<PAGE>
 
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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                               ----------------
 
                                  FORM 10-KSB
(Mark One)
[X]ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
   1934 [FEE REQUIRED]
For the fiscal year ended October 29, 1995
                                       OR
[_]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
   OF 1934 [NO FEE REQUIRED]
For the transition period from....................... to........................
Commission file number 0-14365
 
                               ----------------
 
                         ALPHA TECHNOLOGIES GROUP, INC.
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
 
              DELAWARE                                 76-0079338
   (STATE OR OTHER JURISDICTION OF                  (I.R.S. EMPLOYER
   INCORPORATION OR ORGANIZATION)                  IDENTIFICATION NO.)
 
        750 LEXINGTON AVENUE
             27TH FLOOR
         NEW YORK, NEW YORK                            10022-1208
   (ADDRESS OF PRINCIPAL EXECUTIVE                     (ZIP CODE)
              OFFICES)
 
         ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 446-5258
 
                               ----------------
 
         SECURITIES REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT:
 
                                      None
 
         SECURITIES REGISTERED UNDER SECTION 12(G) OF THE EXCHANGE ACT:
 
                          Common Stock, $.03 par value
                             (TITLE OF EACH CLASS)
 
  Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
 
  Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
KSB or any amendment to this Form 10-KSB. [X] 
 
  State issuer's revenues for its most recent fiscal year.
 
             $64,116,000 for the fiscal year ended October 29, 1995
 
 
  State the aggregate market value of the voting stock held by non-affiliates
of the issuer.
 
                        $37,118,112 at January 19, 1996
 
  State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
 
         Common Stock, 6,142,441 shares outstanding at January 19, 1996
 
                               ----------------
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
  The Company's definitive proxy statement to be filed on or about February 26,
1996 is incorporated by reference into Part III of this report.
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
 
                                     PART I
 
ITEM 1. DESCRIPTION OF BUSINESS.
 
GENERAL
 
  Alpha Technologies Group, Inc. ("Alpha" or the "Company"), through its
wholly-owned subsidiary, Wakefield Engineering, Inc. ("Wakefield"), and its
80%-owned subsidiary, Uni-Star Industries, Inc. ("Uni-Star"), designs,
manufactures and sells thermal management products and connectors. The
Company's thermal management products serve the microprocessor, computer,
consumer electronics, transportation and other industries, and its connector
products serve the defense, telecommunications, automotive and aerospace
industries. Thermal management products, principally heat sinks, remove excess
heat generated by electronic components within personal computers, power
supplies, stereo amplifiers and other electronic systems. The Company also
designs, manufactures and sells miniature and micro-miniature connectors to
meet rigid industrial and military specifications. Most of the Company's
connectors are customized products sold to niche markets.
 
  The Company was incorporated under its original corporate name, Synercom
Technology, Inc., in Texas in 1969, as a software company, and was
reincorporated in Delaware in 1983. In 1993, the Company began its
transformation from a software company to its current business. In September of
1994, the Company sold the remaining aspects of its software and related
services business ("Information Solutions Segment" or "ISS"). Since October
1993, the Company has grown through a combination of acquisitions and internal
growth.
 
 Acquisitions
 
  The following table sets forth the significant acquisitions made by the
Company during the last three fiscal years:
 
<TABLE>
<CAPTION>
            MONTH ACQUIRED                            BUSINESS
            --------------                            --------
 <C>                                  <S>
 October 1993........................ Thermal management operations in
                                      Wakefield and Fall River, Massachusetts
                                      ("Wakefield")
 June 1994........................... Connector and related product operations
                                      in South Pasadena, California,
                                      Montgomeryville, Pennsylvania and
                                      Cincinnati, Ohio ("Uni-Star")
 August 1994......................... Thermal management operations in
                                      Temecula, California ("Ahamtor")
 June 1995........................... Aluminum extrusion operations in
                                      Fullerton, California ("Specialty")
</TABLE>
 
  Wakefield is a wholly-owned subsidiary of the Company; Ahamtor is a division
of Wakefield and Specialty is a wholly-owned subsidiary of Wakefield. Uni-Star
is an 80%-owned subsidiary of the Company.
 
 Discontinued Operation
 
  In September of 1994, the Company sold the assets and business of ISS for
$4,000,000, of which $2,000,000 was paid at closing, $1,000,000 was paid in
January of 1995 and the final $1,000,000 was paid in March of 1995.
 
PRODUCTS
 
 Thermal Management
 
  Thermal management products are designed to dissipate heat generated within
electronic components and systems. The Company designs, manufactures and sells
thermal management products which serve a
<PAGE>
 
variety of industries, including the microprocessor, computer, consumer
electronics, industrial control, medical instrumentation, laser, power supply
and conversion, telecommunication equipment, transportation and welding
equipment industries. Company customers for thermal management products include
leading original equipment manufacturers ("OEMs") of electronic equipment.
 
  The Company's principal thermal management products include:
 
Penguin(TM) Coolers........  Heat sinks specifically designed for high-
                             performance micro-processors and personal
                             computers. These are used to solve thermal
                             problems of Pentium and certain 486 and PowerPC
                             products. Other microprocessor-specific products
                             include fan heat sink assemblies (heat sinks with
                             electric fans attached to them) and aluminum
                             impregnated plastic heat sinks.
 
Extruded Heat Sinks........  Heat sinks and heat sink assemblies designed for
                             high power industrial applications, including
                             transportation and stereo amplifiers and bonded
                             fin heat sinks used by makers of power supplies.
 
Low Power Heat Sinks.......  Heat sinks designed for heat dissipation in power
                             semiconductors, transistors, rectifiers, diodes
                             and other electronic components used in
                             electronic applications. Typically, these are
                             smaller components used on printed circuit
                             boards.
 
Active Cooling Components..  These products use air or liquid to dissipate
                             heat. Air-to-air heat exchangers use fans to
                             exchange heat with cooler air and are used in
                             high-performance telecommunications, military and
                             aerospace systems. Liquid cooling systems are
                             used in applications which require the removal of
                             significantly greater amounts of heat such as
                             mainframe computers.
                            
Precision Compression       
Mounting Clamp Systems.....  These products are complete mounting clamp and
                             heat sink assembly systems for proper
                             installation, compression and cooling of high-
                             power compression pack silicon-controlled
                             rectifiers.
 
Accessory Products.........  The Company's accessories include high-
                             performance thermal compounds, adhesives,
                             interface materials, hardware and installation
                             tools and other accessories.
 
 Connectors
 
  Connectors are electro-mechanical devices which permit electronic components
such as printed circuit boards, power supplies and peripherals to be attached
and separated. The Company designs, manufactures and sells high-reliability
miniature and micro-miniature connectors used in military-specification and
high-performance applications. The Company's connector products are typically
produced in small volumes for niche markets and are highly customized for the
user's specific requirements. Connectors are required in many applications and
are used in a diverse group of industries, including the military, aerospace,
medical instrumentation and telecommunication industries. The Company's
products also include backpanels, headers and automotive switches.
 
  The Company's connector products include:
                            
Micro-Miniature             
Rectangular Connectors.....  Connectors which are configured in one to four
                             rows with up to 400 contacts and designed for
                             high reliability military and commercial
                             applications.
 
                                       2
<PAGE>
 
Coaxial Connectors.........  Coaxial connectors are single contact miniature
                             and micro-miniature devices used predominantly in
                             high reliability communications and control
                             systems.
 
Circular Connectors........  The Company produces numerous families of
                             circular connectors, including hermetic
                             connectors. Hermetic connectors are designed and
                             produced to be impervious to liquids and gases
                             and to function in severe environmental areas
                             such as jet engines and various instrumentation
                             and manufacturing systems.
 
Backpanels and Headers.....  Backpanels are manufactured either as aluminum or
                             printed circuit card units for use in control
                             systems and avionics. The Company also produces
                             VME (an international specification) backpanels
                             and systems enclosures containing backpanels. The
                             Company also provides automatic wire wrapping
                             services, which permit engineers to test and de-
                             bug prototype boards before producing printed
                             circuit cards.
 
Automotive Switches........  The Company's automotive switches are used for
                             brake lights, door jams, cruise control, neutral
                             safety start, junction blocks and other
                             automotive uses.
 
Telephone Module Plugs.....  Modular plugs are available for telephones and
                             other applications.
 
CUSTOMERS
 
  The Company has established a broad base of over three thousand customers,
representing a wide range of industries. Customers for thermal management
products include leading original equipment manufacturers ("OEMs") of
electronic equipment. Customers for connector products are major aerospace and
military system and subsystem suppliers.
 
  No single customer accounted for greater than 10% of the Company's revenues
during its fiscal year 1994 or 1995. The electronics industry, especially the
high-performance microprocessor and personal computer markets, represents the
Company's fastest growing customer group. Sales of the Company's thermal
management products in the microprocessor industry accounted for most of the
growth of such sales in the fiscal year ended October 29, 1995. Generally,
sales of connectors to the defense industry account for approximately 50% of
connector sales.
 
  The Company's products are incorporated into high technology products
manufactured by OEMs and, accordingly, must meet exacting specifications. A
substantial portion of the Company's OEM customers require the Company to
qualify as an approved supplier. In order to so qualify, the Company must
satisfy stringent quality control standards and undergo extensive in-plant
inspections of its manufacturing processes, equipment and quality control
systems.
 
SALES, MARKETING, AND DISTRIBUTION
 
  The Company designs, manufactures and sells both standard and customized
products. The Company seeks to become a strategic supplier to its customers and
to differentiate itself from its competitors by offering a higher level of
service and technical sales support to its customers. The Company has a team of
trained technical applications engineers and technicians who are dedicated to
providing ongoing technical support. These engineers and technicians develop
application-related literature, provide answers to customers' questions on the
use and application of the Company's products and provide field support to
customers. In addition, the Company has entered into a joint marketing
relationship with Flomerics, the developer of FLOtherm, a software used by
engineers to design new thermal management products, to make joint
presentations at trade shows and for Flomerics to feature products developed by
the Company in its demonstrations. The Company believes the technical services
provided by its engineers and technicians are an important factor in its sales
and product development efforts.
 
