<PAGE>
   
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                             FORM 10-KSB/A No. 2
    
 X   Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934

                    For the fiscal year ended June 30, 1997
                                      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 Small Business issuer in its charter)

             Colorado                                84-1042227
 -------------------------------        -------------------------------------
 (State or other jurisdiction of        (I.R.S. Employer Identification. No.)
  incorporation or organization)

2525 West Evans Avenue, Denver, Colorado               80219
----------------------------------------               -----
(Address of principal executive offices)             (zip code)

Issuer'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
                                  -----------------------------------------

Check whether the issuer (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
                                        ---     ---
Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B contained in this form and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-KSB or any
amendment to this Form 10-KSB ___.

State issuer's revenues for its most recent fiscal year: $36,843,000
                                                         -----------
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the
average bid and ask prices of such stock, as of a specified date within the
past 60 days.  On August 28, 1997, the aggregate market value of voting stock
held by non-affiliates, based on the closing price as quoted by the NASDAQ
Stock Market, was $100,229,000.

State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.  Shares of common stock,
$.0001 par value, outstanding as of August 28, 1997: 16,497,738 shares.

Documents incorporated by reference: Definitive Proxy Statement to be filed
with the Commission no later than October 28, 1997.

Transitional Small Business Disclosure Format (check one): Yes      No  X
                                                               ---     ---

                                     1
<PAGE>

           REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS





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


We have audited the accompanying consolidated balance sheet of Topro, Inc. 
and subsidiaries as of June 30, 1997 and the related consolidated statements 
of operations, stockholders' equity and cash flows for the year then ended.  
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements 
based on our audit.

We conducted our audit 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 audit provides 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 at June 30, 1997 and the results of their operations 
and their cash flows for the year then ended in conformity with generally 
accepted accounting principles.


                                       BDO Seidman, LLP

Denver, Colorado
September 26, 1997






                                     F-1

<PAGE>



                      INDEPENDENT AUDITOR'S REPORT






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


We have audited the consolidated balance sheet of Topro, Inc. and 
subsidiaries as of June 30, 1996 (not separately presented herein) and the 
accompanying related consolidated statements of operations, stockholders' 
equity and cash flows for the year then ended.  These financial statements 
are the responsibility of the Company's management. Our responsibility is to 
express an opinion on these financial statements based on our audit.

We conducted our audit 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 audit provides 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 year then ended, in conformity with 
generally accepted accounting principles.



Hein + Associates LLP


Denver, Colorado
October 4, 1996




                                     F-2

<PAGE>

                      TOPRO, INC. AND SUBSIDIARIES


                       CONSOLIDATED BALANCE SHEET

                              June 30, 1997


<TABLE>
                                                                          Pro forma
-------------------------------------------------------------------------------------
                   ASSETS (Note 8)                                        (Note 16)
<S>                                                       <C>            <C>
CURRENT ASSETS:
  Cash (Note 13)                                          $   907,000    $ 3,215,000
  Receivables:
    Trade, net of allowance for doubtful accounts
      of $2,075,000 (Note 6)                                6,097,000      6,097,000
    Other receivables                                          20,000         20,000
  Costs and estimated earnings in excess of billings
    on uncompleted contracts (Note 7)                       5,712,000      5,712,000
  Inventories                                                 174,000        174,000
  Prepaid expenses and other                                  222,000        222,000
-------------------------------------------------------------------------------------
        Total current assets                               13,132,000     15,440,000

PROPERTY AND EQUIPMENT, at cost:
  Building and land                                           850,000        850,000
  Furniture and equipment                                   2,820,000      2,820,000
  Leasehold improvements                                      786,000        786,000
-------------------------------------------------------------------------------------
                                                            4,456,000      4,456,000
  Accumulated depreciation and amortization                (1,823,000)    (1,823,000)
-------------------------------------------------------------------------------------
      Net property and equipment                            2,633,000      2,633,000

CAPITALIZED SOFTWARE COSTS, net of accumulated
  amortization of $401,000                                  2,025,000      2,025,000

OTHER ASSETS:
  Excess of cost over fair value of assets acquired, 
    net of accumulated amortization of $634,000 (Note 4)    8,538,000      8,538,000
  Debt issuance costs, net of accumulated amortization
    of $64,000                                                274,000        274,000
  Other assets                                                284,000        284,000
-------------------------------------------------------------------------------------
TOTAL ASSETS                                              $26,886,000    $29,194,000
-------------------------------------------------------------------------------------
</TABLE>

     The accompanying notes are an integral part of the consolidated 
                          financial statements.


                                     F-3

<PAGE>

                      TOPRO, INC. AND SUBSIDIARIES
                                    
                                    
                       CONSOLIDATED BALANCE SHEET
                                    
                              June 30, 1997


<TABLE>
                                                                              Pro forma
----------------------------------------------------------------------------------------- 
         LIABILITIES AND STOCKHOLDERS' EQUITY                                 (Note 16)
<S>                                                            <C>           <C>
CURRENT LIABILITIES:
  Line-of-credit (Note 8)                                      $    75,000   $    75,000
  Current portion of long-term debt (Note 8):
    Related parties                                                142,000       142,000
    Financial institutions and other                             1,823,000     1,823,000
    Capital lease obligations                                      111,000       111,000
  Accounts payable                                               7,247,000     4,939,000
  Billings in excess of costs and estimated earnings
    on uncompleted contracts (Note 7)                            1,478,000     1,478,000
  Accrued expenses                                               1,718,000     1,718,000
  Reserve for contract losses (Note 13)                            370,000       370,000
----------------------------------------------------------------------------------------- 
      Total current liabilities                                 12,964,000    10,656,000

LONG-TERM DEBT, net of current portion (Note 8):
  Financial institutions and other                               5,332,000     2,647,000
  Capital lease obligations                                         90,000        90,000
----------------------------------------------------------------------------------------- 
      Total long-term debt                                       5,422,000     2,737,000

  Deferred gain (Note 13)                                           24,000        24,000
----------------------------------------------------------------------------------------- 
      Total liabilities                                         18,410,000    13,417,000

COMMITMENTS AND CONTINGENCIES (Notes 3, 7 and 13)

STOCKHOLDERS' EQUITY (Notes 10, 11 and 12):
  Preferred stock, par value $.0001 per share; authorized
    10,000,000 shares, 133,334 shares issued and outstanding            --            --
  Common stock, par value $.0001 per share; authorized
    200,000,000 shares, 11,709,605 shares issued
    and outstanding, 16,500,738 shares issued
    and outstanding pro forma                                        1,000         2,000
  Additional paid-in capital                                    15,998,000    23,298,000
  Accumulated deficit                                           (7,523,000)   (7,523,000)
----------------------------------------------------------------------------------------- 
      Total stockholders' equity                                 8,476,000    15,777,000
----------------------------------------------------------------------------------------- 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                     $26,886,000   $29,194,000
----------------------------------------------------------------------------------------- 
</TABLE>

     The accompanying notes are an integral part of the consolidated
                          financial statements.


                                    F-4

<PAGE>

                      TOPRO, INC. AND SUBSIDIARIES


                  CONSOLIDATED STATEMENTS OF OPERATIONS


                                                   For the years ended June 30,
                                                       1997            1996
-------------------------------------------------------------------------------

REVENUES                                           $36,843,000     $20,633,000

COST OF SALES                                       24,322,000      14,677,000
-------------------------------------------------------------------------------
GROSS PROFIT                                        12,521,000       5,956,000

EXPENSES:
  Sales expenses                                     2,297,000       1,744,000
  General and administrative expenses                9,871,000       4,129,000
  Bad debt expense                                     944,000          51,000
  Amortization of capitalized software costs 
    and goodwill                                       815,000         150,000
  Subsidiary acquisition purchase adjustment
    (Note 4)                                           250,000              --
-------------------------------------------------------------------------------
                                                    14,177,000       6,074,000
OTHER INCOME (EXPENSE):
  Gain on sale of assets                                 8,000         435,000
  Interest expense                                    (987,000)       (380,000)
  Other                                                116,000          79,000
-------------------------------------------------------------------------------
                                                      (863,000)        134,000

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
  INCOME TAX EXPENSE                                (2,519,000)         16,000

Income tax expense (Note 9)                           (110,000)             --
-------------------------------------------------------------------------------
Income (loss) from continuing operations            (2,629,000)         16,000

DISCONTINUED OPERATIONS (Note 5):
  Loss on disposal                                    (106,000)     (1,871,000)
-------------------------------------------------------------------------------
NET LOSS                                           $(2,735,000)    $(1,855,000)
-------------------------------------------------------------------------------
NET LOSS APPLICABLE TO COMMON SHAREHOLDERS         $(2,750,000)    $(1,855,000)
-------------------------------------------------------------------------------
NET LOSS PER SHARE:
  Continuing operations                            $     (0.30)    $        --
  Discontinued operations                                (0.01)          (0.40)
-------------------------------------------------------------------------------
NET LOSS PER SHARE                                 $     (0.31)    $     (0.40)
-------------------------------------------------------------------------------
WEIGHTED AVERAGE SHARES OUTSTANDING                  8,882,000       4,655,000
-------------------------------------------------------------------------------


     The accompanying notes are an integral part of the consolidated
                          financial statements.


