ROBOTIC VISION SYSTEMS INC, POS AM, 1995-08-08

ROBOTIC VISION SYSTEMS INC
POS AM, 1995-08-08
INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 8, 1995

File No. 33-76320
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

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

POST EFFECTIVE AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933

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

ROBOTIC VISION SYSTEMS, INC.
(Exact name o
f Registrant as specified in its charter)

DELAWARE 3827 11-2400145
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification
Number)

425 RABRO DRIVE EAST
HAUPPAUGE, NEW YORK 11788
(516) 273-9700

(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)

PAT V. COSTA, PRESIDENT
425 RABRO DRIVE EAST
HAUPPAUGE, NEW YORK 11788
(516) 273-9700

(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-----------------

COPY TO:
IRA ROXLAND, ESQ.
PARKER DURYEE ROSOFF & HAFT
529 FIFTH AVENUE
NEW YORK, NEW YORK 10017
(212) 599-0500
-----------------

APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after
the effective date of this Amendment to the Registration Statement

If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. /x/
-----------------

PURSUANT TO RULE 429, PROMULGATED UNDER THE SECURITIES ACT OF 1933, THE
PROSPECTUS FORMING A PART OF THIS REGISTRATION STATEMENT ALSO RELATES TO
AN AGGREGATE OF 4,731,671 SHARES OF COMMON STOCK OF ROBOTIC VISION SYSTEMS, INC.
("RVSI"), INITIALLY INCLUDED IN RVSI'S REGISTRATION STATEMENT ON FORM S-1
(FILE NO. 33-61396), DECLARED EFFECTIVE ON OCTOBER 12, 1993, FOR WHICH
AGGREGATE FILING FEES OF $4,457.93 WERE PREVIOUSLY PAID.

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

<PAGE>
ROBOTIC VISION SYSTEMS, INC.

(Cross Reference Sheet Pursuant to Item 501(b) of Regulation S-K)

<TABLE>
<CAPTION>
ITEM NUMBER AND CAPTION HEADING IN PROSPECTUS
----------------------- ---------------------
<S> <C> <C>

Item 1. Forepart of the Registration
Statement and Outside Front Cover Page
Cover Page of Prospectus . . .

Item 2. Inside Front and Outside Back Cover Page
Cover Pages of Inside Front
Prospectus . . . . . . . . . .

Item 3. Summary Information, Risk Summary; The Company;
Factors and Ratio of Earnings to Risk Factors;
Fixed Charges . . . . . . . . . Management's
Discussion and
Analysis of Financial
Condition and Results
of Operations;
Financial Statements;
Notes to Financial
Statements

Item 4. Use of Proceeds . . . . . . . . *

Item 5. Determination of Offering Price Cover Page

Item 6. Dilution . . . . . . . . . . . *

Item 7. Selling Security Holders . . . Selling Stockholders

Item 8. Plan of Distribution . . . . . Cover Page; Selling
Stockholders

Item 9. Description of Securities to be Description of
Registered . . . . . . . . . . Securities

Item 10. Interests of Named Experts and Experts; Legal Matters
Counsel . . . . . . . . . . . .

Item 11. Information with Respect to the
Registrant
The Company; Business;
Subparagraph (a) . . . . . . . Management - Transactions
with Management and Other
Related Persons

Subparagraph (b) . . . . . . . Business - Facilities

Subparagraph (c) . . . . . . . Legal Proceedings

Subparagraph (d) . . . . . . . Dividend Policy; Price
Range of Common Stock;
Description of Securities

<PAGE>
Subparagraph (e) . . . . . . . Financial Statements;
Notes to Financial
Statements

Subparagraph (f) . . . . . . . Summary; Selected
Financial Data

Subparagraph (g) . . . . . . . *

Subparagraph (h) . . . . . . . Selected Financial
Data; Management's
Discussion and
Analysis of Financial
Condition and Results
of Operations

Subparagraph (i) . . . . . . . *

Subparagraph (j) . . . . . . . Management - Executive
Officers and Directors

Subparagraph (k) . . . . . . . Management - Compensation;
Management - Transactions
with Management and Other
Related Persons

Subparagraph (l) . . . . . . . Principal Stockholders

Subparagraph (m) . . . . . . . Management - Transactions
with Management and Other
Related Persons

Item 12. Disclosure of Commission
Position on Indemnification for
Securities Act *
Liabilities . . . . . . . . . .

<FN>
* Omitted because response is negative or inapplicable.

</TABLE>

<PAGE>

SUBJECT TO COMPLETION - PRELIMINARY PROSPECTUS DATED AUGUST 8, 1995

6,156,791 SHARES

ROBOTIC VISION SYSTEMS, INC.

COMMON STOCK
-----------------

This Prospectus relates to 6,156,796 shares of Common Stock comprising,
respectively, 4,824,725 shares which are currently issued and outstanding and
1,332,071 shares which may be issued subsequent hereto upon the exercise of
certain of the Company's currently outstanding common stock purchase warrants,
all of which are being offered for sale by the Selling Stockholders. The
Company will not receive any of the proceeds from the sale of shares by the
Selling Stockholders. See "Selling Stockholders."

The Company has been advised by each of the Selling Stockholders that there
are no underwriting arrangements with respect to the sale of their respective
shares, that such shares will be sold from time to time in public sales in the
over-the-counter market at then prevailing prices or in private transactions at
negotiated prices, and that no greater than usual and customary brokerage fees
will be paid by the Selling Stockholders in connection therewith. See "Selling
Stockholders."
-----------------

AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVES ELEMENTS
OF RISK. SEE "RISK FACTORS."
-----------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------

The Company's Common Stock is traded under the symbol ROBV on the Nasdaq
National Market. The closing price for such Common Stock was $ per share on
August , 1995. See "Risk Factors" and "Price Range of Common Stock."

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

The date of this Prospectus is , 1995

<PAGE>

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Regional Offices of the Commission at 7 World
Trade Center, New York, New York 10048 and Suite 1400, Northwestern Atrium
Center, 500 West Madison Street, Chicago, Illinois 60621. Copies of such
material can also be obtained from the Public Reference Section of the
Commission at prescribed rates by writing to the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549.

The Company has filed with the Commission a Registration Statement on
Form S-1 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Common Stock being offered hereby. This Prospectus does not
contain all the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement, copies of which can be obtained from the Public Reference Section of
the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549,
upon payment of the fees prescribed by the Commission.

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

TABLE OF CONTENTS

Page Page
----- -----
<S> <C> <C> <C>
Summary . . . . . . . . . . . . (i) Principal Stockholders . . . . . 23
Risk Factors . . . . . . . . . . 1 Selling Stockholders . . . . . 25
Price Range of Common Stock . . 2 Description of Securities . . . 27
Dividend Policy . . . . . . . . 2 Legal Proceeding . . . . . . . 27
Capitalization . . . . . . . . 3 Legal Matters . . . . . . . . . 28
Selected Financial Data . . . . . 4 Experts . . . . . . . . . . . . 28
Management's Discussion and Financial Statements . . . . . F- 1
Analysis of Financial Condition Notes to Financial Statements . F- 6
and Results of Operations . . 6 Unaudited Financial Statements F-17
Business . . . . . . . . . . . 11 Notes to Unaudited Financial
Management . . . . . . . . . . 19 Statements . . . . . . . . . F-20

</TABLE>

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

NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THESE SECURITIES TO ANY PERSON IN ANY
JURISDICTION WHERE SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL AT ANY TIME CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF.

<PAGE>

SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS.

THE COMPANY

Robotic Vision Systems, Inc. (the "Company") designs, manufactures, markets
and installs machine vision-based products for productivity improvement and
quality control applications in the manufacturing workplace. These products
have as their primary component the Company's proprietary 3-dimensional machine
vision technology. This technology uses sophisticated structured laser light
and optical triangulation techniques to acquire precise 3-dimensional
measurement information about the surface of a viewed object.

The Company's LS Lead Scanning Systems offer automated high-speed
3-dimensional ("3-D") semiconductor package lead inspection with the added
feature of non-contact scanning of the packages in their shipping trays
("in-tray scanning"). The system uses a laser-based, non-contact, 3-D
measurement technique to inspect and sort quad flat packs, thin quad
flat packs, plastic leaded chip carriers, ball grid arrays and thin
small outline packs from their carrying trays. The system measurements include
coplanarity, total package height, true position spread and span, as well as
lead angle, width, pitch and gap.

The Company was incorporated in New York in 1976 and reincorporated in
Delaware in 1977. Its executive offices are located at 425 Rabro Drive East,
Hauppauge, New York 11788; telephone (516) 273-9700.

PROPOSED ACQUISITION

The Company has entered into a definitive merger agreement, dated as of
April 27, 1995, as amended and restated as of July 11, 1995 (the "Merger
Agreement"), with Acuity Imaging Inc., a publicly owned company located in
Nashua, New Hampshire ("Acuity"), pursuant to which Acuity is to become a wholly
owned subsidiary of the Company (the "Merger"). Acuity designs, develops,
manufactures and supplies 2-D machine vision systems to a diversity of markets.
Consummation of the Merger, which is intended to be completed as a tax-free
reorganization and to be accounted for as a pooling of interests, is subject to
conditions which are customary for transactions of this nature, including
approval by the stockholders of each of the Company (the "Company's Special
Meeting") and Acuity. Consequently, consummation of this transaction cannot
be assured.

The Merger Agreement provides that each then outstanding share of
Acuity's common stock will be converted into the right to receive, and become
exchangeable for (the "Exchange Offer"), 0.766 of a share of the Company's
Common Stock; provided, however, that if the average of the closing prices of
the Company's Common Stock on The Nasdaq National Market for the 20 trading
days ending on (and including) the third trading day immediately prior to the
Company's Special Meeting (the "Average Closing Price") is greater than
$14.50, then the Exchange Ratio shall be equal to the quotient of $11.107
divided by the Average Closing Price (provided that in no event shall the
Exchange Ratio be less than 0.555375) (the "Minimum Collar"); and if the
Average Closing Price is less than $10.00, then the Exchange Ratio shall be
equal to the quotient of $7.66 divided by the Average Closing Price (provided
that in no event shall the Exchange Ratio be more than 0.925626) (the
"Maximum Collar" and collectively with the Minimum Collar, the "Collars").

The Merger Agreement also provides that (i) options to purchase
shares of Acuity's common stock at various exercise prices will be converted
into options to purchase shares of the Company's Common Stock and (ii) rights
under Acuity's 1994 Employee Qualified Stock Purchase Plan to purchase shares of
Acuity's common stock will be converted into rights to purchase shares of the
Company's Common Stock.

Assuming the satisfaction of all conditions set forth in the Merger
Agreement, the Company will issue up to a maximum of 2,524,000 shares of its
Common Stock as a consequence of the Merger.

THE OFFERING

This offering consists of 6,156,796 shares of Common Stock comprising,
respectively, 4,824,725 shares which are currently issued and outstanding and
1,332,071 shares which may be issued subsequent hereto upon the exercise of
certain of the Company's currently outstanding common stock purchase warrants
("Warrants"), all of which are being offered for sale by the several persons
whose respective names are set forth under "Selling Stockholders". The Company
will not receive any of the proceeds from the sale of shares of Common Stock
by the Selling Stockholders. The proceeds, if any, from the exercise of Warrants
will be added to the Company's working capital. The Company is not aware of any
underwriting arrangements with respect to the sale of any of such shares.
See "Selling Stockholders".

<PAGE>

RISK FACTORS

An investment in the shares of Common Stock offered hereby involves elements
of risk. Such risks include, among others, the Company's dependence upon limited
number of customers, competition and pending litigation. See "Risk Factors."

(ii)

<PAGE>

SUMMARY OF FINANCIAL INFORMATION
(In thousands, except per share data):

The financial data set forth below is qualified in its entirety by and should
be read in conjunction with the more detailed information and financial
statements and notes to financial statements appearing elsewhere in
this Prospectus.

STATEMENT OF OPERATIONS DATA (IN THOUSANDS):

SIX MONTHS ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
-------------------- -----------------------------------------------------------
1995(e) 1994(e) 1994 1993 1992 1991 1990
-------- ------- ------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $16,600 $11,790 $24,613 $19,943 $13,335 $ 8,519 $11,256
Income (Loss) before Benefit
from Income Taxes
and Extraordinary Items $ 3,222 $ 1,006 $ 2,710 $ 1,104 $ (983) $(2,428) $(5,523)
(a)

Benefit from Income Taxes $ 2,060 $ 1,093 $ 401 $ 495 - - -
Income (Loss) before Extraordinary
Items $ 5,282 $ 2,099 $ 3,111 $ 1,599 $ (983) $(2,428) $(5,523)(a)
Extraordinary Items - - - - $ 1,210(b)(c) - -

Net Income (Loss) $ 5,282 $ 2,099 $ 3,111 $ 1,599 $ 227(b)(c) $(2,428) $(5,523)(a)
Income (Loss) Per Share before
Extraordinary Items $ .38 $ .16 $ .24 $ .14 $ (.13) $ (.38) $ (.87)

Net Income (Loss) Per Share $ .38 $ .16 $ .24 $ .14 $ .03 $ (.38) $ (.87)

Weighted Average Number of
Common Shares and Equivalents 13,765(d) 12,830(d) 13,057(d) 12,534(d) 7,783 6,354 6,337

<FN>
----------------------------
(a) Includes restructuring charges of $2,526,000.

(b) Includes an extraordinary credit of $1,138,000 (net of income tax provision
of $97,000) relating to an agreement with General Motors Corporation. See
Note 12 of Notes to Financial Statements.

(d) Weighted average number of common shares and common share equivalents
calculated using the modified treasury stock method. See Note 1i of
Notes to Financial Statements.

(e) Derived from unaudited financial statements.

</TABLE>

(iii)

<PAGE>

BALANCE SHEET DATA (in thousands):

SEPTEMBER 30,
-----------------------------------------------------------------
MARCH 31, 1995(a) 1994 1993 1992 1991 1990
---------------- ------- ------ ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Total Assets $21,710 $14,988 $7,889 $ 4,515 $ 4,296 $5,963
Current Liabilities $ 6,936 $ 5,742 $6,215 $ 4,463 $ 5,899 $5,140
Total Liabilities $ 7,149 $ 5,952 $6,460 $ 4,798 $ 6,297 $5,564
Stockholders' Equity (Deficiency) $14,561 $ 9,036 $1,429 $ (283) $(2,001) $ 399
Working Capital (Deficiency) $ 8,311 $ 4,664 $ (766) $(1,326) $(2,476) $ (530)

<FN>
---------------------------------
(a) Derived from unaudited financial statements.

</TABLE>

Reference is made to "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Notes to Financial Statements.

(iv)

<PAGE>

RISK FACTORS

This offering entails elements of risk. The following factors should be
carefully considered before any decision is made to purchase any of the shares
of Common Stock offered hereby.

- CONCENTRATION OF REVENUES. The Company's sales have
been historically concentrated in a small number of customers at any time,
although the specific customers change over time. Sales to Advanced
Semiconductor Engineering Inc. ("ASE") and Anam Industrial Co., Ltd. ("Anam")
accounted for approximately 11% and 10%, respectively, of the Company's revenues
during the six months ended March 31, 1995. Sales to Intel Corporation and
Motorola Inc. accounted for approximately 15% and 10%, respectively, of the
Company's revenues during the fiscal year ended September 30, 1994. Sales to
Samsung Corporation, Anam and Intel Corporation accounted for
approximately 15%, 13% and 13%, respectively, of the Company's revenues during
its year ended September 30, 1993. No other customers accounted for more than
10% of sales during such fiscal periods and fiscal years. The loss of any one or
more of these customers or any significant reduction in their orders for the
Company's products may be expected to materially adversely affect the Company's
operations and prospects. A majority of the Company's sales in recent years
has been export sales to the Far East. For the six months ended March 31, 1995
and for the fiscal years ended September 30, 1994 and 1993, export sales
accounted for approximately 79%, 62% and 74%, respectively, of the Company's
revenues. See "Business - Customers."

- COMPETITION. The Company believes that the machine vision industry is
currently highly fragmented and intensely competitive. The Company is aware that
a large number of concerns, which it estimates to be upward of 100, entered the
industry in the years 1980 through 1986 and that most of these were relatively
young, private concerns. Over the past several years, however, the Company
estimates that the number of its competitors has narrowed to less than 25, which
the Company believes is attributable in substantial part to a consolidation
within the industry. The Company is aware of several competitors which
promote substitute technologies. In addition, the Company believes that there
are other concerns, some of which may be substantially larger and have
substantially greater assets and resources than the Company, engaged in the
development of technology and products which would be competitive with those of
the Company should such concerns choose to enter the machine vision
marketplace. The product development barriers to entering this market are not
overwhelming. See "Business - Competition."

- PENDING LITIGATION. The Company has been the subject of a counterclaim
in excess of $3.0 million asserted by the defendant in a proceeding previously
instituted by the Company in which the Company had alleged that such defendant
had breached certain agreements between the Company and the defendant relating
to the defendant's purchase of all of the assets of the Company's former welding
and cutting systems business. In view of the magnitude of the counterclaim
against the Company when compared to the Company's total assets of approximately
$21.7 million at March 31, 1995, and given the inherent uncertainties of
litigation, an adverse outcome to the Company in the counterclaim could
materially adversely affect the Company's financial viability. See
"Business - Legal Proceedings."

- UNCERTAIN PATENT PROTECTION. At March 31, 1995, the Company owned 76
issued U.S. patents relating to its 3-D vision technology. There can be no
assurance that such patents will not be infringed upon or that the Company
will have adequate remedies for any such infringement. See
"Business - Proprietary Protection."

- MAJOR SUPPLIER IN BANKRUPTCY. During fiscal 1994, one of the
Company's major suppliers voluntarily filed for protection under Chapter 11
of the Federal Bankruptcy Act. The Company anticipates that it may experience a
short term interruption in rebuilding its inventory of this product should this
supplier not emerge from bankruptcy successfully. See "Business - Sources of
Supply."

- EXPORT SALES. Foreign export sales accounted for 62%, 74% and 54%
of the Company's revenues in fiscal 1994, 1993 and 1992, respectively.
To the extent foreign currencies weaken relative to the
U.S. dollar, the Company's products could become more expensive in these
countries. This could adversely affect both the Company's sales volumes and
gross profitability.

- NO DIVIDENDS. The Company does not anticipate paying cash dividends
on its Common Stock in the foreseeable future. The Company intends to reinvest
any funds that might otherwise be available for the payment of dividends in
further development of its business following the Merger. See "Dividend Policy."

<PAGE>

- POSSIBLE VOLATILITY OF STOCK PRICE. Stock prices for many
technology companies fluctuate widely for reasons which may be unrelated to
operating performance or new product or service announcements. Broad market
fluctuations, earnings and other announcements of other companies, general
economic conditions or other matters unrelated to the Company and outside its
control also could affect the market price of the Common Stock.

