SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

[X]      ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
         EXCHANGE ACT OF 1934
                     For the fiscal year ended June 30, 1998

                                       or

[ ]      TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934

For the transition period from ______________ to ___________________

                         Commission file number 1-10196

                        DIMENSIONAL VISIONS INCORPORATED
                        --------------------------------
           (Name of Small Business Issuer as specific in its Charter)

                Delaware                                        23-251-17953
    (State or Other Jurisdiction of                           (I.R.S. Employer
     Incorporation or Organization)                          Identification No.)

    2301 W. Dunlap Avenue, Suite 207                               85021
            Phoenix, Arizona                                     (Zip Code)
(Address of Principal Executive Offices)

         Issuer's telephone number, including area code: (602) 997-1990

           Securities registered pursuant to Section 12(b) of the Act:
                                      None

           Securities registered pursuant to Section 12(g) of the Act:
                                  Common Stock
                                (Title of Class)

         Indicate  by check mark  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  periods  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes   X   No
                                              -----    -----

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation  S-K is not contained  herein,  and will not be contained
herein,  to  the  best  of  registrant's   knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10- KSB. Yes   X   No 
                                           -----    -----

         For the fiscal  year ended June 30,  1998,  the  Company's  revenue was
$609,392.

         As of  September  30,  1998,  the  number of  shares  of  Common  Stock
outstanding was 3,612,226.  The aggregate  market value of the Company's  Common
Stock held by  non-affiliates  of the  registrant as of September 30, 1998,  was
approximately $2,337,732 (based upon 3,402,812 shares at $0.687 per share).

                    DOCUMENTS INCORPORATED BY REFERENCE: NONE

     Certain   exhibits  are   incorporated   by  reference  to  the   Company's
Registration  Statements  on Form S-1 and Form S-8,  Form 10-KSB and Form 8-K as
listed in response to Item 13(a)(3) of Part III.
<PAGE>
ITEM 1. DESCRIPTION OF BUSINESS.

GENERAL

         Dimensional Visions  Incorporated (the "Company") employs a proprietary
software  system  methodology  (the  "System")  to convert  client  provided and
Company created materials into  lithographically  printed  three-dimensional and
animated   images   ("Multi-Dimensional   Images").   The  Company  markets  its
Multi-Dimensional Images products under the "MARKETINGLENSES(SM)"  product line,
consisting of "DV3D(R)" and "Animotion(TM)" Multi-Dimensional Images.

         The  MARKETINGLENSES(SM) product  line  of  DV3D(R)  and  Animotion(TM)
Multi-Dimensional  Images create promotion marketing image solutions for clients
who want to utilize the images to help promote  their  products and services and
increase their sales. The Company  currently is delivering these marketing image
solutions to a limited number of carefully  targeted  companies in the promotion
marketing  industry in the United  States and  intends to seek to  significantly
expand and create additional markets for its products.

         The DV3D(R) and  Animotion(TM) products are determined by the technical
specifications of the polymer based "LENTICULAR"  material on which the image is
printed.   Lenticular   is  a  plastic   optical   material   that   allows  the
three-dimensional  and/or  animation  image to be viewed  without the use of any
viewing  apparatus such as glasses or hoods.  Lenticular is a layer of lenticles
(or  lenses)  in  front  of the  image.  These  lenses  work as a  viewer  which
self-adjusts to whatever distance the viewer is from the image. If the viewer is
looking at DV3D(R) and Animotion(TM) Multi-Dimensional Images,  not only do they
allow  for  three  dimensional  and/or  animation  images  without  any  viewing
apparatus,  but also fluid  animation  simultaneously.  These  Multi-Dimensional
Images may be produced in varying sizes for specified customer applications.

         The Company's sole active subsidiary,  InfoPak, Inc., manufacturers and
markets   a    hardware/software    packaged    product    line    called    the
"INFOPAKSYSTEM(TM)."  This  system is  designed  to handle  substantial  offline
information  and databases that may require  frequent  updating.  This system is
particularly well suited to mobile sales professionals. The Company currently is
delivering  these mobility  solutions to a limited number of carefully  targeted
companies in the automobile appraisal and inventory sales businesses.

