<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  FORM 10-KSB


   X     Annual report pursuant to Section 13 or 15(d) of the Securities
  ---    Exchange Act of 1934

                    For the fiscal year ended June 30, 1996

                                       Or

         Transition report pursuant to section 13 or 15 (d) of the Securities
  ---    Exchange Act of 1934


                       Commission file number:  0 - 19167

                                  TOPRO, INC.                              
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)


                Colorado                                     84-1042227         
-----------------------------------------           ----------------------------
 (State or other jurisdiction of                    I.R.S. Employer I. D. Number
  incorporation or organization)                  
                                                  
2525 West Evans Avenue, Denver, Colorado                       80219
-----------------------------------------                      -----
(Address of principal executive offices)                     (zip code)


 Registrant's telephone number, including area code:    (303) 935-1221

Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
                                                            $.0001 Par Value
                                                            Common Stock 
                                                            Redeemable Purchase
                                                            Warrants

         Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes   X      No 
                                                ---          ---

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein and will not be included
herein, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of the Form 10-KSB
or any amendment to this Form 10-KSB:  X .
                                      ---

         State issuer's revenues for its most recent fiscal year: $ 20,633,000

         Shares of common stock, $.0001 par value, outstanding as of October
10, 1996: 6,639,403 shares.  Aggregate market value of voting stock held by
non-affiliates of the registrant on October 10,1996 $ 11,203,070

         Documents incorporated by reference: None.

         Transitional Small Business Disclosure Format (check one): 
Yes      No  X
    ---     ---
<PAGE>   2
                                  TOPRO, INC.
                                  FORM 10-KSB
                               TABLE OF CONTENTS


<TABLE>
<CAPTION>
Part I                                                                              Page
------                                                                              ----
<S>             <C>                                                                 <C>
      Item 1    Description of Business                                             3

      Item 2    Description of Property                                             7

      Item 3    Legal Proceedings                                                   7

      Item 4    Submission of Matters to a Vote of Security Holders                 7


Part II
-------

      Item 5    Market for Common Equity and Related Stockholder Matters            8

      Item 6    Management's Discussion and Analysis or Plan of Operation           8

      Item 7    Financial Statements                                                14

      Item 8    Changes in and Disagreements with Accountants on Accounting         15
                and Financial Disclosure

Part III
--------

      Item 9    Directors and Executive Officers; Compliance with Section 16(a)
                of the Exchange Act                                                 15

      Item 10   Executive Compensation                                              16

      Item 11   Security Ownership of Certain Beneficial Owners and Management      19

      Item 12   Certain Relationships and Related Transactions                      19

Part IV
-------

      Item 13   Exhibits and Reports on Form 8-K                                    21
</TABLE>





<PAGE>   3
                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

Development of Business - Fiscal 1994 through Fiscal 1996

       Topro, Inc. (the "Company"), a leading control systems integrator,
provides software applications, system design and configuration in the
manufacturing process control industry.  Process control systems are
sophisticated computer controlled packages of measurement instruments and other
devices that provide automatic control of manufacturing processes while
acquiring, converting and storing process data for use by operators and
management information systems.  Manufacturing and process industries utilize
the Company's products and services to realize greater efficiencies in
operation.

        From inception through fiscal 1994, the Company operated primarily
through Tech Sales, Inc. ("TI") and its subsidiary Topro Systems Integration,
Inc. ("TSI").  TI was organized in Colorado in 1974.  In October 1991 TI was
acquired by the Company, a Colorado corporation which had no prior operations.
Through TI the Company acted as a manufacturer's representative and distributed
components and devices used in process-control applications.  Through TSI, the
Company engaged in designing, developing, assembling, marketing, and servicing
integrated process control systems (control systems integration).  TSI's
services historically were marketed primarily to governmental and municipal
customers for water and waste-water treatment plants and, to a lesser extent,
to industrial customers in the chemical, petroleum, mining, electric power, and
food processing industries.

       During fiscal 1995 the board appointed a new CEO, John Jenkins, as part
of a plan to address and improve the Company's performance.  In March 1995, Mr.
Jenkins proposed and the Board approved a new strategic plan based on re-
focusing the Company on its core business of control systems integration.

       During  fiscal 1995 and 1996, the Company's operations were
re-structured to focus solely on the business of control systems integration.
During this period, the Company discontinued certain non-core activities and
acquired other control system integration companies.  Through these strategic
acquisitions, the Company quickly has expanded its system integration business
into new regions and gained access to additional markets in which these
acquired companies had an established  presence and customer base.

       In parallel, as a critical aspect of this new strategy, in fiscal 1995
the Company discontinued certain activities, specifically those conducted
through TI and through Sharp Electric Construction Company ("SEC").  The
Company had acquired SEC, a full service electrical contracting firm, in August
1993, but was markedly unsuccessful in its attempt to successfully integrate
and manage that business.  The Company had expected the acquisition of SEC to
improve the Company's ability to secure process control projects with
electrical construction requirements, and to expand its ability to handle field
installations.  However, the synergy expected in the acquisition did not
materialize.  In spite of various management changes and attempts to
strategically reposition the business, SEC continued to produce severe losses.
Accordingly, in May 1995 the Company sold certain assets of  SEC to Piper
Electric Company ("PEC") and contracted with PEC to provide labor  and
management services for the completion of the existing SEC backlog on a cost
plus fee basis.  The Company retained financial responsibility for uncompleted
contracts from the discontinued operations with a backlog of $3,425,000 on May
1, 1995.  The two largest contracts with an expected completion date August
1996 comprised  $2,596,000 of this backlog on May 1, 1995.  All projects save
one were completed prior to July 1996 and the one remaining is expected to be
completed October 18, 1996.  The SEC operating losses from date of acquisition
and forecasted additional costs of discontinuing the business are reflected in
the Company's financial statements.  A charge from discontinued operations of
$2,390,000 was taken in fiscal year 1995.  The actual costs of completing
contracts during 1996 greatly exceeded costs forecasted at the close of fiscal
1995, resulting in a loss on disposal of $1,871,000 for fiscal 1996.





                                       3
<PAGE>   4
        During fiscal 1995, management determined that the operations of the
Utah regional office of  TI, the Company's distribution and manufacturer's
representation subsidiary, were of little strategic value and historic profit
contribution was negative.  As part of management's new strategic plan, in
fiscal 1995 the Company sold the assets and business of TI's Utah regional
office to local management.  Following this disposition, management
reconsidered the value of  the remaining TI operations in light of the
Company's renewed focus on control systems integration.  As a result, TI and
its operations were formally discontinued on January 30, 1996.  The costs of
terminating the TI operations are fully absorbed in the Company's fiscal year
ended June 30, 1996.

       In fiscal 1993, the Company began to purchase shares of Direct
Measurement Corporation ("DMC"), a privately held corporation organized to
develop, promote and market products utilizing a unique gas flow measuring
method, for which the Company was granted certain distribution rights.  In
fiscal 1995 the Company acquired additional shares and sold a portion of its
holding.  In November 1995, the Company sold its remaining 3,255 share interest
in DMC (see "Certain Relationships and Related Transactions") and in December
1995 abandoned efforts to distribute and promote DMC products.  This decision
was due in part to the Company's shift away from distribution to control
systems integration and due in part to management's re-assessment of the
risk-reward potential of this arrangement to the Company.  The Company had
incurred significant expense in product introduction in fiscal 1995, and sales
for fiscal year 1995 were only $41,000.

       Commencing in fiscal 1995, the Company has expanded its core business of
control system integration through select acquisition of system integrators in
new geographical and application markets.  The acquisition strategy is founded
on identifying quality, regional or specific market niche control systems
integrators and then using their established infra-structures to bring the
Company's products and services to new markets.  Acquisition of systems
integrators in other regions provides opportunities for the Company to expand
more rapidly and efficiently than it could through  development of new regional
markets from infancy.  In addition, the acquired integrators bring significant
new vertical market expertise and technologies to the Company that can be
applied in the Company's established geographical markets.  The Company
believes this broad geographical coverage and position in multiple vertical
markets is a competitive advantage.

       A first step in executing this strategy was the July 1995 acquisition of
Management, Design and Consulting Services, Inc (MDCS), an Atlanta based system
integrator, in exchange for  200,000 shares of the Company's Common Stock.
With the additional personnel and other resources of the Company, MDCS is able
to accept larger projects which it previously turned down.  MDCS sales grew by
45% in the first year after acquisition.

       During fiscal 1995, the Company opened two satellite sales and
engineering offices in certain regions in an attempt to access and support
specific customers and markets. During fiscal 1996, management determined that
these efforts were not effective in establishing and supporting a market
presence, and returned its focus to expansion through acquisitions.

       In February 1996, the Company acquired Advanced Control Technology, Inc.
("ACT"), a leading independent control system integrator headquartered in
Albany, Oregon, in exchange for 1,657,000 "restricted" shares of common stock.
Concurrently with the acquisition of ACT, the Company received $1.5 million in
debt financing through sale of a 9% Convertible Debenture to Renaissance
Capital Growth & Income Fund III, Inc. ("Renaissance Capital").  Proceeds of
that debt financing, as well as proceeds from sale of an additional $1.0
million Convertible Debenture in March 1996 have been used to finance expansion
of the Company's operations following the acquisition of ACT.  See
"Management's Discussion and Analysis."





                                       4
<PAGE>   5
       ACT is a leading control system integrator  with acknowledged leadership
in certain vertical markets including wood products, aerospace, grain handling,
and computer aided dispatch.  ACT annual revenues averaged approximately
$11,000,000 in the three years prior to acquisition.

       On May 30, 1996, the Company acquired Vision Engineering Corporation
("VEC"), a leading control systems integrator based in Cypress, California with
sales and engineering offices in Sacramento, Los Angeles, Phoenix and Chicago
and sales offices in Boston and Puerto Rico, in exchange for  200,000
"restricted" shares of common stock and 900,000 common stock options
exercisable at prices of $2.25 and above per share.  The consideration for VEC
will be increased by 100,000 bonus shares in the event VEC meets certain profit
goals during the first two quarters of fiscal 1997.  The Company sold an
additional $1,000,000 Convertible Debenture to Renaissance Capital in June 1996
to provide additional working capital.

       VEC enjoys a significant market position in the food processing,
pharmaceutical packaging and electronic component manufacturing industries.
Its expertise in machine vision applications is expected to contribute a strong
growth dynamic to the total organization.  VEC revenues averaged approximately
$9,000,000 in the three years prior to acquisition.

       Management believes these acquisitions have given the Company
significant competitive advantages.  The Company's combined staff allows it to
address projects of size and scope that other smaller control system
integrators cannot.  The Company's geographic reach through branch offices
positions it to address the total national needs of customers with diverse
manufacturing locations.

       The Company has retained key management from each of the acquired
organizations, and in some cases promoted these people to senior management
positions in the combined organization.  As the transactions were effected
through the exchange of shares there is now a significant share-ownership
position in the Company's executive management tier.

Narrative Description of Business

       The Company is an industrial technology company that develops, produces
and markets control system integration products and services that provide
factory automation solutions to industry.  The Company operates this business
through its wholly-owned subsidiaries, Topro Systems Integration, Inc. ("TSI"),
based in the Company's Denver, Colorado facilities, MDCS, headquartered in
Atlanta, Georgia, ACT, based in Albany, Oregon, and VEC, headquartered in
Cypress, California.  VEC has branch offices in Sacramento, California and
Chicago, Illinois.  TSI has a branch office in Phoenix, Arizona.  ACT has a
branch office in Seattle, Washington.

       Through these subsidiaries, the Company provides software applications,
system design and configuration for manufacturing process control systems to
industry.  The Company markets its systems, products and services to industrial
customers in the chemical, petrochemical, mining, electric power, and food
processing industries, and to users of advanced communication networks that are
based on fiber optics, microwave, and radio.  The  acquisition of ACT and VEC
have given the Company access to the aerospace, wood products, fleet
management, pharmaceutical and electronics industries.  Through these
acquisitions, the Company has established significant local presence in key
geographical markets including Seattle, Portland, Sacramento, Los Angeles,
Phoenix, Denver, Chicago, and Atlanta.  Further, the Company has added
substantially to its library of industrial software applications and specific
vertical market or industry experience.





                                       5
<PAGE>   6
       During fiscal 1996, the Company's subsidiaries provided process control
systems and services to national  firms, including the following:

       Amgen                  Weyerhauser                Coastal Chem

       Baxter                 Nestle                     Shell

       Johnson & Johnson      Coca-Cola                  Conoco

       Boeing                 Nabisco                    Cypress Minerals

       Lockheed/Martin        Rockwell Semiconducter     BHP

       Georgia Pacific        Hewlett Packard            Cargill

       The Company also serves the market for water and waste-water treatment
facilities.  This market, while having some industrial components, is largely
composed of a governmental/municipal customer base.  The Company acquires this
work through bid and negotiation with electrical and general contractors.  The
competitive bid projects, as a rule, support profit margins that are narrower
than those obtained on industrial contracts.

Competition

       Many firms throughout the United States provide control systems
integration services comparable to those offered by the Company.  The Company
believes that the dominant practice among firms in the control systems
integration business is to focus their competitive efforts on a single
geographic region or a particular niche in the marketplace.  Examples include
vertical market niches (water and waste-water treatment, power-generation,
petroleum, mining, and chemical industries) and/or  functional niches
(programmable logic control, distribution control systems, and data
acquisition).  By focusing upon a given niche, most firms typically acquire
expertise, specialized resources, and business relationships that result in a
competitive advantage within the niche.

       The Company believes that through its acquisition strategy, it has
assembled a broad range of specific market niche expertise which, when combined
with its large resource base and diverse geographical presence, gives it
competitive advantages over  most other firms.  Because of its resource base,
the Company can address projects of a size and scope many other integrators
cannot.  The Company's geographic reach gives it a competitive advantage in
serving customers that have multiple manufacturing facilities spread across the
U.S.

       While most independent control system integrators are much smaller than
the Company, there are some firms which are larger and better financed than the
Company.  The Company may compete in certain markets with these firms but not
generally across all markets.

       In fiscal 1996 the Company began to expend limited funds for research
and development.  This spending is applied to development of specific
industrial application software.  Production costs of the software are
capitalized.  This investment is designed to create both improved margins
through repeat sales of applications in specific vertical markets and improve
the Company's competitive position in these markets.

Backlog

       At June 30, 1995 and June 30, 1996 the order backlog of control systems
was $6,315,000 and $8,837,000, respectively.  Various contracts require the
Company to perform certain system integration functions only after others have
performed work on a specific project. This restriction prevents contracted
backlog from being completed in an ensuing twelve month period.  $800,000 of
the June 30, 1996 backlog cannot be reasonably filled in the period ending June
30, 1997.

Employees

       As of June 30, 1996, the Company had 294 full-time employees.  That
number includes 162 engineers, designers, and project managers; 54 wiring,
assembly, and fabrication workers; 23 sales persons; 10 service technicians;
and 45 administrative personnel.  No employee is represented by a labor union
and the Company believes its employee relations to be good.





                                       6
<PAGE>   7
ITEM 2.  DESCRIPTION OF PROPERTY

         The Company maintains leased facilities and one owned building in the
locations listed below.

