U.S. SECURITIES AND EXCHANGE COMMISSION
                      Washington, D.C. 20549
                           Form 10-KSB

[X] Annual report under section 13 or 15(d) of the Securities
    Exchange Act of 1934 for the fiscal year ended August 31,
    1996.
[ ] Transition report under section 13 or 15(d) of the
    Securities Exchange Act of 1934 for the transition period
    from ______ to ______.

                  Commission File Number 0-13870

                        Technology 80 Inc.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)

                Minnesota                          41-1373380
       -----------------------------    ------------------------------
(State or other jurisdiction of                 (I.R.S. Employer
 incorporation or organization)                Identification No.)

658 Mendelssohn Avenue North, Minneapolis, Minnesota     55427
-----------------------------------------------------------------
(Address of principal executive offices)              (Zip Code)

                          (612) 542-9545
                    --------------------------
                   (Issuer's telephone number)

Securities to be registered under Section 12(b) of the Act:  None
                                                             ----
Securities to be registered under Section 12(g) of the Act:

                                         Common Stock, $.01 par value
                                         ----------------------------
                                               (Title of Class)

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities 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]

The issuer's revenues for its most recent fiscal year were $4,206,691.

The aggregate market value of the voting stock held by non-affiliates 
as of November 15, 1996, (based upon the average between the closing 
bid and asked price as reported in the local over-the-counter market) 
was approximately $1,931,000.  In making this computation, the share 
holdings of certain persons were excluded, but such exclusion shall 
not be deemed an admission that such persons are affiliates of the 
Registrant as that term is defined in Rule 405, Regulation C.

Number of shares outstanding of each of the issuer's classes of
common equity as of November 15, 1996: 1,571,170 shares of common
stock, par value $.01.

Documents Incorporated by Reference:  None.

                              PART I

Item 1. Description of Business.

General
-------
Technology 80 Inc.  ("Registrant")  was incorporated under the
laws of the State of Minnesota on February 12, 1980.  It is
engaged in the business of developing, manufacturing, marketing
and selling computer-related products.  Registrant's initial
products included STD cards and systems and the Chanalyzer
(trademark); Registrant's product line has since been expanded.

Within Registrant's existing industry segment, manufacturing
technical instruments and systems, there are two principal
classes of products and services:  (1) Industrial Control
Products and systems which have now been expanded to include
several industry standard microcomputer bus structures (STD, PC,
Multibus and SBX) and (2) products related to the IBM or FIPS
("Federal Information Processing Standards") mainframe computer
channel.  The primary channel product is the Chanalyzer
(trademark), an instrument designed to detect signal errors or
defective transmissions in mainframe computer systems.

The percentages of revenue contributed by the Industrial Control
Products and systems (including contract design, programming and
consulting work) were 99.8, 97.4, and 90.0 percent for the three
fiscal years ended August 31, 1996, 1995, and 1994, respectively. 
The percentages of revenue contributed by the channel related
products (including proceeds from rentals) were 0.2, 1.9, and 9.5
percent for the three fiscal years ended August 31, 1996, 1995,
and 1994, respectively.

Total assets at August 31, 1996, 1995 and 1994, were $4,897,556,
$4,195,375, and $3,392,471, respectively.  All of Registrant's
sales have been to unaffiliated customers.

Registrant maintains inventory levels in its two product lines
consistent with projected sales.  Due to increased sales and
expected increases in sales, Registrant has found it necessary to
maintain an increased level of  inventories in order to assure
itself of a continuous allotment of parts and materials from its
suppliers and to meet rapid delivery requirements of its
customers.  

Registrant warrants the microcomputer interface cards for a
period of two years from date of shipment.  Registrant warrants
the channel products for one year from the date of delivery on
most parts; certain parts are warranted for a 90 day period. 
There have been very few instances when Registrant was required
to accept the return merchandise which failed to comply with
Registrant's warranty and any such warranty related expenses have
been minimal.  Registrant offers factory repair services for both
product lines.

Industrial Control Products
---------------------------
Registrant designs, manufactures, and markets industrial control
products with an emphasis on motion control applications. Most of
Registrant's industrial control products fall into the category
of add-in boards for various types of industry standard micro
computers.  The original STD product line has been expanded and
now includes a relatively broad product line of micro computer
based boards.

Registrant also offers products which are accessories to the 
add-in boards.  They consist of software products, interface cables,
servo motor amplifiers, and stepper motor drives.  Accessory
products enhance the sales of the main product line by making it
more convenient for the customer to use Registrant's products. 
Accessories can also be significant contributors to sales volume,
especially motor drives and amplifiers.

Registrant's products address four categories of industrial
control applications:  servo motor control, stepper motor
control, encoder/data acquisition, and industrial input/output. 
Most of Registrant's products relate to motion control aspects of
such applications.

Customers
---------
Registrant's customers for its industrial control products are
numerous and consist of both OEM and end-user (in-house)
applications.  The OEM business is specifically solicited since
it may lead to follow-on sales of significant volume.  Prospects
for future sales growth are enhanced by a "layering" effect; OEM
design-ins typically run for several years.

Competition
-----------
There are a large number of manufacturers of industrial control
products in the U.S. and Canada with some products now appearing
from Europe and the Orient.  There are numerous manufacturers
which offer one or more products which compete with one or more
of Registrant's products.  Some of Registrant's competitors are
larger, have been in business longer, and are likely to have
greater resources than Registrant.  Registrant, based on the most
recent information available, believes that it offers one of the
most complete product lines for the industrial control products
market.

There are two types of competition in Registrant's industrial
control products business.  First, there are those products that
are directly competitive with the same functions.  Second, there
are those products which enable the user to implement a system in
an alternative fashion to accomplish the same result.  This may
be accomplished through use of different functional boards on the
same bus structure but more likely involve an alternative bus
structure.  Registrant's broadened line involving various bus
structures lessens this factor.  Competition also comes from
customers' in-house special designs.

Registrant believes that the principal competitive factors are
function, availability of the products and, to a lesser extent,
price.  Registrant's products are comparable in performance and
capability to those of its competitors.  Registrant believes that
its experienced design staff (utilizing its Computer Aided Design
technology) enables it to offer standardized products to meet the
customer's needs with a warranty and price which compare
favorably to competitive alternatives, including the potential
customer's in-house costs.

Channel Related Products
------------------------
The primary product in this market area has been the Chanalyzer
(trademark), which is a computerized, analytical, diagnostic,
monitoring and data logging device designed to easily and quickly
detect errors and faults in the transmission of data between a
mainframe computer and equipment connected to the computer and to
assist in determining the sources of such errors and faults. 
Since the Chanalyzer (trademark) is presently configured only for
use with the IBM channel and the FIPS channel, which is a federal
specification derived from the IBM specification, the market for
the Chanalyzer (trademark) is limited to manufacturers of
equipment, including IBM Corporation, which utilizes the IBM or
the FIPS channels, those who maintain and repair such equipment,
and end users of such equipment.

