<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                               FORM 10-KSB/A No. 1

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

                     For the fiscal year ended June 30, 1998
                                       or
__   Transition  report  pursuant to section 13 or 15 (d) of the  Securities
     Exchange Act of 1934

                        Commission file number: 0 - 19167

                             TAVA TECHNOLOGIES, 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)

7887 East Belleview Avenue, Englewood, Colorado                 80111
-------------------------------------------------              --------
(Address of principal executive offices)                      (zip code)

 Issuer's telephone number, including area code:    (303) 771-9794

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

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: $48,363,000. 

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 September 22, 1998, the aggregate  market value of voting stock held by
non-affiliates, based on the closing price as quoted by the NASDAQ Stock Market,
was $126,128,000.

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


<PAGE>


                             TAVA TECHNOLOGIES, INC.

                                   FORM 10-KSB

                                Table of contents



Part I                                                                    Page

     Item 1   Description of Business.                                      3

     Item 2   Description of Property.                                     10

     Item 3   Legal Proceedings.                                           11

     Item 4   Submission of Matters to a Vote of Security Holders.         12

Part II

     Item 5   Market For Common Equity and Related Stockholder Matters.    12

     Item 6   Discussion and Analysis or Plan of Operation.                13

     Item 7   Financial Statements.                                        21

     Item 8   Changes in and Disagreements with Accountants on Accounting
              and Financial Disclosure.                                    22

Part III

     Item 9   Directors,  executive  officers,  promoters  and  control  
              persons; Compliance  with  Section  16(a) of the  Exchange 
              Act.                                                         22 

     Item 10  Executive compensation.                                      24 

     Item 11  Security  ownership of certain  beneficial owners and
              management.                                                  27 

     Item 12  Certain relationships and related transactions.              29

     Item 13  Exhibits and Reports on Form 8-K.                            29

                                       2

<PAGE>


                             TAVA TECHNOLOGIES, INC.
                                   Form 10-KSB

                           Forward-looking statements


Statements made in this Form 10-KSB that are not historical or current facts are
"forward-looking statements" made pursuant to the safe harbor provisions federal
securities  laws.  These  statements often can be identified by the use of terms
such as "may," "will," "expect," "anticipate," "estimate," or "continue," or the
negative  thereof.  Such  forward-looking  statements  speak only as of the date
made. Any forward-looking  statements represent management's best judgment as to
what may occur in the future. However, forward-looking statements are subject to
risks,  uncertainties  and important  factors  beyond the control of the Company
that could cause actual results and events to differ  materially from historical
results of operations and events and those  presently  anticipated or projected.
These factors include,  but are not limited to those discussed under the caption
"Factors  that May  Affect  Future  Events" in Item 6 of this Form  10-KSB.  The
Company  disclaims any  obligation  subsequently  to revise any  forward-looking
statements to reflect events or  circumstances  after the date of such statement
or to reflect the occurrence of anticipated or unanticipated events.

Item 1.  Description of business.

Recent Developments - Fiscal 1996-1998.

TAVA Technologies, Inc., a Colorado corporation formed in 1974, is an industrial
information  technology  company  providing  consulting  and system  integration
services to industrial  markets.  The Company  designs,  configures and installs
software based  information and control systems that provide  automatic  control
and  optimization  of discrete  and  continuous  manufacturing  processes  while
acquiring,  storing and  converting  real time process data for use by operators
and enterprise  management  information  systems.  The  Company's  products and
services provide its clients greater  operating  efficiencies and the ability to
optimize the performance of information based businesses.

As an independent system integrator, the Company's client specific solutions may
include  hardware  and software  components  from a wide variety of suppliers as
well  as  Company  proprietary  products  and  custom  software.  The  Company's
professional  staff  includes  system  engineers,  software  developers,  system
analysts and technicians.

In fiscal  1996,  TAVA began a program of select  acquisitions  of other  system
integration  companies in geographical  and industry  vertical  markets not then
served effectively by the Company. The strategy included four primary elements:

   - applying  the  infrastructure  of the  acquired  companies  to bring TAVA's
     existing  products and services to new  geographical  markets;  
   - taking the newly acquired  vertical market  expertise,  technologies  and
     products to TAVA's existing markets;
  -  providing  a  nationwide  operating  platform  from  which  TAVA  could  
     more effectively  deliver  standard  product and service  solutions to 
     clients with multiple site locations; and
   - developing a larger resource base to position TAVA to address larger 
     projects and clients than its immediate competition.

In fiscal 1996 TAVA acquired three  independent  system  integration  companies:
Management  Design and  Consulting  Services,  Inc.,  headquartered  in Atlanta,
Georgia ("Management Design"); Advanced Control Technology,  Inc., headquartered
in Albany,  Oregon,  ("Advanced  Control") and Vision  Engineering  Corporation,
based in Cypress,  California with sales and engineering  offices in Sacramento,
Los  Angeles,  Phoenix and Chicago and a sales office in Boston  ("Vision").  In
fiscal  1997,  TAVA  acquired  All  Control  Systems,   Inc.  in  West  Chester,
Pennsylvania ("All Control").  To further expand its market presence,  in fiscal
1998 TAVA opened new offices in Greenville,  South Carolina, Houston, Texas, and
Minneapolis,  Minnesota and formed a wholly-owned subsidiary, TAVA Alabama, Inc.
("TAVA Alabama"), which opened an engineering office in Birmingham, Alabama.

                                       3

<PAGE>

TAVA  is  now  one of  the  nation's  largest  independent  systems  integration
companies  providing  information and control system  technologies to industrial
users.  The  Company  believes  that its  growth  through  acquisition  has been
successful  and plans to  continue  to  acquire  systems  integration  companies
selectively  to further its original  objectives,  as well as obtain  additional
complementary product and consulting practice expertise.

TAVA manages its business through a structure that combines a centrally  managed
national sales and marketing  function with local solution  delivery through its
various  operating  offices.  Large and/or  geographically  diverse projects and
programs are often executed with combined resources from more than one office.

Through the course of its development,  TAVA has retained certain key management
personnel from each of the acquired organizations,  has promoted other employees
to senior management positions in the combined  organization,  and has recruited
new  personnel  to fill a variety of  management  positions  in the new  company
structure.  During  the year  ended  June 30,  1998,  TAVA  added 12 new  senior
management personnel in finance, sales and marketing and operations.

Through  1995,  TAVA  invested  in a  company,  Direct  Measurement  Corporation
("DMC"),  which  developed  and  marketed  products  utilizing a unique gas flow
measuring method.  During fiscal 1996, TAVA sold its remaining investment in DMC
but, as a condition of that sale, retained a future royalty interest in sales of
DMC products.  DMC was purchased by an unrelated  third party which is obligated
under the royalty agreement. No royalty income has been generated to date.

Description of Business.

TAVA is a project based industrial  information technology company that provides
consulting and system integration services to industrial clients in a broad base
of industries  including:  aerospace,  airport facility operations,  automotive,
chemical,  petro-chemical and refining, food and beverage, forest products, pulp
and paper,  mining and mineral  processing,  power generation,  transmission and
distribution,  pharmaceutical and bio-technology,  semi-conductor and electronic
component,   and  environmental   control.  As  a  supplier  of  software  based
information  and  control  systems,  the  Company  provides  information  based,
enterprise performance optimization for its clients.

Contracts for the systems are  negotiated  for a fixed price for a defined scope
of work or executed on a time and materials basis.  Before commencing a project,
TAVA consults with the customer to develop:  a functional  description  document
defining what the project will  accomplish;  a design document to define how the
project will be undertaken to satisfy the stated objectives; and acceptance test
procedures,  which  define  in  advance  how  the  project  will  be  determined
successful.

Control systems:

The control systems that TAVA provides are typically based on Programmable Logic
Controllers,  Computer  Numerical  Controllers,  DDC Controllers  networked with
measurement and control devices,  and operator  interfaces,  typically  Personal
Computers,  that use both  text and  graphics  to  display  the  plant or system
operation  and  performance  characteristics,   usually  in  real-time.  Systems
typically   include  third  party   hardware   components,   packaged   software
applications,  custom  software  developed  by TAVA  staff  and  sometimes  TAVA
proprietary products.

Third party  component  and packaged  software  application  suppliers  include:
Wonderware,  Rockwell  Automation,  Intellution,  General  Electric,  Square  D,
Modicon, Microsoft, Digital Equipment Corporation, IBM, Hewlett Packard and many
others.  The purchased  products are readily  available on a national  basis and
TAVA is not  dependent  upon any  particular  supplier  or  group of  suppliers.
Systems are generally  assembled,  configured and programmed at TAVA's operating
facilities  and are accepted and approved by the customer  prior to shipment for
installation.  TAVA staff generally  executes the final system  installation and
start-up at the client's site.

                                       4

<PAGE>

Information systems:

TAVA provides information systems that generally are either personal computer or
mini-computer based, typically in a client server architecture.  The systems are
networked both to a control system in order to gather plant or process operating
data,  and to  enterprise  management  information  systems  such as  Enterprise
Resource Planning systems to improve and optimize functionality.

The information systems may include:  third party package software  applications
such as advanced  planning and scheduling  modules as supplied by companies such
as I2; third party packaged manufacturing  execution system applications such as
those supplied by RWT, Wonderware  Corporation,  Intellution,  Inc., and others;
custom  applications  developed  by TAVA staff and  sometimes  TAVA  proprietary
products.

Consulting:

In its  consulting  capacity,  TAVA's staff  provides  clients  with  operations
improvement  analyses,  business process engineering and information  technology
planning.  TAVA brings  particular  emphasis and  expertise to  enterprise  wide
integration  of  management  information  and  process  control  and  automation
systems.

TAVA proprietary products:

TAVA develops, on a limited basis, packaged, re-usable software applications for
specific automation, control and information system requirements. These products
are  generally  sold as part of an overall  system.  Some current TAVA  products
include  applications for use in process line data  acquisition,  airport runway
lighting  control  systems,  automatic  positioning  of overhead  cranes,  batch
processing  for  color  mixing,  power  consumption  monitoring,  and Year  2000
assessment.  These products provide the Company with competitive  advantages and
increased  margins in its system sales. The Company plans to continue to develop
similar products on a select basis. 

Sales and marketing:

The Company  sells all of its products and services  through its national  sales
and marketing  organization,  spread geographically across the United States but
reporting  to  its  Executive  Vice  President  of  Sales  and  Marketing.  This
organization  combines  geographical  territory  responsibility  with  specific,
industry market focus. In fiscal 1998, the Company added an international  sales
manager,  resident in the U.S., who manages  international  business development
activities.  To date, the Company's direct international sales have been minimal
and have primarily been associated with supporting the international  affiliates
of its U.S. based companies.

Project execution:

The Company  executes its projects  from its various  operating  offices  spread
geographically  across the United States.  The Company's  staff includes  system
engineers,  software developers,  system analysts and technicians.  Large and/or
geographically   diverse  projects  and  programs  are  executed  with  combined
resources from more than one office.

Projects are executed based on a TAVA standard  methodology that continues to be
expanded in scope and detail.  This TAVA  methodology  is critical to consistent
solution  delivery  across all offices and is the  foundation  for  inter-office
project teaming. The Company has invested  significantly in and will continue to
invest in intra-net and other information  technology  infrastructure to improve
internal communications and overall project execution performance.

                                       5

<PAGE>


During fiscal 1998,  TAVA  provided  information  and control  systems and other
technical services to national firms including the following:

<TABLE>
<CAPTION>
       <S>                  <C>                   <C>    
       Coca-Cola            Merck                 Hershey
       IVAX                 Kimberly Clark        Kraft
       Boeing               Hewlett Packard       Georgia Pacific
       Cyprus Minerals      Lipton
</TABLE>

In addition,  during fiscal 1998,  TAVA provided Year 2000 products and services
to national firms including the following:

<TABLE>
<CAPTION>
       <S>                  <C>                   <C> 
       General Motors       Weyerhaeuser          Koch Industries
       Chevron              Amgen                 Bayer Corp.
       Boeing               Bristol-Myers-Squibb  Polaroid Corp.
       Kraft                Johnson & Johnson     Kennecott Minerals/Utah Copper
</TABLE>

Sales to any one customer during fiscal 1998 did not exceed 10% of the Company's
contract revenue. During 1997, sales to one customer accounted for approximately
18% of contract revenue.

In Denver,  Colorado,  Chicago,  Illinois and Phoenix,  Arizona,  TAVA  operates
service  divisions  that  provide  instrumentation  calibration  and small scope
system  configuration  services to local customers on a "demand"  service basis.
This work is generally done at the customer's facility. As of June 30, 1998, the
group  employed  approximately  15  technicians  on a  full  time  basis.  These
technicians  also  occasionally  support larger system  integration  engineering
projects.  The Company  plans to  continue  to invest in and grow this  business
across its organization.

Year 2000 initiative:

In late  June  1997,  TAVA  engineers  confirmed  the  existence  of  Year  2000
compliance issues in process control and factory automation systems.  Management
believes  that TAVA was one of the first  organizations  to determine  that Year
2000 issues were a very real and serious concern in these systems. Although Year
2000 issues had been earlier recognized in classical  management  information or
financial  systems,  TAVA  found  that the  issue had not been  understood  as a
potentially  severe problem in process control,  factory automation and facility
management systems.  

Most such  systems are complex  combinations  of hardware  and  software  from a
variety of vendors.  Therefore,  a compliance  issue with a single component and
the  corresponding  solution  must be considered in the context of the impact on
the total system. Only a few components in any given system could have Year 2000
compliance issues. Finding these components and determining the resulting impact
in an ordered and accurate  fashion is the critical and  significant  challenge.
Given these  circumstances,  TAVA believed that a system integrator with process
control and factory automation  practice  experience would be the logical choice
to effect the required solutions.

To address this market, commencing in June 1997, TAVA launched a major business
initiative to address Year 2000 compliance problems in process control,  factory
automation  and  facility  management  systems.   The  Company  determined  that
addressing  the Year 2000 issue in these systems was a logical  extension of its
current  business  and it  developed  a  proprietary  package  of  products  and
services,  Plant  Y2kOneTM,  as the  foundation of its approach.  Plant Y2kOneTM
includes a  methodology,  system  inventory  support  tool,  access to a Company
developed  database of Year 2000  compliance  information,  specific code search
engines and a remediation  project  management tool, all packaged on CD ROM. The
product is provided under license for use by clients  directly or in combination
with consulting and technical services supplied by TAVA.

The Company's Year 2000 methodology includes assessment,  analysis, planning and
remediation  phases. In the assessment phase, the overall project is defined and
organized.  An  inventory of all process  control  hardware and software is then
completed  using the Company's  inventory  builder tool. In the analysis  phase,
that  inventory is examined,  component by component,  using TAVA's  database of
vendor Year 2000  compliance  statements.  Custom code is analyzed with TAVA's

                                       6

<PAGE>

search engines to reveal date usage.  The conversion  planning stage applies the
results of the analysis to develop a plan for bringing the client's  system into
Year 2000  compliance.  The final stage is to execute the  remediation  plan and
conduct system and enterprise wide training.

TAVA supplies  complete  Year 2000 project  consulting  services  built upon the
methodology  and use of the  database and tools;  or licenses  the  methodology,
tools and database access which are packaged on CD ROM and supported by internet
access,  to the client for self  execution,  or provides a  combination  of both
approaches.  The project  staffing  and  management  requirements  for Year 2000
consulting  and  service  engagements  entered  into by TAVA are  undertaken  by
engineering and technical staff of TAVA's subsidiaries.  As Year 2000 compliance
projects are a  straightforward  extension of the Company's  core  technologies,
with the  exception  of specific  training on the Plant  Y2kOneTM  product,  the
Company has not had to invest in significant  training of its personnel in order
to support this  initiative.  Newly hired  employees have generally been able to
contribute within the first few weeks of employment.

The Company has made significant financial and resource investment in developing
the Plant Y2kOneTM product, in particular,  the vendor compliance database.  The
Company  established  a  technology  and  resource  center at its West  Chester,
Pennsylvania  office to support  this  effort.  In January  1998,  TAVA formed a
wholly-owned  subsidiary,  TAVA Y2k One, Inc. ("TAVA Y2k"), which owns the Plant
Y2kOneTM  products and administers the operations and business  affairs for this
business.

As of June 30, 1998, the Plant Y2kOneTM vendor compliance database included more
than  40,000  items  and  continues  to  grow  as  the  Company   addresses  new
engagements.  In the fourth quarter of its fiscal 1998, the Company began to see
rapidly  accelerating  market  acceptance  of its Plant  Y2kOneTM  products  and
services.  TAVA Y2k  received  in excess of  $20,000,000  in new  orders for the
product  and related  services  in that  quarter.  Many of these  orders  exceed
$1,000,000 for the  assessment  and analysis phase of the project alone.  Orders
generally  include  licenses of the Plant Y2kOneTM  product and some quantity of
TAVA services that are provided on a time and expense basis. When TAVA continues
with clients from the assessment  and analysis stage to conversion  planning and
remediation,  that activity will generally include purchase of TAVA services and
third party  hardware and  software  components  as required by the  remediation
programs.

The scope and magnitude of these programs has placed significant demands on TAVA
management  and  staff  resources.  As many  client  organizations  are  late in
addressing Year 2000 issues in their factory automation  systems,  schedules are
now very compressed.  The Company has increased staff  significantly in order to
meet this demand,  adding 174  employees  during the 1998 fiscal year.  To date,
hiring  qualified staff has not been a major difficulty as the Company is hiring
from all of its 14 offices.  It is not  competing for the same type of employees
required  for  Year  2000  remediation  in  traditional  management  information
systems.