<TABLE>
<CAPTION>
                                                                                       Current
                                                            Square     Term of          Annual
            Function                      Location           Feet       Lease        Lease Costs
----------------------------------------------------------------------------------------------------
<S>                              <C>                         <C>       <C>                <C>
Corporate Headquarters and       2525 West Evans Ave         32,000      April 1999       $ 148.000
Topro Systems engineering        Denver, CO
and manufacturing facilities

Topro Systems engineering        1800 West Broadway           6,000        Jan 2001        $ 51,000
facilities                       Phoenix, AZ

Advanced Control Technology      2830 Ferry Street           13,000           Owned             N/A
engineering and manufacturing    Albany, OR
facilities

Advanced Control Technology      2514 Ferry Street           12,000       July 2001        $ 72,000
additional facilities            Albany, OR

Advanced Control Technology      3400 188th Avenue            1,000       Month-to-        $ 27,000
engineering office               Lynwood, WA                                  Month

Management Design and Consulting 1360 Seaboard Ind. Blvd      9,000       June 1998        $ 41,000
Services, Inc. engineering and   Atlanta, GA
manufacturing facilities

Vision Engineering Corp.         10855 Business Ctr. Dr.     31,000     Sept.  2001       $ 248,000
Engineering and manufacturing    Cypress, CA
facilities

Vision Engineering Corp.         9940 Business Ctr Dr         7,000        Feb 1997        $ 71,000
Engineering and sales facilities Sacramento, CA

Vision Engineering Corp.         1289 S.  Park Victoria Dr.   1,000       Month-to-        $ 16,000
Engineering and sales facilities Milpitias, CA                                Month

Vision Engineering Corp.         760 Pasquinelli Dr           4,000        Apr 1998        $ 64,000
Engineering and sales facilities Westmont, IL
</TABLE>

ITEM 3. LEGAL PROCEEDINGS

       There are no material legal proceedings pending to which the Company (or
any of its officers or directors in their capacities as such) is a party, or to
which the property of the Company is subject.  Management of the Company is not
aware of any material proceedings being contemplated.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

       None.




                                      7
<PAGE>   8
                                    PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

       The Company's Common Stock, par value $.0001 per share, is traded under
the symbol TPRO on the automated quotation system of the National Association
of Securities Dealers ("NASDAQ").  The Company's outstanding redeemable Common
Stock Purchase Warrants are traded on NASDAQ under the symbol TPROW.  The
warrants are exercisable at a price of $4.25.  During fiscal 1996, the Company
extended the Warrants expiration date to June 17, 1997.

       The range of high and low bid quotations for the Company's Common Stock
as quoted (without retail markup or markdown and without commissions) on NASDAQ
for the past two fiscal years is provided below. They do not necessarily
represent actual transactions:

<TABLE>
<CAPTION>
       1996 Fiscal Year                           High Bid         Low Bid
       ----------------                           --------         -------
       <S>                                         <C>              <C>
       Fourth Quarter                              $ 2.88           $ 1.94
       Third Quarter                               $ 2.94           $ 1.50
       Second Quarter                              $ 1.88           $ 1.50
       First Quarter                               $ 1.94           $ 1.63

       1995 Fiscal Year
       ----------------
       Fourth Quarter                              $ 1.91           $ 1.00
       Third Quarter                               $ 1.75           $ 0.63
       Second Quarter                              $ 3.38           $ 1.50
       First Quarter                               $ 3.38           $ 3.25
</TABLE>

       As of June 30, 1996, there were approximately 464 holders of record of
the Common Stock.

       The Company has never declared a dividend, and it is anticipated that
any earnings will be retained for the Company's business in the foreseeable
future.

       The transfer agent for the Company's common stock is American Securities
Transfer, Incorporated, 938 Quail Street, Lakewood, CO 80215.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION

FISCAL YEAR ENDED JUNE 30, 1996 COMPARED TO FISCAL YEAR ENDED JUNE 30, 1995:

       All sales revenue and operating expenses for 1996 and 1995 have been
restated to eliminate the results of the discontinued operations of Sharp
Electric Construction Company, Inc. ("SEC") and the distribution business of
Tech Sales, Inc.("TI").  The Company's control systems integration operations
included in the following discussion are, Topro Systems Integration, Inc.
("TSI"); Management Design and Consulting Services, Inc.  ("MDCS"); Advanced
Control Technology, Inc.  ("ACT"), whose operations are included in the
discussion  for six months period from January 1, 1996 to June 30, 1996; and
Vision Engineering Corporation (VEC), whose operating results are included for
the period May 1 - June 30, 1996.

       REVENUE FROM SYSTEMS INTEGRATION in 1996 increased $8,815,000 (81%) from
$10,911,000 in 1995 to $19,726,000 in 1996.  This is attributed to a $1,488,000
increase in TSI, a $558,000 increase in MDCS, $4,820,000 from the acquisition
of ACT, and $1,949,000 from the acquisition of VEC.  Management attributes the
revenue increase in TSI and MDCS to aggressive sales efforts in new markets.
The Company has refocused its sales effort on industrial customers in select
vertical markets.  Average industrial contracts are generally smaller in gross
sales value but hold much better margins than municipal work.  As the Company
continues





                                       8
<PAGE>   9
to change its business mix from municipal to industrial markets gross revenues
may decline in favor of improved margins.  No single customer exceeds ten
percent of revenues.

       GROSS PROFIT for the Company increased to $5,701,000 in 1996 from
$3,133,000 in 1995 or 82%.  In TSI the margin declined slightly from $2,647,000
in 1995 to $2,561,000 in 1996 while MDCS improved from $486,000 in 1995 to
$660,000 in 1996.  Additional gross profit was earned from the ACT acquisition
($1,739,000) and the VEC acquisition ($741,000).  The overall GROSS PROFIT
MARGIN realized in 1996, including the acquired companies, was 28.8% compared
to 28.7% in 1995.  The acquired companies gross margins, however, are
considerably higher (36%) - (including MDCS) than for TSI (23%).  TSI gross
margins remained low as the Company executed a substantial amount of municipal
project backlog booked in early Fiscal 1995 but not completed until 1996   It
is expected 1997 will realize much higher gross profit margins, when both ACT
and VEC reflects a full year's operations, and the TSI business includes a
greater industrial component.

       TOTAL SG & A EXPENSES increased $2,817,000 from $2,385,000 in 1995 to
$5,202,000 in 1996. $1,276,000 of the increase was from the acquisition of ACT
and $803,000 from the VEC acquisition.  TSI increased $495,000  from $2,019,000
in 1995 to $2,514,000 in 1996..  MDCS increased $243,000 from $365,000 to
$609,000 in the current period.  SALES EXPENSE increased $575,000.  Nearly all
of the increase was due to the acquisition of ACT and VEC. (TSI decreased
$53,000).  G & A EXPENSE increased $2,128,000 from $1,792,000 in 1995 to
$3,920,000 in 1996.  The addition of ACT ($701,000) and VEC ($636,000)
accounted for $1,337,000 of the increase.  TSI increased from $1,426,000 in
1995 to $1,974,000 in 1996.  The increase is attributable to several factors:
in 1995, discontinued operations of SEC and TI absorbed some fixed expenses
such as utilities, lease expense, and deprecation that were fully absorbed by
TSI in 1996; the costs of executing the Company's acquisition program,
including cross training in procedures and practices, and raising necessary
capital, were part of G & A expenses in 1996 and not present in 1995.
Additionally, TSI absorbed the expense of the VEC Phoenix office for one month.
MDCS G& A expense increased $243,000 from $366,000 in 1995 to $609,000 in 1996
due to the addition of an operations manager and a 46% increase in sales
volume.  Goodwill amortization totaled $114,000 ($83,000 from ACT and $31,000
from VEC).  Goodwill amortization in 1997 will total $352,000.

       The Company continues its efforts to reduce total G & A expense through
programs such as consolidating accounting and sales functions, while investing
in a wide-area network that will reduce costs of inter-company communications.

       INCOME FROM SYSTEMS INTEGRATION decreased $250,000 from a $748,000
profit in 1995 to a profit of $498,000 in 1996.  The acquisition of ACT
(effective for the last half of the year) accounted for a profit of $463,000.
VEC for the two months activity resulted in a loss of $63,000, and MDCS added
$51,000 in net income as compared to $120,000 in 1995 (a decrease of $69,000).
TSI earned $47,000, a change of $580,000 from the profit of $627,000 recorded
in 1995.  The decline in TSI, which included corporate costs, is attributable
to the unusual expenses in general and administrative as discussed above.

       OTHER INCOME AND EXPENSES.  Interest expense increased $197,000 in 1996
($379,000) over 1995 ($182,000) due to greater borrowing at TSI ($34,000), and
to interest expense incurred in the acquired companies of $109,000 in ACT and
$54,000 in VEC.  The Company recognized gains from the disposal of fixed assets
increased $282,000 to $435,000 in 1996.

       INCOME FROM CONTINUING OPERATIONS  was $16,000 in 1996 compared to
$206,000 in 1995, a decrease of $190,000.  A loss of $616,000 was recorded in
the distribution operations in 1996 compared to a loss of $518,000 in 1995. The
distribution business was discontinued in mid-year ending any gross profit
contribution from that business.  TSI earned $292,000 (which includes a gain on
sale of fixed assets and investments of $421,000) in 1996 compared to a
profit of $604,000 in 1995.  This decrease is attributable to higher G&A costs
as well as the lower gross margins sustained by  the municipal project backlog
addressed above.  MDCS's net income decreased $69,000 from $120,000 in 1995 to
$51,000 currently.   Acquisitions added $354,000 from ACT and a loss of $64,000
from VEC.





                                       9
<PAGE>   10
       DISCONTINUED OPERATIONS losses of $1,871,000 consist of the results of
completion of the Sharp Electric backlog.  The actual cost of completing the
projects remaining open at June 30, 1995 greatly exceeded the costs forecasted
at that time.  SEC projects save one were completed prior to July 1, 1996 and
the one remaining is expected to be completed October 18, 1996.

       The Company has net operating loss carry forwards of approximately
$8,200,000 for Federal purposes that will expire in 2008 through 2011.  The net
operating loss carry forward is subject to limitations from the net operating
losses acquired in the acquisitions due to substantial change in ownership.

LIQUIDITY AND CAPITAL RESOURCES FOR THE YEAR ENDED JUNE 30, 1996:

Capital and Debt Financing

       During the year in conjunction with the acquisition of ACT and VEC, the
Company on February 21, 1996 issued $1,500,000, on March 5, 1996 issued
$1,000,000 and on June 23, 1996 issued 1,000,000 of 9% convertible debentures
to Renaissance Capital Growth & Income Fund III, Inc. to provide working
capital funding.  This indebtedness is collateralized by a security interest in
the assets of the Company including assets of ACT, MDCS, TSI and Topro, Inc.
Interest on the unpaid principal balance is due monthly.  Mandatory monthly
principal installments, if the debenture is not sooner redeemed or converted,
are due commencing on March 1, 1999, in principal installments of $10 per
$1,000 of the then remaining principal amount.  The outstanding principal
amount of this debenture is redeemable at 120% of par if the closing bid price
for the Company's common stock averages at least $5.00 for 20 consecutive
trading days and is supported by a minimum of $0.25 in net earnings per share.
The conversion price is $ 1.50 per share on $2,500,000 of the principal amount
of the convertible debentures.  On the next $1,000,000 of the principal amount
of the debenture the conversion price is $2.25.  In addition, the Company
issued to Renaissance 375,000 warrants exercisable to purchase 375,000 shares
of the Company's common stock at $2.00 per share expiring on March 31, 1999.
The Company has apportioned $38,000 to the value of this compensation.  The
convertible debenture requires certain financial covenants of debt to equity of
3.6 to 1, current ratio of 1.1 to 1, minimum tangible net worth of $300,000,
and times interest earned of 2 to 1 to be met.  The Company is not in
compliance with these restrictive covenants as of June 30, 1996.  A waiver has
been granted by Renaissance for a period to extend for 13 months through July
1997.

       The Company in May 1996 completed a private offering begun March 1996
upon sale of a maximum (as amended) of 100,000 Units for gross proceeds of
$1,000,000.  Each unit consisted of eight shares of Common Stock and two common
stock purchase warrants, each exercisable at $1.00 per share commencing on
March 18, 1997 or the earlier date of an effective registration statement.  The
Company closed on a portion of this offering resulting in net proceeds after
commissions of $63,380 through  March 31, 1996 plus $417,500 of the Company's
previously issued 12% Subordinated 180-Day Promissory Notes which were
converted to subscriptions in the offering.  On April 12, 1996, the Company
closed on an additional $347,500 for this stock offering.  This closing
resulted in $32,500 in 12% Subordinated 180-Day Promissory Notes being
converted along with an additional $315,000 in cash resulting in net proceeds
to the Company of $270,200 after offering costs.  On May 30, 1996 the Company
closed on the final portion of the placement for $116,000 for this stock
offering.  From this closing $15,000 in 12% Subordinated 180-Day promissory
Notes were converted along with $101,000 in cash resulting in net proceeds to
the company of $86,670 after offering costs.  Of the total 12% Subordinated 180
Day-Promissory Notes only $15,000 was redeemed through payment of cash.

       During the quarter ended June 30, 1996, the Company borrowed an
additional $ 375,000 from three parties through the issuance of 8 % 270 Day
convertible debentures is due in February 1997.  Accrued interest is due and
payable quarterly.  The debentures may be pre-paid in whole or in part from time
to time without penalty.  The indebtedness represented by this debenture is
specifically made senior to subsequent unsecured debt of the Company.  The
debenture is convertible at the rate of one share per $1.75 of principal and
accrued interest.





                                       10
<PAGE>   11
CASH FLOW

       For the twelve months ending June 30, 1996, the Company's cash increased
$3,000.  PROFITS FROM CONTINUING OPERATIONS totaled $16,000 with operating
charges of $616,000 from the discontinuance of TI included in this result
and  INCLUSIVE OF CHARGES  for depreciation, amortization of note costs,
goodwill, reserve for bad debts, gain on sale of assets, issuance of options
and warrants and issuance of stock for interest, totaling $128,000.  Decreases
in inventories $73,000, billings in excess of costs and estimated earnings
$82,000, and an increase in accounts payables $104,000, resulted in a change of
$259,000 in the statement of cash flow.  FUNDS WERE USED to finance increases
in trade receivables $1,942,000, costs and estimated earnings in excess of
billings $378,000, prepaid expenses $43,000, and accrued expenses $357,000,
totaling $2,720,000.  Cash utilized by discontinued operations of SEC was
$1,198,000.  INVESTMENTS requirements utilizing cash were made in capital
equipment on a consolidated basis of $95,000, software costs capitalized of
$572,000 for the year.  Also, costs associated with the acquisition of ACT and
VEC required $229,000 in resources, proceeds of $40,000 was received on a note
receivable, the sale of the Company's investment of $350,000 in DMC  and the
cash acquired in the ACT and VEC acquisition of $202,000.  FINANCING ACTIVITIES
from short and long term debt, net of repayments, generated $2,790,000 and the
sale of stock generated, net of issuance costs, $1,267,000. Deferred financing
costs totaling $284,000 was incurred utilizing cash.