                                     F-5

<PAGE>

                                          TOPRO, INC. AND SUBSIDIARIES


                                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                    For the years ended June 30, 1996 and 1997

<TABLE>
                                                                                                    Additional
                                                      Preferred stock          Common stock           paid-in         Accumulated
                                                      Shares   Amount       Shares       Amount       capital           deficit
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>      <C>         <C>           <C>        <C>               <C>
Balance, July 1, 1995                                   --      $ --       3,375,628     $1,000     $ 4,178,000       $(2,918,000)
Shares issued for cash in private placements, net       --        --         845,000       --           757,000              --
Shares issued for conversion of 12% 180 day
 debentures and accrued interest                        --        --         390,000       --           488,000              --
Shares issued to employees as compensation              --        --           2,000       --             1,000              --
Shares issued for acquisition of Advanced Control       --        --       1,657,000       --         1,657,000              --
Shares issued for conversion of senior notes and
  accrued interest                                      --        --          94,775       --            63,000              --
Shares issued in payment of Advanced Control debt       --        --          65,000       --           105,000              --
Warrants issued with convertible debentures             --        --            --         --            38,000              --
Shares issued for acquisition of Vision                 --        --         200,000       --           300,000              --
Options issued for acquisition of Vision                --        --            --         --            90,000              --
Shares issued for payment of accounts payable           --        --          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)

Shares issued for cash in private placements, net    133,334      --         880,000       --         2,984,000              --
Shares issued for conversion of 8% notes                --        --         214,285       --           375,000              --
Shares issued for conversion of 12% notes and
 accrued interest                                       --        --          35,000       --            53,000              --
Shares issued for conversion of 10% senior notes
 and accrued interest                                   --        --         548,436       --           367,000              --
Shares issued for financing fees and extensions         --        --          40,000       --            99,000              --
Shares issued for acquisition of All Control            --        --       1,883,333       --         2,825,000              --
Shares issued for acquisition of Vision                 --        --         201,130       --           289,000              --
Shares issued upon exercise of warrants                 --        --       1,178,018       --         1,167,000              --
Shares issued upon exercise of stock options            --        --          90,000       --            66,000              --
Options and warrants issued for outside services        --        --            --         --            52,000              --
Deferred debt costs upon conversion of debt             --        --            --         --           (53,000)             --
Preferred stock dividends                               --        --            --         --              --             (15,000)
Net loss                                                --        --            --         --              --          (2,735,000)
----------------------------------------------------------------------------------------------------------------------------------

Balance, June 30, 1997                               133,334    $ --      11,709,605     $1,000     $15,998,000       $(7,523,000)
----------------------------------------------------------------------------------------------------------------------------------



                      The accompanying notes are an integral part of the consolidated financial statements.


                                                            F-6
</TABLE>

<PAGE>

                      TOPRO, INC. AND SUBSIDIARIES

                  CONSOLIDATED STATEMENTS OF CASH FLOWS

                                               For the years ended June 30,
                                                    1997            1996
----------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Income (loss) from continuing operations      $(2,629,000)    $    16,000
  Adjustments to reconcile income (loss)
   to cash used in continuing operating
   activities:
    Depreciation                                    767,000         296,000
    Amortization                                    815,000         150,000
    Provision for doubtful accounts                 813,000          61,000
    Gain on sale of fixed assets                     (8,000)       (435,000)
    Issuance of compensatory options and warrants    52,000          18,000
    Common stock issued for interest
     and other fees                                  99,000          37,000

    Changes in operating assets and liabilities:
      (Increase) decrease in:
        Receivables                               3,740,000      (1,942,000)
        Costs and estimated earnings in
         excess of billings                      (1,886,000)       (378,000)
        Inventories                                 (26,000)         73,000
        Prepaid expenses and other                    9,000         (43,000)
      Increase (decrease) in:
        Accounts payable                            (32,000)        104,000
        Billings in excess of costs
         and estimated earnings                  (1,528,000)         82,000
        Accrued expenses and other               (1,054,000)       (357,000)
----------------------------------------------------------------------------
Net cash used in continuing operating activities   (868,000)     (2,318,000)
Discontinued operations:
  Loss from discontinued operations                (106,000)     (1,871,000)
  Change in assets                                  526,000       1,294,000
  Decrease in accounts payable                     (974,000)       (621,000)
----------------------------------------------------------------------------
  Net cash used in discontinued operations         (554,000)     (1,198,000)
----------------------------------------------------------------------------
  Net cash used in operating activities          (1,422,000)     (3,516,000)
----------------------------------------------------------------------------

CASH FLOWS  FROM INVESTING ACTIVITIES:
  Cash acquired in acquisitions of subsidiaries       3,000         202,000
  Purchase of investment                                 --        (229,000)
  Sale of investments                                    --         350,000
  Proceeds from sale of property and equipment       13,000              --
  Purchase of property and equipment               (217,000)        (95,000)
  Acquisition costs of subsidiaries                (522,000)             --
  Capitalized software development costs         (1,174,000)       (572,000)
  Proceeds from notes receivable                         --          40,000
----------------------------------------------------------------------------
Net cash used in investing activities            (1,897,000)       (304,000)
----------------------------------------------------------------------------

                  The accompanying notes are an integral part
                   of the consolidated financial statements.

                                     F-7
<PAGE>

                         TOPRO, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                    For the years ended June 30,
                                                         1997          1996
-------------------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES:
  Proceeds from issuance of notes and other
   borrowings                                          1,411,000    12,396,000
  Principal payments on notes and other borrowings    (1,503,000)   (9,556,000)
  Deferred note and other financing costs               (120,000)     (284,000)
  Proceeds from the sale of stock and exercise
   of warrants and options, net of offering
   costs of $336,000                                   4,217,000     1,267,000
  Preferred stock dividends                              (15,000)          --
-------------------------------------------------------------------------------
Net cash provided by financing activities              3,990,000     3,823,000
-------------------------------------------------------------------------------

INCREASE IN CASH                                         671,000         3,000

CASH, BEGINNING OF YEAR                                  236,000       233,000
-------------------------------------------------------------------------------

CASH, END OF YEAR                                    $   907,000    $  236,000
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

  Cash paid for interest                             $ 1,049,000    $  294,000
-------------------------------------------------------------------------------

-------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
 AND FINANCING ACTIVITIES:
Common stock issued in the acquisition of All
 Control                                             $ 2,825,000    $      --
Conversion of notes, accrued interest and debt
 issue costs to common stock                             742,000       588,000
Common stock issued in the acquisition of Vision         289,000       390,000
Purchase of equipment under long-term lease               32,000           --
Notes payable cancelled in exchange for equity
 investment                                                  --        760,000
Common stock issued in the acquisition of
 Advanced Control                                            --      1,657,000
Common stock issued as payment of accounts payable           --         10,000
Warrants issued in connection with convertible debentures    --         38,000
-------------------------------------------------------------------------------

                  The accompanying notes are an integral part
                   of the consolidated financial statements.

                                     F-8

<PAGE>

                         TOPRO, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.   ORGANIZATION AND NATURE OF BUSINESS.

