
<PAGE>

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


                       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 DECEMBER 31, 1995         COMMISSION FILE NO.: 0-16182

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

                     DELAWARE                          11-1962029
          (State or other jurisdiction of           (I.R.S. Employer
          incorporation or organization)         Identification Number)


                645 MADISON AVENUE
                NEW YORK, NEW YORK                        10022
     (Address of principal executive offices)          (Zip Code)

                                 (212) 593-7900
              (Registrant's telephone number, including area code)

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                     Common Stock, par value $.01 per share
            $1.20 Cumulative Exchangeable Redeemable Preferred Stock,
                            par value $.01 per share

        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

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

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 (Section 229.405 of this chapter) 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 [X].

Aggregate market value of the voting stock held by non-affiliates of the
registrant as of the close of business on February 28, 1996. $6,103,000

Common Stock outstanding at February 28, 1996: 12,659,957 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

     DOCUMENT                                             FORM 10-K REFERENCE

 Portion of Vernitron Corporation Notice of Annual
  Meeting of Stockholders and Proxy Statement.            Part III, Items 10-13


- - - --------------------------------------------------------------------------------
<PAGE>

PART I
ITEM 1.   BUSINESS

GENERAL

     Vernitron Corporation (the "Company"), incorporated in New York in 1959 and
reincorporated in Delaware in 1968, is primarily engaged in the design,
manufacture and sale of high performance electromagnetic components and sub-
systems and electrical/electronic terminal blocks and connectors, and the
distribution and service of precision ball bearings.  The Company's products are
manufactured primarily for use in high reliability applications in the
aerospace, defense, communications, medical equipment, office equipment and
industrial markets.

BUSINESS OF THE COMPANY

     The Company operates in three manufacturing plants and three distribution
facilities located in the United States in one business segment,
electromechanical components and sub-systems, which is organized into two
product groups: the Motion Control group and the Industrial Components group.
The Company also uses contract production capacity in Mexico.

     The Motion Control and Industrial Components groups accounted for 38% and
62%, respectively, of the Company's consolidated net sales of $65.2 million in
1995, (see Management's Discussion and Analysis of Financial Condition and
Results of Operations for three year sales comparisons).

     MOTION CONTROL GROUP.  The Motion Control group designs, manufactures and
sells high performance electromagnetic components and  sub-systems.  The group's
products generally involve a high degree of interactive applications engineering
to meet each customer's unique requirements for reliability and accuracy under
demanding and often hostile environmental or shock conditions, such as space
flight or industrial automation. Average unit prices generally exceed $100 and
range upward to more than $1,000 with individual purchase orders generally
covering small unit quantities.  Approximately 54% and 12% of current bookings
by this group are for U.S. and foreign government defense applications,
respectively.  The remainder of the business is spread over a variety of
commercial aerospace, industrial automation and instrumentation applications.  A
large percentage of the defense business is used in or to support tactical
missile programs, shipboard instruments and infrared night vision systems.

     The Motion Control group offers one of the broadest range of
electromechanical components in the motion control industry.  The group's
product offerings include prime movers or motors ("motors"), position and speed
feedback devices, and pressure sensors.  The motor products consist of AC
motors, stepper motors, brush and brushless DC torque motors and brush and
brushless custom DC servo motors.  These motors are used in applications that
require precise speed control, large torque, small size or low power consumption
such as computer disk drives, laser scanners in high-speed printers and bar code
readers, missile guidance systems, industrial controls, aircraft instrumentation
and controls, and robotics.  The position and speed feedback devices consist of
resolvers, synchros, tachometers, optical encoders and potentiometers.  These
devices measure linear or angular position and speed and have applications in
the guidance systems of ships, aircraft and missiles, as well as in ground based
radar, medical and printing equipment and industrial control systems.  The
pressure sensors are used to measure static or dynamic air, hydraulic or other
pressure and have applications in machine tools, HVAC, transportation and
aircraft flight controls.

     The Motion Control group's breath of component product offerings positions
it to provide a single solution to their customer's often diverse motion control
requirements.  These capabilities also enable the Motion Control group to
provide higher level solutions in the form of sub-systems which integrate and
package various motors, feedback devices and pressure sensors with gears or
optics, electronic devices and controls.  Sub-system products include, among
others, laser scanners, robotic arm actuators, aircraft actuators and air data
computers.  In 1995, sub-systems represented approximately 14% of the Motion
Control group's sales.

     INDUSTRIAL COMPONENTS GROUP.  The Industrial Components group manufactures
electrical/electronic terminal blocks and connector products and distributes and
services precision miniature ball bearings.  The group's products


                                        2
<PAGE>

are almost always sold as components and require a minimum amount of specialized
application engineering.  Average unit selling prices range from $1 to $3 and
individual purchase orders generally cover large unit quantities.  Substantially
all of the Industrial Components group sales are to domestic commercial and
industrial markets.

     The Industrial Components group's electrical/electronic terminal blocks and
connector product line focuses mainly on safety agency approved barrier terminal
blocks in the .5 amp to 50 amp range. These terminal blocks are used in a broad
range of power applications, including  telecommunications, power supplies,
security and fire alarms and industrial controls.  This product line also
includes power connectors for frequent connect/disconnect applications, such as
vending machines and coin changers.

     The Industrial Components group also distributes precision miniature ball
bearings from three warehouse locations - Montville, New Jersey, Irvine,
California and Dallas, Texas - to bearing distributors and to end users in a
variety of industries, including manufacturers of computer equipment, medical
equipment and a variety of other precision instruments.

     MARKETING.  The Company's products are sold directly to original equipment
manufacturers and U.S. Government agencies and contractors, and through a
network of manufacturers' representatives and distributors.

     DOMESTIC AND FOREIGN SALES.  The following table sets forth, for each of
the last three fiscal years, information concerning the Company's domestic and
foreign net sales and operating income from continuing operations and
identifiable assets (dollars in thousands):

<TABLE>
<CAPTION>

                                                        FISCAL YEARS
                                                ---------------------------
                                                 1995      1994      1993
                                                -------   -------   -------
<S>                                             <C>       <C>       <C>

Net sales:
  USA. . . . . . . . . . . . . . . . . . . .    $57,402   $57,752   $53,668
  Foreign. . . . . . . . . . . . . . . . . .      7,811     4,380     4,981
                                                -------   -------   -------
                                                $65,213   $62,132   $58,649
                                                -------   -------   -------
                                                -------   -------   -------

Export sales as a % of total sales:                12.0%      7.0%      8.5%
                                                -------   -------   -------
                                                -------   -------   -------

Operating income (loss):
  USA. . . . . . . . . . . . . . . . . . . .    $ 3,155   $ 3,363   $ 1,969
  Foreign. . . . . . . . . . . . . . . . . .        540       314       183
  Restructuring/inventory writedown
   charges (USA) . . . . . . . . . . . . . .          -    (1,315)   (3,500)
                                                -------   -------   -------
                                                $ 3,695   $ 2,362  $ (1,348)
                                                -------   -------   -------
                                                -------   -------   -------

Identifiable assets:
  USA. . . . . . . . . . . . . . . . . . . .    $40,485   $42,197   $47,261
                                                -------   -------   -------
                                                -------   -------   -------

</TABLE>

     COMPETITION.  The Company competes primarily on the basis of its ability to
design and engineer its products to meet performance specifications set by its
customers, most of whom are original equipment manufacturers who purchase
component parts or sub-systems for inclusion in their end products.  Quality,
customer service and competitive pricing are also critical success factors.

     There are a limited number of competitors in each of the markets for the
various types of electromechanical components and sub-systems and
electrical/electronic terminal blocks and connector products manufactured and
sold by the Company.  These competitors, especially those in electromechanical
components and sub-systems, are typically focused on a smaller number of product
offerings than the Company and are often well entrenched.  Some of these
competitors have substantially greater resources than the Company.  The Company
believes, however,  that the breath of its electromagnetic component product
offering provides it with a competitive advantage over its sub-system
competitors in terms of performance and cost.  Reductions in Government defense
spending have resulted in shrinking markets for certain electromechanical
components and increased competition for the remaining business.


                                        3
<PAGE>

     There are numerous competitors in markets to which we distribute precision
ball bearings.  These competitors, who vary in size, include other bearing
distributors as well as bearing manufacturers.

     CUSTOMERS.  There is no customer or group of affiliated customers to which
sales during the fiscal year ended December 31, 1995 were in the aggregate 10%
or more of the Company's consolidated net sales, and there is no customer, the
loss of which would have a material adverse effect on the Company's operations
taken as a whole.

     In fiscal 1995, the Company had aggregate sales, both military and non-
military, of approximately $3.0 million directly to the U.S. Government,
including its agencies and departments.  These sales accounted for approximately
5% of total net sales in 1995 as compared to 6% in 1994 and 5% in 1993.
Approximately 13% of net sales in 1995 were derived from subcontracts with U.S.
Government contractors as compared to 18% in 1994 and 21% in 1993.  The majority
of these contracts may be subject to termination at the convenience of the
Government, and certain of them may also be subject to renegotiation.
Currently, the Company is not aware of any termination or renegotiation of such
contracts which would have a material adverse effect on its business.  Because
approximately 18% of the Company's business is derived directly from contracts
with the U.S. Government or agencies or departments thereof, or indirectly
through subcontracts with U.S. Government contractors, the Company's results of
operations could be materially affected by changes in Government expenditures
for products using component parts it produces.  However, the Company believes
that its exposure to such risk may be lessened by the conventional tactical
nature of the programs it participates in as well as the broad number and
diversity of its product applications and the strength of its engineering
capabilities.

     BACKLOG; SEASONALITY.  As of December 31, 1995 and December 31, 1994, the
Company had a backlog of orders of $28.0 million and $23.0 million,
respectively.  Management believes that a substantial portion of the backlog of
orders at December 31, 1995 will be shipped during fiscal 1996.  Bookings and
shipments, while subject to fluctuation due to the build-to-order nature of a
substantial portion of the Company's business, are not subject to significant
seasonal variations.

