<PAGE>


--------------------------------------------------------------------------------
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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                            ------------------------
 
   
                                   FORM 10-K/A
                                (Amendment No. 2)
    
 
(Mark One)
 
/X/    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
       Act of 1934 (Fee Required) for the fiscal year ended September 30, 1997
 
                                       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. 0-8836 
                    ------


                            STARMET CORPORATION
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)
 
Massachusetts                                             04-2506761
(State or other jurisdiction of                           (I.R.S. Employer
incorporation or organization                             Identification No.)

 
                               2229 Main Street,
                          Concord, Massachusetts 01742
              (Address of Principal Executive Offices) (Zip Code)
                                 (978) 369-5410
                                 --------------
              (Registrant's telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
  None
 
Securities registered pursuant to Section 12(g) of the Act: 

                 15,000,000 shares of Common Stock ($.10 Par Value)
                                (Title of Class)
 
    Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or 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 the disclosure of delinquent filers pursuant to
item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in a definitive proxy or information
statement incorporated in Part III of this Form 10-K or any amendments to this
Form 10-K. / /
 
    The aggregate market value of the Common Stock of the Registrant held by
non-affiliates was approximately $27,324,328 as of December 18, 1997.
 
    As of December 18, 1997, there were issued and outstanding 4,786,344 shares
of the Registrant's Common Stock, $.10 par value.
 
DOCUMENTS INCORPORATED BY REFERENCE
 
(1) Registrant's Annual Report to Stockholders for the fiscal year ended
    September 30, 1997 (Items 5,6,7,8 and 14)

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

<PAGE>

                              STARMET CORPORATION
                       Securities and Exchange Commission
 
<TABLE>
<CAPTION>
Item Numbers and Description                                                                                   PAGE
                                                                                                            -----------
<S>                                                                                                         <C>
 
                                                        PART I
 
ITEM 1. Business.........................................................................................            3
 
ITEM 2. Properties.......................................................................................           17
 
ITEM 3. Legal Proceedings................................................................................           18
 
ITEM 4. Submission of Matters to a Vote of Security Holders...............................................          18
 
                                                        PART II
 
ITEM 5. Market for the Registrant's Common Equity and Related Stockholder Matters.........................          19
 
ITEM 6. Selected Financial Data...........................................................................          19
 
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.............          19
 
ITEM 8. Financial Statements and Supplementary Data.......................................................          19
 
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..............          19
 
                                                       PART III
 
ITEM 10. Directors and Executive Officers of the Registrant...............................................          20
 
ITEM 11. Executive Compensation...........................................................................          22
 
ITEM 12. Security Ownership of Certain Beneficial Owners and Management...................................          27
 
ITEM 13. Certain Relationships and Related Transactions...................................................          28
 
                                                       PART IV
 
ITEM 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K...................................          29
 
SIGNATURES................................................................................................          35

INDEX TO AUDITORS REPORT AND FINANCIAL STATEMENT SCHEDULE.................................................          36
</TABLE>
 
    Inasmuch as the calculation of shares of the registrant's voting stock held
by non-affiliates requires a calculation of the number of shares held by
affiliates, such figure, as shown on the cover page hereof, represents the
registrant's best good faith estimate for purposes of this annual report on Form
10-K, and the registrant disclaims that such figure is binding for any other
purpose. The closing price of the Company's Common Stock as reported by NASDAQ
for trading on December 18, 1996 was $21.50. All outstanding shares beneficially
owned by executive officers and directors of the registrant or by any
shareholder beneficially owning more than 5% of registrant's common stock, as
disclosed herein, were considered solely for purposes of this disclosure to be
held by affiliates.


                                       2

<PAGE>
                                     PART I
 
ITEM 1. BUSINESS

GENERAL
 
    Starmet Corporation (the "Company" or "Starmet"), formerly known as Nuclear
Metals Inc., changed its name on October 1, 1997. The Company also reorganized,
forming four new wholly-owned subsidiaries, effective for fiscal year 1998. The
new subsidiaries are: Starmet NMI Corporation, Starmet Powders, LLC, Starmet
Comcast, LLC and Starmet Aerocast, LLC. Additionally, Carolina Metals Inc., the
Company's wholly-owned subsidiary in Barnwell, South Carolina, has been renamed
Starmet CMI, Inc. The Company's new NASDAQ stock trading symbol is STMT.
Unless the context otherwise requires, references to the Company herein are 
intended to refer to the Company and its subsidiaries.
 
    The Company is engaged in manufacturing a wide variety of specialty metal
products using sophisticated metallurgical technology and metalworking
processes. The Company operates in three industry segments: (1) uranium services
and recycling of low-level contaminated steel; (2) fabrication of a large
assortment of specialty metal products using foundry, extrusion, and machining
capabilities; including the manufacture of high-purity, spherically shaped metal
powders; and (3) manufacture of depleted uranium penetrators.
 
    As of September 30, 1997 the Company had 235 employees.


                               3

<PAGE>

INDUSTRY SEGMENT FINANCIAL INFORMATION
 
    The following table sets forth certain information regarding the revenue,
operating profit (loss) and identifiable assets attributable to the three 
industry segments in which the Company operates.
   
<TABLE>
<CAPTION>
                                                                                             YEAR ENDED
                                                                              --------------------------------------------
                                                                              SEPT. 30,       SEPT. 30,        SEPT. 30,
                                                                                1997            1996             1995
                                                                             -------------  -------------   --------------
                                                                             (as restated)  (as restated) 
<S>                                                                           <C>            <C>        <C>
                                                                                           (IN THOUSANDS)

Net Sales and Contract Revenues:
  Uranium Services & Recycle............................................      $   4,965      $   6,189      $   4,969
  Specialty Metal Products..............................................         13,170         13,730         12,102
  Depleted Uranium Penetrators..........................................          9,927          8,775          1,713

Operating Profit(Loss):
  Uranium Services & Recycle............................................      $     195      $  (2,050)     $    (996)
  Specialty Metal Products..............................................            391          1,432           (341)
  Depleted Uranium Penetrators..........................................            575           (942)          (237)
 
Identifiable Assets:
  Uranium Services & Recycle............................................      $  14,499      $  14,399      $  16,609
  Specialty Metal Products..............................................          6,155          6,195          5,140
  Depleted Uranium Penetrators..........................................          7,965          8,441         12,158
</TABLE>
    
   
See Notes 1 and 14 of Notes to Consolidated Financial Statements.
    
----------------------------------------------
 
    The Company has no foreign operations. The Company has export sales, 
which accounted for 25% of net sales for the fiscal year ended September 30, 
1997. In the prior two fiscal years, 1996 and 1995, export sales were 28% and 
33%, respectively.

                                   4

<PAGE>

INDUSTRY SEGMENTS

    The following is a general description of the Company's three business 
segments. For additional information concerning developments in these 
business segments during fiscal 1997, reference is made to the Company's 1997 
Annual Report, which is incorporated herein by reference and is included as 
Exhibit 13.
  
                           URANIUM SERVICES & RECYCLE
 
    The Company's Uranium Services and Recycle business segment has the 
technical capabilities and facilities to manufacture depleted uranium metal, 
convert a chemical, uranium hexaflouride (UF6) to uranium tetrafluoride 
(UF4), recycle various low-level radioactive metals, produce DUCRETE-TM- 
shielding, repair depleted uranium and tungsten counterweights for military 
and commercial aircraft, and supply depleted and natural uranium alloy 
material for use in United States Enrichment Company's (USEC) Atomic Vapor 
Laser Isotope Separation (AVLIS) program. The sales and marketing team 
supporting the Uranium Services and Recycle business segment has been 
significantly expanded during 1997 from one local office at Starmet CMI 
located in Barnwell, SC to additional sales offices in Oak Ridge, TN, Idaho 
Fall, ID, Aiken, SC, Washington, DC, and Concord, MA.
 
Recycle of Low-Level Radioactive Metals
 
    The Company demonstrated the technical feasibility and economic soundness of
recycling radioactively contaminated steel into storage drums and boxes for
containment of various radioactive wastes at Department of Energy (DoE) sites.
The DoE facilities have millions of tons of radioactively contaminated carbon
steel and stainless steel in the form of structural components and various types
of processing equipment. Through beneficial reuse of contaminated steel scrap,
the DoE will be able to reduce the volume of low-level radioactive waste in a
cost effective manner. In addition to the DoE facilities, it is estimated that
several million tons of low-level contaminated steel will be generated as a
result of decommissioning the more than 100 currently operating commercial
nuclear power plants over the next 30 years. The Company continues to pursue
additional contracts in this product area using a unique spray casting technique
in partnership with a foreign company.
 
    During fiscal 1997, the Company continued its teaming arrangement with
ALARON Corporation in Cayce, SC offering services to remelt slightly
contaminated steel at the Company's Starmet CMI location. The resultant metal is
used in shielding applications


                                  5

<PAGE>

through an interlocking shield called the RAM-LOC-TM- shielding block.
Radioactively contaminated steel remelt services are offered at only two other
facilities in the United States.

    The Company competes in this market with Scientific Ecology Group and 
British Nuclear Fuels Limited.

Production of DUCRETE-TM-
 
    The Company has licensed the exclusive commercial production rights for a 
DOE patented process known as DUCRETE-TM- shielding. DUCRETE-TM- shielding 
was developed by the Idaho National Engineering Laboratory as a potential 
shielding for spent fuel and high level radioactive waste casks. Starmet 
Corporation has exclusive rights to market this technology in the commercial 
sector. DUCRETE-TM- consists of uranium oxide aggregate combined with 
concrete to form a stable and economical shielding for spent fuel and other 
high level radioactive waste products. The Company is actively pursuing a 
contract with the DoE for conversion of its 55,000 metric tons of Uranium 
Hexaflouride into DU aggregate for DUCRETE shielding production. Spent fuel 
containers produced from DUCRETE-TM- will offer the advantages of portability 
and being 3-5 times more effective than standard concrete. DUCRETE shielding 
has the added advantage of being rail transportable, and, therefore, 
re-useable, unlike conventional concrete, which must be disposed of when 
spent fuel is moved to alternative repositories. Pilot facilities were 
installed during 1997 to convert DU oxides into high density DUCRETE-TM- 
shielding aggregate.

Supply of Depleted Uranium Alloy
 
    The Company supplies DU and Natural Uranium (NU) alloy material to USEC 
for use as AVLIS feed material. AVLIS is expected to replace the current 
gaseous diffusion process for separating the fissionable isotope, U(235), 
from natural uranium within the next ten years. The Company currently is 
performing conversion services for USEC, in converting Depleted Uranium 
Hexaflouride (UF(6)) to Uranium feed materials for the AVLIS prove-out 
program. The Company believes that USEC has a need for conversion of 
approximately 15-20 million pounds annually. The Company continues to be the 
primary supplier of AVLIS feed material. However, other companies are 
expected to compete for future business.

Refurbishment of Counterweights
 
DU is used in production of commercial shielding and counterweight products
requiring the unique properties of DU which include density and ease of
fabrication. Starmet NMI and Starmet CMI are the only FAA approved facilities in
the United States to repair DU aircraft counterweights. The Company refurbishes
DU counterweights for essentially all of commercial and domestic carriers flying
wide body, i.e. DC-10, L-1011, and Boeing 747 aircraft, and has begun work on
military aircraft as well. The Company also has the capability to produce
counterweights. The Company competes primarily for business in North America 
with Cameco of Canada.

Significant Customers
 
    United States Enrichment Corporation (USEC) is a significant customer of the
Uranium Services & Recycle segment. In fiscal 1997, sales to USEC accounted for
14% of net sales. If USEC were lost as a customer, this would have a material
adverse effect on the Company.

                              6

<PAGE>

                            SPECIALTY METAL PRODUCTS
 
    The Company has several specialty metal products, including: beryllium
products; specialty, medical, and aerospace powders; and a variety of advanced
metal products and services for aerospace, energy, and commercial applications.