Topro, Inc. ("Topro" or the "Company") designs, develops, assembles, markets
and services control system integration products.  Integrated control systems
are sophisticated computer hardware and software control 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
during February 1996 (See Note 5).

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

In July 1995, the Company acquired all of the outstanding common stock of
Management Design & Consulting Services, Inc. ("Management Design").

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

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

In December 1996, the Company acquired all of the outstanding common stock of
All Control Systems, Inc. ("All Control").

The above companies, with the exception of Sharp and Tech Sales, are engaged in
business activities similar to those of Topro.

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.

PRINCIPLES OF CONSOLIDATION.  The consolidated financial statements include the
accounts of Topro, Tech Sales, Sharp, Management Design, Advanced Control,
Vision and All Control.  Collectively, these entities are referred to as the
Company.  All significant intercompany transactions and accounts have been
eliminated in consolidation.

CASH AND CASH EQUIVALENTS.  The Company considers all highly liquid monetary
instruments 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 with regard to cash and cash equivalents.

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

PROPERTY AND EQUIPMENT.  Property and equipment are stated at cost.
Depreciation is provided utilizing the straight-line method over estimated
useful lives.

                                     F-9
<PAGE>

                         TOPRO, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Estimated useful lives:
  Asset                                                 Years
------------------------------------------------------------------
    Buildings                                             31
    Furniture and equipment                               3-10
------------------------------------------------------------------

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

LEASEHOLD IMPROVEMENTS.  Leasehold improvements are stated at cost.
Amortization is provided utilizing the straight-line method over the terms of
the leases.

SOFTWARE DEVELOPMENT COSTS.  Computer software development costs and other
research and development costs are charged to expense as incurred.  Costs
incurred to develop product masters of computer software, for which
technological feasibility has been established but before ready for sale, are
capitalized.  Capitalized software development costs are amortized on a product-
by-product basis each year based upon the greater of: (1) the amount computed
using the ratio of current year gross revenue to the sum of current and
anticipated future gross revenue for that product, or (2) five year straight-
line amortization.  For the years ended June 30, 1997 and 1996, the Company
capitalized software development costs in the amounts of $1,174,000 and
$572,000, respectively.  Amortization expense was $336,000 and $36,000 for the
years ended June 30, 1997 and 1996, respectively.

DEBT ISSUANCE COSTS.  The costs related to the issuance of debt are capitalized
and amortized as interest expense over the term of the related debt.

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 analysis necessary involve significant
management judgment to evaluate the capacity of an acquired business to perform
within projections.

INCOME RECOGNITION.  The Company utilizes the percentage of completion method
of accounting for all significant long-term contracts.  The percentage of
completion method of reporting income takes into account the cost, estimated
earnings and revenue to date on contracts not yet complete.

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
upon current estimates of the cost to complete the contract.  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 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 loss is recognized in the financial statements.  Contracts which are
substantially complete are considered closed for financial statement purposes.
Costs incurred on contracts in progress in excess of billings are classified as
a current asset.  Amounts billed in excess of revenue earned are classified as
a current liability.

                                     F-10
<PAGE>

                         TOPRO, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Income related to direct sales of equipment and parts is recognized upon
shipment.

INCOME TAXES.  The Company accounts for income taxes under the asset and
liability method of accounting. The asset and liability method requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been recognized in the financial statements or
income tax returns.  Deferred tax assets and liabilities are determined based
upon the difference between the financial statement and income tax bases of
assets and liabilities using current income tax rates.

EARNINGS (LOSS) PER SHARE.  Earnings (loss) per share is calculated by dividing
net income (loss) after deducting preferred stock dividends by the weighted
average common and common equivalent shares outstanding.  Common stock
equivalents are not included when the effect is antidilutive.

USE OF ESTIMATES.  The preparation of the Company's consolidated financial
statements in conformity with generally accepted accounting principles requires
its management to make estimates and assumptions that affect the amounts
reported in the 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 values 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 the revisions could be material.

CONCENTRATIONS OF CREDIT RISK.  Credit risk represents the accounting loss that
would be recognized at the reporting date if counterparties failed to
completely perform as contracted.  Concentrations of credit risk, whether on or
off the 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 of financial
instruments under Statement of Financial Accounting Standards 107, "Disclosures
About Fair Values 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 cash, accounts
receivable, accounts payable, long-term debt and other debt, approximate their
respective carrying values in the consolidated financial statements at June 30,
1997.

STOCK OPTIONS AND STOCK PURCHASE WARRANTS. Accounting Principles Board Opinion
25, "Accounting for Stock Issued to Employees", is applied in accounting for
all employee stock option and stock purchase warrant arrangements.
Compensation cost is recognized for all stock options and stock purchase
warrants granted to employees when the exercise price is less than the market
price of the underlying common stock on the date of grant.

Statement of Financial Accounting Standards 123, "Accounting for Stock-Based
Compensation".  Statement 123 requires pro forma disclosures regarding net
income (loss) as if compensation cost for stock options and stock purchase
warrants had been determined in accordance with the fair value based method
prescribed in Statement 123. Estimates of the fair value are made for each
stock option and stock purchase warrant at the date of grant by the use of the
Black-Scholes option pricing model.

                                     F-11
<PAGE>

                         TOPRO, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS.  Statement of Financial
Accounting Standards 128, "Earnings per Share" and Statement of Financial
Accounting Standards 129 "Disclosure of Information About an Entity's Capital
Structure".  Statement 128 provides a different method of calculating earnings
per share than is currently used in accordance with Accounting Principles Board
Opinion 15 "Earnings per Share".  Statement 128 provides for the calculation of
"basic" and "diluted" earnings per share.  Basic earnings per share includes no
dilution and is computed by dividing income available to common shareholders by
the weighted average number of common shares outstanding for the period.
Diluted earnings per share reflects the potential dilution of securities that
could share in the earnings of an entity, similar to fully diluted earnings per
share.  Statement 129 establishes standards for disclosing information about an
entity's capital structure.  Statements 128 and 129 are effective for financial
statements issued for periods ending after December 15, 1997.  Their
implementation is not expected to have a material effect on the consolidated
financial statements.

Statement of Financial Accounting Standards 130, "Reporting Comprehensive
Income" and Statement of Financial Accounting Standards 131 "Disclosures About
Segments of an Enterprise and Related Information".  Statement 130 establishes
standards for reporting and display of comprehensive income, its components and
accumulated balances.  Comprehensive income is defined to include all changes
in equity except those resulting from investments by owners and distributions
to owners.  Among other disclosures, Statement 130 requires that all items that
are required to be recognized under current accounting standards as components
of comprehensive income be reported in a financial statement that displays with
the same prominence as other financial statements.  Statement 131 supersedes
Statement of Financial Accounting Standards 14 "Financial Reporting for
Segments of a Business Enterprise".  Statement 131 establishes standards on the
way that public companies report financial information about operating segments
in annual financial statements and requires reporting of selected information
about operating segments in interim financial statements issued to the public.
It also establishes standards for disclosures regarding products and services,
geographic areas and major customers.  Statement 131 defines operating segments
as components of a company about which separate financial information is
available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance.

Statements 130 and 131 are effective for financial statements for periods
beginning after December 15, 1997 and require comparative information for
earlier years to be restated.  Because of the recent issuance of these
standards, management has been unable to fully evaluate the impact, if any, the
standards may have on the future financial statement disclosures.  Results of
operations and financial position, however, will be unaffected by
implementation of these standards.

RECLASSIFICATIONS.  Certain reclassifications have been made to the financial
statements for the year ended June 30, 1996 to conform to the current year
presentation.  These reclassifications had no effect on the net loss.

NOTE 3.  LIQUIDITY.

The Company has incurred net losses for the past five years and has experienced
negative cash flow from operations.  In addition, the Company has $2,151,000 of
debt due during fiscal 1998.  At June 30, 1997, the Company was not in
compliance with a loan covenant provision on certain of its debt.  The lender
has granted a waiver of this violation.  Management has taken the following
actions to improve the Company's cash flow and results of operations.

                                     F-12
<PAGE>

                         TOPRO, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

- Management has developed and launched the Company's Plant Y2K program.  It
  is anticipated that this program will generate revenues and cash flow for the
  Company and improve its gross margins.

