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Form 10-Q

U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

(Mark One)

For the quarterly period ended September 30, 2002

OR

For the transition period from _______________ to _______________

Commission file number 0-14068

Memry Corporation
(Exact name of registrant as specified in its charter)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

As of November 6, 2002, 25,474,369 shares of the registrant’s common stock, par value $.01 per share, were issued and outstanding.

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INDEX

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PART I — FINANCIAL INFORMATION

ITEM 1.      Financial Statements

Memry Corporation & Subsidiaries
Consolidated Balance Sheets

See Notes to Consolidated Financial Statements

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Memry Corporation & Subsidiaries
Consolidated Statements of Income
For the Three Months Ended September 30, 2002 and 2001
(Unaudited)

See Notes to Consolidated Financial Statements

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Memry Corporation & Subsidiaries
Consolidated Statements of Cash Flows
For the Three Months Ended September 30, 2002 and 2001
(Unaudited)

See Notes to Consolidated Financial Statements

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MEMRY CORPORATION & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Note A.   BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals), considered necessary for a fair presentation, have been included. Operating results for the three month period ended September 30, 2002, are not necessarily indicative of the results that may be expected for the year ending June 30, 2003 (“fiscal 2003”). For further information, refer to the consolidated financial statements and footnotes thereto included in the Annual Report on Form 10-K for the year ended June 30, 2002 (“fiscal 2002”) of Memry Corporation (the “Company”).

Note B.   INVENTORIES

Inventories at September 30, 2002, and June 30, 2002, are summarized as follows:

Note C.   NOTE RECEIVABLE - RELATED PARTY

On August 29, 2000, the Company made a loan to an executive officer which has been collateralized by his personal residence. The loan was part of the executive officer’s overall compensation package and was to be forgiven, providing certain conditions were met, over a four year period. During 2001, the executive officer was terminated and the note became current at that time. The terms of the note have subsequently been amended such that the note, in the amount of $110,000, is now due on Jan 28, 2005, or at such time that the residence is sold, whichever occurs first. 

Note D.   ACCRUED EXPENSES

Accrued Expenses at September 30, 2002 and June 30, 2002 are summarized as follows:

Note E.   EARNINGS PER SHARE

Basic earnings per share amounts are computed by dividing net income by the weighted-average number of common shares outstanding. Diluted per share amounts assume exercise of all potential common stock instruments unless the effect is to reduce the loss or increase the income per common share.

For the periods presented, there were no items which changed net income as presented in the consolidated statements of income and the amounts used to compute basic and diluted earnings per share. The following is information about the computation of weighted-average shares utilized in the computation of basic and diluted earnings per share.

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Note F.   PROVISION FOR INCOME TAXES

The provision for income taxes for the periods ended September 30, 2002 and three months ended September 30, 2001 is lower than what would be expected by applying the statutory tax rates to pretax income due to the utilization of federal net operating loss carryforwards, for which full valuation allowances have been recorded in the balance sheets of the Company. 

The following is management’s discussion and analysis of certain significant factors that have affected the Company’s financial position and operating results. Certain statements under this caption may constitute “forward-looking statements”. See Part II -- “Other Information”.

(a)   RESULTS OF OPERATIONS

Three Months Ended September 30, 2002, compared to Three Months Ended September 30, 2001.

Revenues.   In the past several years, the Company has focused on increasing the amount of value-added products it provides to the marketplace, i.e., products where additional processing is performed on basic nitinol wire, strip, or tube before it is shipped to the customer. Currently, medical device applications represent some of the best opportunities for increasing the amount of value-added business. The kink-resistant and self-expanding properties of nitinol have made peripheral stenting an area of special interest, and stent components manufactured for Abdominal Aortic Aneurysms (AAA) in particular have become a significant driver of the Company’s revenue. However, because the market for stent components is very dynamic and rapidly changing, the Company has found it difficult to accurately forecast demand for its stent components. Delays in product launches, uncertain timing on regulatory approvals, inventory adjustments by our customers, market share shifts between competing stent platforms and the introduction of next-generation products have all contributed to the variability in revenue generated by shipments of medical stent components.