Strategic alliances and other ventures:

Since  many TAVA  clients  for Year 2000  support  services  are  multi-national
corporations  with  off-shore  operations,   during  fiscal  1998,  the  Company
developed a Solution  Provider  Partner  Program to provide local  international
support  of  client's  off-shore  manufacturing  operations.  Solution  Provider
Partners are system integration firms with experience in factory automation that
are located  near  TAVA's  clients  sites and which can supply  staff to support
TAVA's  international  project  manpower  requirements.  The  Solution  Provider
Partner  undertakes  to train  its  personnel  on use of TAVA's  Plant  Y2kOneTM
product. In addition to the staff augmentation role in support of TAVA projects,
these organizations serve as value added resellers of the Plant Y2kOneTM product
in their own regional  markets.  As of June 30,  1998,  this program had not yet
contributed any material direct revenue.

The Company expects that its Solution  Provider Partner Program will continue to
have value beyond the Year 2000. Staff augmentation support will be required for
non-Year 2000 engagements and select partners will serve as a value added resale
distribution channel for other TAVA products and service.

At June 30, 1998,  TAVA had  agreements  with 23 Solution  Provider  Partners in
locations ranging from Asia to Europe and Africa,  providing the Company with an
additional resource pool of more than 1000 personnel.

                                       7

<PAGE>

In its undertaking to address Year 2000 compliance issues in factory  automation
systems,  TAVA has developed  formal Strategic  Alliance and teaming  agreements
with a number of information technology service companies.  Agreements have been
signed with: Unisys Corporation, Computer Science Corporation; CTA Incorporated;
Software Control  International  and Data  Dimensions,  Inc. The Company also is
working on a similar but  informal  cooperation  basis with others such as Keane
Inc.

The  immediate  purpose  of these  alliances  is to form  complementary  teaming
arrangements that provide clients complete Year 2000 project services,  covering
both  conventional  management  information  systems,  the  domain  of the  TAVA
alliance partners,  as well as TAVA's domain of factory automation systems. TAVA
and its  alliance  partners  believe  that this  teaming  structure is viable in
non-Year  2000,  information  technology  business  development  as well. In the
non-Year  2000  context,  TAVA and an alliance  partner team together to provide
integrated  enterprise IT solutions  that link process  control to  conventional
management  information systems. As in Year 2000 teaming arrangements,  the TAVA
alliance partner provides the management  information systems expertise and TAVA
provides the automation,  information technology domain experience.  A number of
projects have already been identified for pursuit with an alliance partner.

In early fiscal 1998, TAVA developed Year 2000 product marketing  alliances with
two automation  product  suppliers,  Wonderware  and Square D  Corporation.  The
general  effect of these  alliances has been to assist in creating  awareness of
the Year 2000 issue in factory automation systems. The alliances did not produce
any significant  direct commercial  effect.  The Company has determined that the
cooperative marketing programs were not reaching the right decision making level
in  target  clients.  These  specific  alliances  are no longer  being  actively
supported.  TAVA has active working  relationships  with these  organizations on
non-Year 2000 business activity.

TAVA expects that the demand for Year 2000 compliance products and services will
remain very strong  through  calendar  year 1999 and into calendar Year 2000. As
many organizations will not complete total remediation prior to January 1, 2000,
some projects  will include a temporary  solution that will need to be addressed
through  installation  of a permanent  solution in the months  after  January 1,
2000.

The  Company has already  seen that many client  organizations  involved in Year
2000  compliance  programs  have put  other  industrial  information  technology
projects on hold.  There are two  immediate  reasons for this.  One is that most
companies had not budgeted for this activity and are using other capital project
funds as the source of funding Year 2000  programs;  the second is that clients,
for  fear of  duplicate  or  contrary  spending,  want to  avoid  executing  new
information technology projects until they have a completed Year 2000 conversion
plan that addresses their entire information technology structure.  As a result,
TAVA  expects  that during  fiscal 1999 and 2000,  much of its revenue base will
come from projects that involve a Year 2000 compliance element.

The Company believes that the Year 2000 event is an unparalleled  opportunity to
secure new clients for whom it will continue to provide system  integration  and
consulting  services  beyond  Year 2000.  Through  the end of fiscal  1998,  the
Company had secured Year 2000 business with more than 100 clients. The Company's
ability to expand  business with these clients after Year 2000 of course depends
on the quality of execution of its Year 2000 compliance support projects.

In March 1998, TAVA and R.W. Beck Plant Management  Ltd., a leading  engineering
and consulting  firm to the utility  industry,  teamed  together to address Year
2000  compliance  issues in control  and  automation  systems in the  electrical
utility  industry.  In May 1998, TAVA and Beck, as co-owners,  formed  TAVA/R.W.
Beck, LLC  ("TAVA/Beck").  TAVA Y2k granted the LLC a license to apply the Plant
Y2kOneTM technology  exclusively to the utility industry.  TAVA/Beck has its own
management  and  professional  staff.  Staffing  plans  provide  for growth to a
resource base of more than 200 personnel.

Through June 30, 1998, TAVA/Beck has executed agreements with 16 clients.  These
include both  independent  power producers and public  utilities.  Subsequent to
June 30,  1998,  the Los Angeles  Department  of Water and Power  authorized  an
agreement with TAVA/Beck,  subject to City Council review,  to address  embedded
system issues with funding limited to $9 million for a period of 24 months. Also
subsequent to June 30, 1998,  TAVA/Beck signed an agreement with Y2K Africa,  an
affiliate  of the state  utility  of South  Africa.  Y2K  Africa  will apply the

                                       8

<PAGE>

TAVA/Beck  Utility Y2k(TM)  products and services to electric,  gas, water,  and
wastewater  utilities in South Africa and throughout  the continent.  TAVA/ Beck
did not have any direct financial impact on TAVA during fiscal 1998. The Company
expects a  financial  contribution  from this  entity to begin  during the first
quarter of fiscal 1999.

In fiscal 1998,  TAVA  entered  into an agreement to license its Plant  Y2kOneTM
technology to Colorado MEDtech, Inc. ("CMED").  Pursuant to this agreement, CMED
will undertake to modify the Plant Y2kOneTM software tool and database structure
to tailor it  specifically to the needs of the healthcare  market.  The modified
system,  to be known as BioMed  Y2kOne,  is  intended  to assess  compliance  of
biomedical  devices used in hospitals,  clinics,  and extended care  facilities.
CMED will work  directly  with  clients,  and in  cooperation  with  information
technology service companies that are providing Year 2000 compliance services in
the health care industry. CMED will offer a combination of tools and services to
support health care institutions'  efforts to establish Year 2000 compliance for
their biomedical devices. TAVA will receive, as a royalty, a percentage of gross
profits generated by this activity. TAVA did not receive any license income from
CMED during  fiscal  1998.  License  revenues  from this  activity  are expected
beginning in the second quarter of fiscal 1999.

In late fiscal 1997, TAVA signed a strategic  alliance agreement with PacifiCorp
Energy Services, Inc. ("PacifiCorp"), a division of PacifiCorp Holdings, Inc., a
leading  electrical  utility  with  international  operations  headquartered  in
Portland,  Oregon.  The alliance  agreement  addressed the joint  development of
business in automating utility and industrial power distribution substations and
was intended to combine  TAVA's  automation  technology  and  know-how  with the
utility  specific   experience  and  know-how  of  the  PacifiCorp   engineering
resources.  The alliance activity  resulted in one significant  project award in
early fiscal 1998.  During fiscal 1998 there has been little to no activity from
this alliance.

Competition.

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

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

While most  independent  control system  integrators are much smaller than TAVA,
there are some general  engineering  firms which are larger and better financed.
TAVA  competes in certain  markets with these firms but generally not across all
markets.  One example of such a competitor is the automated  System  Division of
Raytheon Engineers and Constructors International, Inc.

Specifically  in the market for Year 2000  compliance in factory  automation and
process control,  TAVA has encountered  little competition for its comprehensive
product offering.  Raytheon is clearly the Company's largest  competitor in this
area.

Research and development.

TAVA conducts  limited  research and  development  through both customer  funded
projects or internal  research  projects.  Costs are incurred in specific system
projects that employ existing technologies for which feasibility  previously has
been  established to develop  applications  within  specific  industries.  These
applications are produced to have broad application in specific industries. Once
technological  feasibility  is  established,  the Company capitalizes software

                                       9

<PAGE>

development costs up to the time the product is available for sale to customers.
This investment is designed to create both improved margins through repeat sales
of applications in specific  vertical markets and to improve TAVA's  competitive
position  in these  markets.  Costs  that  are  incurred  prior  to  determining
technological feasibility are charged to expense. During the year ended June 30,
1998,  TAVA  capitalized  $3,188,000  of costs it  incurred to develop its Plant
Y2kOneTM  product and service  offering and $736,000 to develop  other  software
products.

The Company does not anticipate  that further major  development  effort will be
incurred on its Plant Y2kOneTM  products  other than the continued  expansion of
the vendor management database.  TAVA's product development  resources have been
re-directed  to programs put on hold during the Year 2000 ramp up. Some of these
programs have grown out of the Year 2000 engagement experience.

Backlog.

At June 30, 1998 and 1997,  the sales order  backlogs for the  Company's  system
integration   and  services   business  were   approximately   $34,059,000   and
$12,153,000,  respectively. This included a backlog of approximately $20,984,000
from its Year 2000 products and services business at June 30, 1998. There was no
corresponding  backlog  at June 30,  1997.  Certain of the  Company's  contracts
require the provision of its systems  integration  services as a smaller portion
of a large contract. Consequently, the Company can not always control the timing
of the execution of its work on a specific project. This restriction may prevent
contracted  backlog from being completed  within an ensuing twelve month period.
This backlog  measurement  includes time and expense contracts which,  generally
may be cancelled upon 30 days' notice.

Employees.

At June 30, 1998,  TAVA had 491  full-time  employees,  including 41 contract or
temporary employees.  During the year ended June 30, 1998, the Company added 174
employees, an increase of 55% over the previous year. No employee is represented
by a labor union and the Company believes its employee relations are good.

Item 2.  Description of property.

The Company maintains major leased facilities at the following locations:

<TABLE>
<CAPTION>
                                                              Square      Term of           Current
Function                           Location                    feet        Lease          annual rent
---------------------------------------------------------------------------------------------------------
<S>                                <C>                        <C>        <C>              <C>
TAVA Technologies, Inc.,           7887 East Belleview Ave.    3,100     December 2002    $ 61,000
Corporate headquarters.            Englewood, CO

Topro Systems, engineering         2525 West Evans Avenue     32,000     April 1999       $204,000
and manufacturing facilities.      Denver, CO

Topro Systems, engineering and     1900 West Broadway         13,000     February 2002    $145,000
sales facility.                    Phoenix, AZ

TAVA Y2k and All Control,          905 Airport Road           35,000     February 2004    $390,000
manufacturing, engineering and     West Chester, PA
sales facility.

Advanced Control, engineering,     2830 Ferry Street          13,000     November 2004    $ 82,000
sales and manufacturing            Albany, OR
facilities.

Advanced Control, additional       2514 Ferry Street          12,000     July 2001        $ 72,000
manufacturing facilities.          Albany, OR
</TABLE>

                                       10
<PAGE>

<TABLE>
<CAPTION>
                                                              Square      Term of           Current
Function                           Location                    feet        Lease          annual rent
---------------------------------------------------------------------------------------------------------
<S>                                <C>                        <C>        <C>              <C>
Advanced Control, engineering      8130 304th Avenue S.E.     12,000     February 2000    $ 82,000
office.                            Preston, WA

Management Design, engineering     3900 Kennesaw 75 Pkwy.     16,000     May 2003         $ 87,000
and manufacturing facilities.      Kennesaw, GA 

Vision, engineering and sales      10855 Business Center Dr.  31,000     September 2001   $158,000
facilities.                        Cypress, CA

Vision, engineering and sales      760 Pasquinelli Dr.         4,000     April 2001       $ 65,000
facilities.                        Westmont, IL

Vision, engineering and sales      11315 Sunrise Gold Circle   7,000     September 2002   $ 53,000
facilities.                        Rancho Cordova, CA

TAVA Alabama, engineering          2027 1st Avenue North       2,200     Month to month   $ 51,000
facility.                          Birmingham, AL
</TABLE>

Subsequent  to June 30, 1998,  TAVA leased space for its new offices in Houston,
Texas and Minneapolis, Minnesota. TAVA has capacity for growth in certain of its
facilities.  However,  management  intends  to  expand  facilities  at its Topro
Systems  engineering  and  manufacturing  facility in Denver to support  growth.
Additionally,  management intends to expand its corporate  headquarters facility
to  accommodate  additional  personnel  and  centralize  certain  administrative
functions. Management continuously evaluates adding facilities in new geographic
areas or expanding existing facilities as business conditions warrant.

Item 3.  Legal proceedings.

At June 30, 1998, TAVA and certain of its officers and directors were parties to
certain legal proceedings. On June 17, 1998 and thereafter,  TAVA, John Jenkins,
its President and a director,  Kevin Fallon, its Chief Operating Officer, and H.
Robert  Gill,  a former  director,  were served with a complaint in a civil case
brought by Jon Walker,  Sr. and Imogene  Walker.  The case was filed in the U.S.
District  Court for the District of Oregon on or about May 28, 1998.  Also named
as  defendants  were  TAVA's  prior  financial  consulting  firm  and one of its
principals, a broker-dealer firm with offices in Denver, Colorado and one of its
representatives,  and numerous  John Does and John Doe  entities.  The complaint
relates to the following  circumstances:  on May 28, 1997, the approximate  time
that Mr.  Walker  resigned as a director of TAVA, he and his wife sold a sizable
block of TAVA  shares in the open market to a third  party not  affiliated  with
TAVA. The Walkers allege that as of that date, TAVA  substantially had completed
its Plant Y2kOneTM  products,  and intentionally  withheld this information from
Mr. Walker, while disclosing it to the unaffiliated purchaser.  The Walkers also
allege that the defendants  aggressively  induced them to sell the shares, which
they otherwise would have held until May 1998. The Walkers have asked for relief
consisting  of 929,428 TAVA  shares,  for which they will tender the proceeds of
their  sale,  or, in the  alternative,  money  damages  equal to the  difference
between the $1.50 price at which they sold the shares in May 1997 and the $13.00
price in May 1998, when they claim they would have sold. The defendants  believe
that the Walker's claims are wholly untrue and deny all of the allegations. TAVA
and the related  defendants have filed motions to dismiss the federal securities
claim for  failure to state a claim;  to dismiss  the  claims  asserted  against
Messrs. Gill and Fallon for lack of jurisdiction;  and to transfer the action to
the U.S. District Court for the District of Colorado.  TAVA understands that the
other named  defendants  have filed  similar  motions.  All of these motions are
scheduled for oral argument in November, 1998. Discovery has been stayed pending
outcome of these motions On September 11, 1998,  the Walkers filed a stipulation
and order  dismissing all claims against TAVA's prior financial  consulting firm
and its  principal.  TAVA intends to defend the case  aggressively  and has been
advised that the other  defendants  will do the same.  Although the case is in a
very early stage, as of this date,  management  believes that the claims clearly
are groundless and that its defense of the case will be successful.

                                       11

<PAGE>

TAVA's  subsidiary,  All  Control,  is a party to a civil  action  filed in U.S.
District Court for the District of Maryland by Marshall/Hyman,  a joint venture,
which acted as the general  contractor  on a computer chip  processing  facility
project located in Manasas, Virginia.  Marshall/Hyman filed the suit on December
5, 1997,  claiming  damages in excess of $100,000.  On the same date in the same
court,  All  Control  filed a  counterclaim  requesting  damages  in  excess  of
$3,900,000 arising under its subcontract.  Discovery is proceeding in the matter
and trial is expected to be held in January of 1999. TAVA intends to pursue this
claim vigorously.  In connection with this same project, other lesser claims are
pending among All Control and other parties.

TAVA  is  also a  party  to  various  disputes  involving  matters  of  contract
compliance  and payment of its  billings.  Management  does not believe that the
outcome of any of these  disputes will have a material  adverse effect on TAVA's
results of operations,  its financial  position or cash flows. At June 30, 1998,
TAVA has provided an allowance for doubtful accounts receivable in the amount of
$1,305,000.

Item 4.  Submission  of matters to a vote of security holders.

         None.

Part II.

Item 5.  Market  for  common  equity and related stockholder matters.

TAVA's common stock is traded under the symbol TAVA on the  automated  quotation
system of the National  Association of Securities Dealers National Market System
("Nasdaq").  Prior to  February  18,  1998,  the common  stock was quoted on the
Nasdaq Small-Cap Market.

The range of the high and low closing sales price  quotations  for TAVA's common
stock as quoted by Nasdaq for the past two fiscal years is provided below:

Year ended June 30, 1998    High closing sales price    Low closing sales price
--------------------------------------------------------------------------------
Fourth quarter                      $14.88                      $8.75
Third quarter                       $14.63                      $5.00
Second quarter                      $ 7.00                      $4.75
First quarter                       $ 7.18                      $1.75

Year ended June 30, 1997    High closing sales price    Low closing sales price
--------------------------------------------------------------------------------
Fourth quarter                      $2.13                       $1.22
Third quarter                       $2.81                       $1.22
Second quarter                      $3.38                       $2.13
First quarter                       $2.88                       $1.63
--------------------------------------------------------------------------------

On September 9, 1998,  there were 475 record  holders of TAVA's common stock and
approximately 13,500 beneficial holders,  including holders of shares in nominee
or street name.

TAVA has never  declared a dividend  on its common  stock and it is  anticipated
that any earnings  will be retained for use in its business for the  foreseeable
future.  TAVA is required to obtain the prior  written  consent of the holder of
its  $4,000,000  term note due January  2001 in order to: (a) declare or pay any
dividends, either in cash or property, on any shares of its capital stock of any
class,  except  dividends  or other  distributions  payable  solely in shares of
capital stock of TAVA; (b) directly or indirectly purchase, redeem or retire any
shares of its capital stock of any class or any  warrants,  rights or options to
purchase  or acquire  any  shares of its  capital  stock;  or (c) make any other
payment  or  distribution,  either  directly  or  indirectly,  in respect of its
capital stock. TAVA's ability to pay dividends is not restricted under any other
arrangements or agreements to which it is a party.

