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, 1997.
[ ]  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 $4,918,935.

The aggregate market value of the voting stock held by non- affiliates as of
November 15, 1997, (based upon the average between the closing bid and asked
price as reported in the local over-the-counter market) was approximately
$2,403,000.  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, 1997: 1,605,045 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 is one principal class of products and
services; Industrial Control Products.  Industrial Control Products have now
been expanded to include several industry standard interfaces, commonly known
in the industry as bus structures (STD, PC, Multibus, SBX, VME, PC/104, and
Industry Pack).

Total assets at August 31, 1997, 1996 and 1995, were $6,009,100, $4,897,556,
and $4,195,375, respectively.  All of Registrant's sales have been to
unaffiliated customers.

Registrant maintains inventory levels 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.  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 its products.

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, and terminal boards.
Accessory products enhance the sales of the main product line by making it
more convenient for the customer to use Registrant's products.
 
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.

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 $1,322,250, $1,288,792, and $525,531 for its
industrial control products at August 31, 1997, 1996 and 1995, respectively.

Employees
---------

Registrant had 24 employees as of November 15, 1997, of which none were
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 or 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
--------------------

One patent has been granted for an Industrial Control Product design.
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.

Research and Development
------------------------

Registrant has spent $703,742 and $630,626 during the fiscal years ended
August 31, 1997 and 1996, respectively, for research and development of
industrial control products.  Research and development costs were 14.3% of
revenue for the fiscal year ended August 31, 1997 and 15.0% of revenue for the
fiscal year ended August 31, 1996.  For the foreseeable future, Registrant
expects research and development costs to remain approximately the same, as a
percentage of revenue, in light of the continuing 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 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.   Registrant has signed agreements with several
international distributors to implement and handle sales and marketing of
Registrant's products in foreign markets.

No one customer accounted for 10% or more of Registrant's revenue for fiscal
year 1997. One customer accounted for 11% of Registrant's revenue for fiscal
year 1996.  International sales accounted for 6.0% and 5.1% of revenue for
the years ended 1997 and 1996, 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, 2000.  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 1997 and 1996
is set forth in the table below.

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

       1997                     Low            High
       ----                     ---            ----
       <S>                      <C>            <C>
       First Quarter            2 3/8          2 1/2
       Second Quarter           2 3/8          2 9/16
       Third Quarter            2 3/8          2 7/8
       Fourth Quarter           2 7/8          3 1/4

       1996                     Low            High
       ----                     ---            ----

       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
</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, 1997, there were 158 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 16.9% during the fiscal year ended August 31, 1997, over the
previous fiscal year.  Revenue increased 14.7% during fiscal year 1996, over
the 1995 fiscal year.  The increased revenue in fiscal years 1997 and 1996
resulted from an increased interest in the Registrant's products which has
expanded the customer base during these fiscal years.

Gross profit was 65.4% for fiscal year 1997 compared to 64.8% for the fiscal
year 1996.  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 1997 and 1996 was $1,322,250 and
$1,288,792, respectively.  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.  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 14.3%, and 16.3% in fiscal
1997, and 1996, 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 20.3% and 15.1% of revenue for fiscal
year 1997 and 1996, respectively.  Although management has continued its cost
cutting measures, increased expenditures for compensation have been necessary
to retain quality employees.

Research and development costs, as a percentage of revenue, decreased to 14.3%
in fiscal 1997, compared with 15.0% in 1996  Registrant will continue new
product development.

Income from operations was $811,182 and $776,343 for fiscal years 1997 and
1996, respectively.  The increase in income for 1997 over 1996 was the result
of increased revenues and cost cutting measures offset by increased general
and administrative and research and development expenditures.

Other income for 1997 increased $73,483 or 34.9% from 1996 primarily due to
increases in both realized gains on the sale of investments and investment
income.

Net income for 1997 and 1996, respectively, was $733,327 and $665,355.