     PRODUCT DEVELOPMENT.  The Company develops new electromechanical components
and sub-systems and improves existing products in order to keep pace with the
technological advances which generally characterize its markets.  During fiscal
1995, 1994, and 1993, combined Company and customer sponsored engineering
expense associated with product development, before customer reimbursement, was
$1.2 million, $1.2 million and $1.3 million, respectively.  In general, the
Company recovers from customers between a quarter and a third of such
engineering expense.

     RAW MATERIALS; OTHER SUPPLIERS.  There is no one supplier whose delivery of
raw materials or other products is material to the operations of the Company.
While several divisions use substantial amounts of cobalt, silver and copper in
certain of their products, the Company has not experienced any serious
difficulty in obtaining adequate supplies.

     PATENTS, TRADEMARKS AND LICENSES.  The Company's business is not dependent
on any patent or trademark.

     ENVIRONMENTAL REGULATIONS.  The Company does not believe that its
compliance with federal, state and local laws and regulations governing the
discharge of materials into the environment or otherwise relating to the
protection of the environment has or will have any material effect upon its
capital expenditures, earnings or competitive position.  There can be no
assurance, however, (i) that changes in federal, state or local laws or
regulations, changes in regulatory policy or the discovery of unknown problems
or conditions will not in the future require substantial expenditures, or (ii)
as to the extent of the Company's liabilities, if any, for past failures, if
any, to comply with applicable environmental laws, regulations and permits.

     EMPLOYEES.  The Company employs approximately 550 persons, all in the
United States.  Approximately 35 of such employees are subject to union
contracts.  The Company considers its relations with its employees to be
satisfactory.  There has been no significant interruption of operations due to
labor disputes.

     WORKING CAPITAL PRACTICES.  The markets in which the Company competes are
not characterized by any unusual inventory or collection practices.


                                        4
<PAGE>

ITEM 2.   PROPERTIES

     The Company leases its executive office, located at 645 Madison Avenue, New
York, New York.  The principal plants and other materially important properties
at December 31, 1995 are:

                                                            OWNED OR
                      TYPE OF             SQUARE            LEASED;
LOCATION              FACILITY            FOOTAGE           EXPIRATION
- - - --------              --------            -------           ----------

St. Petersburg, FL    Industrial          52,500            Owned
San Diego, CA         Industrial          60,100            Leased; 2000
Montville, NJ         Industrial          76,200            Leased; 1999
Gilford, NH           Industrial          84,250            Owned
Irvine, CA            Industrial           7,800            Leased; 2000

     All of the facilities owned by the Company are subject to mortgages or
security interests which secure the Company's obligations under its revolving
credit facility or industrial development bonds (see Note 4 to the Financial
Statements).

     The Company believes that its properties are suitable and adequate for its
operations.

ITEM 3.   LEGAL PROCEEDINGS

     The Company is a defendant in various lawsuits, none of which is expected
to have a material adverse affect on the Company's financial position, liquidity
or results of operations.

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

     None.


                                        5
<PAGE>

                                     PART II

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

     The Common Stock is traded on the National Association of Securities
Dealers Automated Quotation Small-Cap Market ("NASDAQ") under the symbol VRNT.
The following table sets forth the range of high and low bid prices for the
fiscal quarters indicated as quoted on NASDAQ:

                                         1995                 1994
                                   ----------------    -----------------
                                    High      Low       High       Low
                                   ------    ------    ------    -------

Fiscal Years Ended December 31:
     First Quarter                 $  3/4    $  5/8    $  5/8    $  5/8
     Second Quarter                 1           3/4     1 1/8       5/8
     Third Quarter                  1 5/8     1         1         11/16
     Fourth Quarter                 1 3/8     1           3/4       5/8

     The high and low market price information presented above is based on real-
time sales.

     On March 1, 1996, the high and low bid price was $7/8.

     On March 1, 1996, the approximate number of holders of record of the Common
Stock was 1,000.

     The Company did not pay cash dividends on the Common Stock during the three
fiscal years ended December 31, 1995.  The Company's policy is to retain
earnings for the foreseeable future.  The Company's credit facility prohibits
the payment of cash dividends.


                                        6
<PAGE>

ITEM 6.   SELECTED FINANCIAL DATA

     The following selected financial data for the five fiscal years presented
below is derived from the audited Financial Statements of the Company as
adjusted to reflect the discontinuance of the Electronic Components group (see
Note 2 to the Financial Statements).  The data should be read in conjunction
with the Financial Statements and the related Notes thereto included elsewhere
herein.

<TABLE>
<CAPTION>

                                                                                          YEARS ENDED DECEMBER 31,
                                                                              -----------------------------------------------
                                                                               1995      1994      1993      1992      1991
                                                                              -------   -------   -------   -------   -------
                                                                               (Dollars in thousands, except per share data)
<S>                                                                           <C>       <C>       <C>       <C>       <C>

Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $65,213   $62,132   $58,649   $62,912   $67,091
Operating income (loss). . . . . . . . . . . . . . . . . . . . . . . . . .      3,695     2,362    (1,348)    1,595     1,936
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      1,994     2,264     2,437     2,597     3,371
Income (loss) from continuing operations . . . . . . . . . . . . . . . . .        884        27    (3,856)   (1,042)   (1,335)
Net income (loss) from continuing operations per common share. . . . . . .       0.02     (0.04)    (0.82)    (0.23)    (0.39)
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     40,485    42,197    47,261    52,247    54,479
Total debt (1) (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . .     11,513    12,363    26,470    26,920    28,836
Shareholders' Equity (2) . . . . . . . . . . . . . . . . . . . . . . . . .     14,745    13,269     5,076     9,603     9,463


</TABLE>
- - - ---------------

(1)  Includes short-term debt and current portion of long-term debt of $466,000
     in 1995, $442,000 in 1994 $1,200,000 in 1993, $1,000,000 in 1992 and
     $2,130,000 in 1991.

(2)  On July 20, 1994, the Company repurchased its senior bank debt at a
     discount and recorded a pretax gain of $9.6 million (see Note 4 to the
     Financial Statements).


                                        7
<PAGE>

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

RESULTS OF OPERATIONS

     Net sales by product group for continuing operations for the past three
years are presented in the table below.  In 1994, the Company adopted a plan to
dispose of its Electronic Components business which, together with the
Industrial Components business, was previously reported as part of the Precision
Components product group (see Note 2 to the Financial Statements).  As a result,
the net sales and results of operations of the discontinued product group have
been excluded from the table and the discussion which follow.

<TABLE>
<CAPTION>

                                                 1995      1994      1993
                                                -------   -------   -------
                                                  (Dollars in thousands)
<S>                                             <C>       <C>       <C>

Motion Control . . . . . . . . . . . . . . .    $24,750   $26,052   $26,648
Industrial Components. . . . . . . . . . . .     40,463    36,080    32,001
                                                -------   -------   -------
Net Sales. . . . . . . . . . . . . . . . . .    $65,213   $62,132   $58,649
                                                -------   -------   -------
                                                -------   -------   -------

</TABLE>

1995 VS. 1994

     Net sales increased by $3.1 million, or 5%, in 1995, compared to 1994.

     The Motion Control group's sales declined by $1.3 million, or 5%, in 1995,
as compared to 1994, primarily as a result of lower shipments of synchros due to
reduced Government spending on spare parts.  The conditions which resulted in
these lower synchro sales are not expected to worsen in 1996 although there can
be no assurance that this will be the case.

     The Industrial Components group's sales increased in 1995 by $4.4 million,
or 12%, as compared to 1994.  Sales of bearings and terminal blocks/connectors
were up by 15% and 8%, respectively, primarily due to new and increased activity
with original equipment manufacturers and the growing acceptance of new and/or
enhanced products offered by the group.

     The Company's backlog at December 31, 1995 of $28.0 million was $5.0
million, or 22%, higher than 1994 year-end backlog, while bookings in 1995 of
$70.2 million were $9.0 million, or 15%, higher than 1994.  The higher backlog
was primarily due to an increase of backlog in the Motion Control group of $3.5
million resulting from the award of a large U.S. Government sub-contract for
tactical weapon components and favorable industrial and defense related bookings
resulting from a more focused approach to the European market.  The Industrial
Components group's backlog increased $1.5 million, due primarily to increased
bookings from original equipment manufacturers.

     Operating income in 1995 of $3.7 million was substantially the same as the
prior year, after excluding the restructuring/inventory writedown charges of
$1.3 million in 1994.  The gross margin earned on the incremental sales volume
($.7 million) and cost reductions in the Motion Control group resulting from
restructuring actions completed during 1994 ($.7 million), were offset by an
unfavorable sales mix in both business groups ($1.0 million) and higher material
costs in the Industrial Components group ($.2 million).  Overall, gross margins
on sales was 26.4% in 1995, as compared to 27.7% in 1994.

     Selling, general and administrative expense, as a percentage of sales,
declined to 20.5% in 1995 from 21.5% in 1994.  Selling, general and
administrative expense of $13.3 million in 1995 was substantially the same as
the prior year.

     Interest expense declined by $.3 million in 1995 as a result of lower
average borrowings due primarily to the repurchase of the Company's bank
indebtedness at a discount (see Note 4 to the Financial Statements).  This was
partially offset by higher interest rates.


                                        8
<PAGE>


     At December 31, 1995, the Company had approximately $13 million of net
operating loss carryforwards available to reduce future taxable income.

1994 VS. 1993

     Net sales increased by $3.5 million, or 6%, in 1994, compared to 1993.