                                       12

<PAGE>

The transfer  agent for TAVA's  common stock is American  Securities  Transfer &
Trust Co., Incorporated, 938 Quail Street, Suite 101, Lakewood, CO 80215.

During  December  1997,  the  holder  of  TAVA's  133,334  shares  of  Series  A
Convertible  Preferred Stock  outstanding,  which shares  constituted the entire
issue of the Series A  Preferred  Stock,  exercised  its  conversion  rights and
converted all of its preferred  stock  holding into  1,333,340  shares of common
stock.

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

Fiscal year ended June 30, 1998 compared to fiscal year ended June 30, 1997:

During December 1996, the Company  completed the  acquisition of All Control,  a
company  engaged in business  similar to its own. The  acquisition was accounted
for under the purchase  method of accounting,  which requires that the operating
results of All Control be included in the Company's  financial  statements  from
the time of acquisition  forward.  During late June 1997, the Company  announced
its plans to develop its Plant Y2kOneTM  suite of products and services.  During
the  period  from  July  1997  through   January  1998,  the  Company   expended
considerable time and resources to plan and develop these products.  They became
widely available for sale during the third quarter of the fiscal year ended June
30,  1998.  Further,  to develop,  market and service  these new  products,  the
Company added 174 new  employees and opened four new offices  during the current
fiscal year. This represented a 55% increase in employees.

The 1997  statement  of  operations  and related  footnote  disclosures  contain
information on operations that were discontinued  during 1995. At June 30, 1998,
the remaining  obligations  of those entities have been  completed.  Losses from
discontinued  operations  were  $106,000  for the  year  ended  June  30,  1997.
Management  believes that there are no remaining material  obligations that will
impact the Company's  operations in the future. The following analysis discusses
only the continuing operations of the Company.

As a consequence of the matters mentioned above,  meaningful  comparisons of the
changes in the Company's  operating results from its fiscal years ended June 30,
1998 and 1997 are  difficult to make.  During the year ended June 30, 1998,  the
Company incurred a net loss in the amount of $250,000, compared to a net loss in
the amount of $2,735,000 for the year ended June 30, 1997. The net loss incurred
during fiscal 1997  included a $944,000  charge to bad debt expense and a charge
in the  amount of  $250,000  related to  expenses  that were  anticipated  to be
incurred,  and subsequently  were, in connection with the acquisition of Vision.
The net loss in  fiscal  1998 was net of a  $100,000  reduction  in the bad debt
reserve and a $270,000 recovery of a litigation  reserve which was accrued as of
June 30, 1997 and reversed in 1998.  In addition,  in fiscal 1998 as a result of
new information on the litigation matter, the potential loss has been determined
by  management  and its legal  counsel to be less than  $10,000.  The  Company's
improved performance during the current fiscal year is primarily attributable to
the sales of its Plant Y2kOneTM products and services. These sales began to have
a  significant  impact on the  Company's  operating  results  during  the fourth
quarter of the fiscal year ended June 30, 1998. Through the first three quarters
of the current  fiscal  year,  the Company  incurred a net loss in the amount of
$855,000.

Revenue  increased by $11,520,000  or 31% to  $48,363,000  during the year ended
June 30, 1998 as compared to revenue of  $36,843,000  in 1997.  Revenue from the
Company's  Plant  Y2kOneTM  products  and services  was  $14,390,000  during the
current year,  $9,000,000 of which was realized during the fourth quarter.  This
revenue  included  revenue  from  license  agreements  and  product  reports  of
$5,765,000 and $8,625,000 from services primarily  associated with the inventory
and analysis  phases of its Plant Y2k OneTM offering.  Management  believes that
revenues from sales of the Company's  Plant Y2kOneTM  products and services will
continue to increase through fiscal 1999 and into fiscal 2000.

Revenue  generated  from the Company's  systems  integration  business  includes
resale of hardware,  software and  subcontracting  services to customers.  These
activities generally are passed through to customers at lower gross margins than
labor  services or  proprietary  product  sales.  The Company's  Plant  Y2kOneTM
services  are labor  intensive  and, to a great  extent,  do not include  resale
items;  accordingly,  these services afford  significantly higher gross margins.
The Company's Year 2000 product  revenue is generated from  repetitive  sales of
Year 2000 product software and compliance status reports. The direct costs after
development  associated  with these  repetitive  sales is much  smaller than the
direct costs associated with the Company's systems integration business and Year
2000

                                       13

<PAGE>

services. Management expects Year 2000 product sales to result in improved gross
margins.  The  Company's  revenue mix between the resale of hardware,  software,
subcontracting  services  and Plant  Y2kOneTM  products to value added labor and
proprietary  products  can have  significant  impact on both  revenue  and gross
margins between accounting periods.

Gross profit increased by $6,432,000 or 51% to $18,953,000 during the year ended
June 30,  1998,  as  compared  to  gross  profit  of  $12,521,000  in 1997.  The
consolidated  results of  operations  resulted in an  increase  in gross  profit
percentage  from 34% in 1997 to 39% during 1998. The improvement in gross profit
percentage is largely  attributable  to higher  margins  obtained on the sale of
Plant Y2kOneTM  products and services.  There are three factors  associated with
the Company's Plant Y2kOneTM  products and services that have a favorable impact
on gross  margins:  (1) the  Company  has  higher  billing  rates  for its Plant
Y2kOneTM  services than it has historically  obtained on its system  integration
projects;  (2) the  Company's  direct  costs  associated  with the revenue  from
PlantY2kOneTM product sales are much lower as a percent of sales than the direct
costs associated with its system integration and service  businesses,  resulting
in higher gross margins from its product revenue;  and (3) the Company obtains a
higher gross margin on the labor  component of its business than on the material
resale  component.  Since Plant  Y2kOneTM  projects are labor  intensive,  gross
margins on them have been better  than  historical  margins  obtained on systems
integration projects. Management expects future gross margins as a percentage of
revenue from this business  segment will fluctuate  between  accounting  periods
depending  on this  business  mix as well as  project  execution.  In the fourth
quarter, the Company reclassified $1,100,000 for the overhead allocation charges
on contracts from general and administrative expense to cost of revenue.

Selling,  general and administrative  expenses increased by $3,939,000 or 30% to
$17,051,000  for the year ended June 30, 1998.  Selling and  marketing  expenses
accounted for $2,597,000 of the increase and general and administrative  expense
accounted for the remaining $1,342,000. The increases are primarily attributable
to  additional  personnel  and the general  increase in the  Company's  business
activity  levels due to the  introduction  of its Plant  Y2kOneTM  products.  In
addition,  the Company opened its corporate office,  three new sales offices and
an  engineering  office during the current  year.  The Company now operates from
thirteen branch  locations  across the United States,  each of which has its own
operating expenses such as salaries,  rent and local  administration.  The sales
and marketing staff increased by seven,  many at the senior and executive level,
to a total of 37 at June 30, 1998.  With the opening of its corporate  office in
Englewood,  Colorado,  the  Company's  executive  management  is  now  centrally
located. During the year, the Company continued to make considerable investments
in  developing  a  national  sales and  marketing  program.  These  efforts  and
expenditures  were made  primarily in connection  with the  introduction  of the
Company's  Plant  Y2kOneTM  program.  Since its growth  will depend to a certain
extent  on  expanding  relationships  with  existing  clients,   developing  new
accounts, penetrating new industry markets, and developing a consulting practice
servicing the system integration sector of industry, management anticipates that
the level of selling,  general and administrative expenses will continue to grow
in order to support the expanded  operations,  but will decrease as a percentage
of sales.

Amortization of goodwill  resulting from  acquisitions  totaled $623,000 for the
year ended June 30, 1998  compared  to  $479,000  for the  preceding  year.  The
increase  is a  result  of a full  year's  amortization  in  fiscal  1998 on the
goodwill  related to the acquisition of All Control,  which occurred in December
1996. In fiscal 1998, goodwill  amortization expense in the amounts of $209,000,
$162,000 and $252,000 were attributed to the  acquisitions  of Vision,  Advanced
Control and All Control, respectively.

The Company  capitalizes  the cost of developing  software  products  which have
achieved technological feasibility, but are not yet ready for sale to customers,
when it believes there is a market for future use of the technology.  During the
years  ended June 30,  1998 and 1997,  the Company  capitalized  $3,924,000  and
$1,174,000,  respectively,  of software development costs.  Development costs of
the Company's  Plant  Y2kOneTM  program  accounted  for  $3,188,000 of the total
capital  expenditure during the current year. The Company is amortizing the cost
associated  with  the  development  of Plant  Y2kOneTM  through  December  1999.
Amortization  expense of the  capitalized  costs was $1,068,000 and $336,000 for
1998 and 1997,  respectively.  In the fourth  quarter,  the Company  capitalized
approximately  $159,000 of development cost and interest expense of $73,000 that
had been expensed in prior quarters.

                                       14

<PAGE>

During  the year ended  June 30,  1998,  the  Company  consolidated  the debt it
assumed with its  acquisitions of Vision,  Advanced Control and All Control into
one  corporate  facility.  Total debt,  including  obligations  under  long-term
capital  leases,  decreased  by  $1,701,000  during the current  year.  Interest
expense  decreased by $331,000 to $656,000 for the year ended June 30, 1998 when
compared  to the  previous  year.  The  decrease  is  the  result  of  principal
repayments,  debt conversions to common stock, and capitalization of interest as
part of the Plant Y2kOne development  efforts,  offset by additional  borrowings
under long-term capital leases, primarily for computer equipment.

Although  the Company  incurred a  consolidated  net loss during  fiscal 1997, a
provision for state income and franchise  taxes was necessary  because there was
taxable  income in a state  which does not  permit the filing of a  consolidated
income tax return. For 1997, the Company had an income tax provision of $110,000
as  compared  to no federal or state  income tax  provision  for 1998.  For both
years,  the Company has recorded a 100% valuation  allowance on its net deferred
tax asset since  management  could not  determine if it was more likely than not
that this asset would be realized.

At June 30, 1998, the Company had net operating  loss carry  forwards  (NOLs) of
approximately  $18,000,000  for Federal income tax purposes.  The NOLs expire in
the years 2008 through 2013. A portion of the NOLs is limited on an annual basis
as a result of Internal Revenue Code Section 382.

Management believes that higher levels of operating earnings and cash flows from
the sale of its Plant  Y2kOneTM  products and  services  will  continue  through
fiscal 1999 and into fiscal 2000. It is anticipated that these earnings and cash
flows will decrease as the calendar Year 2000 approaches. The Company's national
marketing  program and the  introduction of both new national and  international
clients through the provision of Year 2000 compliance  services has afforded the
Company  new   opportunities  to  expand  its  systems   integration   business.
Additionally,  the Company has  introduced  consulting  services in the areas of
operations  improvement  analyses,  business process engineering and information
technology planning. See "Factors That May Affect Future Event," below.

The Company  expects that its growth and  acquisition  strategy will continue to
provide  opportunities  to improve earnings through volume increases and greater
operating  efficiencies  at both the direct and  overhead  expense  levels.  The
Company continues to consolidate  administrative and accounting functions at the
corporate level and anticipates these activities to continue in the near-term.

Liquidity and capital resources for the year ending June 30, 1998.

During the year  ended June 30,  1998,  the  Company  raised  cash  proceeds  of
$16,275,000 through equity financing and the exercise of stock options and stock
purchase warrants.  Additionally, the Company netted cash proceeds of $1,396,000
from debt  borrowing.  Non-cash  equity in the amount of $3,032,000 was provided
through the conversion of the Company's 9% debentures into common stock.

As a result of these  transactions,  the Company has significantly  improved its
financial  position and  liquidity.  At June 30,  1998,  the  Company's  working
capital position was $17,322,000. This compares to working capital in the amount
of $168,000 one year earlier. The Company's cash position has similarly improved
from $907,000 to $4,993,000 during the same time period.

Accounts receivable and accounts payable.

The improved  liquidity has permitted the Company to reduce its accounts payable
balance by approximately $1,507,000 during the current year. The Company's trade
accounts receivable have increased by $8,704,000 from balances at June 30, 1997.
This is primarily the  consequence  of  significant  billings  during the fourth
quarter to customers for the  Company's  Plant  Y2kOneTM  products and services.
Management  continues to review its accounts  receivable for  collectability and
believes that the level of its  allowance  for doubtful  accounts is adequate to
provide for any potential losses that may occur.

                                       15

<PAGE>

The Company's Year 2000 contracts can result in significant  individual accounts
receivable.  Failure to collect on any of these  accounts  could have an adverse
effect on the financial  position of the Company.  This credit risk is mitigated
by TAVA's  commercial and contract terms and the general  financial  strength of
its client base.

The Company  anticipates  that its accounts  receivable will grow  significantly
during its next fiscal year due to anticipated growth in the Company's business.
Management  believes that accounts  receivable growth can be financed by cash on
hand,  establishing new short term credit facilities,  and anticipated  positive
cash flow from  operations.  In the event that the Company is not  successful in
arranging new credit  facilities or generating  cash flow from  operations,  the
Company may need to curtail its anticipated growth.

Debt repayments.

Certain  of  the  Company's   convertible  debt  facilities   require  principal
amortization beginning in March of 1999. Monthly payments will be equal to 1% of
the outstanding  principal amount,  which,  based on the outstanding  balance at
June 30, 1998, would be approximately $15,000 per month. Management believes the
Company will have  sufficient  cash flow from operations to meet these principal
repayments  or  alternative  sources of capital  will be available to meet these
repayments.  The Company's  $4,000,000 term note has been discounted by $796,000
to reflect the value assigned to stock  purchase  warrants which were granted to
the lender.  The  unamortized  discount as of June 30,  1998 was  $730,000.  The
principal is due in January 2001. In the event that the Company elects to prepay
this debt,  the  unamortized  balance of the  discount  remaining at the date of
principal  repayment  would be  reflected as interest  expense.  The discount is
being amortized over the term of the loan. Total principal repayment obligations
for debt and  capitalized  leases are $568,000  for its fiscal 1999.  Management
believes  it will  have  sufficient  cash  flow from  operations  to meet  these
repayments  or  alternative  sources of capital  will be available to meet these
obligations.

Capital expenditures.

At June 30,  1998,  the  Company  was in the  early  stages of  customizing  new
software that it will use  throughout the  organization  to process its internal
accounting  and  operational  information  and data.  Through June 30, 1998, the
Company incurred  approximately  $250,000 of external costs associated with this
new software and has open  commitments to incur  approximately  $250,000  during
fiscal  1999.  The  Company  has  no  other  material  commitments  for  capital
expenditures.  During the year ended June 30,  1998,  the Company  entered  into
capital and operating  leases for the  acquisition  of computer  equipment.  The
leases were for equipment with a cost of $790,000.  The leases  require  monthly
payments through July 2001.

Cash flow.

During the year ended June 30, 1998,  the Company used cash from  operations  in
the amount of $9,209,000,  compared to $1,422,000 during the prior year. This is
a result of working  capital  which was utilized to fund the large  increases in
accounts  receivable,  costs in excess of  billings  and the  increase  in other
current assets.  Similarly,  considerable resources were used to reduce accounts
payable and other current liabilities.

Cash used in investing  activities  increased by $2,193,000 to $4,090,000 during
the year ended June 30, 1998 when compared to the preceding  year.  The increase
is primarily  attributed to costs  incurred in the  development of the Company's
Plant Y2kOneTM products in the amount of $3,188,000.

Cash provided by financing  activities was  $17,385,000  for the year ended June
30, 1998 compared to $3,990,000 for the preceding year. The Company received net
proceeds in the amounts of $4,711,000,  $11,052,000 and $4,000,000 from the sale
of equity securities,  the exercise of stock options and stock purchase warrants
and the issuance of notes and other borrowings,  respectively,  during the year.
Principal  repayments  on debt  obligations  during the year ended June 30, 1998
were $2,604,000.

                                       16
<PAGE>

The Company's  negative cash flow from operations has primarily resulted from an
increase in accounts receivable resulting from increased business activity,  and
a significant  investment in its Plant Y2kOneTM software and product  compliance
data base.  Management  believes  this  negative cash flow will improve over its
next  fiscal  year due to a lower  investment  in its  Year  2000  software  and
improved operating results.

Capital resources.

The  Company's  working  capital  has  improved  significantly  over the last 12
months, primarily from external financing activities.  The Company has an excess
of $17,322,000 of current assets over current  liabilities as of the 1998 fiscal
year end. Further,  the Company had cash on hand of $4,993,000 at June 30, 1998.
Management  anticipates  the  Company  will  continue to invest in its Year 2000
software and product compliance  database.  The majority of this investment will
be associated with immediate  sales where the Company  retains  ownership to the
technology and information developed.  This investment in software and data base
expansion is discretionary and can be increased or decreased by management based
on available capital.

The  Company  anticipates  continuing  to  aggressively  hire to  meet  customer
demands. As staff is expanded, the Company will need to invest in new equipment,
as well as additional office facilities. Management believes equipment financing
can be arranged to meet demands and office space will be leased.

The Company  anticipates it will continue to pursue  acquisitions as part of its
growth  strategy.  If acquisitions are  consummated,  additional  capital may be
required.

Management   believes  that  its  improved  financial  condition  and  favorable
operations trends will continue. Further, management believes that it has access
to  capital  in the  form  of (1)  additional  short  and/or  long  term  credit
facilities,  (2) access to equipment financing and office lease facilities,  and
(3) additional equity financing. Management anticipates it will continue to have
access to  additional  capital  through  these  sources in amounts  necessary to
support its growth plans. See "Factors that May Affect Future Events," below.

Year 2000 assessment.

   
The  following  disclosure  is made  pursuant to the Year 2000  Information  and
Readiness Disclosure Act. The following  disclosure  originated from the Company
and concerns (1) assessments,  projections, or estimates of Year 2000 processing
capabilities; (2) plans, objectives, or timetables for implementing or verifying
Year 2000 processing capabilities; (3) test plans, dates, or results; and/or (4)
reviews and comments concerning Year 2000 processing  capabilities as defined by
the Act.
    

