1995



          Annual Report



          ARMATRON INTERNATIONAL INC.



ARMATRON INTERNATIONAL, INC. AND SUBSIDIARY
-------------------------------------------

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
                                                    Years Ended September 30,
                                          1995            1994            1993

<S>                                       <C>             <C>             <C>
---------------------------------------------------------------------------------------
Net Sales                                 $ 12,017,000    $ 13,286,000    $ 16,174,000
---------------------------------------------------------------------------------------
Operating Loss                            $ (1,159,000)   $   (934,000)   $ (1,106,000)
---------------------------------------------------------------------------------------
Net Loss                                  $ (1,557,000)   $ (1,212,000)   $ (1,548,000)
---------------------------------------------------------------------------------------
Stockholders' Equity                      $    724,000    $  2,281,000    $  3,493,000
---------------------------------------------------------------------------------------
Stockholders' Equity Per Common Share     $        .29    $        .93    $       1.42
---------------------------------------------------------------------------------------
Weighted Average Number of Common 
 Shares Outstanding                          2,459,749       2,459,754       2,459,754
---------------------------------------------------------------------------------------
Loss Per Share of Common Stock:
      Net Loss                            $       (.63)   $       (.49)   $       (.63)
                                          ============================================
---------------------------------------------------------------------------------------
</TABLE>


TO OUR STOCKHOLDERS


   Sales in the lawn and garden market decreased during the 1995 fiscal 
year. Sales were down 9.6%, $12,017,000 compared to $13,286,000 in the 
1994 fiscal year, and the consolidated loss increased to $1,557,000 
compared to $1,212,000 for the prior fiscal year.

   A significant contributing cause of lower sales was precipitated by 
tooling delays for the lawn and garden storage shed resulting in an 
inability to capture the major portion of the selling season. Our first 
shipment occurred in August and the acceptance in the market place has 
been strong. We anticipate the new shed will make a major contribution to 
the 1996 fiscal year. We will introduce additional lawn and garden 
products during this year which augurs well for the current period.

   Production of the ECHOVISION automotive obstacle detection system will 
commence in January of 1996. The expanded and continued testing by various 
customers has resulted in the acceptance of the program by a major 
national company which will be integrated into a significant portion of 
their fleet of trucks. The product is in various stages of testing with 
other major fleet users and based on the results, as reported by 
customers, it appears that this product has a significant future. We are 
confident as we enter into the production and sales stage and wind down 
the development except for an on-going continuing program for improvements 
and for special use customers. Certain proprietary rights integrated into 
this product line could enable Armatron to capture a major share of the 
market for this new technology.

   Experiencing another loss year has caused our Company to fall below 
certain eligibility requirements for listing on the American Stock 
Exchange; therefore, we will not renew our membership. We expect the stock 
will continue to be publicly traded.

   Your Management is disappointed with the results of the year but is 
encouraged and confident in the potential growth for the future of our 
Company.


                                        /s/ CHARLES J. HOUSMAN
                                        Charles J. Housman
                                        President & Chairman of the Board



ARMATRON INTERNATIONAL, INC. AND SUBSIDIARY
--------------------------------------------


ASSETS (Note 6)


<TABLE>
<CAPTION>
                                                                   September 30,
                                                                1995           1994


<S>                                                         <C>            <C>
CURRENT ASSETS:
  Cash and cash equivalents (Note 1)                        $ 1,322,000    $ 3,006,000
  Trade accounts receivable (less allowance for doubtful 
   accounts of $179,000 in 1995 and $100,000 in 1994)         2,189,000      2,414,000
  Current portion of other receivable                            32,000         14,000
  Inventories (Note 2)                                        2,225,000      2,937,000
  Deferred tax asset (Note 8)                                   165,000        165,000
  Prepaid and other current assets                              122,000        266,000
                                                            --------------------------
      Total Current Assets                                    6,055,000      8,802,000


PROPERTY AND EQUIPMENT, net (Note 3)                            952,000        599,000


OTHER ASSETS (Note 4)                                           249,000        198,000
                                                            --------------------------
                                                            $ 7,256,000    $ 9,599,000
                                                            ==========================
</TABLE>

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



CONSOLIDATED BALANCE SHEETS


LIABILITIES AND STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                                  September 30,
                                                               1995           1994

<S>                                                        <C>            <C>
CURRENT LIABILITIES:
  Current portion of long-term debt                        $        --    $     1,000
  Accounts payable                                           1,112,000      1,387,000
  Accrued liabilities (Note 5)                                 705,000        790,000
                                                           --------------------------
      Total Current Liabilities                              1,817,000      2,178,000
                                                           --------------------------

LONG-TERM DEBT including $4,715,000 due to related 
 parties in 1995 and $5,140,000 in 1994 (Note 6)             4,715,000      5,140,000
                                                           --------------------------

COMMITMENTS AND CONTINGENCIES (Note 10)