- POSSIBLE FUTURE PUBLIC SALES OF COMMON STOCK. Sales of
substantial amounts of shares of the Company's Common Stock in the public
market following the date of this Prospectus could adversely affect the market
price of the Company's Common Stock. As of the date of this Prospectus,
10,730,465 shares of the Company's Common Stock are unrestricted and freely
tradable. There are also 2,388,668 restricted shares of the Company's
Common Stock, as such term is defined under Rule 144 of the Securities Act, of
which 1,110,000 shares will be registered under the Securities Act prior to
January 1996, and thereby be freely tradable.

Upon consummation of the Merger and assuming that the Exchange Ratio is
equal to 0.766, an additional 1,904,993 shares (excluding
shares issuable upon exercise of options) of the Company's Common Stock (the
"Merger Shares") will be outstanding. Merger Shares owned by nonaffiliates
of Acuity (approximately 1,844,590 shares) will be eligible for sale
immediately upon consummation of the Merger. Merger Shares owned by affiliates
of Acuity (approximately 60,403 shares) may not be sold until after the results
covering 30 days of post-Merger combined operations of the Company and Acuity
have been filed with the Commission, sent to stockholders of the Company or
otherwise publicly disclosed. After such public disclosures, affiliates of
Acuity will be able to sell such shares without restriction.

Upon consummation of the Merger and assuming that the Exchange Ratio is
equal to 0.766, there will also be outstanding options,
warrants and rights to purchase up to 2,904,453 shares of the Company's Common
Stock. The sale of a substantial amount of these shares could have an adverse
effect on the future market price of the Company's Common Stock. See "Price
Range of Common Stock" and "Selling Stockholders."

PRICE RANGE OF COMMON STOCK

The Company's Common Stock commenced trading on the Nasdaq National Market
on January 5, 1994, under the symbol ROBV. Prior thereto and from December 4,
1991, such Common Stock was traded under the same symbol on the OTC Bulletin
Board. The following table sets forth the high and low bid prices for the
Company's Common Stock for the periods indicated:

FISCAL QUARTER ENDED BID
-------------------- ---------------------
HIGH LOW
------- ------
June 30, 1995 $15-1/4 $6-5/8
March 31, 1995 7-5/8 5-1/2
December 31, 1994 8-1/8 5-1/2

September 30, 1994 6-1/4 4-3/8
June 30, 1994 6-3/4 4-3/4
March 31, 1994 7-1/8 4-5/8
December 31, 1993 5-5/8 3-1/2

September 30, 1993 4-5/8 2
June 30, 1993 2-7/8 1-7/8
March 31, 1993 3-1/32 1-1/4
December 31, 1992 1-7/16 3/4

Bid quotations represent prices between dealers, do not include retail
markups, markdowns or commissions and may not represent actual transactions.

See the cover page of this Prospectus for a more current price quotation
for the Company's Common Stock.

DIVIDEND POLICY

The Company has not paid any cash dividends since its inception and does
not contemplate doing so in the near future. Any decisions as to the future
payment of the dividends will depend on the earnings and financial

<PAGE>

condition of the Company and such other factors as the Board of Directors deems
relevant at that time.

CAPITALIZATION

The following table sets forth the Company's capitalization as of March 31,
1995. No effect has been given to the potential exercise of then outstanding
stock options and common stock purchase warrants.

<TABLE>

<S> <C>
Stockholders' equity:
Common Stock, $.01 par value, 20,000,000 shares
authorized, 11,671,615 shares issued (1). . . . . . . . . . . $ 117,000

Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . 33,047,000

Accumulated deficit. . . . . . . . . . . . . . . . . . . . . . . . ( 18,603,000)
-----------

Total Stockholders' equity . . . . . . . . . . . . . . . . . . . . .$14,561,000
-----------
-----------

<FN>
-------------
(1) Does not include 3,006,147 shares at March 31, 1995 issuable upon the
exercise of outstanding stock options and common stock purchase warrants or
32,625 shares reserved for future issuance under the Company's stock option
plans. See "Management - Compensation" and "-Transactions with Management
and Other Related Persons."

</TABLE>

<PAGE>

SELECTED FINANCIAL DATA

The selected financial data set forth below is qualified in its entirety by
and should be read in conjunction with the more detailed information and
financial statements and notes to financial statements appearing elsewhere in
this Prospectus.

STATEMENT OF OPERATIONS DATA (IN THOUSANDS):

SIX MONTHS ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
-------------------- ----------------------------------------------------------------
1995(e) 1994(e) 1994 1993 1992 1991 1990
------- ------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>

Revenues $16,600 $11,790 $24,613 $19,943 $13,335 $ 8,519 $11,256
Income (Loss) before Benefit
from Income Taxes
and Extraordinary Items $ 3,222 $ 1,006 $ 2,710 $ 1,104 $( 983) $(2,428) $(5,523)(a)
Benefit from Income Taxes $ 2,060 $ 1,093 $ 401 $ 495 -- -- --
Income (Loss) before Extraordinary
Items $ 5,282 $ 2,099 $ 3,111 $ 1,599 $( 983) $(2,428) $(5,523)(a)
Extraordinary Items -- -- -- -- $1,210 (b)(c) -- --
Net Income (Loss) $ 5,282 $ 2,099 $ 3,111 $ 1,599 $ 227 (b)(c) $(2,428) $(5,523)(a)
Income (Loss) Per Share before
Extraordinary Items $ .38 $ .16 $ .24 $ .14 $( .13) $( .38) $( .87)

Net Income (Loss) Per Share $ .38 $ .16 $ .24 $ .14 $ .03 $( .38) $( .87)

Weighted Average Number of Common
Shares and Equivalents 13,765 (d) 12,830 (d) 13,057 (d) 12,534 (d) 7,783 6,354 6,337

<FN>
---------------
(a) Includes restructuring charges of $2,526,000.
(b) Includes an extraordinary credit of $1,138,000 (net of income tax provision
of $97,000) relating to an agreement with General Motors Corporation. See
Note 12 of Notes to Financial Statements.
(c) Includes extraordinary credits of $72,000 resulting from utilization of net
operating loss carryforwards.
(d) Weighted average number of common shares and common share equivalents
calculated using the modified treasury stock method. See Note 1i of Notes
to Financial Statements.
(e) Derived from unaudited financial statements.

</TABLE>

<PAGE>

SELECTED BALANCE SHEET DATA (IN THOUSANDS):

SEPTEMBER 30,
-------------------------------------------------------------------
MARCH 31, 1995(a) 1994 1993 1992 1991 1990
----------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>

Total Assets $21,710 $14,988 $ 7,889 $ 4,515 $ 4,296 $ 5,963

Current Liabilities $ 6,936 $ 5,742 $ 6,215 $ 4,463 $ 5,899 $ 5,140

Total Liabilities $ 7,149 $ 5,952 $ 6,460 $ 4,798 $ 6,297 $ 5,564

Stockholders' Equity
(Deficiency) $14,561 $ 9,036 $ 1,429 $( 283) $(2,001) $ 399

Working Capital
(Deficiency) $ 8,311 $ 4,664 $( 766) $(1,326) $(2,474) $( 530)

<FN>
-----------
(a) Derived from unaudited financial statements.

</TABLE>

Reference is made to "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Notes to Financial Statements.

<PAGE>

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

RESULTS OF OPERATIONS

SIX MONTHS ENDED MARCH 31, 1995 AND 1994

Revenues of $16,600,000 for the six months ended March 31, 1995 represent
an increase of $4,810,000, or 41%, in comparison to revenues of $11,790,000 for
the six months ended March 31, 1994. The increase in revenues was a result of
substantially increased shipments of the Company's LS-2000 and LS-3000 Series
semiconductor lead inspection systems. Revenues relating to the LS-3000 Series,
which was introduced in July 1994, were $14,944,000 for the six-month period
ended March 31, 1995.

Gross profit margins for the six months ended March 31, 1995 and March 31,
1994 were 54% and 45%, respectively. The increase in gross profit margins was
primarily due to the improved profitability of the LS-2000 and LS-3000 Series
product lines.

Company-funded research and development expenditures for the six months
ended March 31, 1995 increased by $591,000 over the comparable 1994 level. The
increase is attributable to continued development of the Company's lead scanning
systems and, in addition, research and development associated with the Company's
aircraft wing ice detection product. Certain software development costs are
capitalized in accordance with the provisions of Statement of Financial
Accounting Standards No. 86. For the six months ended March 31, 1995, $274,000
of these costs were capitalized as compared to $247,000 for the comparable 1994
period.

The Company's selling, general and administrative costs increased by
$920,000, or 36% for the six months ended March 31, 1995 as compared to the six
months ended March 31, 1994. The increase is primarily as a result of increased
marketing and distribution costs associated with the lead scanning systems
product line.

Net income for the six months ended March 31, 1995 was $5,282,000, or $.38
per share as compared to net income of $2,099,000, or $.16 per share
for the six months ended March 31, 1994. During the six months ended
March 31, 1995 and 1994, the Company recorded benefits from income taxes in
the amounts of $2,060,000 and $1,093,000, respectively. Such benefits were
primarily the result of decreases to the valuation allowances against deferred
tax assets, totaling $3,302,000 and $1,143,000 during the six month periods
ended March 31, 1995 and 1994, respectively. These decreases in the valuation
allowances emanated from the Company's profitable operations and the extent to
which the Company can substantiate projected future earnings. Had these
valuation allowances not been decreased, net income for the six month periods
ended March 31, 1995 and 1994 would have been approximately $1,980,000
and $956,000, respectively.

The deferred tax assets (net of valuation allowances) at March 31, 1995 and
September 30, 1994 of $3,429,000 and $1,163,000, respectively, are equivalent to
the benefit to be derived from net operating loss carryforwards that were
expected to be utilized to offset future taxable income projected as of the
respective balance sheet dates. The deferred tax assets at March 31, 1995 and
1994 have been limited to the benefit to be derived from projected future
income, due to the Company's limited history of earnings and its projected
future profitability currently being primarily dependent on one existing
product line. The valuation allowance as of March 31, 1995 was approximately
$4,863,000. The Company is not able to predict whether this valuation allowance
will be changed in the foreseeable future.

YEARS ENDED SEPTEMBER 30, 1994 AND 1993

Revenues of $24,613,000 for the year ended September 30, 1994 represent an
increase of $4,670,000, or 23%, in comparison to revenues of
$19,943,000 for the year ended September 30, 1993. The increase in revenues was
a result of substantially increased shipments of the Company's LS-2000 and LS-
3000 Series semiconductor lead inspection systems. The LS-3000 Series system, a
more advanced, high performance machine, was introduced in July 1994, and
represents the next generation lead scanning system designed to replace the
LS-2000 Series system. Sales of the LS-2000 and LS-3000 Series accounted for
revenues of $23,411,000 for the year ended September 30, 1994, representing an
increase of $5,095,000 or 28%, as contrasted with LS-2000 sales of
$18,316,000 for the year ended September 30, 1993. Sales of the LS-3000 Series
were $5,826,000 for the year ended September 30, 1994. Revenues related to U.S.
Government business during the fiscal year ended September 30, 1994 decreased
by 32% from the prior fiscal year, from $1,595,000 to $1,080,000.

<PAGE>

Gross profit margins for the fiscal years ended September 30, 1994 and 1993
were 48% and 43%, respectively. The increase in gross profit margins during
fiscal 1994 was primarily due to the improved profitability of the LS-2000 and
LS-3000 Series product lines.

Continued development of the LS-2000 Series and the new LS-3000 Series of
lead scanning systems and the Company's ID-1 aircraft wing ice detection systems
primarily accounted for $3,718,000 in the Company funded research and
development expense, net of capitalized software development costs, during the
year ended September 30, 1994, as contrasted with $2,526,000 during fiscal 1993.
In its fiscal year ended September 30, 1994, the Company capitalized $433,000 of
its software development costs as compared to $476,000 over the comparable 1993
period in accordance with the provisions of Statement of Financial Accounting
Standards No. 86. The Company also contracts to perform certain customer-funded
research and development efforts. Revenues and cost of revenues related to such
contracts were $468,000 and $155,000, respectively, during fiscal 1994 as
compared to $342,000 and $271,000, respectively, for fiscal 1993.

The Company's selling, general and administrative costs increased by
$687,000, or 14% for the year ended September 30, 1994 as compared to the prior
fiscal year, primarily as a result of increased marketing and distribution costs
associated with the LS-2000 and LS-3000 Series products. For the year ended
September 30, 1994 net interest income was $58,000 compared to net interest
expense of $25,000 in the comparable 1993 period.

Net income for the year ended September 30, 1994 was $3,111,000, or $.24
per share, as compared to net income of $1,599,000, or $.14 per share for the
year ended September 30, 1993.

During the fiscal years ended September 30, 1994 and 1993, the Company
recorded benefits from income taxes in the amounts of $401,000 and $495,000,
respectively. Such benefits were primarily the result of decreases in the
valuation allowances which emanated from the Company's profitable operations in
fiscal 1994 and 1993, respectively, and the extent to which the Company can
substantiate projected future earnings.

The deferred tax assets at September 30, 1994 and 1993 of $1,163,000 and
$584,000, respectively, are equivalent to the benefit to be derived from net
operating loss carryforwards that were expected to be utilized to offset future
taxable income projected as of the respective balance sheet dates. The deferred
tax assets at September 30, 1994 and 1993 have been limited to the benefit to be
derived from projected future income, due to the Company's limited history of
earnings and its projected future profitability currently being primarily
dependent on one existing product line.

YEARS ENDED SEPTEMBER 30, 1993 AND 1992

Revenues of $19,943,000 for the year ended September 30, 1993 represented
an increase of $6,608,000, or 50%, in comparison to revenues of $13,335,000 for
the year ended September 30, 1992. The increase in revenues was a result of
substantially increased shipments of the Company's LS-2000 Series semiconductor
lead inspection systems. Sales of the LS-2000 Series accounted for revenues of
$18,316,000 for the year ended September 30, 1993, representing an increase of
$7,745,000 or 73%, as contrasted with LS-2000 sales of $10,571,000 for the year
ended September 30, 1992. Revenues related to U.S. Government business during
the fiscal year ended September 30, 1993 decreased by 47% from the prior fiscal
year, from $3,021,000 to $1,595,000.

Gross profit margins for the fiscal years ended September 30, 1993 and 1992
were 43% and 26%, respectively. The increase in gross profit margins during
fiscal 1993 was primarily due to the improved profitability of the LS-2000
Series product line.

The Company recorded an extraordinary item in the year ended September 30,
1992 in the amount of $1,138,000 (net of income tax provision of $97,000)
associated with the satisfaction of approximately $1.3 million of indebtedness
owed to General Motors Corporation ("GM") at no significant cost to the Company
via the sale to GM of certain inventory and spare parts previously utilized by
the Company in its automotive robotic systems integration business which was
discontinued by the Company during its fiscal year ended September 30, 1990. The

<PAGE>

Company also executed a four year service agreement with GM under which the
Company, upon request by GM, will provide maintenance and repair services at the
Company's standard rates for certain automotive systems previously sold to GM.

Continued development of the LS-2000 Series of lead scanning systems and
the Company's ID-1 aircraft wing ice detection systems primarily accounted for
$2,526,000 in the Company-funded research and development expense, net of
capitalized software development costs, during the year ended September 30, 1993
as contrasted with $1,731,000 during the comparable 1992 period. In its fiscal
year ended September 30, 1993, the Company capitalized $476,000 of its software
development costs as compared to $568,000 over the comparable 1992 period in
accordance with the provisions of Statement of Financial Accounting Standards
No. 86. the Company also contracts to perform certain customer-funded research
and development efforts. Revenues and cost of revenues related to such contracts
were $342,000 and $271,000, respectively, during fiscal 1993 as compared to
$107,000 and $133,000, respectively, for fiscal 1992.

Selling, general and administrative expenses were $4,834,000 and
$2,766,000 for fiscal 1993 and 1992, respectively, or 24.2% and 20.7% of total
revenues, respectively. The increase was primarily due to the expansion of sales
efforts in various international markets, increased consulting expenses
relating to new products and markets, and increased employees, salaries and
related expenses to support the growing market for the Company's products. For
the year ended September 30, 1993 interest expense net of interest income
increased by $6,000 over the comparable 1992 period.

Net income for the year ended September 30, 1993 was $1,599,000, or $.14
per share, as compared to net income of $227,000, or $.03 for the year ended
September 30, 1992. Fiscal 1992 net income reflects the effects of extraordinary
items of $1,210,000 attributable to an agreement with GM and utilization of net
operating loss carryforwards.

During the fiscal year ended 1993, the Company adopted the provision of
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes", ("SFAS 109") which requires recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been
included in the Company's financial statements or tax returns. Under this
method, deferred tax assets and liabilities are determined based on the
differences between the financial accounting and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.

The adoption of SFAS 109 was made as of the beginning of the fiscal year on
a prospective basis. This accounting change had no effect on the Company's
financial statements as of the date of adoption. However, the adoption of SFAS
109 resulted in an increase in the income tax benefit recognized in fiscal 1993
and, therefore, an increase in income before extraordinary items of $584,000.

The deferred tax benefit recognized during the fiscal year ended September
30, 1993 represents a decrease in the valuation allowance from the date of
adoption. This adjustment in the valuation allowance emanates from the Company's
profitable operations in fiscal 1993 and the extent to which it could
substantiate projected future earnings. The adjustment in the valuation
allowance as of September 30, 1993 is equivalent to the benefit to be derived
from net operating loss carryforwards that are expected to be utilized to offset
projected future taxable income.

The deferred tax asset at September 30, 1993 has been limited to the
benefit to be derived from projected future income, due to the Company's limited
history of earnings and its projected future profitability currently being
primarily dependent on one existing product line.

Prior to fiscal 1993, the provision for income taxes was based on revenue
and expenses included in the Company's statement of operations. Where
appropriate the Company provided deferred income taxes for the tax effects of
transactions which were recorded for different periods for financial accounting
purposes than for income tax purposes. At September 30, 1992, no deferred taxes
were recorded because of the existence of net operating loss carryforwards.

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

SIX MONTHS ENDED MARCH 31, 1995

The Company's operating, investing, and financing activities for the six
months ended March 31, 1995 utilized net cash and cash equivalents of $1,222,000
as follows:

- Operating activities provided $216,000;

- $551,000 was used to purchase property and equipment, primarily
computer and demonstration equipment;

- $993,000 was invested primarily in U.S. Treasury Notes; and

- Financing activities provided $106,000 primarily through the issuance
of Common Stock upon the exercise of stock options and warrants.

The Company's inventories at March 31, 1995 of $4,533,000 increased by
$1,899,000 from $2,634,000 as of September 30, 1994 primarily to support
higher production volumes. Accounts receivable at March 31, 1995 of $5,691,000
increased by $2,279,000 from $3,412,000 as of September 30, 1994 primarily due
to higher operating levels and increased sales to larger customers with
longer payment terms.