     The Motion Control group's sales declined by $.6 million, or 2%, in 1994,
as compared to 1993, primarily as a result of lower shipments of AC motors and
potentiometers ($2.5 million) due largely to lower U.S. and foreign government
bookings and lower bookings for certain technologically mature product
applications.  These lower shipments were partially offset by higher shipments
of resolvers ($.8 million), due to the timing of certain large orders received
in 1993, and higher electromagnetic sub-system shipments ($1.0 million) due to
new product introductions.  The lower U.S. and foreign government bookings were
due primarily to reductions in defense spending for the Company's products and
the timing of various Government programs.  New business initiatives are ongoing
which are designed to identify additional opportunities for all Motion Control
products using both traditional and alternative product applications in the
military/aerospace, industrial and commercial market.  The Company believes,
although it can not be assured, that these initiatives, along with new product
introductions, will lessen the impact of continued reductions in defense
spending and the reduced demand for certain technologically mature products.

     The Industrial Components group's sales increased in 1994 by $4.1 million,
or 13%, as compared to 1993.  Sales of bearings were up by $2.9 million, or 16%,
reflecting sales to new customers and an improvement in general economic
conditions.  Sales of connector products rose by $1.2 million, or 9%,
principally as a result of sales to new customers in the OEM market, higher
sales of Eurostyle connectors and an improvement in general economic conditions.

     The Company's backlog at December 31, 1994 of $23.0 million was $1.0
million, or 4% lower, than 1993 year-end, while bookings of $61.2 million were
substantially the same as the prior year.  The lower backlog was primarily due
to a reduction of backlog in the Motion Control group of $1.9 million resulting
from lower bookings in resolvers ($1.7 million), primarily due to timing as
several large orders received in 1993 did not repeat in 1994, and potentiometers
($1.4 million), primarily due to lower U.S. Government and foreign bookings.
These lower bookings were partially offset by higher bookings of electromagnetic
sub-systems ($.7 million) due to new product introductions.  The Industrial
Components group's backlog increased $1.0 million due primarily to increased
bookings in the bearings product line resulting from an improvement in general
economic conditions.

     Operating income, excluding restructuring/inventory writedown charges of
$1.3 million and $3.5 million in 1994 and 1993, respectively, was $3.7 million
in 1994, as compared to $2.2 million in 1993, representing a $1.5 million
increase.  This increase was primarily due to the gross margin earned on the
incremental sales volume ($1.3 million) and improved profit margins in the
Motion Control product group resulting from restructuring actions taken in 1993
($.8 million), which were partially offset by higher selling, general and
administrative expenses ($.4 million).  Gross margins were 27.7% in 1994, up
from 26.1% in 1993.

     Selling, general and administrative expense, as a percentage of sales,
declined to 21.5% in 1994 from 22.1% in 1993.  Selling, general and
administrative expense was up by $.4 million in 1994 as a result of increased
expenses related to the relocation of Motion Control's potentiometer and
pressure transducer product lines from the Company's Deer Park, New York
facility to St. Petersburg, Florida ($.5 million) and the reinstatement of
certain profit sharing provisions ($.4 million).  These incremental costs were
partially offset by efficiencies resulting from the aforementioned Motion
Control restructuring initiated in 1993 ($.5 million).

     In 1993, the Company recorded a $3.5 million charge related to the
restructuring of the Motion Control group, of which $2.3 million was related to
the write-down of certain slow-moving and excess raw material inventory related
to wire wound potentiometer products.  As part of this restructuring, the
Company also announced its intention to close and sell the Deer Park, New York
facility.  In 1994, the Company recorded an additional $1.3 million charge
related to this restructuring, $1.0 million of which is to provide additional
inventory reserves to reflect slower turnover of the aforementioned raw material
inventory than was anticipated in the 1993 charge


                                        9
<PAGE>

calculation.  The carrying value of this raw material inventory, after the
additional $1.0 million reserve, was $1.5 million.  The remaining $.3 million of
the 1994 charge is to adjust the carrying amount of the Deer Park, New York
facility held for disposal in connection with the restructuring to reflect
current market values.

     Interest expense declined by $.2 million in 1994 as a result of lower
average borrowings due primarily to the repurchase of the Company's bank
indebtedness at a discount (see Note 4 to the Financial Statements).  This was
partially offset by higher interest rates.

LIQUIDITY AND CAPITAL RESOURCES

     Cash used in operations was $1.0 million in 1995 as compared to cash
provided by operations of $1.4 million and $.8 million in 1994 and 1993,
respectively.  This increase in use of cash was primarily due to a $2.0 million
investment in inventory to support the higher sales level of the Industrial
Components group and the significant increase in the year-end backlog of the
Motion Control group, as well as reductions in accounts payable and accrued
expenses, and other long-term liabilities of $1.3 million and $.9 million,
respectively.

     Cash provided by investing activities was $1.9 million in 1995 as compared
to cash used in investing activities of $.2 million and $.4 million in 1994 and
1993, respectively.  This cash was generated primarily from the sale of assets
of $2.9 million which is comprised of $1.5 million from the sale of assets of
the Electronic Components business discontinued during 1994 (see Note 2 to the
Financial Statements) and $1.4 million from the sale of an idle facility in Deer
Park, New York (see Note 8 to the Financial Statements).  Partially offsetting
these sale proceeds was capital expenditures of $1.0 million.

     Overall, the Company reduced borrowings under its $17.5 million credit
facility by $.9 million.

     The Company had no material commitments for capital expenditures as of
December 31, 1995.  It is anticipated that capital expenditures in 1996 could
range from $1.5 million to $2.0 million as compared to the $1.0 million expended
in 1995.  Working capital requirements are determined by a number of factors
including sales, bookings, backlog and projected growth.  The Company believes
that its $17.5 million credit facility and cash generated from operations will
be sufficient to meet its future capital expenditure and working capital
requirements and required debt amortization.

     In February, 1996, the Company entered into a definitive merger agreement
to acquire Precision Aerotech, Inc.  Completion of the transaction is subject to
the satisfaction of customary conditions, including the receipt of all necessary
financing by the Company.  The Company expects that its new financing
arrangements (which would replace its current credit facility) and cash
generated from the combined operations will be sufficient to meet the future
capital expenditure and working capital requirements of the combined companies
and required debt amortization under its new credit facility (see Note 10 to the
Financial Statements).


                                       10
<PAGE>

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The response to this Item is included in Item 14(a) of this Report.

ITEM 9.   DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

     None. See Item 14(b) of this Report.



                                    PART III



     The information required by Part III is incorporated by reference to the
Company's definitive proxy statement in connection with its 1995 Annual Meeting
of Stockholders to be filed with the Securities and Exchange Commission within
120 days following the end of the Company's fiscal year ended December 31, 1995.
If such proxy statement is not so filed, such information will be filed as an
amendment to this Form 10-K within 120 days following the end of the Company's
fiscal year ended December 31, 1995.



                                     PART IV

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

(a)(1) AND (2)  FINANCIAL STATEMENTS

     See accompanying index to financial statements and schedule.

(a)(3)  EXHIBITS

     See accompanying index to Exhibits.

(b)     REPORTS ON FORM 8-K

     During the quarter ended December 31, 1995, the Company filed one report on
     Form 8-K dated December 18, 1995, which included a press release announcing
     the Company's signing of a letter of intent to acquire Precision Aerotech,
     Inc.


                                       11
<PAGE>

                                   SIGNATURES

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

Dated:                        VERNITRON CORPORATION
                                   (REGISTRANT)

                                   By /s/ STEPHEN W. BERSHAD
                                          STEPHEN W. BERSHAD
                                          CHAIRMAN OF THE BOARD OF DIRECTORS
                                          AND CHIEF EXECUTIVE OFFICER

Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated this 26th day of March, 1996.


     /s/ Stephen W. Bershad             Chairman of the Board of
          STEPHEN W. BERSHAD            Directors and Chief Executive
                                        Officer




     /s/ Raymond F. Kunzmann            Vice President - Finance, Controller
          RAYMOND F. KUNZMANN           and Chief Financial Officer





     /s/ Anthony J. Fiorelli, Jr.       Director
          ANTHONY J. FIORELLI, JR.





     /s/ Eliot M. Fried                 Director
          ELIOT M. FRIED



                                       12
<PAGE>


                           ANNUAL REPORT ON FORM 10-K

                  ITEM 8, ITEM 14(a)(1) AND (2) AND ITEM 14(d)

         INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

                              FINANCIAL STATEMENTS

                          YEAR ENDED DECEMBER 31, 1995

                              VERNITRON CORPORATION
<PAGE>

                FORM 10-K -- ITEM 14(a)(1) AND (2) AND ITEM 14(d)
                              VERNITRON CORPORATION

         INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE



The following financial statements of Vernitron Corporation are included in
Item 8:

     Balance sheets -- December 31, 1995 and 1994. . . . . . . . . . . . . . F-4

     Statement of operations -- For the years ended December 31, 1995,
      1994 and 1993. . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6

     Statement of cash flows -- For the years ended December 31, 1995,
      1994 and 1993. . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7

     Statement of shareholders' equity -- For the years ended December 31,
      1995, 1994 and 1993. . . . . . . . . . . . . . . . . . . . . . . . . . F-8

     Notes to financial statements . . . . . . . . . . . . . . . . . . . . . F-9

     The following financial statement schedule of Vernitron Corporation is
included in Item 14(d):

     Schedule II -- Valuation and qualifying accounts. . . . . . . . . . . .F-17

     All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable, and therefore have been
omitted.


                                       F-2
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS




To the Board of Directors of
Vernitron Corporation:


          We have audited the accompanying balance sheets of Vernitron
Corporation (a Delaware corporation) as of December 31, 1995 and 1994, and the
related statements of operations, shareholders' equity and cash flows for each
of the three years in the period ended December 31, 1995.  These financial
statements and the schedule referred to below are the responsibility of the
Company's management.  Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.

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

          In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Vernitron
Corporation as of December 31, 1995 and 1994, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1995 in conformity with generally accepted accounting principles.

          Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole.  The schedule listed in the index
to financial statements and financial statement schedule is presented for
purposes of complying with the Securities and Exchange Commission's rules and is
not part of the basic financial statements.  This schedule has been subjected to
the auditing procedures applied in the audits of the basic financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.