STOCKHOLDERS' EQUITY (Note 7):
  Common stock, par value $1 per share; authorized 
   6,000,000 shares; issued 2,606,481 shares in 
   1995 and 1994                                             2,606,000      2,606,000
  Additional paid-in capital                                 6,770,000      6,770,000
  Accumulated deficit                                       (8,266,000)    (6,709,000)
                                                           --------------------------
                                                             1,110,000      2,667,000
Less:
  Treasury stock at cost--146,732 shares in 1995 
   and 146,727 in 1994                                         386,000        386,000
                                                           --------------------------
      Total Stockholders' Equity                               724,000      2,281,000
                                                           --------------------------
                                                           $ 7,256,000    $ 9,599,000
                                                           ==========================
</TABLE>

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



ARMATRON INTERNATIONAL, INC. AND SUBSIDIARY
--------------------------------------------


STATEMENTS OF CONSOLIDATED OPERATIONS
For the Years Ended September 30, 1995, 1994 and 1993


<TABLE>
<CAPTION>
                                                     1995             1994              1993

<S>                                              <C>              <C>               <C>
Net Sales                                        $ 12,017,000     $ 13,286,000      $ 16,174,000
Cost of products sold                              10,570,000       11,253,000        13,428,000
                                                 -----------------------------------------------
Gross margin                                        1,447,000        2,033,000         2,746,000
Selling, general and administrative expenses        2,541,000        3,113,000         3,836,000
Provision for (recovery of) bad debts                  65,000         (146,000)           16,000
                                                 -----------------------------------------------

Operating Loss                                     (1,159,000)        (934,000)       (1,106,000)
                                                 -----------------------------------------------

Other Income (Expense):
Interest expense--third parties                       (41,000)          (6,000)           (7,000)
Interest expense--related party                      (488,000)        (494,000)         (548,000)
Other income--net                                     131,000           57,000           113,000
                                                 -----------------------------------------------
Other income (expense)--net                          (398,000)        (443,000)         (442,000)
                                                 -----------------------------------------------

Loss before income taxes                           (1,557,000)      (1,377,000)       (1,548,000)

Income tax benefit (Note 8)                                --         (165,000)               --

Net Loss                                         $ (1,557,000)    $ (1,212,000)     $ (1,548,000)
                                                 ===============================================

Net Loss per Share of Common Stock               $       (.63)    $       (.49)     $       (.63)
                                                 ===============================================

Weighted Average Number of Common Shares
 Outstanding                                        2,459,749        2,459,754         2,459,754
                                                 ===============================================
</TABLE>

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



STATEMENT OF CONSOLIDATED CASH FLOWS
For the Years Ended September 30, 1995, 1994 and 1993


<TABLE>
<CAPTION>
                                                               1995            1994            1993

<S>                                                        <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                   $ (1,557,000)   $ (1,212,000)   $ (1,548,000)
  Adjustments to reconcile net loss to net cash
   flows from operating activities:
    Depreciation and amortization                               453,000         616,000         744,000
    Deferred tax benefit                                             --        (165,000)             --
    Provision (recovery) for bad debts                           65,000        (146,000)         16,000
    Loss on disposal of equipment                                    --          35,000              --
    (Increase) decrease in:
      Accounts receivable                                       160,000         (42,000)        540,000
      Inventories                                               712,000         315,000       2,255,000
      Prepaid and other current assets                          144,000        (124,000)         32,000
      Other assets                                              (32,000)       (105,000)             --
    Increase (decrease) in:
      Accounts payable                                         (275,000)        576,000        (124,000)
      Other current liabilities                                 (85,000)        (37,000)       (287,000)
                                                           --------------------------------------------
      Net Cash Flow from (used for) Operating Activities       (415,000)       (289,000)      1,628,000
                                                           --------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Payment for purchases of equipment and patents               (780,000)       (146,000)       (348,000)
                                                           --------------------------------------------
      Net Cash Flow used for Investing Activities              (780,000)       (146,000)       (348,000)
                                                           --------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings on long-term debt--related party                        --              --         250,000
  Payments on long-term debt--third parties                      (1,000)        (16,000)        (13,000)
  Payments on long-term debt--related party                    (425,000)       (110,000)     (1,000,000)
  Loan origination costs                                        (63,000)             --              --
                                                           --------------------------------------------
      Net Cash Flow used for Financing Activities              (489,000)       (126,000)       (763,000)
                                                           --------------------------------------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS         (1,684,000)       (561,000)        517,000

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                3,006,000       3,567,000       3,050,000
                                                           --------------------------------------------

CASH AND CASH EQUIVALENTS AT END OF YEAR                   $  1,322,000    $  3,006,000    $  3,567,000
                                                           ============================================

SUPPLEMENTAL INFORMATION:
  Interest paid--third parties                             $     41,000    $      6,000    $      8,000
  Interest paid--related party                             $    528,000    $    454,000    $    548,000
  Income taxes paid                                        $         --    $         --    $         --
</TABLE>


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



ARMATRON INTERNATIONAL, INC. AND SUBSIDIARY
--------------------------------------------


CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
For the Years Ended September 30, 1995, 1994 and 1993


<TABLE>
<CAPTION>
                                     Common                                             Treasury
                                     Stock                                                Stock                Total
                              ---------------------    Paid-In      Accumulated    ---------------------    Stockholders'
                              Shares      Amount       Capital        Deficit      Shares      Amount          Equity
                              ------      ------       -------      -----------    ------      ------       -------------