Beryllium Products--General
 
    Beralcast -Registered Trademark- is the Company's patented investment 
cast beryllium aluminum alloy, an engineering material designed for use in 
electronic and secondary structural applications for a variety of aerospace, 
avionics and commercial applications. Cost and weight pressures on today's 
design engineers demand a transition to lightweight, strong, and high 
stiffness materials such as Beralcast -Registered Trademark-. This alloy 
offers 3 1/2 times the stiffness of aluminum with 22 percent less weight and 
is investment castable to net and near net shapes.
 
    The Company's patents on the alloy compositions for Beralcast -registered 
trademark- materials have approximately 15 years remaining and certain 
process details are trade secrets. Prototypes of a variety of aerospace 
components have been produced and the Company also has produced volume 
quantities of battery cases and navigational components for satellites. Sales 
of Beralcast -Registered Trademark- products at present are made directly to 
manufacturers of assemblies and systems. However, the Company is seeking 
partnering arrangements to enable manufacturing and distribution through 
sites other than its Concord, MA facility. The Company's Beralcast 
-Registered Trademark- sales and marketing organization has been expanded 
greatly during 1997 through establishment of sales offices in Concord, MA, 
Wilmington, MA, Los Angeles, CA, San Jose, CA, Ft. Walton Beach, FL, 
Washington, DC, and Canton, CT, and sales representatives in Europe and Japan.

    The Company competes with Brush Wellman Inc. in the production of beryllium 
products. Beryllium alloys also compete with less expensive materials such as 
stainless steel and other alloys.

                                   7

<PAGE>

Beryllium Products--Defense Applications
 
    High performance defense applications for Beralcast -Registered 
Trademark- include: the Comanche (Advanced Attack Helicopter), the F-22 
(Advanced Tactical Fighter), the PAC-3 (updated Patriot missile), the French 
Rafael (Advanced Fighter Aircraft), and a number of other advanced design 
programs. Lockheed Martin's Apache helicopter work is expected to include 
upgrades to the night vision system. This system, referred to as "B-Kit", is 
part of the advanced system being used on the Comanche program. All 
components are distributed directly to customers who generally are prime 
Government contractors. Beralcast -Registered Trademark- investment castings 
compete directly with aluminum A356 aerospace materials, magnesium, and 
aluminum silicon composites. Other competing materials are titanium and 
stainless steel. Use of Beralcast -Registered Trademark- depends largely on 
the customer's weight, stiffness, and vibration damping needs, in combination 
with a willingness to pay a premium for the materials performance benefits.
 
    Lockheed Martin Corporation will use some 58 Beralcast -Registered 
Trademark- components for its Electro Optic Sensor System (EOSS), the night 
vision system and target acquisition system on the Comanche helicopter, the 
Army's most advanced reconnaissance helicopter. This material has the highest 
priority for provision of Comanche program funding and is in the high growth 
stage of its development as a product.

Beryllium Products--Commercial
 
    Advanced commercial products are brought to the market much faster than 
aerospace and Government products, i.e. 1-2 years instead of 5-10 years. All 
of the Company's current products are sold to OEM's and are distributed 
through its Concord, Massachusetts facility. The Company believes that there 
are additional commercial applications for this unique and patented material 
within the commercial marketplace where a modest cost premium over aluminum 
can yield significant improvements in end product performance. The Company has 
produced prototype quantities of golf club heads and disc drive armatures.
 
    The Company also produces seamless beryllium tubes for satellite
applications. The Company can produce extruded Beralcast -Registered Trademark-
tubing for satellites, intended to supplant expensive graphite composites. The
Company's extrusion technology has been demonstrated successfully in the recent
manufacture of tubing struts for the Comanche EOSS.

Sources of Beryllium
 
    Because the Company is able to use relatively low grade beryllium as 
input metal, the Company has more than one source of beryllium (Be) input 
material. Foreign sources of supply have adequate inventories to support the 
Company's production needs for at least three years. Longer term, the 
Company's strategic objective to become self-sufficient, producing its own 
low cost Be using new conversion technologies.

Advanced Metal Products and Services
 
    Since the early 1960's, the Company has produced bi-metallic transition
joints for joining titanium fuel tanks to stainless steel plumbing in
satellites. These joints are made by a proprietary co-extrusion process
resulting in a bond stronger than the parent metals of the joint. Other
bi-metallic bonding processes compete with our co-extruded products in markets

                                   8

<PAGE>

where bond integrity is not as critical, i.e. cryogenic systems for 
refrigerants. This business segment also produces powder metallurgy bearing 
steel which is used by customers to fabricate fuel linkage bearings in jet 
engines. The Company is a sole source supplier of this product which is in a 
declining market, however, sales of this product are not material to the 
success of the business unit. The Company also provides extrusion services to 
various superconductor and research firms using the Company's 1400 ton, 300 
ton, and 100 ton extrusion presses. Generally, local companies take advantage 
of the Company's extrusion services. All of the foregoing products and 
services are provided directly to a large base of Original Equipment 
Manufacturers (OEM's) and there is no dependency on a single customer. Raw 
materials for these products and services are readily available in the metals 
industry requiring no special processing or long lead times.

Metal Powders
 
    The Company manufactures metal powders by proprietary processes called the
Rotating Electrode Process-TM- (REP) and the Plasma Rotating Electrode
Process-TM- (PREP), which produce spherical metal particles within a relatively
controllable size range. The Company supports its Powders business unit with a
sales office in Concord, Massachusetts, and a representative in Japan.
 
    The metal powders produced by the Company include steel, titanium alloy 
and several nickel and cobalt-base alloys generally known in the industry as 
specialty powders. The Company is in the process of seeking strategic 
alliances to assist the Company in moving ahead with its plans to produce not 
only metal powders, but also components made from the consolidation of these 
powders.
 
    The principal markets for the Company's metal powders are medical
applications (titanium and cobalt-based alloy powders), which use the powder as
a porous coating on medical prostheses, and original equipment manufacturers
(steel, titanium alloy and specialty powders), which fabricate metal parts from
the powder through various processes. In addition, the Company continues to
produce steel powders for the photocopy industry, as a carrier for toner in copy
machines and in high-performance laser printers.
 
    Management believes that the metal powders produced by its manufacturing 
processes offer significant advantages for certain product applications 
compared with metal powders produced by other processes. In particular, the 
processes result in inherently "cleaner" powders, more uniformly spherical 
particles and a higher percentage of particles within the desired size range 
from a given amount of raw material.
 
    Key competitive factors in the metal powders market are price and the 
ability to meet exact dimensional, metallurgical and other specifications. 
The steel powder marketed by the Company for photocopy applications competes 
with less expensive powders produced by larger manufacturers. The Company 
believes that the quality of its powder used in the photocopy processes helps 
to offset any price advantage that may exist for competing powders in this 
price sensitive market.

Sources of Raw Materials
 
    The principal raw material for the Company's steel powder is cold-rolled
steel bars, which are readily available. Other metal powders are manufactured to
customer specifications,

                                         9

<PAGE>

and the metals for these powders are generally available for purchase in job
lots from specialty metal suppliers.

Patents
 
    The Company holds three U.S. patents relating to developments in Rotating
Electrode Process production equipment, which provide patent rights through the
year 2001. These patents also are filed and effective in the principal
industrialized European countries, Canada, Israel and Japan. Management believes
that, although the original patent on the Rotating Electrode Process machine
expired in July 1980, the development patents continue to benefit the Company's
competitive position in the Metal Powders market. It is also the opinion of
management that the technical expertise which has evolved from the development
and manufacture of metal powders is of equal importance in maintaining the
Company's competitive position.

Significant Customers
 
    Lockheed Martin Corporation (LMC) is a significant customer of the Company's
Specialty Metal Products segment. In fiscal 1997, sales to LMC accounted for 7%
of sales (See Note 1 of Notes to Consolidated Financial Statements). The Company
currently is under several contracts with LMC to provide
Beralcast-Registered Trademark- hardware for the Comanche Helicopter Program.
The loss of LMC as a customer would have a material adverse effect on the
Company.
 
    Lockheed Idaho Technology Company (LITCO) is another significant customer of
the Company's Specialty Metal Products segment. In fiscal 1997, sales to LITCO
accounted for 5% of net sales. The Company currently is under contract with
Lockheed Idaho Technology Company to produce, from furnished DU recycle metal,
DU castings for the U.S. Army's heavy armor tank program. This contract
continues to have options for several additional years. The loss of LITCO as a
customer would have a material adverse effect on the Company.
 
                          DEPLETED URANIUM PENETRATORS
 
    The Company believes it is a technological leader in the manufacture of
depleted uranium penetrators. Depleted uranium (DU) is a dense, heavy metal that
is 68% heavier than lead. Because of its density and workability, DU is an
effective low-cost material for anti-armor ammunition and is used in numerous
United States Government and foreign government weapons systems. DU is a
low-level radioactive material which is a by-product of the production of
enriched uranium for nuclear fuel and weapons.
 
    The Company competes with Aerojet Ordnance, a division of GenCorp Inc., 
as one of two domestic DU penetrator manufacturers. The principal DU products 
manufactured by the Company, referred to as penetrators, have application in 
various military gun systems. The Company generally sells penetrators 
directly to prime ammunition contractors. The U.S. Government has funded and 
owns a portion of the manufacturing machinery and equipment used by the 
Company for producing penetrators.

                                 10
<PAGE>

    Company continues to produce M829A2 penetrators under a production 
contract with options extending production to the year 1999. This contract is 
subject to appropriations by the Government. The Company currently is in 
production on the third option of this contract. Management strongly believes 
the Government will exercise the remaining option on the contract. The 
Company will continue to pursue both domestic and foreign military depleted 
uranium penetrator production requirements, however, the market for DU 
ordnance is declining, and near term orders are not expected.
 
    During December 1998, the Company will complete an order for DU products 
from a UK customer to support its UK based manufacture of tank ammunition 
containing DU penetrators. This material will complete the customer's near 
term requirements for this type of ammunition and follow-on orders are not 
anticipated within the next 5 years. None of the business practices used in 
this business segment are considered proprietary.
 
    The Company plans to move its DU operations to its Barnwell, South 
Carolina facility as DU products reach the point where the volume of such 
operations are no longer practical at the Concord, MA facility.
 
Significant Customers
 
    Royal Ordnance, a U.K. defense contractor, is a significant customer of 
the Company's Depleted Uranium Penetrator segment. In fiscal 1997, sales to 
Royal Ordnance accounted for 19% of net sales. The Company currently is under 
contract to manufacture penetrator blanks for Royal Ordnance with a 
completion date of December, 1998.
 
    Primex Technologies is also a significant customer of the Company's 
Depleted Uranium Penetrator segment. In fiscal 1997, sales to Primex 
Technologies accounted for 12% of net sales. The Company currently is under 
contract to provide Primex Technologies with 120mm penetrators for the U.S. 
Army's ABRAMS Tank program with options extending another three years.
 
    If Royal Ordnance and Primex Technologies were lost as customers in the 
short term, this would have a material adverse effect on the Company. Both 
customers have finite contracts with the conracts with the Company and 
additional contract requirements from these customers are considered 
unlikely. Management believes that expansion of its Beralcast-Registered 
Trademark-product lines as well as growth in its uranium services and recycle 
industry segment over the next few years will minimize the effect on the 
Company of these probable reductions in contract requirements from these 
customers.

                                     11

<PAGE>
 
    The following table sets forth certain information with respect to the 
backlog of the Company's business segments at September 30, 1997 and 
September 30, 1996 including the portions thereof represented by orders from 
the Company's principal customers, Lockheed Martin, Lockheed Idaho, Prime
Technologies and United States Enrichment Corporation. The backlog for the
Company is affected by the timing of orders from these customers. The Company
believes all orders in backlog are firm.
   