       SEC DISCONTINUANCE - The largest use of cash for the year involved the
discontinued operations of SEC.  During the fiscal 1996 year the SEC operations
utilized $1,198,000 to complete the remaining jobs.

       DMC SALE - The Company sold its remaining shares of DMC stock for a
combination of debt and cash for a total purchase price of $1,110,000.  Debt of
$760,000 owed to a former director and third party was canceled and additional
cash of $350,000 was received by the company.  The sale provides for a bonus
payment to be paid the Company. Should DMC be sold to any third party for
consideration of greater than $420 per share the Company will receive 50% of the
difference between the $420 per share and the actual price.  This additional
consideration will be paid to the Company when received by the DMC selling
shareholders.  The Company realized a gain of $ 410,000 from the sale of the DMC
stock. 

       ACCOUNTS RECEIVABLE ISSUE - In calendar year 1994, the Company was
engaged by an electrical contractor ("EC") to supply control system integration
services on a municipal water treatment facility in California.  As the work
progressed, the EC fell significantly behind in its payment obligations and
eventually was taken over by its bonding company.  As of June 1996, the EC owed
the Company $427,000. The EC's payment obligations are covered by payment and
performance bonds.  In June 1995, the Company received indication of a
forthcoming settlement offer from the general contractor on one of the projects
for the EC's receivable.  It was felt that the Company had reasonably reserved
for the portion of the receivable that was disputed by the EC.  The offer for
settlement has since been withdrawn by the general contractor.  The Company has
retained legal counsel in California to review the adequacy of its stop notice
filings and determine the Company's legal standing.  Stop notices have been
issued to the appropriate municipalities reserving 125% of these funds from
payment to the contractors.  The EC has sent a notice to the bonding company
stating a $192,000 back charge.  The bonding company has reviewed all
supporting documents and doesn't support the EC's claim.  This claim has been
reviewed and evaluated by an independent third party ("ITP") who engages in
providing construction/systems dispute resolution and management services to
both owners and contractor/subcontractors and suppliers on projects similar to
the EC's project.  The ITP view is the back charge claims are not valid.  The
ITP also believes the Company has back charges of between $200,000 and $250,000
in claims against the EC for excessive cost on the projects directly attributed
to the EC's delays.






                                       11
<PAGE>   12
The ITP also believes the Company has a direct claim against the municipality
for owner-directed changes and delays.  The Company is in the process of
perfecting its claims position.  The Company has not made any material
resolution to the outstanding issues with regard to these receivables in the
quarter.

       The Company, on one other project worked on with the EC, has been
discussing a settlement with the general contractor.  The total amount owing
from the EC on this project amounts to $161,000.  The general contractor has
issued a bond to the municipality to cover stop notices issued on the project
because of the EC's non payment including our claim.  The requirement for the
bond by the general contractor was to allow the municipality to release
retainage on the job.  The municipality would not do so unless they had
assurances that the claims were provided for.  The Company feels that it has an
adequate allowance to cover any unforeseen collection issues of these
receivables in the fourth quarter of 1996.

       The Company has no material commitments for capital expenditures.





                                       12
<PAGE>   13
MANAGEMENT DISCUSSION OF LIQUIDITY

       The Company has incurred net losses for the past four years and has had
negative cash flows from operations.  As of June 30, 1996, the Company is not
in compliance with its loan covenants from the issuance of the convertible
debentures issued to Renaissance capital.  Renaissance has granted a
forbearance with compliance with those covenants until July, 1997.  Management
has taken the following actions to improve the Company's cash flow and
operating results:

       1) The discontinuation of the electrical contracting business which
produced losses of over $2,300,000 in 1995 and additional losses of $1,900,000
in 1996.  The last remaining contract will be completed in mid October 1996.
The Company estimates it has recognized all costs to complete all the projects
in its fiscal 1996 results. The significant, and unexpected cost over-runs
required to complete SEC's contract backlog was the largest single drain on the
Company's cash resources in 1996 totaling $1,243,000.  With the completion of
the last project, SEC will no longer be a severe financial drain to the
Company.

       2) The discontinuation of the remaining operation of the distribution
business which generated operating losses of $616,000 inclusive of $110,000 in
costs to wind down the affairs of the operation in 1996.

       3) An overhead reduction program undertaken in the first and second
quarter of fiscal 1996.  In addition, the Company continued to make management
changes to improve the effectiveness of its various functions.

       4) The Company has continued to implement additional management
financial controls that improve the ability to execute projects with maximum
profitability.

       5) The acquisition program increased significantly the Company's sales
revenue and afforded opportunity to reduce consolidated operating costs through
centralization of certain general and administrative functions.

Further, the acquisition program provides the Company significant opportunity
for profitable growth.  The Company is now well positioned in new, fast growing
vertical markets such as food and pharmaceutical packaging, and aerospace
manufacturing.  In addition, the Company's expanded geographical base of
operations provides new regional markets for its traditional products and
services as well as those of the acquired companies.

The Company has continued to shift emphasis away from lower margin municipal
business to higher margin opportunities in the industrial markets.  By way of
specific example, the Company closed its 1996 financial year with the lowest
backlog of municipal work in the past four years.  New municipal orders in 1996
were less than 10% of the total orders booked.

Management believes that the actions taken to improve operating results will
provide adequate cash flow to meet the Company's operating needs, and that if
necessary, the Company will be able to obtain additional debt or equity
financing.  Although there can be no assurance that the Company will be
successful in obtaining additional financing and generating sufficient cash
flow to meet its operating needs, management believes that the actions taken
will be adequate to enable the Company to continue.





                                       13
<PAGE>   14
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<TABLE>
<S>                                                                       <C>
Independent Auditor's Report                                              F-2

Consolidated Balance Sheets - June 30, 1996                               F-3

Consolidated Statements of Operations - For the Years
Ended June 30, 1995 and 1996                                              F-5

Consolidated Statements of Stockholders' Equity - For the
Period from July 1, 1994 through June 30, 1996                            F-6

Consolidated Statements of Cash Flows - For the Years
Ended June 30, 1995 and 1996                                              F-7

Notes to Consolidated Financial Statements                                F-9
</TABLE>




                                      F-1
<PAGE>   15
                          INDEPENDENT AUDITOR'S REPORT





To the Stockholders and Board of Directors
Topro, Inc.
Denver, Colorado




We have audited the accompanying consolidated balance sheet of Topro, Inc. and
subsidiaries as of June 30, 1996, and the related consolidated statements of
operations, stockholders' equity and cash flows for the years ended June 30,
1995 and 1996.  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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Topro, Inc. and
subsidiaries as of June 30, 1996, and the results of their operations and their
cash flows for the years ended June 30, 1995 and 1996, in conformity with
generally accepted accounting principles.




HEIN + ASSOCIATES LLP

Denver, Colorado
October 4, 1996





                                      F-2
<PAGE>   16
                          TOPRO, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                                 JUNE 30, 1996


                                     ASSETS

<TABLE>
 <S>                                                                 <C>
 CURRENT ASSETS:
  Cash                                                               $    236,000

  Receivables:
       Trade, net of allowance for doubtful accounts of $377,000        6,801,000
       Refundable income taxes                                            222,000
       Other                                                               54,000
  Costs and estimated earnings in excess of billings on
       uncompleted contracts                                            2,837,000
  Inventories                                                             148,000
  Prepaid expenses                                                        173,000
  Assets of discontinued operations                                       526,000
                                                                     ------------
           Total current assets                                        10,997,000

 PROPERTY AND EQUIPMENT, at cost:
  Land and building                                                       850,000

  Furniture, equipment and vehicles                                     2,516,000
  Leasehold improvements                                                  743,000
                                                                     ------------
                                                                        4,109,000
  Less accumulated depreciation and amortization                       (1,249,000)
                                                                     ------------
           Net property and equipment                                   2,860,000

 CAPITALIZED SOFTWARE DEVELOPMENT COSTS, net of accumulated
   amortization of $36,000                                                536,000

 DEBT ISSUANCE COSTS, net of accumulated amortization of $52,000          354,000

 EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED, net of
   accumulated amortization of $114,000                                 5,111,000

 OTHER ASSETS                                                             155,000
                                                                     ------------


 TOTAL ASSETS                                                        $ 20,013,000
                                                                     ============
</TABLE>





       SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.





                                      F-3
<PAGE>   17
                          TOPRO, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                                 JUNE 30, 1996



                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
 <S>                                                                 <C>
 CURRENT LIABILITIES:
  Line-of-credit                                                     $  1,019,000
  Current portion of long-term debt:
       Related parties                                                    230,000
       Financial institutions and other                                   975,000
  Current portion of capital lease obligations
                                                                           56,000
  Accounts payable                                                      5,915,000

  Billings in excess of costs and estimated earnings on
       uncompleted contracts                                            1,582,000
  Accrued expenses                                                      2,224,000
                                                                     ------------
           Total current liabilities                                   12,001,000

 LONG-TERM DEBT, net of current portion                                 4,859,000

 CAPITAL LEASE OBLIGATIONS, net of current portion                        151,000

 COMMITMENTS AND CONTINGENCIES (Notes 3, 4, 5, and 14)

 STOCKHOLDERS' EQUITY:
  Preferred stock, par value $1.00 per share; authorized
       10,000,000 shares; no shares issued

  Common stock, par value $.0001 per share; authorized
       200,000,000 shares; 6,639,403 shares issued and outstanding          1,000
  Additional paid-in capital                                            7,774,000
  Accumulated deficit                                                  (4,773,000)
                                                                     ------------
           Total stockholders' equity                                   3,002,000
                                                                     ------------

 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                          $ 20,013,000
                                                                     ============
</TABLE>





       SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.





                                      F-4
<PAGE>   18
                          TOPRO, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                  FOR THE YEARS ENDED JUNE 30,
                                                  ----------------------------
                                                      1995            1996 
                                                  ------------    ------------
<S>                                               <C>             <C>         
 REVENUE:
     Control systems integration                  $ 10,911,000    $ 19,726,000
     Distributorship                                 2,565,000         907,000
                                                  ------------    ------------
                                                    13,476,000      20,633,000
 COST OF SALES:
     Control systems integration                     7,778,000      14,025,000
     Distributorship                                 1,858,000         652,000
                                                  ------------    ------------
                                                     9,636,000      14,677,000

 GROSS PROFIT                                        3,840,000       5,956,000

 OPERATING EXPENSES:
     Sales expense                                     593,000       1,168,000
     General and administrative expense              1,793,000       3,921,000
     Distributorship selling and other expenses      1,225,000         871,000
     Amortization of goodwill                             --           114,000
                                                  ------------    ------------
                                                     3,611,000       6,074,000

 OTHER INCOME (EXPENSE):
     Gain on sale of assets                            158,000         435,000
     Interest expense                                 (182,000)       (380,000)
     Other                                               1,000          79,000
                                                  ------------    ------------
                                                       (23,000)        134,000
                                                  ------------    ------------

 INCOME FROM CONTINUING OPERATIONS                     206,000          16,000

 DISCONTINUED OPERATIONS:

     Loss from discontinued operations of Sharp
         Electric                                   (2,256,000)           --
     Loss on disposal of Sharp Electric               (134,000)     (1,871,000)
                                                  ------------    ------------
                                                    (2,390,000)     (1,871,000)
                                                  ------------    ------------

 NET LOSS                                         $ (2,184,000)   $ (1,855,000)
                                                  ============    ============

 NET INCOME (LOSS) PER SHARE:
     Continuing operations                        $        .08    $        *
     Discontinued operations                              (.94)           (.40)
                                                  ------------    ------------

                   Net loss                       $       (.86)   $       (.40)
                                                  ============    ============


 WEIGHTED AVERAGE SHARES OUTSTANDING                 2,527,000       4,655,000
                                                  ============    ============
</TABLE>

--------------
*  Less than $.01 per share 





       SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.





                                      F-5
<PAGE>   19
                          TOPRO, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                   FOR THE YEARS ENDED JUNE 30, 1995 AND 1996


<TABLE>
<CAPTION>
                                                         COMMON STOCK          ADDITIONAL
                                                  --------------------------     PAID-IN     ACCUMULATED
                                                     SHARES        AMOUNT        CAPITAL       DEFICIT   
                                                  -----------    -----------   -----------   -----------
<S>                                                 <C>          <C>           <C>           <C>         
 BALANCE, July 1, 1994                              2,203,857    $     1,000   $ 3,142,000   $  (734,000)

    Shares issued for cash in private
        placements                                    589,850           --         455,000          --
    Shares issued for commission to
        underwriter                                    37,313           --          25,000          --
    Shares issued for conversion of senior
        notes                                         228,726           --         153,000          --
    Shares issued to employees for
        compensation                                   67,163           --          45,000          --
    Shares issued to employees for cash               248,719           --         280,000          --
    Options issued to an officer for
        compensation                                     --             --          78,000          --
    Net loss                                             --             --            --      (2,184,000)
                                                  -----------    -----------   -----------   -----------

 BALANCE, June 30, 1995                             3,375,628          1,000     4,178,000    (2,918,000)

    Shares issued for cash in private
        placements                                    845,000           --         757,000          --
    Shares issued for conversion of 12%
        180-day debentures and accrued interest       390,000           --         488,000          --
    Shares issued to employees for
        compensation                                    2,000           --           1,000          --
    Shares issued for conversion of senior
        notes                                          39,102           --          26,000          --
    Shares issued for payment of interest on
        senior notes                                   55,673           --          37,000          --
    Shares issued for the acquisition of ACT        1,657,000           --       1,657,000          --
    Shares issued for conversion of ACT debt           65,000           --         105,000          --
    Warrants issued with convertible
        debentures                                       --             --          38,000          --
    Shares issued for the acquisition of
        Vision                                        200,000           --         300,000          --
    Options issued for acquisition of Vision             --             --          90,000          --
    Shares issued for conversion of accounts
        payable balance                                10,000           --          10,000          --
    Warrants issued for services                         --             --          87,000          --
    Net loss                                                                                  (1,855,000)
                                                  -----------    -----------   -----------   -----------

 BALANCE, June 30, 1996                             6,639,403    $     1,000   $ 7,774,000   $(4,773,000)
                                                  ===========    ===========   ===========   ===========
</TABLE>



       SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.