- During the two months subsequent to June 30, 1997, the Company received
  $4,600,000 in proceeds from the exercise of stock options and stock purchase
  warrants.  This cash infusion, together with the reduction of $2,700,000 of
  debt through conversion to common stock, has enhanced the Company's working
  capital position.

- The Company has added to its executive management group and centrally
  located it at its corporate offices.  This will better enable the Company to
  consolidate the management functions of its operations and produce operational
  efficiencies.

- Improve project performance by beginning a program to centralize cash
  management, financial and accounting functions.

- Continue to pursue raising additional cash through the issuance of debt or
  equity financing.

- Continue to eliminate duplications in its cost structure and identify
  areas where costs can be reduced.

Management believes that improved operating results will provide adequate cash
flow to meet operational needs for the foreseeable future. If necessary,
management believes that it will be able to obtain additional debt or equity
financing. Although there are no assurances that the Company will be able to
obtain additional financing or generate adequate cash flow to meet its
operational needs, management believes that actions taken and those that are
planned, will enable the Company to continue as a going concern.

NOTE 4. ACQUISITIONS.

In July 1995, the Company acquired all of the outstanding common stock of
Management Design in exchange for 200,000 shares of its common stock.
Management Design, located in Atlanta, Georgia, provides consulting and
engineering services related to the design, development, assembly and service
of integrated process control systems to customers in the southeastern United
States. The transaction was accounted for as a pooling of interests.

Effective January 1, 1996, the Company acquired all of the outstanding common
stock of Advanced Control in exchange for 1,657,000 shares of its common stock.
Advanced Control is a control system integration company located in Albany,
Oregon. The acquisition was accounted under the purchase method of accounting
and accordingly, the operating results of Advanced Control have been included
in the consolidated statement of operations from the date of acquisition. The
value of the consideration given amounted to of $1,657,000 and was determined
based upon the estimated fair value of the common stock issued and other costs
incurred in connection with the acquisition. The purchase price has been
allocated to the assets purchased and liabilities assumed based upon their fair
values at the date of acquisition. The excess of the purchase price over the
estimated fair value of the net assets acquired was $2,477,000 and is being
amortized over 15 years.

Immediately prior to the acquisition, Advanced Control sold the rights to
certain technology for $5,000 in cash and a $95,000 note receivable. The
Company obtained rights to acquire an equity interest in the purchasing entity.

                                     F-13
<PAGE>

                         TOPRO, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Effective May 1, 1996, the Company acquired all of the outstanding common
stock of Vision in exchange for 200,000 shares of its common stock and
options to acquire: 150,000 shares of its common stock for $2.25 per share
commencing October 1996, 150,000 shares of its common stock for $2.25 per share
commencing April 1997, 300,000 shares of its common stock for $2.50 commencing
January 1998 and 300,000 shares of its common stock for $2.75 commencing
January 1998.  In March 1997, the Company issued an additional 100,000 shares
of its common stock as a result of Vision achieving certain earnings goals and
an additional 101,130 shares to satisfy other obligations assumed upon Vision's
acquisition.  The estimated fair value of the additional 201,130 shares,
amounting to $289,000, has been added to the consideration paid for Vision and
recorded as additional goodwill.  During the year ended June 30, 1997, an
acquisition adjustment relating to an anticipated contractual dispute
settlement, which was determined subsequent to the acquisition and amounting to
$250,000, was charged to operations. Vision is a control systems integration
company located in Cypress, California.  The acquisition was accounted under
the purchase method of accounting and accordingly, the operating results of
Vision have been included in the consolidated statement of operations from the
date of acquisition.  The value of the consideration given amounted to $679,000
and was determined based upon the estimated fair value of the common stock and
options issued and other costs incurred in connection with the acquisition.
The purchase price has been allocated to the assets purchased and liabilities
assumed based upon their fair values at the date of acquisition.  The excess of
the purchase price over the estimated fair value of the net assets acquired was
$3,121,000 and is being amortized over 15 years.

Effective December 1, 1996, the Company acquired all of the outstanding common
stock of All Control in exchange for 1,883,333 shares of its common stock.  Of
the shares issued in connection with the acquisition, 61,733 are being held in
escrow to satisfy any potential future income tax liabilities that may arise
from the tax treatment of capitalized software costs incurred prior to All
Control's acquisition.  All Control is a control systems integration company
located in Westchester, Pennsylvania.  The acquisition was accounted under the
purchase method of accounting and accordingly, the operating results of All
Control have been included in the consolidated statement of operations from the
date of acquisition.  The value of the consideration given amounted to
$2,825,000 and was determined based upon the estimated fair value of the common
stock issued and other costs incurred in connection with the acquisition.  The
purchase price has been allocated to the assets purchased and liabilities
assumed based upon their fair values at the date of acquisition.  The excess of
the purchase price over the estimated fair value of the net assets acquired was
$3,574,000 and is being amortized over 15 years.

An officer of the Company is the majority owner of a company that has an option
to purchase certain of the All Control's software products relating to the
color printing industry.  The option may not be exercised before November 1998
and extends through February 2000.  The agreement provides that the option
price is to be equal to the then net book value of the software products to be
purchased.

The following unaudited pro forma summary combines the consolidated results of
operations of the Company, Advanced Control, Vision and All Control as if their
acquisitions had occurred at the beginning of the periods presented 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 future operations or the results
that would have occurred had the transactions been consummated at the beginning
of the periods indicated.

                                     F-14
<PAGE>

                         TOPRO, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                                      Years ended June 30,
                                                       1997         1996
------------------------------------------------------------------------------
                                                            (Unaudited)
Net revenues                                       $40,210,000   $38,435,000

Net loss                                           $(3,175,000)  $(5,130,000)

Loss per share                                     $     (0.40)  $      (.60)
------------------------------------------------------------------------------
NOTE 5.  DISCONTINUED OPERATIONS.

During May 1995, the Company discontinued the operations of and completed the 
sale of substantially all of the assets of Sharp for $50,000 cash and a 
$50,000 note receivable, due through September 1995.  In 1995, the Comany 
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. The loss incurred during 1997 resulted from the 
completion of remaining projects.  All contracts in progress at the time of 
the sale have been completed at June 30, 1997.

During June 1995, the Company sold the assets of Tech Sales.  Tech Sales'
operations were formally discontinued during February 1996.

The following is a summary of the Company's results from discontinued
operations:

                                                      Years ended June 30,
                                                       1997         1996
------------------------------------------------------------------------------
Revenues                                            $ 423,000    $ 3,379,000

Loss on disposal                                    $(106,000)   $(1,871,000)
------------------------------------------------------------------------------

NOTE 6.  TRADE RECEIVABLES.

The following is a summary of the Company's trade accounts receivable at
June 30, 1997:

------------------------------------------------------------------------------
Contract receivables:
  Completed contracts                                     $  2,174,000
  Uncompleted contracts                                      4,941,000
  Retention                                                  1,057,000
------------------------------------------------------------------------------
                                                             8,172,000
Less: allowance for doubtful accounts                       (2,075,000)
------------------------------------------------------------------------------

Contract receivables, net                                 $  6,097,000
------------------------------------------------------------------------------

Generally, the Company's contracts contain retention provisions that require
certain percentages of completion be achieved before amounts under contracts
may be billed.  Retention is generally collected within one year after the
completion of a contract.

                                     F-15

<PAGE>

                         TOPRO, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company has concentrations of credit risk along industry lines in 
manufacturing, aerospace, mining and food processing customers.  The Company 
undertakes ongoing credit evaluation of its customers, however, collateral is 
generally not required.  The Company typically deals with subcontractors 
under performance bonds and it generally has the right to file mechanics' 
liens to secure contractual obligations. Management believes that the 
allowance for doubtful accounts is sufficient to cover the Company's credit 
risk.

Sales to one customer accounted for approximately 18% of total contract 
revenues for the year ended June 30, 1997. During 1996, no one customer 
accounted for more than 10% of total revenue.

NOTE 7.   COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS.