The Company has assessed Year 2000 compliance matters and has determined that it
has potential for exposure  regarding Year 2000 compliance in three areas of its
internal  and  external  business  activities.  These areas  include (1) its own
internal hardware and software systems which are utilized to process and provide
the  Company's  accounting  and  operational  information,  (2) the hardware and
software  systems it has  historically  designed  and  installed in its clients'
control  systems,  and (3)  Year  2000  inventory,  assessment  and  remediation
services  it is  providing  to assist its  customers  in  identifying  their own
potential  exposure  in  their  manufacturing  and  control  systems  under  the
Company's Plant Y2kOneTM product and service offering.  The following  discusses
management's  assessment  of those  risks and the steps it is taking to minimize
them.

Internal  hardware  and  software.  During the past 18 months,  the  Company has
replaced  or added  new  equipment  to its  inventory  of  network  and  systems
computers.  The Company has committed approximately $1,200,000 for this hardware
replacement,  which has been  financed  with its cash  resources  and with lease
financing. This hardware includes the Company's organization-wide network system
and servers,  telephone systems and personal computer equipment. The Company has
tested  Year  2000  compliance  on new  hardware  as it has  been  accepted.  In
addition,   the   Company   has   contracted   for   the   replacement   of  its
organization-wide  accounting and management information computer software. This
new software will operate the Company's  accounting and operational  information
systems and will be functional at each of its facility locations. The vendor has

                                      17

<PAGE>

warranted  that  the  software  is Year  2000  compliant.  Customization  of the
software has been completed and staff  training has begun.  It is estimated that
the system will be installed and  functional  by January 1999.  The cost of this
system is expected to be approximately $550,000 including software, hardware and
implementation  expense.  The  primary  purpose of  acquiring  this system is to
provide improved  functionality in the area of consolidated financial reporting,
financial project control and management reporting.  In addition, the Company is
reviewing  its  telecommunication  systems  and  analyzing  various  options  to
purchase  and  install a central  telecommunication  system  that would  provide
increased   functionality   associated   with  multiple   office   communication
requirements. This evaluation is expected to be complete by December 1998 with a
resulting  installation  expected  by  April  1999.  Until  this  evaluation  is
complete,   it  is  not  possible  to  estimate  costs  associated  with  a  new
telecommunication  system. However, it is not anticipated that this program will
be a material capital  expenditure.  Management intends to develop a contingency
plan by March 31, 1999 if the planned implementation program is delayed.

In addition  to the above  activities,  the  Company is in the final  process of
completing a full  inventory and assessment of its computer  hardware,  software
systems and embedded devices using its proprietary Plant Y2kOneTM product. It is
anticipated  that this process will be  completed by December  1998.  Management
intends to identify  any  remaining  remediation  effort that may be required to
ensure its internal hardware and software systems are Year 2000 compliant.

Prior customer  installations.  The Company and its  subsidiaries  have provided
systems  integration  hardware and software for use by clients in their  process
control  systems.  Generally,  the hardware is purchased  from a vendor and used
without further customization.  Hardware vendor warranties pass to the Company's
clients.  Software  may be  purchased  from a third  party  vendor  and  further
customized,  or be completely designed by the Company.  During 1997, the Company
undertook a program of  notifying  many of its  customers  that it is aware that
hardware and software it provided may not be Year 2000  compliant  and should be
assessed for Year 2000  compliance.  To date,  the Company has received  various
inquires from its clients to provide information  regarding Year 2000 compliance
on systems it has developed and has responded to these  requests.  Management is
not aware of any claims by any customers to provide  remediation  services under
any  warranty  agreement  (stated or implied) for systems it has  developed  and
delivered,  nor is it  aware  of any  systems  it has  developed  that may be in
violation of any Year 2000 compliance contractual agreements.  To the extent any
such claims may be made,  the Company  intends to address these issues on a case
by case basis.

Year 2000  compliance  services and products and remediation  services.  In June
1997, TAVA launched a major business  initiative to address Year 2000 compliance
problems in process control, factory automation and facility management systems.
The Company  determined that addressing the Year 2000 issue in these systems was
a logical extension of its current business. The Company developed a proprietary
package of products and  services,  Plant  Y2kOneTM,  as the  foundation  of its
approach.  PlantY2kOneTM includes a methodology,  system inventory support tool,
access to a Company  developed  database  of Year 2000  compliance  information,
specific code search  engines and a remediation  project  management  tool,  all
packaged on CD ROM.

The methodology includes assessment,  analysis, planning and remediation phases.
In the  assessment  phase,  the  overall  project is defined and  organized.  An
inventory of all process  control  hardware and software is then completed using
the Company's  inventory  builder tool. In the analysis phase, that inventory is
examined,  component by component,  using the Company's  database of vendor Year
2000 compliance  statements.  Custom code is analyzed with the Company's  search
engines to reveal date usage. The conversion  planning stage applies the results
of the analysis to develop a plan for  bringing  the  client's  system into Year
2000 compliance.  The final stage is to execute the remediation plan and conduct
system and enterprise wide training.

The Company supplies complete Year 2000 project  consulting  services.  They are
built upon the methodology  and use of the database and tools;  the licensing of
the  methodology,  tools and  database  access  which are packaged on CD ROM and
supported by internet  access,  to the client for self execution,  or provides a
combination of both approaches.

                                       18

<PAGE>

The Company has employed  three general  strategies to monitor and limit risk in
performing Year 2000  engagements.  These include:  proper assignment of skilled
employees;  delineation and limitation of liability through  contractual  terms;
and  purchasing  professional  liability  insurance  in  amounts  and  on  terms
considered  appropriate by Company  management.  The Company  believes that this
business is a logical  extension of its historical  business and as such, it has
the  appropriate  employee  skill  sets to  execute  its Year 2000  engagements.
Service projects are managed by experienced project managers who assume the role
of managing the overall customer  engagement.  Service engagements are generally
conducted  under a standard  professional  services  agreement  that  delineates
deliverables and liability. The Company has worked diligently in its contractual
agreements  to  attempt  to limit  liability,  in most cases to no more than the
total  amount of fees paid by the  client.  Further,  the  Company  has  secured
professional  liability  insurance to address  professional  liability  that may
arise from Year 2000  customer  engagements.  The Company's  standard  contracts
specifically  disclaim any Year 2000 compliance  warranty or guarantees,  or the
success of its Year 2000 activities in addressing client compliance, except when
it has been  contracted to develop and  implement  new systems.  The Company has
relied on external  legal counsel to assist in developing  specific  contractual
terms to disclaim any legal liability associated with insuring,  or guaranteeing
Year  2000  compliance  as a  result  of its  activities.  To the  knowledge  of
management,  the Company has not been  associated with any liability for work it
conducted in providing Year 2000 products and services.

Recently issued accounting standards.

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 them
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.  Application  of these  standards  will impact the
future financial disclosures in the Company's consolidated financial statements.
Results of operations  and financial  position,  however,  will be unaffected by
implementation of these standards.

Statement of Financial  Accounting  Standards 132 "Employers'  Disclosure  About
Pensions and Other Post retirement  Benefits."  Statement 132  standardizes  the
disclosure  requirements  for  pensions and other post  retirement  benefits and
requires  additional  information on changes in the benefit obligations and fair
values of plan assets that will facilitate financial analysis.  Statement 132 is
effective  for fiscal  years  beginning  after  December  15, 1997 and  requires
comparative   information  for  earlier  years  to  be  restated,   unless  such
information is not readily available.  Management  believes that the adoption of
Statement  132  will  have  no  material  impact  on  the  Company's   financial
disclosures.

Statement of Financial  Accounting  Standards  133  "Accounting  for  Derivative
Instruments and Hedging Activities."  Statement 133 requires companies to record
derivatives  on the  balance  sheet as assets or  liabilities,  measured at fair
market  value.  Gains or losses  resulting  from  changes in the values of those
derivatives are accounted for depending on the use of the derivative and whether
it qualifies for hedge  accounting.  The key  criterion for hedge  accounting is
that the hedging  relationship must be highly effective in achieving  offsetting
changes in fair value or cash flows. Statement 133 is effective for fiscal years
beginning  after  June  15,  1999.  Management  believes  that the  adoption  of
Statement 133 will have no material effect on its financial statements.

                                       19

<PAGE>

Statement of Position 97-2 "Software Revenue Recognition." Statement of Position
97-2  provides  guidelines  concerning  the  recognition  of revenue of software
products.  This statement requires,  among other things, the individual elements
of a contract for the sale of software  products to be identified  and accounted
for  separately.  The  accounting  for the sale of the Company's  Plant Y2kOneTM
software products may change when it adopts the provisions of this Statement for
its fiscal year beginning July 1, 1998.  Management does not expect the adoption
of this provision to have any impact on its results of operations; however, this
evaluation is not fully complete.

Factors that May Affect Future Events.

The following  factors,  among  others,  could cause actual events and financial
results  to  differ  materially  from  those   anticipated  by   forward-looking
statements made in this Annual Report on Form 10-KSB and presented  elsewhere by
management from time to time.

     TAVA has grown significantly through  acquisitions,  and its future growth
     may be based in part on  selected  acquisitions.  TAVA's  ability to expand
     successfully  by  acquisitions  depends  on  many  factors,  including  the
     successful  identification  and acquisition of businesses and  management's
     ability to  integrate  and operate  the new  businesses  effectively.  TAVA
     competes for acquisition candidates with other entities,  many of whom have
     greater  financial   resources.   Increased   competition  for  acquisition
     candidates may result in fewer acquisition opportunities becoming available
     for  TAVA  as  well  as  less  advantageous  acquisition  terms,  including
     increased  purchase prices.  The anticipated  benefits from any acquisition
     may not be achieved  unless the  operations  of the  acquired  business are
     successfully and timely combined with those of the Company, a process which
     requires  substantial  attention  from  management.  The  diversion  of the
     attention of management, and any difficulties encountered in the transition
     process,  could  have an  adverse  impact  on the  Company's  revenues  and
     operating  results.  In addition,  the process of  integrating  the various
     businesses  could cause the  interruption of, or a loss of momentum in, the
     activities of some or all of these businesses,  which could have an adverse
     effect on the Company's business, operations and financial results.

     TAVA  has  devoted   significant   resources  to  and  expects  to  derive
     significant  revenue from its Plant Y2kOne product suite,  and expects that
     Year 2000 engagements  will comprise a significant  portion of its business
     over  the  next 18  months.  Although  TAVA  attempts  through  contractual
     provisions, insurance, and other means, to limit its exposure to claims for
     damages,  due to the anticipated  far-reaching  impact of Year 2000 related
     litigation  against  businesses,  it is likely that claims will be asserted
     against  TAVA  regardless  of its  culpability.  Even if TAVA  successfully
     defends all such  claims,  the adverse  effects of such  litigation  can be
     substantial,  in terms of management time and attention as well as in costs
     of defense, and could have an adverse effect on TAVA's business, operations
     and financial results.

     TAVA's future success will depend in large part on its ability to continue
     to attract and retain  highly-skilled  technical and management  personnel.
     The  competition  for such personnel is intense.  There can be no assurance
     that the Company will  continue to attract and retain  personnel  necessary
     for the development of its business.

     The Company has an investment in capitalized software of $4,881,000 net of
     accumulated  amortization as of June 30,1998.  Software  development  costs
     generally 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 non Y2k
     software.   Many  factors,   including   competitive   product   offerings,
     technological  changes  and  general  changes in the economy may impact the
     demand and anticipated gross revenues for the Company's  products.  Changes
     in future  estimated  product  sales by  product  may  result in  increased
     amortization  and  may  have  an  impact  on  the  Company's  results  from
     operations.

     The Company's Y2k products are amortized on a  straight-line  basis through
     1999. Future  additional  investment in this product will be amortized over
     this same time period and  therefore,  amortization  expense will increase.
     Further, the Company will continue to evaluate the future resale of product
     features it will be adding to the  products  between  now and the  year-end
     1999. Many factors,  including competitive product offerings, may result in
     changes in the estimated  useful life of these product  features and/or the
     anticipated  future  revenue  from product  compliance  reports that may be
     added  to the  compliance  database.  These  changes,  if any,  may  have a
     significant impact on the Company's results from operations.

                                       20
<PAGE>

     The stock  market in  general,  and the market for  technology  stocks and
     "small cap" stocks such as TAVA, in particular,  have  experienced  extreme
     price fluctuations.  TAVA's stock price is extremely volatile,  and subject
     to factors  entirely beyond its control.  This  volatility  could adversely
     impact the Company by, among other  things,  reducing the  availability  of
     additional  equity  capital,  limiting  its  ability to attract  and retain
     qualified   personnel  and  curtailing  its  ability  to  effect   business
     combinations.

     TAVA has experienced and expects to continue to experience fluctuations in
     its quarterly results.  Gross margins during any period and from one period
     to  another  vary  based  on  a  variety  of  factors  including   employee
     utilization  rates, the number,  type and mix of products and services sold
     during  a  particular   period,  the  number  and  requirements  of  client
     engagements  and other  factors,  many of which are  beyond  the  

     Company's  control.  Since a  significant  portion of the  expenses  of the
     Company  do not  vary  relative  to the  Company's  level of  revenues,  if
     revenues  in a  particular  quarter  do not  meet  expectations,  operating
     results will be adversely affected, which may have an adverse impact on the
     market  price of the  Company's  Common  Stock.  In  addition,  many of the
     Company's  engagements,  particularly in the Year 2000 area, are terminable
     on  relatively  short  notice  without  client  penalty.  An  unanticipated
     termination of a major project could result in an increase in underutilized
     employees and a decrease in revenues and profits.

     The Company performs work for its clients under various types of contracts.
     Accounts receivable may be concentrated with individual clients. Failure to
     collect these  receivables may result in a significant  negative  financial
     impact to the Company.

     The  Company is  growing  rapidly  and  may  require  access to  additional
     capital to support  accounts  receivable,  equipment  purchases and general
     operating expenses. The inability to access additional capital could result
     in insufficient capital to support the Company's growth plans.

As a result of these and other factors, the Company's past financial performance
should  not be relied on as an  indication  of  future  performance.  Management
believes that  period-to-period  comparisons  of its  financial  results are not
necessarily  meaningful  and it expects that results of operations may fluctuate
from period to period in the future.

Item 7.  Financial statements.

Report of independent certified public accountants.                       F-1

Consolidated balance sheet at June 30, 1998.                              F-2

Consolidated statements of operations for the years 
     ended June 30, 1998 and 1997.                                        F-3

Consolidated statements of stockholders' equity for the 
     years ended June 30, 1997 and 1998.                                  F-4

Consolidated statements of cash flows for the years ended 
     June 30, 1998 and 1997.                                              F-5

Notes to consolidated financial statements.                               F-7

                                       21

<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS










To the Board of Directors
TAVA Technologies, Inc.
Englewood, Colorado



We  have  audited  the   accompanying   consolidated   balance   sheet  of  TAVA
Technologies,  Inc. and  subsidiaries  as of June 30, 1998 and the  accompanying
related  consolidated  statements of operations,  stockholders'  equity and cash
flows for the years ended June 30, 1998 and 1997. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial position of TAVA Technologies,
Inc. and  subsidiaries at June 30, 1998 and the results of their  operations and
their cash flows for the years ended June 30, 1998 and 1997, in conformity  with
generally accepted accounting principles.


                              /s/ BDO Seidman, LLP

                                BDO Seidman, LLP


Denver, Colorado
September 21, 1998

                                      F-1

<PAGE>

                    TAVA TECHNOLOGIES, INC. and SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET

                                  June 30, 1998
<TABLE>
<CAPTION>

                                 ASSETS (Note 8)
------------------------------------------------------------------------------------------------------
<S>                                                                                       <C>    
Current assets:
  Cash (Note 14)                                                                          $ 4,993,000
  Accounts receivable, net of allowance for doubtful accounts of $1,305,000 (Note 5)       14,901,000
  Costs and estimated earnings in excess of billings on uncompleted contracts (Note 6)      7,214,000
  Inventories                                                                                 188,000
  Prepaid expenses and other current assets                                                   569,000
------------------------------------------------------------------------------------------------------
    Total current assets                                                                   27,865,000

Property and equipment, net (Note 7)                                                        2,919,000

Capitalized software costs, net of accumulated amortization of $1,335,000                   4,881,000

Other assets:
  Excess of cost over fair value of assets acquired, net of
    accumulated amortization of   $1,257,000 (Note 3)                                       7,915,000
  Debt issuance costs, net of accumulated amortization of $286,000                            364,000
  Other assets                                                                                237,000
------------------------------------------------------------------------------------------------------
Total assets                                                                              $44,181,000
------------------------------------------------------------------------------------------------------

                      LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------------------------------------------------------------------------
Current liabilities:
  Current portion of long-term debt (Note 8):
    Financial institutions and other                                                      $   315,000
    Capital lease obligations                                                                 253,000
  Accounts payable                                                                          5,740,000
  Billings in excess of costs and estimated earnings on uncompleted contracts (Note 6)      1,819,000
  Accrued payroll                                                                           1,035,000
  Other accrued expenses                                                                    1,381,000
------------------------------------------------------------------------------------------------------
    Total current liabilities                                                              10,543,000
 Long-term debt, net of current portion (Note 8):
   Financial institutions and other                                                         4,845,000
   Capital lease obligations                                                                  459,000
------------------------------------------------------------------------------------------------------
     Total long-term debt                                                                   5,304,000
------------------------------------------------------------------------------------------------------
     Total liabilities                                                                     15,847,000
------------------------------------------------------------------------------------------------------

Commitments and contingencies (Notes 6 and 14)

Stockholders' equity (Notes 10 and 12):
  Preferred stock, par value $.0001 per share; authorized 10,000,000 shares,
    shares issued and outstanding - none                                                           --
  Common stock, par value $.0001 per share; authorized 200,000,000
    shares, 21,991,213 shares issued and outstanding                                            2,000
  Additional paid-in capital                                                               36,165,000
  Accumulated deficit                                                                     (7,833,000)
------------------------------------------------------------------------------------------------------
Total stockholders' equity                                                                 28,334,000
------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                                                $44,181,000
------------------------------------------------------------------------------------------------------
</TABLE>