                                       3
<PAGE>
 
  The Company sells its products through in-house sales personnel and a network
of independent contract manufacturers' representatives and distributors. In
North America, thermal management products are marketed through a seven-person
direct sales force, 21 sales representatives and 51 distributors, and
connectors are marketed through 17 manufacturers' representatives supported by
the Company's seven-person sales force. In international markets, the Company
uses nine manufacturers' representatives and 19 international distributors.
International sales of connector products are supported by two Company
facilities located in England and France, which also assemble and sell micro-
miniature connectors for the European market.
 
  In general, the Company's sales representatives and distributors have entered
into agreements that allow for termination by either party upon 30 to 90 days
notice. Generally, distributors are permitted to return a small portion of
products purchased by them during the term of the agreements and to return all
products (other than obsolete products) purchased by them upon termination by
the Company, historically such returns have been minimal. The Company's
distributors are generally not precluded from marketing competitive products.
 
RESEARCH AND PRODUCT DEVELOPMENT
 
  The Company's product development strategy is focused on engineering
modifications of existing products in response to customer needs. The Company
does not focus on the development of entirely new products or materials. During
fiscal 1994, the Company spent $674,000 on product research and development,
and during fiscal 1995, it spent $1,109,000, primarily for development of
thermal management products. The Company believes that its technical
capabilities, in conjunction with collaborative efforts with customers, will
allow it to continue to introduce products responsively and quickly.
 
  The Company is currently developing standard and custom heat sink assemblies
for next generation microprocessors, such as the P6 (Pentium Pro) and P7. In
addition, the Company plans to expand product offerings for many types of low
power heat sinks and to expand its collaboration programs with manufacturers of
alternative materials to achieve cost reduction and performance improvements
for thermal management components.
 
  The Company intends to continue developing new connector products by
modifying and enhancing its current products as well as internally developing
new product lines. In keeping with this strategy, the Company is currently
designing and developing its next generation micro-miniature connector family,
which it expects will quadruple connection capacity in a given space. The
Company expects to begin marketing these products in 1996.
 
COMPETITION
 
  The thermal management market is highly competitive. There are several
companies which compete directly with the Company in the thermal management
business and offer products and services similar to those offered by the
Company. Although no one competitor is dominant, there are four principal
competitors in the thermal management market, including the Company. The
Company's three major competitors are Aavid Thermal Technologies, Inc., IERC, a
division of Dynamics Corporation of America, and Thermalloy, a division of
Bowthorpe, plc. Two of the Company's thermal management product competitors are
divisions of larger corporations and, as such, have significantly greater
financial, marketing and technical resources than the Company. Additional
competition comes from hundreds of small machine shops located throughout the
country.
 
  The connector industry is highly fragmented with competition drawn along very
specific product lines. The larger connector companies, which include AMP,
Molex, ITT and Labinal, are large multi-national companies. These firms have
financial, marketing and technical resources far greater than the Company's.
Typically, these firms manufacture mass market, large volume standardized
products which do not compete directly with the Company's product lines. The
Company's principal competition in its connector operations,
 
                                       4
<PAGE>
 
comes from smaller niche-oriented companies which, like the Company, focus on
low volume customized products. Occasionally, the Company competes with smaller
divisions of the larger firms. The Company's direct competitors include HCC and
Deutsch in the hermetic connector market, CTS's Fabritek division and Teradyne
in the backpanel and header market, and ITT's Cannon division and Labinal's
Cinch division in the miniature and micro-miniature connector market.
 
  The Company seeks to offer its customers customized value-added products that
meet their individual needs. By maintaining a strong engineering capability,
the Company is able to provide products that meet customer specifications in a
timely manner.
 
BACKLOG
 
  The Company's backlog as of October 29, 1995 was approximately $21.1 million
compared with $9.5 million on October 31, 1994. Backlog typically consists of
purchase orders scheduled for shipment within 60 days following the order date
for thermal management products and 90 days for connector products. The
Company's backlog at any time is not indicative of future revenue. The Company
has also entered into buying agreements with several customers for its
connectors, including Lockheed Martin, Raytheon and Rockwell International.
These buying agreements generally provide that, for a term of 18 months to two
years, a customer will purchase all its requirements, if any, for a particular
product from the Company for a fixed price.
 
PROPRIETARY RIGHTS
 
  The Company applies for patents with respect to its most significant
patentable developments. It owns seven patents related to its thermal
management products which expire from 1997 to 2012, and it has five patents
pending. The Company owns 12 patents related to its connector products.
Management believes that its competitive position is not dependent on patents
and that patent expirations will not materially adversely affect the Company's
competitive position.
 
RAW MATERIALS
 
  The principal raw material used in thermal management products is aluminum.
The principal raw materials used in connector products are aluminum, copper,
stainless steel and steel alloy. The Company also uses gold, plating chemicals,
plastics, bar metal and wire in its production of connectors. The price of raw
materials represents a significant portion of the cost of the Company's
products. With the exception of a portion of the Company's extruded aluminum
needs supplied under a one-year fixed price contract, these prices are based
upon market prices at the time of purchase. Historically, the price of aluminum
has experienced substantial volatility. Although thermal management products
are generally shipped within 60 days and connectors are generally shipped
within 90 days, of receipt of orders, increases in raw materials prices cannot
always be reflected in product sales price. All raw materials are readily
available from multiple suppliers at competitive prices. In addition, Specialty
supplies a portion of the Company's needs for extruded aluminum.
 
ENVIRONMENTAL
 
  The Company believes that it conducts its operations in substantial
compliance with applicable environmental requirements.
 
  The Company uses several metal finishing processes in conjunction with
manufacturing its products. Anodizing, a method of electro-charging aluminum
and coating it with chemicals to enhance appearance and improve corrosion
resistance, is used in manufacturing heat sinks and certain other thermal
management products. Anodizing is done by the Company at its Fall River,
Massachusetts facility. A waste-product of the anodizing process is removed
from the Fall River facility by licensed waste haulers. The Company's Temecula,
California thermal management facility utilizes fully licensed third party
vendors to anodize its products. The Company also uses plating in its connector
operations to improve the products' appearance,
 
                                       5
<PAGE>
 
provide corrosion protection and, in some cases, enhance conductivity. The
Company's connector facilities in South Pasadena, California and Cincinnati,
Ohio include precious metal plating operations. These operations generate small
amounts of toxic waste, which are removed from the facilities by licensed waste
haulers.
 
  While the Company believes that it has all environmental permits necessary to
conduct its business and that its activities conform to current environmental
regulations, more stringent environmental regulations may be enacted in the
future, and there can be no assurance that the Company will not incur
significant costs in the future in complying with such regulations. Local
environmental agencies monitor the Company's operations for ongoing compliance
with environmental requirements, and the Company is required to correct any
violations revealed by such monitoring. Although the Company is periodically
subject to notices of violations with respect to environmental requirements, it
is not aware of any violations that would require the Company to incur material
cost, nor has the cost of complying with environmental laws represented a
material cost to the Company.
 
EMPLOYEES
 
  On October 29, 1995, the Company had 693 employees (665 of whom were full
time). Its thermal management operations had 400 employees (388 of whom were
full time), all in domestic operations, and its connector operations had 277
employees in domestic operations (263 of whom were full time) and eight
residents outside the United States (all of whom were full time). In addition,
the Company had 8 corporate employees (6 of whom were full time). Employees are
not represented by a labor union. Management believes that employee relations
are excellent.
 
ITEM 2. DESCRIPTION OF PROPERTY.
 
  The Company has leases for manufacturing facilities at the following
locations:
 
<TABLE>
<CAPTION>
                           APPROXIMATE                              EXPIRATION
        LOCATION           SQUARE FEET   PRINCIPAL FACILITY USE        DATE
        --------           ----------- --------------------------- -------------
<S>                        <C>         <C>                         <C>
South Pasadena,
 California..............    52,696            connectors            May 2004
Temecula, California.....    44,200    thermal management products November 2004
Fullerton, California....    15,000    thermal management products  August 1998
Cincinnati, Ohio.........    18,000            connectors          November 1999
Wakefield, Massachusetts.    56,500    thermal management products November 2003
Fall River,
 Massachusetts...........    60,000    thermal management products  April 2000
Colmar, Pennsylvania.....    37,000            connectors           March 2000
</TABLE>
 
  Management feels that these facilities are in good condition and suitable for
the purposes for which they are used. The Company has office space for its
corporate staff in Houston, Texas, Santa Monica, California and New York, New
York.
 
  In addition, the Company currently has approximately 67,000 square feet of
leased space in Houston, Texas, substantially all of which is subleased under
subleases which expire concurrently with the Company's overlease in 1998. See
Note 9 to Financial Statements.
 
ITEM 3. LEGAL PROCEEDINGS.
 
  There are no material pending legal proceedings against the Company and, to
the Company's knowledge, no such proceedings are threatened.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 
  No matters were submitted during the fourth quarter of fiscal 1995 to a vote
of the holders of the Company's common stock, through the solicitation of
proxies or otherwise.
 
                                       6
<PAGE>
 
                                    PART II
 
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
 
MARKET FOR COMMON STOCK
 
  The Company's common stock is traded on The Nasdaq Stock Market, National
Market System (NMS) under the symbol ATGI. Through the facilities of the
NASDAQ/NMS reporting system, actual sales prices of the Company's common stock
are available.
 
  The following table sets forth the high and low sales prices of the Company's
common stock as reported on the NASDAQ National Market System for each full
quarterly period within the Company's two most recent fiscal years:
 
<TABLE>
<CAPTION>
                         1994              HIGH    LOW
                         ----              ----    ---
            <S>                            <C>     <C>
            First Quarter.................  3 1/8   2 9/16
            Second Quarter................  4       2 5/8
            Third Quarter.................  3 3/4   3
            Fourth Quarter................  5 3/8   3 3/8
<CAPTION>
                         1995              HIGH    LOW
                         ----              ----    ---
            <S>                            <C>     <C>
            First Quarter.................  6       4 7/8
            Second Quarter................  7 1/8   4 7/8
            Third Quarter................. 12 3/8   5 1/4
            Fourth Quarter................ 13 3/8   8 3/8
</TABLE>
 
HOLDERS OF RECORD
 
  On December 29, 1995, there were approximately 227 holders of record of the
Company's common stock.
 
DIVIDENDS
 
  The Company has paid no cash dividends on its common stock during fiscal
years 1994 and 1995. The Board of Directors of the Company currently intends to
retain earnings for further business development and, therefore, does not
intend to pay cash dividends on its common stock in the foreseeable future.
 