                                      F-6
<PAGE>   20
                          TOPRO, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                             FOR THE YEARS ENDED JUNE 30,
                                                                             ----------------------------
                                                                                 1995            1996 
                                                                             ------------    ------------
<S>                                                                          <C>             <C>         
 CASH FLOWS FROM OPERATING ACTIVITIES:
    Income from continuing operations                                        $    206,000    $     16,000
    Adjustments to reconcile net loss to net cash provided by (used in)
        operating activities:
            Depreciation and amortization                                         167,000         446,000
            Allowance for doubtful accounts                                        (1,000)         61,000
            Gain on sale of assets                                               (158,000)       (435,000)
            Issuance of compensatory options and warrants                          78,000          18,000
            Stock issued for interest                                                --            37,000
            Changes in operating assets and liabilities, net of effects
                from acquisition and disposition of Sharp:
                    (Increase) decrease in:
                      Receivables                                                (382,000)     (1,942,000)
                      Costs and estimated earnings in excess of billings         (696,000)       (378,000)
                      Inventories                                                  53,000          73,000
                      Prepaid expenses and other                                 (145,000)        (43,000)
                    Increase (decrease) in:
                      Accounts payable                                          1,090,000         104,000
                      Billings in excess of costs and estimated earnings          194,000          82,000
                      Accrued expenses                                            (55,000)       (357,000)
                                                                             ------------    ------------
            Net cash provided by (used in) continuing operating activities        351,000      (2,318,000)

    Loss from discontinued operations                                          (2,390,000)     (1,871,000)
        Depreciation                                                               69,000            --
        Changes in assets                                                        (506,000)      1,294,000
        Increase (decrease) in accounts payable and accrued expenses            1,167,000        (621,000)
                                                                             ------------    ------------
            Net cash used by discontinued operations                           (1,660,000)     (1,198,000)
                                                                             ------------    ------------
 NET CASH USED IN TOTAL OPERATING ACTIVITIES                                   (1,309,000)     (3,516,000)

 CASH FLOWS FROM INVESTING ACTIVITIES:
    Cash acquired in acquisitions of ACT and Vision                                  --           202,000
    Purchase of investment                                                       (400,000)       (229,000)
    Proceeds from sale of investment                                                 --           350,000
    Purchase of property and equipment                                           (141,000)        (95,000)
    Capitalized software development costs                                           --          (572,000)
    Proceeds from sale of property and equipment                                1,127,000            --
    Proceeds from note receivable                                                  10,000          40,000
                                                                             ------------    ------------
            Net cash provided by (used in) investing activities                   596,000        (304,000)
</TABLE>



       SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.





                                      F-7
<PAGE>   21
                          TOPRO, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS



<TABLE>
<CAPTION>
                                                                             FOR THE YEARS ENDED JUNE 30,
                                                                             ----------------------------
                                                                                 1995            1996 
                                                                             ------------    ------------
<S>                                                                          <C>             <C>         
 CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from borrowings:
        Related parties                                                            75,000            --
        Financial institutions and other                                       14,525,000      12,396,000
    Deferred financing costs                                                         --          (284,000)
    Principal payments on borrowings                                          (14,458,000)     (9,556,000)
    Payment of related party note                                                 (75,000)           --
    Proceeds from sale of common stock, net                                       735,000       1,267,000
                                                                             ------------    ------------
            Net cash provided by financing activities                             802,000       3,823,000
                                                                             ------------    ------------

 INCREASE IN CASH                                                                  89,000           3,000

 CASH, beginning of year                                                          144,000         233,000
                                                                             ------------    ------------

 CASH, end of year                                                           $    233,000    $    236,000
                                                                             ============    ============
 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Cash paid for interest                                                   $    196,000    $    294,000
                                                                             ============    ============
    Cash paid for income taxes                                               $       --      $       --   
                                                                             ============    ============

 SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
   FINANCING ACTIVITIES:
    Common stock issued as payment for commission on the sale of senior                                   
         notes                                                               $     25,000    $       --
                                                                             ============    ============
     Common stock issued to employees as payment of commission                $     45,000    $       --   
                                                                             ============    ============
    Notes received from sale of assets                                       $     85,000    $       --   
                                                                             ============    ============
    Conversion of notes and accrued interest to common stock                 $    150,000    $    551,000
                                                                             ============    ============
    Exchanged 1,200 shares of DMC stock and issued new notes for $760,000                                 
        in exchange for the redemption of $1,000,000 of old notes            $  1,000,000    $       --
                                                                             ============    ============
    Notes payable cancelled in exchange for DMC stock                        $       --      $    760,000
                                                                             ============    ============

    Common stock issued in acquisition of Advanced Control Technologies      $       --      $  1,657,000
                                                                             ============    ============
    Common stock and options issued in acquisition of Vision Engineering     $       --      $    390,000
                                                                             ============    ============
    Common stock issued as payment of accounts payable                       $       --      $     10,000
                                                                             ============    ============
    Warrants issued in conjunction with convertible debentures               $       --      $     38,000
                                                                             ============    ============
    Interest converted to common stock                                       $       --      $     37,000
                                                                             ============    ============
</TABLE>





       SEE ACCOMPANYING NOTES TO THESE CONSOLIDATED FINANCIAL STATEMENTS.





                                      F-8
<PAGE>   22
                          TOPRO, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1.     ORGANIZATION AND NATURE OF OPERATIONS:

       Topro, Inc. (Topro or the Company) designs, develops, assembles,
       markets, and services control system integration products.  Integrated
       control systems are sophisticated computer controlled packages of
       measurement instruments and control devices that provide automatic
       control of manufacturing processes.  The Company also operates a service
       division that provides instrument calibration and system configuration
       services.  Prior to February 1996, it also acted as a distributor and
       manufacturer's representative for instrumentation and control valve
       products through its subsidiary Tech Sales, Inc. (Tech Sales).  The
       operations of Tech Sales were discontinued in February 1996 (see Note
       6).

       In August 1993, the Company acquired 100% of the outstanding common
       stock of Sharp Electric Construction Company (Sharp).  Sharp was
       primarily engaged in electrical project construction and service.  As
       discussed in Note 5, the Company sold the assets of Sharp in May 1995.

       In July 1995, the Company acquired Management Design & Consulting
       Services (MDCS).

       In February 1996, the Company acquired all the outstanding common stock
       of Advanced Control Technology, Inc.  (ACT).

       In May 1996, the Company acquired all the outstanding stock of
       Visioneering Holding Corporation (Vision).

       The above companies with the exception of Sharp, are involved in
       activities similar to Topro.


2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

       Principles of Consolidation - The consolidated financial statements
       include the accounts of Topro, Tech Sales, Sharp, ACT, Vision, and MDCS.
       Collectively, these entities are referred to as the Company.  All
       significant intercompany transactions and accounts have been eliminated.

       Cash and Cash Equivalents - The Company considers all highly liquid
       monetary instruments purchased with an original maturity of three months
       or less to be cash equivalents.  The Company maintains cash in bank
       deposit accounts which, at times, may exceed Federally insured limits.
       The Company has not experienced any losses in such accounts.  The
       Company believes it is not exposed to any significant credit risk on
       cash and cash equivalents.

       Inventories - Inventories, which consist primarily of finished goods,
       are stated at the lower of cost or market using the first-in, first-out
       method.





                                      F-9
<PAGE>   23
                          TOPRO, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



       Property and Equipment - Depreciation of property and equipment is
       provided utilizing the straight-line method over the following estimated
       useful lives:

<TABLE>
<CAPTION>
                                                                       YEARS 
                                                                      -------
        <S>                                                             <C>
        Building                                                         31
        Furniture and equipment                                         5-10
        Vehicles                                                        3-5
</TABLE>


       Major renewals and betterments are capitalized while expenditures for
       maintenance and repairs are charged to expense as incurred.

       Computer Software - Computer software development costs and other
       research and development costs are expensed as incurred.  Costs incurred
       to develop product masters of computer software, for which technological
       feasibility has been established, are capitalized.  Capitalized software
       costs are amortized on a product-by-product basis each year based on the
       greater of:  (1) the amount computed using the ratio of current year
       gross revenues to the sum of current and anticipated future gross
       revenues for that product, or (2) five-year straight-line amortization.
       For the years ended June 30, 1995 and 1996, the Company capitalized $-0-
       and $572,000, respectively, of such costs. Amortization expense was $-0-
       and $36,371 for 1995 and 1996, respectively.

       Excess of Cost Over Fair Value of Net Assets Acquired - The Company
       amortizes costs in excess of the fair value of net assets of businesses
       acquired using the straight-line method over 15 years.  Recoverability
       is reviewed annually or sooner if events or circumstances indicate that
       the carrying amount may exceed fair value.  Recoverability is then
       determined by comparing the undiscounted net cash flows of the assets to
       which goodwill applies to the net book value including goodwill of those
       assets.  The analyses necessary involve significant management judgment
       to evaluate the capacity of an acquired business to perform within
       projections.

       Income Recognition - The Company follows the percentage of completion
       method of accounting for all significant long-term contracts.  The
       percentage of completion method of reporting income from contracts takes
       into account the cost, estimated earnings, and revenue to date on
       contracts not yet completed.

       The amount of revenue recognized is the portion of the total contract
       price that the cost expended to date bears to the anticipated final
       total cost, based on current estimates of cost to complete.  Contract
       cost includes all labor and benefits, materials unique to or installed
       in the project, subcontract costs, and allocations of indirect costs.
       Selling, general and administrative costs are charged to expense as
       incurred.

       As long-term contracts extend over one or more years, revisions in
       estimates of costs and earnings during the course of the work are
       reflected in the accounting period in which the facts which require the
       revision become known.  At the time a loss on a contract becomes known,
       the entire amount of the estimated ultimate loss is recognized in the
       financial statements.  Contracts which are substantially





                                      F-10
<PAGE>   24
                          TOPRO, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



       complete are considered closed for financial statement purposes.
       Revenue earned on contracts in progress in excess of billings is
       classified as a current asset.  Amounts billed in excess of revenue
       earned are classified as a current liability.

       Income related to direct sales of equipment and parts is recognized upon
       shipment.  Commission income is recognized when the commission is
       received from the principal.

       Income Taxes - The Company accounts for income taxes under the liability
       method, which requires recognition of deferred tax assets and
       liabilities for the expected future tax consequences of events that have
       been recognized in the financial statements or tax returns.  Deferred
       tax assets and liabilities are determined based on the difference
       between the financial statement and tax bases of assets and liabilities
       using current enacted tax rates.

       Earnings (Loss) Per Share - Earnings (loss) per share is calculated by
       dividing net income (loss) by the weighted average common shares
       outstanding.  Common stock equivalents have not been included as their
       effects are antidilutive.

       Use of Estimates - The preparation of the Company's consolidated
       financial statements in conformity with generally accepted accounting
       principles requires the Company's management to make estimates and
       assumptions that affect the amounts reported in these financial
       statements and accompanying notes.  Actual results could differ from
       those estimates.  Significant estimates include the estimates of costs
       to complete long-term contracts, and net realizable value of intangible
       assets.  Due to uncertainties inherent in the estimation process, it is
       at least reasonably possible that these estimates could change in the
       near term, and that such revisions could be material.

       Accrued Warranty Costs - Estimated warranty costs are provided for at
       the time of sale of the warranted product.  The Company generally
       extends warranty coverage for one year from the time of sale.

       Concentrations of Credit Risk - Credit risk represents the accounting
       loss that would be recognized at the reporting date if counterparties
       failed completely to perform as contracted.  Concentrations of credit
       risk (whether on or off balance sheet) that arise from financial
       instruments exist for groups of customers or groups of counterparties
       when they have similar economic characteristics that would cause their
       ability to meet contractual obligations to be similarly effected by
       changes in economic or other conditions.

       Fair Value of Financial Instruments - The estimated fair values for
       financial instruments under SFAS No. 107, Disclosures About Fair Value
       of Financial Instruments, are determined at discrete points in time
       based on relevant market information.  These estimates involve
       uncertainties and cannot be determined with precision.  The estimated
       fair values of the Company's financial instruments, which includes all
       cash, accounts receivables, accounts payable, long-term debt, and other
       debt, approximates the carrying value in the consolidated  financial
       statements at June 30, 1996.

       Reclassifications - Certain reclassifications have been made to the
       prior years financial statements to conform to the current year's
       presentation.  Such reclassifications had no effect on net loss.





                                      F-11
<PAGE>   25
                          TOPRO, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



       Impact of Recently Issued Accounting Standards - In March 1995, the
       Financial Accounting Standards Board issued a new statement titled
       Accounting for Impairment of Long-Lived Assets.  This new standard is
       effective for years beginning after December 15, 1995 and would change
       the Company's method of determining impairment of long-lived assets.
       Although the Company has not performed a detailed analysis of the impact
       of this new standard on the Company's financial statements, the Company
       does not believe that adoption of the new standard will have a material
       effect on the financial statements.

       In October 1995, the Financial Accounting Standards Board issued a new
       statement titled Accounting for Stock- Based Compensation (FAS 123).
       The new statement is effective for fiscal years beginning after December
       15, 1995.  FAS 123 encourages, but does not require, companies to
       recognize compensation expense for grants of stock, stock options, and
       other equity instruments to employees based on fair value.  Companies
       that do not adopt the fair value accounting rules must disclose the
       impact of adopting the new method in the notes to the financial
       statements.  The Company currently does not intend to adopt the fair
       value accounting prescribed by FAS 123, and will be subject only to the
       disclosure requirements prescribed by FAS 123.  However, the Company
       intends to continue its analysis of FAS 123 and may elect to adopt its
       provisions in the future.


3.     LIQUIDITY AND CONTINUED OPERATIONS:

       The Company has incurred net losses for the past four years and has had
       negative cash flows from operations.  As of June 30, 1996, the Company
       is not in compliance with the loan covenants in the convertible
       debentures issued to Renaissance Capital.  Renaissance has granted a
       forbearance with compliance with those covenants until July 1997.
       Management has taken the following actions to improve the Company's cash
       flow and operating results:

             o      The discontinuation of the electrical contracting business
                    which produced losses of over $2,300,000 in 1995 and a
                    further loss of $1,900,000 in 1996.  The last remaining
                    contract will be completed in mid October 1996.  The
                    Company has recognized all costs to complete this work, in
                    its fiscal 1996 results.  The huge, unexpected costs
                    overruns required to complete  the Sharp contract backlog
                    were the largest single drain of the Company's cash
                    resources in 1996.  With the completion of the last
                    project, Sharp no longer will be a financial cost to the
                    Company.

             o      The discontinuation of the remaining operations of the
                    distribution business which generated operating losses of
                    $616,000, including $110,000 in costs to terminate the
                    operations in 1996.

             o      An overhead reduction program undertaken in the first and
                    second quarter of fiscal 1996.  In addition, the Company
                    continued to make management changes to improve the
                    effectiveness of its various functions.





                                      F-12
<PAGE>   26
                          TOPRO, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



             o      The Company has continued to implement additional
                    management financial controls that improve the ability to
                    execute projects with maximum profitability.

             o      The acquisition program that increased significantly the
                    Company's sales revenue and afforded opportunity to reduce
                    consolidated operating costs through centralization of
                    certain general and administrative functions.

             o      Further, the acquisition program provides the Company
                    significant opportunity for profitable growth.  The Company
                    is now well positioned in new, fast growing vertical
                    markets such as food and pharmaceutical packaging, and
                    aerospace manufacturing.  In addition, the Company's
                    expanded geographical base of operations provides new
                    regional markets for its traditional products and services
                    as well as those of the acquired companies.

             o      The Company has continued to shift emphasis away from lower
                    margin municipal business to higher margin opportunities in
                    the industrial markets.  By way of specific example, the
                    Company closed its 1996 financial year with its lowest
                    backlog of municipal work in the past four years.  New
                    municipal orders in 1996 were less than 10% of total orders
                    booked.

       Management believes that the actions taken to improve operating results
       will provide adequate cash flow to meet the Company's operating needs,
       and that if necessary, the Company will be able to obtain additional
       debt or equity financing.  Although there can be no assurances that the
       Company will be successful in obtaining additional financing and
       generating sufficient cash flow to meet its operating needs, management
       believes that the actions taken will be adequate to enable the Company
       to continue as a going concern.