        The accompanying notes are an integral part of the consolidated
                             financial statements.
                                      F-2
<PAGE>


                    TAVA TECHNOLOGIES, INC. and SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                                 For the years ended
                                                                        June 30,
-----------------------------------------------------------------------------------------
                                                                 1998           1997
-----------------------------------------------------------------------------------------
<S>                                                          <C>             <C>    
Revenue (Note 5):
  Systems integration and services                           $42,598,000     $36,843,000
  License agreements and software product sales                5,765,000            --
-----------------------------------------------------------------------------------------
    Total revenue                                             48,363,000      36,843,000
-----------------------------------------------------------------------------------------

Cost of revenue                                               29,410,000      24,322,000
-----------------------------------------------------------------------------------------
Gross profit                                                  18,953,000      12,521,000
----------------------------------------------------------------------------------------- 

Operating expenses:
   Sales expenses                                              4,894,000       2,297,000
   General and administrative expenses                        12,157,000      10,815,000
   Amortization of capitalized software costs and goodwill     1,691,000         815,000
   Subsidiary acquisition purchase adjustment (Note 3)              --           250,000
-----------------------------------------------------------------------------------------
                                                              18,742,000      14,177,000
Other income (expense):
  Interest expense                                              (656,000)       (987,000)
  Other, net                                                     195,000         124,000
-----------------------------------------------------------------------------------------
                                                                (461,000)       (863,000)
Loss from continuing operations before
  income tax expense                                            (250,000)     (2,519,000)

Income tax expense (Note 9)                                         --          (110,000)
-----------------------------------------------------------------------------------------
Loss from continuing operations                                 (250,000)     (2,629,000)

Discontinued operations (Note 4):
  Loss on disposal                                                  --          (106,000)
-----------------------------------------------------------------------------------------
Net loss                                                     $  (250,000)    $(2,735,000)
-----------------------------------------------------------------------------------------

Net loss applicable to common stockholders (Note 11)         $  (310,000)    $(2,750,000)
-----------------------------------------------------------------------------------------

Net loss per share, basic and diluted (Note 11):
  Continuing operations                                      $     (0.02)    $     (0.30)
  Discontinued operations                                           --             (0.01)
-----------------------------------------------------------------------------------------
Net loss per share, basic and diluted                        $     (0.02)    $     (0.31)
-----------------------------------------------------------------------------------------
Weighted average shares outstanding, basic and diluted        18,356,000       8,882,000
-----------------------------------------------------------------------------------------
</TABLE>

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

                                      F-3

<PAGE>


                    TAVA TECHNOLOGIES, INC. and SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                   For the years ended June 30, 1997 and 1998

<TABLE>
<CAPTION>

                                                                                                Additional
                                                    Preferred stock        Common stock          paid-in       Accumulated
                                                    Shares   Amount     Shares      Amount       capital         Deficit
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                <C>        <C>      <C>            <C>       <C>             <C>

Balance, July 1, 1996                                   --    $   --    6,639,403     $1,000    $ 7,774,000     $(4,773,000)

Preferred shares issued for cash in private          133,334      --           --         --      1,872,000               --
          placement (Note 10)
Shares issued for cash in private placements, net       --        --      880,000         --      1,112,000               --
          (Note 10)
Shares issued for conversion of 8% notes (Note 10)      --        --      214,285         --        375,000               --
Shares issued for conversion of 12% notes  and          --        --       35,000         --         53,000               --
          accrued interest
Shares issued for conversion of 10% senior notes
          and accrued interest (Note 10)                --        --      548,436         --        314,000               --
Shares issued for financing fees and extensions         --        --       40,000         --         99,000               --
Shares issued for acquisition of All Control            --        --    1,883,333         --      2,825,000               --
          (Note 3)
Shares issued for acquisition of Vision (Note 3)        --        --      201,130         --        289,000               --
Shares issued upon exercise of warrants (Note 10)       --        --    1,178,018         --      1,167,000               --
Shares issued upon exercise of stock options            --        --       90,000         --         66,000               --
          (Note 10)
Options and warrants issued for outside services        --        --           --         --         52,000               --
Preferred stock dividends (Note 10)                     --        --           --         --             --      (   15,000)
Net loss                                                --        --           --         --             --      (2,735,000)
-------------------------------------------------------------------------------------------------------------------------------

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

Shares issued for cash in private placement, net        --        --      955,000         --      4,711,000               --
          (Note 10)
Shares issued upon conversion of 9% debentures          --        --    2,123,697         --      3,032,000               --
          (Notes 8, 10)
Shares issued upon exercise of warrants (Note 10)       --        --    3,679,986      1,000      6,808,000               --
Shares issued upon exercise of stock options            --        --    1,875,545        --       4,243,000               --
          (Note 10)
Shares issued upon conversion of preferred stock   (133,334)      --    1,333,340         --             --               --
          (Note 10)
Shares issued upon conversion of collateral loan        --        --      227,090         --        397,000               --
          (Note 10)
Shares issued under Employee Stock Purchase Plan        --        --       46,311         --         81,000               --
          (Note 10)
Value assigned to warrants issued with debt             --        --           --         --        814,000               --
          (Note 8)
Other                                                   --        --       40,639         --         81,000               --
Preferred stock dividends (Note 10)                     --        --           --         --             --     (    60,000)
Net loss                                                --        --           --         --             --     (   250,000)
-------------------------------------------------------------------------------------------------------------------------------

Balance, June 30, 1998                                  --    $   --   21,991,213     $2,000    $36,165,000     $(7,833,000)
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>


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

                                      F-4

<PAGE>


                                     TAVA TECHNOLOGIES, INC. and SUBSIDIARIES


                                       CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>

                                                                       For the years ended
                                                                             June 30,
                                                                       1998           1997

 -------------------------------------------------------------------------------------------
 <S>                                                             <C>            <C>    
 Cash flows from operating activities:
   Loss from continuing operations                               $  (250,000)   $(2,629,000)
   Adjustments to reconcile net loss from continuing
     operations to cash from continuing operating activities:
       Depreciation                                                  691,000        767,000
       Amortization                                                1,691,000        815,000
       Non-cash interest expense                                      66,000           --
       Provision for doubtful accounts                              (100,000)       813,000
       Loss (gain) on sale of fixed assets                             8,000         (8,000)
       Issuance of compensatory options and warrants                    --           52,000
       Common stock issued for interest and other fees                  --           99,000
       Changes in operating assets and liabilities:
         (Increase) decrease in:
            Accounts receivable                                   (8,704,000)     3,740,000
            Costs and estimated earnings in excess of billings    (1,502,000)    (1,886,000)
            Inventories                                              (14,000)       (26,000)
            Prepaid expenses and other assets                       (280,000)         9,000
         Increase (decrease) in:
            Accounts payable                                      (1,507,000)       (32,000)
            Billings in excess of costs and estimated earnings       341,000     (1,528,000)
            Accrued expenses and other                               351,000     (1,054,000)
                                                                 -----------    ----------- 
Net cash from continuing operating activities                     (9,209,000)      (868,000)
Discontinued operations:
  Loss from discontinued operations                                     --         (106,000)
  Change in assets                                                      --          526,000
  Decrease in accounts payable                                          --         (974,000)
                                                                 -----------    -----------    
Net cash from discontinued operations                                   --         (554,000)
                                                                 -----------    -----------  
Net cash from operating activities                                (9,209,000)    (1,422,000)
                                                                 -----------    -----------  

Cash flows from investing activities:
  Cash acquired in acquisitions of subsidiaries                         --            3,000
  Proceeds from sale of property and equipment                       892,000         13,000
  Purchase of property and equipment                              (1,058,000)      (217,000)
  Acquisition costs of subsidiaries                                     --         (522,000)
  Capitalized software costs, net                                 (3,924,000)    (1,174,000)
                                                                 -----------    -----------    
Net cash from investing activities                                (4,090,000)    (1,897,000)
                                                                 -----------    -----------    
</TABLE>

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

                                      F-5

<PAGE>


                    TAVA TECHNOLOGIES, INC. and SUBSIDIARIES


                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    (continued)
                                    
<TABLE>
<CAPTION>

                                                                           For the years ended June 30,
                                                                                1998           1997
---------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>             <C>    
Cash flows from financing activities:
  Proceeds from issuance of notes and other borrowings                       4,000,000      1,411,000
  Principal payments on notes and other borrowings                          (2,604,000)    (1,503,000)
  Deferred note and other financing costs, net                                (226,000)      (120,000)
  Proceeds from the sale of stock and exercise of warrants
    and options, net of offering costs                                      16,275,000      4,217,000
  Preferred stock dividends                                                    (60,000)       (15,000)
                                                                          ------------    -----------
Net cash from financing activities                                          17,385,000      3,990,000
                                                                          ------------    -----------

Increase in cash                                                             4,086,000        671,000

Cash, beginning of year                                                        907,000        236,000
                                                                          ------------    -----------

Cash, end of year                                                         $  4,993,000    $   907,000
                                                                          ------------    -----------

Supplemental disclosure of cash flow information:

  Cash paid for income taxes                                              $      5,000    $      --
  Cash paid for interest                                                       762,000      1,049,000
                                                                          ------------    -----------

Supplemental disclosure of non-cash investing and financing activities:

  Conversion of debentures to common stock, net of debt issue costs       $  3,032,000    $      --
  Common stock issued upon conversion of preferred stock                     1,872,000           --
  Purchase of equipment under capital leases and other financing               819,000         32,000
  Imputed warrant discount on debt borrowings                                  814,000           --
  Conversion of notes, accrued interest and debt issue
    costs to common stock                                                       47,000        742,000
  Common stock issued in the acquisition of All Control                           --        2,825,000
  Common stock issued in  the acquisition of  Vision                              --          289,000
                                                                          ------------    -----------
</TABLE>



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

                                      F-6

<PAGE>

                    TAVA TECHNOLOGIES, INC. and SUBSIDIARIES

                   Notes to consolidated financial statements
                                      

Note 1.  Organization and nature of business.

TAVA  Technologies,  Inc.,  formerly  Topro,  Inc.,  ("TAVA"  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 or other processes.  The Company also
operates  service  divisions  that  provide  instrument  calibration  and system
configuration  services.  In addition,  the Company has designed and markets its
Plant  Y2kOneTM  suite of products which have been designed to address Year 2000
compliance issues in process control and factory automation systems.

Note 2.  Summary of  significant accounting policies.

Principles of consolidation.  The consolidated financial statements include
the  accounts  of  TAVA  Technologies,   Inc.  ("TAVA"),  and  its  wholly-owned
subsidiaries   Management  Design  &  Consulting  Services,   Inc.  ("Management
Design"),   Advanced  Control  Technology,  Inc.  ("Advanced  Control"),  Vision
Engineering  Holding  Corporation  ("Vision"),  All Control Systems,  Inc. ("All
Control"),  TAVA Alabama,  Inc.  ("TAVA  Alabama") and TAVA Y2k One, Inc. ("TAVA
Y2k").  TAVA Alabama and TAVA Y2k were formed  during the fiscal year ended June
30, 1998.  Additionally,  during  1998,  TAVA Y2k and another  company  formed a
Limited  Liability  Company to provide  Year 2000  products  and services to the
utility  industry.  TAVA Y2k owns a 50%  interest in the LLC,  but does not have
voting  control.  Accordingly,  the Company  accounts for its interest using the
equity method of  accounting.  There were no results of operations  from the LLC
during the year ended June 30, 1998.  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,
which  range  from five to eight  years.  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. The Company expenses all costs incurred to establish
technological  feasibility of computer software products to be sold or leased or
otherwise marketed.  Upon establishing  technological  feasibility of a software
product,  the  Company  capitalizes  direct and  indirect  costs  related to the
product  up to the  time  the  product  is  available  for  sale  to  customers.
Capitalized   software   development   costs   generally   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.  Costs  incurred  to develop  the  Company's  Plant
Y2kOneTM software are being amortized on a straight-line  basis through December
1999.

On a  product-by-product  basis,  the Company  assesses the  carrying  amount of
capitalized  costs for  impairment.  During the year ended  June 30,  1998,  the
Company  charged to expense  software  development  cost which it  considered no
longer  economically  feasible.  For the years ended June 30, 1998 and 1997, the
Company capitalized software development costs in the amounts of $3,924,000

                                      F-7

<PAGE>

                    TAVA TECHNOLOGIES, INC. and SUBSIDIARIES

                   Notes to consolidated financial statements

and $1,174,000,  respectively.  Amortization expense was $1,068,000 and $336,000
for the years ended June 30, 1998 and 1997, 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  (Goodwill).  The Company
amortizes costs in excess of the fair value of net assets of businesses acquired
using the straight-line  method over 15 years.  Goodwill is reviewed annually or
sooner if events or  circumstances  indicate that the carrying amount may exceed
fair value. The Company  assesses  impairment of the carrying amount of goodwill
to the  undiscounted  net cash  flows of the assets to which  goodwill  applies.
Based upon current  circumstances,  management has determined that no indication
of impairment exists.

Income recognition.  The Company utilizes the percentage of completion method of
accounting for  significant  long-term  contracts.  The percentage of completion
method of  reporting  income  takes  into  account  the cost  incurred  to date,
anticipated  total cost,  estimated  earnings and revenue to date on uncompleted
contracts.

The  amount of  revenue  recognized  is the  contract  price  multiplied  by the
percentage of the costs incurred to date to the  anticipated  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 that 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  that  are  substantially
complete are  considered  closed for  financial  statement  purposes.  Costs and
estimated  earnings  incurred on contracts in progress in excess of billings are
classified as an asset.  Amounts billed in excess of cost and estimated earnings
are classified as a liability.

On certain  contracts  and the  majority  of Year 2000  service  contracts,  the
Company  recognizes  revenue when  services are  performed on a time and expense
basis.

The  Company  recognizes  revenue  on the  sale of its  software  products  upon
delivery to its customers and it recognizes revenue on direct sales of equipment
and parts, upon shipment.

Income  taxes.  The Company  accounts for income taxes  utilizing  the asset and
liability method prescribed by Statement of Financial  Accounting Standards 109,
"Accounting  for  Income  Taxes."   Deferred  tax  assets  and  liabilities  are
recognized for the future tax consequences  attributable to differences  between
the financial  statement carrying amounts of existing assets and liabilities and
their  respective tax basis. A valuation  allowance is required to the extent it
is more likely than not that a deferred tax asset will not be realized. Deferred
tax assets and  liabilities  are measured  using  enacted tax rates  expected to
apply to taxable income in the years in which those  temporary  differences  are
expected  to be  recovered  or settled.  The effect on  deferred  tax assets and
liabilities  of a  change  in  tax  rates  is  recognized  in the  statement  of
operations in the period that includes the enactment date.

Earnings per share. The Company calculates earnings per share in accordance with
Statement of Financial Accounting Standards 128, "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 stockholders by the weighted average number of common shares
outstanding for the period.  Diluted earnings per share reflects the dilution of
securities that are common stock  equivalents that were  outstanding  during the
period.   Common  stock   equivalents  are  not  included  when  the  effect  is
anti-dilutive.

                                      F-8

<PAGE>


                    TAVA TECHNOLOGIES, INC. and SUBSIDIARIES

                   Notes to consolidated financial statements

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  include  cash,  accounts  receivable,
accounts  payable and long-term  debt,  approximate  their  respective  carrying
values in the consolidated financial statements at June 30, 1998.

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"  requires  pro  forma  disclosures  regarding  net  income  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.

Impact  of  recently  issued  accounting   standards.   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  them 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.  Application  of these  standards  will impact the
future financial disclosures in the Company's consolidated financial statements.
Results of operations  and financial  position,  however,  will be unaffected by
implementation of these standards.

                                      F-9

<PAGE>

                    TAVA TECHNOLOGIES, INC. and SUBSIDIARIES

                   Notes to consolidated financial statements


Statement of Financial  Accounting  Standards 132 "Employers'  Disclosure  About
Pensions and Other Post Retirement  Benefits."  Statement 132  standardizes  the
disclosure  requirements  for  pensions and other post  retirement  benefits and
requires  additional  information on changes in the benefit obligations and fair
values of plan assets that will facilitate financial analysis.  Statement 132 is
effective  for fiscal  years  beginning  after  December  15, 1997 and  requires
comparative   information  for  earlier  years  to  be  restated,   unless  such
information is not readily available.  Management  believes that the adoption of
Statement  132  will  have  no  material  impact  on  the  Company's   financial
disclosures.

Statement of Financial  Accounting  Standards  133  "Accounting  for  Derivative
Instruments and Hedging Activities."  Statement 133 requires companies to record
derivatives  on the  balance  sheet as assets or  liabilities,  measured at fair
market  value.  Gains or losses  resulting  from  changes in the values of those
derivatives are accounted for depending on the use of the derivative and whether
it qualifies for hedge  accounting.  The key  criterion for hedge  accounting is
that the hedging  relationship must be highly effective in achieving  offsetting
changes in fair value or cash flows. Statement 133 is effective for fiscal years
beginning  after  June  15,  1999.  Management  believes  that the  adoption  of
Statement 133 will have no material effect on its financial statements.

Statement of Position 97-2 "Software Revenue Recognition." Statement of Position
97-2  provides  guidelines  concerning  the  recognition  of revenue of software
products.  This statement requires,  among other things, the individual elements
of a contract for the sale of software  products to be identified  and accounted
for  separately.  The  accounting  for the sale of the Company's  Plant Y2kOneTM
software products may change when it adopts the provisions of this Statement for
its fiscal year beginning July 1, 1998.  Management does not expect the adoption
of this provision to have any impact on its results of operations; however, this
evaluation is not fully complete.

Reclassifications.  Certain reclassifications have been made to the accompanying
1997 financial statements to conform to the current year presentation.

Note 3. Acquisitions.

Effective May 1, 1996,  the Company  acquired all of the  outstanding  shares of
Vision in exchange for 200,000 shares of the Company's common stock.  During the
year ended June 30,  1997,  the Company  issued an  additional  201,130  shares,
amounting to $289,000, which 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.