Revenues increased 13% to $8,896,000 in the first quarter of fiscal 2003 from $7,848,000 during the same period in fiscal 2002, an increase of $1,048,000. Shipments of wire-based medical stent components increased approximately $1,600,000 from the first quarter of fiscal 2002 compared to the first quarter of fiscal 2003 partially offset by a decline of approximately $600,000 of tube-based medical stent components during the same period. Looking forward to the balance of fiscal year 2003, the company anticipates that overall AAA stent component activity will show a significant increase over the fiscal 2002 level.

Other medical device component shipments, including products utilized in minimally invasive surgery and guidewire applications, increased approximately $700,000 between the first quarter of fiscal 2002 and the first quarter of fiscal 2003.

Revenues from sales of arch wire and high pressure sealing plugs increased approximately $500,000 during the first quarter of fiscal 2003.

These revenue increases were partially offset by a decrease of approximately $900,000 in shipments of superelastic tube, utilized in coronary applications and for other peripheral stenting, and a decrease of $300,000 in superelastic wire, utilized in various industrial applications.

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Costs and Expenses.   Manufacturing costs (including costs associated with research and development revenues) increased to $5,756,000 for the three months ended September 30, 2002 from $3,693,000 during the same three-month period in fiscal 2002.  This increase of $2,063,000, or 56%, is primarily the result of two factors.  The Company experienced poor manufacturing yields in the first quarter of fiscal 2003 on both its wire-based and tube-based AAA stent components.   The wire-based yield issues relate primarily to ramp-up issues on this relatively new product area.  The tube-based problems result from process yield variabilities.  The other factor leading to the increase in manufacturing costs was the reduction in shipments of higher margin superelastic tube in the first quarter of fiscal 2003 versus the first quarter in fiscal 2002 that was noted above. 

Because of the foregoing, the Company’s gross margin from sales decreased to 35% for the three month period ended September 30, 2002, from 53% in the comparable period in fiscal 2002. Looking forward to the balance of fiscal year 2003, the Company anticipates that improvements in manufacturing yields will result in an increase in the gross margin from sales.

General, selling and administrative expenses (including depreciation, amortization and a (gain) loss on disposal of assets) decreased $226,000, or 9%, to $2,262,000 for the three months ended September 30, 2002, as compared to $2,488,000 during the same period of fiscal 2002. This decrease is primarily due to a reduction in severance and legal costs. The Company incurred research and development expenses relating to its own internal products as well as the development of future products of $617,000 for the three months ended September 30, 2002, the same as the $617,000 incurred during the same period of fiscal 2002. Other expense decreased from $42,000 in the first quarter of fiscal year 2002 to $20,000 in the comparable period in fiscal year 2003, due primarily to a reduction in interest expense associated with a reduced level of borrowing. The Company recorded a provision for income taxes of $60,000 for the first quarter of fiscal 2003, a decrease of $80,000 as compared to the same period in fiscal 2002. This decrease is due primarily to a reduction in income before taxes for the three month period ended September 30, 2002.

Net Income.   Primarily due to the reduction in gross margin, the Company’s net income decreased by $687,000, to $798,000 in the first quarter of fiscal 2003 compared to a net income of $1,485,000 for the same period in fiscal 2002.

(b)   LIQUITY AND CAPITAL RESOURCES

At September 30, 2002, the Company’s cash and cash equivalents balance was $3,659,000, an increase of $708,000 from $2,951,000 at the start of fiscal 2003. Cash provided by operations was $1,197,000 for the three months ended September 30, 2002. Cash used in investing activities was $370,000 for the three month period ended September 30, 2002, representing funds invested in property, plant and equipment. During the three months ended September 30, 2002, cash used in financing activities totaled $119,000, due principally to the pay-down of the Company’s note payable. Working capital at September 30, 2002, was $9,725,000, an increase of $846,000 from $8,879,000 at June 30, 2002.