                                       7
<PAGE>
 
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS AND FINANCIAL
        CONDITION.
 
OVERVIEW
 
  The Company entered the electronic components business in October 1993. The
following table sets forth the significant acquisitions made by the Company
during the last three fiscal years:
 
<TABLE>
<CAPTION>
            DATE ACQUIRED                             BUSINESS
            -------------                             --------
 <C>                                  <S>
 October 1993........................ Thermal management operations in
                                      Wakefield and Fall River, Massachusetts
                                      ("Wakefield")
 June 1994........................... Connector and related product operations
                                      in South Pasadena, California,
                                      Montgomeryville, Pennsylvania and
                                      Cincinnati, Ohio ("Uni-Star")
 August 1994......................... Thermal management operations in
                                      Temecula, California ("Ahamtor")
 June 1995........................... Aluminum extrusion operations in
                                      Fullerton, California ("Specialty")
</TABLE>
 
  The results of operations acquired are included in the Company's consolidated
results of operations only since their respective acquisition dates. In
September 1994, the Company sold the assets and business of its Information
Solutions Segment ("ISS") and is no longer in the software business. The
consolidated financial statements of the Company report separately the net
assets, gain on the sale and results of operations of such discontinued
operation. Such operation is not included in the following discussion.
 
RESULTS OF OPERATIONS
 
  Sales. Total sales were $64,116,000 in fiscal year 1995 as compared to
$30,145,000 in fiscal 1994, an increase of $33,971,000 or 112.7%. Thermal
management sales increased to $43,865,000 in fiscal 1995 from $20,758,000 in
fiscal 1994. This 111.3% increase in thermal management sales was due to
internal growth of 66.1% and Ahamtor and Specialty sales from the dates of
acquisition. Internal growth was due to higher sales of extruded heat sink
products, primarily Penguin Coolers, related to the rapid growth of the high-
performance microprocessor market. Connector sales were $20,251,000 during
fiscal 1995 compared to $9,387,000 during fiscal 1994. Fiscal year 1994
included only five months of connector sales following the acquisition of Uni-
Star on June 1, 1994; however, connector sales for the 1994 period were above
average because products were shipped under backorders existing at the time of
acquisition.
 
  Gross Profit. The Company's gross profit as a percent of total revenues
("gross profit percentage") for fiscal 1995 was 26.9% compared to 31.6% for
fiscal 1994. This decrease in gross profit percentage was a result of (i) the
inclusion in the 1995 period of Ahamtor and Specialty, which have lower gross
profit percentages than the Company's average, (ii) an increase in the cost of
aluminum, a portion of which could not be reflected in the sales price of the
Company's products, (iii) a significant increase in sales of Penguin Coolers,
which have a lower gross profit percentage than the Company's average, (iv) a
high gross profit contribution during the 1994 period from backorders existing
at the time of the acquisition of Uni-Star and (v) a change in the mix of
products sold from higher margin customized connector products to lower margin
standard connector products.
 
  Research and Development Expense. Research and development expense includes
the cost of enhancing existing products and, to a lesser extent, the cost of
developing new products. Research and development expenses were $1,109,000 in
fiscal 1995 compared to $674,000 in fiscal 1994. The increase was due to an
 
                                       8
<PAGE>
 
increase in engineering staff as well as new licensing costs for engineering
software and the purchase of related workstations.
 
  Selling, General and Administrative Expense. Selling, general and
administrative expenses during fiscal 1995 were $11,941,000, or 18.6% of sales,
compared to $6,572,000, or 21.8% of sales, during the prior fiscal year. This
decrease in selling, general and administrative expenses as a percentage of
sales for fiscal 1995 compared to fiscal 1994 was primarily attributable to
increased sales without a proportionate increase in selling, general and
administrative expenses.
 
  Investment Income. In the past, the Company held marketable securities for
both strategic and investment purposes. Securities held for investment purposes
were reflected at fair market value, and the gain or loss was reflected in
investment income. Securities held for strategic purposes were reflected at
fair market value with the unrealized gain or loss thereon reflected in
stockholders' equity. The gain or loss on such securities was reflected as
investment income only upon sale. Investment income for fiscal 1995 included
$55,000 of investment security gains and $199,000 of gains on sales of
strategic investment securities. In September 1995, the Company adopted a
policy precluding any equity investments other than for strategic purposes. The
Company currently has no investment in marketable securities.
 
  Interest Income (Net). Interest income, which was $263,000 for fiscal 1995
and $168,000 for fiscal 1994, was earned on excess cash. Interest expense was
$775,000 for fiscal 1995 and $131,000 for fiscal 1994.
 
  Income Taxes. The Company's provision for income taxes was impacted
substantially by tax benefits from net operating loss carryforwards ("NOL
Carryforwards"). The Company's tax provision is summarized as follows (in
thousands):
 
<TABLE>
<CAPTION>
                                                              FISCAL   FISCAL
                                                               1994     1995
                                                              -------  -------
      <S>                                                     <C>      <C>
      Income before tax...................................... $ 2,456  $ 3,959
                                                              =======  =======
      Tax at Federal statutory rate (34%).................... $   835  $ 1,346
      State taxes, net of federal benefit....................     305      311
      Net reversal of Valuation Allowance....................  (2,846)  (1,972)
      Effects of discontinued operations and other...........     846      174
                                                              -------  -------
      Income tax (benefit)................................... $  (860) $  (141)
                                                              =======  =======
</TABLE>
 
  On November 1, 1993, the Company implemented Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("Statement 109").
On that date, the Company had NOL Carryforwards of $23,214,000, which resulted
in a potential future tax benefit of $7,893,000 (34% of the NOL Carryforwards).
In addition to tax benefits related to NOL Carryforwards, the Company had net
tax benefits of $814,000 related to tax credits and $714,000 related to certain
temporary differences. The Company established a net deferred tax asset for the
total of the aforementioned tax benefits of $9,421,000. Due to the lack of
taxable income in several prior years and uncertainty regarding the utilization
of NOL Carryforwards, a valuation allowance equal to the net deferred tax asset
was established (the "Valuation Allowance").
 
  During fiscal 1994, the Company reversed $2,846,000 of the Valuation
Allowance. The reversal represented (a) tax benefits of (i) $1,807,000 (34% of
the $5,314,000 of NOL Carryforwards utilized that year) and (ii) $1,360,000
resulting from Management's estimate of probable future taxable income, offset
by (b) $321,000 related to the tax effects of temporary differences. For fiscal
1995, the Company reversed $1,972,000 of the Valuation Allowance. This reversal
represented (a) tax benefits of (i) $1,232,000 (34% of the $4,647,000 of NOL
Carryforwards utilized, less the portion of the Valuation Allowance previously
allocated to these NOL Carryforwards) and (ii) $924,000 resulting from
Management's estimate of future taxable income, offset by (b) $184,000 related
to the tax effects of temporary differences. These reversals of
 
                                       9
<PAGE>
 
the Valuation Allowance are reflected as income tax benefits in the respective
periods. The remaining Valuation Allowance of $4,603,000 (primarily relating to
net operating losses of $13,252,000) will be reversed as warranted by future
profitable operations and Management's future estimates of the realization of
the deferred tax asset based on expected taxable income.
 
  On October 29, 1995, the Company had, for tax purposes, remaining NOL
Carryforwards of approximately $13,252,000 available to offset future taxable
income, and approximately $747,000 of unused investment and research and
development tax credits available to offset future Federal income taxes. The
NOL Carryforwards will expire from 2000 to 2008, and the tax credit
carryforwards will expire from 1996 to 2005. All carryforwards are subject to
review and possible adjustment by the Internal Revenue Service. In addition,
Section 382 of the Internal Revenue Code significantly limits the amount of NOL
Carryforwards usable by a corporation following a more than 50% change in
ownership of the corporation during a three-year period. It is possible that
subsequent transactions involving the Company's capital stock could result in
such a limitation.
 
  Minority Interest. The minority interest not acquired by the Company related
to the Uni-Star business was included in income before provision for income
taxes on the consolidated statement of operations and as a separate item on the
consolidated balance sheet and statement of cash flows. The Company owns 80% of
the outstanding stock of Uni-Star.
 
  Discontinued Operation. The Company sold its software product business in
September 1994. The purchase price was $4 million, of which $2 million was paid
at closing, $1 million was paid in January 1995 and the final $1 million was
paid in March 1995. An expense of approximately $800,000 was accrued,
principally representing lease payments and estimated costs that the Company
expected to incur on the space used by the disposed business, less estimated
payments that it expected to receive for subleasing the space. The Company
recognized a gain on the sale of $1,380,000, net of the $800,000 accrual,
income taxes and a reserve to cover contingencies.
 
LIQUIDITY AND CAPITAL RESOURCES
 
  Funds for operations and purchases of capital equipment, businesses and stock
for the fiscal year ended October 29, 1995 were provided primarily from
existing cash, advances under the Wakefield and Uni-Star loan agreements and
from operating activities. The funds were used as follows:
 
    (i) $2,560,000 were used to purchase Specialty and to retire existing
  Specialty debt;
 
    (ii) $5,009,000 were used to purchase equipment, including machines to
  add capacity and improve productivity in the manufacturing of extruded heat
  sinks, primarily Penguin Coolers, and to upgrade internal computer systems;
  and
 
    (iii) approximately $2,118,000 were used to purchase 391,155 shares of
  Common Stock pursuant to the Company's Common Stock repurchase plan. This
  repurchase program has been completed.
 
  In June 1994, Wakefield entered into a loan agreement which included a
revolving credit facility of up to $4 million, an equipment term loan of
$1,250,000 and an equipment credit facility of $600,000. In May 1995, Wakefield
amended this loan agreement to increase the revolving credit facility to $7
million and the equipment credit facility to $1,050,000, and to extend the term
of the revolving credit facility to April 30, 1997. In addition, Wakefield
borrowed $265,000 as an equipment term loan. Interest on the revolving credit
facility and equipment loans accrues at the bank's corporate base rate plus
 .75%. On October 29, 1995, the interest rate on the bank debt was 9 1/2% per
annum. The obligations under the loan agreement are currently secured by a
first lien on and assignment of the assets of Wakefield, excluding Specialty's
assets. The loan agreement includes various financial covenants which the
Company was in compliance with on October 29, 1995. On, October 29, 1995,
$6,104,000 was outstanding under the revolving credit facility. Wakefield is
currently negotiating with its lender to increase the revolving credit
facilities to $9,000,000 (including loans to be made to Specialty).
 