<C>                           <C>         <C>          <C>          <C>            <C>         <C>          <C>
Balance,
  September 30, 1992          2,606,481   $2,606,000   $6,770,000   $(3,949,000)   (146,727)   $(386,000)   $ 5,041,000
Net loss                             --           --           --    (1,548,000)         --           --     (1,548,000)
------------------------------------------------------------------------------------------------------------------------

Balance,
  September 30, 1993          2,606,481    2,606,000    6,770,000    (5,497,000)   (146,727)    (386,000)     3,493,000
Net loss                             --           --           --    (1,212,000)         --           --     (1,212,000)
------------------------------------------------------------------------------------------------------------------------

Balance,
  September 30, 1994          2,606,481    2,606,000    6,770,000    (6,709,000)   (146,727)    (386,000)     2,281,000
Increase in treasury stock           --           --           --            --          (5)          --             -- 
Net loss                             --           --           --    (1,557,000)         --           --     (1,557,000)
------------------------------------------------------------------------------------------------------------------------

Balance,
  September 30, 1995          2,606,481   $2,606,000   $6,770,000   $(8,266,000)   (146,732)   $(386,000)   $   724,000
========================================================================================================================
</TABLE>


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



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Principles of Consolidation

      The consolidated financial statements include the accounts of 
      Armatron International, Inc. and its wholly owned subsidiary. All 
      intercompany balances and transactions have been eliminated in 
      consolidation.

      Revenue Recognition

      Revenue from product sales is recognized at the time the products 
      are shipped. Following industry trade practice, the Company offers 
      extended payment terms for delivery of seasonal items.

      Cash and Cash Equivalents

      The Company considers all highly liquid instruments purchased with 
      an original maturity of less than three months to be cash 
      equivalents. The Company invests excess funds in short-term, 
      interest-bearing obligations, including reverse repurchase 
      agreements and commercial paper. On September 30, 1994, the Company 
      purchased $475,000 of U.S. Government securities under agreements to 
      resell on October 3, 1994. At September 30, 1994, the Company held 
      $2,500,000 in commercial paper which matured in October 1994. Due to 
      the short-term nature of these investments, the Company did not take 
      possession of the securities, which were instead held in the 
      Company's safekeeping account at a bank.

      The Company has no requirements for compensating balances. The 
      Company maintains its cash in bank deposit accounts which, at times, 
      may exceed federally insured limits and in deposit accounts at its 
      commercial finance company. The Company has not experienced any 
      losses in such accounts. The Company believes it is not exposed to 
      any significant credit risk on cash and cash equivalents.

      Inventories

      Inventories are stated on a first-in, first-out (FIFO) basis at the 
      lower of cost or market.

      Property and Equipment

      Property and equipment are stated at cost. Depreciation is computed 
      based upon the estimated useful lives of the various assets using 
      the straight-line method with annual rates of depreciation of 10 to 
      33-1/3%. Capitalized tooling costs are amortized over three years. 
      Depreciation expense was $426,000, $616,000 and $744,000 for fiscal 
      1995, 1994 and 1993, respectively. Tooling and molding costs are 
      charged to a deferred cost account as incurred, prepaid tooling, 
      until the tool or mold is completed. Upon completion the costs are 
      transferred to a property/equipment account.

      Maintenance and repairs are charged to operations as incurred. 
      Renewals and betterments which materially extend the life of assets 
      are capitalized and depreciated. Upon disposal, the asset cost and 
      related accumulated depreciation are removed from their respective 
      accounts. Any resulting gain or loss is reflected in earnings.

      Advertising

      The Company expenses advertising as incurred. Advertising expense 
      was $295,000, $248,000 and $354,000 for fiscal 1995, 1994 and 1993, 
      respectively.

      Income Taxes

      Effective October 1, 1993 the Company adopted Financial Accounting 
      Standard No. 109 (SFAS No. 109) "Accounting for Income Tax". SFAS 
      No. 109 changes the Company's method of accounting for income taxes 
      from the income statement approach, recognized by Accounting 
      Principles Board No. 11 to an asset and liability approach. As 
      permitted by SFAS No. 9 the Company opted not to restate the 
      financial statements for prior periods.

      Deferred income taxes are provided for temporary differences between 
      financial statement and income tax reporting principally from the 
      carryforward of unused net operating losses, tax credits, and 
      alternative minimum taxes.

      Earnings (Loss) Per Share

      Earnings (loss) per share of common stock is computed on the basis 
      of weighted average number of common shares outstanding in each 
      year.

      Changes in Presentation

      Certain reclassifications have been made to prior year amounts to 
      conform with the 1995 presentation with no effect on net income.

2.    INVENTORIES

      Inventories consist of the following at September 30:

<TABLE>
<CAPTION>
                                       1995           1994

             <S>                    <C>            <C>
             Raw Materials          $ 1,606,000    $ 1,959,000
             Work in Process             84,000        160,000
             Finished Goods             535,000        818,000
                                    --------------------------
                                    $ 2,225,000    $ 2,937,000
                                    ==========================
</TABLE>

3.    PROPERTY AND EQUIPMENT

      Property and equipment consist of the following at September 30:

<TABLE>
<CAPTION>
                                                                1995           1994

         <S>                                                <C>            <C> 
         Land and buildings                                 $    80,000    $    80,000
         Furniture and fixtures                                 391,000        391,000
         Machinery and equipment                              1,902,000      2,404,000
         Capitalized tooling costs                            3,773,000      5,852,000
                                                            --------------------------
                                                              6,146,000      8,727,000

         Less accumulated depreciation and amortization       5,194,000      8,128,000
                                                            --------------------------
                                                            $   952,000    $   599,000
                                                            ==========================
</TABLE>

      The capitalized cost of equipment under capital leases was $125,000 
      at September 30, 1995 and 1994 with related accumulated amortization 
      of $125,000 and $122,000, respectively.