In fiscal 2002 and the first quarter of fiscal 2003, ended on September 30, 2002, the primary capital requirement was to fund additions to property, plant and equipment.

On April 2, 2002, New England Partners exercised 200,000 warrants at a price of $0.853 per warrant, and 400,000 warrants at $1.19 per warrant, to purchase 600,000 shares of common stock of the Company. The Company received $647,000 from this transaction.

On March 31, 2002, a former employee exercised 125,000 warrants at a price of $.90 per warrant, to purchase 125,000 shares of common stock of the Company. The Company received $113,000 from this transaction.

On November 8, 2001, the Company completed a private equity placement with New England Partners and raised $750,000. Proceeds were raised through the sale of units, each of which consisted of two shares of Common Stock and a warrant to purchase one share of Common Stock. Each unit was priced at $2.00. The warrants are exercisable at $1.25 per share, exercisable for a period of five years from the date of issuance. New England Partners was granted piggyback registration rights to participate in the registration of the securities purchased in the private equity placement, which was completed in January 2001. Other terms and conditions were set forth in the definitive documents.

On January 31, 2001, the Company completed a private equity placement and raised $2,395,000. Proceeds were raised through the sale of units, each of which consisted of one share of Common Stock and a warrant to purchase one share of Common Stock. Each unit was priced at $1.00. The warrants are exercisable at $2.25 per share, valid for a period of three years from the date of issuance. Notwithstanding the foregoing, if the fair market value of one share of Common Stock of the Company is equal to or greater than $3.50 for twenty consecutive days during the term of the warrant, the Company has the

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right to demand that the holder exercise the warrant within a 30-day period. Failure of the holder to exercise the warrant within thirty days would cause the warrant to become void and the holder would lose all rights that it has with respect to the warrant. In accordance with the Securities Act of 1933, as amended (the “Securities Act”), the Company filed a registration statement for the registration of the sale by the investors of their Company securities on April 12, 2001. The registration became effective December 27, 2001. Other terms and conditions were set forth in the definitive documents.

On June 30, 1998, the Company and Webster Bank entered into a Commercial Revolving Loan, Term Loan, Line of Credit and Security Agreement and related financing documents and agreements (the “Webster Facility”). Upon entering into the Webster Facility, the Company paid off all amounts outstanding under its prior credit facility with First Union National Bank. The Webster Facility (prior to the amendments described below) included a revolving loan, an equipment loan line of credit and a $500,000 term loan. The term loan is to be repaid in equal monthly installments of principal over its five-year term. The revolving loan provided for borrowings up to the lesser of (a) $3,000,000 or (b) an amount equal to the aggregate of (1) 80% of eligible accounts receivable and (2) the lesser of $1,000,000 or 35% of eligible inventory. The revolving loan requires the payment of a commitment fee equal to 0.25% per annum of the daily-unused portion of the revolving loan. The equipment loan line of credit provides for equipment financing up to the lesser of $750,000 or 75% of the purchase price for eligible equipment each year through June 30, 2001. On June 30, 2000, the Company converted $1,250,000 from the equipment line of credit into a term loan.

On November 30, 1999, the Company and Webster Bank reached agreement on an amendment to the Webster Facility. Under the terms of the agreement, the revolving loan now provides for borrowings up to the lesser of (a) $5,000,000 or (b) an amount equal to the aggregate of (1) 80% of eligible accounts receivable and (2) the lesser of $1,000,000 or 35% of eligible inventory. The equipment loan is amended to provide for equipment financing up to the lesser of $1,250,000 or 75% of the purchase price for eligible equipment each year through June 30, 2001. A new term loan in the amount of $1,000,000 was provided with the requirement that not less than $500,000 of the term loan be used to finance new machinery and equipment purchases. The Company has since satisfied said requirement. Pursuant to a verbal request from Webster Bank during the third quarter of fiscal year 2001, the Company refrained from borrowing under the equipment line until June, 2001, when it borrowed $250,000 from the equipment line and converted on July 1, 2001, the amount to a term loan. The other major provisions of the agreement remain unchanged.