                                       10
<PAGE>
 
  On August 31, 1995, Uni-Star entered into an accounts receivable loan
agreement which included a revolving credit commitment of up to $2.5 million.
Uni-Star also entered into an equipment term loan in the amount of $750,000
(from which $104,000 of preexisting debt was refinanced) and an equipment
acquisition facility of $300,000. The initial proceeds of $963,000 from the
revolving credit commitment and $646,000 net proceeds from the equipment term
loans were used to repay advances of $1,609,000 from the Company to Uni-Star.
The proceeds from the equipment acquisition facility may be used only for the
purchase of capital equipment. Interest on the funds advanced under the
revolving credit commitment ($1 million on October 29, 1995) accrues at the
bank's prime corporate rate plus .50% (9 1/4% per annum on October 29, 1995)
and interest on the equipment term loan accrues at the bank's prime rate plus
 .75% (9 1/2% per annum on October 29, 1995). The principal amount of the
equipment term loan is repayable in 48 equal monthly installments, beginning
October 1, 1995. All Uni-Star credit facilities are secured by a first lien and
assignment of substantially all Uni-Star's assets, including its accounts
receivable, inventory, equipment and general intangibles.
 
  Working capital on October 29, 1995 was $15,696,000. The Company believes
that its currently available cash, anticipated cash flow from operations and
availability under credit facilities should be sufficient to fund its
operations.
 
ITEM 7. FINANCIAL STATEMENTS.
 
  Financial statements required pursuant to this Item are presented on pages F-
1 through F-16 of this report.
 
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.
 
  During the twenty-four month period preceding October 29, 1995, the Company
has neither changed accountants nor had disagreements with its accountants on
any matter of accounting principles or practices, financial statement
disclosure or auditing scope and procedures.
 
                                       11
<PAGE>
 
                                    PART III
 
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
        COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
 
  The information required by this Item will be contained in the Company's
definitive Proxy Statement, which will be filed on or about February 26, 1996,
and is incorporated herein by reference.
 
ITEM 10. EXECUTIVE COMPENSATION
 
  The information required by this Item will be contained in the Company's
definitive Proxy Statement, which will be filed on or about February 26, 1996,
and is incorporated herein by reference.
 
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
 
  The information required by this Item will be contained in the Company's
definitive Proxy Statement, which will be filed on or about February 26, 1996,
and is incorporated herein by reference.
 
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
 
  The information required by this Item will be contained in the Company's
definitive Proxy Statement, which will be filed on or about February 26, 1996,
and is incorporated herein by reference.
 
                                       12
<PAGE>
 
                                    PART IV
 
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
 
EXHIBITS
 
<TABLE>
<CAPTION>
   NO.
   ---
 <C>     <S>
  3.1    --Certificate of Incorporation of the Company, as amended.(1)(2)
  3.1(a) --Amendment to the Certificate of Incorporation of the Company. (Filed
           Herewith)
  3.2    --By-laws of the Company.(3)
 10.1    --Issuer's 1981 Incentive Stock Option Plan, together with amendments
           thereto.(2)
 10.2    --Issuer's 1983 Incentive Stock Option Plan, together with amendments
           thereto.(2)
 10.3    --Issuer's 1983A Incentive Stock Option Plan, together with amendments
           thereto.(2)
 10.4    --Issuer's 1984 Incentive Stock Option Plan, together with amendments
           thereto.(2)
 10.5    --Issuer's 1985 Stock Option Plan, together with amendments
           thereto.(2)(4)(5)(6)(7)
 10.6    --Issuer's 401-K Savings/Stock Purchase Plan.(8)
 10.7    --Lease Agreement, dated October 7, 1987, between PIC Realty
           Corporation and Issuer.(9)
 10.8    --Lease dated as of October 29, 1993 by and between The Equitable Life
           Assurance Society of the United States and Wakefield Engineering,
           Inc.(10)
 10.9    --Asset Purchase Agreement dated as of May 24, 1994, between Microdot
           Inc. and ETP Acquisition Corp. (now known as Uni-Star Industries,
           Inc.)(11)
 10.10   --Standard Industrial/Commercial Single-Tenant Lease dated as of June
           1, 1994 by and between Pasadena Industrial Associates and Uni-Star
           Industries, Inc.(10)
 10.11   --Lease dated as of November 29, 1994 by and between The Goldsmith
           Properties Company and Uni-Star Industries, Inc.(10)
 10.12   --Lease Agreement dated as of January 1995 by and between Robert L.
           Byers and Joyce F. Byers and Uni-Star Industries, Inc.(10)
 10.13   --Asset Purchase Agreement dated as of August 31, 1994 between
           Wakefield Engineering, Inc. and Aham Tor, Inc.(12)
 10.14   --Asset Purchase agreement dated as of September 13, 1994 between the
           Company and Logica North America Inc.(13)
 10.15   --Issuer's 1994 Stock Option Plan as amended and restated. (Subject to
           approval of stockholders at the Issuer's next Annual Meeting.) (Filed
           Herewith)
 10.16   --Loan and Security Agreement dated as of June 22, 1994 entered into
           by and between Shawmut Bank, N.A. and Wakefield Engineering, Inc.,
           together with amendment thereto. (The exhibits and schedules to the
           Loan and Security Agreement are listed on the last page of such
           Agreement. Such exhibits and schedules have not been filed by the
           Issuer, who hereby undertakes to file such exhibits upon request of
           the Commission.)(10)(14)
 10.17   --Accounts Receivable Loan Agreement between Uni-Star Industries, Inc.
           and City National Bank dated as of August 30, 1995.(15)
</TABLE>
 
                                       13
<PAGE>
 
<TABLE>
 <C>      <S>
 10.17(a) --First Amendment to Accounts Receivable Loan Agreement dated as of
           October 27, 1995 by and between Uni-Star Industries, Inc. and City
           National Bank. (Filed Herewith)
 10.18    --Asset Purchase Agreement dated as of June 30, 1995 among Specialty
           Extrusions Ltd., Walter Hastie and William Esparza, and Specialty
           Acquisition Corp. (now known as Specialty Extrusion Corp.) and
           Wakefield Engineering, Inc.(16)
 10.19    --Lease dated September 1, 1993 between B&K Investment Corp. and
           Specialty Extrusions, Ltd., together with assignment thereof dated
           June 30, 1995 from Specialty Extrusions, Ltd. to Specialty
           Acquisition Corp. (now known as Specialty Extrusion Corp.) (Filed
           Herewith)
 10.20    --Employment Agreement with Lawrence Butler dated September 29, 1995.
           (Filed Herewith)
 10.21    --Indenture of Lease Agreement dated as of December 20, 1994 by and
           between Richard J. Tobin, as Trustee of JLN Realty Trust, under
           Declaration of Trust dated June 15, 1981 and filed with Bristol
           County Fall River District Registry of Deeds Land Court Records as
           Document 12977, and Wakefield Engineering, Inc. (Filed Herewith).
 10.22    --Industrial Space Lease dated as of September 29, 1995 by and
           between Rancon Income Fund I and Wakefield Engineering, Inc. (Filed
           Herewith).
 11       --Computation of net income per share. (Filed Herewith)
 21       --Subsidiaries of Registrant.(10)
 23.1(a)  --Consent of Arthur Andersen LLP. (Filed Herewith)
 23.1(b)  --Consent of Arthur Andersen LLP. (Filed Herewith)
 27       --Financial Data Schedule. (Filed Herewith)
</TABLE>
--------
(1) Incorporated herein by reference to the Issuer's Registration Statement on
    Form S-1 (Reg. No. 33-2979), which became effective March 7, 1986.
(2) Incorporated herein by reference to the Issuer's Registration Statement on
    Form S-8, filed September 28, 1987 (Reg. No. 33-17359).
(3) Incorporated herein by reference to the Company's Annual Report or Form 10-
    K for the year ended October 31, 1991.
(4) Incorporated herein by reference to the Issuer's Registration Statement on
    Form S-8, filed March 17, 1988 (Reg. No. 33-20706).
(5) Incorporated herein by reference to the Issuer's Registration Statement on
    Form S-8, filed June 30, 1989 (Reg. No. 33-29636).
(6) Incorporated herein by reference to the Company's Annual Report on Form 10-
    K for the year ended October 31, 1990.
(7) Incorporated herein by reference to the Issuer's Registration Statement on
    Form S-8, filed June 23, 1992 (Reg. No. 33-48663).
(8) Incorporated herein by reference to the Issuer's Registration Statement on
    Form S-8, filed January 29, 1987 (Reg. No. 33-11627).
(9) Incorporated herein by reference to the Company's Annual Report on Form 10-
    K for the year ended October 31, 1987.
(10) Incorporated herein by reference to the Company's Annual Report on Form
     10-KSB for the year ended October 31, 1994.
(11) Incorporated herein by reference to the Company's Form 8-K dated June 1,
     1994, filed on or about June 13, 1994.
(12) Incorporated herein by reference to the Company's Form 8-K dated August
     31, 1994, filed on or about September 13, 1994.
 
                                       14
<PAGE>
 
(13) Incorporated herein by reference to the Company's Form 8-K dated September
     21, 1994, filed on or about October 4, 1994.
(14) Incorporated herein by reference to the Company's Form 10-QSB for the
     quarterly period ended April 30, 1995 filed on June 14, 1995.
(15) Incorporated herein by reference to the Company's Form 10-QSB for the
     quarterly period ended July 30, 1995 filed on September 13, 1995.
(16) Incorporated herein by reference to the Company's Form 8-K dated June 30,
     1995, filed on or about July 14, 1995.
 
REPORTS ON FORM 8-K
 
  No report on Form 8-K was filed during the fourth quarter of the year ended
October 29, 1995.
 
                                       15
<PAGE>
 
                                   SIGNATURES
 
  IN ACCORDANCE WITH SECTION 13 OR 15(D) OF THE EXCHANGE ACT, THE REGISTRANT
CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED.
 
                                          Alpha Technologies Group, Inc.
 
Date: January 26, 1996                            /s/ Lawrence Butler
                                          By___________________________________
                                                      Lawrence Butler
                                                       President and
                                                  Chief Executive Officer
 
  IN ACCORDANCE WITH THE EXCHANGE ACT, THIS REPORT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE
DATES INDICATED.
 
