SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                               ___________________

                                    FORM 10-K
                Annual Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934
                               ___________________

For the Fiscal Year Ended January 31, 1997         Commission File Number 0-4988

                              AEROSONIC CORPORATION
              ----------------------------------------------------
             (Exact name of registrant as specified in its charter)

          Delaware                                          74-1668471
 ------------------------------------         ----------------------------------
(State or other jurisdiction of                          (I.R.S.  Employer
incorporation or organization)                           Identification No.)

                           1212 North Hercules Avenue
                            Clearwater, Florida 34625
                      -------------------------------------
                    (Address of principal executive offices)
                                   (Zip Code)

        Registrant's telephone no., including area code:   (813) 461-3000

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

           Securities registered pursuant to Section 12(g) of the Act:
                          Common Stock - Par Value $.40
                          -----------------------------
                                (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 disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of  registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ] .

As of April 25,  1997,  the  aggregate  market value of the voting stock held by
non-affiliates of the registrant was $23,634,829.

As of  April  25,  1997,  the  issuer  had  3,830,490  shares  of  Common  Stock
outstanding, net of treasury shares.
________________________________________________________________________________

                       Documents Incorporated by Reference
            Document                                    Part of 10K
            --------                                    -----------
      Proxy Statement for the 1997         Part II, Items 10, 11, 12 and 13
     Annual Meeting of Stockholders

<PAGE>

                                     PART I
Item 1.  Business.
         ---------

Aerosonic  Corporation  ("the  Company") is principally  engaged in one business
segment: the manufacture of aircraft instruments ("Instruments").  Prior to June
1996, the Company was engaged in a second business  segment:  the manufacture of
ordnance products  ("Ordnance")  which consisted of military products as well as
commercial  truck and automotive  parts.  The sale of this segment is more fully
described in Note 8 to the Consolidated  Financial Statements and,  accordingly,
has been presented as discontinued operations.

The Company  was  incorporated  under the laws of Delaware in l969,  and in l970
merged with a Florida company  (formerly known as "Aerosonic  Corporation").  As
used herein, unless the context requires otherwise, "Aerosonic" or the "Company"
includes   Aerosonic   Corporation  and  its  operating   subsidiary,   Avionics
Specialties, Inc.

The aircraft  instrument  segment  consists of three  operating  divisions:  The
Clearwater,  Florida Instrumentation  Division ("Clearwater  Instruments"),  the
Aerosonic Wichita,  Kansas  Instrumentation  Division and Avionics  Specialties,
Inc. ("Avionics"), a Virginia Corporation wholly owned by Aerosonic Corporation.
Clearwater   Instruments   was  started  in  1953  and  primarily   manufactures
Altimeters,  Airspeed  Indicators,  Rate  of  Climb  Indicators,  Microprocessor
Controlled  Air Data Test Sets,  and a variety of other flight  instrumentation.
Avionics  was a division of Teledyne  Industries,  Inc.  prior to January  1993.
Avionics maintains four major product lines in the aircraft  instrument segment:
1) Angle of Attack  ("AOA")/Stall  Warning Systems;  2)  Inertial-Lead  Vertical
Speed  Indicator  ("IVSI");  3) Power  Analyzer and Recorder  ("PAR")  System (a
turbine engine monitoring system); 4) Vibration  Monitoring and Analysis.  For a
description of the general  development of these  businesses,  see the narrative
below.





















                                       2

<PAGE>


               PRODUCTS, SERVICES AND RECENT BUSINESS DEVELOPMENTS

PRODUCTS AND DISTRIBUTION

The  Company's   products  are  sold  to  the  U.S.  military  services  and  to
manufacturers  of commercial  and private  aircraft,  both domestic and foreign.
Commercial  sales increased to $16,098,000  from $13,773,000 in the prior fiscal
year. Sales to the U.S. military have decreased to $4,134,000 during the current
fiscal year from $5,193,000 in the prior fiscal year. For the year ended January
31, l997,  approximately  76% of the  Company's  total sales were to the private
sector and the remaining 24% to the military services.

Most of the  Company's  instrument  sales  are  made  directly  through  Company
employees  to original  equipment  manufacturers  or to the  military,  with the
Company's  remaining  sales  being made  through  other  dealers  (who resell to
aircraft operators).

The  products  manufactured  by  the  Company,  together  with  the  approximate
percentage of total sales  contributed  by each such product for the years ended
January 31, l997, 1996 and 1995 are as follows:

                                     1997       1996       1995

AOA/Stall Warning Systems             38%        33%        27%
Other Aircraft Instruments            13%        27%        19%
Repairs                               13%        12%         9%
Altimeters                            10%         9%         8%
Air Speed Indicators                  11%         8%         8%
Spare Parts                           10%         3%         2%
Ordnance -  Commercial                 2%         7%         4%
Ordnance - Military                    3%         1%        23%
                                   ---------- ---------- ----------
                                     100%       100%       100%
                                   ========== ========== ==========

The aggregate amount of foreign sales were $6,208,000, $4,751,000 and $3,104,000
for the years ended  January 31,  1997,  1996 and 1995,  respectively.  Domestic
sales  of  the  Company's  products  are  made  to  many  different   commercial
(non-government)  customers,  none of which  comprised over ten percent (l0%) of
total sales during the year ended January 3l, l997.













                                       3

<PAGE>


BACKLOG

The Company  sales order  backlog as of January  3l,  l997 was  $18,512,000,  as
compared to  $15,212,000 in the previous  fiscal year.  The  Instrument  backlog
includes  $6,821,000,  which is related to Avionics,  and $11,691,000,  which is
related to Clearwater  Instruments.  Management estimates that approximately 85%
of the total backlog,  or  $15,735,000,  can reasonably be expected to be filled
during the current fiscal year.

U.S.  Government  contracts  are subject to  termination  at the election of the
Government and contain specific procedures for equitable settlement in the event
of termination.  It is not possible to predict whether,  or to what extent,  the
present  backlog  may be  reduced or  postponed  in the event of  reductions  or
changes in U.S.  Government  programs.  Some U.S.  Government  contracts contain
fixed price  options for future  performance  and are subject to exercise by the
Government within specified time periods.  These options are not included in the
Company's contractual backlog. The U.S. Government represents  approximately 27%
of the Company's backlog at January 31, 1997.

EMPLOYEES

As of the year ended January 3l, l997, the Company  employed  approximately  274
employees  in  its  business  operations.   This  consisted  of  166  Clearwater
Instrument employees and 108 Avionics employees. The Company's employees are not
represented by labor unions. Management regards its relations with its employees
to be good.

RESEARCH AND DEVELOPMENT

The Company  expended  approximately  $460,000  and  $504,000  in  research  and
development  costs for potential new products and enhancements  during the years
ended January 31, 1997 and 1996. There are approximately  nineteen  engineers at
Aerosonic  and  Avionics,  on a full-  or  part-time  basis,  involved  in these
activities.  Aerosonic  has  completed  the initial  development  stage of a new
Microprocessor  Controlled  Air  Data  Test  Set.  Market  acceptance  has  been
exceptionally  higher than predicted by management.  Due to the  proprietary and
highly   competitive  nature  of  some  of  the  Company's  new  products  under
development, management chooses not to enunciate specific programs.

Research and  development at Avionics  Specialties  has focused on extending the
Angle of Attack product line to achieve increased  functionality.  The new Stall
Warning  Transmitter  and  Liquid  Crystal  Display  for the  Angle of Attack is
complete and has been tested and qualified both  internally and  externally.  An
Angle of Attack Transmitter incorporating a "built-in" stall warning computer is
in the final stage of  development  and is scheduled  for  external  testing and
qualification during late 1997. The transmitter incorporating air data functions
has progressed from the laboratory and wind tunnel to its first flight test. The
successful results of this early testing has generated  considerable interest in
the concept. Further flight testing in conjunction with Lockheed will utilize an
F-16 as a test vehicle during early 1997. This testing will explore a much wider
range of altitudes and airspeeds, including supersonic flight.


                                       4

<PAGE>

Development  on the PAR product  line  continues  to result in new  features and
functions as technology  progresses.  Additional  options now available  include
extended storage using PC card  technology,  "real-time" data reporting and data
acquisition through satellite communications.