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 West Chester,  Pennsylvania.  The acquisition was accounted for 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
plus liabilities assumed of $749,000 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 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 

                                      F-10

<PAGE>


                    TAVA TECHNOLOGIES, INC. and SUBSIDIARIES

                   Notes to consolidated financial statements


the then net book value of the software  products to be purchased.  The net book
value at June 30, 1998 was $209,000.

The following  unaudited pro forma summary combines the consolidated  results of
operations of the Company and All Control as if its  acquisition had occurred at
the beginning of the period presented with pro forma  adjustments to give effect
to  amortization  of goodwill  and  depreciation.  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 period
indicated.

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

Revenue                                                        $ 40,210,000

Net loss                                                       $ (3,175,000)

Basic and diluted net loss per share                           $      (0.40)
--------------------------------------------------------------------------------

Note 4.  Discontinued operations.

During May 1995,  the Company  discontinued  the operations of and completed the
sale of substantially  all of the assets of Sharp Electric  Construction Co. The
loss incurred  during the year ended June 30, 1997 resulted from the  settlement
of obligations of Sharp's projects. All contracts in progress at the time of the
sale have been completed at June 30, 1998.

The following is a summary of the Company's results from discontinued operations
for the year ended June 30, 1997:


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

Revenue                                                        $   423,000

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

Note 5.  Trade receivables.

The following is a summary of the Company's  trade  accounts  receivable at June
30, 1998:

--------------------------------------------------------------------------------
Contract receivables:
  Completed contracts                                          $  4,504,000
  Uncompleted contracts                                          11,410,000
  Retention                                                         292,000
--------------------------------------------------------------------------------
                                                                 16,206,000
Less: allowance for doubtful accounts                            (1,305,000)
--------------------------------------------------------------------------------

Contract receivables, net                                       $14,901,000
--------------------------------------------------------------------------------

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

The Company has  concentrations of credit risk along industry lines with some of
its  customers.   The  Company  undertakes  ongoing  credit  evaluation  of  its
customers,  however, collateral is generally not required. The Company 

                                      F-11

<PAGE>
                    TAVA TECHNOLOGIES, INC. and SUBSIDIARIES

                   Notes to consolidated financial statements

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.

No sales to one customer  accounted for more than 10% of total contract  revenue
for the year ended June 30,  1998.  During  the year  ended June 30,  1997,  one
customer accounted for approximately 18% of total contract revenue.

Note 6.  Costs and estimated earnings on uncompleted contracts.

The following  information  is applicable to  uncompleted  contracts at June 30,
1998:

--------------------------------------------------------------------------------
Costs incurred on uncompleted contracts                          $  56,806,000
Estimated earnings                                                  19,345,000
--------------------------------------------------------------------------------
                                                                    76,151,000
Less: billings to date                                             (70,756,000)
--------------------------------------------------------------------------------
                                                                 $   5,395,000
--------------------------------------------------------------------------------

These amounts are included in the accompanying balance sheet under the following
captions at June 30, 1998:

--------------------------------------------------------------------------------
Costs and estimated earnings 
   in excess of billings on  uncompleted contracts                  $7,214,000

Billings in excess of costs and estimated earnings 
   on uncompleted contracts                                          1,819,000
--------------------------------------------------------------------------------
                                                                    $5,395,000
--------------------------------------------------------------------------------

Costs and estimated  earnings in excess of billings on uncompleted  contracts at
June  30,  1998  includes  an  amount  which is the  subject  of a  dispute  and
litigation  between the Company and a customer.  The dispute arises from certain
change orders and other contractual  matters. The change orders were made at the
request of the customer.  In the opinion of management  and legal  counsel,  the
Company has a legal right to file the claim and it is  reasonable to assert that
the Company will  succeed in its efforts to prevail in this matter,  although it
is  impossible  to predict the final  outcome of this  dispute  and  litigation.
Revenue  from the  disputed  contract  is only  recognized  to the  extent  that
contract costs relating to the claim have been incurred.  Accordingly, in fiscal
1998 and 1997 the Company has recognized revenue equal to costs of approximately
$712,000 and  $2,200,000,  respectively,  of a $3,900,000  claim, as prepared by
management and an independent contract analyst.

Note 7.  Property and equipment.

The following is a summary of the  Company's  property and equipment at June 30,
1998:

                                           Owned         Leased        Total
-------------------------------------------------------------------------------

Furniture and equipment                 $ 3,570,000     $ 902,000   $ 4,472,000
Leasehold improvements                      828,000           --        828,000
--------------------------------------------------------------------------------
                                          4,398,000       902,000     5,300,000
Accumulated depreciation and 
   amortization                          (2,189,000)     (192,000)   (2,381,000)
--------------------------------------------------------------------------------
Net property and equipment              $ 2,209,000     $ 710,000   $ 2,919,000
--------------------------------------------------------------------------------

Depreciation  expense totaled  $691,000 and $767,000,  respectively,  during the
years ended June 30, 1998 and 1997, respectively, was related to equipment under
capital lease obligations.

                                      F-12

<PAGE>
                    TAVA TECHNOLOGIES, INC. and SUBSIDIARIES

                   Notes to consolidated financial statements

Note 8.  Long-term debt and capital lease obligations.

The following is a summary of the Company's indebtedness at June 30, 1998:

<TABLE>
<CAPTION>

Long-term debt:
--------------------------------------------------------------------------------------------------- 
<S>                                                                                  <C>  
Term note payable to a small business investment  company.  Interest is at 11.5%
per annum,  payable  quarterly.  Principal  due January  2001.  The note, in the
principal amount of $4,000,000,  has been discounted by $796,000.  The discount,
which is being amortized through January 2001,  represents the value assigned to
155,000 stock purchase  warrants which were granted to the lender.  The value of
the discount has been calculated using the  Black-Scholes  option pricing model.
The stock purchase  warrants are  exercisable  through March 2003 to purchase an
equal  number of common  shares at a per share price equal to the lower of $6.25
or the  fair  market  value  of the  Company's  common  stock  on the six  month
anniversary of the note. The unamortized discount at June 30, 1998 was $730,000.
The note is  collateralized  by substantially  all assets of the Company and its
subsidiaries.  The note  provides for the  granting of up to 270,000  additional
stock purchase warrants to purchase an equal number of common shares at the then
current  market  price  based upon the  amount of  indebtedness  outstanding  on
certain  anniversary dates of the note.  Additional  warrants,  if granted,  are
exercisable as follows: 20,000 at the lower of $6.25 or the fair market value of
the Company's common stock on the six month anniversary of the note; and 250,000
at the then fair market  value at the time of grant.  All  warrants  expire five
years after the date of grant.                                                       $3,270,000

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 repaid or converted,  monthly  principal  payments are
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 a second  security  position on all the assets of the Company
and its subsidiaries.  The debenture  holders converted  $3,186,000 of principal
into 2,123,697  shares of common stock during the year ended June 30, 1998. (See
Note 10).                                                                             1,514,000

Term  note  payable  to a  finance  institution.  Interest  at 7.5%  per  annum,
principal  and  interest  payable  monthly  through  December  1999.  Secured by
financed software.                                                                      185,000

Four year  promissory  note  bearing  interest  at 8.0% per annum  payable  to a
creditor.  Monthly payments,  including interest,  of $6,103 through April 2000.        125,000

Non-interest  bearing note payable to Advanced Control's legal counsel.  Monthly
principal  payments are due through September 1998. The note has been discounted
using an effective interest rate of 10.25%.                                              66,000

Capital lease obligations secured by computer and telephone equipment.  Interest
rates range from 8.6% to 12.6%.  Monthly  payments  are due  through  July 2001.        712,000
---------------------------------------------------------------------------------------------------
Total indebtedness                                                                    5,872,000
    Less current portion                                                                568,000
---------------------------------------------------------------------------------------------------
    Long-term portion                                                                $5,304,000
---------------------------------------------------------------------------------------------------
</TABLE>
 

                                     F-13

<PAGE>

                    TAVA TECHNOLOGIES, INC. and SUBSIDIARIES

                   Notes to consolidated financial statements


Scheduled debt principal and capital lease payments for years ending June 30 are
as follows:

--------------------------------------------------------------------------------
                               Debt principal     Capital lease        Total
--------------------------------------------------------------------------------
1999                           $   315,000           $302,000       $   617,000
2000                               286,000            281,000           567,000
2001                             4,146,000            225,000         4,371,000
2002                               130,000             15,000           145,000
2003                               115,000                --            115,000
Thereafter                         898,000                --            898,000
--------------------------------------------------------------------------------
                                 5,890,000            823,000         6,713,000

--------------------------------------------------------------------------------
Less amount representing 
   interest and note discount      730,000            111,000           841,000
--------------------------------------------------------------------------------
                                 5,160,000            712,000         5,872,000
Less current portion               315,000            253,000           568,000
--------------------------------------------------------------------------------
                                $4,845,000           $459,000        $5,304,000
--------------------------------------------------------------------------------
During the year ended June 30, 1998 interest  capitalized in connection with the
development of software totaled $142,000.  No interest was capitalized in fiscal
1997.

Note 9.  Income taxes.

Current  income tax expense for the year ended June 30,  1997 was  $110,000  and
related to current amounts payable for state income and franchise taxes. 

A  reconciliation  of the Federal  statutory  tax rate of 34% and the  Company's
effective  tax rates of 0% and 4% for the years  ended  June 30, 1998 and 1997,
respectively, is as follows:

                                                               Years ended
                                                                 June 30,
                                                             1998       1997
------------------------------------------------------------------------------- 

Income tax benefit (expense) computed at the
  Federal statutory rate                               $    85,000    $ 930,000
Compensation deduction related to exercise
  of non-qualified stock options                         1,474,000         --
Non-deductible goodwill amortization                      (228,000)    (163,000)
  State income and franchise taxes                            --        (73,000)
  Net change in deferred items                             453,000      274,000
  Change in effective income tax rate                      322,000         --
  Change in valuation allowance                         (2,067,000)    (926,000)
  Other, individually immaterial                           (39,000)    (152,000)
--------------------------------------------------------------------------------
                                                       $      --      $(110,000)
--------------------------------------------------------------------------------

                                      F-14

<PAGE>
                   TAVA TECHNOLOGIES, INC. and SUBSIDIARIES

                   Notes to consolidated financial statements


Temporary  differences  between the consolidated  financial  statements carrying
amounts  and  the  tax  basis  of  assets  and  liabilities  that  give  rise to
significant  portions  of deferred  income  taxes at June 30, 1998 relate to the
following:

--------------------------------------------------------------------------------
Deferred tax assets (liabilities):
Net operating loss carry forwards                                   $6,790,000
 Accounts receivable                                                   505,000
 Accrued items, deductible when paid for tax purposes                  136,000
 Other, individually immaterial                                         11,000
 Capitalized software costs                                         (1,779,000)
 Property and equipment                                                (94,000)
 Capitalized interest                                                  (53,000)
--------------------------------------------------------------------------------
Total                                                                5,516,000
Less valuation allowance                                            (5,516,000)
--------------------------------------------------------------------------------
Net deferred tax asset (liability)                                  $       --
--------------------------------------------------------------------------------

In  assessing  the  reliability  of deferred  tax assets,  management  considers
whether it is more  likely  than not that some  portion  or all of the  deferred
income tax assets will be realized.  The  realization  of deferred tax assets is
dependent  upon the  generation of future  taxable  income during the periods in
which those temporary  differences become deductible.  Management  considers the
scheduled reversal of deferred tax liabilities,  projected future taxable income
and tax planning strategies in making this assessment.  Accordingly, the Company
has  provided  a  valuation  allowance  on its net  deferred  tax asset  because
management  was  unable  to  determine  if it is more  likely  than not that the
deferred tax asset will be realized.

At June 30, 1998, the Company had net operating  loss carry  forwards  (NOLs) in
the amount of  approximately  $18,000,000  for Federal income tax purposes.  The
NOLs expire in the years 2008 through  2013. A portion of the NOLs is limited on
an annual basis as a result of Internal  Revenue Code Section 382 which  relates
to the change in control  that  occurred as a result of the  Company's  business
acquisitions.

Note 10.  Stockholders' equity.

Exercise of stock purchase warrants:

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 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 $47,000.

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 $214,000.

                                      F-15

<PAGE>
                   TAVA TECHNOLOGIES, INC. and SUBSIDIARIES

                   Notes to consolidated financial statements

During  April 1997,  the Company  lowered the  exercise  price and  extended the
exercise  period of its 662,000  publicly  traded stock purchase  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.

During  March  1998,  the  Company  called  its  publicly  traded  warrants  for
redemption.  Holders of 643,762 warrants exercised their rights and purchased an
equal number of common shares.  The Company  received  proceeds in the amount of
$2,254,000.  Holders of 428 warrants redeemed them for their redemption value of
$0.05 per  warrant.  Warrants  for the  purchase  of 17,810  common  shares were
cancelled due to either non-exercise or non-redemption by the holders.

During  the year ended  June 30,  1998,  holders  of  3,036,224  stock  purchase
warrants  exercised their rights and purchased an equal number of common shares.
The Company received proceeds in the amount of $4,555,000.

Exercise of stock options:

During the year ended June 30, 1997,  holders of 90,000 stock options  exercised
their  rights  and  purchased  an equal  number of common  shares.  The  Company
received proceeds in the amount of $66,000.

During  the year  ended  June 30,  1998,  holders  of  1,875,545  stock  options
exercised  their  rights and  purchased an equal  number of common  shares.  The
Company received proceeds in the amount of $4,243,000.

Private placements:

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,  net  of  associated  placement  costs,  in the  amount  of
$842,000. The stock purchase warrants are exercisable at any time before January
31, 1999 to purchase one share of common stock for $2.46.

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

During  November  1997, the Company sold 955,000 shares of its common stock in a
private placement for $5.50 per share and received  proceeds,  net of associated
costs, in the amount of $4,711,000.

Preferred stock:

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,  net of  $128,000  in  offering  costs.  Each  share of
preferred stock had 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.

On  December  31,  1997,  the  preferred  shareholder  exercised  its  right and
converted 133,334 preferred shares into 1,333,340 shares of the Company's common
stock.  A 6%  cumulative  dividend  was paid to the holder  through  the time of
conversion.  Each warrant, which was exercisable at any time until June 30, 1999
to purchase one share of the  Company's  common  stock for $2.00 per share,  was
exercised by the holder during the year ended June 30, 1998.

                                      F-16

<PAGE>
                   TAVA TECHNOLOGIES, INC. and SUBSIDIARIES

                   Notes to consolidated financial statement

Conversion of debt:

During November 1996, the Company  received  requests from the holders of its 8%
270-day  convertible  notes to convert them to the Company's  common stock.  The
entire  principal in the amount of $375,000 was converted into 214,285 shares of
common stock 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.
Notes were  converted  at the rate of $.67 per unit for each $1.00 of  principal
plus accrued  interest of $17,000 into 548,436  shares of the  Company's  common
stock.  In addition,  the Company charged $53,000 of related costs to additional
paid-in capital.  Each unit consisted of one share of common stock and one stock
purchase  warrant to  purchase  one share of common  stock.  The stock  purchase
warrants are exercisable to purchase one share of common stock for $1.00 through
March 31, 2000.

During the year ended June 30, 1998,  holders of the  Company's  9%  convertible
debentures in the  principal  amount of $3,186,000  exercised  their  conversion
rights and  converted  that  principal  amount into  2,123,697  shares of common
stock.  In addition,  the Company  charged  related  deferred  debt costs in the
amount of $154,000 to additional paid-in capital.

Employee stock purchase plan:

During the year ended June 30,  1998,  the  Company  sold  46,311  shares of its
common stock to employees  under the terms of its 1992 Employee  Stock  Purchase
Plan and received proceeds in the amount of $81,000.

Conversion of collateral loan:

During the year ended June 30, 1998,  the Company  issued  227,090 shares of its
common stock upon  conversion  of a security  bond under the terms of a $350,000
collateral loan, plus $47,000 in accrued  interest.  The arrangement was entered
into in fiscal 1997 and permitted conversion of the collateral loan plus accrued
interest into common stock at the rate of $1.75 per share.

Note 11.   Loss per share.

The  following  is a  reconciliation  of the net loss and the  number  of common
shares  used in the  calculation  of loss per share for the years ended June 30,
1998 and 1997.

                                                              Year ended
                                                                June 30,
                                                          1998          1997
--------------------------------------------------------------------------------
Basic and diluted loss per share:
Net loss:
  Loss from continuing operations                     $(250,000)   $(2,629,000)
  Preferred stock dividend                              (60,000)       (15,000)
--------------------------------------------------------------------------------
  Loss from continuing operations available to
    common stockholders                                (310,000)    (2,644,000)
  Discontinued operations                                  --         (106,000)
--------------------------------------------------------------------------------
  Loss available to common stockholders               $(310,000)   $(2,750,000)
--------------------------------------------------------------------------------
Number of shares:
--------------------------------------------------------------------------------
   Weighted average common shares outstanding        18,356,000      8,882,000
--------------------------------------------------------------------------------
Per share amounts:
   Basic and diluted loss from continuing operations  $   (0.02)   $     (0.30)
   Discontinued operations                                  --           (0.01)
--------------------------------------------------------------------------------
   Basic and diluted loss                             $   (0.02)   $     (0.31)
--------------------------------------------------------------------------------

                                      F-17

<PAGE>

                  TAVA TECHNOLOGIES, INC. and SUBSIDIARIES

                   Notes to consolidated financial statement

The following were not included in the  computation of diluted loss per share as
the effect would be anti-dilutive.

                                                            Year ended
                                                              June 30,
                                                       1998             1997
--------------------------------------------------------------------------------
Number of equivalent common shares:
      Stock options                                 2,168,825         3,182,250
      Stock purchase warrants                         290,994         3,738,663
      Convertible debentures                        1,414,098         2,868,128
      Convertible preferred shares                         --           173,576
--------------------------------------------------------------------------------

Note 12.  Stock options and stock purchase warrants.