<TABLE>
<CAPTION>
             SIGNATURE                           TITLE                    DATE
             ---------                           -----                    ----
 
<S>                                  <C>                           <C>
     /s/ Marshall D. Butler
------------------------------------
        (Marshall D. Butler)         Chairman of the Board
       /s/ Lawrence Butler
------------------------------------
         (Lawrence Butler)           Chief Executive Officer and
                                      Director (Principal
                                      Executive Officer)
     /s/ Johnny J. Blanchard
------------------------------------
       (Johnny J. Blanchard)         Chief Financial Officer
                                      (Principal Financial and
                                      Accounting Officer)
     /s/ Donald K. Grierson
------------------------------------
        (Donald K. Grierson)         Director                       January 26, 1996
      /s/ Frederic A. Heim
------------------------------------
         (Frederic A. Heim)          Director
   /s/ Warren G. Lichtenstein
------------------------------------
      (Warren G. Lichtenstein)       Director
       /s/ Kenneth W. Rind
------------------------------------
         (Kenneth W. Rind)           Director
</TABLE>
 
 
                                       16
<PAGE>
 
                ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
 
                         INDEX TO FINANCIAL STATEMENTS
 
<TABLE>
<S>                                                                         <C>
Financial Statements:
  Report of Independent Public Accountants................................. F-2
  Consolidated Balance Sheets--October 31, 1994 and October 29, 1995....... F-3
  Consolidated Statements of Income--For the Years Ended October 31, 1993
   and 1994
   and October 29, 1995.................................................... F-4
  Consolidated Statements of Stockholders' Equity--For the Years Ended
   October 31, 1993
   and 1994 and October 29, 1995........................................... F-5
  Consolidated Statements of Cash Flows--For the Years Ended October 31,
   1993 and 1994
   and October 29, 1995.................................................... F-6
  Notes to Consolidated Financial Statements............................... F-7
</TABLE>
 
                                      F-1
<PAGE>
 
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To the Stockholders and Board of Directors of
Alpha Technologies Group, Inc.
 
  We have audited the accompanying consolidated balance sheets of Alpha
Technologies Group, Inc., (a Delaware corporation) and subsidiaries as of
October 31, 1994 and October 29, 1995, and the related consolidated statements
of income, stockholders' equity and cash flows for each of the three years in
the period ended October 29, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
 
  We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
 
  In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Alpha Technologies Group, Inc.
and subsidiaries as of October 31, 1994 and October 29, 1995, and the results
of their operations and their cash flows for each of the three years in the
period ended October 29, 1995, in conformity with generally accepted accounting
principles.
 
/s/ Arthur Andersen LLP
 
Houston, Texas
November 16, 1995
 
                                      F-2
<PAGE>
 
                ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
 
       CONSOLIDATED BALANCE SHEETS--OCTOBER 31, 1994 AND OCTOBER 29, 1995
 
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                        OCTOBER 31, OCTOBER 29,
                        ASSETS                             1994        1995
                        ------                          ----------- -----------
<S>                                                     <C>         <C>
CURRENT ASSETS:
  Cash.................................................   $ 7,406     $ 6,058
  Marketable securities (Note 4).......................       937          --
  Notes receivable (Note 3)............................     2,000          --
  Accounts receivable, net of reserves of $111 and $277
   (Note 8)............................................     7,392      11,982
  Inventories, net (Notes 5 and 8).....................     5,831       8,191
  Prepaid expenses (Note 8)............................       742       1,119
                                                          -------     -------
    Total current assets...............................    24,308      27,350
PROPERTY AND EQUIPMENT, at cost (Note 8):
  Manufacturing equipment, leasehold improvements,
   furniture, fixtures and other.......................     4,274      10,930
  Less--Accumulated depreciation and amortization......       315       1,313
                                                          -------     -------
    Property and equipment, net........................     3,959       9,617
GOODWILL, net (Notes 2 and 8)..........................     1,667       2,813
OTHER ASSETS, net (Notes 8 and 14).....................     1,755       2,476
                                                          -------     -------
                                                          $31,689     $42,256
                                                          =======     =======
<CAPTION>
         LIABILITIES AND STOCKHOLDERS' EQUITY
         ------------------------------------
<S>                                                     <C>         <C>
CURRENT LIABILITIES:
  Accounts payable, trade..............................     3,421       5,166
  Accrued compensation and related benefits (Note 6)...     1,402       2,329
  Other accrued liabilities (Note 7)...................     2,222       2,426
  Current portion of long-term debt (Note 8)...........       346         850
  Current portion of other long-term liabilities (Note
   9)..................................................       993         883
                                                          -------     -------
    Total current liabilities..........................     8,384      11,654
LONG-TERM DEBT (Note 8)................................     3,556       9,093
OTHER LONG-TERM LIABILITIES (Note 9)...................     1,821       1,010
COMMITMENTS AND CONTINGENCIES (Note 15)
MINORITY INTEREST (Note 2).............................     1,384       1,736
STOCKHOLDERS' EQUITY (Notes 4, 10, 11 and 12):
  Preferred stock, $100 par value; shares authorized
   180,000.............................................        --          --
  Common stock, $.03 par value; shares authorized
   17,000,000;
  issued 6,727,345 at October 31, 1994 and 6,977,845 at
   October 29, 1995....................................       202         209
  Additional paid-in capital...........................    38,670      39,114
  Retained deficit.....................................   (21,207)    (17,459)
  Unrealized (loss) on marketable securities, net of
   income taxes........................................      (138)         --
  Treasury stock, at cost (544,249 common shares at
   October 31, 1994
   and 935,404 common shares at October 29,1995).......      (983)     (3,101)
                                                          -------     -------
    Total stockholders' equity.........................    16,544      18,763
                                                          -------     -------
                                                          $31,689     $42,256
                                                          =======     =======
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-3
<PAGE>
 
                ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
 
                       CONSOLIDATED STATEMENTS OF INCOME
 
       FOR THE YEARS ENDED OCTOBER 31, 1993 AND 1994 AND OCTOBER 29, 1995
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                    OCTOBER 31,
                                                --------------------   OCTOBER
                                                  1993       1994     29, 1995
                                                ---------  ---------  ---------
<S>                                             <C>        <C>        <C>
SALES (Note 2)................................  $     258  $  30,145  $  64,116
COST OF SALES.................................        190     20,627     46,888
                                                ---------  ---------  ---------
  Gross profit................................         68      9,518     17,228
OPERATING EXPENSES:
  Research and development....................         11        674      1,109
  Selling, general and administrative.........         48      6,572     11,941
                                                ---------  ---------  ---------
    Total operating expenses..................         59      7,246     13,050
                                                ---------  ---------  ---------
OPERATING INCOME..............................          9      2,272      4,178
INVESTMENT INCOME (Note 4)....................         --        108        258
INTEREST AND OTHER INCOME (EXPENSE), net (Note
 8)...........................................        337         76       (477)
                                                ---------  ---------  ---------
INCOME BEFORE TAXES...........................        346      2,456      3,959
PROVISION (BENEFIT) FOR INCOME TAXES (Note
 14):
  Current.....................................        101        500        530
  Deferred....................................         17     (1,360)      (671)
                                                ---------  ---------  ---------
    Total provision (benefit) for income
     taxes....................................        118       (860)      (141)
                                                ---------  ---------  ---------
INCOME BEFORE MINORITY INTEREST, DISCONTINUED
 OPERATIONS AND EXTRAORDINARY CREDIT..........        228      3,316      4,100
LESS: MINORITY INTEREST (Note 2)..............         --       (384)      (352)
GAIN ON SALE OF DISCONTINUED OPERATIONS, net
 of income tax effect (Note 3)................         --      1,380         --
INCOME (LOSS) FROM DISCONTINUED OPERATIONS,
 net of income tax effect (Note 3)............        (22)       978         --
                                                ---------  ---------  ---------
INCOME BEFORE EXTRAORDINARY CREDIT............        206      5,290      3,748
EXTRAORDINARY CREDIT: Tax benefit of net
 operating loss carryforward (Note 14)........        111         --         --
                                                ---------  ---------  ---------
NET INCOME....................................  $     317  $   5,290  $   3,748
                                                ---------  ---------  ---------
PER COMMON AND COMMON EQUIVALENT SHARE
 (Note 13):
  Income before minority interest,
   discontinued operations and extraordinary
   credit.....................................  $    0.04  $    0.52  $    0.62
  Minority interest...........................         --      (0.06)     (0.05)
  Gain on sale of discontinued operations.....         --       0.22         --
  Discontinued operations.....................         --       0.15         --
  Extraordinary credit........................       0.01         --         --
                                                ---------  ---------  ---------
    Net income................................  $    0.05  $    0.83  $    0.57
                                                ---------  ---------  ---------
SHARES USED IN COMPUTING NET INCOME PER
COMMON EQUIVALENT SHARE.......................  6,017,543  6,343,604  6,605,147
                                                =========  =========  =========
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-4
<PAGE>
 
                ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
 
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
 
       FOR THE YEARS ENDED OCTOBER 31, 1993 AND 1994 AND OCTOBER 29, 1995
                         (IN THOUSANDS, EXCEPT SHARES)
 
<TABLE>
<CAPTION>
                                                                UNREALIZED
                                                                   GAIN
                           COMMON STOCK   ADDITIONAL RETAINED   (LOSS) ON  TREASURY STOCK
                         ----------------  PAID IN   EARNINGS   MARKETABLE ---------------
                          SHARES   AMOUNT  CAPITAL   (DEFICIT)  SECURITIES SHARES  AMOUNT
                         --------- ------ ---------- ---------  ---------- ------- -------
<S>                      <C>       <C>    <C>        <C>        <C>        <C>     <C>
BALANCE, OCTOBER 31,
 1992................... 6,211,963  $186   $37,765   $(26,814)     $ --    461,249 $  (609)
Net Income..............        --    --        --        317        --         --      --
Issuance to employees
 pursuant to stock
 options plans (Note
 12)....................    69,926     2       104         --        --         --      --
                         ---------  ----   -------   --------      ----    ------- -------
BALANCE, OCTOBER 31,
 1993................... 6,281,889   188    37,869    (26,497)       --    461,249    (609)
                         ---------  ----   -------   --------      ----    ------- -------
Net Income..............        --    --        --      5,290        --         --      --
Issuance to employees
 pursuant to stock
 options plans (Note
 12)....................   445,456    14       801         --        --         --      --
Unrealized loss on
 marketable securities,
 net of income taxes
 (Note 4)...............        --    --        --         --      (138)        --      --
Stock repurchase (Note
 11)....................        --    --        --         --        --     83,000    (374)
                         ---------  ----   -------   --------      ----    ------- -------
BALANCE, OCTOBER 31,
 1994................... 6,727,345   202    38,670    (21,207)     (138)   544,249    (983)
                         ---------  ----   -------   --------      ----    ------- -------
Net Income..............        --    --        --      3,748        --         --      --
Issuance to employees
 pursuant to stock
 options plans (Note
 12)....................   250,500     7       444         --        --         --      --
Unrealized gain on
 marketable securities,
 net of income taxes
 (Note 4)...............        --    --        --         --       138         --      --
Stock repurchase (Note
 11)....................        --    --        --         --        --    391,155  (2,118)
                         ---------  ----   -------   --------      ----    ------- -------
BALANCE, October 29,
 1995................... 6,977,845  $209   $39,114   $(17,459)     $ --    935,404 $(3,101)
                         ---------  ----   -------   --------      ----    ------- -------
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-5
<PAGE>
 
                ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
       FOR THE YEARS ENDED OCTOBER 31, 1993 AND 1994 AND OCTOBER 29, 1995
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                    OCTOBER 31,
                                                   ---------------  OCTOBER 29,
                                                    1993     1994      1995
                                                   -------  ------  -----------
<S>                                                <C>      <C>     <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income....................................... $   317  $5,290    $ 3,748
 Adjustments to reconcile net income to net cash
  provided by operating activities:
  Net (income) loss from discontinued operations
   (Note 3).......................................      22    (978)        --
  Deferred income taxes (Note 14).................      --  (1,360)      (671)
  Gain on sale of marketable securities-available-
   for-sale (Note 4)..............................      --      --       (199)
  Depreciation and amortization...................      25     453      1,274
  Minority interest (Note 2)......................      --     384        352
  Gain on sale of discontinued operations (Note
   3).............................................      --  (1,380)        --
 Changes in assets and liabilities net of effects
  from acquisitions:
  (Increase) decrease in marketable securities--
   trading securities.............................      --     (27)        27
  (Increase) decrease in accounts receivable......      (4)    829     (3,085)
  (Increase) decrease in notes receivable.........      --  (2,000)     2,000
  (Increase) in prepaid expenses..................     (34)    (55)      (377)
  (Increase) decrease in inventories..............      89     (34)    (2,245)
  (Increase) decrease in goodwill.................      --      22       (952)
  Increase (decrease) in accounts payable, trade..     (70)    755        680
  Increase in accrued compensation and related
   benefits.......................................     276      99        927
  Increase (decrease) in other accrued
   liabilities....................................     (41)  1,541        204
  (Decrease) in other long-term liabilities.......      --      --       (921)
                                                   -------  ------    -------
   Total adjustments..............................     263  (1,751)    (2,986)
                                                   -------  ------    -------
   Net cash provided by continuing operations.....     580   3,539        762
   Net cash provided by discontinued operations
    (Note 3)......................................     596   1,456         --
                                                   -------  ------    -------
   Net cash provided by operating activities......   1,176   4,995        762
                                                   -------  ------    -------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of short-term investments............... (13,211)     --         --
 Proceeds from sale and maturity of short-term
  investments.....................................  12,595   3,516         --
 Payments and expenditures for business
  acquisitions (Note 2 and 16)....................  (4,966) (6,899)    (2,560)
 Proceeds from sale of discontinued operations....      --   2,000         --
 Purchase of marketable securities--available-for-
  sale (Note 4)...................................      --  (1,285)      (850)
 Proceeds from sale of marketable securities-
  available-for-sale (Note 4).....................      --     237      2,097
 Purchase of property and equipment, net..........     (78) (1,427)    (5,009)
 (Increase) in other assets, net..................     (95)     (6)      (162)
                                                   -------  ------    -------
  Net cash (used) by investing activities.........  (5,755) (3,864)    (6,484)
                                                   -------  ------    -------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from issuance of common stock (Note 12).     106     815        451
 Payments to repurchase common stock (Note 11)....      --    (374)    (2,118)
 Proceeds from debt (Note 8)......................      --  13,183     47,409
 Payments on debt (Note 8)........................      --  (9,281)   (41,368)
                                                   -------  ------    -------
  Net cash provided by financing activities.......     106   4,343      4,374
NET INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS......................................  (4,473)  5,474     (1,348)
                                                   -------  ------    -------
CASH AND CASH EQUIVALENTS, beginning of year......   6,405   1,932      7,406
                                                   -------  ------    -------
CASH AND CASH EQUIVALENTS, end of period.......... $ 1,932  $7,406    $ 6,058
                                                   =======  ======    =======
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-6
<PAGE>
 
                ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1. SIGNIFICANT ACCOUNTING POLICIES
 
 Principles of Consolidation
 
  The consolidated financial statements include the accounts of Alpha
Technologies Group, Inc. ("Alpha" or the "Company") (formerly Synercom
Technology, Inc.) and its wholly- and majority-owned subsidiaries. All material
intercompany transactions and balances have been eliminated. Certain
information in the prior year financial statements has been reclassified to
conform to the current year presentation. As more fully described in Note 3,
the discontinued operation, the Information Solutions Segment ("ISS"), was
deconsolidated and fiscal 1993 financial statements have been restated
accordingly.
 
  The Company designs, manufactures and sells thermal management products and
connectors. Thermal management products serve the microprocessor, computer,
consumer electronics, transportation and other industries. Connector products
serve the defense, telecommunications, automotive and aerospace industries.
 
 Revenue Recognition
 
  Revenue from product sales is generally recognized upon shipment to the
customer.
 
 Marketable Securities
 
  Investments in marketable securities are accounted for in accordance with
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities". Of the three categories of
securities prescribed by Statement 115, the Company's security investments are
classified in one of the two following categories:
 
    Available-for-Sale Securities--These securities are stated at cost
  adjusted for market value fluctuations. Unrealized gains and losses created
  by changes in the market values of these securities are recognized as an
  adjustment to and are reported as a separate component of stockholders'
  equity, net of tax. The specific identification method is used in
  determining realized gains and losses from the sale of securities.
 
    Trading Securities--These securities are carried at market value.
  Realized and unrealized gains and losses are recognized currently in
  investment income. The specific identification method is used in
  determining gains and losses.
 
 Inventories
 
  Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out method.
 
 Property and Equipment
 
  The cost of property and equipment is depreciated using the straight-line
method for financial reporting purposes over the estimated useful lives of such
assets, ranging from three to ten years. Leasehold improvements are amortized
on a straight-line basis over the related lease term.
 
 Goodwill
 
  Goodwill represents the excess of cost over fair value of net assets acquired
and is being amortized over 15 years using the straight-line method. The
accumulated amortization on October 31, 1994 and October 29, 1995 was
approximately $6,500 and $163,000, respectively. Amortization expense of
approximately $6,500 and $156,500 was recorded in fiscal 1994 and 1995,
respectively.
 
                                      F-7
<PAGE>
 
                ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
 Income Taxes
 
  The Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," ("Statement 109") on November 1, 1993. Under the
asset and liability method of Statement 109, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using current enacted tax rates. Under Statement 109,
the effect on deferred tax assets and liabilities of a change in tax rates is
recognized in the results of operations in the period that includes the
enactment date. Prior to adopting Statement 109, income taxes were accounted
for in compliance with APB Opinion No. 11--Accounting for Income Taxes;
therefore, the tax benefit of net operating loss carryforwards for fiscal 1993
was classified as an extraordinary credit.
 
 Cash Flows
 
  During fiscal 1994 and 1995, taxes amounting to approximately $16,000 and
$996,000, respectively, were paid. Interest payments in fiscal 1994 and 1995
amounted to approximately $116,000 and $693,000, respectively.
 
 Foreign Currency Translation
 
  Assets and liabilities of the Company's foreign operations are translated
into U. S. dollars at the current exchange rate in effect at the balance sheet
date, and revenues and expenses are translated at the average exchange rate for
the period in accordance with Statement of Financial Accounting Standards No.
52, "Foreign Currency Translation". Resulting translation adjustments are
reported as a separate component of shareholders' equity.
 
 Fiscal Year
 
  For fiscal 1995, the Company adopted a 52/53 week fiscal calendar ending on
the last Sunday of October, therefore fiscal year 1995 ended on October 29,
1995. Fiscal years 1994 and 1995 both include 52 weeks of operations.
 
2. ACQUISITIONS
 
  On June 1, 1994, the Company, through Uni-Star Industries, Inc. ("Uni-Star"),
an 80%-owned subsidiary, acquired substantially all of the assets and business
and assumed certain liabilities of the Interconnect Systems Division of
Microdot Inc. The aggregate purchase price of approximately $5,075,000 included
a net cash payment of $4,836,000 and expenses of $239,000. The Company's share
of the purchase price was $3,988,000. The minority interest not acquired by the
Company is included in income before provision for income taxes on the
consolidated statement of operations and as a separate item on the consolidated
balance sheet and statement of cash flows. On August 31, 1994, Wakefield
Engineering, Inc. ("Wakefield"), a wholly-owned subsidiary of the Company,
acquired substantially all of the assets and business of Aham Tor, Inc.
("ATI"). The purchase price of $2,911,000 was paid in cash. Effective June 30,
1995, Wakefield acquired substantially all of the assets and business of
Specialty Extrusion Ltd. ("Specialty"). The purchase price of $2,000,000 was
paid in cash. In addition, the Company paid existing Specialty debt in the
amount of $560,000. The acquisitions have been accounted for as purchase
transactions, and accordingly, the purchase price has been allocated to the
assets acquired and liabilities assumed for each acquisition. Goodwill, which
relates primarily to the ATI and Specialty acquisitions, represents the excess
of cost over the fair value of the net assets acquired and is being amortized
over 15 years using the straight-line method. Adjustments to the purchase price
may be made during the 12 months following the date of acquisition as a
 
                                      F-8
<PAGE>
 
                ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
result of resolutions of uncertainties existing at the acquisition date. The
operating results of Uni-Star, ATI and Specialty have been included in the
Company's consolidated results of operations since their respective acquisition
dates of June 1, 1994; August 31, 1994; and June 30, 1995.
 