<TABLE>
<CAPTION>
BACKLOG                                                                                         1997           1996
                                                                                              ---------      ---------
                                                                                                    (IN THOUSANDS)

<S>                                                                                           <C>            <C>
Uranium Services
  United States Enrichment Corp.........................................................            424          1,261
  Other.................................................................................          1,028      $     566
                                                                                              ---------      ---------
    Total...............................................................................          1,452          1,827
                                                                                              ---------      ---------
                                                                                              ---------      ---------

Specialty Metal Products
  Lockheed Martin.......................................................................      $   4,237      $   4,664
  Lockheed Idaho........................................................................          2,519          1,970
  Other.................................................................................          3,861          5,868
                                                                                              ---------      ---------
    Total...............................................................................      $  10,617         12,502
                                                                                              ---------      ---------
                                                                                              ---------      ---------
Depleted Uranium Penetrators
  Primex Technologies...................................................................      $   5,474      $   8734
  Royal Ordnance........................................................................          4,278         --
  Other.................................................................................          5,833            181
                                                                                              ---------      ---------
    Total...............................................................................      $  15,585      $   8,919
Company Total...........................................................................      $  27,654      $  23,248
                                                                                              ---------      ---------
                                                                                              ---------      ---------
</TABLE>
    
Marketing
 
    The Company relies on a variety of marketing strategies, including 
advertising and direct sales. Technical papers given at industry symposia, 
presented both by Starmet and in conjunction with customers, also are used as 
marketing vehicles for the Company's advanced metal products and services. 
Strategic alliances are being developed with several key customers

                                     12

<PAGE>

to strengthen the Company's customer and product base into the future and to 
reduce costs through joint research and development costs and marketing 
efforts.
 
    Understanding the importance of Design-To-Cost principles, especially 
those of Lockheed Martin Corporation, is essential to strategic teaming with 
our Beralcast-Registered Trademark- customers. Concentrated efforts on cost 
reduction in the form of Concurrent Engineering, low cost Beryllium metal 
production, facility expansion, and other efforts, add value for future sales 
volumes. Starmet has introduced Nucast, our Beralcast-Registered 
Trademark-teammate, to these cost reduction ideas which is expected to form 
the basis for improved cost competitiveness in the future. Direct marketing 
efforts are increasing.
 
    The Company is committed to expanding its product and customer base for 
metal powders. Market demands for fine metal powders, for re-consolidation or 
incorporation into metal matrix composites, are on the rise and the Company is
positioning itself to exploit these opportunities. Novel product requirements 
for our advanced metal products and services will continue to receive the 
utmost attention for expansion of the Company's product base. A significant 
portion of the Company's business is dependent on the award of contracts or 
subcontracts for the supply of products and materials to governmental 
departments and agencies. Payment to the Company of all or a portion of the 
amounts called for under such contracts or subcontracts, is often subject to 
legislative funding appropriations, government agency purchasing requirements 
and other conditions and factors beyond the Company's control. Accordingly, 
the Company's performance under such contracts may be delayed or may not 
commence at all, in which case the payments thereunder may be recognized 
later than anticipated at the time of the contract award or not at all in 
cases in which the Company is not called upon to perform. As a result, the 
timing and amount of revenues under such government contracts is uncertain 
and subject to change, which may result in fluctuations in the Company's 
operating results and cash flows.

RESEARCH AND DEVELOPMENT ACTIVITIES
 
    The Company engages in research activities to develop new products or 
enhance existing products for new applications. Research and development is 
funded both by the Company and through customer sponsored programs. During 
the past fiscal year, funded research and development has been sponsored by 
the Department of Defense, Department of Energy, and various commercial 
customers.
 
    The Company's is involved in research covering a variety of product areas 
for applications of Beralcast-Registered Trademark- (beryllium aluminum) 
castings, Dmetal powders, and uranium processing technology. The highlights of 
R&D activities in the Uranium Services & Recycle Product segment include 
recycling processes for radioactively contaminated steel scrap, uranium 
production technology for AVLIS feedstock, removal of uranium from MgF(2) slag, 
conversion of UF to uranium oxide, and the manufacture of DUCRETE-TM- as a 
means of incorporating depleted uranium oxide aggregate in a cement matrix to 
make shielded concrete structures. The Company built a pilot plant to 
manufacture uranium oxide aggregate for DUCRETE-TM- and is developing the 
process knowledge required to support large scale production. R&D activities 
in the Specialty Metal Products segment included development of new casting 
processes and alternative methods and forming and manufacturing of 
Beralcast-Registered Trademark- alloys. The Company expects that this 
research will lead to products suitable for commercial mass 
production markets and extend the application of Beralcast-Registered 
Trademark- products in the aerospace and military markets. The Company has 
developed a method for producing fine titanium metal powders

                                    13

<PAGE>

as an extension of our PREP-Registered Trademark- method for making for 
making spherical powders form reactive metals such as titanium, and the 
Company is exploring new methods for utilizing titanium powder in the 
manufacture of metal parts.
 
    The Company also participates in certain cooperative research and 
development activities through arrangements with selected customers and 
Government agencies where there is potential for utilizing proprietary 
technology or specialized resources not directly available to the Company. 
The Company employs a staff of six Ph.D. technologists with backgrounds in 
chemistry, mechanical and metallurgical engineering to conduct research and 
new product development. In addition, the Company has on the R&D staff a 
former Government scientist who invented the DUCRETETM technology. The cost 
for Company-sponsored research and development activities was $1,309,000 in 
fiscal 1997, $876,000 in fiscal 1996, and $439,000 in fiscal 1995. Total 
revenues from customer-funded research and development were $793,000 in 
fiscal 1997, $1,812,000 in fiscal 1996 and $557,000 in fiscal 1995. These 
revenues are included in the revenues of the industry segment to which the 
research and development relates.
 
ENVIRONMENTAL, SAFETY AND REGULATORY MATTERS
 
In General
 
    Two of the materials regularly processed by the Company, depleted uranium 
and beryllium, have characteristics considered to be health or safety hazards 
by various federal, state or local regulatory agencies. Processing of these 
materials requires a high level of safety consciousness, personnel monitoring 
devices and special equipment. Depleted uranium is a low-level radioactive 
material, and the Company is subject to regulation by the United States 
Nuclear Regulatory Commission (NRC). Depleted uranium in the finely divided 
state, such as grinding dust or machine turnings, is combustible at room 
temperature and requires special handling for safe operations and disposal of 
process wastes. Beryllium is known to cause lung disease following 
significant exposure by inhalation of airborne particles. Processing this 
material requires use of extensive ventilation and dust collecting systems. 
Management believes that the experience gained in its many years of working 
with these metals has resulted in capabilities for dealing effectively with 
their special characteristics.
 
    The presence and use in the Company's operations of materials with 
hazardous characteristics subjects the Company to regulation and scrutiny by 
various governmental agencies. Management believes that the Company is 
presently in compliance in all material respects with existing federal, state 
and local regulations and has no knowledge of any threatened actions against 
the Company for violations of any such laws, statutes or regulations, except 
as described below under "Concord Site Remediation and Decommissioning 
Planning Requirements" and in Item 3 below. However, the potential effects of 
evolving legislation and regulations affecting the Company's business cannot 
be predicted.
 
    In the process of manufacturing depleted uranium products, the Company 
generates low-level radioactive waste materials that must be disposed of at 
sites licensed by federal, state, and local governments. With the closing of 
the Barnwell, South Carolina, low-level radioactive waste repository to 
out-of-region generators in July 1994, the Company began storing waste on 
site in Concord and Barnwell. Interim storage is permitted under the 
Company's licenses. At present, the Barnwell repository remains available for 
use by the Company's Starmet CMI facility. The Company has made provisions to 
accommodate an extended period of interim

                                    14

<PAGE>

storage of waste within existing buildings in Concord as the state government 
works toward a regional solution. At the same time, the Company has made 
significant progress in developing and instituting alternatives to disposal 
of its waste. The Company intends to continue the development of technologies 
and processes aimed at eliminating the generation of waste materials 
associated with its manufacturing process.

    For a number of years, ending in 1985, the Company deposited spent acid 
and associated depleted uranium waste and other residual materials by 
neutralizing with lime and discharging the neutralized mixture to a holding 
basin on its premises in Concord, Massachusetts. In 1986, the holding basin 
was covered with Hypalon, an impervious material used to prevent rain and 
surface run-off water from leaching through the holding basin. The Company 
now uses a proprietary "closed loop" process that it developed to discontinue 
such discharges. The Company believes that both practices were and are in 
compliance with all applicable regulations. The Company now is in the process 
of removing and disposing of the material in the holding basin. For a 
discussion of the status of remediation of the holding basin at the Company's 
Concord facility, see "Concord Site Remediation and Decommissioning Planning 
Requirements" elsewhere herein.
 
Concord Site Remediation and Decommissioning Planning Requirements
 
    The Company is required to maintain certain licenses issued by the 
Massachusetts Department of Public Health ("DPH") and the South Carolina 
Department of Health and Environmental Control ("DHEC") in order to possess 
and process depleted uranium materials at its facilities in Massachusetts and 
South Carolina, respectively. Under applicable licensing regulations 
pertaining to decommissioning and disposal of certain hazardous materials 
("D&D") at licensed sites, the Company submitted to the Nuclear Regulatory 
Commission ("NRC") and the applicable state agencies a Decommissioning 
Funding Plan ("DFP") to provide for possible future decommissioning of its 
facilities. The Concord Facility DFP estimated cost is $11.7 million and the 
Barnwell Facility DFP estimate is $2.9 million. The Company is required to 
provide financial assurance for such decommissioning pursuant to applicable 
regulations. The Company has satisfied these requirements and as a result, 
the site licenses for both locations have been renewed.
 
    Substantially all of the depleted uranium materials to which the DFP 
requirements apply were processed by the Company for the United States 
Government. Based on the terms of certain contracts that the Company entered 
into with the United States Government to process such depleted uranium 
materials, the Company believes that such materials continue to be owned by 
the United States Government and that the United States Government is 
obligated, under applicable law, to pay for its percentage of eventual D&D. 
The Company's DFP's reflect its position that it is obligated to provide 
financial assurance only with respect to the portion of the materials which 
are attributable to the Company's commercial production for parties other 
than the United States Government, and that this obligation, has been 
satisfied by a letter of credit to each geographic locations regulatory 
agency.

    The United States Army, in a memorandum of Decision dated September 13, 
1996, determined pursuant to Public Law 85-804, that it should fund 
remediation of the Concord holding basin site as well as D&D related to the 
Concord facility, based in part on the Army's determination that the 
Company's activities are essential to the national defense. The United States 
Army has issued to the Company a fixed price subcontract for remediation of 
the holding basin and the Company entered into a fixed price subcontract with 
a contractor to perform this remediation. This work is expected to continue 
into the first half of fiscal 1998. The Company's contract with the 
contractor is fixed price based on a specified volume of waste to be removed 
from the basin and delivered to a burial site. If the volume of the material 
removed exceeds the specified level then the Company is obligated to pay an 
additional fee per cubic yard of excess material removed. The Army has 
provided written assurances (subject to funding appropriations) of its 
intention to provide funding for D&D costs at the Concord facility under 
future contracts or, in the event that no future contracts were awarded 
(which the Army has indicated is unlikely in view of its current

                                     15

<PAGE>

plans), under an existing contract. D&D costs for the Company's CMI facility 
are covered by the existing letter of credit. The Company has no written 
assurance that the Army will accept responsibility for the share of the 
estimated cost of D&D at its South Carolina facility which directly resulted 
from production work under U.S. government contracts on government supplied 
materials. However, based on the advice of legal counsel, management believes 
that the Army is responsible for its estimated share of D&D.