4.     ACQUISITIONS:

       MDCS - In July 1995, the Company, acquired all the outstanding capital
       stock of MDCS, in exchange for 200,000 shares of the Company's common
       stock.  MDCS provides consulting and engineering services related to the
       design, development, assembly and service of integrated process control
       systems to customers in the southeastern U.S.  The Company intends to
       continue the business of MDCS.  The sole shareholder and President of
       MDCS entered into an employment agreement with the Company for an
       initial term of two years and remains President of MDCS.  The
       transaction was accounted for as a pooling of interests and, therefore,
       all prior period financial statements have been restated to include the
       accounts and operations of MDCS for all periods prior to the acquisition.

       Separate results of operations for the year ended June 30, 1995 are as
follows:

<TABLE>
<CAPTION>
                                         Topro          MDCS         Combined 
                                      -----------    -----------   -----------
        <S>                           <C>            <C>           <C>        
        Net revenues                  $ 9,700,000    $ 1,211,000   $10,911,000

        Net income (loss)              (2,304,000)       120,000    (2,184,000)
</TABLE>





                                      F-13
<PAGE>   27
                          TOPRO, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



       ACT - Effective January 1, 1996, the Company acquired all the
       outstanding common stock of ACT for 1,657,000 restricted shares of the
       Company's common stock.  The acquisition has been accounted for as a
       purchase, and, accordingly the purchase price has been allocated to the
       assets purchased and liabilities assumed based upon the fair values at
       the date of acquisition.  The purchase price of $1,657,000 was
       determined based on the estimated fair value of the restricted shares
       issued.  The excess of the purchase price over the estimated fair value
       of net assets acquired was $2,474,000 and is being amortized over 15
       years.  The operating results of ACT have been included in the
       consolidated statement of operations from the date of acquisition.  The
       major shareholder and president of ACT entered into an employment
       agreement with the Company for 30 months.

       Immediately prior to the acquisition, ACT sold the rights to certain
       technology and related assets to a new entity formed by the former
       shareholders of ACT in exchange for $5,000 cash and a $95,000 note
       receivable.  Topro obtained rights to acquire an equity interest in the
       new entity.

       Vision - Effective May 1, 1996, Topro acquired all the outstanding
       capital stock of Vision, an independent control systems integrator
       located in Cypress, California.  The purchase price was 200,000 shares
       of restricted Topro stock, and options to acquire 150,000 shares of
       Topro stock exercisable at $2.25 commencing October 1996, 150,000 shares
       exercisable at $2.25 commencing April 1997, 300,000 shares exercisable
       at $2.50 commencing January 1998, and 300,000 shares exercisable at
       $2.75 commencing January 1999.  An additional 100,000 shares will be
       issued if Vision meets certain future earning goals.  In connection with
       the merger, Topro agreed to guarantee the bank debt of Vision in the
       amount of $1,165,000.  The acquisition has been accounted for as a
       purchase, and, accordingly the purchase price has been allocated to the
       assets purchased and liabilities assumed based upon the fair values at
       the date of acquisition.  The purchase price of $390,000 was determined
       based on the estimated fair value of the restricted shares and options
       issued.  The excess of the purchase price over the estimated fair value
       of net assets acquired was $2,792,000 and is being amortized over 15
       years.  The operating results of Vision have been included in the
       consolidated statement of operations from the date of acquisition.

       In connection with the merger, the past president of Vision entered into
       an employment agreement with the registrant for an initial term of 6
       months, and a 24-month consulting agreement commencing six months after
       the date of the employment agreement.  The past president will become a
       director of Topro.  The past secretary and vice president of Vision, who
       is the spouse of the past president also entered into an employment
       agreement for an initial term of five months, and a 24-month consulting
       agreement commencing five months after the date of the employment
       agreement.  Each consulting agreement includes a grant of 150,000
       options exercisable at $2.25 per share, expiring in October 2006.

       The following unaudited pro forma summary combines the consolidated
       results of operations of the Company, ACT, and Vision as if the
       acquisitions had occurred at July 1, 1994 and 1995, with pro forma
       adjustments to give effect to amortization of goodwill, depreciation,
       and interest expense on debt incurred in connection with the
       acquisitions.  The pro forma summary is not necessarily indicative of





                                      F-14
<PAGE>   28
                          TOPRO, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



       future operations or the results that would have occurred had the
       transactions been consummated at the beginning of the periods indicated.

<TABLE>
<CAPTION>
                                                      FOR THE YEARS ENDED
                                                             JUNE 30,     
                                                   ----------------------------
                                                       1995            1996 
                                                   ------------    ------------
                                                           (Unaudited)
<S>                                                <C>             <C>         
      Net revenues                                 $ 32,161,000    $ 30,611,000

      Net loss                                       (3,380,000)     (6,221,000)

      Loss per share                                      (0.42)          (1.13)
</TABLE>


5.    SALE OF SHARP ELECTRIC:

      In May 1995, the Company completed the sale of substantially all
      operating assets of Sharp to Piper Electric Company Inc., a privately
      held electrical contracting company.  Piper purchased certain machinery,
      tools, furniture, fixtures, equipment, vehicles, and inventory for
      $50,000 cash and a $50,000 note receivable, due through September 1995.

      In connection with the sale and purchase of assets, Piper, Sharp, and the
      Company have entered into a Management Agreement in which Piper has
      assumed management responsibility for completion of Sharp projects which
      were in progress on the closing date of the transaction, and receives a
      management fee equal to 12.5% of the amounts billed for work performed.
      The Company retained the responsibility of payment of vendors and
      collection of receivables generated from completion of these contracts.

      Condensed results of discontinued operations were as follows:

<TABLE>
<CAPTION>
                                                       1995            1996 
                                                   ------------    ------------
<S>                                                <C>             <C>         
        Revenues                                   $  6,532,000    $  3,379,000
        Loss before income tax expense (benefit)     (2,256,000)     (1,892,000)
        Net loss                                     (2,256,000)     (1,892,000)
</TABLE>


       Assets of discontinued operations are comprised of the following as of
       June 30, 1995 and 1996:

<TABLE>
<S>                                                <C>            <C>         
        Receivables                                $  1,559,000   $    411,000
        Costs and estimated earnings in excess
           of billings                                  244,000        105,000
        Other assets                                    145,000         10,000
                                                   ------------   ------------


                     Total assets                  $  1,948,000   $    526,000
                                                   ============   ============
</TABLE>





                                      F-15
<PAGE>   29
                          TOPRO, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



       In 1995, the company recorded a loss on the sale of the Sharp assets of
       $134,000, which included a provision for estimated future losses of
       $100,000.  In 1996, the Company recorded additional estimated losses of
       approximately $1,871,000, as a result of the cost of completing the
       Sharp projects being significantly greater than originally estimated.


6.     DISCONTINUANCE OF TECH SALES OPERATIONS:

       In June 1995, Tech Sales sold the assets of its Utah office to the local
       management group for an aggregate purchase price of $85,000.
       Fifty-thousand dollars was paid in cash and the remaining $35,000 was in
       the form of a promissory note.  This note bears interest at 2% over
       prime (11% at June 30, 1995).  The principal and all unpaid interest is
       due and payable on June 30, 2000.  The note is collateralized by 18,145
       shares of the Company's common stock.

       On January 30, 1996, the Company formally approved the discontinuance of
       Tech Sales' remaining distributorship and manufacturers' representation
       operations.  Following is a summary of the results of operations of Tech
       Sales:

<TABLE>
<CAPTION>
                                                       FOR THE YEARS ENDED
                                                             JUNE 30,       
                                                   ----------------------------
                                                       1995            1996 
                                                   ------------    ------------
<S>                                                <C>             <C>         
       Revenues                                    $  2,565,000    $    907,000

       Loss from operations                            (518,000)       (616,000)
</TABLE>


7.    TRADE RECEIVABLES:

      The following information summarizes trade receivables at June 30, 1996:

<TABLE>
<S>                                                                <C>         
      Contract receivables:
         Completed contracts                                       $    869,000
         Uncompleted contracts                                        5,812,000
         Retainage                                                      497,000
                                                                   ------------
                                                                      7,178,000

      Less allowance for doubtful accounts                             (377,000)
                                                                   ------------

                                                                   $  6,801,000
                                                                   ============
</TABLE>

      Generally, the Company's contracts contain retainage provisions and
      require that certain percentages of completion be achieved before amounts
      under the contracts can be billed.  Retainages are generally collected
      within one year.





                                      F-16
<PAGE>   30
                          TOPRO, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




      The Company has concentrations of credit risk geographically in the
      western United States, and along industry lines in mining, aerospace, and
      food processing customers.  The Company provides ongoing credit
      evaluations of its customers but collateral is generally not required.
      However, the Company typically deals with subcontractors who are bonded
      and the Company generally has the right to file mechanics' liens to
      secure delinquent accounts.  Management believes that the allowance for
      doubtful accounts is sufficient to cover the Company's credit risk.


8.    CONTRACTS IN PROGRESS:

      The following information is applicable to uncompleted contracts of
      continuing operations at June 30, 1996:

<TABLE>
<S>                                                                <C>         
      Costs incurred on uncompleted contracts                      $ 32,071,000
      Estimated earnings                                              2,282,000
                                                                   ------------
                                                                     34,353,000
      Less billings to date                                         (33,098,000)
                                                                   ------------

                                                                   $  1,255,000
                                                                   ============
</TABLE>


      These amounts are included in accompanying balance sheet under the
      following captions as of June 30, 1996:

<TABLE>
<S>                                                                <C>         
      Costs and estimated earnings in excess of
         billings on uncompleted contracts                         $  2,837,000

      Billings in excess of costs and estimated
         earnings on uncompleted contracts                           (1,582,000)
                                                                   ------------

                                                                   $  1,255,000
                                                                   ============
</TABLE>

9.     INVESTMENT:

       During fiscal 1994, the Company entered into a stock purchase agreement
       with an unaffiliated privately-held entity which has developed certain
       patented flowmeter devices.  In 1995, the Company's former president was
       appointed to the Board of Directors of the investee.  In May 1995, the
       Company sold 1,200 shares, including 900 shares sold to a related party,
       for $164,000, resulting in a gain of $76,000.

       In November 1995, the Company completed the sale of its remaining
       investment in this company to three parties, one of whom is the brother
       of an officer of the Company.  The purchase price was $1,100,000, which
       was comprised of $350,000 in cash and the cancellation of two promissory
       notes with a face value of $760,000.

       The original agreement included certain contingencies which resulted in
       the Company deferring a $341,000 gain, which equals exposure under the
       contingencies.  A $68,000 gain was immediately recognized (for a total
       gain of $410,000).





                                      F-17
<PAGE>   31
                          TOPRO, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



       On June 28, 1996, the Company entered into a amendment to the stock
       purchase agreement which resolved these contingencies.  The Company
       recognized the previously deferred gain of $341,000 in the fourth
       quarter of 1996.  The amendment also provides for a bonus payment to be
       paid to Topro in the event of certain circumstances.  Any gain on this
       bonus payment will be recognized in the period it is received.


10.    LINES-OF-CREDIT AND LONG-TERM DEBT:

        Lines-of-credit consist of the following at June 30, 1996:

<TABLE>
        <S>                                                                   <C>
        Vision has a $650,000 line-of-credit pursuant to a loan agreement
        with a financial institution, collateralized by substantially all
        assets of Vision, with interest at prime plus 2% (total of 10.25%
        at June 30, 1996).  The line expires in December 1996 and requires
        monthly principal payments of $17,000 with an additional principal
        payment of $50,000 in July 1996                                       $  583,000

        ACT has a $500,000 line-of-credit pursuant to a loan agreement with
        a financial institution collateralized by substantially all assets
        of ACT, with interest at prime plus 2.5% (total of 10.75% at
        June 30, 1996).  The line expires in February 1997                       436,000
                                                                              ----------

                                                                              $1,019,000
                                                                              ==========
</TABLE>

        Notes payable to related parties consist of the following at June 30,
        1996:


<TABLE>
        <S>                                                                   <C>
        Notes payable to two officers and directors, with interest at 10%,
        due on demand, unsecured                                              $   80,000

        Notes payable to director and former majority stockholders of
        Vision, with interest at 8%, monthly payments of $10,000,
        unsecured                                                                130,000

        Note payable to relatives of director and former majority
        stockholders of Vision, interest payable quarterly at 10%,
        unsecured                                                                 20,000
                                                                              ----------

                                                                              $  230,000
                                                                              ==========
</TABLE>





                                      F-18
<PAGE>   32
                          TOPRO, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



        Long-term debt payable to financial institutions and others consists of
        the following at June 30, 1996:

<TABLE>
        <S>                                                                   <C>
        Convertible debentures, interest payable monthly at 9%.  The
        balance due relates to three debentures as follows: $1,000,000
        maturing March 1, 2003, $1,500,000 maturing March 1, 2003, and
        $1,000,000 maturing June 1, 2003.  Mandatory principal repayments
        calculated at 1% of the outstanding balance begin monthly in March
        1999, collateralized by all the assets of the Company.(1)             $3,500,000

        Convertible notes, 8% interest payable quarterly on August 17,
        November 17, and February 17, due in February 1997, unsecured.(2)        375,000

        Senior convertible notes, 10% interest payable semi-annually on
        September 30 and March 31, due in March 2000, unsecured.(3)              350,000

        Note payable to a bank, with interest at prime plus 2.5% (total of
        10.75% at June 30, 1996), monthly principal and interest payments
        of $11,000 with remaining balance due August 1997, collateralized
        by substantially all assets of ACT                                       474,000


        Note payable to a bank, due in monthly payments of $3,000 including
        interest at 11%, with remaining balance due November 1996,
        collateralized by land and building of ACT                               262,000

        Note payable to an entity, due in monthly payments of $6,000
        through April 2000, collateralized by second position on land and
        building of ACT                                                          241,000

        Note payable to legal counsel of ACT, monthly payments of $5,000
        due through September 1998.  The note is non-interest bearing, but
        has been discounted at an effective rate of 10.25%                       121,000
</TABLE>


        --------------
        (1)    The first two debentures are convertible into one share of
               common stock at $1.50 of principal and interest, at any time.
               The third debenture is convertible into one share of common
               stock at $2.25 of principal and interest, at any time.  The
               conversion prices may be reduced in the event of certain
               circumstances.

        (2)    The notes are convertible into one share of common stock per
               $1.75 of principal and interest.

        (3)    The notes are convertible into units consisting of one share of
               common stock and one warrant at the rate of $.67 per unit.  The
               warrants are exercisable to purchase one share of common stock
               at $1.00, expiring the earlier of 3 years from date of
               conversion or December 31, 2001.