YEAR ENDED SEPTEMBER 30, 1994

The Company's operating, investing and financing activities for the year
ended September 30, 1994 generated net cash and cash equivalents of $1,103,000
as follows:

- Operating activities provided $566,000;

- $1,002,000 was used to purchase property and equipment, primarily
computer and demonstration equipment;

- $2,984,000 was invested primarily in U.S. Treasury Notes and U.S.
Treasury Bills; and

- Financing activities provided $4,523,000 primarily through the
issuance of common stock and warrants in a private equity placement
and the issuance of common stock upon the exercise of stock options
and warrants.

The Company anticipates that its working capital needs for fiscal 1995 will
be satisfied by operating revenues and, if necessary, through borrowings under
an existing line of credit. The Company, however, will consider the possibility
of additional debt and/or equity financing, if such financing can be arranged on
terms favorable to the Company.

EXPORT SALES

Foreign export sales accounted for 62%, 74% and 54% of the Company's revenues
in fiscal 1994, 1993 and 1992, respectively. The Company's foreign export
sales are denominated in U.S. dollars and, therefore, the Company's receivables
are not exposed to the risk of foreign currency fluctuations. However, to the
extent foreign currencies weaken relative to the U.S. dollar, the Company's
products could become more expensive in these countries. This could affect
both the Company's sales volumes and gross profitability.

EFFECT OF INFLATION

Management believes that the effect of inflation has not been material
during each of the years ended September 30, 1994, 1993 and 1992, respectively,
and the six months ended March 31, 1995.

PROPOSED ACQUISITION

On April 27, 1995, the Company announced that it had entered into a
definitive merger agreement (the "Merger Agreement") with Acuity Imaging Inc., a
publicly owned company located in Nashua, New Hampshire ("Acuity"), pursuant to
which Acuity is to become a wholly owned subsidiary of the Company. Acuity
designs, develops, manufactures and supplies 2-D machine vision systems to a
diversity of markets.

<PAGE>

The Merger Agreement calls for the Company to issue 0.766 of a share
of its Common Stock for each Acuity share (subject to possible adjustments to
the Exchange Ratio as a result of implementation of the Collars), or
approximately 1,904,993 shares, in exchange for all of Acuity's outstanding
common stock assuming that the Exchange Ratio equals 0.766. If the price of
shares of the Company's Common Stock averages more than $14.50 or less than
$10.00 per share during the 20 trading days ending on (and including) the
third trading day immediately prior to the Company's Special Meeting, the
number of shares of the Company's Common Stock issuable to the Acuity's
stockholders would be proportionately adjusted. In no event, however, will
the Exchange Ratio be more than 0.925626 or less than 0.555375. In addition,
Acuity's outstanding stock options are to be exchanged for options upon the
Company's Common Stock in the same 0.766 to one ratio.

Consummation of the proposed merger, which is intended to be completed as a
tax-free reorganization and to be accounted for as a pooling of interests, is
subject to conditions which are customary for transactions of this nature,
including approval by the stockholders of each of the Company and Acuity.
Consequently, consummation of this transaction cannot be assured and it is
therefore not "probable" within the meaning ascribed to such term under the
Securities Act and the rules and regulations promulgated by the Commission
thereunder.

PRIVATE EQUITY PLACEMENT

On June 28, 1995, the Company consummated a private sale of an aggregate of
1,110,000 shares of its Common Stock, at a price of $9.00 from which the Company
derived net proceeds of approximately $9,500,000. The Company has agreed to
file a registration statement under the Securities Act covering these shares
for the respective accounts of the purchasers thereof no later than December
28, 1995. Arnhold and S. Bleichroeder, Inc. acted as the Company's agent in
connection with the Company's sale of these shares.

<PAGE>

BUSINESS

HISTORY

The history of the Company dates back to June 1960 with the founding of
Dynell Electronics Corporation, a manufacturer of large complex radar sets,
special purpose data processing equipment, underwater acoustic detection
equipment and target tracking equipment ("Dynell"). In December 1977, United
Technologies Corp. acquired Dynell for $22 million.

As part of the acquisition, United Technologies agreed to spin-off the
Company, then a division of Dynell, as an independent publicly-held company to
develop a novel technology dealing with optical three-dimensional measurement
and replication techniques. The Company operated as a developmental stage
company for the first four years of its existence.

Initially, the Company applied its vision technology in a project for the
U.S. Navy. The Company developed a turn-key system to aid the Navy in inspecting
propellers for the Navy's nuclear submarines. This project, along with several
other smaller government projects, provided revenues of approximately $9.5
million over a period of time from 1980 to the end of 1984. To reflect its
concentrated focus on vision-based systems, the Company changed its name to
Robotic Vision Systems, Inc. in July 1981.

Having built up a significant base of technology, the Company began to look
to other industrial markets where it could commercially manufacture and market
vision-based systems. In late 1983, GM sought out the Company to undertake
several major projects aimed at automating certain automobile manufacturing
processes, a strategic action which GM undertook in an attempt to achieve
worldwide competitiveness. Seeking to avoid the typical vendor-manufacturer
relationship of the automobile industry, the Company agreed to pursue this
direction only if GM would acquire a significant equity interest in the Company.
In August 1984, GM purchased an approximately 18% equity interest in the Company
for $8.9 million, provided the Company with $3.9 million for research and
development and contracted with the Company to perform a specific $1.0 million
vision related project.

Following the establishment of its relationship with GM, the Company grew
from 60 employees to 225 employees in 1986. The Company's first project for GM
was the design, manufacturing and implementation of a vision guided robotic
sealant turn-key system. The first equipment purchase order from GM for two of
these systems aggregated $6.0 million. In the first year of its relationship
with the Company, GM placed orders for projects worth approximately $15.0
million.

Over the course of the next three years, GM dramatically reduced its level
of capital spending, particularly for high tech automation systems. In view of
this development, the Company sought alternative markets to compensate for
declining revenues in the automotive industry. On an interim basis, the Company
pursued contract business in the robotic welding systems market. The Company
viewed this step as an interim means of generating cash flow to offset further
declines in the automotive sector. Between 1987 and 1990, the Company produced
nine welding systems generating approximately $6.9 million in revenues.

Concurrent with developing its welding systems operations and deciding not
to wait for GM to resume project spending, the Company sought to apply its core
technology to new applications outside the turn-key robotic systems industry. In
particular, the Company considered relevant markets to the machine vision
industry in light of its expertise and the advanced state of its technology. The
Company focused on the electronics industry as having a significant number of
applications where its technology could be applied with identifiable advantages
over current equipment.

The Company's first area of focus in the electronics industry addressed the
difficulties of manual and 2-dimensional ("2-D") inspection methods for printed
circuit boards. As a source of low-cost research, the Company initially
undertook a U.S. Navy project, funded through IBM, to study the feasibility of
fully automating the highly labor intensive and error-prone circuit board
inspection process. This study ultimately resulted in the Company's receipt of
approximately $3.0 million in development funding from IBM and the U.S. Navy to
develop automated

<PAGE>

solder joint inspection applications for vision technology. Building on this
research, the Company successfully completed the engineering and development of
the HR-2000, a fully automated 3-dimensional ("3-D") solder joint inspection and
process control system, by the spring of 1989. Over the next two years, the
Company installed HR-2000 units at several defense electronics manufacturing
houses.

Subsequently, the Company began to explore other applications in the
electronics industry for vision technology based inspection and quality control
equipment. Identifying both the competitive advantages of 3-D inspection over
traditional equipment while also recognizing the size of the market, the Company
decided to pursue the development of a semiconductor lead-inspection system in
August 1990. Two months later, the LS-2000, an automated high-speed 3-D
semiconductor lead inspection system, was introduced. In July 1994, the Company
introduced its advanced LS-3000 Series lead inspection system. Since the
initial introduction of the LS-2000 and through March 31, 1995, the Company has
shipped a total of 238 LS-2000 and LS-3000 Series units. It had an order backlog
for an additional 40 units at March 31, 1995, valued at approximately $11.6
million.

During the fiscal year ended September 30, 1990, the Company withdrew from
its automotive robotic systems integration business because of extremely
aggressive price competition from a large Japanese robot manufacturer, resulting
in reduced margins and a diminishing backlog of orders. The sale of its robotic
welding systems integration business in fiscal 1990 marked the culmination of
the Company's transition from being a supplier of turnkey systems to being a
developer and supplier of standard products having a wide array of commercial
and military applications in the area of electronics inspection.

VISION TECHNOLOGY

An important class of digital imaging systems is "machine vision",
intelligent machines that "see" in order to perform tasks such as automated
inspection in factory environments. These systems operate at a sufficiently high
speed to work within a system's existing production rate and with sufficient
visual discrimination to adaptively react to the factory environment.

On a simple level, machine vision can be categorized into three segments.
In ascending order of sophistication, these systems are 2-D binary imaging,
stereovision and 3-D vision.

2-D imaging has been satisfactory for many applications of machine vision
to date. 2-D vision technology employs a technique known as gray-scaling in
which workpieces are illuminated, viewed and converted into an image composed of
many light points in varying shades of gray, much like a black and white
television picture. The image captures qualitative information about the width
and height of the object but provides no data as to its depth characteristics.
Consequently, 2-D vision is unable to distinguish a three-inch sheetmetal hole
positioned two feet away from a six-inch hole placed four feet away.

Stereovision is an intermediate technology that, while more sophisticated
than 2-D vision, is less sophisticated and reliable than true 3-D vision. This
technology is based on viewing an illuminated workpiece from cameras poised at
two different angles. Theoretically, the relative positions of the two images
seen by the cameras can be reconciled to determine the object's location in
three-dimensional space. While more powerful than 2-D vision, stereovision
requires copious surface detail on the object and unambiguous and consistent
recognition by both cameras. A further constraint is that ambient lighting
conditions found on the typical factory floor may confuse a stereovision system
by shadowing one camera's view more than the other's view.

The highest level of machine vision sophistication is contained in true 3-D
vision. This technology, based on sophisticated structured light and optical
triangulation techniques, is at the heart of all of the Company's systems. With
true 3-D vision technology, workpieces are first illuminated with a known
pattern of laser light. After illumination, a single camera views light patterns
reflected by the workpiece, thus eliminating the problem of sensitivity to
ambient lighting conditions inherent in two-camera systems. Images are then
digitized into a grid of precise data points. In the final stage, exact three-
dimensional coordinates of each of these data points are calculated, and the
position and orientation of the object in three-dimensional space and its
feature characteristics are known.

<PAGE>

Three-dimensional vision is the only technique that can recognize depth
characteristics of almost any arbitrary workpiece.

On a broad level, machine vision applications in automated manufacturing
fall into two categories --inspection and process guidance.

INSPECTION TASKS PROCESS GUIDANCE TASKS
---------------- ----------------------

Verification Positioning
Counting Control
Character Recognition Sorting
Identification Adaptive Control
Flaw Detection Seam Tracking

Inspection functions are ideally suited to machine vision technology.
Because inspection is largely performed on a random sampling basis, human
inspection results in information delays and requires continual sampling to
determine the extent and cause of any defects. Machine vision eliminates
information delay through real-time inspection. Machine-based inspection also
eliminates subjectivity and human errors that result from fatigue and loss of
concentration.

Process guidance, in most cases, represents the more sophisticated
application of machine vision. In these applications, robots, using optical
imaging, must first "find" the location, orientation and geometric features of a
part under manufacture, and then, once a work environment has become "known" to
the computer, guide a robot or other mechanical device to the workpiece and
adaptively control the operation of a specific process.

MARKETS AND PRODUCTS

Revenues derived by the Company during the six months ended March 31, 1995
and its fiscal years ended September 30, 1994, 1993 and 1992 are described
below:

<TABLE>
<CAPTION>
% OF REVENUES
-------------------------------------------------
FISCAL YEAR ENDED
SEPTEMBER 30,
SIX MONTHS ENDED ------------------------
MARCH 31, 1995 1994 1993 1992
---------------- ---- ---- ----
<S> <C> <C> <C> <C>

Semiconductor Lead 99% 95% 92% 79%
Inspection Systems
(LS-2000 and
LS-3000 Series)

Contracts from U.S. 1% 4% 8% 23%
Government (1)

Other (2) --% 1% --% ( 2%)
--- --- --- ---
100% 100% 100% 100%
--- --- --- ---
--- --- --- ---

<FN>
---------------
(1) Includes, but is not limited to, programs relating to the advanced
inspection and machining of ship's propellers, and continued research and
development of the Company's ID-1 Ice Detection Technology.
(2) The Company provided for certain adjustments with respect to revenues
associated with two automotive contracts which were canceled in fiscal
1992.

</TABLE>

<PAGE>

The Company's domestic and foreign export sales during the Company's six
months ended March 31, 1995 and its fiscal years ended September 30, 1994, 1993
and 1992 are described below:

FISCAL YEAR ENDED
SEPTEMBER 30,
SIX MONTHS ENDED ---------------------------
MARCH 31, 1995 1994 1993 1992
---------------- ---- ---- ----
<S> <C> <C> <C> <C>

North America $ 3,501 $ 9,258 $ 5,166 $ 6,074
Asia/Pacific Rim 10,821 14,103 12,608 5,838
Europe 2,278 1,252 2,169 1,423
------- ------- ------- -------
$16,600 $24,613 $19,943 $13,335
------- ------- ------- -------
------- ------- ------- -------

</TABLE>

SEMICONDUCTOR LEAD INSPECTION SYSTEMS

The semiconductor manufacturing process begins with the fabrication of the
semiconductor chip and ends with the final assembly, test/inspection and marking
of the ultimate product. The typical industry descriptions for these areas are
"front end" and "back end."

The front end is a "planar" process where devices are made in "wafer"
format (i.e., large flat surface where the main process concerns are x-y
alignment for various process tools). The trend toward very high density chips
has demanded more inspection and process control in the front end and,
consequently, has created the need for vision guided processes. This technology
advancement generated several large and profitable optical based companies all
of which used 2-D optical and vision technology. While the front end developed
rapidly to utilize the new technology, the back end of the manufacturing process
did not yet involve such tiny part dimensions. The back end had line
separations of 0.1 inches and above, and pin counts were seldom in excess of 40
leads. In addition, there was very little competitive pressure to improve
quality dramatically. Accordingly, automated inspections was not yet required.

Today, the back end of the production process must deal with pin counts as
high as 500 leads and line spacings down to 0.004 inches. In addition,
manufacturers are seeing demands for quality levels as high as 3 or 4 failures
per million. Unlike the front end, the height dimension is also critical in
assuring proper lead contact when mounted. Therefore, at this end of the
process, vision solutions must be "three-dimensional." This advancing
technology has created a significant market opportunity for the Company's series
lead inspection products.

The Company's LS-3000 Series Lead Scanning Systems are an outgrowth of its
prior LS-2000 Series. The Company believes that the LS-2000, first introduced in
October 1990, is the only high-speed automated semiconductor lead inspection
system capable of inspecting devices while they remain in their protective
trays. The LS-2000 is an extension of the Company's HR-2000 product, which was
originally introduced in 1989 for printed circuit board solder joint inspection.
In June 1992, the Company introduced the LS-2000A which is a higher accuracy
version of the LS-2000. At the same time, the Company also introduced the LS-
2700, a significantly faster version of the LS-2000, which also affords a
greater level of accuracy. The Company formally introduced the LS-3000 Series at
the Semicon West trade show in July 1994. All of the models in the LS-3000
Series line are lighter and smaller than the LS-2000A and the LS-2700. The
flagship of the LS-3000 series, the LS-3700, is also significantly faster than
the LS-2700. The Company received purchase orders for 55 and 36 LS-3000 Series
machines during the six months ended March 31, 1995 and the fiscal year ended
September 31, 1994, respectively.

AIRCRAFT ICE DETECTION SYSTEM

In January 1993, the Company announced the completion of the initial
development phase of its new ID-1 aircraft ice detection system. The ID-1 is
designed to make a major improvement in winter flight safety and to fulfill the
intent of strict new FAA regulations concerning the inspection of wing surfaces
in adverse weather conditions. The device is also anticipated to reduce winter
flying delays and their associated costs and to diminish the

<PAGE>

environmental hazard posed by de-icing fluids.

The ID-1 is a full-wing electro-optical ice detection system that is
designed to provide a quick, clear, and reliable indication of the presence or
absence of ice, snow or frost. The Company has filed patent applications for
this technology. The system can be mounted on the bucket of a de-icing truck or
other vehicle and is designed to operate under conditions where visual
inspection can be ineffective or tactile inspection difficult. Its compact size
and high degree of mobility are also designed to allow the ID-1 to detect ice on
aircraft surfaces at any point between the gate and runway.

Extensive field testing of the ID-1 was conducted at several locations
during the 1994-1995 winter ice season. The commercial viability of the ID-1 has
not as yet been proven nor can it be assured. Consequently, there can be no
assurance that the ID-1 can be commercially marketed at a profit at any time in
the proximate future, if ever.

MANUFACTURING

The Company's production facilities are capable of fabricating and
assembling total electronic and electromechanical systems and subsystems.
Facilities include an assembly and wiring department that has the capability of
producing complex wiring harnesses, as well as intricate electronic
subassemblies. The Company maintains a comprehensive test and inspection program
to ensure that all systems meet exacting customer requirements for performance
and quality workmanship to delivery. In addition, an in-house sheetmetal and
machine shop allows for the manufacture of both prototype and production
hardware. To support its internal operations and to extend its overall capacity,
the Company purchases a wide variety of components, assemblies and services from
proven outside manufacturers, distributors and service organizations.

MARKETING

The Company's marketing strategy focuses on cultivating long-term
relationships with the leading manufacturers of electronic and semiconductor
inspection and quality control equipment. As a result of its limited and focused
target market, the Company's marketing efforts rely heavily on direct sales
methods. The selling cycle for the LS-2000 and LS-3000 Series products has
proven to be generally between six to nine months from initial customer contact.
A lengthy purchase process is often the case in the purchase of the initial unit
of a particular product sold by the Company. Subsequent purchases require less
time and often result in multiple orders. Typically, potential purchasers visit
the Company's headquarters to receive a full demonstration of the product and
discuss the merits of the product with the Company's engineers before making a
purchase decision.

Sales activities in the domestic market are handled by a combination of
direct sales personnel and independent sales representatives. Due to the depth
of analysis involved in the customer's purchase decision, management emphasizes
active interaction between the direct sales staff, its independent sales
representatives and the buyer throughout the selling process.

The Company has also established distribution capabilities in both Europe
and the Far East, providing access to virtually all major markets for electronic
and semiconductor test equipment. Leveraging off management's experience and
contacts in the international markets, the Company has negotiated agreements
with four independent representatives in the Far East and three independent
representatives in Europe to sell and service the Company's products.

The Company presently employs 6 persons primarily engaged in personal
selling. In addition, corporate management is committed to frequent
communications with customers, particularly those in higher, policy-making
positions. Lending further support to the sales effort is the Company's 78
person engineering and technical staff, which provides assistance in areas
requiring in-depth technical analysis.