Liquidity and Capital Resources
-------------------------------

Registrant's balance sheet shows a strong capital position.  Operations
provided $358,868 in cash.  Cash and cash equivalents decreased $134,875 from
the previous year.  The Registrant used $52,358 to purchase equipment and
$466,207 to purchase investments (net of sales and maturities) during the
fiscal year ended August 31, 1997. Registrant received $24,555 from employees
exercising stock options.  Inventories increased $220,708 from the previous
year primarily due to increased sales and the anticipated release of new
products during fiscal year 1998.  Accounts receivable are up $294,687 from
the previous year, primarily due to a few large shipments to a new customer
during the last quarter of the year.  Registrant expects that there will be
sufficient capital to fund its operations during fiscal year 1998.

At August 31, 1997, Registrant had investments with a cost and fair market
value of $3,765,049 and $3,348,616 respectively, consisting primarily of
investments in equity securities.  This compares to a cost and fair market
value of $2,868,646 and $2,708,120 respectively, at August 31, 1996.
Approximately 45% and 41% of the fair market value is represented by
investments in three companies at August 31, 1997 and 1996, respectively.

Registrant has no long term borrowings and does not anticipate, at this time,
that it will be necessary to seek any long term 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, 1997, is as follows:

 Name               Age    Position with Company        Position Held Since
 ----               ---    ---------------------        -------------------

 Thomas L. Gould     55    Director, Secretary                4/90

 Duane A. Markus     55    President, Chief Executive
                           Officer, Chief Financial 
                           Officer, Director                  4/90

Jack W. Pagel        55    Director                           4/90

James A. Burkett     43    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. McClees, 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 
               
                                                         
                                       Other    Rest-  Securities/          All
Name                                  Annual   ricted    Under-    LTIP    Other
and                                   Compen-   Stock    lying     Pay-    Compen-
Principal                              sation  Award(s) Options/   outs    sation
Position                                ($)    SARs(#)    ($)        ($)     ($)
---------                             -------  -------  -------     ----   -------
                    Salary    Bonus
             Year    ($)       ($)
             ----   ------    -----
<S>          <S>    <C>      <C>         <C>       <C>    <C>          <C>      <C>
Duane        1997   157,300  322,962      -        -        -          -        -
Markus       1996   143,750   82,635      -        -        -          -        -
CEO          1995   115,000   54,175      -        -      9,000        -        -

James        1997   184,767      -        -        -        -          -        -
Burkett      1996   164,481      -        -        -        -          -        -
COO          1995   149,301      -        -        -      9,000        -        -

</TABLE>

Aggregated Option/SAR Exercised in Last Fiscal Year and FY-End
--------------------------------------------------------------

<TABLE>

Option/SAR Values
-----------------

The following table summarizes options and SARs exercised during 1997 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 ($)
                      Shares
                     Acquired
                        on     Value
                     Exercise  Realized    Exercisable/     Exercisable/
         Name         (#)      ($)        Unexercisable    Unexercisable
-------------        --------  --------   -------------    -------------
<S>                   <C>       <C>       <C>              <C>       
Duane Markus,         29,000    $83,555   18,000/  0       $ 63,000/  $0
CEO

James Burkett,           -          -     30,000/8,000     $105,000/$28,000
COO

</TABLE>

Compensation of Directors
-------------------------

Each director who is not an employee of Registrant during the fiscal year
ended August 31, 1997 received $19,500 as compensation for serving in that
capacity (see also Item 12).

Directors did not receive options during fiscal year 1997, 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, 1997, 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)           5.80
 Jack W. Pagel,
   Director                         345,947 (4)          19.80
 Duane A. Markus,
   Director, CEO                    547,835 (3)(5)       31.36
 James A. Burkett,
   Chief Operating Officer           71,037 (6)(7)        4.07

 All Officers, Directors 
   and Nominees as a Group
   (four people)                  1,066,063 (8)          61.03

</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 18,000 shares which may be acquired pursuant to options
       currently exercisable or exercisable within 60 days of the date hereof.

  (6)  Includes 35,750 shares which may be acquired pursuant to options
       currently exercisable or exercisable within 60 days of the date hereof.

  (7)  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.

  (8)  Includes 141,750 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, 1997, including the independent auditor's report, are filed as a
part of this report:

    Independent Auditor's Report.

    Balance Sheets - At August 31, 1997 and 1996.

    Statements of Income - Years ended August 31, 1997 and 1996.

    Statements of Stockholders' Equity - Years ended August 31, 1997 and 1996.

    Statements of Cash Flows - Years ended August 31, 1997 and 1996.

    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.