   
Update Relative to Concord Site Remediation Status
    

   
    Subsequent to the filing of the Company's Amended Form 10-K on January 
28, 1998, the following changes in the foregoing discussion of Concord Site 
Remediation and Decommissioning Planning Requirements have occurred.  A 
discussion of the Company's environmental, health and safety matters is set 
forth in "Risk Factors -- Environmental, Health and Regulatory Matters," 
"Management's Discussion and Analysis of Financial Condition and Results of 
Operations -- Environmental, Health and Safety Matters," "Business -- 
Environmental, Safety and Regulatory Matters" and "Business -- Concord Site 
Remediation and Decommissioning Planning Requirements" of the Company's 
Registration Statement. The aforementioned sections of the Registration 
Statement are incorporated by reference in this Form 10-K. In addition to the 
disclosures set forth in such sections regarding the remediation of the 
holding basin at the Company's Concord, Massachusetts facility, for the 
quarter ended June 30, 1998, the Company will make a provision for between 
$1.0 million and $1.3 million related to the amount by which the estimated 
costs of remediating the holding basin is expected to exceed the amounts 
covered by the Company's fixed price contract which the U.S. Army (the "Army 
Contract") pursuant to which the holding basin clean-up is being done. The 
exact amount of excess costs is presently unknown, but the Company believes 
the potential range of such costs is between $1.0 million and $3.4 million. 
The Company believes that such costs, subject to confirmation, are 
recoverable as allowable overheads on future government contracts which the 
Company expects to be awarded. Alternatively, the Company believes that all 
or a certain portion of such excess costs may also be recoverable pursuant to 
a contract modification request or pursuant to an additional application for 
relief under Public Law 85-804, pursuant to which the contract with the Army 
was granted. See also Notes 11 and 15 to the Consolidated Financial 
Statements contained herein.
    
 
Forward Looking and Cautionary Statements
 
    Except for the historical information and discussions contained herein, 
statements contained in this Form 10-K, including, without limitation, 
statements incorporated herein by reference, may constitute "forward looking 
statements" within the meaning of the Private Securities Litigation Reform 
Act of 1995. The Company may also make forward looking statements in other 
reports filed with the Securities and Exchange Commission, in materials 
delivered to stockholders and in press releases. In addition, the Company's 
representatives may from time to time make oral forward looking statements. 
Without limiting the generality of the foregoing, the words "believes, " 
"anticipates," "plans," "expects," and similar expressions are intended to 
identify forward-looking statements. Such forward-looking statements are 
based on a number of assumptions and involve a number of risks and 
uncertainties, and, accordingly, actual results could differ materially from 
those projected in the forward-looking statements. Factors that may cause 
such differences include, but are not limited to, the factors described in 
Exhibit 99 to the Company's Quarterly Report on Form 10-Q for the quarter 
ended March 31, 1997.
 
EXECUTIVE OFFICERS OF THE REGISTRANT

    The executive officers of the Company are:

<TABLE>
<CAPTION>

NAME                                                      AGE                   POSITION WITH THE COMPANY
----------------------------------------------------     -----     ----------------------------------------------------
<S>                                                   <C>          <C>
                                                                   
George J. Matthews..................................        67     Chairman of the Board of Directors (1) 

Wilson B. Tuffin....................................        66     Vice Chairman of the Board of Directors
Robert E. Quinn.....................................        44     President, CEO and Treasurer (1)
Kevin R. Raftery....................................        39     President, Starmet Comcast & Aerocast
Douglas F. Grotheer.................................        39     President, Starmet CMI
William T. Nachtrab.................................        44     Vice President, Technology & Engineering
James M. Spiezio....................................        49     Vice President, Finance & Administration
James H. Scarboro...................................        58     Vice President, Marketing
Frank J. Vumbaco....................................        44     Vice President, Health/Safety and Corporate Communications
Bruce E. Zukauskas..................................        47     Vice President, Operations
</TABLE>
 
(1) On January 20, 1998, Mr. Matthews resigned as CEO and Treasurer and the 
    Company elected Mr. Quinn as the New CEO and Treasurer.

    The term of office for each executive officer of the Company is one year 
or until a successor is chosen and qualified. The executive officers are 
elected by the directors at their first meeting following the annual meeting 
of stockholders. There are no family relationships among the directors and 
executive officers.
 
    GEORGE J. MATTHEWS has been Chairman of the Board of Directors since 
1972. He is employed by Matthews Associates Limited, a Massachusetts 
corporation. Matthews Associates Limited is engaged in the business of 
investing in and providing management consultation and assistance to small 
and medium sized businesses. Mr. Matthews devotes approximately 75% of his 
time to the Company's affairs. From November 30, 1994 to January 20, 1998, 
Mr. Matthews held the positions of CEO and Treasurer.
 
    WILSON B. TUFFIN has been Vice Chairman of the Board of Directors since 
November 1994. From 1972 to November 1994, he held the positions of 
President, Chief Executive Officer and Treasurer of the Company.


                                    16

<PAGE>

    ROBERT E. QUINN was elected President of the Company on November 30, 1994 
and CEO and Treasurer on January 20, 1998. Prior to November 30, 1994 he held 
the position of Vice President, Sales with the Company for over five years.

    KEVIN R.RAFTERY became President of Starmet Comcast, LLC and Starmet 
Aerocast, LLC in December 1997. Prior to December 1997 he was the Manager of 
the Beralcast business unit, prior to August 1996 he was Program Manager for 
Beralcast, prior to November 1994 he was Program Engineer for over five years.

    DOUGLASS F. GROTHEER became President of Starmet CMI Corporation in 1997. 
He served as Vice-President of Engineering and Program from 1994 to 1997, as 
Manager of Engineering and Program from 1992 to 1994, as Manager of Ordinance 
Programs from 1986 to 1992, as Program Manager from 1982 to 1986, and as 
Project Engineer from 1980-1982.

    WILLIAM T. NACHTRAB, Ph.D. has held the position of Vice President, 
Technology with the Company since May 1993. Prior to May 1993 he was Manager, 
Research & Development for the prior five years.
 
    JAMES M. SPIEZIO has been the Vice President, Finance and Administration 
since October 1993. Prior to October 1993, he was Controller, and prior to 
April 1989, he served as Manager of Business Planning.
 
    JAMES H. SCARBORO became Vice-President in December 1997. Prior to 
December 1997, he was Marketing Manager for over five years.

    FRANK J. VUMBACO has held the position of Vice President, Health/Safety 
with the Company since November 1993. Prior to November 1993, he was Manager 
of Health/Safety for over five years.
 
    BRUCE E. ZUKAUSKAS has held the position of Vice President, Operations 
since October 1994. Prior to October 1994, he was Quality Manager for over 
five years.
 
ITEM 2. PROPERTIES
 
    CONCORD, MASSACHUSETTS--The majority of the Company's activities are 
conducted at a Company-owned site which comprises approximately 46.4 acres 
and includes a 180,000 square feet building used for manufacturing 
activities, offices and warehousing.
 
    BARNWELL, SOUTH CAROLINA--Starmet CMI, the Company's wholly-owned
subsidiary, is located on 321 acres of land which includes: 

    109,000 square foot facility housing two manufacturing units: one unit    
    provides the capability of converting chemical gas (UF(6)) to chemical 
    salt (UF(4)) and a second unit houses a reduction process to convert 
    chemical salt (UF(4)) to metallic depleted uranium. 

    70,000 square foot DU Recycle Technology Center adjacent to the 
    manufacturing facility which provides the technology and facilities 
    required to provide recovery and recycle of depleted uranium and 
    other useful materials.
 
    A full scale analytical laboratory.
 
    For a discussion of the current underutilization of the CMI facility, see 
"Management's Discussion and Analysis of Operations" contained on page 12 of 
the Company's 1997 Annual Report to Stockholders, which is incorporated 
herein by reference and included in this Report as Exhibit 13.

                                    17

<PAGE>

ITEM 3. LEGAL PROCEEDINGS
 
    The Company is named as a Potentially Responsible Party (PRP) in regard 
to the Maxey Flats, Kentucky, Superfund Site. This site was used until 1977 
as a licensed and approved low level radioactive waste disposal site. A 
committee of PRP's, including the Company, has submitted a remedial 
investigation and feasibility study report to the Environmental Protection 
Agency. The agreement signed by the settling parties in July 1995, outlines 
the responsibilities of all parties and states that the PRP's will undertake 
the initial remedial phase (IRP) of the site remediation at an estimated cost 
of $60 million. The Company's liability is not expected to exceed 
approximately $80,000 over 10 years. For a discussion of proceedings related 
to the recent renewal of the Company's nuclear regulatory licenses, see Part 
I, Item 1 "Business - Environmental, Safety and Regulatory Matters--Concord 
Site Remediation and Decommissioning Planning Requirements"' elsewhere herein.
 
    On December 9, 1997, Brush Wellman, Inc. ("Brush Wellman") filed a patent 
infringement suit against Starmet Corporation in United States District Court 
for the District of Massachusetts (Case No. 97-12705-RCO) alleging that the 
Company is infringing a patent awarded to Brush Wellman for the investment 
casting of aluminum beryllium alloys. Brush Wellman currently holds U.S. 
Patent No. 5,642,773 entitled "Aluminum Alloys Containing Beryllium and 
Investment Casting of Such Alloys." Brush Wellman is seeking an injunction of 
the Company's alleged patent infringement, monetary damages (including treble 
damages) and attorney fees. The Company has been advised by patent counsel 
that Brush Wellman's claims are without merit and that Brush Wellman's patent 
is invalid. The Company's answer to Brush Wellman's complaint is due December 
30, 1997, unless the date for filing an answer is extended, and the Company 
intends to challenge the validity of Brush Wellman's patent, deny any patent 
infringement by the Company and assert counterclaims against Brush Wellman.

   
Update Relative to Legal Proceedings
    

   
    Subsequent to the filing of the Company's Amended Form 10-K on 
January 28, 1998, the following changes in the foregoing discussion of Legal 
Proceedings have occurred. A discussion of the Company's material legal 
proceedings is set forth in "Risk Factors -- Pending Beralcast Patent 
Litigation; Patents and Other Intellectual Property," "Management's 
Discussion and Analysis of Financial Condition and Results of Operations -- 
Legal Proceedings" and "Business -- Legal Proceedings" in the Company's 
Amendment No. 2 to Registration Statement on Form S-1 filed with the 
Securities and Exchange Commission on June 12, 1998 (File No. 333-49629) (the 
"Registration Statement"). The aforementioned sections of the Registration 
Statement are incorporated by reference in this Form 10-K. In addition to the 
disclosures set forth in such sections of the Company's Registration 
Statement, on July 8, 1998, the Company submitted a reply to Brush Wellman's 
response to the U.S. Patent and Trademark Office's ("PTO") order granting the 
reexamination. Also, on July 30, 1998, in response to a motion to stay the 
court case pending the outcome of the re-examination proceeding which was 
filed by the Company on Janaury 27, 1998, the United States District Court 
for the District of Massachusetts dismissed the suit without prejudice to 
either party's moving to restore it to the docket upon the decision of the 
PTO relative to the reexamination. See also Notes 11 and 15 to the 
Consolidated Financial Statements contained herein.
    

 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
    On September 29, 1997, the Company held a special meeting of stockholders
and approved the following proposals: 

    (1) To change the name of the Company to "Starmet Corporation," the name 
    of Carolina Metals, Inc. to "Starmet CMI" and the Company's ticker symbol 
    on Nasdaq to "STMT."
 
<TABLE>
<CAPTION>

*VOTE:         FOR         AGAINST         ABSTAIN       BROKER NON-VOTES
----------  ---------    -----------    -------------    ----------------
<S>         <C>          <C>              <C>             <C>
            2,545,974        5,398            350                  0
</TABLE>
 
                                    18

<PAGE>

    (2) To approve a Plan of Reorganization, dated June 24, 1997 
    (incorporated herein by reference and is included as Exhibit 2), whereby 
    the Company has the authority to reorganize into four new subsidiaries to 
    operate in the following lines of business: depleted uranium products, 
    specialty powders, specialty metals, Beralcast-Registered Trademark- 
    products for aerospace use, and Beralcast-Registered Trademark- products 
    for commercial use. The Company also has the authority to (i) transfer 
    some or all of the assets, debts and obligations related to each business 
    activity to the respective subsidiary in exchange for 100% of such 
    subsidiary's issued and outstanding stock and (ii) transfer the remaining 
    assets used at Starmet CMI's South Carolina facility to Starmet CMI in 
    consideration of the assumption of the debts, obligations and liabilities 
    of such assets.
 