On June 30, 2001, the Company and Webster Bank reached agreement on a second amendment to the Webster Facility. Under the terms of the agreement, the revolving loan now provides for borrowings up to the lesser of (a) if the Availability Test is satisfied, an amount equal to the lesser of (i) $5,000,000 or (ii) an amount equal to the aggregate of (1) 80% of eligible accounts receivable and (2) the lesser of $1,000,000 or 35% of eligible inventory or (b) if the Availability Test is not satisfied, an amount equal to the lesser of (i) $5,000,000 or (ii) an amount equal to the aggregate of (1) 80% of eligible accounts receivable plus (2) the lesser of $1,000,000 or 35% of eligible inventory, multiplied by (3) 75%. The Availability Test means that the Company has raised additional equity and long term debt on terms satisfactory to Webster. There is no provision for equipment loans under the revised agreement. The other major provisions of the agreement remain unchanged. At June 30, 2001, an aggregate amount of approximately $3,100,000 was outstanding under the Webster Facility. The Webster Facility is secured by substantially all of the Company’s assets.

On December 31, 2001, the Company and Webster Bank reached an agreement on a third amendment to the Webster Facility. Under the terms of the third amendment which expires on December 31, 2003, the revolving loan now provides for borrowings up to the lesser of (a) $5,000,000 or (b) an amount equal to the aggregate of (1) 85% of the eligible accounts receivable plus (2) 30% of eligible inventory provided, however, that at no time shall 85% of eligible accounts receivable be less than 50% of the outstanding revolver balance. Several existing term loans totaling $1,728,490 were refinanced into a single term loan, which is due December 31, 2005. The Webster Facility, as amended, includes an equipment loan line of credit that provides for equipment financing up to the lesser of $1,000,000 or 75% of the purchase price for eligible equipment through December 31, 2002. The Company, on January 1, 2003, has the option of converting amounts borrowed under the line of credit to a term loan. The equipment loan line of credit may be extended through December 31, 2003, at Webster Bank’s option. At September 30, 2002, advances of $216,000 had been taken on the equipment line of credit. The other major provisions of the Webster Facility remain unchanged. At September 30, 2002, an aggregate amount of approximately $1,883,000 was outstanding under the Webster Facility. The Webster Facility is secured by substantially all the Company’s assets.

Interest on the revolving loan and equipment line of credit is variable based on LIBOR plus 2.5%. Interest on the outstanding term loan is at a fixed interest rate of 7.55% per annum.

In addition, the credit facility contains various restrictive covenants, including, among others, limitations on encumbrances

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and additional debt, prohibition on the payment of dividends or redemption of stock (except in connection with certain existing put rights), restrictions on management/ownership changes, and required compliance with specified financial ratios.

The Company has in the past grown through acquisitions (including the acquisition of Wire Solutions and Raychem Corporation’s nickel titanium product line). As part of its continuing growth strategy, the Company expects to continue to evaluate and pursue opportunities to acquire other companies, assets and product lines that either complement or expand the Company’s existing businesses. The Company intends to use available cash from operations and authorized but unissued common stock to finance any such acquisitions. The Company does not currently, however, contemplate any material acquisitions for the remainder of fiscal 2003.

The Company has substantial requirements to fund plant and equipment projects to support the expected increased sales volume of SMA and superelastic materials during the fiscal year ending June 30, 2003 and beyond. The Company expects that it will be able to pay for these expenditures through a combination of existing working capital surplus, cash flow generated through operations and increased borrowings. The largest risk to the liquidity of the Company would be an event that caused an interruption of cash flow generated through operations, because such an event could also have a negative impact on the Company’s ability to access credit. The Company’s current dependence on a limited number of products and customers represents the greatest risk to regular operations.