     1996 Form 10-KSB:  Annual Report on Form 10-KSB, File No. 0- 13870, for
     Registrant's fiscal year ended August 31, 1996.

     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, 1997:

              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 26, 1997                /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 26, 1997                /s/ Duane A. Markus
      -------------------------    -----------------------------------
              (Date)                Duane A. Markus, President, CEO,
                                         CFO, Director (Principal
                                            Executive Officer,
                                       Principal Financial Officer)



          November 26, 1997                /s/ Thomas L. Gould
      -------------------------    -----------------------------------
              (Date)                   Thomas L. Gould, Secretary
                                               and Director


          November 26, 1997                 /s/ Jack W. Pagel
      -------------------------    -----------------------------------
              (Date)                      Jack W. Pagel, Director


          November 26, 1997                /s/ Ricky L. Carlson
      -------------------------    -----------------------------------
              (Date)                 Ricky L. Carlson, Vice President,
                                            Finance (Principal
                                            Accounting Officer)



                           TECHNOLOGY 80 INC.

                          FINANCIAL STATEMENTS

                        August 31, 1997 and 1996


                           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, 1997 and 1996, 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, 1997 and 1996, and the results
of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.




LURIE, BESIKOF, LAPIDUS & CO., LLP
Minneapolis, Minnesota


October 15, 1997

                                 - 2 -
<TABLE>
                           TECHNOLOGY 80 INC.

                             BALANCE SHEETS
                        August 31, 1997 and 1996

<CAPTION>

                                    ASSETS            1997          1996
                                                   ----------    ----------
<S>                                                <C>           <C>
CURRENT ASSETS                                     
  Cash and cash equivalents                        $  284,261    $  419,136 
  Short-term investments                               64,402       127,163 
  Accounts receivable (less allowance for doubtful
    accounts:  1997 - $12,000 and 1996 - $9,000)      882,224       587,537 
  Inventories                                       1,177,452       956,744 
  Deferred income taxes                                44,000        38,600 
  Other current assets                                 24,383        29,069
                                                   ----------    ----------
    TOTAL CURRENT ASSETS                            2,476,722     2,158,249 
                                                   ----------    ----------
PROPERTY AND EQUIPMENT
  Furniture and equipment                             473,934       424,670 
  Leasehold improvements                               23,060        23,060
                                                   ----------    ----------
                                                      496,994       447,730 
  Less accumulated depreciation                       395,830       363,780
                                                   ----------    ----------
                                                      101,164        83,950 
                                                   ----------    ----------
OTHER ASSETS
  Investments                                       3,284,214     2,580,957 
  Deferred income taxes                               147,000        74,400
                                                   ----------    ----------
                                                    3,431,214     2,655,357
                                                   ----------    ----------
                                                   $6,009,100    $4,897,556 
                                                   ==========    ==========
</TABLE>
<TABLE>
<CAPTION>

          LIABILITIES AND STOCKHOLDERS' EQUITY
<S>                                                <C>           <C>
CURRENT LIABILITIES
  Accounts payable                                 $   95,117    $   49,413 
  Accrued payroll and payroll taxes                   464,659       217,214 
  Payable to investment company                       285,392          -    
  Accrued income taxes                                 36,990       206,137 
  Accrued liabilities - other                         182,054        74,379
                                                   ----------    ----------
    TOTAL CURRENT LIABILITIES                       1,064,212       547,143 
                                                   ----------    ----------
STOCKHOLDERS' EQUITY                                4,944,888     4,350,413
                                                   ----------    ----------
                                                   $6,009,100    $4,897,556 
                                                   ==========    ==========

See notes to financial statements.
</TABLE>
 
                                 - 3 -
<TABLE>
                           TECHNOLOGY 80 INC.