4.    OTHER ASSETS

      Other assets consists of the following at September 30:

<TABLE>
<CAPTION>
                                                                1995        1994

         <S>                                                  <C>         <C>
         Other receivable, net of current portion             $ 104,000   $  91,000
         Note receivable--employee, due under terms of an
          annual renewable note, interest payable monthly
          at an annual rate of 6%, secured by a second
          mortgage                                              100,000     100,000
         Other                                                   45,000       7,000
                                                              ---------------------
                                                              $ 249,000   $ 198,000
                                                              =====================
</TABLE>

5.    ACCRUED LIABILITIES

      Accrued liabilities consist of the following as of September 30:

<TABLE>
<CAPTION>
                                                    1995         1994

         <S>                                        <C>          <C>
         Salaries, commissions and benefits         $ 321,000    $ 355,000
         Professional fees                             52,000      119,000
         Warranty costs                                64,000       40,000
         Advertising costs                            135,000      177,000
         Other                                        133,000       99,000
                                                    ----------------------
                                                    $ 705,000    $ 790,000
                                                    ======================
</TABLE>

6.    DEBT

      Long-term debt consists of the following as of September 30:

<TABLE>
<CAPTION>
                                                         1995           1994

         <S>                                             <C>            <C>
         Notes payable to related parties                $ 4,715,000    $ 5,140,000
         Equipment notes, at interest rates ranging 
          from 11-1/8% to 12-3/4%                                 --          1,000
                                                         --------------------------
                                                           4,715,000      5,141,000
         Less amount due within one year                          --          1,000
                                                         --------------------------
                                                         $ 4,715,000    $ 5,140,000
                                                         ==========================
</TABLE>

      The Company has a $7,000,000 line of credit with a realty trust 
      operated for the benefit of the Company's principal shareholders. 
      This line of credit, with interest payable at 10%, requires monthly 
      payments of interest only, is payable in full in October 1997 and is 
      collateralized by all assets of the Company. The Company had 
      $4,715,000 outstanding under this line of credit at September 30, 
      1995. The maximum borrowings against this line during fiscal 1995 
      were $5,140,000. Repayment of this line of credit is subordinate to 
      the repayment of any and all balances outstanding on the revolving 
      line of credit described below. Interest expense incurred in the 
      years ended September 30, 1995 and 1994 were $488,000 and $494,000, 
      respectively.

      The Company has a revolving line of credit with a commercial finance 
      company which permits combined borrowings of up to $3,500,000 in 
      cash and letters of credit. This line of credit expires in December 
      1996 and is collateralized by all assets of the Company. The terms 
      of this agreement include a borrowing limit which fluctuates 
      depending on the levels of account receivable and inventory which 
      collateralize the borrowings. Interest on amounts outstanding is 
      payable on a monthly basis at an annual rate of 2-1/4% over the 
      prime rate which was 8-3/4% at September 30, 1995. As of September 
      30, 1995 the Company had outstanding letters of credit amounting to 
      approximately $146,000 under this agreement. The loan agreement 
      contains various covenants pertaining to the maintenance of working 
      capital, net worth and other conditions. The Company is required to 
      maintain continuing working capital of $4,800,000 and net worth of 
      $400,000. At September 30, 1995, working capital was $4,238,000, 
      which is in violation of the loan agreement. On January 5, 1996 the 
      Company received a waiver for the covenant violation. (See Note 13.)

      The Company had a revolving line of credit with a bank which 
      permitted borrowings of up to $1,000,000 in cash and allowed the 
      Company to have a maximum of $1,500,000 of letters of credit 
      outstanding which expired January 1, 1995. Interest on amounts 
      outstanding was payable at a rate of 1% over the commercial base 
      rate. The commercial base rate was 7-3/4% at September 30, 1994. As 
      of September 30, 1994, the Company had outstanding letters of credit 
      amounting to approximately $304,000 under this credit agreement.

      A summary of borrowings on commercial finance company and bank 
      revolving credit agreements and unused lines of credit for the years 
      ended September 30, 1995, 1994 and 1993 is as follows:

<TABLE>
<CAPTION>
                                                   1995          1994          1993

      <S>                                       <C>           <C>           <C>     
      Average borrowings during year            $  394,129    $       --    $       --
      Average interest rate during year              11.25%          7.5%          7.0%
      Maximum borrowings during year            $1,330,000    $       --    $       --
      Unused line of credit at September 30     $3,354,000    $2,196,000    $2,236,000
</TABLE>

7.    STOCK OPTIONS

      The Company's incentive stock option plan terminated December 1, 
      1990. Options were granted to officers and key employees to purchase 
      common shares at prices not less than the fair market value on the 
      date of grant. Options are exercisable in varying installments and 
      expire in varying periods which may not exceed ten years from the 
      date of the grant.