         References   herein  to  the  Company   include   Dimensional   Visions
Incorporated  and its  InfoPak,  Inc.  subsidiary  unless  the  context  denotes
otherwise.

         The Company  intends to focus its resources on its  MARKETINGLENSES(SM)
product line of DV3D(R) and Animotion(TM) Multi-Dimensional Images.  The Company
has retained an investment banking firm to assist the Company in the sale of its
InfoPak, Inc. subsidiary.

         The Company  has been  dependent  upon the  proceeds of the sale of its
securities, loans and revenue from operations to conduct its business. Since its
inception,  the Company has continuously  sustained  significant losses and such
losses are continuing.  There can be no assurance that the Company will generate
sufficient revenue from the sale of its products or be able to continue to raise
funds from other sources necessary to maintain its business. See "Description of
Business - Special Considerations."

         The Company  currently  maintains its  executive  offices and principal
place of business at 2301 West Dunlap Avenue, Suite 207, Phoenix, Arizona 85021,
and its telephone number is (602) 997-1990.

COMPANY HISTORY

         The Company  was  incorporated  in the State of  Delaware  in 1988.  In
September  1995, the Company  acquired all of the  outstanding  Capital Stock of
InfoPak, Inc. in exchange for 500,000 shares of Series P Preferred Stock.

         From 1988  through  1996,  the Company  utilized a  photographic  three
dimensional/lithographically  printed  imaging  process.  This process  severely
limited  the  Company's  ability  to  economically  and  repetitively  transform
two-dimensional images into  multi-dimensional  images. Thus, in 1997, after two
years   of   research   and    development,    the   Company    introduced   its
MARKETINGLENSES(SM) product line of DV3D(R) and Animotion(TM)  Multi-Dimensional
Images using its proprietary  software and production process. In December 1997,
the Company  sold all of its  remaining  photographic  equipment  from its prior
printing technology.

                                        2
<PAGE>
MARKETINGLENSES(SM) PRODUCTS

         The Company currently is focused on offering and delivering  integrated
and systematic promotion marketing solutions to clients to provide them with the
ability to help them  increase  their sales by using the  Company's  two primary
products: DV3D(R) and Animotion(TM) Multi-Dimensional Images.

         The Company  believes  that these  products  will  appeal to  marketers
because they can motivate  customers to purchase and induce  action at the point
of sale.  The  Company's  goal is to produce a highly  advanced,  high  quality,
LENTICULAR  image,  with a wide  variety of imaging  options in today's  market,
while offering unique products and services to the promotion marketing industry.
Applications  which the Company has  developed  and  currently  is  marketing to
current and potential clients include:

1. VIRTUALLY COUNTERFEIT-PROOF "SPECIAL EVENT COLLECTIBLE TICKETS" SUCH AS:

     DV3D(R)Animotion TicketS

2. VIRTUALLY COUNTERFEIT-PROOF "SPECIAL COLLECTIBLE FINANCIAL CARDS" SUCH AS:

     DV3D(R)Animotion Phone CardS

     DV3D(R)Animotion Affinity Credit CardS

     DV3D(R)Animotion Bank Credit Cards

3. QUINTESSENTIAL QUALITY AND QUICKEST "VALUE ADDED PROMOTION IMAGES" SUCH AS:

     CD, Book and magazine covers and inserts.

     Trading cards and greeting cards

     Point of Purchase displays

INFOPAKSYSTEM(TM) PRODUCTS

         The  Company's  InfoPak,  Inc.  subsidiary  produces  sales  automation
technology  that enables  highly mobile  professionals  such as  salespeople  to
increase  their  productivity  by helping them better  manage  certain  critical
information.   The  Company   believes   that  sales   automation  is  currently
revolutionizing  the sales process by using technology to serve customers better
and increase sales productivity.