<TABLE>
<CAPTION>

*VOTE:         FOR         AGAINST         ABSTAIN       BROKER NON-VOTES
----------  ---------    -----------    -------------    ----------------
<S>         <C>          <C>              <C>             <C>
            2,203,531        3,300           1,798           343,093
</TABLE>
 
------------------------
 
*   Note: Of the 4,785,344 shares outstanding as of the record date for the
    stockholder's meeting, only 3,035,299 were eligible to vote. The remaining
    1,750,045 shares were sterilized because of the application of the
    Massachusetts Control Share Acquisition Act (ch. 110 D of the Massachusetts
    General Laws).
 
                                    PART II
 
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND
        RELATED STOCKHOLDER MATTERS
 
    The information required by this item is incorporated by reference to the 
Section entitled "Common Stock Information" in the Registrant's 1997 Annual 
Report to Stockholders, which is included in this Report as Exhibit 13.
 
ITEM 6. SELECTED FINANCIAL DATA

    The information required by this item is incorporated by reference to the 
section entitled "Selected Financial Data" in the Registrant's 1997 Annual 
Report to Stockholders, which is included in this Report as Exhibit 13.
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS

    The information required by this item is incorporated by reference to the 
section entitled "Management's Discussion and Analysis of Operations" in the 
Registrant's 1997 Annual Report to Stockholders, which is included in this 
Report as Exhibit 13.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    The information required by this item is incorporated by reference to the 
Consolidated Financial Statements as of September 30, 1997 and notes thereto 
in the Registrant's 1997 Annual Report to Stockholders, which is included in 
this Report as Exhibit 13.
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
        ACCOUNTING AND FINANCIAL DISCLOSURE
 
    None
 
                                    19


<PAGE>

                                    PART III
 
          ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
    Pursuant to General Instruction G(3) of Form 10-K and instruction 3 to Item
401(b), the information required by this item concerning executive officers is
set forth in Part I, Item 1 under the heading "Executive Officers of the
Registrant".
 
    The following table sets forth certain information concerning the directors
of the Company:
 
<TABLE>
<CAPTION>
                                                                    PRESENT PRINCIPAL EMPLOYMENT
NAME                                               AGE              AND PRIOR BUSINESS EXPERIENCE          DIRECTOR SINCE
---------------------------------------------      ---      ---------------------------------------------  ---------------
<S>                                            <C>          <C>                                            <C>
George J. Matthews                                 67       Chairman of the Board of Directors since               1972
                                                            1972. Chairman of Matthews Associates
                                                            Limited, which is engaged in the business of
                                                            investing in and providing management
                                                            consulting and assistance to small and medium
                                                            sized businesses, including the Company.

Robert E. Quinn                                    44       President of the Company since December 1,             1994
                                                            1994 and Treasurer and Chief Executive 
                                                            Officer of the Company since January 20,
                                                            1998. Prior to becoming President, served
                                                            as Vice President, Sales for over five years.
                                                            Elected as a Director on November 17, 1994 to
                                                            fill a vacancy created by the enlargement of
                                                            the Board of Directors by vote of the 
                                                            Directors.

Wilson B. Tuffin                                  66        Vice Chairman since November 1994. From 1972           1972
                                                            to November 30, 1994, President, Chief
                                                            Executive Officer and Treasurer of the
                                                            Company.                                           

Kenneth A. Smith                                  61        Professor of Chemical Engineering at                   1985
                                                            Massachusetts Institute of Technology since
                                                            1971.                                     
</TABLE>



                                       20
<PAGE>

<TABLE>
<CAPTION>

                                                                    PRESENT PRINCIPAL EMPLOYMENT
NAME                                               AGE              AND PRIOR BUSINESS EXPERIENCE          DIRECTOR SINCE
---------------------------------------------      ---      ---------------------------------------------  ---------------
<S>                                            <C>          <C>                                            <C>

Frank H. Brenton                                  72        Principal of Frank H. Brenton Associates a                1986
                                                            business consulting firm. From 1984 to 1986,
                                                            Chairman of the Board of Directors of
                                                            Marshall's Incorporated, an off-price
                                                            retailer and division of Melville, Inc.

</TABLE>

    Each director is elected for a term of one year. There are no family
relationships among any of the Company's directors and officers.
 
            INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES

    The Board of Directors met seven times during the fiscal year ended 
September 30, 1997. There was no director who during the fiscal year attended 
fewer than 75 percent of the aggregate of all board meetings and all meetings 
of committees on which he served.
 
    The Board of Directors has an Audit Committee which is reconstituted at the
first meeting of the Board following the annual meeting of stockholders. The
Audit Committee, which met two times during fiscal 1997, meets with the
Company's independent auditors and principal financial personnel to review the
scope and results of the annual audit and the Company's financial reports. The
Audit Committee also reviews the scope of audit and non-audit services performed
by the independent public accountants, and reviews the adequacy and
effectiveness of internal accounting controls. The present members of the Audit
Committee are Messrs. Brenton and Smith.
 
    The Board of Directors has a Stock Option Committee which was formed during
fiscal 1997. The Stock Option Committee, which met once during fiscal 1997,
determines the recipients, number of shares and terms of stock options granted
to the Company's employees, directors and consultants. The present members of
the Stock Option Committee are Messrs. Matthews, Tuffin and Quinn.
 
    The Board of Directors does not have any standing committees on compensation
or nomination.
 
    SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
    Section 16(a) of the Securities Exchange Act of 1934 requires directors,
executive officers and stockholders who own more than 10% of the outstanding
common stock of the Company to file with the Securities and Exchange Commission
and NASDAQ reports of ownership and changes in ownership of voting securities of
the Company and to furnish copies of such reports to the Company. To the
Company's knowledge, based solely on review of the copies of such reports
furnished to the Company, during the fiscal year ended September 30, 1997 or
written representations in certain cases, all Section 16(a) filing requirements
were complied with except Messrs. Quinn (a director and executive officer) 
and Spiezio (an executive officer) each failed to timely report one grant of 
options on November 20, 1995 through inadvertence.


                                     21
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION
 
    The following table discloses for the periods presented the compensation for
the person who served as the Company's Chief Executive Officer and for each of
the four most highly compensated executive officers of the Company, other than
the Chief Executive Officer, whose total compensation exceeded $100,000 for the
Company's fiscal year ended September 30, 1997 (collectively, "the Named
Executive Officers"):

<TABLE>
<CAPTION>

                                                                                               LONG TERM COMPENSATION
                                                                                     -------------------------------------------

                                                   ANNUAL COMPENSATION                           AWARDS             PAYOUTS
                                      ---------------------------------------------   ----------------------------  ------------
                                                                                      RESTRICTED        SECURITIES
                                                                       OTHER             STOCK          UNDERLYING      LTP
       NAME AND                                                        ANNUAL           AWARD(S)         OPTIONS/      PAYOUTS
  PRINCIPAL POSITION       YEAR(1)    SALARY ($)    BONUS($)     COMPENSATION($)(2)        $           SARS (#)(6)        $
-----------------------  -----------  -----------  -----------   ------------------- ---------------- ------------- ------------
<S>                      <C>          <C>          <C>           <C>                  <C>              <C>          <C>
George J. Matthews(4)
  Chairman of Board of         1997      350,000       --               --                 --             --            --
  Directors, CEO and           1996      350,000       --               --                 --             --            --
  Treasurer(5)                 1995      350,000       --               --                 --             20,000        --

Robert E. Quinn                1997      200,000       15,000           --                 --             25,000        --
President(3)(5)                1996      173,769       --               --                 --             20,000        --
                               1995      151,673          200           35,000             --             60,000        --
James M. Spiezio
  Vice President,              1997      131,616       13,250           --                 --              8,000                --
  Finance &                    1996      121,058       --               --                 --             10,000        --
  Administration               1995      113,270       10,930           --                 --             12,000        --

William T. Nachtrab            1997      131,616        9,050           --                 --              8,000        --
  Vice President,              1996      114,847       --               --                 --             --            --
  Technology                   1995      108,703       10,830           --                 --             12,000        --

Douglas F. Grotheer            1997      121,934        6,700           --                 --              5,000        --
  President, Starmet           1996      100,252       --               --                 --             --            --
  CMI Corporation              1995       95,002       10,830           --                 --              5,000        --
 
<CAPTION>
 
       NAME AND               ALL OTHER
  PRINCIPAL POSITION       COMPENSATION($)
-----------------------  -------------------
<S>                      <C>
George J. Matthews(4)
  Chairman of Board of           --
  Directors, CEO and             --
  Treasurer(5)                   --
Robert E. Quinn                  --
President(3)(5)                  --
                                 --
James M. Spiezio
  Vice President,                --
  Finance &                      --
  Administration                 --
William T. Nachtrab              --
  Vice President,                --
  Technology                     --
Douglas F. Grotheer              --
  President, Starmet             --
  CMI Corporation                --
</TABLE>
 
(1) The Company's fiscal year ends on September 30th of each year.
 
(2) Excludes perquisites in amounts less than the threshold level required for
    reporting.
 
(3) Mr. Quinn's compensation for the fiscal year ended September 30, 1997 was
    determined pursuant to his Employment Agreement. See "Executive Agreements."
 
(4) Mr. Matthews is assigned as a consultant to the Company pursuant to a
    management agreement between Matthews Associates Limited and the Company.
    All compensation under the agreement is paid by the Company to Matthews
    Associates Limited. See "Executive Agreements."
 
(5) On January 20, 1998, Mr. Matthews resigned as Chief Executive Officer and
    Treasurer of the Company and the Company elected Mr. Quinn as Chief
    Executive Officer and Treasurer.

(6) Options have been adjusted to reflect the Company's two for one stock 
    dividend paid on April 7, 1997.


                                      22
<PAGE>

OPTION GRANTS IN LAST FISCAL YEAR

    The following table sets forth certain information regarding options granted
during the fiscal year ended September 30, 1997 by the Company to the Named
Executive Officers:
 
<TABLE>
<CAPTION>
                                                                 INDIVIDUAL GRANTS
                                                           ----------------------------
                                                            PERCENT
                                                            OF TOTAL                                  POTENTIAL REALIZABLE
                                                             OPTIONS                                    VALUE AT ASSUMED
                                            NUMBER OF        GRANTED                                 ANNUAL RATES OF STOCK
                                           SECURITIES          TO         EXERCISE OR                PRICE APPRECIATION FOR
                                           UNDERLYING     EMPLOYEES IN    BASE PRICE                     OPTION TERM(4)
                                            OPTIONS         FISCAL           ($/       EXPIRATION   ----------------------
         NAME                              GRANTED (#)        YEAR         SHARE)(3)       DATE        10%($)      5%($)
     -----------                          -------------  ---------------  -----------  ------------  ----------  ----------
<S>                                          <C>            <C>              <C>          <C>           <C>         <C>
George J. Matthews.........................       --              --             --            --           --          --
Robert E. Quinn............................       15,000(1)                   $  15.563       8/5/2007  $  146,812  $  372,051
                                                  10,000(2)         20.8%          7.38     11/19/2006      46,412     117,618
James M. Spiezio...........................        4,000(1)                      15.563       8/5/2007      39,150      99,214
                                                   4,000(2)          6.7%          7.38     11/19/2006      18,565      47,047
William T. Nachtrab........................        4,000(1)                      15.563       8/5/2007      39,150      99,214
                                                   4,000(2)          6.7%          7.38     11/19/2006      18,565      47,047
Douglas F. Grotheer........................        3,000(1)                      15.563       8/5/2007      29,362      74,410
                                                   2,000(2)          4.2%          7.38     11/19/2006       9,282      23,524
</TABLE>
 
------------------------

(1) These options are first exercisable on August 5, 1998 at which time the
    options will be one-third vested with options vesting in additional
    one-third increments in two annual installments commencing on August 5,
    1999.
 