                          STATEMENTS OF INCOME
                  Years Ended August 31, 1997 and 1996
<CAPTION>

                                                      1997          1996
                                                   ----------    ----------
<S>                                                <C>           <C>
REVENUE                                            $4,918,935    $4,206,691 

COST OF GOODS SOLD                                  1,702,373     1,478,799 
                                                   ----------    ----------
GROSS PROFIT                                        3,216,562     2,727,892 
                                                   ----------    ----------
OPERATING EXPENSES
  General and administrative                          998,562       637,097 
  Research and development                            703,742       630,626 
  Selling                                             703,076       683,826
                                                   ----------    ----------
                                                    2,405,380     1,951,549 
                                                   ----------    ----------
INCOME FROM OPERATIONS                                811,182       776,343 
                                                   ----------    ----------
OTHER INCOME (EXPENSE)
  Gain on sales of investments                        144,804        81,503 
  Investment income                                   141,830       127,448 
  Miscellaneous                                   (     2,489)        1,711
                                                   ----------    ----------
                                                      284,145       210,662 
                                                   ----------    ----------
INCOME BEFORE INCOME TAXES                          1,095,327       987,005 

PROVISION FOR INCOME TAXES                            362,000       321,650 
                                                   ----------    ----------
NET INCOME                                         $  733,327    $  665,355 
                                                   ==========    ==========
EARNINGS PER SHARE                                 $     0.43    $     0.39 
                                                   ==========    ==========
WEIGHTED AVERAGE COMMON AND COMMON
  EQUIVALENT SHARES OUTSTANDING                     1,723,540     1,726,008 
                                                   ==========    ==========

See notes to financial statements.
</TABLE>
 
                                    - 4 -
<TABLE>
                             TECHNOLOGY 80 INC.

                     STATEMENTS OF STOCKHOLDERS' EQUITY
                    Years Ended August 31, 1997 and 1996

<CAPTION>
                                     Common Stock
                                     ------------     Additional     Loans        Unrealized   
                                   Shares *            Paid-in     for Stock    Gains/(Losses)  Retained   
                                   Issued    Amount    Capital     Purchases    on Investments  Earnings       Total     
                                 ----------  -------  ----------   ---------    -------------- ----------   ----------
<S>                               <C>        <C>      <C>         <C>              <C>         <C>          <C>
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 stock options            9,500       95      11,296         -              -             -         11,391 

 Unrealized loss on investments,
   net of tax benefit 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 

 Net income                             -        -           -           -              -         733,327      733,327 
                                                                                              
 Exercise of stock options           33,875      339      24,216         -              -             -         24,555 

 Unrealized loss on investments,
   net of tax benefit of $92,500        -        -           -           -        ( 163,407)          -    (   163,407)
                                 ----------  -------  ----------   ---------       --------    ----------   ----------
BALANCE - AUGUST 31, 1997         1,605,045  $16,051  $3,408,160  ($ 162,263)     ($265,933)   $1,948,873   $4,944,888 
                                 ==========  =======  ==========   =========       ========    ==========   ==========

*  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, 1997 and 1996


<CAPTION>
                                                        1997          1996
                                                     ----------    ----------
<S>                                                  <C>           <C>
OPERATING ACTIVITIES
  Net income                                         $  733,327    $  665,355 
  Adjustments to reconcile net income to net
   cash provided by operating activities:
    Depreciation                                         34,877        28,350 
    Deferred income taxes                                14,500        13,000 
    Gain on sales of investments                    (   144,804)  (    81,503)
    Changes in operating assets and liabilities:
      Accounts receivable                           (   294,687)  (    80,722)
      Inventories                                   (   220,708)  (   158,950)
      Other current assets                                4,686        12,876 
      Accounts payable                                   45,704   (     1,587)
      Accrued liabilities                               355,120        77,060 
      Accrued income taxes                          (   169,147)      206,137
                                                     ----------    ----------
        Net cash provided by operating activities       358,868       680,016 
                                                     ----------    ----------
INVESTING ACTIVITIES
  Proceeds from sale of equipment                           267         1,350 
  Purchases of property and equipment               (    52,358)  (    23,463)
  Proceeds from sales and maturities of investments   1,835,230     2,215,083 
  Purchases of investments                          ( 2,301,437)  ( 3,392,846)
  Payments on loans for stock purchases                     -           1,442
                                                     ----------    ----------
        Net cash used by investing activities       (   518,298)  ( 1,198,434)
                                                     ----------    ----------
FINANCING ACTIVITY
  Proceeds from exercise of stock options                24,555        11,391 
                                                     ----------    ----------
NET DECREASE IN CASH AND CASH EQUIVALENTS           (   134,875)  (   507,027)

CASH AND CASH EQUIVALENTS
  Beginning of year                                     419,136       926,163
                                                     ----------    ----------
  End of year                                        $  284,261    $  419,136 
                                                     ==========    ==========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
  Cash paid for:
    Income taxes                                     $  516,641    $  104,252 
    Interest                                              5,101         5,881 


SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES
  Investments purchased and payable to
  investment company                                 $  285,392   $       -    

See notes to financial statements.
</TABLE>
 
                                - 6 -

                          TECHNOLOGY 80 INC.