  The following unaudited pro forma summary is not necessarily indicative
either of results of operations that would have occurred had the purchases been
made on November 1, 1992, or of future results of operations of the combined
companies. Total revenues included in the following unaudited pro forma summary
reflect the effect of accounting for ISS as a discontinued operation. Net
income included in the following unaudited pro forma summary does not reflect
the effect of income from discontinued operations or the gain on sale of
discontinued operations.
 
  For the Periods Ended (Unaudited):
 
<TABLE>
<CAPTION>
                                             OCTOBER 31,
                                       -------------------------   OCTOBER 29,
                                          1993         1994           1995
                                       ------------ ------------ -----------------
                                        (IN THOUSANDS, EXCEPT PER SHARE DATA)
     <S>                               <C>          <C>          <C>
     Total revenues................... $     47,719 $     51,420   $     67,732
     Net income.......................          724        3,680          3,747
     Net income per common and common
      equivalent share................ $        .12 $        .58   $        .57
     Number of shares used in
     computing earnings per share.....        6,018        6,344          6,605
</TABLE>
 
3. DISCONTINUED OPERATION
 
  Effective September 21, 1994, the Company sold the assets and business of ISS
to Logica North America, Inc. ("Logica"). Logica purchased the rights to WMIS,
a work management information system product; the intellectual property rights
for the INFORMAP family of products; and the computer equipment, furniture and
fixtures of ISS. The purchase price of $4,000,000 was paid as follows: (1)
$2,000,000 cash at closing and (2) two promissory notes of $1,000,000 each with
the first note paid 120 days after the closing and the second note 180 days
after the closing. The sale resulted in a gain of approximately $1,380,000, net
of income tax expense of $49,000.
 
  Summary operating results of the discontinued operation are as follows for
the fiscal years ended October 31:
 
<TABLE>
<CAPTION>
                                                                 1993     1994
                                                                -------  ------
                                                                (IN THOUSANDS)
     <S>                                                        <C>      <C>
     Revenues.................................................. $10,594  $8,184
     Costs and expenses........................................  10,617   7,186
                                                                -------  ------
     Income (loss) before taxes................................     (23)    998
     Income tax provision (benefit)............................      (1)     20
                                                                -------  ------
     Net income (loss)......................................... $   (22) $  978
                                                                =======  ======
</TABLE>
 
4. MARKETABLE SECURITIES
 
  Marketable securities consist of equity securities classified as available-
for-sale securities and trading securities. During fiscal year 1995, the
Company disposed of all its marketable securities. On October 31, 1994
available-for-sale securities were valued at $910,000 and trading securities
were valued at $27,000. A net unrealized holding loss on available-for-sale
securities of $138,000, which is net of income taxes, was included in
stockholders' equity on October 31, 1994. Proceeds from the sale of available-
for-sale securities totaled approximately $2,097,000 for fiscal year 1995. A
gain of $199,000 was realized on those sales and included in investment income
for the year ended October 29, 1995.
 
                                      F-9
<PAGE>
 
                ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
5. INVENTORIES
 
  Inventories consisted of the following on:
 
<TABLE>
<CAPTION>
                                                         OCTOBER 31, OCTOBER 29,
                                                            1994        1995
                                                         ----------- -----------
                                                             (IN THOUSANDS)
      <S>                                                <C>         <C>
      Raw materials and components......................   $3,428      $5,260
      Work in process...................................    1,488       1,803
      Finished goods....................................    1,059       1,548
                                                           ------      ------
                                                            5,975       8,611
      Valuation reserve.................................     (144)       (420)
                                                           ------      ------
                                                           $5,831      $8,191
                                                           ======      ======
</TABLE>
 
6. ACCRUED COMPENSATION AND RELATED BENEFITS
 
  Accrued compensation and related benefits consisted of the following on:
 
<TABLE>
<CAPTION>
                                                         OCTOBER 31, OCTOBER 29,
                                                            1994        1995
                                                         ----------- -----------
                                                             (IN THOUSANDS)
      <S>                                                <C>         <C>
      Accrued salaries and wages........................   $  480      $  742
      Accrued vacation pay..............................      423         499
      Other.............................................      499       1,088
                                                           ------      ------
                                                           $1,402      $2,329
                                                           ======      ======
</TABLE>
 
7. OTHER ACCRUED LIABILITIES
 
  Other accrued liabilities consisted of the following on:
 
<TABLE>
<CAPTION>
                                                         OCTOBER 31, OCTOBER 29,
                                                            1994        1995
                                                         ----------- -----------
                                                             (IN THOUSANDS)
      <S>                                                <C>         <C>
      Accrued commissions...............................   $  399      $  849
      Accrued state income taxes........................      469         156
      Other.............................................    1,354       1,421
                                                           ------      ------
                                                           $2,222      $2,426
                                                           ======      ======
</TABLE>
 
                                      F-10
<PAGE>
 
                ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
8. LONG-TERM DEBT
 
  Long-term debt consisted of the following on:
 
<TABLE>
<CAPTION>
                                                        OCTOBER 31, OCTOBER 29,
                                                           1994        1995
                                                        ----------- -----------
                                                            (IN THOUSANDS)
   <S>                                                  <C>         <C>
   Variable-rate revolving credit facility...........     $2,447      $6,104
     (effective interest rate of 9.5% at October 29,
     1995), interest payable monthly, principal is
     repaid and reborrowed based on cash requirements
   Variable-rate revolving credit commitment.........         --       1,000
     (effective interest rate of 9.25% at October 29,
     1995), interest payable monthly, principal is
     repaid and reborrowed based on cash requirements
   Variable-rate equipment notes.....................      1,455       2,839
     (effective interest rates of 9.5% at October 29,
     1995), payable in monthly installments ranging
     from $5,521 to $20,833, plus accrued interest,
     with maturities ranging from October of 1997
     through June of 1999
                                                          ------      ------
                                                           3,902       9,943
   Less current portion..............................        346         850
                                                          ------      ------
                                                          $3,556      $9,093
                                                          ======      ======
</TABLE>
 
  The revolving credit facility, variable equipment term loan and variable
equipment credit facility relate to a Loan and Security Agreement (the "Loan
Agreement") entered into by Wakefield in June of 1994. The Loan Agreement was
amended in May of 1995 to increase the revolving credit facility from a maximum
aggregate commitment of $4,000,000 to $7,000,000 and to extend the term of such
facility to April 30, 1997. The equipment credit facility was increased from a
maximum aggregate amount of $600,000 to $1,050,000. The proceeds from the
equipment credit facility may be used only for the purchase of capital
equipment. In addition, Wakefield entered into an equipment term note in the
amount of $265,000. Interest accrues at the bank's corporate base rate plus
three-quarters of one percent. The obligations under the Loan Agreement are
secured by a first lien and assignment of all the assets of Wakefield,
exclusive of the assets of Specialty Extrusion Corp., including without
limitation, all accounts receivable, inventory, equipment and general
intangibles which in aggregate totals $20,598,000. The terms of the Loan
Agreement include various covenants which provide for, among other things, the
maintenance of a tangible capital base at various levels throughout the
commitment period. On October 29, 1995, Wakefield was in compliance with these
convenants. On October 29, 1995, $6,104,000 was drawn on the revolving credit
facility.
 
  On August 30, 1995, Uni-Star entered into an Accounts Receivable Loan
Agreement which included a revolving credit commitment in the aggregate
principal amount of $2,500,000 of which $1,000,000 was drawn on at October 29,
1995. Uni-Star also entered into an equipment term loan in the amount of
$750,000 and an equipment acquisition facility of $300,000 which must be
borrowed prior to August 31, 1996. Interest on the revolving credit commitment
accrues at the bank's prime rate plus one half of one percent and interest on
the equipment term loan accrues at the bank's prime rate plus three quarters of
one percent. The equipment term loan is repayable in 48 equal monthly
installments of principal of $15,625 plus accrued interest, payable on the
first day of each month beginning October 1, 1995. All of the Uni-Star credit
facilities are secured by a first lien and assignment of substantially all of
its assets, including without limitation, accounts receivable, inventory,
equipment and general intangibles which in aggregate totals $8,999,000. The
Accounts Receivable Loan Agreement includes various covenants with which Uni-
Star was in compliance on October 29, 1995.
 
                                      F-11
<PAGE>
 
                ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  Interest paid on all outstanding debt amounted to approximately $116,000 in
fiscal year 1994 and approximately $693,000 in fiscal year 1995.
 
  Aggregate payments of long-term debt outstanding as of October 29, 1995 for
the next five years are summarized below:
 
<TABLE>
<CAPTION>
            FISCAL YEARS                         AMOUNT
            ------------                       ----------
            <S>                                <C>
            1996.............................. $  850,000
            1997..............................  7,954,000
            1998..............................    762,000
            1999..............................    377,000
            2000..............................         --
                                               ----------
                                               $9,943,000
                                               ==========
</TABLE>
 
  Management intends to renew or refinance the revolving credit facility and
the revolving credit commitment upon maturity.
 
9. OTHER LONG-TERM LIABILITIES
 
  Other long-term liabilities consisted of the following on:
 
<TABLE>
<CAPTION>
                                 OCTOBER 31, OCTOBER 29,
                                    1994        1995
                                 ----------- -----------
                                     (IN THOUSANDS)
            <S>                  <C>         <C>
            Accrued lease
             differential.......   $1,865      $1,362
            Other...............      949         531
                                   ------      ------
                                    2,814       1,893
            Less current
             portion............     (993)       (883)
                                   ------      ------
                                   $1,821      $1,010
                                   ======      ======
</TABLE>
 
  The accrued lease differential primarily represents the lease payments and
estimated costs that the Company expects to incur related to office space in
Houston, Texas less estimated payments that it expects to receive for
subleasing this space. Approximately $800,000 of the accrued lease differential
was expensed in fiscal 1994 in connection with the sale of the discontinued
operation. The remainder of the accrued lease differential was expensed in
fiscal 1992 as restructuring costs related to the office space.
 
10. PREFERRED STOCK
 
  On October 31, 1994 and October 29, 1995, the Company had authorized 180,000
shares of unissued, preferred stock with a par value of $100 per share. The
Board of Directors has the authority to issue such preferred stock and to set
the terms thereof, including the dividend rate, conversion rights, redemption
rights, voting rights and liquidation preferences.
 
