companies Act of 1982 of Barbados, W.I.; Computrac International, Inc.,
         an Arizona  Corporation,  Horizon  Engineering  and  Testing  Inc.,  an
         Arizona  Corporation,   each  of  which  is  wholly  owned  by  Arizona
         Instrument Corporation.

24.1     Accountants'  Consent:  Incorporated  by reference from the Form 10-KSB
         filed on March 31, 1997.

27       Financial Data Schedule: Incorporated by reference from the Form 10-KSB
         filed on March 31, 1997.

(b)      There were no reports on Form 8-K for the year ended December 31, 1996

         * Management Contract or compensatory plan or arrangement.
                                      -13-
<PAGE>
                                   SIGNATURES

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


                                        ARIZONA INSTRUMENT CORPORATION




Date:  April 29, 1997                   By:/s/ George G. Hays
                                           -------------------------------------
                                           George G. Hays, Vice President and
                                           Chief Financial Officer
                                      -14-