(2) These options were first exercisable on November 19, 1997 at which time the
    options were one-third vested with options vesting in additional one-third
    increments in two annual installments commencing on November 19, 1998.
 
(3) The exercise price per share is the market price of the underlying Common
    Stock on the date of grant. The exercise price reflects a 2-for-1 stock
    dividend paid on April 7, 1997.
 
(4) Amounts represent hypothetical gains that could be achieved for the
    respective options if exercised at the end of the option term. These gains
    are based upon assumed rates of share price appreciation set by the
    Securities and Exchange Commission of five percent and ten percent
    compounded annually from the date the respective options were granted to
    their expiration date. The gains shown are net of the option exercise price,
    but do not include deductions for taxes of the options exercise price or
    other expenses associated with the exercise. Actual gains, if any, are
    dependent on the performance of the Common Stock and the date on which the
    option is exercised. There can be no assurance that the amounts reflected
    will be achieved.


                                     23
<PAGE>

           AGGREGATED OPTION EXERCISED IN LAST FISCAL YEAR AND FISCAL
                             YEAR-END OPTION VALUES
 
    The following table sets forth certain information concerning options
exercised during the fiscal year ended September 30, 1997 by the Named Executive
Officers, as well as the aggregate value of unexercised options held by such
executive officers on September 30, 1997. The Company has no outstanding stock
appreciation rights, either freestanding or in tandem with options.
<TABLE>
<CAPTION>
                                                                                                           
                                                                                                           
                                                                                                           
                                                                                    NUMBER OF SECURITIES   
                                                                                   UNDERLYING UNEXERCISED  
                                                                                   OPTIONS AT FY-END (#)   
                                                                                 --------------------------
<S>                                        <C>                <C>                <C>          <C>          
                                                SHARES
                                              ACQUIRED ON         VALUE (1)
NAME                                         EXERCISE (#)        REALIZED($)     EXERCISABLE  UNEXERCISABLE
-----------------------------------------  -----------------  -----------------  -----------  -------------
George J. Matthews.......................              0                  0          13,334         6,666  
Robert E. Quinn..........................              0                  0          46,667        58,333  
James M. Spiezio.........................              0                  0          16,333        18,667  
William T. Nachtrab......................              0                  0          13,000        12,000  
Douglas F. Grotheer......................              0                  0           8,334         6,666  
 
<CAPTION>







                                                       VALUE OF       
                                                     UNEXERCISED     
                                                    IN-THE-MONEY    
                                                  OPTIONS AT FY-END(2)      
                                              ----------------------------
NAME                                          EXERCISABLE    UNEXERCISABLE
-----------------------------------------     -----------    -------------
George J. Matthews.......................      $ 148,274      $    74,126
Robert E. Quinn..........................        509,003          487,202
James M. Spiezio.........................        193,679          162,599
William T. Nachtrab......................        157,449           90,129
Douglas F. Grotheer......................         83,324           43,327
</TABLE>

------------------------
 
(1) Value realized equals fair market value on the date of exercise, less the
    exercise price, times the number of shares acquired, without deducting taxes
    or commissions paid by employee.
 
(2) Value of unexercised options equals fair market value of the shares
    underlying in-the-money options on September 30, 1997 ($17.25 per share),
    less the exercise price, times the number of options outstanding. All such
    options were "in of the money" as of September 30, 1997.
 
                                  PENSION PLAN
 
    The following table sets forth the aggregate annual benefit payable upon
retirement at normal retirement age for each level of remuneration specified at
the listed years of service.
 
<TABLE>
<CAPTION>
                                        YEARS OF SERVICE
                                     ----------------------
<S>            <C>        <C>        <C>        <C>
REMUNERATION      15         20         25      30 OR MORE
-------------  ---------  ---------  ---------  -----------
$100,000.....     23,520     31,360     39,220      47,040
150,000.....      38,520     51,360     64,200      77,040
200,000.....      53,520     71,360     89,200     107,040
</TABLE>


                                24

<PAGE>

<TABLE>
<CAPTION>
                                        YEARS OF SERVICE
                                     ----------------------
<S>            <C>        <C>        <C>        <C>
REMUNERATION      15         20         25      30 OR MORE
-------------  ---------  ---------  ---------  -----------


300,000.....      83,520    111,360    139,200     167,040
400,000.....     113,520    151,360    189,200     227,040
500,000.....     143,520    191,360    239,200     287,040
</TABLE>
 
    The Company has a defined benefit plan (the "Pension Plan") designed to
provide retirement benefits for employees and ancillary benefits to their
beneficiaries, joint annuitants and spouses. All employees of the Company become
participants in the Pension Plan after attaining the later of age 21 or a year
of service with the Company. The Pension Plan provides retirement benefits based
on years of service and compensation. An employee's benefits under the Pension
Plan generally become fully vested after five years of service. At normal
retirement (the later of age 65 and five years of Plan participation),
participants are entitled to a monthly benefit for the remainder of their life
in an amount equal to one-twelfth of the sum of their "Annual Credits" for their
last 30 years or lesser period of employment with the Company and its
predecessors. An employee's "Annual Credit" is 1.25% of the portion of his
annual compensation that is subject to Social Security tax and two percent (2%)
of the balance of his annual compensation. Participants with five years of
service are entitled to retirement at age 55, but the monthly benefit payable
under the Pension Plan is reduced by 0.5% for each month that early retirement
precedes normal retirement but not to less than $100 per month if the 
Participant has ten or more years of service. The surviving spouse of a 
retiree under the Plan is entitled to receive benefits equal to one-half the 
amount the retiree had been receiving. Alternative benefit payments that are 
equivalent to the benefit described above are also available to participants. 
Benefits payable under the plan are not reduced by Social Security payments 
to the retiree. Amounts shown assume benefits commence at age 65. Benefit 
amounts shown are straight-life annuities. The executive officers named in 
the Summary Compensation Table have the following years of credited service 
for pension plan purposes: Robert E. Quinn-21 years; James M. Spiezio-11 
years; William T. Nachtrab-7 years; and Douglas Grotheer-17 years. Mr. 
Matthews does not participate in the Pension Plan.
 
                 DIRECTORS' COMPENSATION AND STOCK OPTION PLAN
 
    Each outside director of the Company receives an annual fee of $15,000 
and is elegible to receive options under the Company's Director Option Plan. 
Messrs. Brenton and Smith, the Company's two non-employee directors, were 
each granted options to purchase 3,000 shares of Common Stock at an exercise 
price of $15.563 per share in the previous fiscal year.
 
    During fiscal year 1997, Matthews Associates Limited, of which Mr. Matthews
is sole owner, received compensation from the Company in connection with
consulting services provided to the Company pursuant to a management agreement
between the Company and Matthews Associates Limited. See "Executive
Compensation" and "Executive Agreements."
 
    The Company entered into an employment and consulting agreement with Mr.
Tuffin in November 1994, which shall continue in force until February 1999.
Pursuant to such agreement, Mr. Tuffin receives annual compensation of $105,000
for his services as a consultant to the Company. During the term of the
agreement and for a period of two (2) years after its expiration, or the
termination of Mr. Tuffin's employment with the Company, whichever occurs later,
Mr. Tuffin may not compete directly or indirectly with the Company within the
continental United States.
 
                              EXECUTIVE AGREEMENTS
 
    EMPLOYMENT AGREEMENT WITH MR. QUINN
 
    In October 1997, the Company entered into an amended employment agreement
with Mr. Quinn. Pursuant to the agreement, Mr. Quinn will receive initial
compensation at the annual rate of $200,000, subject to such annual increases
and bonuses as the Board of Directors may from time to time determine. The


                                    25
<PAGE>

agreement shall continue in force until February 28, 2002, unless terminated by
either party in accordance with its terms, and is subject to annual renewals as
described in the agreement. During the term of the agreement and for a period of
two (2) years after its expiration, or after the termination of Mr. Quinn's
employment with the Company, whichever occurs later, Mr. Quinn may not compete
directly or indirectly with the Company within the continental United States.
The Company shall require any successor to a majority of its business activities
to assume its obligations under this agreement.
 
    EMPLOYMENT AGREEMENTS WITH MESSRS. SPIEZIO, NACHTRAB AND GROTHEER
 
    In October 1997, the Company entered into employment agreements with Messrs.
Spiezio, Nachtrab and Grotheer (each an "Executive"). Under the terms of their
respective agreements, Messrs. Spiezio, Nachtrab and Grotheer are entitled to an
annual base salary of $142,000, $136,000, and $135,000, respectively, subject to
such annual increases and bonuses as the Board of Directors may from time to
time determine. Each of the agreements shall continue in force for an initial
period of three (3) years, unless such agreement is terminated by the Company or
the Executive in accordance with its terms. Annually, the Board of Directors, in
its discretion, may extend the term of each agreement for an additional year.
During the term of each Agreement and for a period of eighteen (18) months after
any termination of employment, each Executive may neither i) compete directly or
indirectly with the Company within the continental United States nor ii) solicit
any of the Company's customers or employees. Each of the agreements may be 
terminated by the Company prior to a change in control (as defined in the 
agreements) and upon twelve months written notice.
 
    MANAGEMENT AGREEMENT WITH MR. MATTHEWS
 
    The Company has entered into a management agreement with Matthews Associates
Limited, a Massachusetts corporation ("MAL"), of which Mr. George J. Matthews,
Director and Chairman of the Board of Directors of the Company, is sole owner.
The agreement provides MAL with a minimum compensation of $350,000 per annum for
all services under the agreement. The agreement expires on February 28, 2002,
subject to annual renewals as described in the agreement. In the event of
termination of MAL by the Company, the Company is obligated to pay to MAL all of
the amounts due under the agreement for the remaining term.
 
          COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
    During the fiscal year ended September 30, 1997, the Board of Directors of
the Company was responsible for establishing executive compensation (other than
stock option compensation). Messrs. Quinn and Matthews participated in
deliberations of the Company's Board of Directors concerning executive officer
compensation. Neither participated in setting his own compensation. No executive
officer of the Company served as a director or member of a compensation
committee, or its equivalent, of another entity, one of whose executive officers
served as director of the Company.


                                    26
<PAGE>

    ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
    The following table sets forth as of January 21, 1998, certain 
information with respect to the beneficial ownership of the Common Stock by 
(i) each person known by the Company to be a beneficial owner of more than 
five percent (5%) of the Common Stock, (ii) each director of the Company, 
(iii) each Named Executive Officer and (iv) all directors and executive 
officers of the Company as a group. Except as otherwise noted, each party 
included in the table has sole voting and investment power with respect to 
the shares beneficially owned.
 