         The  Company  provides  an  integrated   "Sales   Automation"   palmtop
hardware/software  package and database update  subscription  service called the
"InfoPakSystem(TM)".  This  system is  designed  to handle  substantial  offline
information  and  databases  that may  require  frequent  updating.  The Company
believes  that the system is well suited to sales  professionals  who are highly
mobile  and  require  frequent  utilization  of data  to  effectively  sell  and
communicate with their companies and customers. The Company's goal is to produce
unique   "MOBILITY   AUTOMATION"   products  and  services  that  the  Company's
competitors  currently do not have.  Applications which the Company currently is
marketing to current and potential clients include:

1.       Automobile "AutoInfoPak" NADA Appraisals

2.       Automobile "AutoInfoPak" Blue Book Appraisals

                                        3
<PAGE>
STRATEGY

MARKET & PENETRATION

         The   Company    has    defined    the    primary    market   for   its
"MARKETINGLENSES(SM)"  product lines as promotion  marketing  companies  located
throughout  the United  States.  According  to the  January  1998 issue of Promo
Magazine, these companies spent a total of $71 billion on promotion marketing in
1996 as follows:
                                          Estimated:
                Market:                   ----------
                -------              Promotion Marketing
     Promotion Marketing Industry       Total Market $

              Categories                 1996 Revenue        % of Total
              ----------                 ------------        ----------
Premium/Incentives                      $20,500,000,000          29%
                                        
Point of Purchase                       $12,600,000,000          18%
                                        
Ad Specialties                          $ 9,490,000,000          13%
                                        
Couponing                               $ 6,040,000,000           8%
                                        
Specialty Printing                      $ 5,600,000,000           8%
                                        
Sponsorships                            $ 5,400,000,000           8%
                                        
Promo Licensing                         $ 4,990,000,000           7%
                                        
Promo Fulfillment                       $ 2,500,000,000           3%
                                        
Agencies Net Revenue                    $ 1,089,900,000           2%
                                        
Promo Research                          $ 1,000,000,000           1%
                                        
Product Sampling                        $   856,300,000           1%
                                        
Internet Interactive                    $   815,400,000           1%
                                        
In Store Services                       $   652,000,000           1%

           TOTAL                        $71,533,600,000         100%

         The Company intends to focus its efforts on the promotion markets which
had revenue of  approximately  $71 billion in 1996. The Company believes that if
it can obtain a relatively  small portion of this business  (less than one-tenth
percent), the Company can achieve profitability.

         The Company uses its own employees and "Value-added Resellers" ("VARs")
to sell its products.

         The Company  has  developed a  comprehensive  "high-profile"  marketing
program to help  market its  products.  The  Company's  initial  and  sustaining
marketing program is comprised of the following components:

1.       DIMENSIONAL  VISIONS  CORPORATE  IDENTITY & COLLATERAL  MATERIALS - The
         Company has created an effective  corporate  identity program utilizing
         its own DV3D(R) and  Animotion(TM)  created images for its  stationery,
         business cards, Qualifications/Capabilities Brochure, and "Show & Sell"
         presentations.  These corporate  identity materials were first designed
         and  produced  in  January  1998.  By  utilizing  its own  DV3D(R)  and
         Animotion(R)  images for itself,  the Company believes it will become a
         self-promotional  testimonial to the potential  "increased sales" power
         of its products.

2.       QUARTERLY  DIRECT  MAILINGS - The Company  intends to create a one page
         letter that will be sent to approximately  500 companies every quarter.
         The  marketing  message  will be changed for every  mailing and will be
         sent to the

                                        4
<PAGE>
         creative director of the top 100 largest promotional marketing agencies
         and the 200 largest regional advertising agencies throughout the United
         States.  The  mailings  will  request  that the target  company fax the
         letter back to the Company  requesting more  information and particular
         samples of the Company's products.

3.       TRADE SHOWS & VARS  PROSPECTS - The Company plans to attend and display
         its  MARKETINGLENSES(SM)  product line at two  promotion  and marketing
         trade shows a year.  The primary  objective is to create VAR prospects,
         as well as, create awareness of its product line.