COMPETITION

Most of the  Company's  products  are sold in highly  competitive  markets.  The
Company   manufactures  a  larger  variety  of  aircraft  instruments  than  its
competitors,  who, in most instances, compete with the Company on no more than a
few types of aircraft  instruments.  Some  competitors have larger overall sales
and financial resources than the Company. Management believes that the Company's
products are priced to sell competitively with those of its competitors.

RAW MATERIALS

The principal materials used in the Company's  manufacturing processes are glass
lenses,  raw metals and castings.  These items,  as well as other raw materials,
parts and components  used by the Company's  instrument  divisions are generally
available from a number of sources and in sufficient  quantities to meet current
requirements subject to normal lead times.


Item 2.  Properties.
         -----------

The  following  sets forth the  locations  and  general  characteristics  of the
Company's principal plants:

                                    Approximate No. Square Feet
          Location                  of  Factory and Office Area
          --------                  --  -----------------------

      Clearwater, Florida                           90,000
      Wichita, Kansas                                7,500
      Charlottesville, Virginia                     53,000

All properties are well  maintained,  fully occupied by the Company and suitable
for the Company's  present level of production.  All locations operate more than
one shift,  five days a week.  The  property in Wichita,  Kansas is owned by the
Company and is  unencumbered.  The Clearwater,  Florida property is mortgaged in
accordance  with an  Industrial  Revenue  Bond  executed  in l988.  (See Note 7,
"Financial Statements".)

The Charlottesville, Virginia property was purchased from Teledyne Industries in
April  1994 for  $1,260,000,  and is  mortgaged  by a  long-term  note  with the
Company's  bank.  The property  consists of a 53,000  square foot  manufacturing
facility on approximately 12 acres of land.

The Company sold its Newport,  Arkansas  manufacturing  operation  during fiscal
1994.  The land and  building  are still  owned by  Aerosonic  and leased to the
purchaser under a five-year lease agreement with a purchase option.

                                       5

<PAGE>


Item 3.  Legal Proceedings.
         ------------------

SENSONICS,  INC. V. AEROSONIC:  In 1993, the Company was named as a co-defendant
in a patent  infringement suit filed by Sensonics Inc. claiming that the Company
infringed Sensonics' expired patent for an electromagnetical tapping device that
the Company used as a component  part.  During June 1996, the Company's Board of
Directors approved a proposed settlement of the lawsuit for $2,000,000. Pursuant
to this  settlement,  the Company  recorded a $225,000,  $960,000  and  $815,000
provision for the  settlement  of litigation  during the years ended January 31,
1997,  1996 and 1995,  respectively.  All amounts related to the settlement were
paid during the year ended January 31, 1997.

The Company was sued in September of 1996 by David S. Goldman,  former President
and Chief Executive Officer of Aerosonic Corporation, for an alleged breach of a
consulting agreement between Mr. Goldman and the Company. The suit seeks damages
in excess of $15,000.  The Company  has filed a motion to dismiss  this  action,
which is currently  under review.  During fiscal year 1997, the Company sued Mr.
Goldman and  Mil-Spec  Finishers,  Inc.,  a former  subcontractor  to  Aerosonic
Corporation controlled by Mr. Goldman, seeking damages in excess of $15,000, for
alleged  fraud  and  misappropriation  of  funds,   appropriation  of  corporate
opportunity, breach of fiduciary duty and conversion.

The Company is also involved in certain claims and legal actions  arising in the
ordinary  course  of  business.  In the  opinion  of  management,  the  ultimate
disposition of the above matters will not have a material  adverse effect on the
Company's financial position, results of operations, or liquidity.


Item 4.  Submission of Matters to a Vote of Security Holders.
         ----------------------------------------------------

None.

















                                       6

<PAGE>


                                     PART II

Item 5.  Market  for  Registrant's  Common  Stock and  Related  Security  Holder
         -----------------------------------------------------------------------
         Matters.
         --------

The Company's  Common Stock is traded on the American  Stock  Exchange under the
symbol  "AIM".  The  range of high and low bid  quotations  as  reported  by the
American  Stock  Exchange  for each of the  quarters  of the fiscal  years ended
January 3l, l997 and January 3l, l996 is as follows:

Fiscal Year Ended January 31, 1997
----------------------------------

Quarter              Bid              Bid
--------------------------------------------
   1       High       2      Low    1-5/16
--------------------------------------------
   2       High       3      Low     1-1/2
--------------------------------------------
   3       High       3      Low     1-7/8
--------------------------------------------
   4       High     4-3/8    Low     2-5/8
--------------------------------------------


Fiscal Year Ended January 31, 1996
----------------------------------

Quarter              Bid              Bid
--------------------------------------------
   1       High    2-7/16    Low     2-1/4
--------------------------------------------
   2       High     2-1/2    Low     2-1/8
--------------------------------------------
   3       High     2-5/8    Low     2-1/8
--------------------------------------------
   4       High    2-3/16    Low     1-7/8
--------------------------------------------


During those same periods,  no cash  dividends  were paid. The payment of future
dividends,  if any, on the Company's common stock and the amount thereof will be
dependent upon the Company's earnings, financial requirements, and other factors
deemed relevant by the Company's Board of Directors.

As of April 25,  l997,  the  Company's  outstanding  shares of common stock were
owned by 2,350 shareholders of record.







                                        7

<PAGE>

Item 6.  Selected Financial Data.
         ------------------------
<TABLE>
<CAPTION>

The following  selected financial data for the five years in the period ended January 31, 1997 have been
derived from the Company's Consolidated Financial Statements.


                                                      Years Ended January 31,
                                                      -----------------------

                                      1997           1996         1995          1994          1993
                                  ------------- ------------- ------------- ------------- -------------
<S>                               <C>           <C>           <C>            <C>           <C>            
Revenue                           $ 20,232,000  $ 17,360,000  $ 17,774,000   $ 19,417,000  $ 13,643,000   
                                  ============  ============  ============   ============  ============   

Income (loss) from
  continuing operations           $  1,123,000  $ (1,293,000) $   (299,000)  $  1,712,000  $   $777,000
                                  ============  ============  ============   ============  ============

Income (loss) from
  continuing operations per share $       0.29  $      (0.34) $      (0.08)  $       0.45  $       0.20   
                                  ============  ============  ============   ============  ============

Total assets                      $ 17,215,000  $ 17,851,000  $ 17,965,000   $ 18,293,000  $ 18,686,000
                                  ============  ============  ============   ============  ============

Long-term obligations             $  2,444,000  $  2,814,000  $  3,114,000   $  2,880,000  $  3,969,000
                                  ============  ============  ============   ============  ============



* Included in net income for the year ended  January 31, 1993 is $70,000,  or $.02 per share,  resulting
from the cumulative effect of the change in accounting for income taxes.

</TABLE>







































                                                       8

<PAGE>


Item 7.  Management's Discussion and Analysis of Financial Condition and Results
         -----------------------------------------------------------------------
         Results of Operations.
         ----------------------

This item  contains  certain  forward-looking  statements  within the meaning of
Section 27A of the  Securities  Act of 1933 and  Section  21E of the  Securities
Exchange Act of 1934. The Company's actual results could differ  materially from
the  results  anticipated  in these  forward-looking  statements  as a result of
certain factors set forth in "Management's  Discussion and Analysis of Financial
Condition and Results of Operations."

The following  discussion and analysis  should be read in  conjunction  with the
Company's Consolidated Financial Statements and notes thereto included elsewhere
herein.

DISCONTINUED OPERATIONS

During the  fiscal  years  ended  1997 and 1996,  the  Company  operated  in two
business segments i) the Ordnance Division and ii) the Instrument Division.

In order to focus on its core business,  the Company  decided to discontinue the
Ordnance Division and during May 1996, the Company sold substantially all of the
assets of this segment.  The $1,700,000 sale,  consisting  primarily of property
and equipment, was paid in cash and resulted in a $41,000 gain.

For financial reporting purposes,  the Company is accounting for the disposition
of its Ordnance segment as a discontinued operation.  Accordingly, the Company's
Consolidated  Statements  of  Operations  present the  results of the  Company's
discontinued  operations  separately  from the results of  Company's  continuing
operations.

RESULTS OF CONTINUING OPERATIONS

Net sales for fiscal 1997 were  $20,232,000  which represent a $2,872,000 or 17%
increase from the prior year.  Clearwater Instrument Division sales increased by
35% in the  current  year  to  $10,074,000  as  compared  to  $7,448,000  in the
preceding year. The Avionics Division sales were $10,158,000, a 9% increase over
the prior year.