                                   ARTHUR ANDERSEN LLP





New York, New York
March 21, 1996


                                       F-3
<PAGE>

                              VERNITRON CORPORATION
                                 BALANCE SHEETS

                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                            December 31,
                                                          -----------------
                                                           1995      1994
                                                          -------   -------
<S>                                                       <C>       <C>

                                     ASSETS

CURRENT ASSETS:
  Cash . . . . . . . . . . . . . . . . . . . . . . . .    $    91   $    27
  Accounts receivable, net of allowance
   for doubtful accounts of
   $233 in 1995 and $345 in 1994 . . . . . . . . . . .      8,525     9,293
  Inventories, net . . . . . . . . . . . . . . . . . .     16,544    14,527
  Other current assets . . . . . . . . . . . . . . . .        651       468
                                                          -------   -------
    TOTAL CURRENT ASSETS . . . . . . . . . . . . . . .     25,811    24,315

NET PROPERTY, PLANT AND EQUIPMENT. . . . . . . . . . .      7,603     7,990

EXCESS OF COST OVER NET ASSETS ACQUIRED, net of
   accumulated amortization of $836 in 1995
   and $627 in 1994. . . . . . . . . . . . . . . . . .      6,624     6,832

NET ASSETS HELD FOR DISPOSAL . . . . . . . . . . . . .         --     2,507

OTHER ASSETS . . . . . . . . . . . . . . . . . . . . .        447       553
                                                          -------   -------
    TOTAL ASSETS . . . . . . . . . . . . . . . . . . .    $40,485   $42,197
                                                          -------   -------
                                                          -------   -------

</TABLE>


                       See notes to financial statements.



                                       F-4
<PAGE>

                              VERNITRON CORPORATION
                                 BALANCE SHEETS

                  (Dollars in thousands, except per share data)

                      LIABILITIES AND SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                            December 31,
                                                          -----------------
                                                           1995      1994
                                                          -------   -------
<S>                                                       <C>       <C>

CURRENT LIABILITIES:

  Accounts payable . . . . . . . . . . . . . . . . . .    $ 5,315   $ 6,394
  Accrued expenses and other liabilities . . . . . . .      5,696     5,941
  Current portion of long-term debt. . . . . . . . . .        466       442
                                                          -------   -------
    TOTAL CURRENT LIABILITIES. . . . . . . . . . . . .     11,477    12,777

LONG-TERM DEBT, less current portion . . . . . . . . .     11,047    11,921

OTHER LONG-TERM LIABILITIES. . . . . . . . . . . . . .      2,697     3,579

DEFERRED INCOME. . . . . . . . . . . . . . . . . . . .        519       651

SHAREHOLDERS' EQUITY:

$1.20 CUMULATIVE EXCHANGEABLE REDEEMABLE
 PREFERRED STOCK $.01 PAR VALUE: authorized 1,400,000
 shares, issued and outstanding 781,642 shares in
 1995 and 672,344 shares in 1994 . . . . . . . . . . .          8         7

COMMON STOCK, $.01 PAR VALUE:
 authorized 20,000,000 shares, issued and outstanding
 12,604,107 in 1995 and 12,538,012 shares in 1994. . .        126       125

CAPITAL IN EXCESS OF PAR . . . . . . . . . . . . . . .     14,611    13,982

RETAINED EARNINGS (Reflects application of
 quasi-reorganization accounting principles as
 of December 31, 1991, eliminating a deficit of
 $14,094). . . . . . . . . . . . . . . . . . . . . . .                 (845)
                                                          -------   -------

    TOTAL SHAREHOLDERS' EQUITY . . . . . . . . . . . .     14,745    13,269
                                                          -------   -------
    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY . . . .    $40,485   $42,197
                                                          -------   -------
                                                          -------   -------

</TABLE>


                       See notes to financial statements.


                                       F-5
<PAGE>

                              VERNITRON CORPORATION
                             STATEMENT OF OPERATIONS

                  (Dollars in thousands, except per share data)

<TABLE>
<CAPTION>

                                                                                             Years Ended December 31,
                                                                                    -----------------------------------------
                                                                                        1995           1994          1993
                                                                                    ------------    ----------     ----------
<S>                                                                                 <C>             <C>            <C>

NET SALES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $    65,213     $   62,132     $   58,649

Cost of sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         47,973         44,903         43,338
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . .         13,336         13,343         12,950
Restructuring/inventory writedown charges. . . . . . . . . . . . . . . . . . . .                         1,315          3,500
Amortization of intangible assets. . . . . . . . . . . . . . . . . . . . . . . .            209            209            209
                                                                                    -----------     ----------     ----------

OPERATING INCOME (LOSS). . . . . . . . . . . . . . . . . . . . . . . . . . . . .          3,695          2,362         (1,348)

Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          1,994          2,264          2,437
Other expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            252             54             71
                                                                                    -----------     ----------     ----------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES AND EXTRAORDINARY GAIN . .          1,449             44         (3,856)
Charge in lieu of taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . .            565             17
                                                                                    -----------     ----------     ----------

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE EXTRAORDINARY GAIN . . . . . . .            884             27         (3,856)

DISCONTINUED OPERATIONS:
  Loss from operations, net of tax benefit of $92 in 1994. . . . . . . . . . . .                          (143)          (670)
  Loss on disposal, net of tax benefit of $1,317 in 1994 . . . . . . . . . . . .                        (2,059)
                                                                                    -----------     ----------     ----------

INCOME (LOSS) BEFORE EXTRAORDINARY GAIN                                                     884         (2,175)        (4,526)
Extraordinary gain on debt repurchase, net of charge in lieu of taxes
 of $3,744 in 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         5,856
                                                                                    -----------     ----------     ----------

NET INCOME (LOSS). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            884          3,681         (4,526)

Preferred stock dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . .            574            355            375
                                                                                    -----------     ----------     ----------

NET INCOME (LOSS) APPLICABLE TO COMMON SHAREHOLDERS' . . . . . . . . . . . . . .    $       310     $    3,326     $   (4,901)
                                                                                    -----------     ----------     ----------
                                                                                    -----------     ----------     ----------
NET INCOME (LOSS) PER COMMON SHARE:
  Continuing operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $      0.02     $    (0.04)    $    (0.82)
  Discontinued operations. . . . . . . . . . . . . . . . . . . . . . . . . . . .                         (0.26)         (0.13)
  Extraordinary gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          0.69
                                                                                    -----------     ----------     ----------
  Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $      0.02     $     0.39     $    (0.95)
                                                                                    -----------     ----------     ----------
                                                                                    -----------     ----------     ----------

  Weighted average common shares outstanding . . . . . . . . . . . . . . . . . .     12,555,368      8,509,003      5,185,070
                                                                                    -----------     ----------     ----------
                                                                                    -----------     ----------     ----------

</TABLE>


                        See notes to financial statements.


                                       F-6
<PAGE>

                              VERNITRON CORPORATION
                             STATEMENT OF CASH FLOWS

                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                                                             Years Ended December 31,
                                                                                    -----------------------------------------

                                                                                        1995           1994           1993
                                                                                    ------------    ----------     ----------
<S>                                                                                 <C>             <C>            <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $       884     $    3,681     $   (4,526)
  Adjustments to reconcile net income (loss) to cash (used in) provided by
   operating activities:
    Extraordinary gain on debt repurchase, net . . . . . . . . . . . . . . . . .                        (5,856)
    Loss on disposal of discontinued operations, net . . . . . . . . . . . . . .                         2,059
    Utilization of pre quasi-reorganization tax benefits . . . . . . . . . . . .            519             16
    Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . .          1,622          1,742          1,732
    (Increase) decrease in accounts receivable . . . . . . . . . . . . . . . . .            768           (970)           934
    (Increase) decrease in inventories . . . . . . . . . . . . . . . . . . . . .         (2,017)           682          2,019
    (Increase) decrease in other current assets. . . . . . . . . . . . . . . . .           (183)           498            449
    Increase (decrease) in accounts payable, accrued expenses and other
     liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (1,324)           349             10
    Increase (decrease) in other long-term liabilities . . . . . . . . . . . . .           (882)          (461)           113
    Other -- net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           (343)          (349)            87
                                                                                    -----------     ----------     ----------

      NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES. . . . . . . . . . . .           (956)         1,391            818
                                                                                    -----------     ----------     ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         (1,026)          (797)          (381)
  Proceeds from sale of assets . . . . . . . . . . . . . . . . . . . . . . . . .          2,896            605
                                                                                    -----------     ----------     ----------
      NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES. . . . . . . . . . . .          1,870           (192)          (381)
                                                                                    -----------     ----------     ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . .         69,614         45,665          3,900
  Repayment from borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . .        (70,464)       (49,272)        (4,350)
  Net proceeds from common stock rights offering . . . . . . . . . . . . . . . .                         2,332
                                                                                    -----------     ----------     ----------

      NET CASH USED IN FINANCING ACTIVITIES. . . . . . . . . . . . . . . . . . .           (850)        (1,275)          (450)
                                                                                    -----------     ----------     ----------

      NET INCREASE (DECREASE) IN CASH. . . . . . . . . . . . . . . . . . . . . .             64            (76)           (13)
CASH AT BEGINNING OF YEAR. . . . . . . . . . . . . . . . . . . . . . . . . . . .             27            103            116
                                                                                    -----------     ----------     ----------

CASH AT END OF YEAR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $        91     $       27     $      103
                                                                                    -----------     ----------     ----------
                                                                                    -----------     ----------     ----------

</TABLE>


                       See notes to financial statements.