      Information concerning stock options for the years ended September 
      30, 1995, 1994 and 1993 is summarized below:

<TABLE>
<CAPTION>
                                              Options Outstanding
                                            Shares       Price Range

                 <C>                        <C>          <C>
                 September 30, 1993         25,500       $1.75--$2.50
                   Granted                      --                 --
                   Exercised                    --                 --
                   Canceled                  5,500              $2.50
                                           --------------------------
                 September 30, 1994         20,000       $1.75--$2.50
                   Granted                      --                 --
                   Exercised                    --                 --
                   Canceled                     --                 --
                                           --------------------------
                 September 30, 1995         20,000       $1.75--$2.50
                                           ==========================
</TABLE>

      At September 30, 1995 and 1994, options for 20,000 shares were 
      exercisable. The expiration dates of the options range from 1995 to 
      1999. The average exercise price of outstanding options is $2.27.

8.    INCOME TAXES

      As discussed in the summary of significant accounting policies the 
      Company adopted Statement of Financial Accounting Standards No. 109 
      as of October 1, 1993. The adoption of this change did not have a 
      cumulative effect on the financial position or the net results of 
      operations.

      The provision for income taxes for continuing operations consists of 
      the following:

<TABLE>
<CAPTION>
                                                 (000's)
                                         Year Ended September 30,
                                         1995      1994      1993

          <S>                            <C>       <C>       <C> 
          CURRENT TAX PROVISION
            Federal                      $   --    $   --    $   --
            State                            --        --        --
                                         --------------------------
          TOTAL CURRENT PROVISION            --        --        --
                                         --------------------------
          DEFERRED TAX BENEFIT
            Federal                          --      (127)       --
            State                            --       (38)       --
                                         --------------------------
          TOTAL DEFERRED BENEFIT         $   --    $ (165)   $   --
                                         --------------------------
          INCOME TAXES BENEFIT           $   --    $ (165)   $   --
                                         ==========================
</TABLE>

      The following significant components of deferred tax assets and 
      liabilities are included on the balance sheet at September 30, 1995:

<TABLE>
<CAPTION>
                                                        1995           1994

         <S>                                         <C>            <C> 
         Doubtful Receivables                        $    80,000    $    45,000
         Inventory Obsolescence and Shrinkage            177,000        312,000
         Sales Allowances                                 26,000         99,000
         Warranties                                       28,000         18,000
         Non-qualified Executive Retirement Plan         130,000        135,000
         Tax Loss Carryforwards                        6,381,000      5,600,000
         Tax Credit Carryforwards                        459,000        439,000
         Less Valuation Allowance                     (7,116,000)    (6,483,000)
                                                     --------------------------
         NET DEFERRED TAX ASSETS                     $   165,000    $   165,000
                                                     ==========================
</TABLE>

      For income tax purposes the Company has unused Federal operating 
      loss carryforwards of $15,997,000 expiring through 2009 and State 
      operating loss carryforwards of $13,304,000 expiring through 2000.

      In addition to the loss carryforwards the Company has research and 
      development and investment tax credit carryovers of $124,000 and 
      $335,000 respectively through 2001 which are available to reduce 
      future tax liabilities.

9.    BENEFIT PLANS

      The Company has a 401(k) Savings Plan whereby employees may 
      voluntarily defer a portion of their compensation and the Company 
      matches a portion of the employee deferral. All employees with at 
      least one year of continuous service are eligible for the plan. 
      Company contributions vest 100% after five years. For fiscal 1995, 
      1994 and 1993, the Company's contributions amounted to $0, $22,000 
      and $63,000, respectively.

      The Company also has a retirement plan for certain senior 
      executives. The benefits payable under this retirement plan are 
      based upon a formula which allows for the offset of benefits under 
      other offered retirement plans and Social Security benefits. At 
      September 30, 1995, the unfunded benefit obligation of this 
      retirement plan was approximately $291,000. The Company has made no 
      contributions to this retirement plan in each of the three years 
      ended September 30, 1995.

10.   COMMITMENTS AND CONTINGENCIES

      The Company was obligated at September 30, 1995 under certain 
      operating leases for various types of equipment and the Company's 
      operating facility. The lease for the operating facility expires in 
      September 2000. Rental expense for fiscal 1995, 1994 and 1993 was 
      $450,000, $625,000, and $569,000, respectively. The future minimum 
      lease commitments total $1,547,000 as follows: $261,000 in fiscal 
      1996, $332,000 in 1997, $324,000 in 1998, $315,000 in 1999, and 
      $315,000 in 2000.

      In January 1991, the California Department of Health Services (DHS) 
      issued a Corrective Action Order (CAO) against the Company and a 
      former subsidiary. The CAO requires the Company and a former 
      subsidiary to comply with a Cleanup and Abatement Order which had 
      been issued in 1990 against the Company for soil contamination at 
      the site of the former subsidiary. To date, no determination has 
      been made with regard to the extent of any environmental damage and 
      who may be liable. The Company does not believe, based on the 
      information available at this time, that the outcome of this matter 
      will have a material adverse effect on its financial position or 
      results of operations.