The market has introduced faster channel speeds of the current
Bus and Tag architecture, and also new channel designs, such as
the Fiber Optic channel which is not compatible with the
Chanalyzer (trademark) or any of Registrant's channel related
products.  As a result, market opportunities for the Chanalyzer
(trademark) have and will continue to decline.

Suppliers
---------
All parts for Registrant's products are supplied by third party
vendors.  Most of such parts are standard off-the-shelf items
available from several sources.  Special fabricated parts made to
Registrant's specifications are producible by several local
vendors.  Printed circuit boards, which are a large part of
Registrant's products, are produced by several local vendors, and
additional vendors could be utilized if conditions warranted.

Registrant utilizes the latest state of the art components,
especially in integrated circuits, in its designs.  Delivery of
certain new products is sometimes initially delayed due to
shortage of these state of the art devices.  Once available,
however, there has been no instance when such integrated circuits
were not available with reasonable lead time.  Registrant does
not anticipate any parts supply problems in the foreseeable
future.

Backlog
-------
Registrant had a backlog of $1,288,792, $525,531 and $387,146 for
its industrial control products at August 31, 1996, 1995 and 1994
respectively.  There was no backlog for its channel related
products in each of these years.

Employees
---------
Registrant had 23 employees as of November 15, 1996, of which 1
was part-time.  Registrant is not a party to any collective
bargaining agreement, and Registrant considers its employee
relations to be satisfactory.  In view of the small number of
employees, the loss of certain technical and sales personnel
could adversely affect Registrant in the short-term.

Registrant requires, to the extent allowed by Minnesota law, its
employees to assign to Registrant all inventions developed during
their employment by Registrant.  Registrant also requires all
employees to enter into an agreement pursuant to which, among
other things, the employee agrees not to divulge confidential or
proprietary information to any competitor and, for a period of
two years following termination of employment with Registrant,
not to compete with Registrant in any subsequent employment. 
Registrant has such agreements with all of its present employees. 
Such agreements are not binding in the event Registrant is
acquired in a transaction opposed by Registrant's Board of
Directors.

Patents and Licenses
--------------------
Two patents for the Chanalyzer (trademark) have been granted. 
One patent has also been granted for a design in the industrial
control line.  Registrant claims copyright protection as to the
artwork and documentation of all of its products, but has not
sought to register any of its copyrights.  There can be no
assurance that any existing patents or any future patents will
prevent competitors from producing substantially similar
products.  Registrant does not anticipate that any persons will
have an interest in licensing its patents.

Registrant relies less on the protection provided by patents and
copyrights than it does on the technical and creative skills of
its personnel and on its abilities to market and service its
products, to establish its market position for each of its
products, and to improve its products and develop new products to
stay abreast of new technology.  It does, however, believe that a
patent portfolio has considerable value in affording Registrant
the means by which it can bargain for technology interchanges
with other patent holders on a favorable basis.

Research and Development
------------------------
Registrant has spent $630,626 and $477,700 during the fiscal
years ended August 31, 1996 and 1995, respectively, for research
and development of  industrial control products.  Research and
development costs were 15.0% of revenue for the fiscal year ended
August 31, 1996 and 13.0% of revenue for the fiscal year ended
August 31, 1995.  For the foreseeable future, Registrant expects
research and development costs to remain approximately the same,
as a percentage of revenue, in light of the need for new products
and utilization of new technology to provide the basis for future
revenues.

Research and development opportunities are constantly being
explored by Registrant.  If new product opportunities are found
with significant potential market demand, a sharp increase in
research and development expenditures may result as Registrant
engages in efforts to develop and bring such products to market. 
Such increased expenditures may have short-term adverse effects
on Registrant's profitability.

Marketing and Sales
-------------------
Industrial control products are marketed in the United States and
Canada through independent nonexclusive manufacturers'
representatives.  Independent manufacturers' representatives
specializing in motion control are the main outlets.  Direct 
in-house sales to catalog distributors are the next largest sales
distribution method.  The Registrant uses a small number of
distributors and system integrators specializing in motion
control products to supplement the efforts of the manufacturers'
representatives.

Registrant employs a national sales manager for direct selling of
the motion control product line and markets its channel related
products in the United States through a direct sales staff.
Registrant has signed agreements with several international
distributors to implement and handle sales and marketing of
Registrant's products in foreign markets.  

One customer accounted for 11% of Registrant's revenue for fiscal
year 1996.  No one customer accounted for 10% or more of
Registrant's revenue for fiscal year 1995.  International sales
accounted for 5.1% and 6.8% of revenue for the years ended 1996
and 1995, respectively.  Registrant's business is not seasonal in
nature.

Item 2. Description of Property.

Registrant's facilities are located in a multiple-tenant building
located at 658 Mendelssohn Avenue North, Minneapolis, Minnesota. 
The portion of the building occupied by Registrant consists of
4,810 square feet for production, warehouse, laboratory, drafting
and engineering plus 3,690 square feet for offices for a total of
8,500 square feet.  Registrant leases this space under a lease
expiring September 30, 1997.  See note 7 to financial statements.

Item 3. Legal Proceedings.

The Registrant is presently not a party to any pending legal
proceedings.

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

No matter was submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.

                             PART II

Item 5. Market for Common Equity and Related Stockholder Matters

Registrant's common stock, $.01 par value, is traded in the
Minneapolis/St. Paul local, over-the-counter market.  The
information concerning the range of high and low bid quotations
for Registrant's fiscal years ended 1996 and 1995 is set forth in
the table below.

                Common Stock Trading Price Ranges
                ---------------------------------
<TABLE>
<CAPTION>
                         Common Stock Bid

       1996                           Low             High
       ----                           ---             ----
       <S>                            <C>             <C>
       First Quarter                  2 1/8           2 3/4
       Second Quarter                 2 1/2           3 1/4
       Third Quarter                  2               2 1/2
       Fourth Quarter                 2 1/2           3

       1995                           Low             High
       ----                           ---             ----
       First Quarter                  1 3/8           1 1/2
       Second Quarter                 1 1/2           1 5/8
       Third Quarter                  1 5/8           1 5/8
       Fourth Quarter                 1 5/8           2 1/8
</TABLE>

Prices were obtained from Twin Cities media. The quotations
reflect inter-dealer prices, without retail markup, markdown or
commission and may not represent actual transactions.

As of November 15, 1996, there were 178 record holders of
Registrant's common stock.

It is the present intention of Registrant to retain any earnings
to finance the development of its business and, accordingly,
Registrant does not anticipate payment of any cash dividends in
the foreseeable future.