                                       F-7
<PAGE>

                              VERNITRON CORPORATION
                        STATEMENT OF SHAREHOLDERS' EQUITY

                  (Dollars in thousands, except per share data)

<TABLE>
<CAPTION>

                                            PREFERRED STOCK                 COMMON STOCK              CAPITAL       RETAINED
                                       --------------------------     --------------------------     IN EXCESS      EARNINGS
                                          SHARES         AMOUNT         SHARES         AMOUNT         OF PAR        (DEFICIT)
                                       ------------    ----------     ----------    ------------     ---------      ---------
<S>                                    <C>            <C>             <C>           <C>              <C>            <C>

Balance at December 31, 1992               495,896     $        5     $5,185,070    $        52      $   9,546      $      --
  Net Loss . . . . . . . . . . . .                                                                                     (4,526)
  Dividends (a). . . . . . . . . .          82,050              1                                          374           (375)
  Transfer to Capital in Excess
   of Par (b). . . . . . . . . . .                                                                        (375)           375
  Other. . . . . . . . . . . . . .                                                                          (1)
                                      ------------     ----------     ----------   ------------      ---------      ---------
Balance at December 31, 1993 . . .         577,946              6      5,185,070             52          9,544         (4,526)
                                      ------------     ----------     ----------   ------------      ---------      ---------

  Net Income . . . . . . . . . . .                                                                                      3,681
  Dividends (a). . . . . . . . . .          94,398              1                                          354           (355)
  Transfer to Capital in Excess
   of Par (b). . . . . . . . . . .                                                                        (355)           355
  Common Stock rights offering . .                                     7,352,942             73          2,259
  Amount realized from
   utilization of pre quasi-
   reorganization tax benefits . .                                                                       2,182
  Other. . . . . . . . . . . . . .                                                                          (2)
                                      ------------     ----------     ----------   ------------      ---------      ---------
Balance at December 31, 1994 . . .         672,344              7     12,538,012            125         13,982           (845)
                                      ------------     ----------     ----------   ------------      ---------      ---------

  Net Income . . . . . . . . . . .                                                                                        884
  Dividends (a). . . . . . . . . .         109,298              1                                          573           (574)
  Transfer to Capital in Excess
   of Par (b). . . . . . . . . . .                                                                        (535)           535
  Contribution to 401(k) plan. . .                                        58,095              1             66
  Amount realized from
   utilization of pre quasi-
   reorganization tax benefits . .                                                                         519
  Other. . . . . . . . . . . . . .                                         8,000                             6
                                      ------------     ----------     ----------   ------------      ---------      ---------
Balance at December 31, 1995 . . .         781,642     $        8     12,604,107   $        126      $  14,611      $      --
                                      ------------     ----------     ----------   ------------      ---------      ---------
                                      ------------     ----------     ----------   ------------      ---------      ---------

</TABLE>

(a)  Represents a 15% dividend paid in additional shares and valued at the
     average of the closing bid and ask price as of the dividend record date.
     The per share amounts of these dividends were $.70, $.57 and $.79 per share
     of Preferred Stock in 1993, 1994 and 1995, respectively.

(b)  Represents transfer of the excess of Preferred Stock dividends over
     available Retained Earnings.


                       See notes to financial statements.


                                       F-8
<PAGE>

                              VERNITRON CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

                                DECEMBER 31, 1995

                  (Dollars in thousands, except per share data)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Revenue is recognized upon the shipment of product or when services are
rendered.

     Inventories are priced at the lower of cost (principally first-in, first-
out, or average) or market.

     Deferred financing costs are amortized ratably over the life of the
corresponding debt or commitment.

     The excess of cost over net assets acquired is being amortized over thirty-
five years using the straight-line method.  The Company continually reviews
goodwill to assess recoverability from future operations using undiscounted cash
flows.  Impairments would be recognized in operating results if a permanent
diminution in value occurred.

     Property, plant and equipment are stated at cost, less accumulated
depreciation.  Depreciation is provided primarily by the straight-line method
using estimated lives for buildings and improvements of 20 years and for
machinery and equipment using estimated useful lives ranging from 3 to 8 years.

     Inter-division items and transactions have been eliminated in
consolidation.

     Certain items in the 1994 and 1993 financial statements have been
reclassified to conform to the 1995 presentation.

     Per share data is based upon the weighted average of common shares
outstanding during each period.  Outstanding common stock options or warrants
have not been included in the 1995, 1994 or 1993 computation of per share data
as they were deemed to have been anti-dilutive.

     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 and the reported amounts of revenues and expenses during the
reporting period.  Actual results could differ from those estimates.

NOTE 2 - DISCONTINUED OPERATIONS

     In September 1994, the Company adopted a plan to dispose of all of its
Electronic Components business which was comprised of the trimmer, transformer
and microwave component product lines.  The disposal has been accounted for as a
discontinued operation and, accordingly, the related net assets and operating
results have been reported separately from continuing operations.  The Company's
1993 Statement of Operation has been restated to reflect continuing operations.
The loss on disposal of the Electronic Components business for the year ended
December 31, 1994 is comprised of the loss on disposal of the net assets of the
business and operating losses until disposal.  During 1994, the Company sold a
portion of the assets of its Electronic Components business for $605. During
1995, the Company sold the remaining discontinued business assets for $1,500.


                                       F-9
<PAGE>

                              VERNITRON CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


NOTE 2 - DISCONTINUED OPERATIONS (CONT'D)

Net assets held for disposal as of December 31, 1994 consisted of the following:

<TABLE>

          <S>                                                       <C>

          Inventory                                                 $ 1,992
          Machinery & Equipment                                         365
          Other current assets                                           59
          Current liabilities                                          (478)
          Reserve to write-down net assets
           held for disposal to net realizable value                 (1,065)
                                                                    -------
          Net assets of discontinued operations                         873

          Idle facility (See Note 8)                                  1,634
                                                                    -------
          Net assets held for disposal                              $ 2,507
                                                                    -------
                                                                    -------
</TABLE>

     Revenues applicable to the discontinued business for the years ended
December 31, 1995, 1994 and 1993 were $290, $6,897 and $9,095, respectively.
The loss from operations of the discontinued Electronic Components business from
September 30, 1994 to December 31, 1994 and through the date of disposal in
1995, were $326 and $40, respectively, net of related tax benefits.  These
losses were charged to a reserve established in 1994 as part of the loss on
disposal.

NOTE 3 - SHAREHOLDERS' EQUITY

COMMON STOCK -

     In July 1994, the Company completed a rights offering of Common Stock in
which 7,352,942 shares were issued for gross proceeds of $2,500 ($2,332, net of
expenses).

PREFERRED STOCK -

     The certificate of designation setting forth the amended terms of the
Company's $1.20 Cumulative Exchangeable Redeemable Preferred Stock provides for,
among other things, (1) a liquidation preference of $8 per share, (2) an annual
dividend of $1.20 per share, and (3) the ability to pay dividends thereon in
additional shares instead of cash up to March 1, 1996.  Under the certificate of
designation, the right to receive cash dividends is expressly subject to, among
other things, any provision contained from time to time in the Company's
financing agreements prohibiting the payment of cash dividends.  The Company's
Senior Credit Facility prohibits the payment of cash dividends (see Note 4) and
the financing agreements to be entered into by the Company in connection with
the acquisition of Precision Aerotech, Inc. will contain a similar prohibition
(see Note 10).  The Company at its option may redeem the Preferred Stock at a
price of $8.00 per share or an amount per share equal to the product of 1.1 and
the average of the NASDAQ daily closing prices per share (defined in general to
be the average of the highest reported bid and the lowest reported asked prices)
for ten consecutive trading days, as defined, together with all accrued and
unpaid dividends to the redemption date.

Since August, 1991, the Company has paid quarterly dividends on the Preferred
Stock in additional shares at an annual rate of 15% based on the shares
outstanding.


                                      F-10
<PAGE>

                              VERNITRON CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


NOTE 4 - LONG-TERM DEBT

<TABLE>
<CAPTION>

                                                            1995      1994
                                                          -------    ------
<S>                                                       <C>       <C>

Credit Facility. . . . . . . . . . . . . . . . . . . .    $ 9,643   $10,493
Industrial Revenue Bond. . . . . . . . . . . . . . . .      1,870     1,870
                                                          -------   -------
                                                           11,513    12,363
Less current portion . . . . . . . . . . . . . . . . .        466       442
                                                          -------   -------
                                                          $11,047   $11,921
                                                          -------   -------
                                                          -------   -------

</TABLE>

     In July 1994, the Company obtained a new $15,000 four-year, senior secured
credit facility (the "Senior Credit Facility"). The proceeds of the Senior
Credit Facility along with the net proceeds of the rights offering (see Note 3)
were used to repurchase the Company's bank indebtedness at a discount and to
provide additional working capital.  As a result of the repurchase of
indebtedness, an extraordinary gain of $5,856, net of a charge in lieu of taxes
of $3,744, was recorded.

     During 1995, the Company negotiated an amendment to the Senior Credit
Facility increasing the amount that can be borrowed under the facility to
$17,500, subject to availability based on the satisfaction of certain borrowing
base formulas.  As of December 31, 1995, $13,600 of the $17,500 credit facility
was available to the Company.

     Borrowings under the Senior Credit Facility bear interest at a fluctuating
rate per annum equal to the rate of interest publicly announced by Chemical Bank
as its prime rate plus 2.5% (the prime rate was 8.5% at December 31, 1995).  A
commitment fee of .5% is payable on any unused amount of the Senior Credit
Facility.  The Senior Credit Facility contains certain restrictive covenants
which, among other things, impose limitations with respect to the incurrence of
additional liens, mergers, consolidations and specified sale of assets.  In
addition, the Senior Credit Facility prohibits the payment of cash dividends.
Borrowings under the Senior Credit Facility are secured by substantially all of
the assets of the Company.

     The Company had outstanding at December 31, 1995, industrial development
revenue bonds (the "Bonds") in the amount of $1,870 secured by its Gilford, NH
manufacturing facility which has a net carrying amount of approximately $2,200.
The Bonds are payable in 2005.  During 1994, the Bonds were remarketed and, as a
result, a letter of credit securing repayment was released and the interest rate
was converted from a floating rate to a fixed rate of 13% per annum.