<PAGE>

Supporting the personal selling effort is a range of marketing
communications materials including brochures, video tapes and slide and overhead
presentations. Additionally, news coverage and trade articles are used to
enhance the Company's reputation and image. The Company also exhibits at
selected trade shows.

CUSTOMERS

The Company's sales have been historically concentrated in a small number
of customers at any time, although the specific customers change over time.
Sales to ASE and Anam accounted for approximately 11% and 10%, respectively,
of the Company's revenues during the six months ended March 31, 1995. Sales to
Intel Corporation and Motorola Inc. accounted for approximately 15% and 10%,
respectively, of the Company's revenues during the fiscal year ended September
30, 1994. Sales to Samsung Corporation, Anam Corporation and Intel Corporation
accounted for approximately 15%, 13% and 13%, respectively, of the Company's
revenues during its year ended September 30, 1993. Sales to the U.S. Government
accounted for 4%, 8% and 23% of the Company's total revenues for the fiscal
years ended September 30, 1994, as contrasted with 8% and 23% for the fiscal
years ended September 30, 1993 and 1992, respectively. No other customers
accounted for more than 10% of sales during such fiscal years and fiscal
periods.

RESEARCH AND DEVELOPMENT

The Company-sponsored research and development efforts over recent years
have been largely devoted to continued development of advanced three-dimensional
vision technology and applications software for use in various inspection and
process control automation systems. The Company's primary research and
development efforts are focused on development of new electronic and
semiconductor inspection and quality control products and improvements of
existing products, along with development of the Company's ID-1 aircraft wing
ice detection technology. Research and development expenditures, net of
capitalized software development costs, aggregated approximately $3,718,000,
$2,526,000, and $1,731,000 for the Company's fiscal years ended September 30,
1994, 1993 and 1992, respectively, and approximately $2,389,000 for its six
month fiscal period ended March 31, 1995. In its fiscal years ended September
30, 1994, 1993 and 1992 and its six month fiscal period ended March 31, 1995,
the Company capitalized $433,000, $476,000, $568,000 and $274,000, respectively,
of its software development costs in accordance with the provisions of Statement
of Financial Accounting Standards No. 86. The Company also contracts to perform
certain customer-funded research and development efforts. Revenues and cost of
revenues related to such contracts were $468,000 and $155,000, respectively, for
fiscal 1994, compared to $342,000 and $271,000, respectively, for fiscal 1993
and were $106,000 and $42,000, respectively, for its six month fiscal period
ended March 31, 1995.

SOURCES OF SUPPLY

The raw materials and components used in the development and manufacture of
the Company's products are generally available from domestic suppliers at
competitive prices; fabrication of certain major components has been
subcontracted for on an as-needed basis. The Company has not experienced any
significant difficulty in obtaining adequate supplies to perform under its
contracts.

During fiscal 1994, one of the Company's major suppliers voluntarily filed
for protection under Chapter 11 of the Federal Bankruptcy Code. This supplier
has advised the Company that it expects to emerge successfully from bankruptcy.
However, as a protective measure to ensure a stable supply of this vendor's
product, the Company has acquired a three month inventory and has negotiated an
escrow arrangement with this vendor that would afford the Company access to the
documentation required to reprocure or manufacture this product in the event the
vendor is no longer able to furnish such product to the Company.

BACKLOG

At March 31, 1995 the Company's backlog was approximately $11.6 million as
contrasted with approximately $7.0 million, $7.3 million and $6.0 million at
September 30, 1994, 1993 and 1992, respectively. The Company believes that most
of its backlog at March 31, 1995 will be completed prior to the close of
calendar year

<PAGE>

1995. The Company does not believe that its backlog at any particular time is
necessarily indicative of its future business.

CUSTOMER SERVICE AND SUPPORT

Given the high cost of downtime, it is imperative that any malfunction in
one of the Company's systems, regardless of cause, be addressed in the shortest
possible time. The Company therefore makes available a 24-hour a day "hot line"
which can be used to request service support. The Company's service organization
consists of technicians, mechanics and engineers reporting to customer service
managers who not only are intimately familiar with its own vision sensors and
processors, but also with the other system components. Additionally, the Company
has made arrangements with many of its component suppliers whereby they have
agreed to provide service specialists within 24 hours should the need arise.
Such calls are coordinated through the Company's service manager who is assisted
by a full-time service administrator.

The Company's service personnel have their formal training augmented by
direct participation in testing of systems at the Company's facility and also in
the installation and acceptance tests at the customer's plant.

GOVERNMENT REGULATION

Approximately 1%, 4%, 8% and 23% of the Company's sales during the six
months ended March 31, 1995 and the fiscal years ended September 30, 1994, 1993
and 1992, respectively, were related directly or indirectly to U.S. Government
programs. Any substantial overall reduction in government expenditures may
adversely affect the Company's business. Orders under government prime contracts
or subcontracts are customarily subject to termination at the convenience of
the government. In this event, the contractor is normally entitled to
reimbursement for allowable costs and a reasonable allowance for profits,
unless the termination was due to a default on the part of the contractor.
Government contracts are also subject to audit by applicable government
agencies prior to finalization.

PROPRIETARY PROTECTION

At March 31, 1995 the Company owned 76 issued U.S. patents, with expiration
dates ranging from 1995 to 2011, relating to its three-dimensional vision
technology. The Company also owns the rights to several U.S. patent applications
relating to such technology.

The Company does not believe that its present operations are materially
dependent upon the proprietary protection that may be available to the Company
by reason of any one or more of such patents. Moreover, as its patent position
has not been tested, no assurance can be given as to the effectiveness of the
protection afforded by its patent rights.

COMPETITION

The Company believes that machine vision has evolved into a new industry
over the past ten years in which a number of machine vision-based firms have
developed successful industrial applications for the technology. The Company is
aware that a large number of companies, estimated to be upward of 100 firms,
entered the industry in the years 1980 through 1986 and that most of these were
small private concerns. Over the last several years the number of competitors
has narrowed to less than 25. The Company believes this is attributable, to a
large extent, to a consolidation within the industry.

The Company is not aware of any other entity having a three-dimensional
vision system capability as comprehensive and highly automated as that achieved
by the Company. However, the Company is aware of several competitors which might
promote substitute technologies. The Company believes that there are other
concerns, some of which may be substantially larger and have substantially
greater assets and resources than the Company, engaged in the development of
technology and products which would be competitive with those of the Company
should they choose to enter the machine vision marketplace.

<PAGE>

EMPLOYEES

At March 31, 1995 the Company employed 141 persons, of whom 78 were
engineering and other technical personnel.

FACILITIES

The Company leases approximately 50,000 square feet of office and factory
space at 425 Rabro Drive East, Hauppauge, New York under a lease which extends
to March 31, 2001. The lease requires the Company to pay property taxes and
certain operating expenses and contains escalation clauses relating to property
taxes.

<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Set forth below are the names, ages and the positions and offices held by
each of the directors and executive officers of the Company.

DIRECTOR
NAME AGE SINCE POSITIONS AND OFFICES
---- --- -------- ---------------------

Pat V. Costa 51 1984 Chairman of the Board, President and
Chief Executive Officer

Frank A. DiPietro 68 1992 Director

Donald F. Domnick 73 1988 Director

Jay M. Haft 59 1977 Director

Mark J. Lerner 42 1994 Director

Howard Stern 57 1981 Senior Vice President and Director

Robert H. Walker 59 1990 Executive Vice President,
Secretary/Treasurer and Director

Steven J. Bilodeau 36 -- Executive Vice President

Earl H. Rideout 48 -- Vice President

William E. Yonescu 52 -- Vice President

PAT V. COSTA has served as President, Chief Executive Officer and Chairman
of the Board of Directors of the Company since July 1984. Prior thereto and from
1977, Mr. Costa was employed by GCA Corporation, most recently in the capacity
of Executive Vice President. GCA is engaged in the manufacture of various
electronic instrumentation equipment and systems.

FRANK A. DIPIETRO began his career with GM in 1944. During his forty-five
year career with GM, he was actively involved in automobile assembly and
manufacturing engineering systems. He retired in 1990 and continues as a
consultant in laser systems in several industries. At the time of his
retirement, Mr. DiPietro held the position of Director of Manufacturing
Engineering, Chevrolet-Pontiac-Canada Car Group, for GM.

DONALD F. DOMNICK served as Vice President of Caterpillar, Inc. from 1977
through 1985. Mr. Domnick, who has been retired since 1985, is also a fellow of
the Society of Manufacturing Engineers, is a Director of Midstate College in
Peoria, Illinois and is on the Board of Advisors of St. Francis Medical Center.

JAY M. HAFT has been interim Chief Executive Officer of Noise
Cancellation Technologies Inc., a company engaged in the development of noise
cancellation technology and products ("NCT"), since November 1994. Since
January 1994, Mr. Haft has been of counsel to the law firms of Ruden,
Barnett, McClosky, Smith, Schuster & Russell, P.A. in Fort Lauderdale,
Florida and Parker, Duryee, Rosoff & Haft, RVSI's, counsel, in New York, New
York. Prior thereto, Mr. Haft was a partner of Parker, Duryee, Rosoff & Haft
from September 1991 through December 1994 and a partner in the New York law
firm of Rivkin, Radler, Dunne and Bayh from 1988 to August 1991. Mr. Haft
currently serves as a member of the board of directors of NCT, Extech Inc., a
hotel management company, CAS Medical Systems, a medical devices company,
Nova Technologies, Inc., a patient care equipment company, Viragen, Inc., a
proprietary drug company, and Oryx Technology Corporation, a materials
sciences company.

<PAGE>

MARK J. LERNER has been President of Morgen, Evan & Company, Inc., an
investment banking firm which focuses on Japanese-U.S. transactions, since 1992.
Prior thereto and from 1990, he was a managing director at Chase Manhattan Bank
where he headed the Japan corporate finance group. From 1982 to 1990 Mr. Lerner
worked in the Investment Banking Division of Merrill Lynch as head of its Japan
Group, coordinating its New York-based Japanese activities with professionals in
Tokyo and London.

HOWARD STERN has been Senior Vice President and Technical Director of the
Company since December 1984. Prior thereto and from 1981, he was Vice President
of the Company.

ROBERT H. WALKER is and has been Executive Vice President and
Secretary/Treasurer of the Company since December 1986. Prior thereto and from
December 1984 he was Senior Vice President of the Company. From 1983 to 1985 he
also served as Treasurer. Mr. Walker is also a Director of Tel Instrument
Electronics Corporation, a publicly-owned company.

STEVEN J. BILODEAU is and since December 1986 has been Executive Vice
president of the Company. Prior thereto and from April 1985 he served the
Company in various capacities, most recently as Vice President of Operations.

EARL H. RIDEOUT is and since February 1989 has been Vice President of the
Electronics Group for the Company. Prior thereto and from 1986 he was Executive
Vice President of Vitronics Corporation, a firm engaged in the manufacture and
distribution of solder reflow ovens for the electronics industry. From 1984 to
1986 he was President and Chief Operating Officer of Testamatic Corporation, a
manufacturer of bare board test equipment.

WILLIAM E. YONESCU is and since June 1991 has been Vice President for New
Product Development of the Company. Prior thereto and from March 1984, he was
Research and Development Manager of the Company.

EXECUTIVE COMPENSATION

Set forth below is the aggregate compensation for services rendered in all
capacities to the Company during its fiscal years ended September 30, 1994, 1993
and 1992 by its chief executive officer and each of its four most highly
compensated executive officers whose compensation exceeded $100,000 during its
fiscal year ended September 30, 1994:

SUMMARY COMPENSATION TABLE

LONG TERM COMPENSATION
----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------- -------------------- ---------
OTHER RESTRIC- LONG ALL
NAME AND ANNUAL TED TERM IN- OTHER
PRINCIPAL FISCAL COMPEN- STOCK NUMBER OF CENTIVE COMPEN-
POSITION YEAR SALARY BONUS SATION AWARDS OPTIONS PAYOUTS SATION
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>

Pat V. Costa 1994 $176,702 $36,000 -- -- -- -- $52,310(1)(2)
Chief Executive 1993 $169,218 -- -- -- 100,000 -- $52,262(1)(2)
Officer 1992 $148,866 -- -- -- 340,000 -- --

Steven J. Bilodeau 1994 $139,260 $31,000 -- -- -- -- $ 2,686(2)
Executive Vice 1993 $133,426 $ 6,000 -- -- 50,000 -- $ 2,096(2)
President 1992 $117,374 $ 1,800 -- -- 141,900 -- --

Earl H. Rideout 1994 $112,127 $13,500 -- -- -- -- --
Vice President 1993 $112,550 -- -- -- 25,000 -- --
1992 $ 99,008 $ 2,700 $3,808(3) -- 70,000 -- --

Howard Stern 1994 $117,787 $26,000 -- -- -- -- $ 2,347(2)
Senior Vice 1993 $112,805 -- -- -- 45,000 -- $ 1,699(2)
President 1992 $ 99,237 -- -- -- 129,330 -- $ 1,541(2)

Robert H. Walker 1994 $111,715 $26,000 -- -- -- -- $ 1,785(2)
Executive Vice 1993 $102,082 $ 4,000 -- -- 41,113 -- $ 1,598(2)
President 1992 $ 89,794 -- -- -- 94,580 -- $ 1,394(2)

<PAGE>

<FN>
---------------
(1) During fiscal 1992, the Company entered into a Stock Appreciation Rights
Agreement with Mr. Costa.
Under the terms of this agreement, Mr. Costa will receive a cash payment
based on the appreciation in the market value of the Company's Common
Stock. The maximum cash payments which may be made under this agreement
are $50,000 for the fiscal years ended September 30, 1993 and 1994, $75,000
for fiscal year ending September 30, 1995 and $100,000 for fiscal year
ending September 30, 1996. However, the timing of these payments may be
accelerated by the Board of Directors. Payments of $50,000 have been made
to Mr. Costa for each of the years ended September 30, 1993 and 1994.
(2) Represents accrued and vested payments under the Company's Stock Ownership
Plan. For Mr. Costa, this amount equaled $2,310 and $2,262 for the fiscal
years ended September 30, 1993 and 1994, respectively.
(3) Vacation pay in lieu of time.

</TABLE>

Set forth below is further information with respect to unexercised options
to purchase the Company's Common Stock under the Company's 1982, 1987 and 1991
stock option plans:

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES

NUMBER OF VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED OPTIONS AT SEPTEMBER 30, 1994 AT SEPTEMBER 30, 1994
ON VALUE ----------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>

Pat V. Costa 60,073 $253,295 219,927 160,000 $1,054,602 $ 670,475

Steven J. Bilodeau 44,900 $187,400 76,000 71,000 $ 358,992 $ 291,985

Earl H. Rideout 27,006 $115,826 24,244 43,750 $ 111,346 $ 190,025

Howard Stern 23,500 $104,160 86,580 64,250 $ 413,364 $ 265,930

Robert H. Walker 25,500 $110,654 56,858 53,335 $ 268,070 $ 216,997

</TABLE>

EMPLOYEE AGREEMENTS

Mr. Pat V. Costa is employed as Chief Executive Officer and President of
the Company under an indefinite term agreement which currently provides for
annual base salary of $180,627. Pursuant to the terms of his employment
agreement, Mr. Costa has been granted certain rights in the event of the
termination of his employment or a change in control of the Company.
Specifically, in the event of termination for any reason other than for cause
and other than voluntarily, Mr. Costa will be entitled to the continuance of
salary and certain fringe benefits for a period of twelve months and may
exercise all outstanding stock options which are exercisable during the twelve
month period succeeding termination at any time within such twelve month period.
In the event of the occurrence of a change in control of the Company (as defined
in his employment agreement) and, further, in the event that Mr. Costa is not
serving in the positions of Chief Executive Officer, President and Chairman of
the Company (other than for cause) within one year thereafter, Mr. Costa will be
entitled to exercise all outstanding stock options, regardless of when otherwise
exercisable, during the six month period following the termination date of his
employment.

The Company has also granted certain rights in the event of termination of
employment to Messrs. Bilodeau, Rideout, Stern, Walker and Yonescu. Specifically
in the event of involuntary termination other than for cause, each officer will
be given a termination package which provides for three months severance pay and
continued benefits, with the exception of Mr. Rideout whose employment agreement
allows for six months severance. In addition, the Company has agreed to provide
a maximum of one hundred days' advance written notice to each of Messrs.
Bilodeau, Stern, and Walker in the event the Company should desire to terminate
their employment other than for cause. In such event, each such officer shall be
entitled to exercise all outstanding stock options, regardless of when

<PAGE>

otherwise exercisable, during a specified period following such termination.

DIRECTORS' COMPENSATION

During the fiscal year ended September 30, 1994, directors who were not
otherwise employees of the Company were compensated at the rate of $1,000 for
attendance at each meeting of the Board of Directors or any committee thereof,
$250 for attendance at any second meeting held during the same day, and $100 for
participation at a telephonic meeting or execution of a consent in lieu of a
meeting.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

As of March 31, 1995, GM owned approximately 10.5% of the Company's
outstanding Common Stock. Sales to GM accounted for less than 1% of the
Company's total sales for the Company's fiscal year ended September 30, 1994.

Mr. Jay M. Haft, a Director of the Company, is Of Counsel to Parker Duryee
Rosoff & Haft, the Company's general counsel.

<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth, as of July 31, 1995, the number and
percentage of shares of the Company Common Stock held by (a) all persons who,
to the knowledge of the Company, are the beneficial owners of, or who otherwise
exercise voting or dispositive control over, more than 5% of outstanding the
Company Common Stock within the meaning of Rule 13d-3 of the Exchange Act, (b)
all directors of the Company and (c) all executive officers and directors of the
Company as a group:

NAME AND ADDRESS AMOUNT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
------------------- ----------------------- ----------------

Pat V. Costa 326,647(2) 2.4%

Frank A. DiPietro 45,000(3) (13)

Donald F. Domnick 25,500(4) (13)

Jay M. Haft 516,546(5) 3.8%

Mark J. Lerner 100,411(6) (13)

Howard Stern 109,222(7) (13)

Robert H. Walker 69,983(8) (13)

General Motors Corporation 1,225,775 9.3%
767 Fifth Avenue
New York, New York 10153

Marie Cioti 1,100,000(9) 8.1%
408 Mamaroneck Road
Scarsdale, New York 10583

Robotic Vision Systems 897,865(10) 6.8%
Shareholder's Committee
and Robotic Vision Shareholder's
Group
c/o BEG Enterprises,Inc.
33493 14 Mile Road, #100
Farmington Hills, MI 48831

All current executive 1,321,018(11)(2) 9.3%
officers and directors as a
group (10 persons)

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

(1) Includes shares issuable pursuant to currently exercisable options and
warrants as well as those options and warrants which will become
exercisable within 60 days of July 31, 1995. Except as otherwise
indicated, the persons named herein have sole voting and dispositive power
with respect to the shares beneficially owned.

(2) Includes (i) 295,326 shares issuable to Mr. Costa upon exercise of
outstanding options and (ii) 1,321 vested shares held under the Stock
Ownership Plan over which shares Mr. Costa has voting power, but does not

<PAGE>

have dispositive control.