Item 6. Management's Discussion and Analysis or Plan of Operation

Results of Operations
---------------------
Revenue increased 14.7% during the fiscal year ended August 31,
1996, over the previous fiscal year.  Revenue increased 14.5%
during fiscal year 1995, over the 1994 fiscal year.  The
increased revenue in fiscal years 1996 and 1995 resulted from an
increased interest in the Registrant's products which has
expanded the customer base during these fiscal years.

Gross profit was 64.8% for fiscal year 1996 compared to 64.2% for
the fiscal year 1995.  The Registrant continues to focus on
manufacturing and purchasing in economical quantities and taking
advantage of available purchase discounts. 

Order backlog at the end of fiscal years 1996 and 1995 was
$1,288,792 and $525,531, respectively, all of which were for
industrial control products; channel related products had no
backlog. This backlog was a consequence of the receipt of
purchase orders with delivery scheduled over a period of several
months and may be rescheduled or canceled by the customer.  A
large order from one customer at year end accounted for 42% of
the $763,261 increase in the backlog.  Industrial control
products are built to a production schedule based on sales
forecasts.  Most smaller orders require an immediate shipment
which Registrant is generally able to meet. Almost all sales are
shipped within a short time, generally within days.  Customers
often require same day shipment with overnight air delivery. 

Selling expenses, as a percentage of revenue, were 16.3% and
17.4% in fiscal 1996, and 1995, respectively.  The decrease is a
result of Management's overall cost cutting measures.  Management
would consider increasing some expenses, such as trade shows,
advertising, marketing  and promotion, if an overall benefit
would be realized. 

General and administrative expenses were 15.1% and 13.2% of
revenue for fiscal year 1996 and 1995, respectively.  Although
management has continued its cost cutting measures, some
increased expenditures have been necessary to retain quality
employees and keep up with the growth of sales.

Research and development costs, as a percentage of revenue,
increased to 15.0% in fiscal 1996, compared with 13.0% in 1995. 
Registrant will continue new product development.

Income from operations resulted in income of $776,363 and
$754,196 for fiscal years 1996 and 1995, respectively.  The
increase in income for 1996 over 1995 was the result of increased
revenues and cost cutting measures offset by increased general
and administrative and research and development expenditures.

Other income for 1996 decreased $20,316 from 1995.  This
represents an 8.8% decrease.

Net income for 1996 and 1995, respectively, was $665,355 and
$645,054.

Liquidity and Capital Resources
-------------------------------
Registrant's balance sheet shows a strong capital position. 
Operations provided $680,016 in cash.  Cash and cash equivalents
decreased $507,027 from the previous year.  The Registrant used
$23,463 to purchase equipment and $1,177,763 to purchase
investments (net of sales and maturities) during the fiscal year
ended August 31, 1996.  $11,391 was received as a result of
employees exercising stock options.  Inventories increased 
$158,950 from the previous year primarily due to increased sales
and the anticipated release of new products during fiscal year
1997.  Registrant expects that there will be sufficient capital
to fund its operations during fiscal year 1997. 

Registrant has no borrowings and does not anticipate, at this
time, that it will be necessary to seek any debt financing in the
near future for ongoing operations, but may consider some type of
financing for other purposes.

Statements included in this Management's Discussion and Analysis
or Plan of Operation and elsewhere in this Form 10-KSB, in future
filings by the Registrant with the Securities and Exchange
Commission and in the Registrant's press releases and oral
statements made with the approval of authorized executive
officers, if the statements are not historical or current facts,
should be considered "forward-looking statements" made pursuant
to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995.  These statements are subject to
certain risks and uncertainties that could cause actual results
to differ materially from historical earnings and those presently
anticipated or projected.  Registrant wishes to caution the
reader not to place undue reliance on any such forward-looking
statements, which speak only as of the date made.

Item 7. Financial Statements

The financial statements and notes thereto are found following
the signature page of this report.

Item 8. Changes in and Disagreements With Accountants on
        Accounting and Financial Disclosure

There were no changes nor disagreements with accountants of the
type required to be reported.

                             PART III

Item 9. Directors, Executive Officers, Promoters and Control
        Persons; Compliance With Section 16(a) of the Exchange Act

The name, age and position of each person who is a director or
executive officer of Registrant as of November 15, 1996, is as follows:

Name                  Age   Position with Company         Position Held Since
----                  ---   ---------------------         -------------------
Thomas L. Gould        54   Director, Secretary                   4/90

Duane A. Markus        54   President, Chief Executive
                            Officer, Chief Financial 
                            Officer, Director                     4/90

Jack W. Pagel          54   Director                              4/90

James A. Burkett       42   Chief Operating Officer               4/93

Mr. Gould was elected to fill a vacancy on the Board of Directors
on April 23, 1990.  Mr. Gould has been the President of GH
Medical, Inc., since 1990 and has worked as a securities salesman
at Equity Securities Trading Co., Inc., Minneapolis, Minnesota,
since July 1988.  Prior to that time, Mr. Gould was employed as a
securities salesman by a number of brokerage firms in
Minneapolis, Minnesota, including Engler Budd & Co., Inc. from
July 1986, to July 1988; Craig-Hallum, Inc. from January 1986, to
July 1986; J.W. McKlees, Inc. from September 1985, to January
1986; and Pagel, Inc. from August 1981, to September 1985.

Mr. Markus was elected to fill a vacancy on the Board of
Directors on April 23, 1990.  Mr. Markus was elected interim
Chief Executive Officer of the Company in September 1990, and
President, CEO and CFO on December 12, 1990.  Mr. Markus, from
September 1985, until September 1990, was engaged in managing his
personal investments.  From approximately 1983 to 1985, Mr.
Markus was employed by Pagel, Inc. as a securities trader, and
for more than four years prior to 1983, Mr. Markus was employed
by Pagel, Inc. as its Executive Vice President and Trader.

Mr. Pagel was elected to fill a vacancy on the Board of Directors
on April 23, 1990.  Mr. Pagel, since September 1985, has been
engaged in managing his personal investments.  Prior to that
time, Mr. Pagel was President and sole shareholder of Pagel, Inc. 

Mr. Burkett was promoted to Chief Operating Officer by the Board
of Directors in April 1993.  Mr. Burkett was hired in August 1985
as Sales Manager and has since held the positions of Director of
Sales and Marketing and Vice President of Industrial Control
Products.  Prior to his employment at Technology 80 Inc., Mr.
Burkett was employed as Vice President of the North American
Office of Omni Switch, Inc., Phoenix, Arizona.