Scheduled debt maturities during the next five years, which are comprised solely
of payment under the Company's Senior Credit Facility (as amended) are $466
(1996), $466 (1997) and $8,711 (1998).


                                      F-11
<PAGE>

                              VERNITRON CORPORATION

                          NOTES TO FINANCIAL STATEMENTS



NOTE 5 - BALANCE SHEET INFORMATION

     The details of certain balance sheet accounts are as follows:

<TABLE>
<CAPTION>

                                                            1995      1994
                                                          -------    ------
<S>                                                       <C>       <C>

Inventories:
  Raw materials. . . . . . . . . . . . . . . . . . . .    $ 7,203   $ 7,623
  Work-in-process. . . . . . . . . . . . . . . . . . .      5,293     6,098
  Finished goods . . . . . . . . . . . . . . . . . . .      9,255     8,532
                                                          -------   -------
                                                           21,751    22,253

  Less reserves. . . . . . . . . . . . . . . . . . . .      5,207     7,726
                                                          -------   -------
                                                          $16,544   $14,527
                                                          -------   -------
                                                          -------   -------

Net property, plant and equipment:
  Land . . . . . . . . . . . . . . . . . . . . . . . .    $   600   $   600
  Buildings and improvements . . . . . . . . . . . . .      3,923     3,562
  Machinery and equipment. . . . . . . . . . . . . . .      8,155     7,490
                                                          -------   -------
                                                           12,678    11,652
  Less accumulated depreciation and amortization . . .      5,075     3,662
                                                          -------   -------
                                                          $ 7,603   $ 7,990
                                                          -------   -------
                                                          -------   -------

Accrued expenses and other liabilities:
  Compensation and related benefits. . . . . . . . . .    $ 2,180   $ 2,180
  Legal. . . . . . . . . . . . . . . . . . . . . . . .        280       443
  Other. . . . . . . . . . . . . . . . . . . . . . . .      3,236     3,318
                                                          -------   -------
                                                          $ 5,696   $ 5,941
                                                          -------   -------
                                                          -------   -------

</TABLE>

NOTE 6 - INCOME TAXES

     At December 31, 1995, the Company has net operating loss carryforwards of
approximately $13,300 which expire in the years 2005 through 2009 and
alternative minimum tax credit carryforwards of approximately $270.  In
addition, the Company has approximately $7,200 of previously unrecognized tax
benefits, principally related to inventories.  As the portion of the loss
carryforwards and deferred tax benefits originating prior to the 1991 quasi-
reorganization are realized, the corresponding tax effect will be credited to
Capital in Excess of Par under quasi-reorganization accounting principles rather
than reducing the Provision for Taxes.  In 1995, $519 was credited to Capital in
Excess of Par representing the utilization of such pre quasi-reorganization tax
benefits to offset current year tax expense.  As of December 31, 1995, $4,526 of
the pre quasi-reorganization tax effected benefits remain unutilized.  The
utilization and realization of the carryforwards and future tax benefits will
substantially reduce or eliminate the amount of cash taxes payable on taxable
income in the future.

     The Company utilizes the liability method (SFAS No. 109) in accounting for
income taxes.  Income (loss) from continuing operations before taxes is from
domestic sources only for each of the three years ended December 31, 1995.


                                      F-12
<PAGE>

                              VERNITRON CORPORATION

                          NOTES TO FINANCIAL STATEMENTS

NOTE 6 - INCOME TAXES (CONT'D)

     The provision for taxes on income from continuing operations consists of:

<TABLE>
<CAPTION>

                                                  1995      1994      1993
                                                 ------    ------    ------
<S>                                              <C>       <C>       <C>

Current taxes:
  U.S. Federal - charge in lieu of taxes . .     $  454    $   14    $   --
  State and local. . . . . . . . . . . . . .        111         3        --
                                                 ------    ------    ------
                                                    565        17        --
                                                 ------    ------    ------

Deferred taxes:
  U.S. Federal . . . . . . . . . . . . . . .
                                                 ------    ------    ------
                                                 $  565    $   17    $   --
                                                 ------    ------    ------
                                                 ------    ------    ------

</TABLE>

     The reasons for the difference between the provision for taxes and the
amount computed by applying the statutory federal income tax rate to income
(loss) before taxes are as follows:

<TABLE>
<CAPTION>

                                                  1995      1994      1993
                                                 ------    ------   -------
<S>                                              <C>       <C>      <C>

U.S. federal statutory rate. . . . . . . . .         34%       34%       34%
Computed expected tax provision (benefit). .     $  493    $   15   $(1,539)
Increase (decrease) in taxes resulting from:
  State and local taxes, net of federal
   tax benefit . . . . . . . . . . . . . . .         72         2
  Amortization of goodwill . . . . . . . . .         71        71        71
  Portion of loss not currently
   realizable. . . . . . . . . . . . . . . .                          1,468
  Other. . . . . . . . . . . . . . . . . . .        (71)      (71)
                                                 ------    ------   -------
Actual tax provision . . . . . . . . . . . .     $  565    $   17  $     --
                                                 ------    ------   -------
                                                 ------    ------   -------

</TABLE>

     Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.  Significant components
of the Company's deferred tax assets and liabilities are as follows:

<TABLE>
<CAPTION>

                                                             DECEMBER 31,
                                                            1995      1994
                                                          -------    ------
<S>                                                       <C>       <C>

Tax net operating loss carryforwards . . . . . . . . .    $ 4,794   $ 4,130
Inventory valuation differences. . . . . . . . . . . .      2,070     1,736
Other, net . . . . . . . . . . . . . . . . . . . . . .        389     1,057
                                                          -------   -------
  Sub-Total                                                 7,253     6,923
Valuation allowance. . . . . . . . . . . . . . . . . .     (7,253)   (6,923)
                                                          -------   -------
Total deferred taxes . . . . . . . . . . . . . . . . .    $    --   $    --
                                                          -------   -------
                                                          -------   -------

</TABLE>

     The net change in the valuation allowance in 1995 and 1994 was an increase
of $330 and a decrease of $1,713, respectively.

     Total net federal, foreign and state and local income taxes paid
(refunded), in 1995, 1994, and 1993 were $52, $(9), and $(8), respectively.


                                      F-13
<PAGE>

                              VERNITRON CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


NOTE 7 - PENSION ARRANGEMENTS

     The Company has two pension plans for which benefits and participation have
been frozen.  Pension benefits under these plans are generally based upon years
of service and compensation.  The Company's funding policy is to contribute
amounts to these plans sufficient to meet the minimum funding requirements set
forth in the Employee Retirement Income Security Act of 1974, plus such
additional amounts as the Company may determine to be appropriate from time to
time.

     Multi-employer plans covering certain union members generally provided
benefits of stated amounts for each year of service.  During 1994, in connection
with the restructuring of the Motion Control group (see Note 8), the employment
of the union members participating in these multi-employer plans ended and, as a
result, contributions to these plans ceased.  As of December 31, 1995, there
were no unpaid contributions to multi-employer plans.

     A summary of components of net periodic pension cost for the defined
benefit plans and the total contribution charged to pension expense for the
multi-employer plans follows:

<TABLE>
<CAPTION>

                                                  1995      1994      1993
                                                 ------    ------    ------
<S>                                              <C>       <C>       <C>

Defined benefit plans:
Service cost-benefits earned during
 the period. . . . . . . . . . . . . . . . .     $   --    $   --    $   --
Interest cost on projected benefit
 obligation. . . . . . . . . . . . . . . . .         74        73       105
Actual return on plan assets . . . . . . . .        (25)        1         5
Net amortization and deferral. . . . . . . .         17        (5)      (10)
                                                 ------     -----     -----
Net pension cost of defined benefit plans. .         66        69       100
Multi-employer plans . . . . . . . . . . . .                   59       301
                                                 ------     -----     -----
Total pension expense. . . . . . . . . . . .      $  66     $ 128     $ 401
                                                 ------     -----     -----
                                                 ------     -----     -----

</TABLE>

  Assumptions used in accounting for the defined benefit plans as of the plans'
measurement dates were:

                                                  1995      1994      1993
                                                 ------    ------    ------

Weighted-average discount rate . . . . . . .        7.5%      7.5%      7.5%
Expected long-term rate of return on
 assets. . . . . . . . . . . . . . . . . . .        6.0%      6.0%      7.3%


                                      F-14
<PAGE>

                          NOTES TO FINANCIAL STATEMENTS

                              VERNITRON CORPORATION


NOTE 7 - PENSION ARRANGEMENTS, (CONT'D)

     The following table sets forth the funded status and amount recognized in
the consolidated balance sheets for the Company's defined benefit pension plans.

<TABLE>
<CAPTION>

                                                  1995      1994      1993
                                                -------   -------   -------
<S>                                             <C>       <C>       <C>

Actuarial present value of benefit obligations:
Vested benefit obligation. . . . . . . . . .    $ 1,116   $ 1,026   $ 1,003
                                                -------   -------   -------
                                                -------   -------   -------

Accumulated benefit obligation . . . . . . .    $ 1,116   $ 1,026   $ 1,003
                                                -------   -------   -------
                                                -------   -------   -------

Projected benefit obligations. . . . . . . .    $ 1,116   $ 1,026   $ 1,003
Less plan assets at fair market value. . . .        231        32        35
                                                -------   -------   -------
Projected benefit obligation in excess
 of plan assets. . . . . . . . . . . . . . .        885       994       968
Unrecognized net gain. . . . . . . . . . . .         98        83        80
                                                -------   -------   -------

Net pension liability recognized in the
 balance sheet . . . . . . . . . . . . . . .    $   983   $ 1,077   $ 1,048
                                                -------   -------   -------
                                                -------   -------   -------

</TABLE>

     Unrecognized net gains and losses are amortized over the average future
service lives of participants.  Plan assets are invested in a managed portfolio
consisting primarily of equity securities.

     Under the Company's 401(k) plan, eligible employees may elect to contribute
a percentage of their earnings which the Company has matched up to 3% of gross
earnings based on the level of income.  Company matching contributions were $325
in 1995 and $363 in 1994. The Company made no matching contribution in 1993.