(3) Includes (i) 12,000 shares issuable to Mr. DiPietro upon exercise of
outstanding options and (ii) 28,000 shares owned of record by his spouse.

(4) Includes 12,000 shares issuable to Mr. Domnick upon exercise of outstanding
options.

(5) Includes (i) 52,000 shares issuable to Mr. Haft upon exercise of
outstanding options, (ii) 305,600 shares issuable upon exercise of
outstanding warrants, of which 286,100 are held by his spouse, (iii)
142,000 shares owned of record by his spouse and (iv) 7,666 shares held
indirectly in a retirement trust.

(6) Includes (i) 5,000 shares issuable to Mr. Lerner upon exercise of
outstanding options and (ii) 95,411 shares issuable to Morgen Evan &
Company, Inc. of which Mr. Lerner is the principal owner, upon exercise
of outstanding warrants.

(7) Includes (i) 103,330 shares issuable to Mt. Stern upon exercise of
outstanding options and (ii) 5,892 vested shares held under the Stock
Ownership Plan over which shares Mr. Stern has voting power, but does not
have dispositive control.

(8) Includes (i) 64,636 shares issuable to Mr. Walker upon exercise of
outstanding options and (ii) 5,347 vested shares held under the Stock
Ownership Plan over which shares Mr. Walker has voting power, but does not
have dispositive control.

(9) Includes 400,000 shares issuable upon exercise of certain outstanding
warrants.
(10) Information obtained from amended Schedule 13D filed with the Commission on
November 18, 1994.

(11) Includes (i) 235,446 shares owned of record and beneficially and (ii)
1,063,642 shares issuable upon exercise of certain outstanding stock
options and warrants.

(12) Includes 21,930 vested shares held in the Company's Stock Ownership Plan
for certain officers of the Company over which shares such officers have
voting power, but do not have dispositive control.
(13) Less than one percent.

<PAGE>

SELLING STOCKHOLDERS

GENERAL

The table sets forth certain information with respect to the Selling
Stockholders. The shares set forth therein are being included in the
Registration Statement of which this Prospectus forms a part pursuant to
registration commitments afforded to the Selling Stockholders by contractual
obligations. The Company will not receive any proceeds from the sale of the
shares by the Selling Stockholders. Net proceeds, if any, from the exercise of
Warrants to permit the sale of the underlying shares which are covered by this
Prospectus will be added to the Company's working capital:

BENEFICIAL
OWNERSHIP OF
BENEFICIAL SHARES OF
OWNERSHIP OF COMMON STOCK
NAME OF RELATION- SHARES OF NUMBER OF SHARES AFTER GIVING
SELLING SHIP WITH COMMON STOCK AT OF COMMON STOCK EFFECT TO
STOCKHOLDER THE COMPANY JULY 31, 1995(1) OFFERED FOR SALE(1) PROPOSED SALE(1)
----------- ----------- ----------------- ------------------- ----------------
<S> <C> <C> <C> <C>

Aetrium Incorporated 25,000 25,000 --
AIM Overseas N.V. 150,000 150,000 --
Anorad Corporation 20,000 20,000 --
Arnhold and S. Bleichroeder, Inc. 49,050 29,800 19,250
Ronald Berman(2) 897,865 64,000 --
Ruth Bourne 5,700 5,700 --
William G. Bourne 12,400 2,400 10,000
F. Hardy Bowen 27,000 16,000 11,000
Pat Capone 16,000 16,000 --
Marie Cioti 1,100,000 1,100,000 --
Robert S. Cline 6,400 6,400 --
Alfred L. Cohen 283,620 184,000 99,620
Robert P. Colin 8,000 8,000 --
Terry D. Diamond 208,000 208,000 --
Terry D. Diamond as 40,000 40,000 --
Trustee of Terry D.
Diamond Trust
dated 5/7/86
Paul DiMatteo 2,000 2,000 --
The Donaldson Trust 1,600 1,600
dated 1/28/93 Account
B. Revocable Kenneth
and Elizabeth Donaldson,
Trustees
Marc Eller(2) 897,865 96,000 801,865
Harold Freund 32,000 32,000 --
Thomas Giandoreggio 6,000 6,000 --
Steven Gluckstein 32,150 6,400 25,750
Jay Gottlieb 400,000 400,000 --
William R. Griffith 59,250 59,250 --
Clayre Hulsh--Haft 528,100 528,100 --
James Haft 64,000 64,000 --
Jay M. Haft Director 79,166 28,780 50,386
Jonathan Howe 35,004 35,004 --
Harris S. Jaffe 6,667 6,667 --
Edward K. Korff 9,600 9,600 --
Herbert Kozlov 50,750 50,750 --
Max Kurowski 25,000 25,000 --
Laidlaw Holdings, Inc. 20,000 20,000 --
Anita Lapidus &
Leon Lapidus 154,640 154,640 --

<PAGE>

Anita Lapidus & Leon
Lapidus, as custodians
for Jonathan Lapidus 77,346 77,346 --
Anita Lapidus &
Leon Lapidus, as
custodians for
Samuel Lapidus 77,347 77,347 --
Kristina McCormack 8,400 1,400 7,000
Wayne E. Meyer Former Director 10,000 10,000 --
Morgen, Evan & Company Inc. (3) 131,411 90,000 41,411
The Laurick Trust 400,000 400,000 --
Morgan Stanley F/A/C 131,250 131,250 --
Common Fund Equity Fund
Morgan Stanley F/A/C 309,750 309,750 --
Weiss Global Hedged
Investment Ltd. Partnership
Morgan Stanley F/A/C 84,000 84,000 --
Weiss Offshore Global
Hedged Fund
National Assurance Indemnity Company 32,000 32,000 --
NOM & Co. 138,000 138,000 --
Karen G. Olah 14,400 14,400 --
John C. Onufer, Jr. 234,500 184,000 50,500
Michael J. Parrella 136,000 136,000 --
George Pavlides 16,000 16,000 --
Ronald W. Place 25,000 25,000 --
Riede Systems Asia
Pte. Ltd. 5,000 5,000 --
Rock Financial(2) 897,865 32,000 865,865
Burnett Roth and 32,000 32,000 --
Helen Roth as
Joint Tenants
N.M. Rothschild & Sons 16,000 16,000 --
(C.I.) Limited
Ira Roxland 45,375 45,375 --
Barry Shaw 128,000 128,000 --
Martin Stein 59,250 59,250 --
Marvin Weinstein &
Sherry Weinstein 26,667 26,667 --
Carl Yackel 64,000 64,000 --

<FN>
-----------
(1) Includes shares issuable upon the exercise of currently outstanding options
and warrants as well as those options and warrants which will become
exercisable within 60 days of July 31, 1995. To the Company's knowledge,
except as otherwise indicated, the persons named herein have sole voting
and dispositive power with respect to the shares beneficially owned.
(2) Denotes a member of a "group" within the meaning of Section 13(d) of the
Exchange Act. See Note 10 to the tabular presentation under "Principal
Stockholders."
(3) Mark J. Lerner, a director of the Company, is the principal stockholder of
this concern.

</TABLE>

PLAN OF DISTRIBUTION

The Company has been advised by the Selling Stockholders that there are no
underwriting agreements with respect to the sale of the shares, that such Shares
will be sold from time to time in the over-the-counter market at then prevailing
prices or in private transactions at negotiated prices, and that usual and
customary brokerage fees will be paid by the Selling Stockholders in connection
therewith.

<PAGE>

DESCRIPTION OF SECURITIES

COMMON STOCK

The Company is currently authorized to issue up to 20,000,000 shares of its
Common Stock, $.01 par value. As of July 31, 1995, there were 13,128,576 shares
of its Common Stock issued and outstanding, held of record by approximately
2,700 persons.

Holders of shares of the Company Common Stock are entitled to such
dividends as may be declared from time to time by the Board of Directors in its
discretion, on a ratable basis, out of funds legally available therefor, and to
a pro rata share of all assets available for distribution upon liquidation,
dissolution or the winding up of the affairs of the Company. All of the
outstanding shares of the Company Common Stock are fully paid and non-
assessable.

WARRANTS

As of July 31, 1995, there were 1,361,412 warrants issued and outstanding,
held of record by 29 persons, each allowing the holder thereof to acquire one
share of the Company Common Stock at various dates through June 2000 at
exercise prices ranging from $1.00 to $14.63 per share. See "Management -
Transactions with Management and Other Related Persons".

The Company Common Stock issuable upon exercise of all such warrants, when
paid for in accordance with their respective terms, will be fully paid and non-
assessable. All such shares are included in the Registration Statement of which
this Prospectus is a part. See "Management - Transactions with Management and
Other Related Persons" and "Selling Stockholders". The Warrants provide for
adjustment of the exercise price to protect the holders against dilution upon
the occurrence of such events as stock dividends an distributions, splits,
recapitalizations, mergers and the like.

TRANSFER AGENT

The transfer agent for the Company Common Stock is American Stock Transfer
& Trust Company, 40 Wall Street, New York, New York 10005. The Company acts as
its own warrant agent.

REPORTS TO STOCKHOLDERS

The Company furnishes to its Stockholders, after the close of each fiscal
year, an Annual Report which contains audited financial statements.

SHARES ELIGIBLE FOR FUTURE SALE

As of July 18, 1995, 10,730,465 shares of the Company's Common Stock
were unrestricted and freely tradable. As of such date, there were also
2,388,668 restricted shares of the Company's Common Stock, as such term is
defined under Rule 144 of the Securities Act, of which 1,110,000 shares will
be registered under the Securities Act prior to January 1996, and thereby be
freely tradable.

Upon consummation of the Merger and assuming that the Exchange Ratio is
equal to 0.766, an additional 1,904,993 shares
(excluding shares issuable upon exercise of options) of the Company's Common
Stock (the "Merger Shares") will be outstanding. Merger Shares owned by
nonaffiliates of Acuity (approximately 1,844,590 shares) will be eligible for
sale immediately upon consummation of the Merger. Merger Shares owned by
affiliates of Acuity (approximately 60,403 shares) may not be sold until
after the results covering 30 days of post-Merger combined operations of the
Company and Acuity have been filed with the Commission, sent to stockholders
of the Company or otherwise publicly disclosed. After such public disclosure,
affiliates of Acuity will be able to sell such shares without restriction.

Upon consummation of the Merger and assuming that the Exchange Ratio is
equal to 0.766, there will also be outstanding options,
warrants and rights to purchase up to 2,904,453 shares of the Company's
Common Stock. The sale of a substantial amount of these shares could have an
adverse effect on the future market price of the Company's Common Stock.

LEGAL PROCEEDING

On or about October 22, 1992, the Company instituted an action in the
United States District Court for the

<PAGE>

Eastern District of New York against defendant Cybo Systems, Inc. ("Cybo"),
entitled ROBOTIC VISION SYSTEMS, INC. V. CYBO SYSTEMS, INC. A/K/A CYBOT SYSTEMS,
INC., alleging that the defendant breached certain agreements between the
parties with respect to the sale by the Company to the defendant of all of the
assets of its welding and cutting systems business.

On or about December 4, 1992, Cybo filed and served an answer denying the
substantive allegations of the Company's complaint. In addition, Cybo asserted
counterclaims against the Company alleging, among other things, breach of
contract and warranties, fraud, bad faith, trespass and conversion and is
seeking aggregate damages in excess of $3.3 million. Shortly thereafter, the
Company moved to dismiss certain of Cybo's counterclaims on the ground that Cybo
failed to plead fraud with the requisite particularity. By Order dated March 20,
1993, the Court (i) granted the Company's motion to dismiss without prejudice,
and (ii) granted Cybo leave to serve an amended answer with amended
counterclaims by April 19, 1993. Cybo has since served an amended answer and
counterclaims which purport to plead fraud with the requisite particularity.
Subsequent thereto, the Company moved to dismiss Cybo's claims for trespass and
conversion, which motion is presently pending. The Company, upon the advice of
its general counsel, believes Cybo's counterclaims are without merit and that
the ultimate outcome of this matter will not have a material adverse effect on
the Company's financial position or results of operations. The Company plans to
defend against such counterclaims vigorously. Except for certain matters
relating to the issue of damages, the parties have completed discovery.

In addition, on October 21, 1993, the Company instituted an action against
Cybo and Robert Rongo, a Cybo employee who had previously been employed by the
Company, in the Supreme Court of the State of New York, County of Suffolk. The
action, entitled ROBOTIC VISION SYSTEMS, INC. V. ROBERT RONGO AND CYBO SYSTEMS,
INC. A/K/A CYBOT SYSTEMS, INC., alleges that Rongo, induced by Cybo, breached a
confidentiality agreement which he had entered into while in the Company's
employ. Defendants have asserted an answer to the Company's complaint, which
answer incorporates the counterclaims asserted by Cybo in the action previously
filed by the Company against Cybo, discussed above. Mr. Rongo made a motion to
dismiss the action for lack of jurisdiction, but that motion was denied.

The Company is a defendant in a recently filed proceeding instituted by
one of its competitors seeking (i) a declaration of the invalidity of one
of the Company's patents ("Pertinent RVSI Patent"), (ii) a declaration
that the plaintiff is not infringing the Pertinent RVSI Patent and (iii) a
restraining order or other relief preventing the Company from contacting
customers of the plaintiff regarding the Pertinent RVSI Patent. Such
proceeding does not seek or assert damages. Based upon the advice of its
patent counsel, the Morrison Law Firm, the Company believes this suit is
without merit. The Company has filed an answer and counterclaim seeking (i) a
declaration that the Pertinent RVSI Patent is valid, (ii) a declaration that
the plaintiff has infringed a number of the Company's patents, including the
Pertinent RVSI Patent, (iii) the prohibition of further infringement by
plaintiff of certain patents of the Company, including the Pertinent RVSI
Patent, (iv) a denial of the plaintiff's request for injunctive relief, (v)
monetary damages for the plaintiff's infringement of the Company's patents,
and (vi) a trebling of monetary damages because of willful infringement by
plaintiff of the Company's patents.

LEGAL MATTERS

Matters relating to the legality of the shares of the Company's Common
Stock offered by this Prospectus are being passed upon by Parker Duryee Rosoff
& Haft A Professional Corporation, 529 Fifth Avenue, New York, New York 10017.
Jay M. Haft, of counsel to such Firm and a director of the Company beneficially
owns 158,946 shares of Common Stock of the Company, as well as options and
warrants to acquire an additional 357,600 shares of such Common Stock. Members
of Parker Duryee Rosoff & Haft, other than Mr. Haft, beneficially own 148,625
shares of Common Stock of the Company and warrants to acquire an additional
72,667 shares of Common Stock of the Company.

Matters relating to the patent litigation are being passed upon for the
Company by the Morrison Law Firm, 145 North Fifth Avenue, Mt. Vernon, N.Y.
10550-1201.

EXPERTS

The financial statements of the Company at September 30, 1994 and 1993 and
for the years ended September 30, 1994, 1993 and 1992 appearing in this
Prospectus have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, included herein, and are included in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.

<PAGE>
INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of Robotic Vision Systems, Inc.:

We have audited the accompanying balance sheets of Robotic Vision Systems,
Inc. as of September 30, 1994 and 1993, and the related statements of
operations, stockholders' equity (deficiency), and cash flows for each of the
three years in the period ended September 30, 1994. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an 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, such financial statements present fairly, in all material
respects, the financial position of the Company at September 30, 1994 and 1993,
and the results of its operations and its cash flows for each of the three years
in the period ended September 30, 1994 in conformity with generally accepted
accounting principles.

Deloitte & Touche LLP
Jericho, New York
December 14, 1994

F-1
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
BALANCE SHEETS
SEPTEMBER 30, 1994 AND 1993
<TABLE>
<CAPTION>
ASSETS (NOTE 8) NOTES 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................ 13 $ 1,568,000 $ 465,000
Investments.............................................. 13 1,495,000 --
Receivables -- net....................................... 2,13 3,412,000 2,157,000
Inventories.............................................. 3 2,634,000 2,136,000
Deferred income taxes.................................... 4 1,163,000 584,000
Prepaid expenses and other............................... 134,000 107,000
----------- -----------
Total current assets................................... 10,406,000 5,449,000
PLANT AND EQUIPMENT -- NET............................... 5 1,923,000 1,317,000
OTHER ASSETS............................................. 6 1,159,000 1,123,000
INVESTMENTS.............................................. 13 1,500,000 --
----------- -----------
TOTAL.................................................. $14,988,000 $ 7,889,000
----------- -----------
----------- -----------

LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C> <C>

CURRENT LIABILITIES:
Notes payable............................................ 8 $ 63,000 $ --
Accounts payable......................................... 2,717,000 2,579,000
Accrued expenses......................................... 7,9 2,243,000 2,742,000
Advance contract payments received....................... 719,000 894,000
----------- -----------
Total current liabilities.............................. 5,742,000 6,215,000
OTHER LIABILITIES........................................ 9 210,000 245,000
----------- -----------
TOTAL LIABILITIES...................................... 5,952,000 6,460,000
----------- -----------
COMMITMENTS AND CONTINGENCIES............................ 10

STOCKHOLDERS' EQUITY: 11
Common stock, $.01 par value; shares authorized,
20,000,000; shares issued and outstanding, 1994 --
11,583,602 and 1993 -- 9,651,285........................ 116,000 97,000
Additional paid-in capital............................... 32,805,000 28,328,000
Accumulated deficit...................................... (23,885,000) (26,996,000)
----------- -----------
Stockholders' equity..................................... 9,036,000 1,429,000
----------- -----------
TOTAL.................................................. $14,988,000 $ 7,889,000
----------- -----------
----------- -----------
</TABLE>

See Notes to Financial Statements.

F-2
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

<TABLE>
<CAPTION>
NOTES 1994 1993 1992
----------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
REVENUES............................................... 14 $ 24,613,000 $ 19,943,000 $ 13,335,000
COST OF REVENUES....................................... 12,722,000 11,454,000 9,802,000
-------------- -------------- --------------
GROSS PROFIT........................................... 11,891,000 8,489,000 3,533,000
-------------- -------------- --------------
OPERATING COSTS AND EXPENSES:
Research and development costs......................... 3,718,000 2,526,000 1,731,000
Selling, general and administrative expenses........... 5,521,000 4,834,000 2,766,000
Interest income........................................ (104,000) (2,000) (11,000)
Interest expense....................................... 46,000 27,000 30,000
-------------- -------------- --------------
9,181,000 7,385,000 4,516,000
-------------- -------------- --------------
INCOME (LOSS) BEFORE BENEFIT FROM INCOME TAXES AND
EXTRAORDINARY ITEMS................................... 2,710,000 1,104,000 (983,000)
BENEFIT FROM INCOME TAXES.............................. 4 401,000 495,000 --
-------------- -------------- --------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS............... 3,111,000 1,599,000 (983,000)
EXTRAORDINARY ITEMS:
Gain relating to agreement with General Motors
Corporation (net of income tax provision of
$97,000).............................................. 4,12 -- -- 1,138,000
Utilization of net operating loss carryforward......... 4 -- -- 72,000
-------------- -------------- --------------
NET INCOME............................................. $ 3,111,000 $ 1,599,000 $ 227,000
-------------- -------------- --------------
INCOME (LOSS) PER SHARE:
Income (loss) before extraordinary items............... $ .24 $ .14 $ (.13)
Extraordinary items.................................... -- -- .16
-------------- -------------- --------------
Net income............................................. $ .24 $ .14 $ .03
-------------- -------------- --------------
</TABLE>

See Notes to Financial Statements.