                                      F-19
<PAGE>   33
                          TOPRO, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



<TABLE>
        <S>                                                                    <C>
        Term loan payable to a bank, with a variable interest adjusted
        quarterly based on prime pus 2.75% (total of 11.0% at June 30,
        1996), collateralized by a second security interest on
        substantially all assets of Vision, guaranteed by SBA and
        personally guaranteed by a director, which personal guarantee is
        collateralized by a third trust deed on the director's residence,
        payable in monthly principal and interest payments of $7,000,
        adjusted quarterly, through September 2002                               324,000

        Term loan payable to a bank, with a variable interest rate at prime
        plus 2% (total of 10.25% at June 30, 1996), collateralized by
        equipment and leasehold improvements, due on demand or if no
        demand, payable in monthly installments of $7,000 plus interest
        through April 1998                                                       153,000

        Various notes payable, due in maximum monthly installments totaling
        $2,000 through March 1998, collateralized by equipment and
        vehicles                                                                  34,000
                                                                              ----------

               Total                                                           5,834,000
               Less current portion                                             (975,000)
                                                                              ----------

               Long-term portion                                              $4,859,000
                                                                              ==========
</TABLE>



       The payment schedule for the years ended June 30 is as follows:

<TABLE>
<CAPTION>
                                       RELATED
     YEAR                              PARTIES                 OTHER 
     ----                             ----------            ----------
     <S>                                <C>                   <C>
     1997                             $  230,000            $  975,000
     1998                                   --                 823,000
     1999                                   --                 288,000
     2000                                   --                 157,000
     2001                                   --                  76,000
       Thereafter                           --               3,515,000
                                      ----------            ----------
                                      
                                      
                                      $  230,000            $5,834,000
                                      ==========            ==========
</TABLE>

      The convertible debentures described above include covenants which
      require the Company, among other things, to maintain certain working
      capital and net worth ratios.  At June 30, 1996, the Company was not in
      compliance with certain covenants, however, the lender has granted a
      forbearance with compliance of the covenants through July 1997.





                                      F-20
<PAGE>   34
                          TOPRO, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



11.   INCOME TAXES:

      Deferred tax assets (liabilities) as of June 30, 1996 are comprised of
      the following:

<TABLE>
        <S>                                                        <C>
        Current deferred tax assets (liabilities):
              Trade receivables                                    $    128,000
              Contingency loss on discontinued operations                50,000
              Deferred gain                                              23,000
              Accrued liabilities                                       284,000
                                                                   ------------
                          Total                                         485,000

        Less valuation allowance                                       (485,000)
                                                                   ------------

                          Net                                      $       --   
                                                                   ============

        Long-term deferred tax assets (liabilities):
              Property and equipment                               $   (138,000)
              Net operating loss carryforwards                        2,792,000
                                                                   ------------
                    Total                                             2,654,000
        Less valuation allowance
                                                                     (2,654,000)
                                                                   ------------


                          Net                                      $       --   
                                                                   ============
</TABLE>


      At June 30, 1996, the Company has net operating loss carryforwards of
      approximately $8,200,000 for Federal income tax purposes which expire in
      2008 through 2011.  A portion of these carryforwards will be limited due
      to the change in control of acquired companies.


12.   STOCKHOLDERS' EQUITY:

      In addition to its common stock, the Company has authorized 10,000,000
      shares of $1.00 par value preferred stock.  The Company's Articles of
      Incorporation permit the Board of Directors to issue the Preferred Stock
      in series with rights and privileges to be determined by the Board of
      Directors at the time of issuance.

      In October 1994, the Company issued 110,000 shares of common stock and
      110,000 warrants for proceeds of $144,000, net of issuance cost of
      $16,000 in a private placement.

      In December 1994, 30,000 shares of common stock and 30,000 warrants were
      issued for proceeds of $38,000, net of issuance cost of $4,000 in a
      private placement.





                                      F-21
<PAGE>   35
                          TOPRO, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



      In December 1994, the President and Chief Executive Officer of the
      Company purchased 178,571 shares of common stock and 178,571 warrants for
      proceeds of $235,000, net of issuance cost of $15,000.

      In April 1995, the Company issued 449,850 shares of common stock and
      449,850 warrants in a private placement for proceeds $273,000, net of
      issuance cost of $28,000.

      In conjunction with the placement of senior notes, the Company issued
      149,254 warrants to the note holders and 37,313 shares and 37,313
      warrants to the underwriter as a commission.

      In May 1995, two senior note holders converted a total of $150,000 of
      notes and $6,000 of accrued interest into 228,726 shares of common stock
      and 228,726 warrants.

      In June 1995, the Company issued 137,311 shares of common stock and
      137,311 warrants to employees.  67,163 shares and warrants were for
      payment of services rendered by the employees.  The remaining 70,148
      shares and warrants were issued for cash of $45,000, net of issuance cost
      of $2,000.

      In conjunction with the president's employment agreement, the Company
      granted him options to purchase a total of 315,000 shares of common
      stock, exercisable as follows:

            o      Options to purchase 80,000 shares at $.75 per share
                   exercisable commencing January 23, 1995 through January 23,
                   2005.

            o      Options to purchase 60,000 shares at $1.20 per share
                   exercisable commencing June 30, 1995 through June 30, 2005.

            o      Options to purchase 75,000 shares at $1.75 per share
                   exercisable commencing June 30, 1996 through June 30, 2006.

            o      Options to purchase 100,000 shares at $3.50 per share
                   exercisable commencing June 30, 1997 through June 30, 2007.

      The Company recorded compensation expense of $78,000 related to the grant
      of these options during the year ended June 30,1995, which represents the
      difference between the market price at the date of grant and the exercise
      price.

      In May 1996, the Company extended the exercise period for 662,000
      warrants to June 1997.

      In September 1995, a senior note holder converted $25,000 of notes and
      $1,000 of accrued interest into 39,102 shares of common stock and 39,102
      warrants exercisable at $1.00 through August 1998.

      In October 1995, the Company issued 50,000 warrants exercisable at $1.00
      through October 2000 to its public relations firm.





                                      F-22
<PAGE>   36
                          TOPRO, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



      In November 1995, the Company issued 14,286 warrants exercisable at $1.75
      through November 2000 to a financial institution in conjunction with a
      loan agreement.

      In conjunction with the convertible debentures issued in February and
      March 1996, the Company issued to Renaissance Capital 375,000 warrants
      exercisable at $2.00 per share through March 1999.  The Company allocated
      $38,000 of the debenture proceeds to the warrants.

      In December 1995 and January 1996, the Company issued a total of $480,000
      of convertible 12%, 180-day notes.  The note holders received a total of
      240,000 warrants exercisable at $1.00 per share through April 2000.  In
      May 1996, the Company completed a private placement of units consisting
      of a total of 800,000 shares of common stock and warrants to purchase
      200,000 shares of common stock.  The warrants are exercisable at $1.00
      per share through April 2000.  This offering included conversion of the
      $465,000, 180-day notes, accrued interest of $23,000 and $535,000 of cash
      proceeds.  The Company incurred offering costs of $167,000 in connection
      with these transactions.  The Company also granted the underwriter a
      warrant to purchase 150,000 shares exercisable at $1.25 per share through
      March 2001.

      In September 1995, the Company completed a private placement of 435,000
      shares of common stock at $1.00 per share.  The Company incurred offering
      costs of $11,000 in connection with this  transaction.

      In February 1996, the Company issued 200,000 warrants to a public
      relations firm, exercisable through February 1999 as follows:  50,000 at
      $1.25, 50,000 at $2.00, 50,000 at $2.50, and 50,000 at $3.00.  The
      Company recorded $87,000 as the value of these warrants, which is being
      recognized as expense over the two-year term of the services agreement.

      In April and June 1996, the Company issued 55,673 shares and 50,000
      warrants exercisable at $2.00 per share through May 1999 in payment of
      $37,000 of interest on the senior notes payable.

      Following is a summary of changes in stock options and warrants
outstanding:

<TABLE>
<CAPTION>
                                                                     EXERCISE
                                                        SHARES         PRICE     
                                                     ------------   ------------
       <S>                                           <C>            <C>
       Options:
       --------
       JULY 1, 1994                                        80,000    $3.50-$4.25
              Granted                                     377,250     $.63-$3.50
              Exercised                                      --             --   
                                                     ------------   ------------
       JUNE 30, 1995                                      457,250     $.63-$4.25
              Granted                                   1,200,000    $2.25-$2.75
              Exercised                                      --             --   
                                                     ------------   ------------
       JUNE 30, 1996                                    1,657,250      $.63-4.25
                                                     ============   ============

                  EXERCISABLE AT JUNE 30, 1996            732,250
                                                     ============
</TABLE>





                                      F-23
<PAGE>   37
                          TOPRO, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



<TABLE>
       <S>                                           <C>            <C>
       Warrants:
       ---------

       JULY 1, 1994                                       922,000    $3.38-$5.10
              Granted                                   1,458,019     $.67-$2.50
              Exercised                                      --             --   
                                                     ------------   ------------
       JUNE 30, 1995                                    2,380,019     $.67-$5.10
              Granted                                   1,320,388
              Exercised                                      --             --   
                                                     ------------   ------------
       JUNE 30, 1996                                    3,700,407    $.625-$5.10
                                                     ============   ============

                  EXERCISABLE AT JUNE 30, 1996          3,700,407
                                                     ============
</TABLE>


<TABLE>
<CAPTION>
                                                                        Expiration
                                                                           Date          Shares 
                                                                      --------------   ---------
       <S>                                                            <C>               <C>
       Options outstanding at June 30, 1996 expire as follows:
       -------------------------------------------------------

       Exercise price of $4.25                                          April 2002        60,000
       Exercise price of $3.75                                         November 2002      10,000
       Exercise price of $3.50                                         February 2004      10,000
       Exercise price of $.75                                          January 2005       80,000
       Exercise price of $1.20                                         January 2005       60,000
       Exercise price of $1.75                                         January 2006       75,000
       Exercise price of $3.50                                         January 2007      100,000
       Exercise price of $.63                                          February 2005      25,000
       Exercise price of $1.63                                           June 2000        27,250
       Exercise price of $1.62                                          August 2005       10,000
       Exercise price of $2.25                                        September 2006     150,000
       Exercise price of $2.25                                         October 2006      450,000
       Exercise price of $2.50                                         October 2006      300,000
       Exercise price of $2.75                                         October 2006      300,000
                                                                                       ---------
                                                                                       1,657,250
                                                                                       =========
</TABLE>





                                      F-24
<PAGE>   38
                          TOPRO, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



<TABLE>
<CAPTION>
                                                                        Expiration
                                                                           Date          Shares 
                                                                      --------------   ---------
       <S>                                                            <C>               <C>
       Warrants outstanding at June 30, 1996 expire as follows:
       --------------------------------------------------------

       Exercise price of $5.10                                          August 1995         60,000
       Exercise price of $4.25                                           June 1997         662,000
       Exercise price of $3.375                                        October 1998        100,000
       Exercise price of $3.50                                         October 1998         50,000
       Exercise price of $3.625                                        October 1998         50,000
       Exercise price of $2.50                                         October 1999         66,667
       Exercise price of $2.00                                         December 1997       178,571
       Exercise price of $.67                                           March 2000          74,627
       Exercise price of $1.25                                         October 1999         50,000
       Exercise price of $.67                                           April 2000         159,144
       Exercise price of $.67                                            May 2000            8,333
       Exercise price of $1.00                                          April 2000       1,133,951
       Exercise price of $1.00                                           May 1998          228,726
       Exercise price of $1.00                                         October 2000         50,000
       Exercise price of $1.75                                         November 2000        14,286
       Exercise price of $1.25                                         February 1999        50,000
       Exercise price of $2.00                                         February 1999        50,000
       Exercise price of $2.50                                         February 1999        50,000
       Exercise price of $3.00                                         February 1999        50,000
       Exercise price of $2.00                                           May 1999           50,000
       Exercise price of $2.00                                          March 1999         375,000
       Exercise price of $1.25                                          March 2001         150,000
       Exercise price of $1.00                                          August 1998         39,102
                                                                                         ---------
                                                                                         3,700,407
                                                                                         =========
</TABLE>

13.   BENEFIT PLANS:

      The Company has a profit-sharing plan that covers all full-time employees
      with 12 months of service who elect to enter the plan.  At the option of
      the Board of Directors, an amount, not to exceed that allowable under the
      Internal Revenue Code of 1984, as amended, may be contributed to the
      plan.  During the years ended June 30, 1995 and 1996, the Company
      contributed $41,000, and $-0-, respectively, to the plan.

      The Company has 250,000 shares of common stock reserved for issuance
      under an incentive stock option plan.  Through June 30, 1996, 37,250
      options have been granted under this plan.  For options granted under the
      plan, the exercise price must be equal to or exceed the fair market value
      of the Company's common stock on the date of grant.

      In October 1992, the stockholders approved an employee stock purchase
      plan (the 1992 Plan), covering essentially all of the Company's employees
      except those owning directly or indirectly more than 5% of the Company's
      common stock.  The 1992 Plan, as amended, has authorized 10,000 shares
      and specifies certain dates that eligible employees may subscribe to
      purchase stock.  The exercise price shall be not





                                      F-25
<PAGE>   39
                          TOPRO, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



      less than 85% of the fair market value of the stock on enrollment date or
      exercise date, whichever is lower.  During the year ended June 30, 1995,
      employees elected to purchase 2,992 shares.  The Company executed these
      transactions on behalf of the employees through purchases on the open
      market.


14.   COMMITMENTS AND CONTINGENCIES:

      Leases - Vision leases equipment under leases which are classified as
      capital leases.  The following is an analysis of leased equipment under
      capital leases at June 30, 1996:

<TABLE>
        <S>                                                          <C>
        Equipment                                                    $  216,000
        Accumulated amortization                                         (2,000)
                                                                     ----------

                                                                     $  214,000
                                                                     ==========
</TABLE>

      Amortization on equipment under capital leases charged to expense during
      1995 and 1996 was $-0- and $2,000, respectively.

      The Company also leases office space and equipment under operating
      leases.

      Following is a schedule of future minimum lease payments for all leases:

<TABLE>
<CAPTION>
                                                      Capital           Operating
                   Year Ended June 30,                Leases              Leases    
              -----------------------------         ----------          ----------
              <S>                                   <C>                 <C>
              1997                                  $   90,000          $  406,000
              1998                                      81,000             364,000
              1999                                      59,000             285,000
              2000                                      39,000             132,000
              2001                                      13,000              88,000
              Thereafter                                  --                  --    
                                                    ----------          ----------
                                                    
                                                       282,000          $1,275,000
                                                                        ==========
              Less amount representing interest        (75,000)
                                                    ----------          
                                                       207,000
              Current portion                          (56,000)
                                                    ----------          
                                                    
                                                    
                                                    $  151,000
                                                    ==========
</TABLE>

      Rental expense under all operating leases amounted to $239,000 and
      $310,000 for the years ended June 30, 1995 and 1996, respectively.





                                      F-26
<PAGE>   40
                          TOPRO, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



      In April 1995, the Company sold a building for $1,025,000 and leased the
      building back.  The building is used as the Company's headquarters, as
      well as its primary production facility.  The Company used $770,000 of
      the proceeds to pay off two mortgages with financial institutions.  The
      sale resulted in a deferred income of which $97,000 is being amortized
      over the four-year lease term.  The minimum lease payments of $148,000 a
      year are included in the table above.

      Employment Agreements - The Company has entered into a employment
      agreement with an officer and director of the Company.  The agreement
      expires in January 1997 and provides for minimum annual salaries of
      $100,000 for the first year of employment and $160,000 in the second year
      of employment.  The agreement is automatically extended at the end of the
      initial term and on each anniversary unless a written notice is delivered
      by either party.  See Note 4 for other employment agreements.

      Contingencies - The Company and its subsidiaries are parties to various
      legal proceedings and are subject to various claims arising in the
      ordinary course of business.  Management believes that the disposition of
      these matters will not have a material effect on the consolidated
      financial position of the Company.