The following information is applicable to uncompleted contracts of continuing
operations at June 30, 1997:

-------------------------------------------------------------------------------
Costs incurred on uncompleted contracts                          $ 54,400,000
Estimated earnings                                                 10,136,000
-------------------------------------------------------------------------------
                                                                   64,536,000
Less: billings to date                                            (60,302,000)
-------------------------------------------------------------------------------
                                                                 $  4,234,000
-------------------------------------------------------------------------------

These amounts are included in the accompanying balance sheet under the
following captions at June 30, 1997:

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

Costs and estimated earnings in excess of billings on 
 uncompleted contracts                                           $  5,712,000

Billings in excess of costs and estimated earnings on 
 uncompleted contracts                                              1,478,000
-------------------------------------------------------------------------------
                                                                 $  4,234,000
-------------------------------------------------------------------------------
   
Costs and estimated earnings in excess of billings on uncompleted contracts 
at June 30, 1997 includes a claim, which is expected by management to be 
billed and collected within one year.  The claim arises from a dispute with a 
customer over certain change orders and other contractual matters.  The 
change orders were made at the request of the customer.  Revenue from the 
claim is only recognized to the extent that contract costs relating to the 
claim have been incurred  During the year ended June 30, 1997, approximately 
$2,200,000 of a $3,900,000 claim amount have been included in contract 
revenues.
    
NOTE 8.   LINES-OF-CREDIT, SHORT AND LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS.

The following is a summary of the Company's indebtedness at June 30, 1997:

-------------------------------------------------------------------------------
LINE OF CREDIT:
$500,000 line-of-credit pursuant to a loan agreement with a 
financial institution, collateralized by substantially all assets 
of Advanced Control and a deed of trust on its real property, 
interest at the prime rate (2) plus 2.0% per annum.  The line 
expires in November 1997.                                           $    75,000
-------------------------------------------------------------------------------
Total line-of-credit                                                $    75,000
-------------------------------------------------------------------------------



                                     F-16

<PAGE>

                         TOPRO, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Line-of-credit, short and long-term debt and capital lease obligations
continued.

-------------------------------------------------------------------------------
RELATED PARTY: 

Notes payable to an officer and a director of the Company, 
interest at 10.0% per annum payable semiannually, due on 
demand, unsecured.                                                  $    80,000

Notes payable to a director and former majority stockholders 
of Vision, interest at 8.0% per annum, monthly payments of 
$10,000, unsecured.                                                      42,000


Note payable to relatives of a director and former majority 
stockholders of Vision, interest at 10.0% per annum payable 
quarterly, unsecured.                                                    20,000
-------------------------------------------------------------------------------
 Total related party                                                $   142,000
-------------------------------------------------------------------------------
SHORT-TERM DEBT:
Term loan pursuant to a loan agreement with a financial 
institution, collateralized by substantially all assets of 
Vision, interest at the prime rate (2) plus 2.0% per annum.  
The loan matures in December 1997 and requires monthly 
principal payments in the amount of $17,000 plus interest.          $   243,000

$1,000,000 term loan pursuant to a loan agreement with a 
financial institution collateralized by substantially all 
assets of All Control and guaranteed by an officer, interest 
at the prime rate (2) plus 3.5% per annum, monthly principal 
payments of $20,000.  Prior to February 10, 1997, this 
obligation  was a $1,600,000 line-of-credit. In conjunction 
with the acquisition of All Control, the line-of-credit was 
converted to a term loan of $1,000,000 which is due on January 
1, 1998.                                                                900,000

Term loan pursuant to a loan agreement with a financial 
institution collateralized by substantially all assets and a 
deed of trust on the real property of Advanced Control.  
Monthly principal and interest payments of $11,000, interest 
at the prime rate (2) plus 2.5% per annum.  The loan has a 
balloon payment on the unpaid balance due November 1997.                404,000

Term loan payable to a bank, interest at the prime rate (2) 
plus 2.0% per annum, collateralized by equipment and leasehold 
improvements of Vision, due on demand or if no demand, payable 
in monthly installments of $7,000 plus interest through April 
1998.                                                                    69,000
-------------------------------------------------------------------------------
 Total short-term                                                   $ 1,616,000
-------------------------------------------------------------------------------
LONG-TERM DEBT:
9% convertible debentures with a small business investment 
fund.  Outstanding borrowings bear interest at 9.0% per annum, 
interest payable monthly.  If the debentures are not sooner 
redeemed or converted, a mandatory principal redemption is due 
beginning March 1, 1999 in the amount of 1% of the then 
remaining principal amount outstanding. The debentures are 
convertible into the Company's common stock at the rate of one 
share for each $1.50 of principal. The loan is collateralized 
by all the assets of Topro, Advanced Control, Management 
Design and All Control .  During July and August, 1997, the 
debenture holders converted $2,685,000 of principal into 
1,790,032 shares of common stock. (1)                               $ 4,700,000


                                     F-17

<PAGE>


                         TOPRO, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Line-of-credit, short and long-term debt and capital lease 
obligations continued.

-------------------------------------------------------------------------------
Mortgage note payable to a bank, due in monthly installments 
of $2,941 including interest at 11.0% per annum, balloon 
payment of remaining balance is due November 2001, 
collateralized by a first deed of trust on Advanced Control's 
land and building.                                                      255,000

Four year promissory note bearing interest at 8.0% per annum 
payable to a creditor.  Monthly payments of $6,103 are due 
beginning May 1, 1996.  The promissory note is collateralized 
by a second position on the real estate of Advanced Control.            185,000

Term loan payable to a bank, interest adjusted quarterly based 
upon the prime rate (2) plus 2.75% per annum, collateralized 
by a second security interest on substantially all assets of 
Vision, guaranteed by the Small Business Administration and 
personally guaranteed by an officer, which personal guarantee 
is collateralized by a third deed on the officer's residence, 
payable in monthly principal payments of $7,000 adjusted 
quarterly, through September 2002.                                      274,000

Non-interest bearing note payable to Advanced Control's legal 
counsel payable over 30 months at $5,000 monthly beginning 
April 1, 1996.  The note has been discounted using an 
effective interest rate of 10.25%.                                       88,000

Various notes payable, due in monthly installments through 
November 1998, collateralized by equipment and vehicles.                 37,000

Capital lease obligations secured by equipment.                         201,000
-------------------------------------------------------------------------------
Total long-term                                                     $ 5,740,000
-------------------------------------------------------------------------------

Total indebtedness                                                  $ 7,573,000
       Less current portion                                          (2,151,000)
-------------------------------------------------------------------------------
       Long-term portion                                            $ 5,422,000
-------------------------------------------------------------------------------

(1)  The debentures include covenants which require the Company to maintain
certain working capital and net worth ratios.  At June 30, 1997, the Company
was not in compliance with a certain financial covenant, however, the lender
has agreed to waive its rights to declare a default for such violation and has
reduced the minimum standards required for the ratio through December 1997 at
which time management believes the Company will be in compliance with such
covenants.

(2)  At June 30, 1997, the prime rate of interest was 8.50% per annum.

Scheduled principal payments for  years ending June 30 are as follows:

                                                    Related party       Other
-------------------------------------------------------------------------------
1998                                                  $142,000       $2,009,000
1999                                                      --            434,000
2000                                                      --            650,000
2001                                                      --            547,000
2002                                                      --            646,000
Thereafter                                                --          3,145,000
-------------------------------------------------------------------------------


                                      F-18

<PAGE>

                         TOPRO, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During September and October 1996, the Company issued 12% unsecured
subordinated Series 1996-A Promissory Notes in the amount of $150,000.  The
Company paid the lenders fees in the amount of 2,500 shares of its common
stock for each $50,000 of principal and an aggregate of 32,500 shares of its
common stock as fees to extend the maturities of the notes.  Notes in the
principal amount of $100,000 plus accrued interest were repaid.  The holder of
a note in the principal amount of $50,000 converted its note into 35,000 shares
of the Company's common stock at the rate of one share for each $1.50 of
principal plus accrued interest of $3,000.

On October 30, 1996, the Company issued $1,200,000 of its 9% convertible
debentures to the holder of $3,500,000 of its previously issued 9% convertible
debentures.

During November 1996, the Company received requests from the holders of its 8%
270 day convertible notes to convert them into the Company's common stock.  The
entire principal in the amount of $375,000 was converted into 214,285 common
shares at the rate of one share for each $1.75 of principal.