                    NOTES TO FINANCIAL STATEMENTS



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

    Description 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 may affect the reported amounts
    and disclosures in the financial statements and accompanying notes. 
    Actual results could differ from those estimates.

    Cash Equivalents
    ----------------
    All highly liquid investments purchased with a maturity of three
    months or less are considered to be cash equivalents.

    Short-Term Investments
    ----------------------
    Investments which mature within one year from the balance sheet
    date and investments sold prior to the issuance of the financial
    statements are classified as short-term.

    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.

    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 the
    incremental shares issuable upon the exercise of stock options.


    (continued)

 
                                - 7 -

                          TECHNOLOGY 80 INC.

                    NOTES TO FINANCIAL STATEMENTS



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

    Earnings Per Share (continued)
    ------------------
    In February 1997, the Financial Accounting Standards Board issued
    Statement of Financial Accounting Standards No. 128, "Earnings per
    Share" ("SFAS No. 128").  SFAS No. 128 differs from current
    accounting guidance in that earnings per share is classified as
    basic earnings per share and diluted earnings per share, compared
    with primary earnings per share and fully diluted earnings per
    share under current standards.  Basic earnings per share differs
    from primary earnings per share in that it includes only the
    weighted average common shares outstanding and does not include any
    dilutive securities in the calculation.  Diluted earnings per share
    under SFAS 128 differs in certain calculations from fully diluted
    earnings per share under the existing standards.  Adoption of SFAS
    No. 128 is required for interim and annual periods ending after
    December 15, 1997.  Had the Company applied SFAS No. 128 as of
    August 31 1997 and 1996, basic and diluted earnings per share would
    have been as follows:
<TABLE>
<CAPTION>
                                          1997       1996
                                         -----      -----
             <S>                         <C>        <C>
             Basic                       $0.47      $0.43 

             Diluted                     $0.43      $0.39 
</TABLE>
    Comprehensive Income
    --------------------
    In June 1997, the Financing Accounting Standards Board issued
    Statement of Financial Accounting Standards No. 130, "Reporting
    Comprehensive Income", which establishes financial accounting and
    reporting standards for comprehensive income and its components
    (revenues, expenses, gains and losses).  The Standard is effective
    for fiscal years beginning after December 15, 1997.


 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>
                                            1997        1996
                                        ----------   ---------
             <S>                        <C>          <C>
             Raw materials              $  586,884   $ 448,907 
             Work in process               237,845     124,609 
             Finished goods                352,723     383,228
                                        ----------   ---------
                                        $1,177,452   $ 956,744 
                                        ==========   =========
</TABLE>
 
                                - 8 -

                          TECHNOLOGY 80 INC.

                    NOTES TO FINANCIAL STATEMENTS



 4. Investments -
<TABLE>
    A summary of the cost, unrealized gains and losses, and fair value
    of investment are as follows:
<CAPTION>
                                          Gross Unrealized     Estimated
                                         ------------------
                               Cost       Gains     Losses    Fair Value 
                            ----------   -------   --------   ----------
    <S>                     <C>          <C>      <C>         <C>
    August 31, 1997:
      Available-for-sale -
        equity securities   $3,760,049   $91,822  ($508,255)  $3,343,616 

      Held-to-maturity -
        municipal bonds          5,000       -          -          5,000
                            ----------   -------   --------   ----------
                            $3,765,049   $91,822  ($508,255)  $3,348,616 
                            ==========   =======   ========   ==========
    August 31, 1996:
      Available-for-sale -
        equity securities   $2,833,633   $95,003  ($255,529)  $2,673,107 

      Held-to-maturity -
        municipal bonds         35,013       -          -         35,013
                            ----------   -------   --------   ----------
                            $2,868,646   $95,003  ($255,529)  $2,708,120
                            ==========   =======   ========   ==========
</TABLE>
    Approximately 45% and 41% of the fair market value is represented
    by investments in three companies at August 31, 1997 and 1996,
    respectively.  Gross realized gains and (losses), using the
    specific identification method, totalled $166,757 and ($21,953) for
    1997 and $94,021 and ($12,518) for 1996, respectively.  The held-
    to-maturity securities are due in one year or less.