<TABLE>

Item 10. Executive Compensation

Summary Compensation Table
--------------------------
The following table sets forth the annual and long term
compensation for the CEO and each executive officer whose
compensation exceeded $100,000 for such period:

<CAPTION>
                                                              Long Term Compensation      
                                                         --------------------------------
                       Annual Compensation                       Awards           Payouts 
            ------------------------------------------   -----------------------  --------
Name                                         Other       Restricted   Securities
and                                          Annual        Stock      Underlying    LTIP      All Other
Principal                                    Compen-      Award(s)     Options/    Payouts    Compen-
Position   Year     Salary ($)   Bonus($)    sation ($)     ($)        SARs (#)      ($)      sation ($)
--------   ----     ---------    -------     ----------   -------      --------    -------    -------
<S>        <S>      <C>           <C>             <C>        <C>       <C>             <C>        <C>       
Duane      1996     143,750       82,635          -          -            -            -          -
Markus     1995     115,000       54,175          -          -          9,000          -          -
CEO        1994     100,000       35,781          -          -          9,000          -          -

James      1996     164,481           -           -          -            -            -          -
Burkett    1995     149,301           -           -          -          9,000          -          -
COO        1994     135,162           -           -          -         14,000          -          -

Aggregated Option/SAR Exercised in Last Fiscal Year and FY-End Option/SAR Values
--------------------------------------------------------------------------------
</TABLE>
<TABLE>
The following table summarizes options and SARs exercised during
1996 and presents the value of unexercised options and SARs held
by the named executives at fiscal year end.

<CAPTION>
                                                         Number of
                                                         Securities      Value of
                                                         Underlying      Unexercised
                                                         Unexercised     In-the-Money
                                                         Options/SARs    Options/SARs
                                                         at FY-End (#)   at FY-End ($)
                        Shares
                      Acquired on                        Exercisable/    Exercisable/
      Name            Exercise (#)  Value Realized ($)   Unexercisable   Unexercisable
-----------------     ------------  ------------------   -------------   -------------
<S>                       <C>             <C>            <C>              <C>        
Duane Markus, CEO         -               -              47,000/   0      $135,125/  $0  
James Burkett, COO        -               -              20,500/17,500    $58,938/$50,313

</TABLE>

Compensation of Directors
-------------------------
Each director who is not an employee of Registrant during the
fiscal year ended August 31, 1996 received $9,500 as compensation
for serving in that capacity (see also Item 12).

Directors did not receive options during fiscal year 1996, nor
were any exercised.
<TABLE>
Item 11. Security Ownership of Certain Beneficial Owners and
         Management

The following table sets forth information as of November 15,
1996, as to the shares of the Company's Common Stock beneficially
owned by Messrs. Pagel, Markus, and Gould (the only persons known
by the Registrant to own, beneficially, more than 5% of the
Registrant's outstanding Common Stock) and, as of such date, by
each of the Company's other current directors and officers and,
as of such date, by all officers and directors as a group.

<CAPTION>
                                       Amount and Nature
                                         of Beneficial      Percent of Shares
Name of Beneficial Holder              Ownership (1) (2)       Ownership (2)
-------------------------              --------------------  ----------------
<S>                                        <C>                    <C>
Thomas L. Gould, Director                    101,244 (4)           5.81
Jack W. Pagel, Director                      341,747 (4)          19.62
Duane A. Markus, Director, CEO               515,910 (3) (4)      29.61
James A. Burkett, Chief Operating Officer     64,787 (5) (6)       3.72

All Officers, Directors and Nominees
as a Group (four people)                   1,023,688     (7)      58.76

</TABLE>
         (1) All shares reflected as beneficially owned are
             those as to which the shareholder has sole voting
             and investment power, unless otherwise noted.

         (2) Shares not outstanding, but deemed beneficially
             owned by virtue of the right of an individual to
             acquire them within 60 days, are treated as
             outstanding only when determining the amount and
             percent owned by such individual and when
             determining the amount and percent owned by the
             group.

         (3) Includes 57,200 shares beneficially owned by Mr.
             Markus's children as to which Mr. Markus has voting
             power and the power of disposition.

         (4) Includes 47,000 shares which may be acquired
             pursuant to options currently exercisable or
             exercisable within 60 days of the date hereof.

         (5) Includes 30,000 shares which may be acquired
             pursuant to options currently exercisable or
             exercisable within 60 days of the date hereof.

         (6) Includes 12,300 shares beneficially owned by Mr.
             Burkett's spouse and child as to which Mr. Burkett
             has voting power and/or the power of disposition.

         (7) Includes 171,000 shares which may be acquired
             pursuant to options currently exercisable or
             exercisable within 60 days of the date hereof.

Item 12. Certain Relationships and Related Transactions

See Note 6 to the financial statements.

Item 13. Exhibits and Reports on Form 8-K

(a) 1.   Financial Statements

The following financial statements of the Registrant for its
fiscal year ended August 31, 1996, including the independent
auditor's report, are filed as a part of this report:

     Independent Auditor's Report.

     Balance Sheets - At August 31, 1996 and 1995.

     Statements of Income - Years ended August 31, 1996 and 1995.

     Statements of Stockholders' Equity - Years ended August 31, 1996 and 1995.

     Statements of Cash Flows - Years ended August 31, 1996 and 1995.

     Notes to Financial Statements.

(a) 2.   Exhibits

         (A) Exhibits filed with this Report. 

             Exhibit 11 -- Statement Re: Computation of Per-Share Earnings.

             Exhibit 27 -- Financial Data Schedule.

         (B) Exhibits incorporated by reference.  [The location
             of incorporated document is stated in brackets,
             such as those which enclose this sentence.]  The
             full description of each previous Form 10-K follows
             this list.

             3.1     Restated Articles of Incorporation, as
                     adopted by the shareholders of Registrant
                     on January 12, 1988.  [Exhibit 3.1, 1988
                     Form 10-K.]
            
             3.2     Restated Bylaws of Registrant, as adopted
                     by the Board of Directors of Registrant,
                     effective March 24, 1988.  [Exhibit 3.2,
                     1988 Form 10-K.]

             3.2-1   Amendment to Restated Bylaws of Registrant,
                     adopted by the Board of Directors,
                     effective January 10, 1989.  [Exhibit 3.2-1, 
                     1989 Form 10-K.]

             3.2-2   Amendment No. 2 to Restated Bylaws of
                     Registrant, adopted by the Board of
                     Directors, effective December 3, 1990. 
                     [Exhibit 3.2-2, 1991 Form 10-K.]

             10.2    Form of Employee Agreement presently in
                     effect with respect to certain technical
                     and sale employees.  [Exhibit 10.3, 1985
                     Form S-18.]
             
             10.9-2  Incentive Stock Option Plan, as adopted by
                     Registrant's shareholders on December 12,
                     1984, and as amended by Registrant's Board
                     of Directors on November 18, 1987. 
                     [Exhibit 10.9-2, 1987 Form 10-K.]