Net Sales for fiscal  1996 were  $17,360,000  which  represent  a $414,000 or 2%
decrease from the prior year.  Clearwater Instrument Division sales increased 8%
during  fiscal 1996 to  $8,046,000  compared to  $7,448,000  during fiscal 1995.
Avionics Division sales were $9,314,000, a 10% decrease from fiscal year 1995.

The increase in sales during fiscal 1997 is attributable to an overall expansion
in  the  aircraft  marketplace  inclusive  of  increased  requirements  for  new
production  aircraft  and  modification  of  existing  aircraft  worldwide.  The
increase  in Fiscal 1996 sales from the  preceding  year was  attributable  to a
general  upward  trend  within  the  aircraft  industry  both  domestically  and
worldwide.

                                       9



<PAGE>


The sales  increase  experienced  by Avionics  during  fiscal 1997 was primarily
attributed  to the  resumption of sales of the F-16 to the U.S.  Government  and
consequently  increased  orders  within the  AOA/Stall  Warning  Systems line of
business.  Sales for the F-16  products were $716,000 in fiscal 1997 as compared
to $98,000 in the preceding year. Similarly, the decrease in sales during Fiscal
1996  from  the  preceding  year  was  primarily  due  to  the  U.S.  Government
rescheduling shipments for the F-16 aircraft due to excess inventory.  Sales for
these  products  were $98,000 in fiscal 1996 as compared to  $1,096,000  for the
prior fiscal year.

GROSS MARGINS

The  Company's  gross  margin  percentage  increased  to 35% during  fiscal 1997
compared  to 25%  in the  prior  year.  Exclusive  of a  $925,000  write-off  of
inventory during fiscal 1996, the Company's gross margin percentage approximates
30%. These increases result from a 17% increase in sales with only a 1% increase
in cost of goods sold.  This is primarily  due to strong  management  efforts to
minimize costs within the manufacturing and service processes of the Company. In
addition, management has focused on expanding the profitable product lines.

During  fiscal  1996,  the Company  wrote-off  $925,000 of  inventory,  of which
$545,000 had been  reclassified  as "long-term"  inventory in the previous year.
Exclusive of the  write-off,  the Company's  gross profit  percentage was 30% as
compared to 29% in the prior year.

SELLING GENERAL AND ADMINISTRATIVE EXPENSES

As a percentage of total sales,  selling,  general and  administrative  expenses
decreased  to 24% during  fiscal 1997 from 27% and 25% during  fiscal years 1996
and 1995,  respectively.  This primarily  results from cost reduction efforts by
management to improve the overall profitability of the Company.

PROVISION FOR SETTLEMENT OF LITIGATION

In connection with the Sensonics  litigation  previously described under Item 3.
Legal Proceedings,  the Company recorded provisions totaling $225,000,  $960,000
and $815,000 during fiscal years 1997, 1996 and 1995, respectively.

INTEREST EXPENSE

Interest  expense for fiscal  l997,  net of interest  income,  totaled  $278,000
compared  to  $280,000 in the prior year.  The  Company's  short- and  long-term
borrowings  increased by $428,000  during  fiscal 1997 compared to $3,821,000 at
the end of fiscal 1996.

Interest expense for fiscal 1996, net of interest income, increased $54,000 from
fiscal 1995,  due to increased  rates and periodic  utilization of the Company's
line of credit.  The  Company's  short- and  long-term  borrowings  decreased by
$110,000 during fiscal 1996 compared to $3,931,000 at the end of fiscal 1995.





                                       10

<PAGE>


INCOME TAX EXPENSE

Income tax expense  increased in fiscal 1997 to ($606,000) as compared to income
tax benefit of $517,000  during  fiscal 1996.  The increase was primarily due to
increases in pretax income.  Income tax benefit (expense) as a percent of income
before taxes was approximately 35% in fiscal 1997, and 29% in fiscal 1996.

Income tax benefit  increased  during  fiscal 1996 to $517,000 as compared to an
income tax benefit of $165,000  during  fiscal 1995.  The increase was primarily
due to  increases  in pretax  income.  Income  tax  benefit as percent of income
before  taxes was  approximately  29% during  fiscal 1996 and 36% during  fiscal
1995.

EARNINGS PER SHARE

The Company  recorded  net income of $924,000,  or $.24 per share during  fiscal
1997 as  compared  to a net  loss of  $1,886,000,  or  ($.50)  per  share in the
preceding year.  Included in this prior year loss was a provision for settlement
of the Sensonics litigation of $960,000.

Net Income from continuing  operations  (exclusive of the ordnance  segment) was
$1,123,000  or $.29 per share  during  fiscal  1997 as compared to a net loss of
$1,293,000, or ($.34) per share in the preceding year.

Net loss during  fiscal  1995  totaled  $211,000  or ($.06) per share.  This was
inclusive of a provision for settlement of the Sensonics litigation of $815,000.

Net loss from  continuing  operations  (exclusive  of the ordnance  segment) was
$299,000 or ($.08) per share  during  fiscal 1995 which  includes  the  $815,000
Sensonics provision.

Net loss from discontinued  ordnance operations was $199,000 or ($.05) per share
during  fiscal  1997 as  compared  to a net loss of $593,000 or ($.16) per share
during the preceding year.

Net income from  discontinued  ordnance  operations was $88,000 or .02 per share
during fiscal 1995.

LIQUIDITY AND CAPITAL RESOURCES

Management  considers liquidity to be the Company's ability to generate adequate
cash to meet its short- and long-term  business  needs.  The principal  internal
source of such cash is the Company's operations,  while external sources include
borrowings under the Company's credit facilities.

Net cash used in  operating  activities  during  fiscal  year l997 was  $528,000
compared to net cash generated of $289,000 in the prior year. During fiscal year
1997,  significant net cash used in operating activities resulted primarily from
decreases in accrued  expenses  (payment of settlement  expenses  related to the
Sensonics AND OTHER LITIGATION) and increases in inventories. During fiscal year
1996,  cash was  generated  primarily  by  noncash-expending  depreciation,  the
write-off of inventories and increases in accounts payable and accrued expenses.



                                       11

<PAGE>


Net  cash  generated  through  investing   activities  during  fiscal  1997  was
$1,340,000  compared to net cash used of $742,000 in the prior year. The sale of
the Ordnance  Division during fiscal year 1997 provided  $1,700,000 in cash from
investing  activities.  Capital expenditures during fiscal year 1997 of $399,000
primarily consisted of machinery and equipment used in the Instrument  Division.
These expenditures were funded by operations. Capital expenditures during fiscal
year 1996 of $1,156,000  were funded from a $450,000  long-term note and working
capital provided from operations.

Net cash  generated  through  financing  activities  during fiscal year 1997 was
$428,000  compared to net cash used of $110,000 in the prior year.  The proceeds
and uses of the Company's  credit  facilities  are outlined in the  Consolidated
Statements of Cash Flows and Note 7 to the Consolidated Financial Statements.

The Company has a $2,000,000 line of credit facility,  which expires on July 15,
1997 and bears  interest at the prime  rate.  At January  31,  1997,  there were
approximately $750,000 available under this facility.

The Company's current ratio was strong at 3 to 1 at January 31, 1997 compared to
2 to 1 at January 31, 1996. In addition, working capital increased by $2,725,000
to $8,489,000 in fiscal year 1997. The increase primarily relates to the payment
of Sensonics litigation costs accrued for at January 31, 1996, increases in cash
and inventories and reductions of current maturities of long-term debt and notes
payable.

Funds  necessary for future  capital  expenditures,  notes payable and long-term
debt  payments and other cash flow needs in the ordinary  course of business are
expected to be funded  primarily  from current  cash  resources  and  internally
generated funds.

ACQUISITIONS

Currently, the Company has no arrangements or understandings with respect to any
acquisitions.   However,   the   Company   continues   to  monitor   acquisition
opportunities.

ACCOUNTING STANDARDS

In February 1997, the Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards (SFAS) No. 128,  "Earnings Per Share." SFAS No.
128 is  designed  to modify  the  earnings  per share  information  provided  in
financial  statements  by  simplifying  existing  earnings  per share data on an
international  basis. SFAS No. 128 is effective for financial  statements issued
for periods ending after December 15, 1997,  including  interim  periods.  Early
application  is not permitted.  Management is currently  assessing the impact of
SFAS No. 128 on the Company's presentation of earnings per share data.