During March 1997, the Company received requests from the holders of $350,000
of its 10% senior convertible notes to convert them into units of the
securities.  The notes were converted at the rate of $.67 per unit for each
$1.00 of principal plus accrued interest of $17,000.  Each unit consisted of
one share of common stock and one stock purchase warrant to purchase common
stock.  The stock purchase warrants are exercisable to purchase one share of
common stock for $1.00 per share until March 31, 2000.

NOTE 9.  INCOME TAXES.

Deferred tax assets (liabilities) at June 30, 1997 are comprised of the
following:

-----------------------------------------------------------------------
Current deferred tax assets (liabilities):
  Trade receivables                                 $    705,000
  Contract loss provisions                               122,000
  Deferred gain                                           60,000
  Accrued liabilities                                    267,000
  Property and equipment                                (143,000)
  Capitalized software                                  (689,000)
  Net operating loss carryfowards                      3,127,000
-----------------------------------------------------------------------
Total                                                  3,449,000
Less valuation allowance                              (3,449,000)
-----------------------------------------------------------------------

Net                                                 $       --
-----------------------------------------------------------------------

Income tax expense for the year ended June 30, 1997 relates to amounts
currently payable for state income tax purposes.  Income tax expense for the
year ended June 30, 1997 does not bear the normal relationship to the expected
tax benefit resulting from the loss incurred due to state taxes and the change
in the valuation allowance.  The Company recognized a 100% valuation allowance
on the net deferred tax asset since it could not be determined if it was more
likely than not it would be realized.

                                     F-19
<PAGE>

                         TOPRO, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At June 30, 1997, the Company had net operating loss carryforwards in the
amount of approximately $9,000,000 for Federal income tax purposes.  The loss
carryforwards expire in 2008 through 2012.  A portion of these carryforwards
will be limited due to the change in control of acquired subsidiary companies.

NOTE 10.  STOCKHOLDERS' EQUITY.

During September 1995, a note holder converted $25,000 of notes and $1,000 of
accrued interest into 39,102 shares of common stock and stock purchase warrants
to purchase 39,102 shares of common stock. Each stock purchase warrant is
exercisable to purchase one share of common stock for $1.00 through August
1998.

During September 1995, the Company completed a private placement of 435,000
shares of common stock and incurred offering costs in the amount of $11,000 in
conjunction therewith.

During October 1995, the Company granted 50,000 stock purchase warrants to a
public relations firm. Each warrant is exercisable to purchase one share of
common stock for $1.00 through October 2000.

During November 1995 in conjunction with a loan agreement, the Company granted
14,286 stock purchase warrants to a financial institution. Each warrant is
exercisable to purchase one share of common stock for $1.75 through November
2000.

During February and March 1996 in conjunction with the issuance of $3,500,000
of its 9% convertible debentures, the Company granted 375,000 stock purchase
warrants to the lender. Each stock purchase warrant is exercisable to purchase
one share of common stock for $1.50 through March 1999.  The Company allocated
$38,000 of the debenture proceeds to the warrants.

During December 1995 and January 1996, the Company issued $480,000 of its 12%
convertible 180 day notes.  The note holders were granted 240,000 stock
purchase warrants.  Each stock purchase warrant is exercisable to purchase one
share of common stock for $1.00 through April 2000.  During May 1996, the
Company completed a private placement of units consisting of 800,000 shares of
common stock and 240,000 stock purchase warrants.  Each stock purchase warrant
is exercisable to purchase one share of common stock for $1.00 through April
2000.  The offering included the conversion of $465,000 of the Company's 12%
convertible notes and $535,000 in cash proceeds.  In conjunction with this
offering, the Company granted the underwriter 150,000 stock purchase warrants.
Each warrant is exercisable to purchase one share of common stock for $1.50
through March 2001.

During February 1996 in conjunction with a service agreement with its public
relations firm, the Company granted 200,000 stock purchase warrants to the
firm.  Each stock purchase warrant is exercisable to purchase one share of
common stock through October 2000 as follows: 50,000 exercisable at $1.25,
50,000 exercisable at $2.00, 50,000 exercisable at $2.50 and 50,000 exercisable
at $3.00.  The Company recognized $87,000 of expense as the value of the
warrants which is being amortized over the two year term of the service
agreement.

During April 1996, the Company granted 100,000 stock purchase warrants as
additional compensation to its investment advisor.  Each stock purchase warrant
is exercisable to purchase one share of common stock for $2.56 through February
2001.

                                     F-20
<PAGE>

                         TOPRO, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During January and June 1996, the Company issued 55,673 shares of its common
stock and granted 50,000 stock purchase warrants in payment of $37,000 of
interest on its debt. Each stock purchase warrant is exercisable to purchase
one share of common stock for $2.00 through May 1999.

On November 27, 1996, the Company sold 700,000 shares of its $.0001 par value
common stock and granted 70,000 stock purchase warrants in a private placement,
receiving proceeds in the amount of $1,050,000.  The stock purchase warrants
are exercisable at any time before January 31, 1999 to purchase one share of
common stock for $2.46.

On March 13, 1997, the Company called 1,043,449 redeemable stock purchase
warrants, representing an equal number of underlying common shares, for
redemption.  The stock purchase warrants were exercisable by the holders to
purchase one share of common stock at rates of $1.00 and $1.75 per share.
Holders of warrants representing 906,327 shares of common stock exercised their
rights thereunder.  The Company received proceeds in the amount of $906,000.
Upon the expiration of the exercise period, 122,836 warrants to purchase common
stock for $1.00 per share and 14,286 warrants to purchase common stock for
$1.75 per share were canceled due to non-exercise by the holders.

During March 1997, the Company sold 180,000 shares of its $.0001 par value
common stock in a private placement, receiving proceeds in the amount of
$270,000.

During April 1997, the holder of stock purchase warrants to purchase 32,870 and
24,537 shares of common stock for $.67 and $1.00, respectively, exercised its
rights thereunder.  The Company received proceeds in the amount of $46,560.

During April 1997, the Company lowered the exercise price from $4.25 to $1.00
per share to holders of stock purchase warrants to purchase 214,284 shares of
common stock.  The warrants were originally issued in connection with the sale
of common stock by the Company.  The holders exercised their rights thereunder
and the Company received proceeds in the amount of $214,284.

During April 1997, the Company lowered the exercise price and extended the
exercise period of its 662,000 publicly traded warrants.  The warrants'
exercise price was reduced to $3.50 from $4.25 and the exercise period was
extended from June 17, 1997 until June 24, 1999.  The warrants were originally
issued in connection with the sale of common stock by the Company.  The stock
purchase warrants are redeemable by the Company at the exercise price if the
closing price of its common shares is $6.38 or more for 20 consecutive trading
days.

On April 29 and June 30, 1997, the Company sold 100,000 and 33,334 shares,
respectively, of its Series A Convertible Preferred Stock and granted 300,000
and 100,000 common stock purchase warrants, respectively, in a private
placement. The Company received proceeds in the amounts of $1,500,000 and
$500,000, respectively.  Each share of preferred stock has a stated value of
$15.00 per share and is convertible at any time at the holder's option into 10
shares of the Company's $.0001 par value common stock at a rate of $1.50 per
share of common stock, subject to adjustment.  The preferred shares will
automatically convert into common stock if, after one year from issue, the
closing price of the Company's common stock for 20 consecutive trading days is
$3.00 or more or on April 30, 2002, whichever occurs first. Each share of
preferred stock shall receive a 6% cumulative dividend, payable quarterly,
based upon its stated value and has voting rights on matters submitted to a
vote of common stockholders equal to the number of common shares into which it
may be converted.  Each warrant may be exercised at any time until June 30,
1999 to purchase one share of the Company's common stock for $2.00 per share.

                                     F-21
<PAGE>

                         TOPRO, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 11.  STOCK OPTIONS AND STOCK PURCHASE WARRANTS.

The following is a summary of changes in stock options and stock purchase
warrants outstanding during the years ended June 30, 1996 and 1997.  Each stock
option and stock purchase warrant outstanding is exercisable to purchase one
share of the Company's $.0001 par value common stock.