NOTE 8 - OTHER INFORMATION

RESTRUCTURING PLAN -

     During 1993, the Company announced its plan to restructure its Motion
Control group.  The motion control business had been organized as two separate
divisions.  The plan consolidated the two divisions under a single operating
management based in San Diego.  In connection with the restructuring, the
Company recorded a charge of $3,500.  The charge included $2,300 for the write-
down of slow moving and excess inventory to net realizable value.  In addition,
$1,200 was recorded for severance, early retirement, other employee-related
benefits and other related charges.  As part of the restructuring, the Company
closed its Deer Park, New York facility.

  During 1994, the Company recorded an additional $1,315 charge related to this
restructuring, $1,015 of which provided additional inventory reserves to reflect
slower turnover of the inventory than was anticipated in the 1993 charge
calculation.  The remaining $300 of the 1994 charge was to adjust the carrying
amount of the Deer Park, New York facility.

  In September 1995, the Company sold the idle Deer Park, New York facility for
net proceeds of $1,401.  Included in other expense, is a loss in the sale of
this facility of $233.


                                      F-15
<PAGE>

                              VERNITRON CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


NOTE 8 - OTHER INFORMATION, (CONT'D)

STOCK OPTIONS -

     Options to purchase up to 193,000 shares of Vernitron common stock, with
exercise prices of $.75 - $.83 per share, have been issued to certain key
employees of the Company.  Of that amount, 133,900 options are vested, with the
balance becoming vested as follows: 30,300 (1996) and 28,800 (1997).  These
options are exercisable for up to seven years from the date of grant.  There are
249,000 shares available for future grant.

INTEREST PAID - in 1995, 1994, and 1993 was $1,989, $1,883 and $2,168
respectively.

NOTE 9 - COMMITMENTS AND CONTINGENCIES

     Future minimum payments, under noncancellable operating leases (exclusive
of property expenses and net of sublease rental income), as of December 31,
1995, are as follows:

<TABLE>

          <S>                                                        <C>

          1996 . . . . . . . . . . . . . . . . . . . . . . . . .     $1,399
          1997 . . . . . . . . . . . . . . . . . . . . . . . . .      1,333
          1998 . . . . . . . . . . . . . . . . . . . . . . . . .      1,088
          1999 . . . . . . . . . . . . . . . . . . . . . . . . .      1,177
          2000 . . . . . . . . . . . . . . . . . . . . . . . . .        139
          2001 and thereafter. . . . . . . . . . . . . . . . . .        272
                                                                     ------
                                                                     $5,408
                                                                     ------
                                                                     ------

</TABLE>


     Rent expense under such leases, net of sublease rental income, amounted to
$1,539 in 1995, $1,379 in 1994 and  $1,348 in 1993.

     In February 1990, the Company sold and leased back its San Diego,
California facility under an operating lease.  The Company has a deferred gain
as of December 31, 1995 on this transaction of $519, which is being amortized to
income over the ten year lease term as a reduction of annual rent expense.

     The Company is a defendant in various lawsuits, none of which is expected
to have a material adverse effect on the Company's financial position or results
of operations.

NOTE 10 - SUBSEQUENT EVENTS

     In February 1996, the company entered into a definitive merger agreement to
acquire Precision Aerotech, Inc.  Precision Aerotech designs, manufactures and
markets laser scanners, precision metal optics, high performance air bearings
and precision machined parts sold predominantly in commercial markets.
Precision Aerotech's sales for the twelve months ended January 31, 1996 were
approximately $43.5 million.

     The definitive merger agreement contemplates the payment of $5 per share in
cash for each outstanding share of common stock of Precision Aerotech and the
repayment of Precision Aerotech's debt. It is expected that the purchase will
require approximately $19 million in cash, all of which Vernitron expects will
be financed with additional borrowings.  Completion of the transaction is
subject to the satisfaction  of customary conditions, including receipt of all
necessary financing by the Company.  Shareholders owning 95% of Precision
Aerotech's common stock have agreed to sell their shares to Vernitron and vote
in favor of the merger.  Subject to the foregoing, the acquisition is expected
to close in the second quarter of 1996.


                                      F-16
<PAGE>

                              VERNITRON CORPORATION

                  SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS

                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>


- - - ----------------------------------------------------------------------------------------------------------
COL. A                              COL. B       COL. C         COL. D         COL. E           COL. F
- - - ----------------------------------------------------------------------------------------------------------
                                         Additions
                                   ----------------------
                                   Balance at  Charged to     Charged to
                                   Beginning   Costs and      Other                          Balance at
      Classification               of Period   Expenses       Accounts       Deductions      End of Period
      --------------               ----------  ----------     -----------    -----------     -------------
<S>                                <C>         <C>            <C>            <C>             <C>

ALLOWANCE FOR DOUBTFUL ACCOUNTS


Year ended December 31, 1995:         $345       $106                             $218(a)         $233
Year ended December 31, 1994:         $278       $124                             $ 57(a)         $345
Year ended December 31, 1993:         $291       $ 40                             $ 53(a)         $278


</TABLE>

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

(a)  Uncollectible accounts written off, net of recoveries.



                                      F-17

<PAGE>

                                    EXHIBIT INDEX

<TABLE>
<CAPTION>

EXHIBIT
NUMBER                                 DESCRIPTION                       SEQ. PG. NO.
- - - -------                                -----------                       ------------
<S>       <C>                                                            <C>

3(1)      Certificate of Incorporation of the Registrant (filed as
           Exhibit 1 to the Form 8-A, filed on August 8, 1991 (the
           "Form 8-A") and incorporated herein by reference).

3(2)      By-Laws of the Registrant (filed as Exhibit 2 to the Form 8-
           A and incorporated herein by reference).

4(1)      Certificate of the Designation, Powers, Preferences and
           Rights of the $3.75 Cumulative Exchangeable Redeemable
           Preferred Stock ("Preferred Stock") (filed as Exhibit 4(2)
           to the Registrant's Registration Statement on Form S-4
           (Registration Number 33-16310), filed on August 6, 1987
           (the "Registration Statement") and incorporated herein by
           reference).

4(2)      Certificate of Amendment of Certificate of Incorporation
           Effecting the Amendment and Restatement of the Certificate
           of the Designation, Powers, Preferences and Rights of the
           Preferred Stock, dated as of August 14, 1991 (filed as
           Exhibit 4(2) to the Registrant's Annual Report on Form 10-
           K for the year ended December 31, 1991 (the "1991 Form 10-
           K") and incorporated herein by reference).

4(3)      Form of Indenture between Registrant and the Bank of
           Montreal Trust Company, as Trustee, relating to the 15%
           Subordinated Debentures of the Registrant, issuable at the
           option of the Registrant in exchange for the Preferred
           Stock (filed as Exhibit 4(1) to the Registration Statement
           and incorporated herein by reference).

10(1)     Indenture of Trust by and between the Industrial Development
           Authority of the State of New Hampshire and Laconia
           Peoples National Bank and Trust Company for $3,000,000
           principal amount of Industrial Development Authority of
           the State of New Hampshire Floating Rate Monthly Demand
           Industry Facility Bonds (filed as Exhibit 10(18) to the
           Registrant's Annual Report or Form 10-K for the fiscal
           year ended December 28, 1985, filed on April 15, 1986 (the
           "1985 Form 10-K") and incorporated herein by reference).

10(2)     Loan Agreement by and among the Industrial Development
           Authority of the State of New Hampshire, the Registrant
           and V Land Corporation for $3,000,000 principal amount of
           Industrial Development Authority of the State of New
           Hampshire Floating Rate Monthly Demand Industry Facility
           Bonds (filed as Exhibit 10(19) to the 1985 Form 10-K and
           incorporated herein by reference).

</TABLE>


                                     E-1


<PAGE>


<TABLE>
<CAPTION>

EXHIBIT
NUMBER                                 DESCRIPTION                       SEQ. PG. NO.
- - - -------                                -----------                       ------------
<S>       <C>                                                            <C>

10(3)     Reimbursement Agreement by and among V Land Corporation, the
           Registrant and National Westminster Bank PLC for
           $3,000,000 principal amount of Industrial Development
           Authority of the State of New Hampshire Floating Rate
           Monthly Demand Industry Facility Bonds (filed as Exhibit
           10(20) to the 1985 Form 10-K and incorporated herein by
           reference).

10(4)     Bond Purchase Agreement by and between E.F. Hutton &
           Company, Inc. and the Industrial Development
           Authority of the State of New Hampshire for
           $3,000,000 principal amount of the Industrial
           Development Authority of the State of New Hampshire
           Floating Rate Monthly Demand Industry Facility
           Bonds (filed as Exhibit 10(21) to the 1985 Form 10-
           K and incorporated herein by reference).

10(5)     Amended and Restated Credit Agreement, dated as of March
           28, 1991 (the "Credit Agreement") by and among the
           Registrant, The Bank of New York and National
           Westminster Bank USA (filed as Exhibit 10(5) to the 
           Form 10-K for the fiscal year ended December 30,
           1990, filed on March 28, 1991 (the "1990 Form 10-
           K") and incorporated herein by reference).

10(6)     Amendment No. 1 to the Credit Agreement, dated as of
           December 31, 1991 (filed as Exhibit 10(6) to the
           1991 Form 10-K and incorporated herein by
           reference).

10(7)     Security Agreement dated as of August 28, 1987 among the
           Registrant, certain subsidiaries of the Registrant,
           Irving Trust Company, National Westminster Bank USA
           and Irving Trust Company, as Collateral Agent
           (filed as Exhibit 10(79) to Post-Effective
           Amendment No. 1, filed on September 2, 1987 to the
           Registration Statement (the "Post-Effective
           Amendment") and incorporated herein by reference).