4.       INTERNET HOME PAGE  (DV3D.COM) - The Company  inaugurated its home page
         on the Internet/World Wide Web in February 1998. This home page concept
         has been expanded to include VARs and clients.

5.       PUBLIC  RELATIONS - Starting in 1998,  the Company has generated  press
         releases to announce significant product introductions and achievements
         which  will be sent  to the  appropriate  promotion  of  marketing  and
         advertising trade magazines.

6.       ADVERTISING  - Because the Company  utilizes  VARs for the sales of its
         products, the Company plans to offer a co-op-advertising program to its
         VARs starting in 1999.

RESEARCH AND DEVELOPMENT

         The Company has incurred  substantial research and development expenses
to develop and improve its  MARKETINGLENSES(SM)  products.  In the fiscal  years
ended June 30, 1998 and 1997, the Company  expended  approximately  $100,000 and
$200,000,  respectively,  in such expenses. The Company does not believe that it
will  be  necessary  to  incur  major   additional   research  and   development
expenditures at this time. However,  in view of the substantial  competition and
potential technological changes in the imaging industry, the Company may find it
necessary to incur substantial additional research and development expenditures.

PRODUCTION

PRODUCTION OF MARKETINGLENSES(SM) PRODUCTS

         The Company  controls or supervises all phases of the production of its
print products from the image  development and computerized  enhancement  phases
through the color  separation  and printing  phases.  Images are provided to the
Company by clients in many formats  including  digitally in graphic file formats
and  photographically  in pictures or  transparencies.  Photographic  images are
scanned  into the computer to be modified and  enhanced.  Through a  proprietary
process,  several images are composited  together to generate a final image that
will appear as a three-dimensional  and/or animation image when viewed through a
lenticular  material.  Lenticular is a plastic optical  material that allows the
three-dimensional  and/or  animation  image to be viewed  without the use of any
viewing  apparatus such as glasses or hoods. The final computer image is sent to
an image setter  located at the  Company's  main  offices  where films are made.
These  films  are  forwarded  to  a  commercial   printer  where,   through  the
lithographic  process,  the images are  printed  on a polymer  based  lenticular
material which focuses the  multi-dimensional  or animation images.  The Company
produces  the  DV3D(R)  and  Animotion(TM)  images  for the  final  image at its
facilities in Phoenix,  Arizona.  Printing is done under the  supervision of the
Company with third-party vendors. The polymer based lenticular material on which
the DV3D(R) and Animotion(TM) images are printed is supplied by producers in the
petrochemical and plastic fabricating industries.

PRODUCTION OF INFOPAKSYSTEM(TM) PRODUCTS

         The Company programs the software for its InfoPakSystem(TM) products at
its facilities in Phoenix,  Arizona. The hardware for its system,  including the
palmtop hardware, is provided by third party vendors.

STRATEGIC BUSINESS ALLIANCES

         In January  1998,  the Company also  entered into a strategic  business
alliance with Consolidated  Printing  Corporation for marketing of the Company's
DV3D(R)  Animotion(TM) tickets, similar to the type of tickets  produced for the
Arizona Diamondbacks' opening day game. The agreement provides that Consolidated
Printing,  one of the largest printing  companies of specialty events tickets in
the United States,  will market the Company's DV3D(R)  Animotion(TM) tickets for
sporting and other specialty events throughout the United States.

                                        5
<PAGE>
         In  September,  1998,  the Company  entered  into a strategic  business
alliance with Cookies,  a supplier of children's  accessories to the Walt Disney
Company and Warner Bros. The agreement  provides that Cookies will integrate the
Company's DV3D(R) Animotion(TM) products into various children's accessories.

         In September  1998, the Company also entered into a strategic  business
alliance with Plymouth,  Inc. for utilizing the Company's DV3D(R)  Animotion(TM)
in Plymouth's school supply products.