                                                               Weighted average
                                              Number of shares  exercise price
-------------------------------------------------------------------------------
Stock options:
Balance, July 1, 1995                               425,000         $2.26
  Granted                                         1,237,250          2.40
  Exercised                                              --           --
  Expired / cancelled                                    --           --
-------------------------------------------------------------------------------
Balance, June 30, 1996                            1,662,250         $2.37
  Granted                                         1,610,000          2.06
  Exercised                                         (90,000)          .74
  Expired / cancelled                                    --           --
-------------------------------------------------------------------------------
Balance, June 30, 1997                            3,182,250         $2.26
-------------------------------------------------------------------------------

Stock purchase warrants:
Balance, July 1, 1995                             2,380,019         $2.09
  Granted                                         1,590,345          1.45
  Exercised                                              --           --
  Expired / cancelled                               (60,000)         5.10
-------------------------------------------------------------------------------
Balance, June 30, 1996                            3,910,364         $1.79
  Granted                                         1,143,436          1.59
  Exercised                                      (1,178,016)          .99
  Expired / cancelled                              (137,121)         1.08
-------------------------------------------------------------------------------
Balance, June 30, 1997                            3,738,663         $2.00
-------------------------------------------------------------------------------

The following information summarizes stock options outstanding at June 30,
1997.

<TABLE>
                     Outstanding                                   Exercisable
---------------------------------------------------------  -----------------------------
 Year of      Number     Weighted average     Range of        Number    Weighted average
expiration  Outstanding   exercise price   exercise price  exercisable   exercise price
---------------------------------------------------------  -----------------------------
<S>         <C>          <C>               <C>             <C>          <C>
   2002        575,000         $1.53        $1.39 - $1.54     575,000        $1.53
   2002        135,000         $3.65        $2.75 - $4.25     135,000        $3.65
   2003         10,000         $3.75                $3.75      10,000        $3.75
   2004         10,000         $3.50                $3.50      10,000        $3.50
   2005         20,000         $ .63                $ .63      20,000        $ .63
   2005         60,000         $1.20                $1.20      60,000        $1.20
   2006         37,250         $1.35        $1.25 - $1.63      37,250        $1.35
   2006        375,000         $2.15        $1.75 - $2.25     375,000        $2.15
   2007      1,276,667         $2.56        $2.25 - $2.75     576,667        $2.51
   2007        200,000         $1.78        $1.42 - $2.13         --         $ --
   2008        216,667         $2.42        $2.25 - $2.50         --         $ --
   2009        266,666         $2.44        $2.25 - $2.50         --         $ --
---------------------------------------------------------  -----------------------------
             3,182,250         $2.26        $0.63 - $4.25   1,798,917        $2.13
---------------------------------------------------------  -----------------------------
</TABLE>
                                     F-22

<PAGE>


                                  TOPRO, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The weighted average grant date fair value of stock options granted during the
year is summarized as follows.

                                                        Year ended June 30,
                                                      1997               1996
------------------------------------------------------------------------------
  Market value equal to exercise price                $0.37             $  --
  Market value greater than exercise price            $0.86             $1.17
  Market value less than exercise price               $0.74             $  --

------------------------------------------------------------------------------
The following information summarizes stock purchase warrants outstanding at
June 30, 1997:

<TABLE>
                        Outstanding                                         Exercisable          
------------------------------------------------------------------------------------------------ 
     Year of       Number     Weighted average    Range of          Number     Weighted average  
   expiration    Outstanding   exercise price   exercise price   exercisable    exercise price   
------------------------------------------------------------------------------------------------ 
    <S>            <C>             <C>           <C>               <C>              <C>
     1998          178,571         $2.00                 $2.00     178,571          $2.00        
     1998          228,726         $1.00                 $1.00     228,726          $1.00
     1998          200,000         $3.47         $3.38 - $3.63     200,000          $3.47
     1999          105,673         $1.12         $1.00 - $1.25     105,673          $1.12
     1999          995,000         $2.06         $2.00 - $2.50     995,000          $2.06
     1999          712,000         $3.46         $3.00 - $3.50     712,000          $3.46
     2000          927,026         $0.93         $0.67 - $1.00     927,026          $0.93
     2000           50,000         $1.25                 $1.25      50,000          $1.25
     2000           66,667         $2.50                 $2.50      66,667          $2.50
     2001          150,000         $1.25                 $1.25     150,000          $1.25
     2001          100,000         $2.56                 $2.56     100,000          $2.56
     2007           25,000         $1.50                 $1.50      25,000          $1.50
------------------------------------------------------------------------------------------------ 
                 3,738,663         $2.00         $0.67 - $3.63   3,738,663          $2.00
------------------------------------------------------------------------------------------------ 
</TABLE>

The weighted average grant date fair value of stock purchase warrants granted 
during the year is summarized as follows. 

                                                        Year ended June 30,
                                                      1997               1996
------------------------------------------------------------------------------

  Market value equal to exercise price                $  --             $0.92
  Market value greater than exercise price            $0.53             $1.34
  Market value less than exercise price               $0.39             $0.59

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

The Company applies Accounting Principals Board Opinion 25 in accounting for
stock options and stock purchase warrants granted to employees.  Had
compensation expense been determined based upon the fair value of the awards at
the grant date and consistent with the method under Statement of Financial
Accounting Standards 123, the Company's net loss and loss per share would have
been increased to the pro forma amounts indicated in the following table.


                                   F-23

<PAGE>

                                  TOPRO, INC.
                                       
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                                       Years ended June 30,
                                                       1997            1996
-------------------------------------------------------------------------------

  Net loss as reported                              $(2,735,000)   $(1,855,000)
  Net loss pro forma                                $(3,377,000)   $(2,688,000)
  Net loss per share as reported                    $      (.31)   $     (0.40)
  Net loss per share pro forma                      $      (.38)   $     (0.58)

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

The fair value of each employee stock option and stock purchase warrant granted
during the years ended June 30, 1997 and 1996 was estimated on the date of
grant using the Black-Scholes option pricing model. The assumptions used in the
pricing calculations were: expected volatility, 63%, risk free interest rate,
7.5%, expected annual dividends, none and estimated lives of the warrants and
options of between one and two years.

NOTE 12. BENEFIT PLANS.

The Company maintains the 1997 Stock Option and Bonus Plan covering all
employees, officers, directors and consultants to it.  Under this plan,
participants may be awarded qualified or non-qualified stock options and stock
bonuses.  The exercise price of an award of a qualified stock option may not be
less than 100% of the market value on the date of the grant.  The exercise
price of an award of a non-qualified stock option may not be less than 85% of
the market value on the date of the grant.  The Company has reserved up to
1,500,000 shares of its common stock for awards under this plan.  The Company
made awards of 1,500,000 options under the plan during the year ended June 30,
1997.

The Company maintains the 1992 Employee Stock Purchase Plan covering all
employees with a minimum of 3 months of service except those employees owning,
directly or indirectly, more than 5% of its common stock. The Company executes
purchase transactions on behalf of the participating employees through semi-
annual purchases in the open market.  The exercise price for participating
employees shall be the lower of 85% of the fair market value of the Company's
common stock at the beginning or end of each six month period.  During the year
ended June 30, 1997, participating employees elected to purchase 10,350 shares
of the Company's common stock.

The Company maintains the 1992 Incentive Stock Option Plan.  There are 250,000
shares of common stock reserved for issuance under the terms of the plan.
Through June 30, 1996, 37,250 options have been granted under the plan.  No
awards were made under this plan during the year ended June 30, 1997.  The
exercise price of the options granted must be equal to or exceed the fair
market value of the Company's common stock on the date of the grant.

The Company maintains 401(K) plans covering its employees and those of its
subsidiaries.  Matching contributions are made at the discretion of the Board
of Directors.  During the year ended June 30, 1997, the Company made matching
contributions in the amount of $46,000.  No matching contribution was made
during the year ended June 30, 1996.


                                   F-24

<PAGE>

                          TOPRO, INC. AND SUBIDIARIES
                                       
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The Company maintains a profit sharing plan that covers all full-time employees
with a minimum of 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, as amended, may be contributed to the plan.  The
Company did not make contributions to the plan during the years ended June 30,
1997 and 1996

NOTE 13.  COMMITMENTS AND CONTINGENCIES.