F-3
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

<TABLE>
<CAPTION>
COMMON STOCK
--------------------- ADDITIONAL STOCKHOLDERS'
NUMBER PAID-IN ACCUMULATED EQUITY
NOTES OF SHARES AMOUNT CAPITAL DEFICIT (DEFICIENCY)
----- ---------- --------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, October 1, 1991............... 6,357,480 $ 64,000 $26,757,000 $(28,822,000) $(2,001,000)
Shares issued to the Defined
Contribution Stock Ownership and
Deferred Compensation Plan............ 9 26,027 -- 22,000 -- 22,000
Shares and warrants issued in
connection with private equity
placement, net of offering costs...... 11 3,000,000 30,000 1,309,000 -- 1,339,000
Shares and warrants issued for
professional services rendered........ 11 230,000 2,000 128,000 -- 130,000
Net income............................. -- -- -- 227,000 227,000
---------- --------- ----------- ------------ ------------
Balance, September 30, 1992............ 9,613,507 96,000 28,216,000 (28,595,000) (283,000 )
Shares issued to the Defined
Contribution Stock Ownership and
Deferred Compensation Plan............ 9 16,250 -- 22,000 -- 22,000
Offering costs incurred in connection
with registration of shares and
warrants.............................. -- -- (80,000) -- (80,000 )
Shares issued in connection with the
exercise of stock options............. 21,528 1,000 20,000 -- 21,000
Warrants issued for professional
services rendered..................... 11 -- -- 125,000 -- 125,000
Warrants issued in connection with the
settlement of litigation.............. 11 -- -- 25,000 -- 25,000
Net income............................. -- -- -- 1,599,000 1,599,000
---------- --------- ----------- ------------ ------------
Balance, September 30, 1993............ 9,651,285 97,000 28,328,000 (26,996,000) 1,429,000
Shares issued to the Defined
Contribution Stock Ownership and
Deferred Compensation Plan............ 9 8,610 -- 36,000 -- 36,000
Shares and warrants issued in
connection with private equity
placement, net of offering costs...... 11 1,360,000 14,000 3,790,000 -- 3,804,000
Warrants issued for professional
services.............................. 11 -- -- 38,000 -- 38,000
Shares issued in connection with the
exercise of stock options............. 11 321,107 3,000 345,000 -- 348,000
Shares issued in connection with the
exercise of warrants.................. 11 242,600 2,000 268,000 -- 270,000
Net income............................. -- -- -- 3,111,000 3,111,000
---------- --------- ----------- ------------ ------------
Balance, September 30, 1994............ 11,583,602 $ 116,000 $32,805,000 $(23,885,000) $9,036,000
---------- --------- ----------- ------------ ------------
---------- --------- ----------- ------------ ------------
</TABLE>

See Notes to Financial Statements.

F-4
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

<TABLE>
<CAPTION>
1994 1993 1992
-------------- -------------- --------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Income (loss) before extraordinary items.......................... $ 3,111,000 $ 1,599,000 $ (983,000)
Adjustments to reconcile income (loss) before extraordinary items
to net cash provided by (used in) operating activities:
Deferred income taxes........................................... (579,000) (584,000) --
Depreciation and amortization................................... 620,000 425,000 322,000
Provision for doubtful accounts receivable...................... -- 82,000 20,000
Issuance of common stock and warrants for professional services
rendered....................................................... -- 125,000 130,000
Issuance of common stock -- Defined Contribution Stock
Ownership and Deferred Compensation Plan...................... 36,000 22,000 22,000
Warrants issued as settlement of litigation..................... -- 25,000 --
Other........................................................... 4,000 -- 3,000
Changes in assets and liabilities:
Receivables................................................... (1,255,000) (437,000) (123,000)
Inventories................................................... (498,000) (1,108,000) 392,000
Prepaid expenses and other current assets..................... (27,000) 25,000 (2,000)
Other assets.................................................. (275,000) (650,000) (483,000)
Accounts payable.............................................. 138,000 1,490,000 (122,000)
Accrued expenses.............................................. (499,000) 18,000 282,000
Advance contract payments received............................ (175,000) 244,000 (310,000)
Other liabilities............................................. (35,000) (90,000) (139,000)
-------------- -------------- --------------
Net cash provided by (used in) operating activities............... 566,000 1,186,000 (991,000)
-------------- -------------- --------------
INVESTING ACTIVITIES:
Additions to plant and equipment.................................. (1,002,000) (837,000) (347,000)
Purchase of investments........................................... (2,984,000) -- --
-------------- -------------- --------------
Net cash used in investing activities............................. (3,986,000) (837,000) (347,000)
-------------- -------------- --------------
FINANCING ACTIVITIES:
Issuance of common stock and warrants -- private equity placement
(less offering costs)............................................ 3,842,000 (80,000) 1,339,000
Issuance of common stock in connection with the exercise of stock
options and warrants............................................. 618,000 21,000 --
Notes payable..................................................... 63,000 -- --
-------------- -------------- --------------
Net cash provided by (used in) financing activities............... 4,523,000 (59,000) 1,339,000
-------------- -------------- --------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.............. 1,103,000 290,000 1,000
CASH AND CASH EQUIVALENTS:
BEGINNING OF YEAR................................................ 465,000 175,000 174,000
-------------- -------------- --------------
END OF YEAR...................................................... $ 1,568,000 $ 465,000 $ 175,000
-------------- -------------- --------------
SUPPLEMENTAL INFORMATION -- Interest paid......................... $ 46,000 $ 25,000 $ 137,000
-------------- -------------- --------------
-- Taxes paid................... $ 269,000 $ 11,000 $ --
-------------- -------------- --------------
</TABLE>

See Notes to Financial Statements.

F-5
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

1. SUMMARY OF SIGNIFICANT ACCOUNTING AND FINANCIAL REPORTING POLICIES

a. DESCRIPTION OF BUSINESS -- Robotic Vision Systems, Inc. (the "Company")
is principally engaged in the development, manufacture and marketing of
standard inspection and measurement products which have a variety of
commercial and military applications.

b. REVENUES AND COST OF REVENUES -- The Company recognizes revenue on its
standard electronic inspection and measurement products upon shipment.
The Company recognizes revenues and related cost of revenues associated
with the long-term contracts using the percentage-of-completion method of
accounting, measured by the percentage of total costs incurred in
relation to total estimated costs at completion. Contract costs include
material, direct labor, manufacturing overhead and other direct costs.
The degree of accuracy with which the Company is able to estimate the
profit to be realized on fixed-price long-term contracts is greater as
the contract approaches completion; accordingly, the Company reviews its
estimates periodically and records adjustments thereto as required. On
firm fixed-price contracts which are in the early stages of completion,
and for which estimates of profit cannot be reasonably determined, the
Company utilizes the percentage-of-completion method recognizing revenue
in amounts equal to costs incurred until such time that profit margins
can be reasonably estimated. If a loss is anticipated on a contract, the
entire amount of the estimated loss is accrued in the period in which the
loss becomes known.

Revenues are billed in accordance with the terms of each contract. The
Company estimates that all of its unbilled receivables at September 30,
1994 will become billable during the ensuing twelve months.

c. CASH AND CASH EQUIVALENTS -- Cash and cash equivalents includes money
market accounts with an original maturity of less than three months.

d. PLANT AND EQUIPMENT -- Plant and equipment is recorded at cost less
accumulated depreciation and amortization and includes the costs
associated with demonstration equipment and other equipment internally
developed by the Company. The cost of internally developed assets
includes direct material and labor costs and applicable factory overhead.
Depreciation is computed by the straight-line method over estimated lives
ranging from two to eight years. Leasehold improvements are amortized
over the lesser of their respective estimated useful lives or lease
terms.

e. INVENTORIES -- Inventories are stated at the lower of cost (using the
first-in, first-out cost flow assumption) or market.

f. SOFTWARE DEVELOPMENT COSTS -- Software development costs are capitalized
in accordance with Statement of Financial Accounting Standards No. 86.
Capitalized software development costs are amortized primarily over a
five-year period, which is the estimated useful life of the software.
Amortization begins in the period in which the related product is
available for general release to customers.

g. RESEARCH AND DEVELOPMENT COSTS -- The Company charges research and
development costs for Company-funded projects to operations as incurred.
Research and development costs which are reimbursable under
customer-funded contracts are treated as contract costs.

F-6
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

1. SUMMARY OF SIGNIFICANT ACCOUNTING AND FINANCIAL REPORTING POLICIES
(CONTINUED)

h. INCOME TAXES -- In fiscal 1993, the Company adopted the provision of
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" ("SFAS 109"), which requires recognition of deferred tax
assets and liabilities for the expected future tax consequences of events
that have been included in the Company's financial statements or tax
returns. Under this method, deferred tax assets and liabilities are
determined based on the differences between the financial accounting and
tax bases of assets and liabilities using enacted tax rates in effect for
the year in which the differences are expected to reverse.

Prior to fiscal 1993, the provision for income taxes was based on revenue
and expenses included in the Company's statement of operations. Where
appropriate, the Company provided deferred income taxes for the tax
effects of transactions which were recorded for different periods for
financial accounting purposes than for income tax purposes. At September
30, 1992, no deferred taxes were recorded because of the existence of net
operating loss carryforwards.

i. INCOME (LOSS) PER SHARE -- Income (loss) before extraordinary items per
common share, extraordinary items per common share, and net income per
common share are computed by dividing each year's income (loss) before
extraordinary items, extraordinary items and net income by the respective
weighted average number of shares of common stock outstanding during the
period, after giving effect to dilutive options and warrants. For the
year ended September 30, 1994 and 1993, the effect of options and
warrants was calculated using the modified treasury stock method. The
average number of shares used in the computation of per common share
amounts for the year ended September 30, 1992 does not include shares
issuable pursuant to options and warrants since their effect was not
material. The weighted average number of common and common equivalent
shares outstanding for 1994, 1993 and 1992 was 13,057,000, 12,534,000 and
7,783,000, respectively.

j. RECLASSIFICATION -- Certain amounts in the 1992 and 1993 financial
statements have been reclassified to conform with the 1994 presentation.

2. RECEIVABLES

Receivables at September 30, 1994 and 1993 consisted of the following:

<TABLE>
<CAPTION>
1994 1993
------------- -------------
<S> <C> <C>
Accounts billed and receivable from the United States
Government and its agencies............................. $ 351,000 $ 593,000
Accounts receivable from other customers................. 2,463,000 1,378,000
Unbilled receivables (including retainages on
contracts-in-progress).................................. 702,000 290,000
------------- -------------
Total.................................................. 3,516,000 2,261,000
Less allowance for doubtful accounts receivable.......... 104,000 104,000
------------- -------------
Receivables -- net....................................... $ 3,412,000 $ 2,157,000
------------- -------------
------------- -------------
</TABLE>

F-7
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

3. INVENTORIES

Inventories at September 30, 1994 and 1993 consisted of the following:

<TABLE>
<CAPTION>
1994 1993
------------- -------------
<S> <C> <C>
Raw materials.......................................... $ 356,000 $ 348,000
Work-in-process........................................ 2,278,000 1,788,000
------------- -------------
Total................................................ $ 2,634,000 $ 2,136,000
------------- -------------
------------- -------------
</TABLE>

4. INCOME TAXES

The benefit from income taxes for the fiscal years ended September 30,
1994 and 1993 consisted of the following:

<TABLE>
<CAPTION>
1994 1993
-------------- --------------
<S> <C> <C>
Current:
Federal....................................................... $ 905,000 $ 653,000
State......................................................... 173,000 126,000
Utilization of net operating loss carryforwards............... (900,000) (690,000)
-------------- --------------
178,000 89,000
Deferred:
Federal....................................................... 891,000 --
State......................................................... 108,000 --
Adjustment of valuation allowance............................. (1,578,000) (584,000)
-------------- --------------
Total....................................................... $ (401,000) $ (495,000)
-------------- --------------
-------------- --------------
</TABLE>

The income tax provision relating to the extraordinary credit relating
to the agreement with General Motors Corporation for the fiscal year ended
September 30, 1992, consists of the following:

<TABLE>
<S> <C> <C>
Federal -- charge equivalent..................... $ 72,000
State -- current................................. 25,000
-----------
$ 97,000
-----------
-----------
</TABLE>

As described in Note 1, the Company adopted SFAS 109 during fiscal 1993.
The adoption of SFAS 109 was made as of the beginning of the fiscal year on
a prospective basis. This accounting change had no effect on the Company's
financial statements as of the date of adoption. However, the adoption of
SFAS 109 resulted in an increase in the income tax benefit recognized in
fiscal 1993 and, therefore, an increase in income before extraordinary items
of $584,000 ($.05 per common share).

The adjustments of the valuation allowance during fiscal 1994 and fiscal
1993 emanate from the Company's profitable operations during those years and
the extent to which the Company can substantiate projected future earnings.
The deferred tax assets as of September 30, 1994 and 1993 are equivalent to
the benefit to be derived from net operating loss carryforwards that were
expected to be utilized to offset future taxable income projected as of the
respective balance sheet dates. The deferred tax assets at September 30,
1994 and 1993 have been limited to the benefit to

F-8
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

4. INCOME TAXES (CONTINUED)
be derived from projected future income, primarily due to the Company's
limited history of earnings and its projected future profitability currently
being primarily dependent on one existing product line.

A reconciliation between the statutory U.S. Federal income tax rate and
the Company's effective tax rate for the years ended September 30, 1994 and
1993 is as follows:

<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
U.S. Federal statutory rate.................................................. 34.0% 34.0%
Increases (reductions) due to:
State taxes -- net of Federal tax benefit.................................. 4.2 7.5
Utilization of net operating loss carryforwards............................ (31.9) (34.1)
Anticipated future utilization of net operating loss carryforwards......... (21.4) (52.9)
Other -- net............................................................... .3 .7
----- -----
Total.................................................................... (14.8)% (44.8)%
----- -----
----- -----
</TABLE>

The deferred tax assets at September 30, 1994 and 1993 are comprised of the
following:

<TABLE>
<CAPTION>
DEFERRED TAX ASSETS 1994 1993
------------------------------------------------------------------ -------------- --------------
<S> <C> <C>
Net operating loss carryforwards.................................. $ 7,743,000 $ 8,763,000
Tax credit carryforwards.......................................... 767,000 460,000
Accrued liabilities............................................... 462,000 451,000
Inventory......................................................... 269,000 196,000
Fixed assets...................................................... 47,000 122,000
Receivables....................................................... 40,000 40,000
-------------- --------------
9,328,000 10,032,000
Less valuation allowance.......................................... (8,165,000) (9,448,000)
-------------- --------------
Total........................................................... $ 1,163,000 $ 584,000
-------------- --------------
-------------- --------------
</TABLE>

As of September 30, 1994, the Company had Federal net operating loss
carryforwards of approximately $20,300,000. Such loss carryforwards expire
in the fiscal years 1995 through 2007 as follows:

Fiscal Year Ending September 30,

<TABLE>
<S> <C>
1995 $ 33,000
1996.......................................................... 1,136,000
1997.......................................................... 797,000
1998.......................................................... 518,000
1999.......................................................... 1,030,000
2000-2004..................................................... 9,678,000
2005-2007..................................................... 7,108,000
-----------
Total....................................................... $20,300,000
-----------
-----------
</TABLE>

F-9
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

4. INCOME TAXES (CONTINUED)
Additionally, the Company had Federal income tax credits of
approximately $518,000 and state income tax credits of approximately
$377,000. The utilization of the carryforwards to offset future tax
liabilities is dependent upon the Company's ability to generate sufficient
taxable income during the carryforward periods.

5. PLANT AND EQUIPMENT
Plant and equipment at September 30, 1994 and 1993 consisted of the
following:

<TABLE>
<CAPTION>
1994 1993
------------- -------------
<S> <C> <C>
Machinery and equipment......................................... $ 1,581,000 $ 1,602,000
Furniture, fixtures and other equipment......................... 1,064,000 1,126,000
Demonstration equipment......................................... 469,000 418,000
Leasehold improvements.......................................... 112,000 45,000
------------- -------------
Total......................................................... 3,226,000 3,191,000
Less accumulated depreciation and amortization.................. 1,303,000 1,874,000
------------- -------------
Plant and equipment -- net...................................... $ 1,923,000 $ 1,317,000
------------- -------------
------------- -------------
</TABLE>

6. OTHER ASSETS
Other assets at September 30, 1994 and 1993 consisted of the following:

<TABLE>
<CAPTION>
1994 1993
------------- -------------
<S> <C> <C>
Software development costs, net of accumulated amortization of
$413,000 and $174,000, respectively............................ $ 1,064,000 $ 870,000
Other........................................................... 95,000 253,000
------------- -------------
Total......................................................... $ 1,159,000 $ 1,123,000
------------- -------------
------------- -------------
</TABLE>

Certain software development costs totaling $433,000 and $476,000 have
been capitalized during the fiscal years ended September 30, 1994 and 1993,
respectively. Amortization expense relating to software development costs
for 1994, 1993 and 1992 was $239,000, $137,000 and $37,000, respectively.

7. ACCRUED EXPENSES
Accrued expenses at September 30, 1994 and 1993 consisted of the
following:

<TABLE>
<CAPTION>
1994 1993
------------- -------------
<S> <C> <C>
Accrued wages and related employee benefits..................... $ 857,000 $ 472,000
Accrued warranty and other product related costs................ 385,000 526,000
Accrued sales commissions....................................... 348,000 596,000
Accrued pension costs (Note 9).................................. 175,000 112,000
Other........................................................... 478,000 1,036,000
------------- -------------
Total......................................................... $ 2,243,000 $ 2,742,000
------------- -------------
------------- -------------
</TABLE>

8. NOTES PAYABLE TO BANK
The Company maintains a line of credit agreement with a bank under which
the Company may borrow up to $1,500,000 against certain customer accounts
receivable and inventory. Borrowings under this agreement bear interest at
the higher of the banks prime lending rate or the Federal funds rate plus
one-half of one percent. The interest rate for borrowings under this
agreement at September 30, 1994 was 8.75 percent. This agreement expires in
June 1995.

F-10
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

9. EMPLOYEE BENEFIT PLANS
DEFINED BENEFIT PLAN

The Company has a noncontributory pension plan for employees who meet
certain minimum eligibility requirements. The level of retirement benefit is
based on a formula which considers both employee compensation and length of
credited service.