 5. Income Taxes -
<TABLE>
    The provision for income taxes consists of the following:
<CAPTION>
                                                     1997       1996    
        Current:                                   --------   --------
          <S>                                      <C>        <C>
          Federal                                  $347,200   $306,450 
          State                                         300      2,200
                                                   --------   --------
                                                    347,500    308,650
                                                   ========   ========
        Deferred: 
          Federal                                 (   9,700) (   3,000)
          State                                      24,200     16,000
                                                   --------   --------
                                                     14,500     13,000
                                                   --------   --------
                                                   $362,000   $321,650 
                                                   ========   ========
    (continued)
</TABLE>
 
                                - 9 -

                          TECHNOLOGY 80 INC.

                    NOTES TO FINANCIAL STATEMENTS



 5. Income Taxes - (continued)

    The Company utilized approximately $109,000 in state net operating
    loss carryforwards and $13,500 of state tax credits to reduce their
    1997 state tax liability.  The Company utilized approximately
    $326,000 of state net operating loss carryforwards and $4,000 of
    federal tax credits to reduce their 1996 federal and state tax
    liabilities.

    The significant components of deferred income tax assets and
    liabilities are as follows:
<TABLE>
<CAPTION>
                                               1997                         1996
                                    ---------------------------  --------------------------
                                      Total   Federal    State     Total   Federal   State
                                    --------  --------  -------  --------  -------  -------
    <S>                             <C>       <C>       <C>      <C>       <C>      <C>
    Deferred income tax assets:       
      Net operating loss and 
        credit carryforwards        $ 52,300  $    -    $52,300  $ 76,500  $   -    $76,500 
      Unrealized losses on
        investments                  150,500   137,000   13,500    58,000   52,800    5,200 
      Other                           26,000    23,800    2,200    22,000   20,100    1,900
                                    --------  --------  -------  --------  -------  -------
                                     228,800   160,800   68,000   156,500   72,900   83,600 
                                    --------  --------  -------  --------  -------  -------
    Deferred income tax liabilities:
      Impact of state net
        operating loss and
        credit carryforwards          17,800    17,800      -      26,000   26,000      -    
      Other                           20,000    18,300    1,700    17,500   16,100    1,400
                                    --------  --------  -------  --------  -------  -------
                                      37,800    36,100    1,700    43,500   42,100    1,400
                                    --------  --------  -------  --------  -------  -------
    Net deferred tax asset          $191,000  $124,700  $66,300  $113,000  $30,800  $82,200
                                    ========  ========  =======  ========  =======  =======
</TABLE>
    The significant differences between income taxes at the statutory rate and
    the effective tax rates were as follows:
<TABLE>
<CAPTION>
                                                         1997               1996
                                                       --------           --------
      <S>                                              <C>                <C>
      Tax computed at the statutory rate               $372,500           $336,000 
      State income taxes, net of federal benefit         16,200             12,000 
      Tax exempt investment income                    (  27,800)         (  23,300)
      Other                                               1,100          (   3,050)
                                                       --------           --------
      Income tax expense                               $362,000           $321,650 
                                                       ========           ========
</TABLE>
    At August 31, 1997, the Company has a net deferred tax asset of
    $34,500 reflecting the benefit of $52,300 of state tax credits.  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 and $65,800 of state tax credits. 
 
                                - 10 -

                          TECHNOLOGY 80 INC.

                    NOTES TO FINANCIAL STATEMENTS



 6. Transactions with Related Parties -

    The Company has consulting agreements with two directors and
    accrued $141,800 and $53,100 for services rendered under the
    agreements, at August 31, 1997 and 1996, respectively.  In
    addition, $39,000 and $19,000 is accrued for directors' fees to
    these individuals at August 31, 1997 and 1996, respectively. 
    Consulting and director fees expense for these individuals totaled
    $180,800 and $72,100 in 1997 and 1996, 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 a balance of $162,263 at
    August 31, 1997, 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 1997 and 1996.