                                       12

<PAGE>


Other Matters
-------------

Major  emphasis is being devoted to sales  expansion in the  marketplace  with a
totally  restructured  marketing  concept.   During  fiscal  1997,  the  Company
established a new division,  the Aerosonic Customer Support Division.  This unit
is located "on-site" in Clearwater,  Florida and will react  independently  from
"order-in"  to  "order-out"  requirements  for all repair and overhaul and spare
parts requirements for the Aerosonic Clearwater division.

Avionics Specialties will continue their marketing and operations  independently
as previous.

The  Company is  currently  utilizing  the theory of synergy  corporate-wide  to
reduce  selling,  general  and  administrative  costs and to better  utilize the
personnel  assets  already in  existence.  This should allow a  streamlining  of
production flow and realize the goal of inventory reduction.

Item 8. Financial Statements and Supplementary Data.
        --------------------------------------------

The consolidated  financial statements and supplementary data required by Item 8
are listed in the index beginning on page 14 and are included in this Form 10-K.


Item  9.  Changes  in and  Disagreements  With  Accountants  on  Accounting  and
          ----------------------------------------------------------------------
          Financial Disclosure.
          ---------------------

Not applicable.


Item l0.  Directors and Executive Officers.
          ---------------------------------

Information  concerning  the Directors and Executive  Officers of the Company is
incorporated by reference to the Company's definitive proxy statement which will
be filed with the Securities  and Exchange  Commission  (Commission)  within 120
days after the close of fiscal 1997.


Item ll.  Executive Compensation.
          -----------------------

Information   concerning  executive   compensation  is  hereby  incorporated  by
reference to the Company's  definitive  proxy statement which will be filed with
the Commission within 120 days after the close of fiscal 1997.







                                       13

<PAGE>


Item l2.  Security Ownership of Certain Beneficial Owners to Management.
          --------------------------------------------------------------

Information  concerning  security  ownership  of certain  beneficial  owners and
management is hereby incorporated by reference to the Company's definitive proxy
statement  which  will be filed  with the  Commission  within 120 days after the
close of fiscal 1997.

Item l3.  Certain Relationships and Related Transactions.
          -----------------------------------------------

Information  concerning certain relationships and related transactions is hereby
incorporated by reference to the Company's definitive proxy statement which will
be filed with the Commission within 120 days after the close of fiscal 1997.

Item l4.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.
          ----------------------------------------------------------------

(a) (1)       Financial Statements:

The  following  consolidated  financial  statements  of the Company are included
herein.

                                                                   Page
                                                                   ----

Report of Independent Accountants                                   15

Consolidated Balance Sheets at January 31, 1997 and 1996            16

Consolidated Statements of Operations for the years ended
   January 31, 1997, 1996 and 1995                                  17

Consolidated Statements of Shareholders' Equity for the years
   ended January 31, 1997, 1996 and 1995                            18

Consolidated Statements of Cash Flows for the years ended
   January 31, 1997, 1996 and 1995                                  19

Notes to Consolidated Financial Statements                        20-28

(a) (2)       Financial Statement Schedules:

All  schedules  have been omitted  inasmuch as the required  information  is not
present or not  present  in amounts  sufficient  to  require  submission  of the
schedule,  or because the  information  required  is  included in the  Company's
Consolidated Financial Statements, including the notes thereto.





                                       14

<PAGE>


REPORT OF INDEPENDENT ACCOUNTANTS


Board of Directors
Aerosonic Corporation
Clearwater, Florida

We have audited the accompanying 1997 and 1996 consolidated financial statements
of Aerosonic  Corporation and subsidiary  listed in the index on page 14 of this
Form 10-K. These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provides a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,   the  consolidated  financial  position  of  Aerosonic
Corporation and subsidiary as of January 31, 1997 and 1996, and the consolidated
results  of their  operations  and their  cash flows for the years then ended in
conformity with generally accepted accounting principles.



COOPERS & LYBRAND L.L.P.

Tampa, Florida
April 4, 1997

















                                       15

<PAGE>

Aerosonic Corporation and Subsidiary
Consolidated Balance Sheets
January 31, 1997 and 1996

<TABLE>
<CAPTION>
                                 ASSETS                             1997               1996
<S>                                                             <C>             <C>    
Current assets:
    Cash and cash equivalents                                   $  1,250,000    $     10,000
    Receivables                                                    3,398,000       3,370,000
    Income tax receivable                                            149,000         436,000
    Inventories                                                    7,286,000       6,050,000
    Costs and estimated earnings in excess
       of billings on uncompleted contract                            58,000         262,000
    Prepaid expenses                                                  66,000          37,000
    Deferred income taxes                                            344,000         956,000
                                                                ------------    ------------

              Total current assets                                12,551,000      11,121,000
                                                                ------------    ------------

Property, plant and equipment, net                                 4,491,000       6,415,000
Deferred income taxes                                                 53,000          43,000
Other assets                                                         120,000         272,000
                                                                ------------    ------------

                                                                   4,664,000       6,730,000
                                                                ------------    ------------

                                                                $ 17,215,000    $ 17,851,000
                                                                ============    ============

                    LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
    Current maturities of long-term debt and notes payable      $  1,805,000    $  1,007,000
    Accounts payable, trade                                          964,000         969,000
    Compensation and benefits                                        772,000         963,000
    Accrued litigation costs                                               0       1,775,000
    Other accrued expenses                                           521,000         643,000
                                                                ------------    ------------

           Total current liabilities                               4,062,000       5,357,000

Long-term debt and notes payable, net of current maturities        1,944,000       2,814,000
Note payable, related party                                          500,000               0
Deferred income taxes                                                582,000         491,000
                                                                ------------    ------------

           Total liabilities                                       7,088,000       8,662,000
                                                                ------------    ------------
Commitments and contingencies (Note 13)

Shareholders' equity:
    Common stock, $.40 par value; authorized 8,000,000 shares,
         issued 3,986,262 shares                                   1,595,000       1,595,000
    Additional paid-in capital                                     3,410,000       3,410,000
    Retained earnings                                              5,430,000       4,506,000
    Less treasury stock; 178,753 shares in 1997 and 186,772
          shares in 1996, at cost                                   (308,000)       (322,000)
                                                                ------------    ------------

           Total shareholders' equity                             10,127,000       9,189,000
                                                                ------------    ------------

                                                                $ 17,215,000    $ 17,851,000
                                                                ============    ============
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
                                       16

<PAGE>

Aerosonic Corporation and Subsidiary
Consolidated Statements of Operations
for the years ended January 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>

                                                                   1997            1996            1995

<S>                                                            <C>             <C>             <C>         
Net sales                                                      $ 20,232,000    $ 17,360,000    $ 17,774,000

Cost of goods sold                                               13,225,000      13,063,000      12,675,000
                                                               ------------    ------------    ------------

          Gross profit                                            7,007,000       4,297,000       5,099,000

Selling, general, and administrative expenses                     4,767,000       4,754,000       4,513,000
                                                               ------------    ------------    ------------

          Operating income (loss)                                 2,240,000        (457,000)        586,000
                                                               ------------    ------------    ------------

Other deductions:
       Provision for settlement of litigation (Note 13)            (225,000)       (960,000)       (815,000)
       Interest expense, net                                       (278,000)       (280,000)       (226,000)
       Other, net                                                    (8,000)       (113,000)         (9,000)
                                                               ------------    ------------    ------------
                                                                   (511,000)     (1,353,000)     (1,050,000)
                                                               ------------    ------------    ------------

Income (loss) from continuing operations before income taxes      1,729,000      (1,810,000)       (464,000)

Income tax benefit (expense)                                       (606,000)        517,000         165,000
                                                               ------------    ------------    ------------

          Income (loss) from continuing operations                1,123,000      (1,293,000)       (299,000)

Discontinued ordnance operations:
       Income (loss) from discontinued operations, net of
           income tax benefit (expense) of $94,000, $353,000
           and ($32,000), respectively                             (240,000)       (593,000)         88,000          
       Gain on sale of discontinued operations                       41,000               0               0
                                                               ------------    ------------    ------------

          Net income (loss)                                    $    924,000    $ (1,886,000)   $   (211,000)
                                                               ============    ============    ============