Plan assets are invested in pooled bank investment accounts, and the
fair value of such assets is based on the quoted market prices of underlying
securities in such accounts. The Company funds pension plan costs based on
minimum and maximum funding criteria as determined by independent actuarial
consultants.

The components of net pension cost for the fiscal years ended September
30, 1994, 1993 and 1992 are summarized as follows:

<TABLE>
<CAPTION>
1994 1993 1992
------------ ---------- ----------
<S> <C> <C> <C>
Service cost -- benefits earned during the period...... $ 143,000 $ 91,000 $ 93,000
Interest on projected benefit obligations.............. 62,000 49,000 58,000
Estimated return on plan assets........................ (52,000) (43,000) (55,000)
Other -- amortization of actuarial gains and net
transition asset...................................... (30,000) (32,000) (35,000)
------------ ---------- ----------
Net pension cost....................................... $ 123,000 $ 65,000 $ 61,000
------------ ---------- ----------
------------ ---------- ----------
</TABLE>

The funded status of the plan compared with the accrued expense included
in the Company's balance sheet at September 30, 1994 and 1993 is as follows:

<TABLE>
<CAPTION>
1994 1993
------------- ------------
<S> <C> <C>
Fair value of plan assets........................................ $ 724,000 $ 621,000
------------- ------------
Actuarial present value of benefit obligation:
Accumulated benefit obligation, including vested benefits of
$636,000 and $491,000 in 1994 and 1993, respectively.......... 790,000 587,000
Effect of projected compensation increases..................... 226,000 137,000
------------- ------------
Projected benefit obligation for services rendered to date....... 1,016,000 724,000
------------- ------------
Projected benefit obligation in excess of plan assets............ (292,000) (103,000)
Unrecognized net loss (gain)..................................... 67,000 (85,000)
Remaining unrecognized net transition asset being amortized over
11 years........................................................ (122,000) (157,000)
Unrecognized prior service costs................................. 40,000 48,000
------------- ------------
Accrued pension cost............................................. $ (307,000) $ (297,000)
------------- ------------
------------- ------------
</TABLE>

F-11
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

9. EMPLOYEE BENEFIT PLANS (CONTINUED)
Accrued pension costs are included in the accompanying September 30,
1994 and 1993 balance sheets as follows:

<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Accrued expenses.................................................... $ 175,000 $ 112,000
Other liabilities................................................... 132,000 185,000
----------- -----------
$ 307,000 $ 297,000
----------- -----------
----------- -----------
</TABLE>

Significant assumptions used in determining net periodic pension cost
and related pension obligations are as follows:

<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Discount rate............................................................... 7.50% 8.25%
Rate of compensation increase............................................... 4.00% 4.00%
Expected long-term rate of return on assets................................. 8.25% 8.25%
</TABLE>

DEFINED CONTRIBUTION STOCK OWNERSHIP AND DEFERRED COMPENSATION PLAN

The Company has a defined contribution plan for all eligible employees,
as defined by the Plan. The Plan provides for employee cash contributions
ranging from two to ten percent of compensation and matching employer
contributions of Company stock at a rate of 25 percent of an employee's
contribution, limited to a maximum of six percent of a participant's
compensation. The Plan also provides for additional employer contributions
of Company stock at the discretion of the Company's Board of Directors. The
Company incurred $61,000, $36,000 and $22,000 for employer contributions to
the Plan in 1994, 1993 and 1992, respectively. In 1994, 1993 and 1992, the
Company issued 8,610, 16,250 and 26,027, respectively, shares of its common
stock to the Plan related to its prior year contribution.

STOCK APPRECIATION RIGHTS

During fiscal 1992, the Company entered into a stock appreciation rights
agreement with its President. Under the terms of the agreement, the
President will receive a cash payment equal to the appreciation in the
market value of a fixed number of shares of the Company's common stock if
certain conditions are met.

The Company records the compensation expense related to this agreement
at the date that the amount of payment to be made can be reasonably
estimated. The Company recorded compensation expense of $85,000 and $100,000
related to this agreement during fiscal 1994 and 1993, respectively. No
compensation expense was recorded relating to this agreement during fiscal
1992. The maximum future compensation which may be earned under this
agreement is $90,000.

F-12
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

10. COMMITMENTS AND CONTINGENCIES

a. OPERATING LEASES

The Company has entered into operating lease agreements for
equipment, manufacturing and office facilities. The minimum noncancelable
scheduled rentals under these agreements are as follows:

<TABLE>
<CAPTION>
YEAR ENDING SEPTEMBER 30: AMOUNT
------------------------------------------------------------------- -------------
<S> <C>
1995............................................................... $ 408,000
1996............................................................... 396,000
1997............................................................... 385,000
1998............................................................... 257,000
-------------
Total............................................................ $ 1,446,000
</TABLE>

Rent expense for 1994, 1993 and 1992 was $363,000, $347,000 and
$347,000, respectively.

b. LITIGATION

During fiscal 1992, the Company instituted an action against Cybo
Systems, Inc. ("Cybo"), alleging that Cybo breached certain agreements
between the parties with respect to the sale by the Company to Cybo of
all of the assets of its welding and cutting systems business.

In response to the action brought by the Company, Cybo asserted
claims against the Company alleging, among other things, breach of
contract and warranties, fraud, bad faith, and conversion. Cybo is
seeking aggregate damages in excess of $3.3 million. The Company believes
that Cybo's claims are without merit and plans to defend against them
vigorously. The Company's management, after discussion with legal
counsel, believes that the ultimate outcome of this matter will not have
a material adverse impact on the Company's financial position or results
of operations.

c. UNITED STATES GOVERNMENT CONTRACTS

Certain of the Company's contracts are subject to audit by applicable
United States governmental agencies. Until such audits are completed, the
ultimate profit on these contracts cannot be finally determined; however,
in the opinion of management, the final contract settlements will not
have a material adverse effect on the Company's financial position or
results of operations.

11. STOCKHOLDERS' EQUITY

PRIVATE EQUITY PLACEMENTS -- During fiscal 1994, the Company entered
into an agreement with a group of investors. Under the agreement the Company
received approximately $3,800,000, after expenses, in exchange for the
issuance of 1,360,000 shares of the Company's common stock. The Company also
issued warrants exerciseable through December 1999 to purchase 51,000 shares
of the Company's common stock at an exercise price of $3.75 per share.

During fiscal 1992, the Company entered into an agreement with a group
of investors which included a director of the Company. Under the agreement
the Company received approximately $1,300,000, after expenses, in exchange
for the issuance of 3,000,000 shares of the Company's common stock and
warrants exercisable through July 1996 to purchase an additional 1,000,000

F-13
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

11. STOCKHOLDERS' EQUITY (CONTINUED)
shares of the Company's common stock at an exercise price of $1.00 per
share. Additionally, the director included in the group of investors
received warrants exercisable through July 1997 to purchase 240,000 shares
of the Company's common stock at an exercise price of $1.00 per share.

SHARES AND WARRANTS ISSUED FOR SERVICES RENDERED -- During fiscal 1994,
the Company issued warrants for the purchase of 30,000 shares of the
Company's common stock at an exercise price of $4.69 per share as
compensation for professional services rendered. The Company recorded an
expense of approximately $38,000 related to the issuance of such warrants.

During fiscal 1993, the Company issued warrants under certain agreements
granting the holders thereof the right through June 1998 to purchase up to
227,004 shares of the Company's common stock at exercise prices ranging from
$0.88 to $3.00 per share as compensation for professional services rendered.
The Company recorded an expense of approximately $125,000 related to the
issuance of such warrants.

During fiscal 1992, the Company issued 230,000 shares of common stock
and a warrant expiring April 1996 to purchase 66,667 shares of the Company's
common stock at an exercise price of $1.00 per share to a law firm in
satisfaction of unpaid legal fees of $130,000. A director of the Company is
a partner in the law firm. The market value of the shares and the warrant on
the dates of issuance was $130,000.

WARRANT ISSUED IN SETTLEMENT OF LITIGATION -- During fiscal 1993, the
Company issued warrants in connection with the settlement of a lawsuit to
purchase up to 25,000 shares of the Company's common stock at an exercise
price of $4.37 per share. The expiration date of such warrants is November
1, 1996. The Company recorded an expense of approximately $25,000 related to
the issuance of such warrants.

WARRANTS EXERCISED -- During fiscal 1994, the Company received
approximately $270,000 in connection with the issuance of 242,600 shares of
its common stock upon the exercise of warrants to purchase such shares at
prices between $0.88 and $4.38 per share.

WARRANTS OUTSTANDING -- As of September 30, 1994, there were warrants
outstanding to purchase approximately 1,372,000 shares of the Company's
common stock with exercise prices of between $1.00 and $4.69 per share.

STOCK OPTION PLANS -- The Company has four stock option plans (the 1977,
1982, 1987 and 1991 plans) which provide for the granting of options to
employees or directors at prices and terms as determined by the Board of
Directors' Stock Option Committee (the "Committee"). With respect to the
1977 and 1987 plans, option prices may not be less than the fair market
value at date of grant. Any excess of the fair market value of shares under
option at the date of grant over the exercise price is charged to operations
over the period in which the stock options vest. All options issued by the
Company to date have exercise prices which were equal to market value of the
Company's common stock at the date of grant. No new options may be granted
under the 1977 and 1982 plans.

F-14
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

11. STOCKHOLDERS' EQUITY (CONTINUED)
The following table sets forth summarized information concerning the
Company's stock options:

<TABLE>
<CAPTION>
NUMBER OF EXERCISE
SHARES PRICE RANGE
----------- -----------------
<S> <C> <C>
Options outstanding for shares of common stock at October 1,
1991......................................................... 834,088 $ .75 - $7.06
Granted....................................................... 1,130,721 .53 - 1.63
Canceled or expired........................................... (649,323) .53 - 7.06
----------- -----------------
Options outstanding for shares of common stock at September
30, 1992..................................................... 1,315,486 .53 - 5.69
Granted....................................................... 470,963 .88 - 4.04
Canceled or expired........................................... (99,852) .53 - 5.69
Exercised..................................................... (21,528) .53 - 1.44
----------- -----------------
Options outstanding for shares of common stock at September
30, 1993..................................................... 1,665,069 .53 - 4.25
Granted....................................................... 257,416 3.63 - 6.81
Canceled or expired........................................... (23,478) .53 - 5.32
Exercised..................................................... (321,107) .53 - 4.19
----------- -----------------
Options outstanding for shares of common stock at September
30, 1994..................................................... 1,577,900 $ .53 - $6.81
----------- -----------------
----------- -----------------
Options exercisable at September 30, 1994..................... 725,845
-----------
-----------
Shares reserved for issuance at September 30, 1994............ 1,692,525
-----------
-----------
</TABLE>

12. GAIN RELATING TO AGREEMENT WITH GENERAL MOTORS CORPORATION

In September 1989, General Motors Corporation ("GM") and the Company
entered into an agreement whereby GM would lend the Company up to
$1,100,000. Loans under this agreement bore interest at two percentage
points above the prime rate and were collateralized by substantially all of
the Company's assets.

The Company recorded interest expense of approximately $22,000 for the
year ended September 30, 1992 relating to this note payable.

In fiscal 1992, the Company and GM entered into an agreement whereby GM
exchanged this debt and the related accrued interest thereon and released
the security interest held by GM in the Company's assets as full payment for
(i) certain automotive spare parts inventories held by the Company, (ii) the
execution of a service agreement under which the Company will provide
maintenance and repair services for a four-year period and (iii) execution
of an agreement by the Company and its officers and directors not to bring a
suit against GM.

During fiscal 1992, the Company recorded an extraordinary item relating
to the agreement from the sale of the inventory to GM. The inventory which
was sold to GM had been written off during fiscal 1990 as part of the
Company's restructuring decision. The Company is recognizing the revenue
related to the service agreement on a straight-line basis over the life of
the agreement, with $18,000, $18,000 and $14,000 recognized in fiscal 1994,
1993 and 1992, respectively. Costs related to the fulfillment of the service
agreement are expensed as incurred.

F-15
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

13. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair
value of each class of financial instruments:

a. Cash and Cash Equivalents -- The carrying amounts approximate fair value
because of the short maturity of these instruments.

b. Investments -- Fair value equals quoted market value.

c. Receivables -- The carrying amount approximates fair value because of
the short maturity of these instruments.

As of September 30, 1994, investments consisted of certain debt
securities issued by the United States government with maturities through
November 1996. The Company's intention is to hold such investments until
their maturity, therefore, such investments are recorded at their amortized
cost. As of September 30, 1994, the aggregate fair value of investments
maturing within one year was approximately $1,478,000 and the fair value of
investments with maturities of longer than one year was approximately
$1,447,000. The aggregate unrealized losses as of September 30,1994 were
approximately $70,000.

14. SEGMENT AND PRINCIPAL CUSTOMER INFORMATION

For the purposes of segment reporting, management considers the Company
to operate in one industry, the machine vision industry.

During the years ended September 30, 1994, 1993 and 1992 the Company
recognized revenues on sales to major customers as set forth below:

PERCENT OF TOTAL REVENUES

<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
United States Government and its agencies............................ 4 8 23
Major customers:
Customer A......................................................... 15 13 21
Customer B......................................................... 10 3 --
Customer C......................................................... 9 15 3
Customer D......................................................... 5 13 --
Customer E......................................................... -- -- 17
All other customers.................................................. 57 48 36
--- --- ---
Total.............................................................. 100 100 100
--- --- ---
--- --- ---
</TABLE>

Foreign export sales accounted for 62 percent, 74 percent and 54 percent
of the Company's revenues in fiscal 1994, 1993 and 1992, respectively.

The Company's domestic and foreign export sales during the years
ended September 30, 1994, 1993 and 1992 are set forth below:

<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
North America $ 9,258,000 $ 5,166,000 $ 6,074,000
Asia/Pacific Rim 14,103,000 12,608,000 5,838,000
Europe 1,252,000 2,169,000 1,423,000
----------- ----------- -----------
Total $24,613,000 $19,943,000 $13,335,000
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

* * * * * * *

F-16
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1995 1994
-------------- --------------
(UNAUDITED) (NOTE 1)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents...................................................... $ 346,000 $ 1,568,000
Investments (Note 2)........................................................... 1,500,000 1,495,000
Receivables -- net (including unbilled receivables of $678,000 at March 31,
1995 and $702,000 at September 30, 1994)...................................... 5,691,000 3,412,000
Inventories (Note 3)........................................................... 4,533,000 2,634,000
Deferred income taxes.......................................................... 2,923,000 1,163,000
Prepaid expenses and other current assets...................................... 254,000 134,000
-------------- --------------
Total Current Assets......................................................... 15,247,000 10,406,000
Machinery and equipment (at cost, less accumulated depreciation and
amortization)................................................................... 2,210,000 1,923,000
Deferred income taxes............................................................ 506,000 --
Other assets..................................................................... 1,260,000 1,159,000
Investments (Note 2)............................................................. 2,487,000 1,500,000
-------------- --------------
TOTAL........................................................................ $ 21,710,000 $ 14,988,000
-------------- --------------
-------------- --------------

<CAPTION>
LIABILITIES
<S> <C> <C>
Current Liabilities:
Accounts payable............................................................... $ 4,503,000 $ 2,717,000
Accrued expenses............................................................... 2,330,000 2,243,000
Advance contract payments received............................................. 103,000 719,000
Notes payable (Note 4)......................................................... -- 63,000
-------------- --------------
Total Current Liabilities.................................................... 6,936,000 5,742,000
Other liabilities................................................................ 213,000 210,000
-------------- --------------
Total Liabilities............................................................ 7,149,000 5,952,000
-------------- --------------
<CAPTION>
STOCKHOLDER'S EQUITY
<S> <C> <C>

Capital stock -- common -- authorized 20,000,000 shares, $.01 par value; issued
and outstanding 11,671,615 shares at March 31, 1995 and 11,583,602 shares at
September 30, 1994.............................................................. 117,000 116,000
Additional paid-in capital....................................................... 33,047,000 32,805,000
Accumulated deficit.............................................................. (18,603,000) (23,885,000)
-------------- --------------
Total Stockholder's Equity................................................... 14,561,000 9,036,000
-------------- --------------
TOTAL........................................................................ $ 21,710,000 $ 14,988,000
-------------- --------------
-------------- --------------
</TABLE>

F-17
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
STATEMENTS OF INCOME
(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
MARCH 31, MARCH 31,
------------------------------ ----------------------------
1995 1994 1995 1994
-------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues........................................... $ 16,600,000 $ 11,790,000 $ 9,071,000 $ 5,901,000
Cost of revenues................................... 7,616,000 6,439,000 4,054,000 3,101,000
-------------- -------------- ------------- -------------
Gross profit....................................... 8,984,000 5,351,000 5,017,000 2,800,000
Research and development costs..................... 2,389,000 1,798,000 1,270,000 968,000
Selling, general and administrative expenses....... 3,469,000 2,549,000 1,955,000 1,321,000
Interest (income) net.............................. (96,000) (2,000) (65,000) (9,000)
-------------- -------------- ------------- -------------
Income before income tax benefit................... 3,222,000 1,006,000 1,857,000 520,000
Income tax benefit................................. 2,060,000 1,093,000 2,606,000 1,123,000
-------------- -------------- ------------- -------------
Net income......................................... $ 5,282,000 $ 2,099,000 $ 4,463,000 $ 1,643,000
-------------- -------------- ------------- -------------
-------------- -------------- ------------- -------------
Net income per common share........................ $ .38 $ .16 $ .32 $ .13
-------------- -------------- ------------- -------------
-------------- -------------- ------------- -------------
</TABLE>

F-18
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31,
------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income........................................................................ $ 5,284,000 $ 2,099,000
Adjustments to reconcile net income to net cash from operating activities:
Deferred income taxes........................................................... (2,266,000) (1,143,000)
Depreciation and amortization................................................... 410,000 320,000
Issuance of common stock -- defined contribution stock ownership and deferred
compensation plan.............................................................. 60,000 36,000
Provision for doubtful receivable............................................... 20,000 --
Issuance of warrants for professional services rendered......................... 14,000 --
Asset and liability management:
Receivables................................................................... (2,299,000) (1,293,000)
Inventories................................................................... (1,899,000) (266,000)
Prepaid expenses and other current assets..................................... (121,000) (73,000)
Other assets.................................................................. (247,000) (166,000)
Accounts payable.............................................................. 1,786,000 95,000
Accrued expenses.............................................................. 87,000 281,000
Advanced contract payment received............................................ (616,000) (774,000)
Other liabilities............................................................. 3,000 (40,000)
-------------- --------------
Net cash provided by (used in) operating activities............................... 216,000 (924,000)
-------------- --------------
CASH FLOWS (USED IN) INVESTING ACTIVITIES:
Additions to property and equipment........................................... (551,000) (715,000)
Investments................................................................... (993,000) (3,000,000)
-------------- --------------
Net cash used in investing activities............................................. (1,544,000) (3,715,000)
-------------- --------------
CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES:
Issuance of common stock in connection with the exercise of stock option and
warrants..................................................................... 169,000 32,000
Notes payable................................................................. (63,000) 187,000
Proceeds/net of expenses related to issuance of common stock.................. -- 4,078,000
-------------- --------------
Net cash provided by financing activities......................................... 106,000 4,297,000
-------------- --------------
DECREASE IN CASH AND CASH EQUIVALENTS............................................. $ (1,222,000) $ (342,000)
-------------- --------------
-------------- --------------
</TABLE>

F-19
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

1. CONDENSED FINANCIAL STATEMENTS

The condensed balance sheet of Robotic Vision Systems, Inc. ("RVSI" or
the "Company") as of March 31, 1995, the condensed statements of operations for
the three and six month periods ended March 31, 1995 and 1994 and the condensed
statements of cash flows for the six month periods ended March 31, 1995 and 1994
have been prepared by the Company, without audit. The balance sheet as of
September 30, 1994 was derived from the audited balance sheet included in
the Company's September 30, 1994 Annual Report on Form 10-K. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial condition, results of operations and
cash flows at March 31, 1995 and for all periods presented have been made.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's September 30, 1994 Form 10-K. The results of
operations for the period ended March 31, 1995 are not necessarily indicative of
the operating results for the full year.