<TABLE>
<CAPTION>
   NAME AND ADDRESS         AMOUNT AND NATURE
  OF BENEFICIAL OWNER         OF BENEFICIAL
    CHARLES ALPERT              OWNERSHIP          PERCENT OWNED
-----------------------  -----------------------  ---------------
<S>                      <C>                      <C>

Charles Alpert                 2,481,837(1)(2)        50.33%
Joseph Alpert
WIAF Investors Co.
466 Arbuckle Avenue
Lawrence, NY 11516


and

Melvin B. Chrein, M.D.
Meryl J. Chrein
Marshall J. Chrein
Michael Chrein
21 Copper Beech Lane
Lawrence, NY 11559


George J. Matthews               415,764(3)            8.63%
Chairman of the Board of
  Directors
  Director & Consultant
c/o Matthews Assocaites
  Limited
100 Corporate Place
Peabody, MA 01960



Wilson B. Tuffin                401,982(4)              8.39%
Vice Chairman and Director
23 Arlington Street
Acton, MA 01720


Dimensional Fund
     Advisors, Inc.             338,000(5)              7.1%
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401

Robert E. Quinn                  85,479(6)              1.76%
President, CEO, Treasurer
  and Director


James M. Spiezio                 23,665(7)                *
Vice President, Finance and 
  Administration

William T. Nachtrab
Vice President, Technology       16,999(8)                *


Kenneth A. Smith, Director       14,000(9)                * 

Frank H. Brenton, Director       14,000(9)                *

Douglas F. Grotheer              11,075(10)               *
President of CMI Corporation

</TABLE>


                                     27
<PAGE>

<TABLE>
<CAPTION>

   NAME AND ADDRESS         AMOUNT AND NATURE
  OF BENEFICIAL OWNER         OF BENEFICIAL
    CHARLES ALPERT              OWNERSHIP          PERCENT OWNED
-----------------------  -----------------------  ---------------
<S>                      <C>                      <C>


All directors and                982,964(11)           19.87%
executive officers as a
group (8 persons)

</TABLE>

------------------------
 
(1) Does not reflect the effect on voting rights of the Massachusetts Control
    Share Acquisition Act. The Company is subject to Chapter 110D of the
    Massachusetts General Laws which governs "control share acquisitions," which
    are acquisitions of beneficial ownership of shares which would raise the
    voting power of the acquiring person above any one of three thresholds:
    one-fifth, one-third or one-half of the total voting power. All shares
    acquired by the person making the control share acquisition
    within 90 days before or after any such threshold is crossed obtain voting
    rights only upon the authorization from a majority of the stockholders other
    than the person acquiring such shares, officers of the Company and those
    directors of the Company who also are employees. Based on certain filings
    made with the SEC, the Company believes that certain control share
    acquisitions have occurred and that the members of the group which effected
    such control share acquisitions, namely WIAF Investors Co., Charles Alpert,
    Joseph Alpert, Melvin B. Chrein, Meryl J. Chrein, Marshall J. Chrein and
    Michael Chrein (collectively the "Investor Group") are the holders of
    1,749,598 shares (the "Affected Shares") which were acquired in control 
    share acquisitions (within the meaning of Chapter 110D) and accordingly 
    will have no voting rights as to the Affected Shares unless or until such 
    voting rights are authorized as described above.

(2) Derived from Schedules 13DA, dated October 3, 1994, submitted to the
    Company. The seven persons named are described as a group in such Schedules
    13DA. The persons named reported ownership of the following shares: WIAF
    Investors Co. 1,724,856; Melvin B. Chrein 202,300; Meryl J. Chrein 245,500;
    Charles Alpert 50,000; Joseph Alpert 50,000; Michael Chrein 16,200; and
    Marshall J. Chrein 48,200. Each person reported sole voting and dispositive
    power with respect to the shares owned by such person. Also includes 21,021,
    79,435 and 2,325 shares which Melvin B. Chrein, WIAF Investors Co. and
    Marshall Chrein, respectively, have the right to acquire upon conversion of
    outstanding 10% Convertible Subordinated Debentures and 27,000, 12,000 and
    3,000 shares which Charles Alpert or nominee, Melvin B. Chrein and Marshall
    J. Chrein, respectively, have the right to acquire under outstanding
    Warrants.
 
(3) Includes (i) 13,334 shares which may be purchased upon the exercise of
    currently exercisable options, (ii) 2,325 shares which may be acquired upon
    the conversion of an outstanding 10% Convertible Debenture, (ii) 13,961
    shares which Mr. Matthews' wife has the right to acquire upon the conversion
    of an outstanding 10% Convertible Subordinated Debenture, as to which Mr.
    Matthews disclaims beneficial ownership, and (iii) 990 shares owned by Mr.
    Matthews' wife.
 
(4) Includes 6,666 shares which may be purchased upon the exercise of options.
 
(5) The officers of Dimensional Fund Advisors, Inc. also serve as officers of
    DFA Investment Dimensions Group, Inc. (the "Fund") and The DFA Investment
    Trust Company (the "Trust"), each an open-end management investment company
    registered under the Investment Company Act of 1940. In their capacity as
    officers of the Fund and the Trust, these persons vote 128,600 shares which
    are owned by the Fund and 13,000 shares which are owned by the Trust.
 
(6) Includes 63,333 shares which may be purchased upon the exercise of currently
    exercisable options.
 
(7) Includes 21,665 shares which may be purchased upon the exercise of currently
    exercisable options.
 
(8) Includes 14,999 shares which may be purchased upon the exercise of currently
    exercisable options.
 
(9) Includes 8,000 shares which may be purchased upon the exercise of currently
    exercisable options.
 
(10) Includes 9,001 shares which may be purchased upon the exercise of currently
    exercisable options.
 
(11) See notes (3), (4), (6), (7), (8), (9) and (10) above.
 
            ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
    In October 1997, the Company entered into an employment agreement with Mr.
Raftery at an initial base salary of $100,000 and on terms similar to Messrs.
Spiezio, Nachtrab and Grotheer. (See "Executive Agreements").
 
    In December 1997, the Company sold $900,000 worth of 10% Convertible
Subordinated Debentures due on December 31, 1999 to WIAF Investors Co.
($500,000), Melvin Chrein ($150,000), Joshua Feibusch ($150,000), Marshall
Chrein ($50,000) and George Matthews ($50,000) Such debentures are convertible
into shares of Common Stock at an exercise price of $21.50 per share. WIAF
Investors Co., Melvin Chrein and Marshall Chrein have filed Schedules 13DA
identifying themselves as part of an investor group which holds more than five
percent of the Company's outstanding Common Stock and Mr. Matthews is currently
a director of the Company and at the time of the transaction was the Company's
Chief Executive Officer and Treasurer. Mr. Feibusch is not affiliated with the
Company.


                                       28
<PAGE>

                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
 
    (a) 1. Financial Statements
 
    The following consolidated financial statements of the Company, included 
in the Company's 1997 Annual Report are filed as part of this report:
   
    Auditors' Report
    Consolidated Balance Sheets--September 30, 1997 and September 30, 1996.
    Consolidated Statements of Operations for the years ended September 30, 
      1997, September 30, 1996 and September 30, 1995.
    Consolidated Statements of Stockholders' Equity for the years ended 
      September 30, 1997, September 30, 1996 and September 30, 1995.
    Consolidated Statements of Cash Flows for the years ended September 30,
      1997, September 30, 1996 and September 30, 1995.
    Notes to Consolidated Financial Statements
    
    2. Financial Statement Schedule for the Three Years Ended September 30, 1997
 
    Auditors' Report on Schedule II-Valuation and Qualifying Accounts
 
                                    29

<PAGE>

3. Exhibits:
 
<TABLE>
<CAPTION>
ITEM NO.*                                                DESCRIPTION
---------  --------------------------------------------------------------------------------------------------------
<S>        <C>
 2         Plan of Reorganization, dated June 24, 1997. (12)
 3(a)      Articles of Organization, as amended, of the Registrant.**
 3(b)      By-laws, as amended, of the Registrant, incorporated by reference to File No. 2-62266, Part II, Exhibit
           3(b).
 4(a)      Financing Agreement, dated May 11, 1982, among Barnwell County, South Carolina, Registrant and Carolina
           Metals, Inc. (a wholly-owned subsidiary) relating to Barnwell County, South Carolina Industrial
           Development Revenue Bond (Nuclear Metals, Inc. project) 1982, incorporated by reference to File No.
           2-70044, Part II, Exhibit 4(d).
 4(b)      Financing Agreement, dated September 27, 1984 among Barnwell County, South Carolina, Registrant and
           Carolina Metals, Inc. (a wholly owned-subsidiary) relating to Barnwell County, South Carolina Industrial
           Development Revenue Bond (Nuclear Metals, Inc. project) 1984, incorporated by reference to File No.
           0-8836, Part II, Exhibit 4(e).
 4(c)      Financing Agreement, dated June 1, 1985 among Massachusetts Industrial Finance Agency and the Registrant
           relating to Massachusetts Industrial Development Revenue Bond (NMI-- 1985 Concord Issue) incorporated by
           reference to File No. 0-8836, Part II, Exhibit 4(f)
 4(d)      Nuclear Metals, Inc. Non-Qualified Stock Option Plan as amended.(1)
 4(e)      Nuclear Metals, Inc. Restated Employees' Stock Option Plan as amended. (1)
 4(f)      Nuclear Metals, Inc. Directors' Stock Option Plan as amended. (6)
 4(h)      Warrant to Purchase 25,000 shares of the Company's Common Stock issued to State Street Bank and Trust
           Company. (6)
 4(i)      Common Stock Purchase Warrant dated September 16, 1996 issued to Melvin B. Chrein and schedule of
           similar warrants. (7)
 4(j)      Common stock purchase warrant dated September 22, 1997 issued to Roger M. Marino for 60,000 shares.**
10(a)      Agreement, effective March 1, 1993, between the Registrant and Matthews Associates Limited. (2)
10(b)      Agreement, effective March 1, 1993, between the Registrant and Wilson B. Tuffin, as amended November 17,
           1994. (2)
10(c)      Employment Agreement, effective February 8, 1995 between the Registrant and Robert E. Quinn. (7)

                                    30

<PAGE>

10(d)      Agreement with Olin Corporation regarding large caliber penetrators. (Confidential treatment has been
           granted for certain portions of this Exhibit). (3)
10(e)      Credit Agreement dated March 31, 1995 among the Company, Carolina Metals, Inc. and State Street Bank and
           Trust Company.(4)
10(f)      First Amendment to Credit Agreement dated as of June 30, 1995 among the Company, Carolina Metals, Inc.
           and State Street Bank and Trust Company. (5)
10(g)      Amended and Restated Revolving Credit Note dated March 31, 1995 (as amended December 24, 1996 ) of the
           Registrant and Carolina Metals, Inc. (7)
10(h)      Second Amendment to Credit Agreement dated as of December 24, 1996 among the Registrant, Carolina
           Metals, Inc. and State Street Bank and Trust Company. (7)
10(i)      10% Convertible Subordinated Debenture dated January 10, 1996 payable to WIAF Investors Co. in amount of
           $334,000.00 and schedule of similar debentures. (7)
10(j)      10% Subordinated Debenture dated September 16, 1996 payable to Melvin B. Chrein in the amount of
           $100,000.00 and schedule of similar debentures. (7)
10(k)      Letter Agreement dated as of September 16, 1996 with Kathleen Matthews and schedule similar letter
           agreements. (7)
10(l)      Joint Security Agreement dated as of March 31, 1995 among the Registrant, Carolina Metals,
           Inc. and State Street Bank and Trust Company. (6)
10(m)      First Amendment to Joint Security Agreement dated September 26, 1995 among the Registrant, Carolina
           Metals, Inc. and State Street Bank and Trust Company.(6)
10(n)      Patent Assignment of Security dated September 26, 1995 between the Registrant and State Street Bank and
           Trust Company.(6)
10(o)      Trademark Assignment of Security dated September 26, 1995 between the Registrant and State Street Bank
           and Trust Company. (6)
10(p)      Purchase order dated August 23, 1995 between the Registrant and Olin Corporation. (Confidential
           treatment requested as to certain portions) (6)
10(q)      Forbearance and Amendment Agreement dated as of January 11, 1996 between the Registrant, Carolina
           Metals, Inc. and State Street Bank and Trust Company. (6)
10(r)      Waiver of Breach of Covenant, by and among the Registrant, Carolina Metals, Inc. and State Street Bank
           and Trust Company.(7)