Earnings (loss) per share:
       Continuing operations                                   $       0.29    $      (0.34)   $      (0.08)
       Discontinued operations                                        (0.05)          (0.16)           0.02
                                                               ------------    ------------    ------------
Earnings (loss) per share                                      $       0.24    $      (0.50)   $      (0.06)
                                                               ============    ============    ============
                                                                                                           
Weighted average number of common and common
       equivalent shares outstanding                              3,806,173       3,797,690       3,793,814
                                                               ============    ============    ============

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

</TABLE>













                                                          17

<PAGE>


Aerosonic Corporation and Subsidiary
Consolidated Statements of Shareholders' Equity
for the years ended January 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                                               Additional                                   Total
                                                  Common        Paid-In      Retained      Treasury    Shareholders'
                                                   Stock        Capital      Earnings        Stock         Equity
                                                -----------   -----------   -----------    -----------  ------------
<S>                                             <C>           <C>           <C>            <C>          <C>         
Balances at February 1, 1994                    $ 1,595,000   $ 3,394,000   $ 6,603,000    $  (304,000) $ 11,288,000

  Net loss                                                0             0      (211,000)             0      (211,000)

  Acquisition of 20,000 common shares                     0             0             0        (49,000)      (49,000)

  Reissuance of 10,810 shares of treasury stock           0        13,000             0         17,000        30,000
                                                -----------   -----------   -----------    -----------  ------------

Balances at January 31, 1995                      1,595,000     3,407,000     6,392,000       (336,000)   11,058,000

  Net loss                                                0             0    (1,886,000)             0    (1,886,000)

  Reissuance of 7,799 shares of treasury stock            0         3,000             0         14,000        17,000
                                                -----------   -----------   -----------    -----------  ------------

Balances at January 31, 1996                      1,595,000     3,410,000     4,506,000       (322,000)    9,189,000

  Net income                                              0             0       924,000              0       924,000

  Reissuance of 8,019 shares of treasury stock            0             0             0         14,000        14,000
                                                -----------   -----------   -----------    -----------  ------------

Balances at January 31, 1997                    $ 1,595,000   $ 3,410,000   $ 5,430,000    $  (308,000) $ 10,127,000
                                                ===========   ===========   ===========    ===========  ============       

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

</TABLE>






























                                                                   18

<PAGE>


Aerosonic Corporation and Subsidiary
Consolidated Statements of Cash Flows
for the years ended January 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>

                                                                         1997          1996          1995
<S>                                                                 <C>            <C>            <C>  
Cash flows from operating activities:
      Net income (loss)                                             $   924,000    $(1,886,000)   $  (211,000)
      Adjustments to reconcile net income (loss) to net cash
            provided by operating activities:
         Increase (decrease) in allowance for doubtful accounts          27,000         13,000        (13,000)
         Write-off of inventory                                               0        925,000              0
         Depreciation                                                   674,000        789,000        810,000
         Gain on disposal of equipment                                        0        (11,000)       (53,000)
         Gain on disposal of ordnance division                          (41,000)             0              0
         Deferred income taxes                                          693,000       (479,000)      (270,000)
         Gain on sale of unconsolidated subsidiary                            0        (48,000)             0
         Provision for litigation                                             0        960,000              0
         Changes in current assets and liabilities:
            Receivables                                                 (55,000)        (7,000)       (11,000)
            Income tax receivable                                       287,000       (146,000)      (290,000)
            Inventories                                              (1,254,000)      (694,000)     1,425,000
            Cost and estimated earnings in excess of billings on
                   uncompleted contract                                 204,000         28,000       (290,000)
            Prepaid expenses                                            (29,000)        27,000        120,000
            Other assets                                                121,000        (78,000)      (125,000)
            Accounts payable                                             (5,000)       291,000     (1,081,000)
            Accrued expenses                                         (2,074,000)       605,000        751,000
                                                                    -----------    -----------    -----------


              Net cash provided by (used in) operating activities      (528,000)       289,000        762,000
                                                                    -----------    -----------    -----------

Cash flows from investing activities:
      Proceeds from sale of property and equipment                        9,000         79,000        280,000
      Proceeds from sale of ordnance division                         1,700,000              0              0
      Investment in unconsolidated subsidiary                                 0              0       (100,000)
      Proceeds from sale of investment in and repayment of
              advances to unconsolidated subsidiary                           0        282,000              0
      Capital expenditures                                             (399,000)    (1,156,000)    (1,825,000)
      Collection of note receivable                                      30,000         53,000         25,000
                                                                    -----------    -----------    -----------

              Net cash provided by (used in) investing activities     1,340,000       (742,000)    (1,620,000)
                                                                    -----------    -----------    -----------

Cash flows from financing activities:
      Proceeds from long-term debt and notes payable                  2,524,000      3,225,000      1,100,000
      Proceeds from related party notes payable                       1,250,000              0              0
      Principal payments on long-term debt and notes payable         (2,596,000)    (3,335,000)      (811,000)
      Principal payments on related party notes payable                (750,000)             0              0
      Payments to acquire treasury stock                                      0              0        (49,000)
                                                                    -----------    -----------    -----------

              Net cash provided by (used in) financing activities       428,000       (110,000)       240,000
                                                                    -----------    -----------    -----------

Net  increase (decrease) in cash and cash equivalents                 1,240,000       (563,000)      (618,000)
Cash and cash equivalents at beginning of year                           10,000        573,000      1,191,000
                                                                    -----------    -----------    -----------

Cash and cash equivalents at end of year                            $ 1,250,000    $    10,000    $   573,000
                                                                    ===========    ===========    ===========

Supplemental disclosure of cash flow information:
      Cash paid during the year for:
         Interest                                                   $   353,000    $   294,000    $   280,000
                                                                    ===========    ===========    ===========
         Income taxes                                               $         0    $     7,000    $   287,000
                                                                    ===========    ===========    ===========

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

</TABLE>
                                       19

<PAGE>

AEROSONIC CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     DESCRIPTION OF BUSINESS - The primary business of Aerosonic Corporation and
     subsidiary   (the   Company)   is  to   manufacture   and   sell   aircraft
     instrumentation  to government and commercial users  (instrument  division)
     from its plants  located in Florida,  Virginia  and  Kansas.  Prior to June
     1996,  the  Company  also  sold  non-munitions   components  for  artillery
     projectiles  to the U.S.  Government  and  automotive  and  truck  parts to
     commercial customers (ordnance division) from its plant located in Florida.
     The sale of this division is more fully  described in Note 8. The Company's
     customers are located worldwide.

     PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include
     the financial  statements of Aerosonic  Corporation  (which operates as the
     Clearwater,  Florida and  Wichita,  Kansas  Instrument  divisions)  and its
     wholly  owned  subsidiary,   Avionics  Specialties,  Inc.  All  significant
     intercompany   balances   and   transactions   have  been   eliminated   in
     consolidation.

     CASH AND CASH EQUIVALENTS - For purposes of the consolidated balance sheets
     and  consolidated  statements  of cash  flows,  the Company  considers  all
     short-term  investments  purchased  with original  maturity  dates of three
     months or less to be cash equivalents.

     CONCENTRATIONS  OF CREDIT RISK - Financial  instruments  which  potentially
     subject the Company to concentrations of credit risk consist principally of
     cash and receivables. As of January 31, 1997 and 1996, substantially all of
     the Company's cash balances,  including  amounts  representing  outstanding
     checks,  were deposited with high credit  quality  financial  institutions.
     During  the  normal  course of  business,  the  Company  extends  credit to
     customers conducting business in the aviation industry worldwide.

     INVENTORIES - Inventories  are stated at the lower of cost or market.  Cost
     is determined using the first-in, first-out method.

     PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are stated at
     cost.   Depreciation   on  plant  and   equipment  is   calculated  on  the
     straight-line  method over the estimated  useful lives of the assets.  Upon
     disposition, the cost and related accumulated depreciation are removed from
     the accounts and any related gain or loss is reflected in earnings.

     RESEARCH AND DEVELOPMENT - Research and  development  costs are expensed as
     incurred. Research and development approximated to $460,000,  $504,000, and
     $407,000   during  the  years  ended  January  31,  1997,  1996  and  1995,
     respectively.

     INCOME TAXES - The Company  accounts for income  taxes in  accordance  with
     Statement of Financial Accounting Standards No. 109, "Accounting for Income
     Taxes."  Under  this  method,  deferred  tax  liabilities  and  assets  are
     determined based on the difference between the financial statement carrying
     amounts and tax bases of assets and liabilities  using enacted tax rates in
     effect in the years in which the differences are expected to reverse.