             10.9-3  Form of stock option agreement entered into
                     by Registrant and certain of its employees
                     pursuant to Incentive Stock Option Plan, as
                     amended on November 18, 1987.  [Exhibit
                     10.9-3, 1987 Form 10-K.]


             10.10-2 Form of Security Agreement.  [Exhibit
                     10.10-2, 1988 Form 10-K.]

             10.11-3 Form of Distribution Agreement.  [Exhibit
                     10.11-3, 1989 Form 10-K.]

             10.12   Technology 80 Inc. Directors' Stock Option
                     Plan, as amended.  [Exhibit 10.12, 1991
                     Form 10-K.]

             10.12-1 Form of stock option agreement entered into
                     by Registrant and certain of its directors
                     pursuant to Directors' Stock Option Plan. 
                     [Exhibit 10.12-1, 1986 Form 10-K.]

             10.13   Domestic distribution agreement.  [Exhibit
                     10.13, 1988 Form 10-K.]

             10.14   International Distribution Agreement. 
                     [Exhibit 10.14, 1988 Form 10-K.]

             1986 Form 10-K:  Annual Report on Form 10-K, File
             No. 0-13870, for Registrant's fiscal year ended
             August 31, 1986.

             1987 Form 10-K:  Annual Report on Form 10-K, File
             No. 0-13870, for Registrant's fiscal year ended
             August 31, 1987.

             1988 Form 10-K:  Annual Report on Form 10-K, File
             No. 0-13870, for Registrant's fiscal year ended
             August 31, 1988.

             1989 Form 10-K:  Annual Report on Form 10-K, File
             No. 0-13870, for Registrant's fiscal year ended
             August 31, 1989.

             1990 Form 10-K:  Annual Report on Form 10-K, File
             No. 0-13870, for Registrant's fiscal year ended
             August 31, 1990.

             1991 Form 10-K:  Annual Report on Form 10-K, File
             No. 0-13870, for Registrant's fiscal year ended
             August 31, 1991.

             1992 Form 10-K:  Annual Report on Form 10-K, File
             No. 0-13870, for Registrant's fiscal year ended
             August 31, 1992.

             1993 Form 10-K:  Annual Report on Form 10-K, File
             No. 0-13870, for Registrant's fiscal year ended
             August 31, 1993.

             1994 Form 10-K:  Annual Report on Form 10-K, File
             No. 0-13870, for Registrant's fiscal year ended
             August 31, 1994.

             1995 Form 10-KSB:  Annual Report on Form 10-KSB,
             File No. 0-13870, for Registrant's fiscal year
             ended August 31, 1995.

             1985 Form S-18:  Registration Statement of Form S-18, 
             File No. 2-96972-C, effective May 14, 1985.

(b)          Reports on Form 8-K

The following reports on Form 8-K were filed by the Registrant
during the last quarter of the Registrant's fiscal year ended
August 31, 1996:

              Date of Report          Event
              --------------          -----
                   None

                            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.


                                       Technology 80 Inc.
                              -----------------------------------
                                          (Registrant)


      November 27, 1996               /s/ Duane A. Markus
      -----------------       ------------------------------------
          (Date)             Duane A. Markus, President, CEO, CFO

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.


      November 27, 1996               /s/ Duane A. Markus
      -----------------       ------------------------------------
          (Date)              Duane A. Markus, President, CEO, CFO,
                             Director (Principal Executive Officer,
                                  Principal Financial Officer)


      November 27, 1996               /s/ Thomas L. Gould
      -----------------       ------------------------------------
          (Date)             Thomas L. Gould, Secretary and Director


      November 27, 1996                /s/ Jack W. Pagel
      -----------------       ------------------------------------
          (Date)                     Jack W. Pagel, Director


      November 27, 1996               /s/ Ricky L. Carlson
      -----------------       ------------------------------------
          (Date)            Ricky L. Carlson, Vice President, Finance
                                 (Principal Accounting Officer)

















                                  TECHNOLOGY 80 INC.

                                 FINANCIAL STATEMENTS

                               August 31, 1996 and 1995





















                           C O N T E N T S


                                                                   Page 
                                                                   -----

INDEPENDENT AUDITOR'S REPORT                                         1

FINANCIAL STATEMENTS

  Balance sheets                                                     2

  Statements of income                                               3

  Statements of stockholders' equity                                 4

  Statements of cash flows                                           5

  Notes to financial statements                                    6 - 12















                   INDEPENDENT AUDITOR'S REPORT




Board of Directors and Stockholders
TECHNOLOGY 80 INC.
Minneapolis, Minnesota


We have audited the accompanying balance sheets of TECHNOLOGY 80
INC. as of August 31, 1996 and 1995, and the related statements
of income, stockholders' equity and cash flows for the years then
ended.  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 TECHNOLOGY 80 INC. as of August 31, 1996 and 1995, and the
results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting
principles.



/s/LURIE, BESIKOF, LAPIDUS & CO., LLP
------------------------------------- 
LURIE, BESIKOF, LAPIDUS & CO., LLP
Minneapolis, Minnesota


October 4, 1996

                              - 2 -
<TABLE>
                        TECHNOLOGY 80 INC.

                          BALANCE SHEETS
                     August 31, 1996 and 1995

<CAPTION>

                   ASSETS                              1996         1995   
                                                   -----------  -----------
<S>                                                <C>          <C>
CURRENT ASSETS
 Cash and cash equivalents                         $  419,136   $  926,163 
 Short-term investments                               127,163      917,271 
 Accounts receivable (less allowance for doubtful
   accounts: 1996 and 1995 - $9,000)                  587,537      506,815 
 Inventories                                          956,744      797,794 
 Deferred income taxes                                 38,600       43,000 
 Other current assets                                  29,069       41,945 
                                                    ---------    --------- 
   TOTAL CURRENT ASSETS                             2,158,249    3,232,988 
                                                    ---------    --------- 
PROPERTY AND EQUIPMENT
 Furniture and equipment                              424,670      402,752 
 Leasehold improvements                                23,060       23,060 
                                                    ---------    --------- 
                                                      447,730      425,812 
 Less accumulated depreciation                        363,780      335,625 
                                                    ---------    --------- 
                                                       83,950       90,187 
                                                    ---------    --------- 
OTHER ASSETS
 Investments                                        2,580,957      831,200 
 Deferred income taxes                                 74,400       41,000 
                                                    ---------    --------- 
                                                    2,655,357      872,200 
                                                    ---------    --------- 
                                                   $4,897,556   $4,195,375 
                                                    =========    ========= 
</TABLE>
<TABLE>
<CAPTION>
         LIABILITIES AND STOCKHOLDERS' EQUITY

<S>                                                <C>          <C>
CURRENT LIABILITIES
 Accounts payable                                  $   49,413   $   51,000 
 Accrued payroll and payroll taxes                    217,214      172,517 
 Accrued income taxes                                 206,137        1,752 
 Accrued liabilities - other                           74,379       40,264 
                                                    ---------    --------- 
   TOTAL CURRENT LIABILITIES                          547,143      265,533 

DEFERRED INCOME TAXES                                     -         72,000 

STOCKHOLDERS' EQUITY                                4,350,413    3,857,842 
                                                    ---------    --------- 
                                                   $4,897,556   $4,195,375 
                                                    =========    ========= 

See notes to financial statements.
</TABLE>

                              - 3 -
<TABLE>
                        TECHNOLOGY 80 INC.