11.   BUSINESS SEGMENT INFORMATION

      The Company operates principally in two segments, the Consumer 
      Products segment and the Industrial Products segment. Operations in 
      the Consumer Products segment involve the manufacture and 
      distribution of Flowtron leaf-eaters, bugkillers, yard carts and 
      storage sheds. The Company distributes its consumer products 
      primarily to major retailers throughout the United States, with some 
      products distributed under customer labels. Substantially all of 
      this segment's sales and accounts receivable related to business 
      activities with such retailers. The Industrial Products segment has 
      developed an electronic obstacle avoidance system for automotive 
      applications. This product completed field testing in fiscal 1994 
      and is ready for distribution. There are no intercompany sales 
      between segments. Operating profit is total revenue less operating 
      expenses excluding interest expense, general corporate expenses and 
      income taxes. Identifiable assets by industry segment are those 
      assets that are identified in the operation of each of the Company's 
      segments. Corporate assets are principally cash and other assets. 
      The Company export sales are not significant. Net sales to a single 
      customer accounted for $2,441,000, or 20%, of net sales in fiscal 
      1995, $4,125,000, or 31%, of net sales in fiscal 1994, and 
      $4,652,000, or 29% of net sales in fiscal 1993.

<TABLE>
<CAPTION>
                                                           For the Years Ended September 30,
                                                         1995            1994            1993

      <S>                                            <C>             <C>             <C>
      Net sales to unaffiliated customers:
        Consumer Products                            $ 11,920,000    $ 13,223,000    $ 16,125,000
        Industrial Products                                97,000          63,000          49,000
                                                     --------------------------------------------
            Total net sales                          $ 12,017,000    $ 13,286,000    $ 16,174,000
                                                     ============================================

      Operating profit (loss)
        Consumer Products                            $    (25,000)   $    542,000    $    753,000
        Industrial Products                              (410,000)       (341,000)       (411,000)
                                                     --------------------------------------------
                                                         (435,000)        201,000         342,000
      General corporate expenses                         (724,000)     (1,135,000)     (1,448,000)
                                                     --------------------------------------------
      Consolidated operating loss                      (1,159,000)       (934,000)     (1,106,000)
      Interest expense                                   (529,000)       (500,000)       (555,000)
      Other income--net                                   131,000          57,000         113,000
                                                     --------------------------------------------
      Loss before income taxes                       $ (1,557,000)   $ (1,377,000)   $ (1,548,000)
                                                     ============================================

      Identifiable assets:
        Consumer Products                            $  5,766,000    $  6,412,000    $  7,129,000
        Industrial Products                                61,000          74,000         163,000
        Corporate                                       1,429,000       3,113,000       3,106,000
                                                     --------------------------------------------
            Total assets                             $  7,256,000    $  9,599,000    $ 10,398,000
                                                     ============================================

      Depreciation:
        Consumer Products                            $    422,000    $   610,000     $    737,000
        Industrial Products                                 4,000          6,000            7,000
        Corporate                                              --             --               --
                                                     --------------------------------------------
            Total depreciation and amortization      $    426,000    $   616,000     $    744,000
                                                     ============================================

      Capital expenditures:
        Consumer Products                            $    780,000    $   146,000     $    348,000
        Industrial Products                                    --             --               --
                                                     --------------------------------------------
            Total capital expenditures               $    780,000    $   146,000     $    348,000
                                                     ============================================
</TABLE>

12.   INTERIM FINANCIAL REPORTING

      The aggregate impact on the "Net Income" resulting from fourth 
      quarter adjustments relating to the  reversal of reserves in the 
      amount of $77,000 which was material and had the effect of 
      increasing Net Income by $77,000 in the fourth quarter.

13.   SUBSEQUENT EVENT

      On January 5, 1996 the Company received a waiver from the commercial 
      finance company for the violation of certain loan covenants (Note 6). 
      The working capital requirements for the period from October 1, 1995 
      through May 31, 1996 were adjusted to a minimum level of $3,100,000.

      These statements are presented on the basis that the Company is a 
      going concern which contemplates the realization of assets and 
      satisfaction of liabilities in the normal course of business. The 
      accompanying financial statements show a loss from the consolidated 
      results of operations of $1,557,000 for the year ended September 30, 
      1995, and the Company has a consolidated accumulated deficit of 
      $8,266,000 at September 30, 1995.

      On January 5, 1996 the Company's principal stockholder issued a 
      letter of guaranty to the Company pledging to advance any amounts 
      which may be required to maintain and support the Company's working 
      capital needs throughout the term of the Loan and Security Agreement 
      between the Company and its commercial lender which expires 
      December 19, 1996.

      In this regard, certain assets of the principal shareholder have 
      been designated and set aside for purposes of satisfying the 
      obligations under the guaranty in an amount believed to exceed the 
      forecasted cash flow needs for the upcoming fiscal year.



REPORT OF INDEPENDENT ACCOUNTANTS


Stockholders and Directors of ARMATRON INTERNATIONAL, INC.:

We have audited the accompanying consolidated balance sheets of Armatron 
International, Inc. as of September 30, 1995 and 1994, and the related 
consolidated statements of operations, cash flows and stockholders' 
equity, for the years ended September 30, 1995 and 1994. These financial 
statements are the responsibility of the Company's management. Our 
responsibility is to express an opinion on these financial statements 
based on our audit. The consolidated statements of operations, cash flows 
and stockholders' equity for the year ended September 30, 1993 were 
audited by other independent accountants whose report dated November 24, 
1993 expressed an unqualified opinion on those statements.