     Revenue  Recognition - The Company generally  recognizes revenue from sales
     of its products on the accrual basis on the date such products are shipped.
     In certain  circumstances,  the U.S.  Government  accepts title to products
     while still on the Company's  premises.  The Company records these items as
     sales when the  government  accepts  title in writing and assumes all other
     risks and rewards of ownership.



                                       20

<PAGE>


     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

1.   DESCRIPTION  OF BUSINESS AND SUMMARY OF  SIGNIFICANT  ACCOUNTING  POLICIES,
     CONTINUED:

     REVENUE    RECOGNITION,    CONTINUED    -   The    Company    follows   the
     percentage-of-completion  method of accounting  for income on one long-term
     engineering  service  contract.  Under  this  method,  contract  revenue is
     computed as that  percentage of estimated total revenue that costs incurred
     to date bear to total  estimated  costs,  after  giving  effect to the most
     recent  estimates  of costs to  complete.  Revisions  in costs and  revenue
     estimates   are  reflected  in  the  period  in  which  the  revisions  are
     determined.  Provisions for estimated  losses on uncompleted  contracts are
     made in the period in which such losses are  determined  without  regard to
     the percentage-of-completion.

     EARNINGS PER SHARE - Earnings  per share has been  computed by dividing net
     income by the  weighted  average  number of common  and  common  equivalent
     shares  outstanding.  Common  equivalent shares represent stock options and
     are included in the computation unless they are antidilutive.

     USE OF ESTIMATES IN THE FINANCIAL STATEMENTS - The preparation of financial
     statements in conformity  with  generally  accepted  accounting  principles
     requires  management  to make  estimates  and  assumptions  that affect the
     reported  amounts of assets and  liabilities  and  disclosure of contingent
     assets and liabilities at the date of the financial  statements.  Estimates
     also  affect the  reported  amounts of  revenues  and  expenses  during the
     reporting period. Actual results could differ from those estimates.

     FAIR VALUE OF FINANCIAL  INSTRUMENTS  - Statement  of Financial  Accounting
     Standards No. 107 "Disclosures About Fair Value of Financial  Instruments,"
     requires  disclosure  of the fair value of certain  financial  instruments.
     Cash,  accounts  receivable,  short-term  borrowings,  accounts payable and
     accrued liabilities are reflected in the financial statements at fair value
     because of the short-term maturity of these instruments. The fair values of
     the Company's  long-term  debt,  notes payable and credit letters of credit
     are disclosed in Note 7.

     NEW ACCOUNTING  PRONOUNCEMENT - In February 1997, the Financial  Accounting
     Standards Board issued Statement of Financial  Accounting  Standards (SFAS)
     No.  128,  "Earnings  Per  Share."  SFAS No. 128 is  designed to modify the
     earnings  per  share  information   provided  in  financial  statements  by
     simplifying  existing  earnings per share data on an  international  basis.
     SFAS No. 128 is  effective  for  financial  statements  issued for  periods
     ending  after  December  15,  1997,   including   interim  periods.   Early
     application is not permitted.  Management is currently assessing the impact
     of SFAS No. 128 on the Company's presentation of earnings per share data.

     RECLASSIFICATIONS  - Certain prior year amounts have been  reclassified  to
     conform with 1997 presentation.


2.   RECEIVABLES:

     Receivables consisted of the following at January 31, 1997 and 1996:
<TABLE>
<CAPTION>
                                                                  1997          1996
<S>                                                            <C>           <C>   
       Trade, less allowance for doubtful accounts of $97,000
           in 1997 and $70,000 in 1996                         $ 3,279,000   $ 3,319,000
       Officers and employees                                        6,000        15,000
       Current notes receivable and other                          113,000        36,000
                                                               -----------   -----------
                                                               $ 3,398,000   $ 3,370,000
                                                               ===========   ===========
</TABLE>
                                       21

<PAGE>

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

3.   INVENTORIES:

     Inventories at January 31, 1997 and 1996 consisted of the following:


                                                            1997         1996
       Instruments:                                   
          Raw materials and work in process             $6,843,000   $5,233,000
          Finished goods                                   443,000      554,000
                                                        ----------   ----------
                                                         7,286,000    5,787,000
       Ordnance - raw materials and work in process        263,000
                                                        ----------   ----------
                                                      
                                                        $7,286,000   $6,050,000
                                                        ==========   ==========
                                                    

     During fiscal year 1996,  the Company wrote off  inventory,  resulting in a
     non-cash transaction of approximately $925,000.



4.   PROPERTY, PLANT AND EQUIPMENT:

     Property,  plant and  equipment  consisted of the  following at January 31,
     1997 and 1996:


                                                          1997          1996

       Land and improvements                          $   462,000   $   461,000
       Buildings and improvements                       3,162,000     3,119,000
       Machinery and equipment                          3,565,000     5,985,000
       Patterns, dies, and tools                          161,000       194,000
       Furniture and fixtures                             418,000       383,000
                                                      -----------   -----------
                                                        7,768,000    10,142,000
       Less accumulated depreciation and amortization   3,277,000     3,727,000
                                                      -----------   -----------

                                                      $ 4,491,000   $ 6,415,000
                                                      ===========   ===========




5.   COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACT:

     The Company has one  long-term  contract to provide  engineering  services,
     which is  recorded  on the  percentage  of  completion  method.  Costs  and
     estimated  earnings in excess of  billings on this  contract at January 31,
     1997 and 1996 are comprised of the following:


                                                        1997             1996

       Costs incurred to date                         $1,935,000     $1,726,000
       Estimated earnings                                391,000        385,000
                                                      ----------     ----------
                                                       2,326,000      2,111,000
       Less billings to date                           2,268,000      1,849,000
                                                      ----------     ----------
                                               
                                                      $   58,000     $  262,000
                                                      ==========     ==========
                                       
                                       22

<PAGE>

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED



6.   INCOME TAXES:

     Income tax (expense) benefit for the years ended January 31, 1997, 1996 and
     1995 consisted of:


                                        1997            1996            1995
       Continuing operations:
        Current:
           Federal                   $  69,000       $   38,000      $(93,000)
           State                             0                0       (12,000)
                                 -------------   --------------  -------------
                                        69,000           38,000       (105,000)
                                 -------------   --------------  -------------
        Deferred:
           Federal                    (585,000)         451,000        256,000
           State                      (90,000)           28,000         14,000
                                 -------------   --------------  -------------
                                      (675,000)         479,000        270,000
                                 -------------   --------------  -------------

                                     $(606,000)      $  517,000      $$165,000
                                 =============   ==============  =============
      Discontinued operations
        Current:
           Federal                   $  94,000       $  353,000      $(30,000)
           State                             0                0        (2,000)
                                 -------------   --------------  -------------
                                     $  94,000       $  353,000      $(32,000)
                                 =============   ==============  =============
      Total
        Current:
           Federal                   $ 163,000       $  391,000      $(123,000)
           State                             0                0        (14,000)
                                 -------------   --------------  -------------
                                       163,000          391,000       (137,000)
                                 -------------   --------------  -------------
        Deferred:

           Federal                    (585,000)         451,000        256,000
           State                       (90,000)          28,000         14,000
                                 -------------   --------------  -------------
                                      (675,000)         479,000        270,000
                                 -------------   --------------  -------------

                                     $(512,000)      $  870,000       $133,000
                                 =============   ==============  =============

     The following is a reconciliation  of the statutory federal income tax rate
     to the actual  effective  income tax rate for the years  ended  January 31,
     1997, 1996 and 1995:

                                                1997          1996       1995

      Federal tax rate                         (35.00)%      35.00 %     35.00 %
      Increase in taxes resulting from:
        State income taxes, net of federal
          tax benefit                            0.00         1.10        3.60
        Other                                   (0.66)       (4.50)       0.10
                                             ----------    ---------    --------

      Effective tax rate                       (35.66)%      31.60 %     38.70 %
                                             ==========    =========    ========


                                       23

<PAGE>

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

6.   INCOME TAXES, CONTINUED:

     The tax  effects of  temporary  differences  that give rise to  significant
     portions of the deferred tax assets and deferred tax liabilities at January
     31, 1997 and 1996 are as follows:

<TABLE>
<CAPTION>

                                                                          1997        1996
                                                                          ----        ----
<S>                                                                   <C>          <C>    
       Current deferred tax assets:
          Accrued litigation costs                                    $       0    $ 662,000
          Accounts receivable, principally due to allowance
               for doubtful accounts                                     36,000       26,000
          Inventories, principally due to additional costs
               inventoried for tax purposes pursuant to the Tax
               Reform Act of 1986                                       125,000      138,000
          Compensated absences, principally due to accrual for
               financial reporting purposes                              96,000       56,000
          Accrued warranty liability                                     30,000       27,000
          Other                                                         110,000      184,000
          Valuation allowance                                           (53,000)    (137,000)
                                                                      ---------    ---------
               Total current deferred tax assets                        344,000      956,000
                                                                      ---------    ---------

       Non-current deferred tax assets:
          State net operating loss                                       61,000       49,000
          Valuation allowance                                            (8,000)      (6,000)
                                                                      ---------    ---------
               Total non-current deferred tax assets                     53,000       43,000
                                                                      ---------    ---------

               Total deferred tax assets                                397,000      999,000
                                                                      ---------    ---------
       Deferred tax liabilities:
          Property, plant and equipment, principally due to
               differences in depreciation and capitalized interest     582,000      491,000

               Total gross deferred tax liabilities                     582,000      491,000
                                                                      ---------    ---------

                 Net deferred tax asset (liability)                   $(185,000)   $ 508,000
                                                                      =========    =========
</TABLE>
                                                                                
     The Company has established a valuation allowance of approximately  $61,000
     as of January 31, 1997 which primarily  relates to state net operating loss
     carryforwards.   State  operating  loss   carryforwards   of  approximately
     $1,850,000  will expire during the years 2011 through 2012. The result is a
     decrease of $82,000 in the  valuation  allowance  from  January  31,  1996.
     Management  has assessed that it is more likely than not that the remaining
     net deferred tax assets after valuation  allowance will be realized through
     future taxable earnings and the reversal of certain timing differences.

     During  November  1996,  the Company was notified of an  examination by the
     Internal Revenue Service for the years ended January 31, 1995 and 1994. The
     examination was completed  during April 1997 without material impact on the
     Company's financial statements.


                                       24

<PAGE>

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

7.   CREDIT FACILITIES , LONG-TERM DEBT AND NOTES PAYABLE:

     Long-term  debt and notes payable at January 31, 1997 and 1996 consisted of
     the following

                                                            1997         1996

       Industrial development revenue bonds             $1,188,000   $1,262,000
             Revolving credit facility                   1,250,000      295,000
             Acquisition loan                              400,000      800,000
             Mortgage note payable                         904,000      978,000
             Equipment loans                                 7,000      486,000
             Note payable, related party                   500,000
                                                        ----------   ----------
                                                         4,249,000    3,821,000
             Less current maturities                     1,805,000    1,007,000
                                                        ----------   ----------

             Long-term debt and notes payable,
                 less current maturities                $2,444,000   $2,814,000
                                                        ==========   ==========


     The amount of  long-term  debt and notes  payable  maturing  in each of the
     fiscal years 1999, 2000, 2001 and 2002 approximates $147,000 annually.

     INDUSTRIAL  DEVELOPMENT REVENUE BONDS - The industrial  development revenue
     bonds are payable in quarterly principal and monthly interest  installments
     through  December 2012 and bear interest at 90 percent of prime.  The bonds
     are collateralized by property,  plant and equipment located in Clearwater,
     Florida.  The  pledged  collateral  has a carrying  value of  approximately
     $2,655,000 at January 31, 1997.  The mortgage and  underlying  bonds may be
     redeemed by the holder,  in whole,  at the  principal  amount plus  accrued
     interest on the 10th,  15th, or 20th  anniversary  date of the mortgage and
     underlying  bonds.  If the tax  exempt  status  of the bond is  revoked  or
     impaired,  certain  portions  could  become  immediately  payable,  or  the
     interest  rate will be increased.  In addition,  the total of $1,262,000 is
     subject to accelerated maturity.

     REVOLVING  CREDIT FACILITY - The Company has available a $2,000,000 line of
     credit.  Interest is payable  monthly at prime and  principal is payable on
     demand.  The line of credit  agreement,  which  expires July 15,  1997,  is
     collateralized  by equipment  and  receivables,  and is subject to the same
     covenants  included  in  the  Company's  long-term  debt  agreements.   The
     collateralized  assets had an  approximate  carrying value of $2,711,000 at
     January 31, 1997. Approximately $750,000 of additional credit was available
     under this facility at January 31, 1997. The weighted average interest rate
     under this facility for the years ended January 31, 1997 and 1996 was 8.25%
     and 8.81%, respectively.

     The Company is required to maintain  compensating  bank  balances  equal to
     five percent of total amounts available under the line of credit, plus five
     percent of the outstanding borrowings.

     ACQUISITION LOAN - The acquisition loan represents financing related to the
     purchase of Avionics  Specialties,  Inc.  The loan bears  interest at prime
     plus1/4percent and is payable in monthly installments through January 1998.
     The loan is  collateralized  by  equipment  and  receivables  which  have a
     carrying value of $5,022,000 at January 31, 1997.

     MORTGAGE   NOTE  PAYABLE  -  The  mortgage   note  is  payable  in  monthly
     installments  through May 2009, including interest at 7 1/2 percent through
     May 1999 and prime plus 1 percent  thereafter.  The lender has a put option
     exercisable in May 2001. The note is  collateralized  by substantially  all
     property,  plant and equipment at the Avionics Specialties,  Inc. location.
     The   collateralized   property  has  a  carrying  value  of  approximately
     $1,784,000 at January 31, 1997.

                                       25

<PAGE>

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

7.   CREDIT FACILITIES, LONG-TERM DEBT AND NOTES PAYABLE, CONTINUED:

     EQUIPMENT LOANS - The Company has one outstanding equipment loan at January
     31, 1997 totaling $7,000.  The loan bears interest at prime  plus1/4percent
     and is payable in monthly installments through maturity in August 2000. The
     loan was paid in full during February 1997.

     An equipment loan which bore interest at prime plus1/4percent  approximated
     $412,000 at January 31, 1996. The loan was payable in monthly  installments
     through satisfaction during January 1997.

     NOTE PAYABLE, RELATED PARTY - The note payable, related party consists of a
     term  loan  owed to a  shareholder  of the  Company.  The  loan,  which  is
     uncollateralized,  is payable in full at maturity during May 2001 and bears
     interest at prime.

     The Company's  long-term debt  agreements and the line of credit  agreement
     include certain restrictive covenants,  including restrictions on dividends
     (dividends  during any single calendar year cannot exceed 25 percent of net
     income for that year),  limitations on business  acquisitions  and sales of
     assets,  and the maintenance of certain financial ratios as well as minimum
     working capital and tangible net worth requirements, as defined.

     The carrying amount of long-term debt and notes payable at January 31, 1997
     approximates fair value. The prime rate of interest at January 31, 1997 was
     8.25%.

8.   DISCONTINUED OPERATIONS - SALE OF ORDNANCE DIVISION:

     During June 1996, the Company sold substantially all assets of its ordnance
     division. The sale, which totaled $1,700,000, resulted in a $41,000 gain.

     Identifiable  assets  of  approximately  $2,076,000  at  January  31,  1996
     consisted primarily of property and equipment.

     Information  summarizing  discontinued  ordnance  operations  for the years
     ended January 31, 1997, 1996 and 1995 is as follows:

<TABLE>
<CAPTION>
                                                            1997          1996            1995
<S>                                                     <C>            <C>            <C>        
       Net sales                                        $   945,000    $ 1,606,000    $ 6,620,000
                                                        ===========    ===========    ===========

       Income (loss) from discontinued operations
           before income taxes                          $  (293,000)   $  (946,000)   $   120,000

       Income tax benefit (expense)                          94,000        353,000        (32,000)
                                                        -----------    -----------    -----------

       Net income (loss) from discontinued operations   $  (199,000)   $  (593,000)   $    88,000
                                                        ===========    ===========    ===========
</TABLE>

9.   MAJOR CUSTOMER INFORMATION:

     Sales to U. S. Government agencies,  when combined,  represented 10 percent
     or  more  of  net  sales  and  amounted  to  $5,079,000,   $5,193,000,  and
     $13,355,000   for  the  years  ended  January  31,  1997,  1996  and  1995,
     respectively.  Foreign sales for the years ended January 31, 1997, 1996 and
     1995  represented  10  percent  or  more  of  net  sales  and  amounted  to
     $6,208,000,  $4,751,000,  and  $3,104,000  respectively.  All foreign sales
     contracts  are  payable in U.S.  dollars  therefore  avoiding  any  foreign
     currency exchange risk.  Receivables,  trade at January 31, 1997,  included
     approximately  $863,000 in receivables due from U.S.  Government  agencies,
     substantially all of which have been collected as of April 15, 1997.