15.   FOURTH QUARTER ADJUSTMENT:

      In the fourth quarter of fiscal 1996, the Company recorded adjustments to
      capitalize computer software development costs which had been incurred in
      the first three quarters of the year.  The effect of these adjustments
      was to reduce the net loss by approximately $320,000.


16.   SUBSEQUENT EVENTS:

      In September 1996, the Company received $150,000 of proceeds of 12%
      unsecured subordinated promissory notes.  Principal and interest are due
      November 8, 1996, however, the Company may extend the maturity date for
      up to three months by payment of 2,500 shares of common stock per $50,000
      of principal for each month extended.  The Company also issued 7,500
      shares of common stock as a loan origination fee.  The notes are
      convertible at the option of the holder at one share of common stock per
      $.50 of principal and accrued interest, upon occurrence of certain
      events.





                                      F-27
<PAGE>   41
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURES.

       Not applicable.


                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS; COMPLIANCE WITH SECTION 16(A) OF THE
        EXCHANGE ACT

       The directors and executive officers of the Company are listed below.
Directors are elected to hold office until the next annual meeting of
shareholders and until their respective successors have been elected and
qualified.  Executive officers are elected by the Board of Directors and hold
office until their successors are elected and qualified.  There are no
committees of the Board of Directors.

<TABLE>
<CAPTION>
       Name                        Age         Positions
       ----                        ---         ---------
       <S>                         <C>         <C>
       R. Larry Ethridge           60          Chairman and Director
                                               
       John P. Jenkins             46          President, Chief Executive
                                               Officer and a Director; President
                                               of ACT; President of MDCS
                                               
       William B. Heermann         45          Executive Vice President
                                               
       Jon E. Walker               63          Director; Vice-Chairman of ACT
                                               
       H. Robert Gill              58          Director
                                               
       H. R. Hodge                 65          Director
                                               
       E. Gregory Fisher           50          President of MDCS, Inc.
</TABLE>

BIOGRAPHICAL INFORMATION

       R. Larry Ethridge.  Mr. Ethridge has been Chairman and a Director of the
Company since October, 1991.  Mr.  Ethridge co-founded the Company's
predecessor, Tech Sales in 1974.  Following Tech Sales' acquisition by the
Company, Mr. Ethridge served as President and CEO of the Company until January,
1995.  Mr. Ethridge holds a Bachelor of Science degree in Mechanical
Engineering from Le Tourneau College, Longview, Texas.

       John P. Jenkins. Mr. Jenkins has served as President, Chief Executive
Officer, and a Director of the Company since January, 1995.  Mr. Jenkins has
broad domestic and international operating experience in technology intensive
business with divisional profit and loss responsibility in a Fortune 200
company.  Prior to joining the Company, Mr. Jenkins served as president of
Morgan Technical Ceramics, Inc., a wholly-owned subsidiary of Morgan Crucible
plc, a publicly-traded on the London stock exchange diversified industrial
products company based in England.  Mr. Jenkins holds a Bachelor of Science
degree in Mechanical Engineering from the University of Washington, and a Juris
Doctor degree from the University of Denver, Denver, Colorado.  He serves as a
director of Integrated Security Systems, Inc., a publicly held company.
        
       William B. Heermann.  Mr. Heermann has been Executive Vice President of
the Company since October, 1991, also serving as a director until May, 1994.
He joined Tech Sales in 1975, and progressed through a series of positions in
that firm, including sales engineer, senior salesman, and project manager.  Mr.
Heermann holds a Bachelor of Science degree in Civil Engineering from Michigan
State University.




                                     15
<PAGE>   42
       Jon E. Walker.  Mr. Walker serves as a Director of the Company and as
Vice-Chairman of ACT, a company which was acquired by the Company in February,
1996.  Mr. Walker founded ACT and served as its president and CEO until
February, 1996. He is a graduate of Oregon State University, in Corvallis,
Oregon with a Bachelor of Science Degree in Electrical Engineering.  Mr. Walker
has over 36 years experience in engineering and management.

       H. Robert Gill.  Mr. Gill has been a director of the Company since
October, 1992.  From 1989 until 1996, Mr. Gill served as president, chief
executive officer and a director of ConferTech International Inc., a publicly
held audio tele-conferencing firm headquartered in Westminster, Colorado.  From
1983 to 1988, he served as President of the Industrial Systems Divisions of
Ball Corporation, a manufacturer of factory automation and control equipment.
For seven years prior to joining Ball Corporation, Mr. Gill served as Director
of Marine Products and Operations for Magnavox Corporation.

       H. R. Hodge.  Mr. Hodge has been a director of the Company since
October, 1992.  Mr. Hodge has been President and owner of Beta Metal Tech, a
manufacturer of precision computer and electronic sheet metal enclosures, since
1987.  From 1984 to 1987, he was in business as a management consultant.  From
1971 to 1984, he owned and operated Mountain States Metal Products, Inc., a
metal stamper for the high-tech industry.

       E. Gregory Fisher.  Mr. Fisher has been with the Company as president
and director of MDCS, Inc. since the Company acquired MDCS in 1995.  Mr. Fisher
founded MDCS, Inc. in 1976 and managed its operations since its inception.
Prior thereto, he held engineering positions with Vertex Systems, Inc. and Gulf
Oil Company.  Mr. Fisher holds a Bachelor of Arts degree in economics from
Georgia State University, Atlanta, Georgia.

Compliance with Section 16 (a) of the Exchange Act

       Section 16 (a) of the Securities Exchange Act of 1934 ( the "Exchange
Act") requires the Company's directors and officers and persons who own more
than ten percent of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC").  Directors, officers and greater than ten- percent shareholders
are require by SEC regulation to furnish the Company with copies of all Section
16 (a) reports filed.

       Based solely on its review of the copies of the reports it received from
persons required to file, the Company believes that during the period from July
1, 1995 through June 30, 1996, all filing requirements applicable to its
officers, directors and greater than ten-percent shareholders were complied.


ITEM 10. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

(a)(b) The following table sets forth information regarding compensation paid
during the past three fiscal years to the Company's Chief Executive Officer and
to any of the Company's four most highly compensated executive officers who
were received total salary and bonus in excess of $100,000 per annum during the
fiscal year ended June 30, 1996:





                                       16
<PAGE>   43
SUMMARY COMPENSATION TABLE


<TABLE>
<CAPTION>
                           Annual Compensation                              Long Term Compensation   
                  ----------------------------------------    ------------------------------------------------------
                                                                        Awards                       Payouts         
                                                              ---------------------------      ---------------------
      (a)          (b)        (c)         (d)       (e)          (f)              (g)             (h)       (i)
                                                     Other    Restricted       Securities
Name and Principal                                  Annual      Stock           Underling         LTIP     All Other
Position           Year    Salary($)    Bonus($)   Comp ($)   Awards ($)  Option/SAR's (#)     Payouts  Compensation
--------------------------------------------------------------------------------------------------------------------
<S>                <C>    <C>         <C>          <C>         <C>            <C>              <C>        <C>
JOHN P. JENKINS    1996   $146,416     $      0    $ 6,732     $    0         $      0         $   0      $1,600(1)
President          1995   $ 40,000(2)  $      0    $13,510     $    0          315,000(3)                 $    0
  and CEO          1994        N/A           --         --         --               --            --          --

JON E. WALKER      1996   $ 84,000(4)  $ 50,000(4) $     0     $    0         $      0         $   0      $7,500(5)
Vice-Chairman      1995        N/A           --         --         --               --            --          --
   of ACT          1994        N/A           --         --         --               --            --          --
</TABLE>

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

(1)    Equal to the insurance premiums paid by the Company with respect to term
       life insurance and the full dollar value of the remainder of the
       premiums paid by the Company.

(2)    Represents compensation commencing January 23, 1995.

(3)    John P. Jenkins was granted Non-Qualified Options to purchase 315,000
       shares on December 27, 1994 the date of his employment agreement with
       the Company.  As of June 30, 1996, 215,000 options were exercisable.

(4)    Represents compensation paid commencing January 1, 1996 through June 30,
       1996.

(5)    Equal to the insurance premiums paid by the Company with respect to term
       life insurance and the full dollar value of the remainder of the
       premiums paid by the Company from January 1, 1996 through June 30, 1996.

(c)  OPTION/SAR GRANTS IN LAST FISCAL YEAR

       During the fiscal year ended June 30, 1996, no options or SARs were
granted to any of the executive officers required to be named in the Summary
Compensation Table.

(d)  AGGREGATED OPTION/SAR EXERCISES FY-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
       (a)               (b)             (c)                    (d)                              (e)
                                                  Number of Securities Underlying        Value of Unexercised
                                                     Unexercised Options/SARs           In-the Money Options/
                       Shares           Value               at FY-End(#)                  SARs at FY-End (#)
Name            Acquired on Exercise  Realized       Exercisable/Unexercisable      Exercisable/Unexercisable (1)
-----------------------------------------------------------------------------------------------------------------
<S>                      <C>             <C>            <C>        <C>                       <C>
John P. Jenkins          -0-             -0-             80,000    (E)                       $ 110,000
President & CEO                                          60,000    (E)                       $  55,500
                                                         75,000    (E)                       $  28,125
                                                        100,000    (U)                       $       0(2)
</TABLE>

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

(1)    The year-end values represent the difference between the option exercise
       prices (ranging from $.75 to $3.50 per share) and the $2.125 market
       value of the Company's Common Stock on June 28, 1996, the last trading
       day before fiscal year end.  Fair market value represents the average of
       the bid and ask prices reported by Nasdaq.
(2)    The exercise price of $3.50 is in excess of the year end market value of
       the Common Stock,





                                       17
<PAGE>   44
(e)    Long-Term Incentive Plan ("LTIP") Awards.  During the fiscal year ended
June 30, 1996, the Company did not make any LTIP grants not disclosed above.

(f)    Compensation of Directors.  The Company pays no cash compensation to
directors for their service as such.  It had been the Company's practice to
grant each year to outside directors a non qualified stock option for 5,000
shares of the Company's Common Stock; however, no such grant was made during
fiscal 1996.  During fiscal 1996, the Company did pay $4,095 in consulting fees
to one of its directors, H. Robert Gill.

(g)    Employment Contracts and Termination of Employment and Change-in-Control
Arrangements.  The Company has an employment agreement with John  Jenkins, its
President and CEO, providing for, among other things, minimum cash compensation
currently at $160,000 per annum and  an automobile for his exclusive use.  The
agreement expires on January 23, 1997 but will renewed automatically for one
year unless 30 days' notice of non-renewal is given by either party.  During
any renewed term of the agreement, the Company is required to give Mr. Jenkins
an aggregate of nine months prior notice and/or salary continuation benefits in
order to terminate his employment other than for cause, as defined in the
agreement.  The salary continuation benefits will cease on such prior date as
Mr. Jenkins accepts other full-time employment.  Pursuant to the employment
agreement, the Company granted Mr. Jenkins a non-qualified stock option for
315,000 shares of Common Stock as described above.

       The Company entered into a two year agreement for employment commencing
August 1, 1995 with E. Gregory Fisher, President of MDCS, Inc. providing for a
minimum base salary of $75,000 per annum.  The agreement will be renewed
automatically for additional two year terms unless six months' prior notice of
non-renewal is given by either party.  Mr. Fisher is also entitled to receive
bonus compensation equal to one percent of the total price received by MDCS,
Inc.  for all orders placed during the period of 18 months following the
Company's acquisition of MDCS.  If the Company terminates Mr. Fisher's
employment other than for cause, he is entitled to receive his base salary
through the term of the agreement, less up to six months's salary payments
which will be paid as severance.  Pursuant to the agreement, on the
commencement date of his employment and on each anniversary thereof, the
Company grants to Mr. Fisher an option to purchase 10,000 shares of the
Company's common stock at the current bid price.  Pursuant to the agreement,
the Company provides a $500,000 term life insurance policy with a beneficiary
designated by Mr. Fisher.  Mr. Fisher is also provided with an automobile.

       In connection with the acquisition of ACT, on February 21, 1996 the
Company entered into a 30-month employment agreement with Jon E. Walker
pursuant to which he  serves as Vice-Chairman of ACT.   The employment
agreement provides for a minimum annual base salary of at least $144,000.  In
the event of Mr. Walker's death or the Company's termination of Mr. Walker's
employment (other than for cause, as defined in the agreement), during the term
of the agreement the Company is required to continue to pay the base salary
payments through the term of the agreement to Mr. Walker's estate in the event
of death or to Mr. Walker, until such prior date as he accepts other full-time
employment.  Mr. Walker was paid a signing bonus of $50,000.  The agreement
requires the Company to keep in force the life insurance policy maintained by
ACT, for which Mr. Walker has designated the beneficiary.

       The Company has a 401(k) profit-sharing plan for all eligible employees,
not limited to officers.  Beginning in fiscal 1994, the Company amended the
plan providing for an elective match 25 cents for each $1 contributed by
participating employees.  The Company did not make the match in calendar 1995.

(h)    Report on Repricing of Options/SARs.  During the fiscal year ended June
30, 1996, the Company did not amend or adjust the terms of any stock option or
SAR previously awarded to any of the named executive officers.





                                       18
<PAGE>   45
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

       The following table sets forth, as of September 30, 1996, the number of
shares of the Company's Common Stock beneficially owned by (a) owners of more
than five percent of the Company's outstanding Common Stock who are known to
the Company and (b) the Directors of the Company, individually, and the
Executive Officers and Directors of the Company as a group, and (c) the
percentage of ownership of the outstanding Common Stock represented by such
shares.  The security holders listed below are deemed to be the beneficial
owners of shares of Common Stock underlying options and warrants which are
exercisable within 60 days of September 30, 1996.

<TABLE>
<CAPTION>
                                                                                Percentage of
                                                     Beneficial                  Common Stock
       Name of Beneficial Owner                      Ownership                    Outstanding   
       ------------------------                      ---------                ------------------
       <S>                                         <C>                             <C>
       R. Larry Ethridge                               427,019                       6.43%
       6325 W. Mansfield #2236
       Denver, CO 80235

       John P. Jenkins                                 579,642 (1)                   8.23%
       2525 W. Evans Avenue
       Denver, CO 80219

       Jon E. Walker                                   946,932 (2)                  14.22%
       2830 Ferry Street
       Albany, OR 97321

       H. Robert Gill                                   15,000 (3)                    .23%

       H. R. Hodge                                      15,000 (4)                    .23%

       All executive officers and directors          2,331,714 (5)                   32.8%
        as a group  (7 individuals)

       Michael Taylor                                  566,000 (6)                   8.02%
       10855 Business Ctr Dr
       Cypress, CA 90630

       Renaissance Capital Growth                    2,486,111 (7)                  27.24%
        & Income Fund III, Inc.
       8080 N.  Central Expwy Suite 210
       Dallas, TX 75206

       Richard Brown                                   401,431                       6.04%
       2830 Ferry Street
       Albany,  OR  97321

       Steven M. Bathgate                              523,524 (8)                   7.73%
       5350 S. Roslyn St., #380
       Englewood, CO 80110

       Eugene C.  McColley                             370,774 (9)                   5.51%
       5350 S.  Roslyn St., #380
       Englewood, CO 80111
</TABLE>

---------------
(1)    The figure shown reflects 401,071 shares that are subject to options and
       warrants held by Mr. Jenkins.