We conducted our audits in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audits to 
obtain reasonable assurance about whether the financial statements are 
free of material misstatements. 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 
Armatron International, Inc. as of September 30, 1995 and 1994 and the 
results of its operations and its cash flows for the years ended September 
30, 1995 and 1994, in conformity with generally accepted accounting 
principles.

As discussed in Note 1 to the consolidated financial statements, the 
Company changed its method of accounting for income taxes during the year 
ended September 30, 1994.


                                        /s/ R. J. GOLD & COMPANY, P.C.
                                        R. J. GOLD & COMPANY, P.C.

Needham, Massachusetts
December 1, 1995
January 5, 1996 as to Note 13.



MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS


LIQUIDITY AND CAPITAL RESOURCES

In fiscal 1995, operating activities consumed $415,000 in cash, which was 
due primarily to a net loss of $1,557,000 and a decrease of $360,000 in 
accounts payable and other current liabilities.  These were partially 
offset by reductions in:  accounts receivable of $160,000, inventories of 
$712,000 and other current and non-current assets of $112,000.  Investing 
activities consumed $780,000 for equipment purchases.  Financing 
activities consumed $426,000 for the payment of long-term debt and $63,000 
for the payment of loan orgination costs.  As a result primarily of these 
factors, cash and cash equivalents decreased $1,684,000.

In fiscal 1995, 1994 and 1993, purchases of equipment amounted to 
$780,000, $146,000, and $348,000 respectively.  These expenditures were 
mainly for tooling and dies used in production of the Company's lawn and 
garden products.  The Company plans to spend approximately $133,000 for 
capital expenditures in fiscal 1996.  These expenditures will be mainly 
for tooling and dies for the Company's lawn and garden products.

In December 1994, the Company obtained from a commercial finance company a 
revolving line of credit which allows aggregate borrowings of $3,500,000 
to be used as working capital and which expires in December 1996.  The 
interest rate on loans shall be 2 1/4% over the prime rate which was 8 
3/4% at September 30, 1995.  Borrowings made against this line of credit 
are collateralized by all assets of the Company.   As of September 30, 
1995, the Company was contingently liable for outstanding letters of 
credit of approximately $146,000 under this line of credit agreement.

The Company has a $7,000,000 line of credit from a realty trust operated 
for the benefit of the Company's principal shareholders.  This line of 
credit, with interest at 10%, requires monthly payments of interest only, 
is payable in full in October 1997 and is collateralized by all assets of 
the Company.   The Company had $4,715,000 outstanding under this line of 
credit at September 30, 1995.  The maximum borrowings against this line 
during fiscal 1995 were $5,140,000. Repayment of this line of credit is 
subordinate to the repayment of any and all balances outstanding on the 
revolving line  of credit with the commercial finance company.

Following industry trade practice, the Company offers extended payment 
terms for delivery of seasonal items such as the Flowtron leaf-eater, 
bugkiller, chipper/shredder, and compost bin, resulting in seasonally 
fluctuating requirements for working capital.

Production of the ECHOVISION  automotive obstacle detection system will 
commence in January 1996.  The Company believes that the financial 
requirements for the program have been adequately provided for within the 
credit lines available.

At September 30, 1995, the Company had unused operating loss carryforwards 
of approximately $15,997,000 which are available to be applied against 
taxable income for the years 1996 through 2009.  As noted in Footnote 7 
Income Taxes, the Company recorded a Net Deferred Tax Asset of $165,000.  
The Company expects to realize this asset through improved operating 
performance achieved through the anticipated contribution of its new and 
expanded product lines.  Taxable Income for fiscal 1996 must increase to 
approximately $400,000 in order to fully realize the recorded net deferred 
tax asset.

In January 1991, the California Department of Health Services (DHS) issued 
a Corrective Action Order (CAO) against the Company and a former 
subsidiary.  The CAO requires the Company and a former subsidiary to 
comply with a Cleanup and Abatement Order which had been issued in 1990 
against the Company for soil contamination at the site of the former 
subsidiary.  To date, no determination has been made with regard to the 
extent of any environmental damage and who may be liable.  The Company 
does not believe, based on the information available at this time, that 
the outcome of this matter will have a material adverse effect on its 
financial position or results of operation.

Management is of the opinion that, unless there is a significant rise in 
interest rates, inflation will not be an important factor in fiscal 1996. 

The Company believes that its present working capital, lines of credit 
from a commercial finance company and related party, and other sources of 
financing will be sufficient to finance its seasonal borrowing needs, 
operations and investments in capital expenditures in fiscal 1996.   Other 
sources of financing, provided by the Company's principal stockholder, are 
available to finance any working capital deficiencies.

RESULTS OF OPERATIONS

Conditions contributing to the 9% decrease in sales are active competition 
and a maturing product line which resulted in a decrease of approximately 
2% in the average selling price and a reduction of 7% in sales volume.

Net sales to one customer accounted for approximately $2,441,000, or 20%, 
of consolidated net sales in fiscal 1995, as compared to net sales to  one 
customer of $4,125,000, or 31%, in fiscal 1994, and $4,652,000, or 29%, in 
fiscal 1993.