In connection with a December 1994 subordinated debt financing, the Company granted Connecticut Innovations, Incorporated (“CII”), at the time the holder of both common stock and warrants of the Company, a “put” right if at any time before the earlier of June 28, 2006 and the date on which CII ceases to hold at least 35% of the common stock underlying the convertible securities originally issued to it, the Company ceases to (a) maintain its corporate headquarters and all of its product business operations in the State of Connecticut (including the assembly of all products to be sold to U.S. Surgical Corporation), excluding the Company’s components and sub-assembly business acquired from Raychem, (b) base its president and chief executive officer, a majority of its senior executives, and all of its administrative, financial, research and development, marketing and customer service staff relating to its product business (subject to the same inclusions and exclusions as clause (a)) in the State of Connecticut, (c) conduct all of its operations relating to its product business directly or through subcontractors and through licensed operations in the State of Connecticut (subject to the same inclusions and exclusions as clause (a)), and (d) maintain its principal bank accounts with banks located in the State of Connecticut (provided, however, that assets, revenues, employees, operations and bank accounts attributable to any entity acquired by the Company shall not be considered when determining if the Company has satisfied such requirements so long as such entity (1) was acquired in an arm’s length transaction, (2) was not an affiliate of the Company and was not controlled by an affiliate of the Company prior to such acquisition, and (3) had been in existence and operating as a business for at least one year at the time of the acquisition). Upon CII’s exercise of its put, the Company shall be obligated to purchase from CII all the Company’s Common Stock then owned by CII and underlying warrants then owned by CII at a price equal to the greater of the then current market price of the Company’s common stock or $2.00 per share, less, in either event, the aggregate amount of unpaid exercise prices of all warrants put to the Company by CII. Using $2.00 as the put price per share, which exceeds the market price for the Company’s common stock on September 30, 2002, the aggregate put price that would have to be paid by the Company if the put were exercised would be approximately $2.25 million. To the extent that the current market value of the Company’s common stock exceeds $2.00 per share at any time, the put price would be greater. If CII were to have the right to put its securities and were to choose to exercise that right, it would have a serious adverse effect on the Company’s liquidity and the Company would most likely have to seek equity financing to be able to meet its obligations to CII. However, the Company believes that it has the ability to ensure that its operations do not move from Connecticut in a manner that would trigger CII’s put. 

During the fourth fiscal quarter of 2001, the Company relocated to a facility located at 3 Berkshire Blvd., Bethel, CT 06801, to house the Company’s corporate headquarters and east coast manufacturing and assembly operation. The leased facility consists of approximately 37,500 square feet of manufacturing and office space located in a suburban industrial park. The total cost of leasehold improvements, furnishings, and moving expenses associated with the new facility was approximately $2,600,000. The annual rent for the facility is approximately $336,000 versus the rent at the prior Brookfield, CT, location of approximately $170,000 for 24,000 square feet.

On November 6, 2001, the Company amended its lease for its manufacturing and office facility located at 4065 Campbell Avenue, Menlo Park, CA. The lease, originally scheduled to end in March, 2003, was extended until September 30, 2004. Under the terms of the amended lease, the Company will continue to pay a monthly base rent of approximately $49,000 through March, 2003, and subsequent to that date, the monthly base rental shall be modified to reflect changes in the Consumer Price Index. The other major provisions of the lease remain unchanged.