10(8)     Stock Pledge and Security Agreement dated as of August 28,
           1987 among the Registrant, certain subsidiaries of
           the Registrant, Irving Trust Company, National
           Westminster Bank USA and Irving Trust Company as
           Collateral Agent (filed as Exhibit 10(80) to the
           Post-Effective Amendment and incorporated herein by
           reference).

10(9)     Reimbursement, Contribution and Subrogation Agreement (the
           "Reimbursement Agreement") dated as of August 28,
           1987 among certain subsidiaries of the Registrant
           (filed as Exhibit 10(81) to the Post-Effective
           Amendment and incorporated herein by reference).

10(10)    Waiver/Amendment dated as of August 28, 1987 to
           Reimbursement Agreement, as amended, between the
           Registrant, V Land Corporation and National
           Westminster Bank PC (filed as Exhibit 10(78) to the
           Post-Effective Amendment and incorporated herein by
           reference).

</TABLE>


                                     E-2


<PAGE>


<TABLE>
<CAPTION>

EXHIBIT
NUMBER                                 DESCRIPTION                       SEQ. PG. NO.
- - - -------                                -----------                       ------------
<S>       <C>                                                            <C>

10(11)    Fifth amendment dated as of June 15, 1990, to Reimbursement
            Agreement (filed as Exhibit 10(10) to the 1990 Form
            10-K and incorporated herein by reference).

10(12)    Employment Agreement dated as of September 5, 1989, by and
            between the Registrant and Edward M. Murchie (filed
            as Exhibit 10(32) to the Registrant's Annual Report
            on Form 10-K for the year ended December 31, 1989,
            filed on March 28, 1990 (the "1989 Form 10-K") and
            incorporated herein by reference).

10(13)    Agreement by and between the Registrant and John R. Slowik,
            dated as of September 17, 1990 (filed as Exhibit
            10(14) to the 1990 Form 10-K and incorporated
            herein by reference).

10(14)    Agreement by and between the Registrant and One Lambda,
            Inc., dated as of December 27, 1990 (filed as
            Exhibit 10(15) to the 1990 Form 10-K and
            incorporated herein by reference).

10(15)    Form of Indemnification Agreement (filed as Exhibit 10(16)
            to the 1990 Form 10-K and incorporated herein by
            reference).

10(16)    Vernitron Corporation Long-Term Stock Incentive Plan (filed
            as Exhibit 10(16) to the 1991 Form 10-K and
            incorporated herein by reference).

10(17)    Form of Stock Option Agreement, dated as of September 30,
            1991 (filed as Exhibit 10(17) to the 1991 Form 10-K
            and incorporated herein by reference).

10(18)    Amendment No. 2 to the Credit Agreement, dated as of
            December 31, 1992 (filed as Exhibit 10(18) to the
            Registrant's Annual Report on Form 10-K for the
            year ended December 31, 1992 (the "1992 Form 10-K")
            and incorporated herein by reference).

10(19)    Amendment No. 3 to the Credit Agreement, dated as of
            September 30, 1993 (filed as Exhibit 10(19) to the
            Registrant's Annual Report on Form 10-K for the
            year ended December 31, 1993 (the "1993 Form 10-K")
            and incorporated herein by reference).

10(20)    Amendment No. 4 to the Credit Agreement, dated as of
            December 29, 1993 (filed as Exhibit 10(20) to the
            1993 Form 10-K and incorporated herein by
            reference).

10(21)    Amendment No. 5 to the Credit Agreement, dated as of March
            15, 1994 (filed as Exhibit 10(21) to the 1993 Form
            10-K and incorporated herein by reference).

</TABLE>


                                     E-3


<PAGE>


<TABLE>
<CAPTION>

EXHIBIT
NUMBER                                 DESCRIPTION                       SEQ. PG. NO.
- - - -------                                -----------                       ------------
<S>       <C>                                                            <C>

10(22)    Letter Agreement, dated March 15, 1994, between Vernitron
            Corporation and The Bank of New York and National
            Westminster Bank USA (filed as Exhibit 10(1) to the
            Registrant's Quarterly Report on Form 10-Q for the
            fiscal quarter ended March 31, 1994 (the "1994
            First Quarter Form 10-Q") and incorporated herein
            by reference).

10(23)    Letter Agreement, dated May 4, 1994, between Vernitron
            Corporation and The Bank of New York and National
            Westminster Bank USA (filed as Exhibit 10(2) to the
            1994 First Quarter Form 10-Q and incorporated
            herein by reference).

10(24)    Letter Agreement, dated May 6, 1994, between Vernitron
            Corporation and Stephen W. Bershad (filed as
            Exhibit 10(3) to the 1994 First Quarter Form 10-Q
            and incorporated herein by reference).

10(25)    Letter Agreement, dated May 4, 1994, between Vernitron
            Corporation and Lehman Brothers, Inc. (filed as
            Exhibit 10(4) to the 1994 First Quarter Form 10-Q
            and incorporated herein by reference).

10(26)    Commitment Letter, dated May 6, 1994, between Vernitron and
            The CIT Group/Credit Finance, Inc. (filed as
            Exhibit 10(5) to the 1994 First Quarter Form 10-Q
            and incorporated herein by reference).

10(27)    Letter Agreement, dated June 24, 1994, between the Company
            and National Westminster Bank USA and The Bank of
            New York (the "Banks") (filed as Exhibit 10(1) to
            the Registrant's Quarterly Report on Form 10-Q for
            the fiscal quarter ended June 30, 1994 (the "1994
            Second Quarter Form 10-Q") and incorporated herein
            by reference).

10(28)    Amendment No. 6, dated as July 20, 1994, to the Amended
            and Restated Credit of Agreement, dated as of
            March 28, 1991, by and between the Company and the
            Banks (filed as Exhibit 10(2) to the 1994 Second
            Quarter Form 10-Q and incorporated herein by
            reference).

10(29)    Intercreditor and Subordination Agreement, dated as of
            July 20, 1994, between the Company, the Banks and
            CIT Group/Credit Finance, Inc. ("CIT") (filed as
            Exhibit 10(3) to the 1994 Second Quarter Form 10-Q
            and incorporated herein by reference).

10(30)    Loan and Security Agreement, dated as of July 20, 1994,
            between the Company and CIT (filed as Exhibit
            10(4) to the 1994 Second Quarter Form 10-Q and
            incorporated herein by reference).

10(31)    $2,451,000 Promissory Note, dated July 20, 1994, of the
            Company payable to CIT (filed as Exhibit 10(5) to
            the 1994 Second Quarter Form 10-Q and incorporated
            herein by reference).

</TABLE>


                                     E-4


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EXHIBIT
NUMBER                                 DESCRIPTION                       SEQ. PG. NO.
- - - -------                                -----------                       ------------
<S>       <C>                                                            <C>

10(32)    Trademark and Patent Security Agreement, dated as of July
            20, 1994, between the Company and CIT (filed as
            Exhibit 10(6) to the 1994 Second Quarter Form 10-Q
            and incorporated herein by reference).

10(33)    Mortgage and Security Agreement, dated as of July 20,
            1994, between the Company and CIT with respect to
            the Company's facility  located in St. Petersburg,
            Florida (filed as Exhibit 10(7) to the 1994 Second
            Quarter Form 10-Q and incorporated herein by
            reference).

10(34)    Mortgage and Security Agreement, dated as of July 20, 1994,
            between the Company and CIT with respect to the
            Company's facility located in Deer Park, New York
            (filed as Exhibit 10(8) to the 1994 Second Quarter
            Form 10-Q and incorporated herein by reference).

10(35)    Warrant, dated as of July 20, 1994, granted by the Company
            in favor of CIT (filed as Exhibit 10(9) to the 1994
            Second Quarter Form 10-Q and incorporated herein by
            reference).

10(36)    Letter Agreement, dated June 24, 1994, between the Company
            and Lehman Brothers, Inc. (filed as Exhibit 10(10)
            to the 1994 Second Quarter Form 10-Q and
            incorporated herein by reference).

10(37)    Amendment No. 1, dated March 17, 1995, to Loan and Security
            Agreement, dated as of July 20, 1994, between the
            Company and CIT (filed as Exhibit 10(37) to the
            Form 10-K for the year ended December 31, 1994 (the
            "1994 Form 10-K").

10(38)    Amended and Restated $2,701,334 Promissory Note, dated
            March 17, 1995, between the Company and CIT (filed
            as Exhibit 10(38) to the 1994 Form 10-K).

10(39)    Amendment No. 1, dated March 17, 1995, to Mortgage and
            Security Agreement, dated as of July 20, 1994,
            between the Company and CIT, with respect to the
            Company's St. Petersburg, Florida facility (filed
            as Exhibit 10(39) to the 1994 Form 10-K).

10(40)    Agreement and Plan of Merger, dated as of February 16,1996,
            between Vernitron Corporation, PA Acquisition
            Corporation and Precision Aerotech, Inc.

10(41)    Shareholders Agreement, dated as of February 16,1996,
            between Vernitron Corporation, PA Acquisition
            Corporation, Teachers Insurance and Annuity
            Association of America and Foothill Capital
            Corporation.

22          Subsidiaries of the Registrant.

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                                     E-5


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<TABLE>
<CAPTION>

EXHIBIT
NUMBER                                 DESCRIPTION                       SEQ. PG. NO.
- - - -------                                -----------                       ------------
<S>       <C>                                                            <C>

28(1)     Agreement of Limited Partnership of SWB Associates, L.P.,
            (the "Partnership") dated as of December 4, 1988
            (filed as Exhibit 1 to the Registrant's current
            report on Form 8-K dated as of December 7, 1988,
            filed on December 8, 1988 (the "December 1988 8-K")
            and incorporated herein by reference).

28(2)     Agreement by and between SWB Associates, L.P., SWB Holding
            Corporation, Shearson Lehman Brothers Holdings
            Inc., and Shearson Electric, Inc., dated as of
            March 22, 1991 (filed as Exhibit 28(4) to the 1990
            Form 10-K and incorporated herein by reference).

</TABLE>


                                     E-6