The  following is a summary of the changes in stock  options and stock  purchase
warrants  during the years ended June 30, 1997 and 1998.  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, 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
          Granted                             873,000                5.74
          Exercised                        (1,875,545)               2.30
          Expired / cancelled                 (10,880)               1.62
--------------------------------------------------------------------------------
Balance, June 30, 1998                      2,168,825            $   3.63
--------------------------------------------------------------------------------

Stock purchase warrants:
Balance, July 1, 1996                       3,910,364                1.79
          Granted                           1,143,436                1.59
          Exercised                        (1,178,018)                .99
          Expired / cancelled                (137,119)               1.08
--------------------------------------------------------------------------------
Balance, June 30, 1997                      3,738,663             $  2.00
          Granted                             295,632                4.05
          Exercised                        (3,679,986)               1.97
          Expired / cancelled                 (63,315)               2.66
--------------------------------------------------------------------------------
Balance, June 30, 1998                        290,994             $  4.34
--------------------------------------------------------------------------------

                                      F-18


<PAGE>
                    TAVA TECHNOLOGIES, INC. and SUBSIDIARIES

                   Notes to consolidated financial statement


The following information summarizes stock options outstanding at June 30, 1998.
<TABLE>
<CAPTION>

                              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>    
  
  2001          30,000           $13.04        $12.94 - $13.23         10,001         $13.04
  2002         223,475           $ 1.54        $ 1.41 - $ 1.55        223,475         $ 1.54
  2002          41,000           $ 3.45        $ 2.75 - $ 4.25         41,000         $ 3.45
  2003          52,000           $ 7.15        $ 6.41 - $ 8.33         32,000         $ 6.41
  2003          21,000           $11.74        $10.40 - $12.16         16,000         $12.16
  2005          63,850           $ 1.23        $ 1.20 - $ 1.63         63,850         $ 1.23
  2006         352,000           $ 2.22        $ 1.75 - $ 2.75        285,334         $ 2.21
  2007         169,000           $ 2.04        $ 1.42 - $ 2.25         69,000         $ 1.92
  2007         491,500           $ 2.77        $ 2.49 - $ 3.66        241,500         $ 2.50       
  2007         145,000           $ 5.46        $ 4.94 - $ 6.50         21,250         $ 5.42
  2008         200,000           $ 2.50                 $ 2.50            --          $  --          
  2008         355,000           $ 6.20        $ 5.50 - $ 6.87         75,000         $ 6.25
  2008          25,000           $12.48        $10.11 - $13.17            --          $  --
----------------------------------------------------------------------------------------------------
             2,168,825           $ 3.63        $ 1.20 - $13.23      1,078,410         $ 2.85
----------------------------------------------------------------------------------------------------
</TABLE>

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

                                                          Years ended June 30,
                                                          1998           1997
------------------------------------------------------------------------------- 

Market value equal to exercise price                     $3.68          $0.37
                                                                              
Market value greater than exercise price                 $  --          $0.86
Market value less than exercise price                    $1.03          $0.74

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

The following information summarizes stock purchase warrants outstanding at June
30, 1998:
<TABLE>
<CAPTION>

                              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>    
  1999        25,000             $1.25                 $1.25         25,000           $1.25
  1999        70,000             $2.54         $2.46 - $3.00         70,000           $2.54
  2000        11,194             $0.67                 $0.67         11,194           $0.67
  2003       159,800             $6.32         $6.25 - $8.58        159,800           $6.32
  2007        25,000             $1.50                 $1.50         25,000           $1.50
--------------------------------------------------------------------------------------------------
             290,994             $4.34         $0.67 - $8.58        290,994           $4.34
--------------------------------------------------------------------------------------------------
</TABLE>

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

                                                                    Years
                                                                ended June 30,
                                                                1998      1997
--------------------------------------------------------------------------------
Market value equal to exercise price                            $8.01    $  --
Market value greater than exercise price                        $4.34    $0.53
Market value less than exercise price                           $0.78    $0.39
--------------------------------------------------------------------------------

                                      F-19

<PAGE>
                    TAVA TECHNOLOGIES, INC. and SUBSIDIARIES

                   Notes to consolidated financial statement

The Company  applies  Accounting  Principles  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 basic and diluted loss per share would
have been increased to the pro forma amounts indicated in the following table.

                                                         Years ended June 30,
                                                           1998        1997
--------------------------------------------------------------------------------
Net loss as reported                                  $  (250,000)  $(2,735,000)
Net loss pro forma                                    $(1,668,000)  $(3,377,000)

Basic and diluted loss per share as reported          $     (0.02)  $     (0.31)
Basic and diluted loss per share pro forma            $     (0.09)  $     (0.38)

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

The fair value of each employee stock option and stock purchase  warrant granted
during the years ended June 30, 1998 and 1997 was estimated on the date of grant
using the  Black-Scholes  option  pricing  model.  The  assumptions  used in the
pricing calculations were as follows:

                                                       Years ended June 30,
                                                          1998         1997
--------------------------------------------------------------------------------
Expected volatility                                   89% - 104%        63%
Risk free interest rate                                  6.5%          7.5%
Expected annual dividends                                None         None
Estimated lives of options and warrants               1 - 5 years   1 - 2 years
-------------------------------------------------------------- -----------------

Note 13.  Benefit plans.

The  Company  maintains  the 1997  Stock  Option  and Bonus  Plan  covering  all
employees,  officers,  directors and consultants.  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 2,700,000 shares of its common
stock for  awards  under this  plan.  The  Company  made  awards of 873,000  and
1,500,000  options under the plan during the years ended June 30, 1998 and 1997,
respectively.

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 or issues shares on behalf of the participating  employees
through  semi-annual  purchases  in the open market or  issuances.  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  years  ended  June  30,  1998  and  1997,   respectively,
participating  employees  elected to  purchase  63,127 and 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, 1997, 37,250 options had been granted under the plan. No awards
were made under this plan  during the year  ended June 30,  1998.  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.

                                      F-20

<PAGE>
                    TAVA TECHNOLOGIES, INC. and SUBSIDIARIES

                   Notes to consolidated financial statement


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 years  ended June 30,  1998 and 1997,  the  Company  made
matching contributions in the amounts of $60,000 and $46,000, respectively.

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 allowed 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, 1998 and
1997.

Note 14.  Commitments and contingencies.

The Company  leases  office space,  production  facilities  and equipment  under
operating  leases.  Rent  expense  under  operating  leases was  $1,090,000  and
$1,086,000 for the years ended June 30, 1998 and 1997, respectively.

The  following is a summary of minimum  future lease  payments  under  operating
leases:

Years ending June 30,
--------------------------------------------------------------------------------
      1999                                                       $1,463,000
      2000                                                        1,341,000
      2001                                                        1,225,000
      2002                                                          803,000
      2003                                                          604,000
      Thereafter                                                    410,000
--------------------------------------------------------------------------------
                                                                 $5,846,000
--------------------------------------------------------------------------------

Sale and  lease-back  arrangements.  During  December 1997, the Company sold the
land  and  building  at a  production  facility  for  $850,000  under a sale and
lease-back  arrangement.  The gain on the sale was immaterial.  The Company used
the proceeds to satisfy its obligations  under two notes secured by the land and
building and for other working capital purposes.

Self  insurance.  The Company is partially  self-insured  for  employee  medical
liabilities  which cover risk up to $50,000  per  individual  covered  under its
medical  insurance  plan.  The Company has purchased  excess  medical  liability
coverage for individual  claims in excess of $50,000 and aggregate annual claims
in excess of an estimated $900,000 at June 30, 1998.

Employment  agreements.  The Company has entered into the  following  employment
agreements with officers and other key 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 $195,000 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 two year employment agreement, which expires in June 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.

                                      F-21
<PAGE>
                    TAVA TECHNOLOGIES, INC. and SUBSIDIARIES

                   Notes to consolidated financial statement

With an officer, a two 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 two 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 an employee,  a two 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.

With an employee,  a two year  employment  agreement which expires in March 2000
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 of not less than $145,000 and $155,000 during the first and second
years,  respectively.  The  employment  agreement  provides  for the granting of
75,000 stock options exercisable on each of the agreement  commencement date and
its first  anniversary  date at the then  market  price.  The stock  options are
exercisable for a period of ten years from the date of grant.

Legal proceedings.  At June 30, 1998, the Company's subsidiary,  All Control, is
party to a civil action filed by a general contractor claiming damages in excess
of $100,000.  All Control has filed a counter claim requesting damages in excess
of  $3,900,000  arising under its  subcontract.  The claim arises from 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 related
to this project (see Note 6).

At June 30,  1998,  the Company and certain of its officers are named in a civil
complaint  brought by a former director,  alleging that the defendants  withheld
material information regarding the Company's Year 2000 product at a time when he
was a director and sold a considerable block of the Company's stock.  Management
believes that the  allegations  are groundless and intends to vigorously  defend
its position. Although the proceeding is at a very early stage, as of this date,
management believes that its defense of the case will be successful.

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, 1998, the Company has reserves for potential
losses on  contracts  and an allowance  for  doubtful  accounts in the amount of
$1,372,000  resulting  primarily from  management's and counsel's  assessment of
legal proceedings.

Restricted  cash.  The cash balance at June 30, 1998  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.

Letters of credit.  During  June 1998,  the  Company  issued two 60-day  standby
letters of credit aggregating $165,000 to secure its obligations to suppliers.

                                      F-22
<PAGE>
                    TAVA TECHNOLOGIES, INC. and SUBSIDIARIES

                   Notes to consolidated financial statement

Note 15.  Fourth quarter adjustments.

During the fourth  quarter of fiscal 1998, the Company  reclassified  $1,100,000
for overhead  allocation  charges on contracts  from general and  administrative
expense to cost of revenue.  Also in the fourth quarter, the Company capitalized
approximately  $159,000 of development cost and interest expense of $73,000 that
had been  expensed  in  prior  quarters.

Note 16.  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 of the  Company is also an owner of an entity for which the  Company
performs  subcontract  work.  Billings to the related entity for the years ended
June  30,  1998  and  1997  were   approximately   $1,448,000  and   $1,154,000,
respectively.  Accounts receivable from this entity as of June 30, 1998 and 1997
were $155,000 and $233,000, respectively.

                                      F-23
<PAGE>

Item  8.  Changes  in and  disagreements  with  accountants  on  accounting  and
financial disclosures.

None.
                                    Part III

   

Item 9. Directors, executive officers, promoters and control persons; Compliance
with Section 16(a) of the Exchange Act.

The directors and executive officers of the Company are listed below.  Directors
are elected to hold office  until the next annual  meeting of  shareholders  and
until their  respective  successors  have been elected and qualified.  Executive
officers  are  elected by the Board of  Directors  and hold  office  until their
successors are elected and qualified.

The following table sets forth the names and ages of all directors and executive
officers  and the  positions  and offices  that each such person  holds with the
Company.

         Name                     Age          Position
--------------------------------------------------------------------------------
         John Jenkins(1)          48           Chairman of the Board, President
                                               and Chief Executive Officer

         Kevin Fallon             45           Chief Operating Officer

         Douglas H. Kelsall       44           Chief Financial Officer
                                               and Secretary

         Larry B. Hagewood        49           Executive Vice President,
                                               Sales and Marketing

         Robert C. Pearson(1)     63           Director

         Robert L. Costello(1)    46           Director

         Rick L. Schleufer        45           Director

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

(1)   Member of Audit Committee and Compensation Committee.

H. Robert Gill and Judith A. Draper  resigned  their  positions as board members
during January and March 1998, respectively.

Biographical information.

John Jenkins. Mr. Jenkins has served as President,  Chief Executive Officer, and
a Director of the  Company  since  January  1995 and as Chairman of the Board of
Directors since August 1997.  Before joining the Company,  Mr. Jenkins served as
president of Morgan  Technical  Ceramics,  Inc., a  wholly-owned  subsidiary  of
Morgan Crucible plc, a diversified  industrial products company based in England
and publicly-traded on the London stock exchange.  Prior to his tenure at Morgan
Technical,  he was Vice President and General Manager of the Structural  Ceramic
Division Coors Ceramics Company,  a subsidiary of the Adolph Coors Company.  Mr.
Jenkins holds a Bachelor of Science  degree in Mechanical  Engineering  from the
University  of  Washington,  and a Juris Doctor  degree from the  University  of
Denver.

                                       22
<PAGE>

Kevin Fallon. Mr. Fallon has served as Chief Operating Officer since joining the
Company in December 1996. During 1982, Mr. Fallon founded and became employed as
President and Chief Executive  Officer of All Control  Systems,  Inc., which the
Company  acquired  in  December  1996.  Prior to that time,  he held  management
positions in quality and process  control,  design  engineering  and testing and
sales  engineering.  Mr.  Fallon holds a Bachelor of Science  degree from Drexel
University  and a Master of Business  Administration  from the Wharton School of
Business, University of Pennsylvania.

Douglas H. Kelsall.  Mr.  Kelsall has served as Chief  Financial  Officer of the
Company  since July  1997.  Mr.  Kelsall  served as Chief  Financial  Officer of
Evolving Systems, Inc., a company engaged in software development, from December
1995 to June 1997, as President of Caribou Capital Corporation from June 1993 to
December 1995 and in various management and Vice President positions at Colorado
National  Bank from October 1978 to June 1993.  Mr.  Kelsall holds a Bachelor of
Arts  degree  from  the   University  of  Colorado  and  a  Master  of  Business
Administration degree from the University of Denver.

Larry B.  Hagewood.  Mr.  Hagewood has served as Executive Vice President of the
Company since  September 1997.  Prior to joining the Company,  he served for six
years as Group Vice President of the Systems Business for Elsag Bailey, a global
leader for automation  solutions to the  industrial  manufacturing  market.  Mr.
Hagewood  holds a Bachelor  of Science  degree in Nuclear  Physics  from  Auburn
University.

Robert C.  Pearson.  Mr.  Pearson has been a director  of the Company  since May
1997. Mr. Pearson has been associated with Renaissance Capital Group, Inc. since
April 1994,  presently  serving as Senior Vice President,  Director of Corporate
Finance. He served as Executive Vice President of the Thomas Group from May 1990
to March 1994.  For 25 years prior to that time, Mr. Pearson held various senior
management  positions at Texas Instruments,  including Vice President of Finance
from October 1983 to June 1985.  Mr.  Pearson holds a Bachelor of Science Degree
from the University of Maryland and a Master of Business Administration from the
University of Michigan.  Mr. Pearson hold  directorships in the following public
companies: Poore Brothers, Inc. and Interscience Computer.

Robert L.  Costello.  Mr.  Costello has been a director of the Company since May
1997. Mr. Costello has been employed as Executive Vice President of URS Greiner,
Inc. and Vice  President  and Director of URS  Corporation  since April 1996. He
served as a Director and Chief Executive  Officer of Greiner  Engineering,  Inc.
from August 1995 to March 1996, President and Chief Operating Officer of Greiner
Engineering, Inc. from February 1994 to August 1995 and Vice President and Chief
Financial Officer of Greiner  Engineering,  Inc. from 1987 to February 1994. Mr.
Costello  holds a Bachelor of Arts degree from Western State College of Colorado
and a Master of Business Administration from the University of Oregon.

Rick L. Schleufer.  Mr.  Schleufer has served as a director of the Company since
January 1998. Since 1986, he has been employed by  Enterprise/IndeNet  presently
serving as director of IndeNet,  Inc. and Chief Executive  Officer of Enterprise
Systems  Group,  Inc.  From 1979 to 1986,  Mr.  Schleufer  founded and was Chief
Executive of several  small  business  enterprises.  Prior to the  management of
these ventures,  Mr.  Schleufer was employed by the national  accounting firm of
Grant Thornton. Mr. Schleufer holds a Bachelor of Science Degree in Business and
Accounting  from  the  University  of  Colorado,   and  is  a  Certified  Public
Accountant.

Compliance with Section 16 (a) of the Exchange Act.

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

                                       23
<PAGE>

Based solely on its review of the copies of the reports it received from persons
required to file,  and written  representations  it received from these persons,
the Company  believes that during the fiscal year ended June 30, 1998 all filing
requirements applicable to its officers,  directors and greater than ten percent
shareholders  were  complied  with  except as  follows:  the Form 3 due ten days
following  the  election of Larry B.  Hagewood as an  executive  officer was not
timely filed; Kevin Fallon did not timely file two reports on Form 4 relating to
two sales during July 1997 and nine purchases during October 1997; and Robert C.
Pearson did not timely file three reports on Form 4 relating to two  conversions
and two sales during April 1998,  two sales during May 1998,  and one conversion
and five sales during June 1998,  all relating to  securities  held of record by
Renaissance Capital Growth & Income Fund III, Inc. and Renaissance U.S. Growth &
Income Trust PLC. Mr.  Fallon's  transactions  were reported on a Form 5 for the
fiscal  year ended  June 30,  1998 which was not  timely  filed.  Mr.  Pearson's
transactions  were  reported on an amended Form 5 for the fiscal year ended June
30, 1998 which was not timely filed.

Involvement in certain legal proceedings.

During the past five years, no director or executive  officer of the Company has
been  involved in legal  proceedings  of the nature  required to be disclosed by
this item.

Item 10.  Executive compensation.

(a) (b)  Summary compensation table.

The following table sets forth  information  regarding  compensation paid during
the past three fiscal years to the Company's Chief Executive  Officer and to any
of its four most highly  compensated  executive officers who earned total salary
and bonus in excess of $100,000  per annum during the fiscal year ended June 30,
1998.