In addition to funding normal operations, the Company may be required to secure new facilities to house its west coast

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operations during the next two fiscal years. The cost of this move and associated relocation expenses would be substantial; however the Company believes that the combination of its borrowing facility and cash flow generated through operations will be sufficient to meet the Company’s total capital requirements. If funds available through these sources were not sufficient, then the Company would likely be forced to raise equity capital which could have a material adverse effect on the per share market price of the Company’s common stock.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4.    CONTROLS AND PROCEDURES

At the beginning of the first quarter of the Company’s current fiscal year, in response to recent legislation and additional requirements, we reviewed our internal control structure and our disclosure controls and procedures. As a result of such review we implemented minor changes, primarily to formalize and document the procedures already in place. We have designed our disclosure controls and procedures to ensure that material information related to the Company is made known to our disclosure committee on a regular basis, in particular during the period in which the quarterly reports are being prepared. Our disclosure committee consists of our Controller, our Chief Financial Officer, and our executive officer principally in charge of day-to-day manufacturing operations. As required, we will evaluate the effectiveness of our disclosure controls and procedures on a quarterly basis, and did so on October 29, 2002, a date within 90 days prior to the filing of this quarterly report. We believe as of that date, such controls and procedures are operating effectively as designed.

We presented the results of our most recent evaluation to our independent auditors, McGladrey & Pullen, LLP, and the Audit Committee of the Board of Directors. Based on such evaluation, the Company’s management, including the principal executive officer and principal financial officer, concluded that the Company’s disclosure controls and procedures are adequate to insure the clarity and material completeness of the Company’s disclosure in its periodic reports required to be filed with the SEC and there are no significant deficiencies in the design or operation of internal controls which could significantly affect our ability to record, process, summarize and report financial data.

PART II — OTHER INFORMATION

Certain statements in this Quarterly Report on Form 10-Q that are not historical fact, as well as certain information incorporated herein by reference, constitute “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties and often depend on assumptions, data or methods that may be incorrect or imprecise. The Company’s future operating results may differ materially from the results discussed in, or implied by, forward-looking statements made by the Company. Factors that may cause such differences include, but are not limited to, those discussed below and the other risks detailed in the Company’s other reports filed with the Securities and Exchange Commission.

Forward-looking statements give our current expectations or forecasts of future events. You can usually identify these statements by the fact that they do not relate strictly to historical or current facts. They often use words such as “anticipate”, “estimate”, “expect”, “project”, “intend”, “plan”, “believe,” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, prospective products or product approvals, future performance or results of current and anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, and financial results.

Any or all of our forward-looking statements in this Quarterly Report on Form 10-Q and information incorporated by reference may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Many factors mentioned in this discussion--for example, product competition and the competitive environment--will be important in determining future results. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially. The Company undertakes no obligation to revise any of these forward-looking statements to reflect events or circumstances after the date hereof.

Other Factors That May Affect Future Results

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ITEM 1.    LEGAL PROCEEDINGS

                 Not applicable.

ITEM 2.    CHANGES IN SECURITIES

On August 20, 2002 the Company received notice of the cashless exercise of an outstanding warrant to purchase 305,485 shares of Common Stock based on an exercise price of $1.19 per share, resulting in the net issuance of 69,428 shares of Common Stock. On August 23, 2002 the Company received notice of the cashless exercise of an outstanding warrant to purchase 282,450 shares of Common Stock based on an exercise price of $0.853 per share, resulting in the net issuance of 128,008 shares of Common Stock. The issuance of these shares was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933.

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

(a)   EXHIBITS

None

(b)   REPORTS ON FORM 8-K

Current Report on Form 8-K furnished August 19, 2002 (Item 9) (Relating to the furnishing of certifications to the SEC pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002).

Current Report on Form 8-K furnished September 30, 2002 (Item 9) (Relating to the furnishing of certifications to the SEC pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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CERTIFICATIONS

I, James G. Binch, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Memry Corporation;

2.  Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.  The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

                    a)  designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

                    b)  evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

                    c)  presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.  The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

                    a)  all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

                    b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.  The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

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I, Robert P. Belcher, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Memry Corporation;

2.  Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.  The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

                    a)  designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

                    b)  evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

                    c)  presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.  The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

                    a)  all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

                    b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.  The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

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