In fiscal 1995, selling, general and administrative expenses decreased 
$572,000, or 18%, as compared to fiscal 1994, primarily due to the 
decrease in sales.   Selling, general and administrative expenses 
decreased $723,000, or 19%, in fiscal 1994 as compared to fiscal 1993, 
primarily due to the decrease in sales and our active expense reduction 
program.

In fiscal 1995, the operating loss increased $225,000 to $1,159,000 when 
compared to fiscal 1994.  The operating loss in fiscal 1994 was $934,000, 
a decrease of $172,000 when compared to the operating loss of $1,106,000 
in fiscal 1993.

Interest expense during fiscal 1995 increased $29,000 to $529,000 when 
compared to fiscal 1994, and decreased $55,000 between fiscal 1994 and 
fiscal 1993, as a result of more expensive borrowing terms related to the 
new credit line.

Other income of $131,000 in fiscal 1995, $57,000 in fiscal 1994 and 
$113,000 in fiscal 1993 consists primarily of income earned on short-term 
investments.  

The aggregate effect of all fourth quarter adjustments as described in 
Footnote 12. of the financial statements, on current years reported 
operations resulting from the reversal of reserves for accrued expenses 
amount to $77,000.  These reversals are not expected to have an impact 
upon future operations.

The Company believes inflation did not have a material effect on its 
results of operations for fiscal 1995, 1994 or 1993.



FIVE-YEAR FINANCIAL SUMMARY


SELECTED FINANCIAL DATA:

<TABLE>
<CAPTION>
                                                              Years Ended September 30,
                                               1995       1994         1993        1992        1991
                                                         (in thousands, except per share data)

<S>                                            <C>         <C>         <C>         <C>         <C>
Net Sales                                      $ 12,017    $ 13,286    $ 16,174    $ 18,562    $ 23,624
Operating Income (Loss)                        $ (1,159)   $   (934)   $ (1,106)   $   (929)   $    664
Income (Loss) before Extraordinary Item        $ (1,557)   $ (1,212)   $ (1,548)   $ (1,432)   $    166
Extraordinary Item                             $     --    $     --    $     --    $     --    $     40
Net Income (Loss)                              $ (1,557)   $ (1,212)   $ (1,548)   $ (1,432)   $    206

Earnings (Loss) Per Share of Common Stock:
  Operating Income (Loss)                      $   (.47)   $   (.38)   $   (.45)   $   (.38)   $    .27
  Income (Loss) before Extraordinary Item      $   (.63)   $   (.49)   $   (.63)   $   (.58)   $    .06
  Extraordinary Item                           $     --    $     --    $     --    $     --    $    .02
                                               --------------------------------------------------------
  Net Income (Loss)                            $   (.63)   $   (.49)   $   (.63)   $   (.58)   $    .08
                                               ========================================================

Total Assets                                   $  7,256    $  9,599    $ 10,398    $ 13,120    $ 15,359   

Long-Term Obligations                          $  4,715    $  5,140    $  5,251    $  6,016    $  6,030
</TABLE>


There were no dividends paid on common shares during any of the above 
years. Under the financing agreement, as set forth in footnote 6 to the 
company's financial statements the Company is restricted from paying 
dividends for the two-year term of that agreement.

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

Common Stock Information:

The approximate number of shareholders of record at December 1, 1995 was 1,135.

The following table indicates the quarterly high and low prices for the 
Company's common stock on the American Stock Exchange for the last two 
years:

<TABLE>
<CAPTION>
                                 1995                1994
           Quarter         High        Low      High      Low

           <S>             <C>         <C>      <C>         <C>
           First           1- 1/16     11/16    1-3/4       15/16
           Second          1- 1/18      3/4     1-5/16      15/16
           Third           1- 1/16     13/16    1-5/16    1   
           Fourth            15/16      9/16    1-1/4       15/16
</TABLE>


           BOARD OF DIRECTORS

           Charles J. Housman
            President, Treasurer & Chairman of the Board

           Edward L. Housman
            President, Automatic Radio International

           Elliot J. Englander
            Member, Englander, Finks, Ross, Cohen & Brander, P.C.
            Attorneys at Law

           Craig Spangenberg
            Partner, Spangenberg, Shibley, Traci & Lancione
            Attorneys at Law

           William Welsh
            Retired, former partner, Clayton Dubilier, Inc.
            Financial Consultants


           OFFICERS

           Charles J. Housman, President, Treasurer

           Sal DeYoreo, Vice President

           Elliot J. Englander, Clerk


           AUDITORS
           R. J. Gold & Company, P.C.

           GENERAL COUNSEL
           Englander, Finks, Ross, Cohen & Brander, P.C.

           TRANSFER AGENT
           American Stock Transfer & Trust Co.

           STOCK EXCHANGE
           American Stock Exchange

           FORM 10-K
           A copy of the Company's Fiscal 1995 Annual Report on Form 10-K 
           to the Securities and Exchange Commission is available to 
           Stockholders, without charge, upon written request to the Company:

           Armatron International, Inc.
           Two Main Street
           Melrose, MA 02176



                                  ARMATRON
                             INTERNATIONAL INC.