11. REPURCHASE OF COMMON STOCK
 
  In September of 1994, the Board of Directors of the Company approved a plan
to purchase up to $2,500,000 of the Company's common stock. Pursuant to the
stock repurchase plan, the Company purchased 83,000 shares of common stock
during fiscal year 1994 at an aggregate price of $374,137. During fiscal year
1995, 391,155 shares of common stock were purchased at an aggregate price of
$2,118,173. This repurchase program has been completed.
 
                                      F-12
<PAGE>
 
                ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
12. STOCK OPTION PLANS
 
  The Company has in effect nonqualified and incentive stock option plans under
which shares are available for exercise. As of October 29, 1995, the Board of
Directors has reserved 1,597,000 shares of common stock for issuance under the
plans, of which 600,000 shares are subject to shareholder approval. The prices
at which substantially all stock options outstanding have been granted have
been equal to or in excess of the fair market value of the Company's stock at
the time of the grant. These options vest over periods up to five years. On
October 29, 1995, there were 350,000 shares available for future grants,
subject to the aforementioned shareholder approval. The following table
summarizes activity under the plans:
 
<TABLE>
<CAPTION>
                                                         SHARES
                                                      UNDER OPTION  PRICE RANGE
                                                      ------------ -------------
<S>                                                   <C>          <C>
Outstanding on October 31, 1992......................    961,530   $1.16--$15.00
 Granted.............................................    532,000    1.38--  3.19
 Forfeited...........................................   (171,873)   1.47--  4.50
 Exercised...........................................    (69,926)   1.47--  2.69
 Expired.............................................    (24,734)   4.50-- 15.00
                                                       ---------   -------------
Outstanding on October 31, 1993......................  1,226,997   $1.16--$ 7.12
 Granted.............................................    363,000    2.93--  4.53
 Forfeited...........................................    (48,524)   1.50--  7.12
 Exercised...........................................   (445,456)   1.47--  4.06
 Expired.............................................    (42,600)           4.50
                                                       ---------   -------------
Outstanding on October 31, 1994......................  1,053,417   $1.16--$ 4.53
 Granted.............................................    457,000    5.13--  5.98
 Forfeited...........................................    (10,000)           2.69
 Exercised...........................................   (250,500)   1.16--  3.19
 Expired.............................................     (2,917)           4.50
                                                       ---------   -------------
Outstanding on October 29, 1995......................  1,247,000   $1.16--$ 5.98
                                                       =========   =============
Exercisable on October 29, 1995......................    448,053   $1.16--$ 4.53
                                                       =========   =============
</TABLE>
 
13. NET INCOME PER SHARE
 
  Net income per common and common equivalent share was computed using the
weighted average number of shares of common stock and common equivalent shares
outstanding during each year. Common equivalent shares included the number of
shares issuable upon exercise of options, less the number of shares that could
have been purchased with the exercise proceeds.
 
14. INCOME TAXES
 
  On November 1, 1993, the Company adopted Statement 109 through a cumulative
catch-up adjustment. The implementation of this statement did not have a
material effect on the Company's balance sheet or results of operations. The
Company's profitable operations during fiscal 1995 and 1994 resulted in the
utilization of net operating loss carryforwards, the tax benefit of which was
fully reserved upon implementation of Statement 109. Income taxes for fiscal
year 1993 were accounted for in compliance with APB Opinion No. 11; therefore,
the tax benefit of net operating loss carryforwards was classified as an
extraordinary credit which reduced taxes for the year by $111,000.
 
                                      F-13
<PAGE>
 
                ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  The provisions for income taxes were as follows for the fiscal years 1993
through 1995:
 
<TABLE>
<CAPTION>
                                                     OCTOBER 31,
                                                    --------------  OCTOBER 29,
                                                    1993    1994       1995
                                                    -----  -------  -----------
     <S>                                            <C>    <C>      <C>
     Federal income tax............................ $ 118  $    51    $ 1,221
     State income tax..............................    --      449        458
                                                    -----  -------    -------
                                                      118      500      1,679
     Benefit of reversal of valuation reserve
      (Statement 109)..............................    --   (1,360)    (1,820)
     Benefit of net operating loss carryforwards
      (APB 11).....................................  (111)      --         --
                                                    -----  -------    -------
                                                    $   7  $  (860)   $  (141)
                                                    =====  =======    =======
</TABLE>
 
  The differences in the income taxes provided for and the amounts determined
by applying the Federal statutory rate to income before taxes of the Company
are summarized as follows:
 
<TABLE>
<CAPTION>
                                                    OCTOBER 31,
                                                    -------------   OCTOBER 29,
                                                    1993    1994       1995
                                                    -----   -----   -----------
     <S>                                            <C>     <C>     <C>
     Federal income statutory rate.................  34.0 %  34.0 %     34.0 %
     State income taxes, net of federal income tax
      benefit......................................    --    18.3 %      7.6 %
     Benefit of reversal of valuation reserve
      (Statement 109)..............................    --   (55.3)%    (46.0)%
     Other.........................................    --      --         .8 %
     Benefit of net operating loss carryforwards... (32.0)% (32.0)%       --
                                                    -----   -----      -----
                                                      2.0 % (35.0)%     (3.6)%
                                                    =====   =====      =====
</TABLE>
 
  The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities and their changes during
the year ended October 29, 1995 were as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                          DEFERRED
                                             OCTOBER 31, (PROVISION) OCTOBER 29,
                                                1994       BENEFIT      1995
                                             ----------- ----------- -----------
     <S>                                     <C>         <C>         <C>
     Deferred Tax Assets:
       Net operating loss carryforwards.....   $ 6,086     $(1,580)    $ 4,506
       Tax credits..........................       814         (67)        747
       Accrued liabilities..................       791          27         818
       Other................................       560         549       1,109
                                               -------     -------     -------
       Total gross deferred tax assets......     8,251      (1,071)      7,180
       Less: Valuation allowance............    (6,575)      1,972      (4,603)
                                               -------     -------     -------
       Net deferred tax asset...............   $ 1,676     $   901     $ 2,577
                                               =======     =======     =======
     Deferred Tax Liabilities:
       Amortization and depreciation........      (183)       (282)       (465)
       Other................................      (133)         52         (81)
                                               -------     -------     -------
       Total deferred tax liabilities.......      (316)       (230)       (546)
                                               -------     -------     -------
       Net deferred tax asset...............   $ 1,360     $   671     $ 2,031
                                               =======     =======     =======
</TABLE>
 
                                      F-14
<PAGE>
 
                ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
  Due to the Company's historical results of operations, a valuation allowance
was provided for the deferred tax assets. Because the Company generated taxable
income and was able to utilize net operating loss carryforwards during fiscal
1994 and 1995 and, due to an increase in the likelihood of the future
realization of the net deferred tax asset, the Company reversed $1,360,000 and
$1,820,000, respectively, of the valuation allowance. On October 29, 1995, the
Company had, for tax purposes, net operating loss carryforwards of
approximately $13,252,000 and unused investment and research and development
tax credits of approximately $747,000 available to offset future taxable income
and Federal income taxes. The net operating loss carryforwards will expire from
2000 to 2008, and the tax credit carryforwards will expire from 1996 to 2005.
All carryforwards are subject to review and possible adjustment by the Internal
Revenue Service. In compliance with the Tax Reform Act of 1986, investment tax
credits carried forward were reduced by 35%. The Company's ability to utilize
the net operating loss carryforwards to offset alternative minimum taxable
income is limited to 90% for tax years after fiscal 1987.
 
  Additionally, Section 382 of the Internal Revenue Code limits the amounts of
net operating loss carryforwards usable by a corporation following a more than
50 percentage point change in ownership of the corporation during a three-year
period. It is possible that subsequent transactions involving the Company's
capital stock could result in such a limitation. As of October 29, 1995,
Management believes that such a change in ownership has not occurred.
 
15. COMMITMENTS AND CONTINGENCIES
 
  The Company has operating lease commitments for certain office equipment and
manufacturing, administrative and support facilities. Minimum lease payments
under noncancellable leases on October 29, 1995 are as follows:
 
<TABLE>
<CAPTION>
                                             OPERATING
              FISCAL YEARS                     LEASES
              ------------                 --------------
                                           (IN THOUSANDS)
            <S>                            <C>
              1996........................     $2,533
              1997........................      2,346
              1998........................      1,412
              1999........................      1,063
              2000........................        822
              Thereafter..................      2,167
                                              -------
              Minimum lease payments......    $10,343
                                              =======
</TABLE>
 
  Rent expense (exclusive of operating expenses and net of sublease rents) for
all operating leases was approximately $384,000, $869,000 and $1,339,000 in
fiscal 1993, 1994 and 1995, respectively. Expected sublease payments for each
fiscal year are as follows: 1996 $610,000; 1997 $610,000; 1998 $152,000; and
1999 and thereafter $0. See Note 9.
 
  Through September 30, 1994, the Company, for its Information Solutions
Segment, had a partially self-funded insurance program for its group health
insurance plan. Effective January 1, 1995, Wakefield implemented the same type
of program for its group health insurance plan. Under these plans, the Company
assumed liability for payment of medical claims below a specific dollar amount
related to any one individual. The Company is also insured if claims should
exceed a specific aggregate dollar amount for all covered individuals. Asserted
and unasserted medical/health insurance claims are accrued for based on the
Company's experience and the advice of an independent claims manager.
 
                                      F-15
<PAGE>
 
                ALPHA TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
16. RELATED-PARTY TRANSACTIONS
 
  For services rendered in connection with the acquisitions made during fiscal
years 1994 and 1993, further described in Note 2-Acquisitions, the Company paid
$57,500 each and $75,000 each, respectively for fiscal 1994 and 1993, to two
corporations, which are general partners of a partnership having a greater than
10% ownership of the Company. The sole stockholder of one of the corporations
is currently an officer and director of the Company and the sole stockholder of
the other corporation is a director of the Company and was previously an
executive officer. In fiscal 1994, the two individuals were each granted five-
year nonincentive stock options to purchase an aggregate of 120,000 shares of
the Company's common stock. In fiscal 1993, the two individuals were each
granted a ten-year nonincentive stock option to purchase 50,000 shares of the
Company's common stock. The options were granted at an exercise price equal to
the fair value of the common stock on the dates of grant. The right to exercise
these options vests in equal installments over three years. At the time of the
payments and option grants, neither individual was a compensated officer or
employee of the Company.
 
                                      F-16