                       STATEMENTS OF INCOME
               Years Ended August 31, 1996 and 1995


<CAPTION>
                                               1996                  1995    
                                            ----------            ---------- 
<S>                                         <C>                   <C>
REVENUE                                     $4,206,691            $3,668,353 

COST OF GOODS SOLD                           1,478,799             1,312,767 
                                             ---------             --------- 
GROSS PROFIT                                 2,727,892             2,355,586 
                                             ---------             --------- 
OPERATING EXPENSES
 Selling                                       683,826               637,781 
 General and administrative                    637,097               485,909 
 Research and development                      630,626               477,700 
                                             ---------             --------- 
                                             1,951,549             1,601,390 
                                             ---------             --------- 
INCOME FROM OPERATIONS                         776,343               754,196 
                                             ---------             --------- 
OTHER INCOME
 Investment income                             127,448               106,445 
 Gain on sale of investments                    81,503               117,325 
 Miscellaneous                                   1,711                 7,208 
                                             ---------             --------- 
                                               210,662               230,978 
                                             ---------             --------- 
INCOME BEFORE INCOME TAXES                     987,005               985,174 

PROVISION FOR INCOME TAXES                     321,650               340,120 
                                             ---------             --------- 
NET INCOME                                  $  665,355            $  645,054 
                                             =========             ========= 
EARNINGS PER SHARE                          $     0.39            $     0.39 
                                             =========             ========= 
WEIGHTED AVERAGE COMMON AND COMMON
 EQUIVALENT SHARES OUTSTANDING               1,726,008             1,658,474 
                                             =========             ========= 


See notes to financial statements.
</TABLE>

                                    - 4 -
<TABLE>
                             TECHNOLOGY 80 INC.

                     STATEMENTS OF STOCKHOLDERS' EQUITY
                    Years Ended August 31, 1996 and 1995


<CAPTION>
                                     Common Stock
                                 -------------------    Additional   Loans       Unrealized      Retained   
                                  Shares *              Paid-in    for Stock    Gains/(Losses)   Earnings   
                                  Issued      Amount    Capital    Purchases    on Investments  (Deficit)      Total
                                 ---------   -------   ----------  ----------   --------------  -----------  ----------
<S>                              <C>         <C>       <C>         <C>          <C>           <C>            <C>
BALANCE - AUGUST 31, 1994        1,552,920   $15,529   $3,364,361  ($171,404)    $     -      ($   94,863)    $3,113,623 

 Net income                             -         -            -          -            -          645,054        645,054 

 Exercise of options                 8,750        88        8,287         -            -               -           8,375 

 Unrealized gains on investments,
   net of tax of $56,000                -         -            -          -        83,091              -          83,091 

 Loan payments                          -         -            -       7,699           -               -           7,699 
                                 ---------    ------    ---------    -------     --------       ---------      ---------
BALANCE - AUGUST 31, 1995        1,561,670    15,617    3,372,648  ( 163,705)      83,091         550,191      3,857,842 

 Net income                             -         -            -          -            -          665,355        665,355 

 Exercise of options                 9,500        95       11,296         -            -               -          11,391 

 Unrealized loss on investments,
   net of tax of $114,000               -         -            -          -     ( 185,617)             -     (   185,617)

 Loan payments                          -         -            -       1,442           -               -           1,442 
                                 ---------    ------    ---------    -------      -------       ---------      ---------
BALANCE - AUGUST 31, 1996        1,571,170   $15,712   $3,383,944  ($162,263)   ($102,526)     $1,215,546     $4,350,413 
                                 =========    ======    =========    =======      =======       =========      =========

*  Common stock: $.01 par value; authorized - 5,000,000 shares. 





See notes to financial statements.
</TABLE>

                                   - 5 -
<TABLE>
                            TECHNOLOGY 80 INC.

                         STATEMENTS OF CASH FLOWS
                   Years Ended August 31, 1996 and 1995


<CAPTION>
                                                            1996         1995   
                                                       -----------   -----------
OPERATING ACTIVITIES
  <S>                                                  <C>          <C>
  Net income                                            $  665,355   $  645,054 
  Adjustments to reconcile net income to net
   cash provided by operating activities:
    Depreciation                                            28,350       32,552 
    Deferred income taxes                                   13,000      246,000 
    Gain on sale of investments                        (    81,503) (   117,325)
    Changes in operating assets and liabilities:
      Accounts receivable                              (    80,722)      41,881 
      Inventories                                      (   158,950) (    62,364)
      Other current assets                                  12,876  (    11,172)
      Accounts payable                                 (     1,587) (     6,485)
      Accrued income taxes                                 206,137           -  
      Accrued liabilities                                   77,060  (     6,830)
                                                         ---------    --------- 
      Net cash provided by operating activities            680,016      761,311 
                                                         ---------    --------- 
INVESTING ACTIVITIES
  Proceeds from sale of equipment                            1,350           -  
  Purchases of property and equipment                  (    23,463) (    56,333)
  Proceeds from sales and maturities of investments      2,215,083    1,419,654 
  Purchases of investments                             ( 3,392,846) ( 1,672,976)
  Payments on loans for stock purchases                      1,442        7,699 
                                                         ---------    --------- 
      Net cash used by investing activities            ( 1,198,434) (   301,956)
                                                         ---------    --------- 
FINANCING ACTIVITY
  Proceeds from exercise of stock options                   11,391        8,375 
                                                         ---------    --------- 
NET INCREASE (DECREASE) IN
  CASH AND CASH EQUIVALENTS                            (   507,027)     467,730 

CASH AND CASH EQUIVALENTS
  Beginning of year                                        926,163      458,433 
                                                         ---------    --------- 
  End of year                                           $  419,136   $  926,163 
                                                         =========     ======== 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  Cash paid for:
    Income taxes                                        $  104,252    $  94,210 
    Interest                                                 5,881        1,872 




See notes to financial statements.
</TABLE>

                                   - 6 -

                            TECHNOLOGY 80 INC.

                       NOTES TO FINANCIAL STATEMENTS


 1. Nature of Business and Summary of Significant Accounting Policies -

 Nature of Business
 ------------------
 TECHNOLOGY 80 INC. designs, manufactures, and markets motion control
 components and systems for original equipment manufacturer (OEM) machine and
 instrument builders and end users located worldwide.  Products are sold
 through direct sales, manufacturers' representatives and distributors.