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------------
                                                                          Long-term compensation
                                                                   --------------------------------------
                                      Annual compensation                     Awards             Payouts
                               -----------------------------------------------------------------------------
         (a)             (b)       (c)        (d)        (e)           (f)            (g)        (h)        (i)
                                                                              
------------------------------------------------------------------ --------------------------------------------------
                                                        Other       Restricted     Security                 All
 Name and                                               annual        stock       underlying     LTIP      other
 Principal Position     Year      Salary     Bonus       comp         awards     options/SARs   payouts    comp(1)
------------------------------------------------------------------ --------------------------------------------------
<S>                    <C>         <C>        <C>             <C>            <C>   <C>          <C>        <C> 

John Jenkins           1998        $182,700   $20,000          --             --        --       --        $7,937
Chairman, President    1997        $165,000   $30,000          --             --   450,000(2)    --        $7,726
and Chief Executive    1996        $146,400        --          --             --        --       --            --

Kevin Fallon           1998        $158,300   $18,000          --             --        --       --        $6,000
Chief Operating        1997(3)     $ 87,500   $18,000          --             --   200,000(4)    --        $7,007
Officer                1996              --        --          --             --        --       --            --
                       
Douglas H. Kelsall     1998(5)     $138,000        --          --             --        --       --        $3,600
Chief Financial        1997              --        --          --             --   300,000(6)    --            --
Officer and Secretary  1996              --        --          --             --        --       --            --
                      

Larry B. Hagewood      1998(7)     $143,700        --          --             --   225,000(8)    --        $5,300
Vice President         1997              --        --          --             --        --       --            --
Sales & Marketing                        --        --          --             --        --       --            --
                      1996
---------------------------------------------------------------------------------------------------------------------
                                      
                                       24
<PAGE>

<FN>

(1)  Represents  the value of term life  insurance,  the premiums for which were
paid by the Company,  and/or the value of an automobile or automobile  allowance
provided for the executive's personal use.

(2) Mr. Jenkins was granted  non-qualified options to purchase 450,000 shares of
common stock in connection with the January 28, 1997 extension of his employment
agreement. At October 1, 1998, 241,500 of those options were exercisable.

(3) Represents compensation commencing December 1, 1996.

(4) Mr. Fallon was granted  non-qualified  options to purchase 200,000 shares of
common stock in connection  with his employment  agreement.  At October 1, 1998,
133,334 of those options were exercisable.

(5) Represents compensation commencing July 15, 1997.

(6) Mr. Kelsall was granted non-qualified options to purchase 300,000 shares of
common stock in connection  with his employment  agreement.  At October 1, 1998,
115,000 of those options were exercisable.

(7) Represents compensation commencing August 15, 1997.

(8) Mr. Hagewood was granted non-qualified options to purchase 225,000 shares of
common stock in connection  with his employment  agreement.  At October 1, 1998,
115,000 of those options were exercisable.
</FN>
</TABLE>

(c) Option and stock appreciation right grants table.

The following  table sets forth  information  regarding the grant of options and
stock appreciation  rights during the fiscal year ended June 30, 1998, to any of
the executive officers required to be named in the Summary Compensation Table.

<TABLE>
<CAPTION>

          (a)                     (b)                    (c)                    (d)                    (e)
------------------------ ---------------------- ----------------------- --------------------- ----------------------
                               Number of           Percent of total
                              securities           options or SARs
                           underlying options    granted to employees     Exercise or base
         Name               or SARs granted         in fiscal year      price ($ per share)   Expiration date
------------------------ ---------------------- ----------------------- --------------------- ----------------------
<S>                             <C>                      <C>                   <C>            <C>

Larry B. Hagewood               75,000                   8.6%                  $2.09          July 2007
                                75,000                   8.6%                  $3.14          July 2007
                                75,000                   8.6%                  $3.66          July 2007
------------------------ ---------------------- ----------------------- --------------------- ----------------------
</TABLE>

(d) Aggregated option and stock appreciation right exercises in last fiscal year
and fiscal year end option and stock appreciation right values.

The  following  table  sets  forth   information   regarding  option  and  stock
appreciation  right exercises during the fiscal year ended June 30, 1998, by any
of the  executive  officers  required  to be named in the  Summary  Compensation
Table.

                                       25
<PAGE>

<TABLE>
<CAPTION>

          (a)                   (b)               (c)                     (d)                           (e)
------------------------- ----------------- ----------------- ---------------------------- -------------------------------
                                                                 Number of securities                 Value of
                                                                      underlying                unexercised in-the-
                             Number of                          unexercised options or            money options or
                          shares acquired                       SARs at fiscal year end       SARs at fiscal year end
          Name              on exercise      Value realized   (exercisable/unexercisable)  (exercisable/unexercisable)(1)
------------------------- ----------------- ----------------- ---------------------------- -------------------------------
<S>                                <C>              <C>                    <C>                      <C>   
John Jenkins:                        8,500          $ 55,500          
     Exercisable                   100,000          $553,000               376,500                  $2,912,800
     Unexercisable                                                         200,000                  $1,476,000

Kevin Fallon:                           
     Exercisable                       --               $--                133,334                  $1,017,300
     Unexercisable                                                          66,666                  $  508,700

Douglas H.  Kelsall:                80,000          $413,600
     Exercisable                                                            20,000                  $  169,200
     Unexercisable                                                         200,000                  $1,514,000

Larry B. Hagewood:                  35,000          $325,100
     Exercisable                                                            40,000                  $  311,600
     Unexercisable                                                         150,000                  $  972,000
-------------------------
<FN>

 (1) The year-end value  represents the difference  between the option  exercise
prices (ranging from $1.20 to $3.66 per share) and the $9.88 market value of the
Company's  common  stock on June 30,  1998,  multiplied  by the number of shares
under option.  Market value  represents  the closing price reported by NASDAQ on
June 30, 1998.
</FN>
</TABLE>

(e) Long-term incentive plan awards.

During  the  fiscal  year  ended June 30,  1998,  the  Company  did not make any
long-term incentive plan awards not disclosed above.

(f) Compensation of directors.

The Company pays no cash  compensation  to directors for their services as such.
The Company  maintains its 1998  Non-Employee  Director Stock Option Plan. Under
this plan, automatic grants of 4,000 stock options are made to each non-employee
director each calendar quarter. The exercise price of the stock options is equal
to fair  market  value of the  common  stock on the date of grant.  The  options
expire five years from date of grant.

(g) Employment  contracts and  termination  of employment and  change-in-control
arrangements.

The  Company has  entered  into the  following  employment  agreements  with the
executive officers required to be named in the Summary Compensation Table.

The Company has a two year employment  agreement with John Jenkins which expires
in January 1999, but will be  automatically  renewed on each anniversary for one
year periods  unless  written  notice of  non-renewal  in given by either party,
providing  for a minimum  annual  salary in the  amount of  $195,000  during the
current  contract  year.  The  employment  agreement  provided  for the grant 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.  The  Company is  obligated  to pay the
premium on a term life  insurance  policy with a death  benefit of $500,000  for
which Mr.  Jenkins names the  beneficiary.  In the event of a change in control,
the Company is obligated to pay Mr. Jenkins his base salary then in effect for a
period of 24 months following a notice of termination.

                                       26
<PAGE>


The Company has a two year employment  agreement with Kevin Fallon which expires
in December 1998 but will be  automatically  renewed on each anniversary for one
year periods  unless  written  notice of  non-renewal  is given by either party,
providing a minimum  annual  salary in the amount of $175,000 and a bonus of not
less than $15,000 during the current  contract  year.  The employment  agreement
provided for the grant 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. The Company is
obligated  to pay the  premium  on a term  life  insurance  policy  with a death
benefit of at least $250,000 for which Mr. Fallon names the beneficiary.  In the
event of a change in control,  the Company is  obligated  to pay Mr.  Fallon his
base  salary  then in effect  for a period of 12  months  following  a notice of
termination.

The Company has a two year  employment  agreement  with Douglas H. Kelsall which
expires in June 1999 but will be  automatically  renewed on each anniversary for
one year periods  unless written notice of non-renewal is given by either party,
providing for a minimum  annual salary of $145,000  during the current  contract
year, 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.  In the event of a
change in control,  the Company is obligated to pay Mr.  Kelsall his base salary
then in effect for a period of 24 months following a notice of termination.

The Company has a two year  employment  agreement  with Larry B. Hagewood  which
expires in July 1999 but will be  automatically  renewed on each anniversary for
one year periods  unless written notice of non-renewal is given by either party,
providing for a minimum annual salary in the amount of $160,000.  The employment
agreement provided for the grant 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.  In the event of a
change in control,  the Company is obligated to pay Mr. Hagewood his base salary
then in effect for a period of 12 months following a notice of termination.

(h) Report on repricing of options and stock appreciation rights.

During the fiscal year ended June 30, 1998,  the Company did not amend or adjust
the terms of any stock option or stock  appreciation right previously awarded to
any of the named executive officers.

Item 11. Security ownership of certain beneficial owners and management.

The following  table sets forth,  as of October 1, 1998, the number of shares of
the Company's voting securities  beneficially owned by (a) any person (including
any "group") who is known by the Company to be the beneficial owner of more than
five percent of any class of its voting  securities  and (b) the  percentage  of
ownership of the outstanding shares of each class represented by such shares.

<TABLE>
<CAPTION>

----------------------- ---------------------------------------- ---------------------------- -----------------------
         (1)                              (2)                                (3)                       (4)
                                   Name and address                   Amount and nature
    Title of class                of beneficial owner              of beneficial ownership     Percentage of class
----------------------- ---------------------------------------- ---------------------------- -----------------------
     <S>                <C>                                             <C>                            <C>
     Common stock       Kevin Fallon
                        7887 E. Belleview Avenue, Suite 820
                        Englewood, Colorado 80111                       1,529,574(1)                   6.9%
----------------------- ---------------------------------------- ---------------------------- -----------------------
<FN>

(1) Includes shares  underlying  133,334 options  exercisable  within 60 days of
October 1, 1998.
</FN>
</TABLE>

                                       27
<PAGE>

The following  table sets forth,  as of October 1, 1998, the number of shares of
the Company's equity  securities  beneficially  owned by its directors and named
executive officers, individually, and by its executive officers and directors as
a group, and the percentage of ownership of the outstanding shares of each class
represented  by such  shares.  The  persons  listed  below are  deemed to be the
beneficial  owners  of shares  of  underlying  options  and  warrants  which are
exercisable within 60 days of October 1, 1998.

<TABLE>
<CAPTION>

----------------------- ---------------------------------------- ---------------------------- -----------------------
         (1)                              (2)                                (3)                       (4)
                                   Name and address                   Amount and nature
    Title of class                of beneficial owner              of beneficial ownership     Percentage of class
----------------------- ---------------------------------------- ---------------------------- -----------------------
    <S>                 <C>                                            <C>                            <C> 
    Common stock        John Jenkins
                        7887 E. Belleview Avenue, Suite 820
                        Englewood, Colorado 80111                        791,600(1)                    3.6%

     Common stock       Kevin Fallon
                        7887 E. Belleview Avenue, Suite 820
                        Englewood, Colorado 80111                      1,529,574(2)                    6.9%

     Common stock       Douglas H. Kelsall
                        7887 E. Belleview Avenue, Suite 820
                        Englewood, Colorado 80111                        157,600(3)                    --(9)

     Common stock       Larry B. Hagewood
                        7887 E. Belleview Avenue, Suite 820
                        Englewood, Colorado 80111                        115,000(4)                    --(9)

     Common stock       Robert C. Pearson
                        8080 No. Central Expressway
                        Suite 210-LB 59
                        Dallas, Texas 75206                            1,058,635(5)                    4.8%

     Common stock       Robert L. Costello
                        7887 E. Belleview Avenue, Suite 820
                        Englewood, Colorado 80111                         24,000(6)                    --(9)

     Common stock       Rick L. Schleufer
                        7887 E. Belleview Avenue, Suite 820
                        Englewood, Colorado 80111                         11,000(7)                    --(9)

     Common stock       All executive officers and
                        directors as a group                           3,687,409(8)                   16.7%
----------------------- ---------------------------------------- ---------------------------- -----------------------
<FN>

(1)  Includes 576,500 shares that are issuable upon exercise of stock options.

(2)  Includes 133,334 shares that are issuable upon exercise of stock options.

(3)  Includes 105,000 shares that are issuable upon exercise of stock options.

(4) Represents 115,000 shares issuable upon exercise of stock options.

(5)  Represents  1,009,635  shares  that are  subject to the  conversion  of the
Company's  9%  convertible  debentures  held by two  investment  funds  that are
advised by Renaissance  Capital Group, and a 25,000 share warrant held by one of
those funds.  Mr.  Pearson has disclaimed  beneficial  ownership of all of those
shares.  Includes  24,000 shares issuable upon exercise of stock options held by
Mr. Pearson.

(6) Represents shares issuable upon exercise of stock options.

                                       28
<PAGE>

(7) Includes 8,000 shares issuable upon exercise of stock options.

(8) Includes 2,020,469 shares issuable upon exercise of options and warrants and
upon conversion of debentures, as described in notes (1) - (8).

(9) Less than one percent.
</FN>
</TABLE>

Item 12.  Certain relationships and related 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 executive  officer who is also a principal  stockholder  of the Company is an
owner of an entity for which the Company performs  subcontract work. Billings to
the related entity were approximately $1,448,000 and $1,154,000 during the years
ended June 30, 1998 and 1997, respectively.

Item 13. Exhibits, financial statement schedules and reports on Form 8-K.

(a)      Exhibits.

The following exhibits are filed herewith or have been previously filed with the
Securities and Exchange Commission and are incorporated by reference herein:

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

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

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

2.4  Agreement of Merger dated December 31, 1996 - regarding the  acquisition of
     All Control Systems, Inc. (E)

2.5  Amendment  Number 1 to the All Control Systems,  Inc.  Agreement of Merger.
     (E)

3.3  Restated Articles of Incorporation. (F)

3.4  Amendment to Articles of  Incorporation - Designation of Series A Preferred
     Stock. (L)

3.5  Amendment to Articles of Incorporation - Name Change. (M)

3.5  By Laws. (G)

10.1 1992 Employee Stock Purchase Plan. (H)

10.2 1992 Incentive Stock Option Plan. (H)

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

                                       29
<PAGE>

10.4 Loan  Agreement  dated  February 21, 1996 -  Renaissance  Capital  Growth &
     Income Fund III, Inc. (B)

10.5 Loan  Agreement  and  Convertible   Debenture  dated  October  30,  1996  -
     Renaissance Capital Growth & Income Trust, PLC. (I)

10.6 Employment  agreement  dated as of  December  31,  1996 with Kevin  Fallon,
     C.O.O. (J)

10.7 Employment  agreement  dated as of  January  28,  1997 with  John  Jenkins,
     Chairman of the Board of Directors, C.E.O. and President. (K)

10.8 Employment  agreement  dated as of May 5,1997 with Douglas H. Kelsall,  CFO
     (R)

10.9 1997 Stock option and bonus plan.  (R)

10.10 Employment  agreement  dated  July 15,  1997 with Larry B.  Hagewood,  
      Vice President. (N)

10.11 Non-Employee Director Stock Option Plan. (O)

10.12 Loan and  Security  Agreement  dated  March 27,  1998 with  Sirrom  
      Capital Corporation d/b/a Tandem Capital Inc. (O)

21.1 List of Subsidiaries (P).

23.1 Consent  of BDO  Seidman,  LLP to the  incorporation  by  reference  of the
     audited  financial  statements and their report thereon dated September 21,
     1998. (P)

23.2 Consent  of BDO  Seidman,  LLP to the  incorporation  by  reference  of the
     audited  financial  statements and their report thereon dated September 21,
     1998. (Q)

--------------------------------------------------------------------------------
          (A)  Incorporated by reference from the Registrant's  Form 8-K Current
               Report dated August 10, 1995.

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

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

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

          (E)  Incorporated  by reference from the  Registrant's  Form 8-K dated
               December 31, 1996, as amended.

          (F)  Incorporated by reference from the Registrant's Form 10-K for the
               fiscal year ended June 30, 1996.

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

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

          (I)  Incorporated by reference from the  Registrant's  Form 10-QSB for
               the quarter ended September 30, 1996.

                                       30
<PAGE>

          (J)  Incorporated by reference from the  Registrant's  Form 10-QSB for
               the quarter ended December 31, 1996.

          (K)  Incorporated  by  reference  from the  Registrant's  Registration
               Statement  on Form S-3,  SEC file  number  333-170891,  effective
               March 6, 1997.

          (L)  Incorporated by reference from the  Registrant's  Form 10-QSB for
               the quarter ended March 31, 1997.

          (M)  Incorporated  by  reference  from  the   Registrant's   Form  S-8
               Registration  Statement  effective  October  17,  1997,  File No.
               333-46339.

          (N)  Incorporated by reference from the  Registrant's  Form 10-QSB for
               the quarter ended September 30, 1997.

          (O)  Incorporated by reference from the  Registrant's  Form 10-QSB for
               the quarter ended March 31, 1998.

          (P)  Previously filed.

          (Q)  Filed herewith.

--------------------------------------------------------------------------------
(b)  Reports on Form 8-K.

   During the last  quarter of the period  covered by this  report,  the Company
   filed reports on Form 8-K as listed below. No financial statements were filed
   with these reports.

   The following reports on Form 8-K reported  information pursuant to "Item 5 -
Other Events".

          i.   Form 8-K dated April 17, 1998, filed April 20, 1998. 
          ii.  Form 8-K dated April 23, 1998, filed April 23, 1998. 
          iii. Form 8-K dated April 24, 1998, filed April 29, 1998. 
          iv.  Form 8-K dated May 12, 1998, filed May 12, 1998. 
          v.   Form 8-K dated May 21, 1998, filed May 21, 1998.
          vi.  Form 8-K dated June 3, 1998, filed June 3, 1998.

                                       31

<PAGE>


                             TAVA Technologies, Inc.


                                   Signatures

  Pursuant  to the  requirements  of  Section  13 or  15(d)  of the  Securities
   Exchange Act of 1934,  the registrant has caused this Amendment No. 1 to Form
   10-KSB  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
   authorized.

                                                 TAVA Technologies, Inc.



   Date:  October 28, 1998                       By:  /s/ John Jenkins     
   -----------------------                          ----------------------------
                                                    John P. Jenkins, President 
                                                    and Chief Executive Officer 


                                       32