                                       19
<PAGE>   46
(2)    The figure shown includes 17,500 underlying warrants held jointly with
       spouse, 20,000 shares held jointly with spouse, and 454,716 shares owned
       of record by spouse.
(3)    The figures shown reflect 15,000 shares that are subject to options held
       by Mr. Gill.
(4)    The figures shown reflect 15,000 shares that are subject to options held
       by Mr. Hodge.
(5)    Includes 10,000 shares underlying options in addition to those described
       in footnotes (1) - (4).
(6)    The figure shown represents: 114,000 shares underlying warrants and
       152,000 shares held of record by the Michael and Kathleen Taylor Trust;
       150,000 shares underlying options held by Mr. Taylor; and 150,000 shares
       underlying options held by Mrs. Taylor.
(7)    The figure shown represents 2,111,111 shares underlying 8% Convertible
       Debentures and 375,000 shares underlying warrants.
(8)    Includes securities held with spouse and in Keough accounts.  Also
       includes one-half of the 227,547 shares and 177,547 warrants held of
       record by Kiawah Capital Partners, a partnership owned by Steven M.
       Bathgate and Eugene C. McColley.   Mr. Bathgate disclaims beneficial
       ownership of one-half of the securities held by Kiawah Capital Partners.
(9)    Includes one-half of the 227,547 shares and 177,547 warrants held of
       record by Kiawah Capital Partners, a partnership owned by Steven M.
       Bathgate and Eugene C. McColley.   Mr. McColley disclaims beneficial
       ownership of one-half of the securities held by Kiawah Capital Partners.

Item 12. Certain Relationships and Related Transactions

       On June 30, 1985, R. Larry Ethridge and William B. Heermann lent the
Company the sums of $60,000 and $40,000, respectively, on unsecured notes that
were payable upon demand.  The funds were used by the Company for working
capital.  In November 1990, the Company advanced $10,000 to each of Messrs.
Ethridge and Heermann.  On June 30, 1993 the advances were offset against the
notes; and new unsecured demand notes, carrying a rate of interest of 10.0%, in
the amount of $50,000 and $30,000, respectively were issued by the Company.  As
of June 30, 1995 these notes remain outstanding and neither party has made
demand to the Company for payment.  Interest payments are current on the notes.

       On October 20, 1993 J. Neal Ethridge, a brother of the Company's
Chairman, loaned a subsidiary of the Company $750,000.  Warrants totaling
200,000 shares at a price equal to the bid price of the Company's stock on the
date of grant were issued to Mr. Ethridge.  During fiscal 1995, at a time when
J. Neal Ethridge was a Director of the Company, this note was cancelled and Mr.
Ethridge and a non-affiliated party extended loans of $570,000 and $190,000,
respectively, to Topro, Inc. in exchange for promissory notes secured by a
pledge of the DMC shares, subordinated to the Company's Senior Convertible Note
holders.  A new note in the amount of $570,000 was renegotiated on June 1,
1995.  On November 8, 1995, the Company sold its remaining 3,255 share owned in
DMC to three parties, including J. Neal Ethridge, who was at that time a
Director of the Company.  The purchase price of $1,110,000 (approximately $341
per share) was paid with $350,000 in cash, and cancellation of the aggregate of
$760,000 of the Company's promissory notes held by Mr.  Ethridge and the other
party.  On June 28, 1996 the Company entered into an amendment to the stock
purchase agreement resolving these contingencies.  The amendment provides for a
bonus payment to be paid the Company.  Should DMC be sold to any third party
for consideration of greater than $420 per share the Company will receive 50%
of the difference between the $420 per share and the actual price.  This
additional consideration will be paid to the Company when received by the DMC
selling shareholders.  The Company realized a gain of $ 410,000 from the sale
of the DMC stock.  The Board of Directors believes that the terms of this
transaction were at least as favorable as terms which could have been obtained
from any non-affiliated party.





                                       20
<PAGE>   47
                                    PART IV

ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

       (a)       EXHIBITS.  The following Exhibits are filed herewith or have
been previously filed with the Securities and Exchange Commission and are
incorporated by reference herein:

       2.1       Agreement and Plan of Merger dated July 26, 1995 regarding the
acquisition of Management Design and Consulting Services, Inc.  (A)

       2.2       Agreement and Plan of Merger dated February 21, 1996 -
regarding the acquisition of Advanced Control Technology, Inc.  (B)

       2.3       Agreement of Merger dated May 17, 1996 - regarding the
acquisition of Visioneering Holding Corporation.  (C)

       3.3       Restated Articles of Incorporation.  Filed herewith.

       3.4       By Laws  (H)

       4.1       Form of Senior Convertible Promissory Note and Security
Agreement. Pursuant to Item 601 (b)(4)(iii)(A), a copy will be furnished to the
Commission upon request.

       10.1      $570,000 Variable Rate Secured Promissory Note and Security
Agreement dated June 1, 1995 with J. Neal Ethridge. (D)

       10.2      $190,000 Variable Rate Secured Promissory Note and Security
Agreement dated June 1, 1995 with Gary Cansler.  (D)

       10.3      Promissory Note issued by Tech Sales, Inc. in favor of R.
Larry Ethridge, President and a Director of the registrant, in the amount of
$50,000.  (I)

       10.4      Promissory Note issued by Tech Sales, Inc. in favor of William
B. Heermann, Vice President and a Director of the registrant, in the amount of
$30,000.  (I)

       10.6      1992 Employee Stock Purchase Plan.  (J)

       10.7      1992 Incentive Stock Option Plan.  (J)

       10.8      Agreement dated March 29, 1993 with Direct Measurement
Corporation, whereby the Company invested $300,000 for an approximate 17%
equity interest in Direct Measurement Corporation.  An additional Agreement
signed March 29, 1993, granted the Company an exclusive three year right to
market Direct Measurement Corporation's products for three years throughout
North America with non exclusive rights world wide.  (J)

       10.9      Employment Agreement  dated December 27, 1994 between the
Registrant and John Jenkins. (E)

       10.10     Non-Qualified Stock Option Agreement dated December 27, 1994
between the Registrant and John Jenkins.  (D)

       10.11     Asset Purchase Agreement dated May 5, 1995 - regarding sale of
certain operating assets of the Registrant's subsidiary Sharp Electric
Construction Company to Piper Electric Co., Incorporated.   (F)





                                       21
<PAGE>   48
       10.13     Note, Loan and Security Agreement dated August 24, 1992 With
Merrill Lynch Business Financial Services, Inc. as amended February 19, 1993
and renewed August 23, 1993.  (J)

       10.14     Renewal, dated April 4, 1995, of Note, Loan and Security
agreement with Merrill Lynch Business Financial Services.  (D)

       10.15     Agreement signed October 4, 1994 with Direct Measurement
Corporation.  (K)

       10.16      Agreement dated December 6, 1994 with Direct Measurement
Corporation. (D)

       10.17     Stock Purchase Agreement dated November 7, 1995 - regarding
DMC shares.  (G)

       10.18     Loan Agreement - Renaissance Capital Growth & Income Fund III,
Inc.  (B)

       10.19     Employment Agreement dated July 27, 1995 between the
Registrant and E. Gregory Fisher (?)

       10.20     Employment Agreement dated February 21, 1996 between the
Registrant and Jon E. Walker.  (B)

       21.1      List of Subsidiaries.  Filed herewith.

       27        Financial Data Schedule

---------------
       (A)       Incorporated by reference to the Form 8-K Current Report dated
                 August 10, 1995.

       (B)       Incorporated by reference from the Company's Form 8-K dated
                 February 21, 1996.

       (C)       Incorporated by reference from the Company's Form 8-K dated
                 May 30, 1996.

       (D)       Incorporated by reference from the Company's Form 10-KSB for
                 the fiscal year ended June 30, 1995.

       (E)        Incorporated by reference to the Form 8-K Current Report
                 dated January 23, 1995.

       (F)       Incorporated by reference to Exhibit 2.1 to the Form 8-K
                 Current report dated May 2, 1995.

       (G)       Incorporated by reference from the Company's Form 8-K dated
                 November 8, 1995.

       (H)       Incorporated by reference from Exhibit 3.3 to Registration
                 Statement on Form S-1, File No. 33-47159, effective June 17,
                 1992.

       (I)       Incorporated by reference from the Company's Form 10-K for the
                 fiscal year ended June 30, 1992.

       (J)       Incorporated by reference from the Company's Form 10-K for the
                 fiscal year ended June 30, 1993.

       (K)       Incorporated by reference from the Company's Form 10-K for the
                 fiscal year ended June 30, 1994.


       (b)       REPORTS ON FORM 8-K

       During the last quarter of the period covered by this report the Company
filed a report on Form 8-K dated May 30, 1996, reporting the acquisition of
Visioneering Holding Corp.  Required financial statements of Visioneering
Holding Corp. were filed with the Form 8-K.  Pro forma financial information
was filed by amendment to the Form 8-K.





                                       22
<PAGE>   49
                                   SIGNATURES

       Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                     Topro, Inc.

Date: October    , 1996              By:  /s/ John P. Jenkins             
-----------------------                 ----------------------------------
                                           John P. Jenkins
                                           President and CEO


Date: October    , 1996              By:  /s/ Thomas Tennessen          
-----------------------                 --------------------------------
                                           Thomas Tennessen
                                            Principal Accounting Officer

       Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
        Signatures                Title                         Date
<S>                               <C>                           <C>          
  /s/ R. Larry Ethridge           Chairman and a                October  15, 1996
-----------------------------     Director                              -----      
R. Larry Ethridge                 


  /s/ John P. Jenkins             President and                 October  15, 1996
-----------------------------     Director (Chief                       -----      
John P. Jenkins                   Executive Officer)
                                  

                                  Executive Vice President      October    , 1996
-----------------------------                                           -----      
William B. Heermann


  /s/ H. Robert Gill              Director                      October  15, 1996
-----------------------------                                           -----      
H. Robert Gill

  /s/ H. R. Hodge                 Director                      October  15, 1996
-----------------------------                                           -----      
H. R. Hodge


                                  Director                      October    , 1996
-----------------------------                                           -----      
Jon E. Walker
</TABLE>





 


                                       23
<PAGE>   50
                             EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit Number            Exhibit Description                                      Page
-------------             -------------------                                      ----
<S>              <C>                                                               <C>
     2.1         Agreement and Plan of Merger dated July 26, 1995 regarding the
                 acquisition of Management Design and Consulting Services, 
                 Inc.  (A)

     2.2         Agreement and Plan of Merger dated February 21, 1996 -
                 regarding the acquisition of Advanced Control Technology, 
                 Inc.  (B)

     2.3         Agreement of Merger dated May 17, 1996 - regarding the
                 acquisition of Visioneering Holding Corporation.  (C)

     3.3         Restated Articles of Incorporation.  Filed herewith.

     3.4         By Laws  (H)

     4.1         Form of Senior Convertible Promissory Note and Security
                 Agreement. Pursuant to Item 601 (b)(4)(iii)(A), a copy 
                 will be furnished to the Commission upon request.

    10.1         $570,000 Variable Rate Secured Promissory Note and Security
                 Agreement dated June 1, 1995 with J. Neal Ethridge. (D)

    10.2         $190,000 Variable Rate Secured Promissory Note and Security
                 Agreement dated June 1, 1995 with Gary Cansler.  (D)

    10.3         Promissory Note issued by Tech Sales, Inc. in favor of R.
                 Larry Ethridge, President and a Director of the registrant, 
                 in the amount of $50,000.  (I)

    10.4         Promissory Note issued by Tech Sales, Inc. in favor of William
                 B. Heermann, Vice President and a Director of the registrant, 
                 in the amount of $30,000.  (I)

    10.6         1992 Employee Stock Purchase Plan.  (J)

    10.7         1992 Incentive Stock Option Plan.  (J)

    10.8         Agreement dated March 29, 1993 with Direct Measurement
                 Corporation, whereby the Company invested $300,000 for an 
                 approximate 17% equity interest in Direct Measurement 
                 Corporation.  An additional Agreement signed March 29, 1993, 
                 granted the Company an exclusive three year right to market 
                 Direct Measurement Corporation's products for three years 
                 throughout North America with non exclusive rights world 
                 wide.  (J)

    10.9         Employment Agreement  dated December 27, 1994 between the
                 Registrant and John Jenkins. (E)

    10.10        Non-Qualified Stock Option Agreement dated December 27, 1994
                 between the Registrant and John Jenkins.  (D)

    10.11        Asset Purchase Agreement dated May 5, 1995 - regarding sale of
                 certain operating assets of the Registrant's subsidiary Sharp 
                 Electric Construction Company to Piper Electric Co., 
                 Incorporated.   (F)
</TABLE>

<PAGE>   51
                             EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit Number            Exhibit Description                                      Page
-------------             -------------------                                      ----
<S>              <C>                                                               <C>
    10.13        Note, Loan and Security Agreement dated August 24, 1992 With
                 Merrill Lynch Business Financial Services, Inc. as amended 
                 February 19, 1993 and renewed August 23, 1993.  (J)

    10.14        Renewal, dated April 4, 1995, of Note, Loan and Security
                 agreement with Merrill Lynch Business Financial Services.  (D)

    10.15        Agreement signed October 4, 1994 with Direct Measurement
                 Corporation.  (K)

    10.16        Agreement dated December 6, 1994 with Direct Measurement
                 Corporation. (D)

    10.17        Stock Purchase Agreement dated November 7, 1995 - regarding
                 DMC shares.  (G)

    10.18        Loan Agreement - Renaissance Capital Growth & Income Fund III,
                 Inc.  (B)

    10.19        Employment Agreement dated July 27, 1995 between the
                 Registrant and E. Gregory Fisher (?)

    10.20        Employment Agreement dated February 21, 1996 between the
                 Registrant and Jon E. Walker.  (B)

    21.1         List of Subsidiaries.  Filed herewith.

    27           Financial Data Schedule
</TABLE>

---------------
       (A)       Incorporated by reference to the Form 8-K Current Report dated
                 August 10, 1995.

       (B)       Incorporated by reference from the Company's Form 8-K dated
                 February 21, 1996.

       (C)       Incorporated by reference from the Company's Form 8-K dated
                 May 30, 1996.

       (D)       Incorporated by reference from the Company's Form 10-KSB for
                 the fiscal year ended June 30, 1995.

       (E)        Incorporated by reference to the Form 8-K Current Report
                 dated January 23, 1995.

       (F)       Incorporated by reference to Exhibit 2.1 to the Form 8-K
                 Current report dated May 2, 1995.

       (G)       Incorporated by reference from the Company's Form 8-K dated
                 November 8, 1995.

       (H)       Incorporated by reference from Exhibit 3.3 to Registration
                 Statement on Form S-1, File No. 33-47159, effective June 17,
                 1992.

       (I)       Incorporated by reference from the Company's Form 10-K for the
                 fiscal year ended June 30, 1992.

       (J)       Incorporated by reference from the Company's Form 10-K for the
                 fiscal year ended June 30, 1993.

       (K)       Incorporated by reference from the Company's Form 10-K for the
                 fiscal year ended June 30, 1994.