 Use of Estimates
 ----------------
 The preparation of financial statements in conformity with generally accepted
 accounting principles requires management to make estimates and assumptions
 that affect the reported amounts and disclosures.  Actual results could differ
 from those estimates.

 Cash Equivalents
 ----------------
 The Company considers all highly liquid investments purchased with a maturity
 of three months or less to be cash equivalents.

 Inventories
 -----------
 Inventories are stated at the lower of cost or market determined on a
 first-in, first-out (FIFO) basis.

 Inventory writedowns are provided, when considered appropriate, based on the
 age and anticipated use of the specific inventories and related market
 forecast.

 Property and Equipment
 ----------------------
 Property and equipment are stated at cost.  Depreciation is computed over the
 estimated useful lives of the related assets.  The straight-line method is
 used for substantially all assets for financial reporting purposes and
 accelerated methods are used for tax purposes.

 Investments
 -----------
 On September 1, 1994, the Company adopted Statement of Financial Accounting
 Standards No. 115, "Accounting for Certain Investments in Debt and Equity
 Securities" (SFAS 115).  There was no cumulative effect as a result of
 adopting SFAS 115.

 SFAS 115 establishes three categories of securities.  The first category,
 held-to-maturity securities, is composed of debt securities which a company
 has the positive intent and ability to hold-to-maturity.  These securities are
 carried at amortized cost.  The second category, available-for-sale
 securities, may be sold to address the liquidity and other needs of a company. 
 Debt and equity securities classified as available-for-sale are carried at
 fair value in the balance sheet with unrealized gains and losses reported, net
 of tax, as a separate component of stockholders' equity.  The third category,
 trading securities, is for debt and equity securities acquired for the purpose
 of selling them in the near term.  The Company has not classified any of its
 securities as trading securities.

 (continued)

                               
                                  - 7 -

                            TECHNOLOGY 80 INC.

                       NOTES TO FINANCIAL STATEMENTS


 1. Nature of Business and Summary of Significant Accounting Policies -
    (continued)

 Earnings Per Share
 ------------------
 Earnings per share is based on the weighted average number of common and
 common equivalent shares outstanding during each year.  Common stock
 equivalents include the dilutive effect of stock options assumed to have been
 exercised.

 Fair Value Disclosure of Financial Instruments
 ----------------------------------------------
 Cash and cash equivalents, receivables, accounts payable, and accrued
 liabilities are carried at amounts which reasonably approximate their fair
 value due to their short-term nature.

 Reclassifications
 -----------------
 Certain reclassifications were made to the 1995 financial statements so as to
 present them on a basis comparable with the current year.  The
 reclassifications had no effect on previously reported net income or retained
 earnings.


 2. Credit Risk -

 The Company maintains its cash in bank deposit accounts which, at times, may
 exceed federally insured limits.  The Company has not experienced any losses
 in such accounts and does not believe it is exposed to any significant credit
 risk on cash.


 3. Inventories -

          Inventories consist of the following:
<TABLE>
<CAPTION>
                                          1996             1995   
                                        --------         -------- 
                 <S>                    <C>              <C>
                 Raw materials          $448,907         $303,990 
                 Work in process         124,609          156,162 
                 Finished goods          383,228          337,642 
                                         -------          ------- 
                                        $956,744         $797,794 
                                         =======          =======
</TABLE>

                                   - 8 -

                            TECHNOLOGY 80 INC.

                       NOTES TO FINANCIAL STATEMENTS



 4. Investments -

  The Company has investments in U.S. corporate equity securities with costs
  aggregating $2,833,633 and $692,109 at August 31, 1996 and 1995,
  respectively.  These investments, accounted for as available-for-sale, had
  gross unrealized gains and (losses) at August 31, 1996 of $95,003 and
  ($255,529), respectively.  At August 31, 1995, these investments had gross
  unrealized gains and (losses) of $140,098 and ($1,007), respectively.  The
  fair market values are $2,673,107 and $831,200 at August 31, 1996 and 1995,
  respectively.  Approximately 41% and 72% of the fair market value is
  represented by investments in three companies at August 31, 1996 and 1995,
  respectively.  Gross realized gains and (losses) from sales of 
  available-for-sale securities are calculated using the specific 
  identification method and totalled $94,021 and ($12,518) for 1996, and 
  $119,030 and ($1,705) for 1995, respectively.

  The Company also has investments with costs aggregating $35,013 and $917,271
  at August 31, 1996 and 1995, respectively, consisting primarily of
  obligations of states and political subdivisions, which are accounted for as
  held-to-maturity securities.  The held-to-maturity securities are due in one
  year or less and cost approximated market value at August 31, 1996 and 1995.


 5. Income Taxes -

  The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
                                         1996                    1995   
                                       --------                -------- 
      Current:
          <S>                          <C>                      <C>
          Federal                      $306,450                 $91,800 
          State                           2,200                   2,320 
                                        -------                 ------- 
                                        308,650                  94,120 
                                        -------                 ------- 
      Deferred:
          Federal                      (  3,000)                213,800 
          State                          16,000                  32,200 
                                        -------                 ------- 
                                         13,000                 246,000 
                                        -------                 ------- 
                                       $321,650                $340,120 
                                        =======                 ======= 
</TABLE>

  The Company utilized approximately $326,000 of state net operating loss
  carryforwards and $4,000 of federal tax credits to reduce its 1996 tax
  liabilities.  The Company utilized approximately $305,000 and $348,000 of
  federal and state net operating loss carryforwards, respectively, and
  $110,000 of federal tax credits to reduce its 1995 tax liabilities.

  (continued)
                                    - 9 -

                            TECHNOLOGY 80 INC.