                                    31


<PAGE>

10(s)      Envirocare of Utah Inc. Low-Activity Radioactive Waste Disposal Agreement. (Confidential treatment has
           been granted for certain portions of this Exhibit). (9)
10(t)      Amendment of Solicitation/Modification of Contract dated March 10, 1997 issued by Department of the
           Army. (10)
10(u)      Securities Pledge Agreement dated July 3, 1997 between Khosrow B. Semnoni and Nuclear Metals, Inc. (11)
10(v)      Employment Agreement, effective October 1, 1997 between the Registrant and James M. Spiezio.**
10(w)      Amended and Restated Revolving Credit Note dated October 1, 1997 among the Company, Starmet Powders,
           LLC, Starmet Aerocast, LLC, Starmet Comcast, LLC, Starmet NMI Corporation, Starmet CMI Corporation,
           Starmet Holdings Corporation, NMI Foreign Sales Corporation and State Street Bank and Trust Company.**
10(x)      Amended and Restated Credit Agreement dated October 1, 1997 among the Company, Starmet Powders, LLC,
           Starmet Aerocast, LLC, Starmet Comcast, LLC, Starmet NMI Corporation, Starmet CMI Corporation, Starmet
           Holdings Corporation, NMI Foreign Sales Corporation and State Street Bank and Trust Company.**
10(y)      Amended and Restated Joint Security Agreement dated October 1, 1997 among the Company, Starmet Powders,
           LLC, Starmet Aerocast, LLC, Starmet Comcast, LLC, Starmet NMI Corporation, Starmet CMI Corporation,
           Starmet Holdings Corporation, NMI Foreign Sales Corporation and State Street Bank and Trust Company.**
10(z)      Patent Assignment of Security dated October 1, 1997 between the Company and State Street Bank and Trust.**
10(aa)     Employment Agreement, effective October 1, 1997 between the Registrant and William T. Nachtrab.**
10(bb)     Employment Agreement, effective October 1, 1997 between the Registrant and Douglas F. Grotheer. **
10(cc)     Employment Agreement, effective October 1, 1997 between the Registrant and Kevin R. Raftery. **
10(dd)     First Amendment to Credit Agreement dated as of December 9, 1997 among the Company, Starmet
           Powders, LLC, Starmet Aerocast, LLC, Starmet Comcast, LLC, Starmet NMI Corporation, Starmet CMI
           Corporation, Starmet Holdings Corporation, NMI Foreign Sales Corporation and State Street Bank and Trust
           Company.**
10(ee)     Third Amendment to Credit Agreement dated August 7, 1997 among Nuclear Metals, Inc., Carolina Metals,
           Inc. and State Street Bank and Trust Company.**
</TABLE>

                                     32
<PAGE>

   
<TABLE>

<S>        <C>
10(ff)     Amendment to Employment Agreement dated October 1, 1997 between the Registrant and Robert E. Quinn.**
10(gg)     Letter agreement with Roger M. Marino dated September 22, 1997 between the registrant and Roger M.
           Marino.**
10(hh)     10% Subordinated Debenture dated September 22, 1997 payable to Roger Marino in the amount of $500,000.00.**
10(ii)     Letter agreement dated December 23, 1997 regarding issuance of subordinated convertible
           debentures among the Registrant Melvin Chrein, WIAF Investors Co., Marshall Chrein, Joshua Feibusch and 
           George J. Matthews.**
10(jj)     10% Convertible Subordinated Debenture dated December 23, 1997 payable to WIAF Investors Co. in amount of $500,000.00 
           and schedule of similar debentures.**
10(kk)     Second Amendment to Credit Agreement dated as of December 29, 1997 among the Company, Starmet Powders, LLC, 
           Starmet Aerocast, LLC, Starmet Comcast, LLC, Starmet NMI Corporation, Starmet CMI Corporation, Starmet Holdings 
           Corporation, NMI Foreign Sales Corporation and State Street Bank and Trust Company.**
10(ll)     Second Additional Revolving Credit Note dated December 29, 1997 among the Company, Starmet Powders, LLC, Starmet 
           Aerocast, LLC, Starmet Comcast, LLC, Starmet NMI Corporation, Starmet CMI Corporation, Starmet Holdings Corporation, 
           NMI Foreign Sales Corporation and State Street Bank and Trust Company.**
13         Starmet Corporation 1997 Annual Report to Stockholders. ***
21         Subsidiaries of the Registrant. **
23(a)      Consent of Independent Public Accountants.***
27         Financial Data Schedule.**
99(a)      Memorandum of Decision dated September 13, 1996 from the United States Army Contract Adjustment Board.
           (8)
99(b)      Amendment No. 2 to Registration Statement on Form S-1 (File No. 333-49629) (13)

</TABLE>
    
------------------------
 
*   Item numbers correspond to Exhibit Table, Item 601, Regulation S-K

   
**  Previously filed as an exhibit to the Company's Annual Report on Form 
    10-K for the fiscal year ended September 30, 1997
    

   
*** Indicates an exhibit filed herewith
    
 
(1) Incorporated by reference to the similarly numbered Exhibit filed with the
    Registrant's Annual Report on Form 10-K for the fiscal year ended September
    30, 1992.
 
(2) Incorporated by reference to the similarly numbered Exhibit filed with the
    Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30,
    1992.
 
(3) Incorporated by reference to Exhibit 10 to the Registrant's Quarterly Report
    on Form 10-Q for the quarter ended March 31, 1993.
 
(4) Incorporated by reference to Exhibit 10A to the Registrant's Form 10-Q for
    the Quarter ended March 31, 1995.
 
(5) Incorporated by reference to Exhibit 10(c) to the Registrant's Annual Report
    on Form 10-K for the fiscal year ended September 30, 1995.
 
(6) Incorporated by reference to the similarly numbered Exhibit filed with the
    Registrant's Annual Report on Form 10-K for the fiscal year ended September
    30, 1995.
 
(7) Incorporated by reference to the similarly numbered Exhibit filed with the
    Registrant's Annual Report on Form 10-K for the fiscal year ended September
    30, 1996.
 
                                     33

<PAGE>


(8) Incorporated by reference to Exhibit 99 filed with the Registrant's Annual
    Report on Form 10-K for the fiscal year ended September 30, 1996.
 
(9) Incorporated by reference to Exhibit 10A to Registrant's Form 10-Q for the
    quarter ended March 31, 1997.
 
(10) Incorporated by reference to Exhibit 10B to Registrant's Form 10-Q for the
    quarter ended March 31, 1997.
 
(11) Incorporated by reference to Exhibit 10 to Registrant's Form 10-Q for the
    quarter ended June 30, 1997.

(12) Incorporated by reference to Annex A to Registrant's proxy statement for 
    special meeting held on September 29, 1997.
   
(13) Incorporated by reference to the Registrant's Amendment No. 2 to 
    Registration Statement on Form S-1 (File No. 333-49629)
    
                                     34

<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.
 
STARMET CORPORATION
 
   
By:         /s/ Robert E. Quinn
   ____________________________________________
   Robert E. Quinn, President and Chief Executive
    Officer (principal executive officer and director)
    
 
   
Date:           August 11, 1998
   __________________________________________
    
 
   
By:           /s/ James M. Spiezio
   ____________________________________________
   James M. Spiezio, Vice President Finance and
    Administration (principal financial and accounting officer)
    
 
   
Date:           August 11, 1998
   __________________________________________
    
 
   
    
 
   
By:          /s/ George J. Matthews
   ____________________________________________
   George J. Matthews, Chairman of the Board of
    Directors
    
 
   
Date:           August 11, 1998
   __________________________________________
    
 
By:         /s/ Wilson B. Tuffin
   ____________________________________________
   Wilson B. Tuffin, Vice Chairman
 
   
Date:           August 11, 1998
   __________________________________________
    
 
By:           /s/ Frank H. Brenton
   ____________________________________________
   Frank H. Brenton, Director
 
   
Date:           August 11, 1998
   __________________________________________
    
 
By:          /s/ Kenneth A. Smith
   ____________________________________________
   Kenneth A. Smith, Director
 
   
Date:           August 11, 1998
   __________________________________________
    

 
   
By:          /s/ William J. Shea
   ____________________________________________
   William J. Shea, Director
    
 
   
Date:           August 11, 1998
   __________________________________________
    

                                     35

<PAGE>
 
INDEX TO FINANCIAL STATEMENT SCHEDULES
 
Independent Auditors' Report
 
Schedule II--Valuation and Qualifying Accounts


                                     








                                     36

<PAGE>
 
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
    To the Board of Directors and Stockholders of Starmet Corporation:
   
    We have audited the accompanying consolidated balance sheets of Starmet 
Corporation (formerly Nuclear Metals, Inc.) (a Massachusetts Corporation) and 
subsidiaries as of September 30, 1997 and 1996, and the related consolidated 
statements of operations, stockholders' equity and cash flows for each of the 
three years in the period ended September 30, 1997. These financial 
statements and the schedule referred to below are the responsibility of the 
Company's management. Our responsibility is to express an opinion on these 
financial statements and schedule based on our audits.
    
    We conducted our audits in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free 
of material misstatement. An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements. 
An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall 
financial statement presentation. We believe that our audits provide a 
reasonable basis for our opinion.
 
    In our opinion, the consolidated financial statements referred to above 
present fairly, in all material respects, the financial position of 
Starmet Corporation and subsidiaries as of September 30, 1997 and 1996, and the 
results of their operations and their cash flows for each of the three years 
in the period ended September 30, 1997, in conformity with generally accepted 
accounting principles.
 
    Our audit was made for the purpose of forming an opinion on the basic 
financial statements taken as a whole. The schedule listed in the index of 
the financial statements is presented for purposes of complying with the 
Securities and Exchange Commission rules and is not part of the basic 
financial statements. This schedule has been subjected to the auditing 
procedures applied in the audit of the basic financial statements and, in our 
opinion, fairly states in all material respects the financial data required 
to be set forth therein in relation to the basic financial statements taken 
as a whole. 
   
    The consolidated financial statements and schedule referred to above as of 
September 30, 1996 and 1997, and for the years then ended, have been restated 
(see Note 1). 
    

                                                       ARTHUR ANDERSEN LLP



Boston, Massachusetts
   
August 7, 1998
    

                                     37

<PAGE>

                       NUCLEAR METALS, INC. AND SUBSIDIARIES
                       Schedule II- Valuation and Qualifying
                 Accounts For the Three Years Ended September 30, 1997
   
<TABLE>
<CAPTION>
                                                                 ADDITIONS
                                                  BALANCE AT     CHARGED TO
                                                  BEGINNING      COSTS AND                        END
CLASSIFICATION                                     OF YEAR        EXPENSES      DEDUCTIONS      OF YEAR
----------------------------------------------  --------------  ------------  -------------   ------------
<S>                                             <C>             <C>           <C>                   <C>
YEAR ENDED SEPTEMBER 30, 1997:
Allowance for doubtful accounts...............  $     821,000   $    --       $   400,000     $    421,000
                                                --------------  ------------  ------------    ------------
                                                --------------  ------------  ------------    ------------
Inventory Reserves (as restated)(a)...........  $    4,212,000  $    --       $    --         $  4,212,000
                                                --------------  ------------  ------------    ------------
                                                --------------  ------------  ------------    ------------
YEAR ENDED SEPTEMBER 30, 1996:
Allowance for doubtful accounts...............  $      883,000  $    100,000  $   162,000     $    821,000
                                                --------------  ------------  ------------    ------------
                                                --------------  ------------  ------------    ------------
Inventory Reserves (as restated)(a)...........  $    1,522,000  $  2,690,000  $     --        $  4,212,000
                                                --------------  ------------  -------------    ------------
                                                --------------  ------------  -------------    ------------
YEAR ENDED SEPTEMBER 30, 1995:
Allowance for doubtful accounts...............  $    1,290,000  $    400,000  $   807,000     $    883,000
                                                --------------  ------------  ------------    ------------
                                                --------------  ------------  ------------    ------------
Inventory Reserves............................  $    1,522,000  $    --       $     --         $ 1,522,000
                                                --------------  ------------  ------------    ------------
                                                --------------  ------------  ------------    ------------
</TABLE>
    

   

(a) See Note 1 of Notes to Consolidated Financial Statements

    

                                     38