2. INVESTMENTS

At March 31, 1995 and September 30, 1994, investments consist primarily of
U.S. Treasury Notes and U.S. Treasury Bills.

3. INVENTORIES

As of March 31, 1995 and September 30, 1994 inventories consisted of the
following:

<TABLE>
<CAPTION>
MARCH 31, 1995 SEPTEMBER 30, 1994
-------------- ------------------
<S> <C> <C>
Raw Materials................................................................. $ 461,000 $ 356,000
Work-in-Process............................................................... 4,072,000 2,278,000
-------------- ------------------
Total....................................................................... $ 4,533,000 $ 2,634,000
-------------- ------------------
-------------- ------------------
</TABLE>

4. NOTES PAYABLE

The Company has an agreement with a bank under which the Company may borrow
up to $1,500,000. Loans under this agreement bear interest at a rate of prime
plus one percent per annum and are secured by all the assets of the Company. The
amount outstanding under this credit facility was $-0- at March 31, 1995 and
$63,000 at September 30, 1994. The agreement expires on June 7, 1995.

5. INCOME TAXES

The income tax benefit for the six months ended March 31, 1995 and 1994
consisted of the following:

<TABLE>
<CAPTION>
1995 1994
-------------- -------------
<S> <C> <C>
Current provision.................................................................. $ (206,000) $ (50,000)
Deferred provision................................................................. (1,036,000) --
Adjustment of valuation allowance.................................................. 3,302,000 1,143,000
-------------- -------------
Total............................................................................ $ 2,060,000 $ 1,093,000
-------------- -------------
-------------- -------------
</TABLE>

F-20
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS -- CONTINUED
(UNAUDITED)

5. INCOME TAXES (CONTINUED)
The adjustments to the valuation allowance during the quarters ended March
31, 1995 and 1994 emanate from the Company's profitable operations and the
extent to which the Company can substantiate projected future earnings. The
deferred tax assets as of March 31, 1995 and September 30, 1994 are equivalent
to the benefit to be derived from net operating loss carryforwards and other tax
credits which are expected to be utilized to offset future taxable income
projected as of those dates. The deferred tax assets as of March 31, 1995 and
September 30, 1994 have been limited to the benefit to be derived from projected
future income, primarily due to the Company's limited history of earnings and
its projected future profitability currently being primarily dependent on one
existing product line.

6. SUBSEQUENT EVENTS

a) PROPOSED MERGER AGREEMENT

On April 27, 1995, the Company and Acuity Imaging, Inc. ("Acuity") signed a
definitive merger agreement. Upon consummation of the merger, Acuity will become
a wholly-owned subsidiary of RVSI.

The merger terms, as amended on July 11, 1995, contemplate that RVSI
is to issue 0.766 of a share of its common stock for each Acuity share (the
"Exchange Ratio"), or approximately 1,883,000 shares of RVSI common stock in
exchange for all of Acuity's outstanding shares as of March 31, 1995. In
addition, Acuity's outstanding stock options are to be exchanged for options
upon RVSI's common stock in the same 0.766 to one ratio. If the price of the
RVSI Common Stock averages more than $14.50 or less than $10.00 per share
during the 20 business days preceding the consummation of the Merger, the
number of shares of the RVSI Common Stock issuable to the Acuity Stockholders
would be proportionately adjusted. In no event, however, will the Exchange
Ratio be more than .925626 or less than .555375.

Consummation of the merger, which is intended to be completed as a tax-free
reorganization and to be accounted for as a pooling of interests, is subject to
conditions customary for transactions of this nature, including approval by the
stockholders of each of RVSI and Acuity.

b) PRIVATE EQUITY PLACEMENT

On June 28, 1995, the Company entered into an agreement with a group of
investors. Under the agreement the Company received approximately $9.5
million, after expenses, in exchange for the issuance of 1,110,000 shares of
the Company's common stock. The Company also issued warrants exercisable
through June 2000 to purchase 68,300 shares of the Company's common stock
at exercise prices ranging from $8.75 to $9.00 per share.

F-21
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth various expenses which will be incurred
in connection with the offering contemplated by Post-Effective Amendment No. 1
to this Registration Statement. All amounts set forth below are estimated:

<TABLE>

<S> <C>

Printing expenses. . . . . . . . . . . . . . . . . . . . . . $ 3,500
Legal fees and expenses. . . . . . . . . . . . . . . . . . . 15,000
Accounting fees and expenses . . . . . . . . . . . . . . . . 5,000
Miscellaneous expenses . . . . . . . . . . . . . . . . . . . 1,500
---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $ 25,000
---------
---------
</TABLE>

Item 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Article SEVENTH of the Certificate of Incorporation of Robotic Vision
Systems, Inc. (the "Registrant") provides with respect to the indemnification of
directors and officers that the Registrant shall indemnify to the fullest extent
permitted by Section 145 of the Delaware General Corporation Law, as amended
from time to time, each person that such Section grants the Registrant power to
indemnify. Article Sixth of the Certificate of Incorporation of the Registrant
also provides that no director shall be liable to the corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a director,
except with respect to (1) a breach of the director's duty of loyalty to the
corporation or its stockholders, (2), acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (3)
liability under Section 174 of the Delaware General Corporation Law or (4) a
transactions from which the director derived an improper personal benefit, it
being the intention of the foregoing provision to eliminate the ability of the
corporation's directors to the corporation or its stockholders to the fullest
extent permitted by Section 102(b)(7) of Delaware General Corporation Law, as
amended from time to time.

Section 145 of Delaware Corporation Law provides, INTER ALIA, that to the
extent a director, officer, employee or agent of a corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding, whether civil, criminal, administrative or investigative or in
defense of any claim, issue, or matter therein (hereinafter, a "Proceeding"), by
reason of the

II-1

<PAGE>

fact that he is or was a director, officer, employee or agent of a corporation
or is or was serving at the request of such corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise (collectively an "Agent" of the corporation), he shall
be indemnified against expenses (including attorney's fees) actually and
reasonably incurred by him in connection therewith.

Section 145 also provides that a corporation may indemnify any person who
was or is a party or is threatened to be made a party to any threatened
Proceeding by reason of the fact that he is or was an Agent of the corporation,
against expenses (including attorney's fees) judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful; provided, however, that in
an action by or in the right of the corporation, the corporation may not
indemnify such person in respect of any claim, issue, or matter as to which he
is adjudged to be liable to the corporation unless, and only to the extent that,
the Court of Chancery or the court in which such proceeding was brought
determines that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is reasonably entitled to indemnity.

Item 15. RECENT SALES OF UNREGISTERED SECURITIES

The following sets forth information relating to all securities of the
Registrant which were sold by it during the past three years and which were not
registered under the Securities Act of 1933, as amended (the "Act").

(a) In January 1992, Registrant sold 1,500,000 shares of its Common Stock
and common stock purchase warrants to acquire an additional 500,000
shares of its Common Stock to 11 persons, all of whom were "accredited
investors' within the meaning of Rule 501, promulgated under the Act,
from which it derived gross proceeds of $750,000.00 Jay M. Haft, a
director of Registrant, received common stock purchase warrants to
acquire 120,000 shares of Registrant's Common Sock for his services in
facilitating the consummation of such placement.

(b) In January 1992, Registrant issued 200,000 shares of its Common Stock
and common stock purchase warrants to acquire an additional 66,667
shares of its Common Stock to Parker Duryee Rosoff & Haft, its
counsel("PD"), in satisfaction of $100,000 in legal fees and
disbursements

II-2

<PAGE>

owed to such Firm.

(c) In February 1992 Registrant issued to Anorad Corporation, in
consideration for favorable credit terms on outstanding monies due,
warrants exercisable at $1.00 per share through February 1996, to
acquire up to 20,000 shares of Registrant's Common Stock.

(d) In July 1992, Registrant sold 1,500,000 shares of its Common Stock and
common stock purchase warrants to acquire an additional 500,000 shares
of its Common Stock to the same persons referred to in subparagraph
(a) above, from which it derived gross proceeds of $750,000. Mr. Haft
again received common stock purchase warrants to acquire 120,000
shares of Registrant's Common Stock for his services in facilitating
the consummation of such placement.

(e) In July 1992, Registrant issued 30,000 shares of its Common Stock to
PD in satisfaction of $30,000 in legal fees and disbursements owed to
such Firm.

(f) In September 1992, Registrant issued to Wayne E. Meyer, a former
director, in consideration for consulting services, warrants,
exercisable at $1.06 per share through September 1995 to acquire up to
10,000 shares of Registrant's Common Stock.

(g) In December 1992, Registrant issued to Paul DiMatteo, a former
employee in consideration for delayed payment of compensation due,
warrants, exercisable at $1.00 per share through December 1996, to
acquire up to 2,000 shares of Registrant's Common Stock.

(h) In the period from December 1992 to January 1995, Registrant issued to
Morgen, Evan & Company, Inc., in consideration for consulting services
and in partial payment of sales commissions, warrants to acquire up to
131,411 shares of Registrant's Common Stock, exercisable at prices
ranging from $.0875 per share to $6.56 per share and expiring between
December 1996 and January 1999. Mark J. Lerner, a director of
Registrant, is President of Morgen, Evan & Company, Inc.

(i) In the period from December 1992 to March 1995, the Registrant issued
to 6 persons/firms, in consideration for consulting services, warrants
to acquire an aggregate of up to 74,284 shares of Registrant's Common
Stock, exercisable at $1.00 per share to $6.125 per share and expiring
between December 1996 and February 1999.

II-3

<PAGE>

(j) In April 1993, Registrant issued to Riede Systems, Inc., in partial
consideration for services as a sales representative, warrants,
exercisable at $2.19 per share through April 1997, to acquire up to
5,000 shares of Registrant's Common Stock.

(k) In November 1993, Registrant issued to Ronald Place, a former
employee, as part of a legal settlement, warrants, exercisable at
$4.375 per share through September 1996, to acquire up to 25,000
shares of Registrant's Common Stock.

(l) In the period from December 1993 to January 1994, Registrant sold
1,360,000 shares of its Common Stock to 29 persons, all of whom were
"accredited investors", from which it derived gross proceeds of
$4,250,000. Arnhold and S. Bleichroeder acted as Registrant's
placement agent in connection therewith and received warrants,
exercisable at $3.75 per share through January 1999, to acquire up to
51,000 shares of Registrant's Common Stock.

(m) In February 1994, Registrant retroactively issued to Laidlaw
Holdings, Inc. as of July 1993 warrants, exercisable at $3.00
per share through July 1999, to acquire up to 20,000 shares of
Registrant's Common Stock in settlement of fee dispute attendant
to an unconsummated private placement.

(n) On June 28, 1995, Registrant consummated a private sale of an
aggregate of 1,110,000 shares of its Common Stock to 30 accredited
persons, at a price of $9.00 from which the Company derived net
proceeds of approximately $9,500,000. Arnhold and S. Bleichroeder,
Inc. acted as Registrant's agent in connection with Registrant's sale
of these shares and received, in addition to $499,500, warrants to
purchase 33,300 shares of Registrant's Common Stock.

Exemption from registration under the Act is claimed for each sale of
securities referred to above in reliance upon the exemption afforded by Section
4(2) of the Act. The certificates evidencing each of such securities bear
appropriate restrictive legends thereon and "stop transfer" orders are
maintained on Registrant's stock transfer records thereagainst. None of these
sales involved the payment of underwriting commissions.

Item 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following is a list of Exhibits filed herewith as part of the
Registration Statement:

EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
2 Agreement and Plan of Merger and Reorganization, dated as of April 27,
1995, as amended and restated as of July 11, 1995, by and among
Registrant, RVSI Acquisition Corp. and Acuity Imaging, Inc.*

3(a) Registrant's Certificate of Incorporation, as amended to date(1)

3(b) Registrant's By-Laws, as amended(2)

4(a) Stock and Warrant Purchase Agreement by and between Registrant and
General Motors Corporation dated as of December 12, 1984(3)

II-4

<PAGE>

4(b) Stock Purchase Warrant expiring December 12,1989 issued to General
Motors Corporation(3)

4(c) Form of warrant expiring December 14, 1988 (Exhibit 4(f))(4)

4(d) Amendment to Warrant issued to General Motors (Exhibit 4(d))(5)

5.1 Opinion of Parker Duryee Rosoff & Haft*

10(a) Research and Development Master Agreement by and between Registrant
and General Motors Corporation dated as of December 12, 1984(3)

10(b) Patent License and Technology Agreement by and between Registrant and
General Motors Corporation dated as of December 12, 1984(3)

10(c) License Agreement by and between Registrant and Med-Bed Technologies,
Inc. dated as of January 24, 1984(3)

10(d) Employment Agreement, dated December 11, 1984 between Registrant and
Pat V. Costa(3)

10(e) Letter of Agreement dated December 21, 1984 between Registrant and
Howard Stern (Exhibit 10(f))(6)

10(f) Letter of Agreement dated July 14, 1983 between Registrant and Robert
H. Walker (Exhibit 10(g))(3)

10(g) Lease agreement dated May 2, 1990 between Registrant and NM&J
Investors covering the premises located at 425 Rabro Drive east,
Hauppauge, New York(7)

10(h) Mortgage between Registrant as Mortgagee and Earl H. Rideout and
Catherine Rideout as Mortgagors(5)

10(i) Loan Agreement dated September 13, 1989 between Registrant and General
Motors Corporation(5)

10(j) Asset Purchase Agreement dated as of September 30, 1990 between
Registrant and Cybo Systems, Inc.(8)

11 Statement regarding computation of per share earnings (included in
Note 1i of the Notes to Financial Statements)

22 Subsidiaries of Registrant(3)

23.1 Consent of Deloitte & Touche LLP

II-5

<PAGE>

23.2 Consent of Parker Duryee Rosoff & Haft (included in Exhibit 5.1)*

23.3 Consent of Morrison Law Firm*

24.1 Power of Attorney (included on the signature page of Part II of this
Registration Statement)*

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

* Previously filed with this Registration Statement.

(1) Denotes document filed as Exhibit to Registrant's Annual Report on Form 10-
K for its fiscal year ended September 30, 1987 and incorporated herein by
reference.
(2) Denotes document filed as Exhibit to Registrant's Registration Statement on
Form S-1 (File No. 2-75483) and incorporated herein by reference.
(3) Denotes document filed as Exhibit to Registrant's Annual Report on Form 10-
K for its fiscal year ended September 30, 1984 and incorporated herein by
reference.
(4) Denotes document filed as Exhibit to Registrant's Annual Report on Form 10-
K for its fiscal year ended September 30, 1985 and incorporated herein by
reference.
(5) Denotes document filed as Exhibit to Registrant's Annual Report on Form 10-
K for its fiscal year ended September 30, 1989 and incorporated herein by
reference.
(6) Denotes document filed as Exhibit to Registrant's Annual Report on Form 10-
K for its fiscal year ended September 30, 1986 and incorporated herein by
reference.
(7) Denotes document filed as Exhibit to Registrant's Annual Report on Form 10-
K for its fiscal year ended September 30, 1990 and incorporated herein by
reference.
(8) Denotes document filed as Exhibit to Registrant's Current Report on Form 8-
K for an event which occurred on October 1, 1990 and incorporated herein by
reference.

(b) FINANCIAL STATEMENT SCHEDULES

All financial statement schedules are omitted because the conditions
requiring their filing do not exist or the information required thereby is
included in the financial statements filed, including the notes thereto.

Item 17. UNDERTAKINGS

The Registrant hereby undertakes:

(1) That for purposes of determining any liability under the Act, the
information omitted from the form of Prospectus filed

II-6

<PAGE>

as part of this Registration Statement in reliance upon Rule 430A and contained
in a form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

(2) That for the purpose of determining any liability under the Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

(3) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:

(i) To include any prospectus required by section 10(a)(3)
of the Securities Act;

(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information
set forth in the Registration Statement;

(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.

(4) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(5) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.

(6) Insofar as indemnification for liabilities arising under the Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions referred to in Item 14 of this Part II to
the Registration Statement, or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by

II-7

<PAGE>

the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against the public policy as expressed in the Act
and will be governed by the final adjudication of such issue.

II-8

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Post-Effective Amendment to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
Village of Hauppauge, State of New York, on the 7th day of August, 1995.

ROBOTIC VISION SYSTEMS, INC.

By: *
-----------------------------------
Pat V. Costa, President

Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated:

SIGNATURE TITLE DATE
--------- ----- ----

Chairman of the Board
President and
Director, (Principal
* Executive Officer) August 7, 1995
-------------------
Pat V. Costa

Executive Vice President,
Secretary/Treasurer and
Director (Principal
Financial Officer and
Principal Accounting
/s/Robert H. Walker Officer) August 7, 1995
-------------------
Robert H. Walker

Senior Vice President
* and Director August 7, 1995
-------------------
Howard Stern

Director
-------------------
Donald F. Domnick

* Director August 7, 1995
-------------------
Jay M. Haft

<PAGE>

Director
-------------------
Frank A. DiPietro

Director
-------------------
Mark J. Lerner

-----------------------
* Robert H. Walker, pursuant to the Powers of Attorney, (executed by each of
the officers and directors listed above and indicated as signing above, and
filed with the Securities and Exchange Commission), by signing his name
hereto does hereby sign and execute this Post-Effective Amendment to the
Registration Statement on behalf of each of the persons referenced above.

Dated: August 7, 1995 /s/Robert H. Walker
----------------------------
Robert H. Walker

<PAGE>

Exhibit 23.1

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Post Effective Amendment No. 3 to Registration
Statement No. 33-76320 of Robotic Vision Systems, Inc. of our report dated
December 14, 1994 appearing in the Prospectus, which is part of such
Registration Statement, and to the reference to us under the heading "Experts"
in such Prospectus.

Deloitte & Touche LLP

Jericho, New York
August 7, 1995