                                       26

<PAGE>

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

10.  BENEFIT PLANS:

     Effective February 1, 1993, the Company adopted a tax-deferred savings plan
     which covers  substantially  all employees of the Company.  Under the plan,
     participants  may elect to  contribute up to 10% of pre-tax  earnings.  The
     Company  will  fund  a  100%  matching  contribution,   up  to  3%  of  the
     participant's yearly compensation. Such matching contributions will be made
     in cash or common stock of the  Company.  Additional  contributions  may be
     made at the  Company's  discretion.  For the years ended  January 31, 1997,
     1996 and 1995,  the  Company's  contribution  was $165,000,  $145,000,  and
     $141,000,  respectively.  During the years ended January 31, 1997, 1996 and
     1995, the Company issued 8,019,  7,799 and 10,810 shares of treasury stock,
     respectively,  in partial  payment of the Plan.  These stock  contributions
     were properly accounted for as non-cash transactions.

     In March  1993,  the Board of  Directors  adopted,  subject to  shareholder
     approval,  an Incentive Stock Option Plan,  which provides for the granting
     of 300,000 shares of the Company's  authorized but unissued common stock to
     key  employees.  Under the plan,  options  granted may be either  incentive
     stock options as defined by the Internal  Revenue  code,  or  non-qualified
     stock  options.  Options may be granted at prices not less than fair market
     value at the date of option  grant.  The option price for  incentive  stock
     options  granted to an optionee who possesses  more than 10% total combined
     voting  power of value of the Company may not be less than 110% of the fair
     market  value  at the date of  option  grant.  The  stock  options  will be
     exercisable  over a period  determined  by the Board of  Directors,  but no
     longer than five years after the date they are granted.

     As of January 31, 1994,  options for 120,500 common shares were outstanding
     at an exercise price of $3.00 per share, of which 13,500, 22,000 and 13,000
     were  canceled  during the years  ended  January 31,  1997,  1996 and 1995,
     respectively.  There were no options granted during the years ended January
     31,  1997,  1996 and 1995.  As of January  31,  1997,  no options  had been
     exercised  and  the  remaining   72,000   options  were  fully  vested  and
     exercisable.

     Statement of Financial  Accounting Standards No. 123, "Accounting for Stock
     Based  Compensation,"   establishes   financial  accounting  and  reporting
     standards for stock-based  employee  compensation plans. This statement has
     no financial  accounting  or reporting  impact on the Company for the years
     ended January 31, 1997 and 1996.


11.  INVESTMENT IN AND ADVANCES TO UNCONSOLIDATED SUBSIDIARY:

     During the year ended  January 31,  1995,  the Company  acquired 50% of the
     outstanding   stock  of  a  newly  formed   corporate  joint  venture  (A&M
     Specialties,  Inc.).  The Company  accounted for its  investment  using the
     equity  method of  accounting;  however,  the  investee  generated  nominal
     earnings (less than $10,000)  during the period ended January 31, 1995 and,
     therefore,  no adjustment of the Company's  investment was made during that
     period.

     During the year ended January 31, 1995,  the Company sold  equipment to A&M
     Specialties,  Inc. for $160,000 in exchange for a note, which resulted in a
     non-cash transaction.

     During the year ended January 31, 1996,  the Company sold its investment in
     A&M Specialties, Inc., which resulted in a $48,000 gain.


                                       27

<PAGE>

     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

12.  RELATED PARTY TRANSACTIONS:

     The Company  purchased  painting  services of  approximately  $14,000,  and
     $470,000  during the years ended  January 31, 1996 and 1995,  respectively,
     from an entity owned by a shareholder  and former Chief  Executive  Officer
     and  Chairman of the Board of  Directors  of the  Company.  The Company has
     filed a lawsuit related to these services as described in Note 13.

     During the year ended  January 31, 1997,  the Company  obtained  short-term
     financing totaling $500,000 from a shareholder and officer. The loan, which
     was  fully  repaid   during  the  year,   was   non-interest   bearing  and
     uncollateralized.

     During the year ended  January 31,  1997,  the Company  obtained  long-term
     financing from a shareholder  totaling  $750,000 at origination.  Principal
     repayments  totaling  $250,000 were made during the year.  The terms of the
     note are more fully described in Note 7.

13.  COMMITMENTS AND CONTINGENCIES:

     In 1993, the Company was named as a co-defendant  in a patent  infringement
     suit filed by Sensonics Inc. claiming that the Company infringed Sensonics'
     expired  patent for an  electromagnetical  tapping  device that the Company
     used as a component part. During May 1996, the Company's Board of Directors
     approved a proposed  settlement of the lawsuit for $2,000,000.  Pursuant to
     this  settlement,  the Company  recorded a $225,000,  $960,000 and $815,000
     provision for the  settlement of litigation  during the years ended January
     31,  1997,  1996  and  1995,  respectively.  All  amounts  related  to  the
     settlement were paid by the Company during the year ended January 31, 1997.

     The  Company  was sued in  September  of 1996 by David S.  Goldman,  former
     President  and Chief  Executive  Officer of Aerosonic  Corporation,  for an
     alleged  breach of a  consulting  agreement  between  Mr.  Goldman  and the
     Company. The suit seeks damages in excess of $15,000. The Company has filed
     a motion to dismiss this action,  which is currently  under review.  During
     fiscal year 1997,  the Company  sued Mr.  Goldman and  Mil-Spec  Finishers,
     Inc., a former  subcontractor  to Aerosonic  Corporation  controlled by Mr.
     Goldman,  seeking  damages  in excess of  $15,000,  for  alleged  fraud and
     misappropriation of funds,  appropriation of corporate opportunity,  breach
     of fiduciary duty and conversion.

     The Company is also involved in certain claims and legal actions arising in
     the ordinary course of business. In the opinion of management, the ultimate
     disposition of the above matters will not have a material adverse effect on
     the Company's financial position, results of operations, or liquidity.

     At  January  31,  1997,  the  Company  was  committed  to future  purchases
     primarily for materials of approximately  $2,070,000.  At January 31, 1997,
     the Company had an  additional  $79,000  letter of credit which  guarantees
     trade  activities.  The contract amount of all of the Company's  letters of
     credit is a reasonable  estimate of their fair value, as the value for each
     is fixed over the life of the commitment.











                                       28


<PAGE>


(a) (3)       Exhibits:

              Exhibit 27 - Financial Data Schedule (Electronic filing only).

(b)           Reports on Form 8-K

              No  reports on Form 8-K were  filed by the  Registrant  during the
              quarter ended January 31, 1997.













































                                       29

<PAGE>



SIGNATURES

Pursuant to the  requirements of Section l3 or l5(d) of the Securities  Exchange
Act of l934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


AEROSONIC CORPORATION
(Registrant)


By: /s/ J. Mervyn Nabors                               Date:  April 28 ,1997
   -----------------------------                              --------------
      J. Mervyn Nabors, President
      Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of l934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the dates indicated.


    /s/ J. Mervyn Nabors
    --------------------------------------   
    J. Mervyn Nabors                                   Date:  April 28 ,1997
    President, Chief Executive Officer                        --------------
    and Chairman of the Board

    /s/ William C. Parker
    --------------------------------------   
    William C. Parker                                  Date:  April 28 ,1997
    Executive Vice President and Director                     --------------

    /s/ David A. Baldini
    --------------------------------------    
    David A. Baldini                                   Date:  April 28 ,1997
    Vice President and Director                               -------------- 

    /s/ Eric J. McCracken
    --------------------------------------    
    Eric J. McCracken                                  Date:  April 28 ,1997
    Chief Financial Officer and Director                      --------------

    /s/ Richard A. Frank
    --------------------------------------
    Richard A. Frank                                   Date:  April 28 ,1997
    Director                                                  --------------  

    /s/ Joseph P. Sherman
    --------------------------------------
    Joseph P. Sherman, Jr.                             Date:  April 28 ,1997
    Director                                                  -------------- 


                                       30