 7. Building Lease -

    The Company's office and production facilities lease expired
    September 30, 1997.  Effective September 11, 1997, the Company
    negotiated an amendment to extend this lease to September 30, 2000. 
    The lease provides that the Company pay certain operating expenses,
    including real estate taxes, insurance, and maintenance, in
    addition to the monthly base rent of $4,165.

    The future minimum annual rental commitment under the above lease
    is as follows:
<TABLE>
<CAPTION>
                              Year Ending
                              August 31,      Amount
                              -----------    --------
                                <C>          <C>
                                1998         $ 49,505 
                                1999           49,980 
                                2000           49,980 
                                2001            4,165
                                             --------
                                             $153,630 
                                             ========
</TABLE>
    Rent expense for 1997 and 1996, including operating expenses, was
    approximately $68,700 and $67,200, respectively.

 
                                - 11 -

                          TECHNOLOGY 80 INC.

                    NOTES TO FINANCIAL STATEMENTS



 8. Common Stock Options -

    Incentive Stock Option Plan

    The Company has an Incentive Stock Option Plan which expired in
    fiscal 1995.  Options issued under the Plan are exercisable for a
    specific period of time, as determined by the Board of Directors,
    but not greater than ten years.  The options granted 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. 
    Option transactions under the Plan are summarized as follows:
<TABLE>
<CAPTION>
                                             Number       Weighted-Average
                                           of Shares       Exercise Price
                                           ---------      ----------------
      <S>                                   <C>                 <C>
      Outstanding at August 31, 1995        177,750             $1.25

        Expired                            (    125)            $1.38
        Cancelled                          ( 12,875)            $1.37
        Exercised                          (  9,500)            $1.20
                                            -------
      Outstanding at August 31, 1996        155,250             $1.25

        Expired                            (    375)            $1.69
        Cancelled                          (  8,250)            $1.49
        Exercised                          ( 33,875)            $0.72
                                            -------
      Outstanding at August 31, 1997        112,750             $1.38
                                            =======
</TABLE>
    The following table summarizes stock options outstanding and
    exercisable at August 31, 1997:
<TABLE>
<CAPTION>
                                     Outstanding                  Exercisable
                             ------------------------------     ----------------
                                        Weighted   Weighted            Weighted  
                                         Average    Average             Average  
                                        Remaining  Exercise             Exercise  
       Exercise Price Range  Shares       Life      Price       Shares   Price
       --------------------  -------    ---------  --------     ------ ---------
          <C>                 <C>        <C>        <C>         <C>      <C>
              $0.81           28,500     4 months   $0.81       28,500   $0.81
          $1.38 - $1.44       37,125    15 months   $1.38       30,125   $1.38
          $1.69 - $1.86       47,125    27 months   $1.73       29,875   $1.75
                             -------    ---------  --------     ------ ---------
          $0.81 - $1.86      112,750    17 months   $1.38       88,500   $1.32
                             =======                            ======
</TABLE>
    (continued)
 
                                - 12 -

                          TECHNOLOGY 80 INC.

                    NOTES TO FINANCIAL STATEMENTS



 8. Common Stock Options - (continued)

    Directors' Stock Option Plan

    The Company had a Directors' Stock Option Plan which granted stock
    options to members of the Board of Directors who were not employees
    of the Company.  Stock options were granted at an exercise price
    equal to not less than the fair market value at the date of grant
    and are exercisable over ten years.

    Options to purchase 96,000 shares were outstanding and exercisable
    at $0.56 - $1.69 per share (average exercise price of $0.97) at
    August 31, 1997.  Outstanding stock options expire over a period
    ending no later than December 2004 and have a weighted average
    remaining exercise life of approximately 4 years.  During 1997,
    options to purchase 4,000 shares at an average exercise price of
    $2.88 expired.


 9. Pension Plan -

    The Company has a Simplified Employee Pension Plan to which it can
    contribute up to 15% of eligible employees' compensation. 
    Contributions are made at the discretion of the Company; no
    contributions were made for 1997 or 1996.


10. Major Customer -

    No one customer had revenues in excess of 10% in 1997.  One
    customer accounted for approximately 11% of 1996 revenue.