                       NOTES TO FINANCIAL STATEMENTS



 5. Income Taxes - (continued)

  The significant components of deferred income tax assets and liabilities are
  as follows:

<TABLE>
<CAPTION>
                                       1996                      1995           
                              -----------------------  -------------------------  
                               Total  Federal  State    Total   Federal   State  
                              ------- ------- -------  -------  -------  ------- 
    Deferred income tax assets:
     <S>                     <C>      <C>     <C>     <C>      <C>       <C>
     Net operating loss and 
      credit carryforwards   $ 76,500 $    -  $76,500 $ 92,000  $    -   $92,000 
     Unrealized losses on
      investments              58,000  52,800   5,200       -        -        -  
     Other                     22,000  20,100   1,900   21,000   17,000    4,000 
                              -------  ------  ------  -------   ------   ------ 
                              156,500  72,900  83,600  113,000   17,000   96,000 
                              -------  ------  ------  -------   ------   ------ 
    Deferred income tax liabilities:
     Impact of state net
      operating loss and
      credit carryforwards     26,000  26,000      -    31,000   31,000       -  
     Unrealized gains on 
      investments                  -       -       -    56,000   42,000   14,000 
     Other                     17,500  16,100   1,400   14,000   11,000    3,000 
                              -------  ------  ------  -------   ------   ------ 
                               43,500  42,100   1,400  101,000   84,000   17,000 
                              -------  ------  ------  -------   ------   ------ 
    Net deferred tax asset   $113,000 $30,800 $82,200 $ 12,000 ($67,000) $79,000 
                              =======  ======  ======  =======   ======   ====== 
</TABLE>
  The significant differences between income taxes at the statutory rates and
  the effective tax rates were as follows:
<TABLE>
<CAPTION>
                                                     1996        1995   
                                                  ----------  ----------
       <S>                                        <C>         <C>
       Tax computed at the statutory rate          $336,000    $335,000 
       State income taxes, net of federal benefit    12,000      21,000 
       Tax exempt investment income               (  23,300)  (  21,300)
       Other                                      (   3,050)      5,420 
                                                    -------     ------- 
       Income tax expense                          $321,650    $340,120 
                                                    =======     ======= 

     At August 31, 1996, the Company has a net deferred tax asset of
     $46,000 reflecting the benefit of $109,000 in state loss
     carryforwards, which expire in 2004, and $59,000 of state tax credits. 
     At August 31, 1995, the Company has a net deferred tax asset of
     $60,000 reflecting the benefit of $435,000 in state loss carryforwards
     and $48,000 of state tax credits.
     
</TABLE>
     
                                  - 10 -

                            TECHNOLOGY 80 INC.

                       NOTES TO FINANCIAL STATEMENTS



 6.  Transactions with Related Parties -

     The Company has agreements with two of its directors for various
     consulting arrangements.  At August 31, 1996 and 1995, $53,100 and
     $21,650 is accrued for services rendered under the agreements,
     respectively.  In addition, $19,000 and $15,000 is accrued for
     directors' fees to these individuals at August 31, 1996 and 1995,
     respectively.  Consulting and director fees expense for these
     individuals was $72,100 and $36,650 in 1996 and 1995, respectively.

     During fiscal 1994, the Company provided loans to certain employees
     and directors to purchase the Company's stock.  The stock purchased by
     these individuals is held by the Company as collateral against the
     loan balances.  The loans, which have an outstanding balance of
     $162,263 at August 31, 1996, are classified as a reduction of
     stockholders' equity.  The loans bear interest at 6% and are due on
     demand.  Interest on these loans of approximately $10,000 was earned
     by the Company during both 1996 and 1995.


 7.  Building Lease -

     The Company's office and production facilities lease expires September
     30, 1997.  The lease provides that the Company pay certain operating
     expenses, such as real estate taxes, insurance, and maintenance, in
     addition to the monthly base rent of $3,690.  In the event the Company
     purchases and occupies its own facilities, the lease provides that it
     may be terminated by the Company subject to a $11,070 termination fee.

     The Company's future minimum annual rental commitment, under the above
     lease, is as follows:
<TABLE>
<CAPTION>
                          Year Ending
                            August 31,     Amount 
                          -----------     --------
                              <S>         <C>
                              1997        $44,280 
                              1998          3,690 
                                           ------ 
                                          $47,970 
                                           ====== 
</TABLE>
     Rent expense, including operating expenses, under all operating leases
     for 1996 and 1995 was approximately $67,200 and $67,500, respectively.

                                   - 11 -

                            TECHNOLOGY 80 INC.

                       NOTES TO FINANCIAL STATEMENTS



 8.  Common Stock Options -

     Incentive Stock Option Plan
     ---------------------------
     On December 12, 1984, the stockholders approved an Incentive Stock
     Option Plan pursuant to which selected employees, including officers,
     may be granted incentive stock options.  For employees holding 10% or
     less of the Company's voting stock, stock options are granted with an
     exercise price equal to an amount not less than the fair market value
     at the date of grant.  Options are exercisable for a specific period
     of time, as determined by the Board of Directors, but not greater than
     ten years.  For options granted to an employee holding more than 10%
     of the Company's voting stock, the option price cannot be less than
     110% of the fair market value at the date of grant and the options are
     exercisable up to a five-year period.  The options become exercisable
     in four equal annual installments beginning on the first anniversary
     of the date of grant.  The Company reserved 200,000 shares of common
     stock for issuance pursuant to the Plan.  The Plan expired in fiscal
     1995.  Option transactions under the Plan are summarized as follows:
<TABLE>
<CAPTION>
                                          Number  
                                         of Shares    Option Price
                                         ---------    -------------
     <S>                                 <C>          <C>   
     Outstanding at August 31, 1994       136,500     $0.62 - $1.81
       Expired                           (  1,000)        $1.38
       Cancelled                         (  5,250)    $0.82 - $1.38
       Granted                             56,250     $1.69 - $1.86
       Exercised                         (  8,750)    $0.82 - $1.38
                                          ------- 
     Outstanding at August 31, 1995       177,750     $0.62 - $1.86
       Expired                           (    125)        $1.38
       Cancelled                         ( 12,875)    $0.82 - $1.69
       Exercised                         (  9,500)    $0.82 - $1.69
                                          ------- 
     Outstanding at August 31, 1996       155,250     $0.62 - $1.86
                                          ======= 
</TABLE>
     Options to purchase 95,314 shares were exercisable at August 31, 1996. 
     Outstanding stock options expire over periods ending no later than
     December 1999.

     Directors' Stock Option Plan
     ----------------------------
     On January 13, 1987, the stockholders approved a Directors' Stock
     Option Plan, which grants stock options to members of the Board of
     Directors who are not employees of the Company.  This Plan has an
     effective date of June 10, 1986, and was amended on April 2, 1991. 
     Stock options are granted with an exercise price equal to not less
     than the fair market value at the date of grant and options are
     exercisable over ten years.  However, options granted after April 2,
     1991, expire 90 days after the holder of the option ceases to be a
     director of the Company.  The Company reserved 100,000 shares of
     common stock for issuance pursuant to the Plan.

     Options to purchase 100,000 shares were outstanding and exercisable at
     an aggregate price of $104,485 at August 31, 1996.  Outstanding stock
     options will expire over a period ending no later than December 2004.
     
     
                                  - 12 -

                            TECHNOLOGY 80 INC.

                       NOTES TO FINANCIAL STATEMENTS



 9.  Pension Plan -

     Effective January 1, 1990, the Company adopted a Simplified Employee
     Pension Plan to which it can contribute up to 15% of eligible
     employees' compensation.  The contribution is at the discretion of the
     Company and no contributions were made for 1996 or 1995.


10.  Major Customer -

     One customer accounted for approximately 11% of 1996 revenue.