CAPITAL AND OPERATING LEASE OBLIGATIONS.  The Company leases certain pieces of
equipment under capital leases.  The following is an analysis of the net book
value of equipment under capital leases at June 30, 1997:

------------------------------------------------------------------------------
                   Equipment                                      $  283,000

                   Accumulated depreciation                         (110,000)
------------------------------------------------------------------------------
                   Net book value                                 $  173,000
------------------------------------------------------------------------------

Depreciation on equipment under capital leases charged to expense during the
years ended June 30, 1997 and 1996 was $33,000 and $2,000, respectively.

The Company leases office space, production facilities and equipment under
operating leases.  Rent expense under operating leases was $1,086,000 and
$310,000 for the years ended June 30, 1997 and 1996, respectively.

The following is a summary of minimum future lease payments:

Years ending June 30,                Capital leases         Operating leases
------------------------------------------------------------------------------
      1998                               $112,000              $  988,000
      1999                                 79,000                 855,000
      2000                                 46,000                 725,000
      2001                                 17,000                 692,000
      2002                                     --                 413,000
      Thereafter                               --                 612,000
------------------------------------------------------------------------------
                                          254,000              $4,285,000
      Less amount representing interest    53,000
-------------------------------------------------
                                          201,000
      Current portion                     111,000
-------------------------------------------------
                                         $ 90,000
-------------------------------------------------

SALE AND LEASE-BACK ARRANGEMENT.  In April 1995, the Company sold its corporate
headquarters and production facility for $1,025,000 under a sale and lease-back
arrangement.  The Company used $770,000 of the proceeds to satisfy its
obligations under two mortgage notes with financial institutions.  The sale
resulted in a deferred gain in the amount of $97,000 which is being amortized
over the four year term of the lease.


                                   F-25

<PAGE>

                         TOPRO, INC. AND SUBSIDIARIES
                                       
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


EMPLOYMENT AGREEMENTS.  The Company has entered into the following employment
and consulting agreements with officers, directors and other key present and
former employees.

With an officer who is also a director, an agreement which expires in January
1999, but will be automatically renewed on each anniversary for one year
periods unless written notice is provided by either party, providing for a
minimum annual salary in the amount of $175,000 during the current contract
period.  The employment agreement provides for the granting of 450,000 stock
options exercisable at $2.50 per share which vest as follows: January 1997,
100,000, December 1997, 150,000 and December 1998, 200,000.   The stock options
expire in January 2007.

With an officer, a 2 year employment agreement, which expires in February 1999
but will be automatically renewed on each anniversary for one year periods
unless written notice is provided by either party, providing for minimum annual
salary in the amounts of $135,000 and $145,000 during the first and second
year, respectively, and a bonus of not less than $15,000 per year.  The
employment agreement provides for the granting of 300,000 stock options which
vest as follows: July 1997, 100,000 at an exercise price of $1.42 per share;
July 1998, 100,000 at an exercise price of $2.13 per share and July 2000,
100,000 at an exercise price of $2.49 per share.  The stock options expire in
May 2007.

With an officer, a 2 year employment agreement, which expires in July 1999 but
will be automatically renewed on each anniversary for one year periods unless
written notice is provided by either party, providing a minimum annual salary
in the amount of $160,000.  The employment agreement provides for the granting
of 225,000 stock options which vest as follows: July 1997, 75,000 at an
exercise price of $2.09 per share; July 1998, 75,000 at an exercise price of
$3.14 per share and July 2000, 75,000 at an exercise price of $3.66 per share.
The stock options expire in July 2007.

With an officer, a 2 year employment agreement, which expires in December 1998
but will be automatically renewed on each anniversary for one year periods
unless written notice is provided by either party, providing a minimum annual
salary in the amount of $150,000 and a bonus of not less than $18,000 during
the first year and $15,000 during the second year.  The employment agreement
provides for the granting of 200,000 stock options with an exercise price of
$2.25 which vest as follows:  February 1997, 66,667; February 1998, 66,667 and
February 1999, 66,666.  The stock options expire in February 2007.

With a former major stockholder and officer of a subsidiary, a 6 month
employment agreement and a consecutive 24 month consulting agreement which
expires in October 1998 providing for minimum annual compensation in the
amount of $140,000.  With the spouse of this officer, who is also a former
officer of the subsidiary, a 5 month employment agreement and a consecutive 24
month consulting agreement which expires in September 1998, providing for
minimum annual compensation in the amount of $120,000.  Each consulting
agreement provides the granting of 150,000 stock options exercisable at $2.25
per share through October 2006.

With an officer and former sole stockholder of a subsidiary, a 2 year
employment agreement which expires in August 1999 but will be automatically
renewed for two year periods, providing for a minimum annual salary in the
amount of $75,000.  The employment agreement provides for the granting of
10,000 stock options exercisable at the then market price.  The options are
exercisable for ten year periods.

LEGAL PROCEEDINGS.  At June 30, 1997, there is a proceeding involving a claim
by the Company for damages included in its balance sheet under the caption of:
Costs and estimated earnings in excess of billings on uncompleted contracts
(See Note 7).  The claim, in the total amount of $3,900,000, arises from


                                   F-26

<PAGE>

                         TOPRO, INC. AND SUBSIDIARIES

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

a dispute with a customer regarding contractual disagreements primarily
resulting from change orders.  The Company is also party to various disputes
involving contractual matters of contract compliance and payment of its
billings.  Management does not believe that the outcome of these disputes will
have a material adverse effect on the Company's results of operations, its
financial position or cash flows.  The Company, in the routine course of
business, utilizes legal services to protect lien rights on projects to secure
payment of its outstanding accounts.  At June 30, 1997, the Company has
reserves for potential losses on contracts and an allowance for doubtful
accounts in the amount of $2,445,000 resulting primarily from management's and
counsel's assessment of legal proceedings.

RESTRICTED CASH.  The cash balance at June 30, 1997 includes certificates of
deposit in the amount of $125,000 which are restricted and being held by a
bonding company to secure the Company's obligations under a performance bond.

OTHER CONTINGENCIES.  During June 1996, the Company recognized a gain in the
amount of $341,000.  This gain related to the sale of stock the Company had
purchased as an investment and later sold.  Prior to June 1996, the gain was
being deferred pending the outcome of certain contingencies associated with the
sale agreement.

NOTE 14.  FOURTH QUARTER ADJUSTMENTS.

During the fourth quarter of fiscal 1997, the Company recorded an adjustment to
the allowance for doubtful accounts and incurred an expense for the year ended
June 30, 1997 in the amount of $944,000.

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

NOTE 15.  RELATED PARTY TRANSACTIONS.

An officer of the Company is a Board member of a financial consulting company
and a partner in its affiliate.  The consulting company has made investments in
private placements of the Company's securities.  Since joining the Company, the
officer has abstained in all matters relating to the financial consulting
company's investment in the Company.

An officer and stockholder of the Company is also an owner of an entity for
which the Company performs subcontract work.  Billings to the related entity
were approximately $1,154,000 during the year ended June 30, 1997.

NOTE 16.  PRO FORMA BALANCE SHEET AND SUBSEQUENT EVENTS.

The consolidated pro forma balance sheet at June 30, 1997 gives effect to the
following transactions which occurred during the period July 1 - August 31,
1997.

-    The conversion of $2,685,000 of the Company's 9% convertible debentures
     into 1,790,032 shares of its common stock.
-    Cash proceeds in the amount of $4,616,000 received upon the exercise by
     the holders of 3,001,101 stock options and stock purchase warrants for
     3,001,101 shares of common stock.  For pro forma purposes, the cash 
     proceeds were applied one half to the cash balance and one half to the 
     reduction of accounts payable.


                                   F-27

<PAGE>

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

   
Date: December 9, 1997              By: /s/ John P. Jenkins
----------------------                 -----------------------------------------
                                           John P. Jenkins
                                           President and Chief Executive Officer


Date: December 9, 1997              By: /s/ Douglas H. Kelsall
----------------------                 -----------------------------------------
                                           Douglas H. Kelsall
                                           Principal Accounting Officer