         The Company believes that these and future strategic business alliances
will  allow  the  Company  to  vastly  expand  the  scope of its  marketing  and
production of its MARKETINGLENSES(SM) Multi-Dimensional Images products.

COMPETITION

         Other  processes  currently  are  available  which  allow a  viewer  to
perceive an image in three-dimensions, including those which employ stereoscopic
glasses  and  viewing  hoods  and  other  processes,  and  holograms  and  other
three-dimensional  image  systems  which  do not  require  the  use  of  viewing
apparatus.  The Company is aware of at least two companies,  Optigraphics,  Inc.
and National  Graphics,  Inc.,  which compete with the Company's print products.
Further,  the Company's products may be more expensive than  conventional,  high
quality,  two-dimensional prints and for this reason, high quality, conventional
processes  and methods may be favored for many,  if not most,  illustration  and
promotion contexts.

PATENTS, TRADEMARKS AND PROPRIETARY PROTECTION

         The Company owns the rights to two U.S. patents,  "Method and Apparatus
For Stereoscopic  Photography" and "Electronic  (digitized) Method and Apparatus
For  Stereoscopic  Photography".  The Company  uses a portion of the  technology
covered by these patents in the  Multi-Dimensional  Images compositing  process.
However,   in  view   of  the   Company's   current   process   of   production,
Multi-Dimensional  Images,  the Company intends to seek a patent for its current
process.  No assurances can be given that a patent will be granted.  The Company
also owns U.S. patents "System and Method for Providing Data and Program Code to
a  Card  for  Use  by  a  Reader"  and  "Electronic   Telephone  Directory  with
Interchangeable  Listings" which relate to its  INFOPAKSYSTEM(TM)  data delivery
system.

         The Company enters into confidentiality agreements with all persons and
entities who or which may have access to its technology.  However,  no assurance
can be given that such agreements,  the patents or any additional  patents which
may be issued to the Company will prevent third parties from developing  similar
or  competitive  technology.  There can be no  assurance  that the patents  will
provide  the  Company  with  any  significant  competitive  advantages,  or that
challenges will not be instituted  against the validity or enforceability of its
patents,  or if instituted that any such challenges will not be successful.  The
cost of  litigation  to uphold the  validity  and  prevent  infringement  can be
substantial.  In addition,  no assurance can be given that the Company will have
sufficient  resources to either  institute  or defend any action,  suit or other
proceeding by or against the Company with respect to any claimed infringement of
patent or other  proprietary  rights. In the event that the Company should lose,
in the near  future,  the  protection  afforded  by the  patents  and any future
patents,  such  event  could  have a material  adverse  effect on the  Company's
operations. Furthermore, there can be no assurance that the Company's technology
will not  infringe  patent or other  rights owned by others or licenses to which
may not be available to the Company.

         The Company has  registered  the DV3D(R)  trademark  and has applied to
register the Animotion(TM) and MARKETINGLENSES(SM)  marks with the United States
Patent and Trademark office.

EMPLOYEES

         As of June 30, 1998, the Company had eight employees, including four in
management (one of whom is involved in manufacturing), one involved in marketing
and sales, three in manufacturing and production,  and one in administrative and
clerical  functions.  The  Company is not a party to any  collective  bargaining
agreements. The Company considers its relations with employees to be good.

                                        6
<PAGE>
                             SPECIAL CONSIDERATIONS

         The following factors, in addition to those discussed elsewhere in this
Report, should  be  carefully  considered  in  evaluating  the  Company  and its
business.

LACK OF SIGNIFICANT  COMMERCIAL SALES;  SUBSTANTIAL  CHANGE IN BUSINESS STRATEGY
AND NEW PRODUCTS

         Although the Company has been in existence since 1988, the Company only
recently  developed  its   MARKETINGLENSES(SM)   product  line  of  DV3D(R)  and
Animotion(TM) Multi-Dimensional Images.  From 1988  through  1996,  the  Company
utilized  a  photographic  three  dimensional/lithographically  printed  imaging
process.  Utilizing this  photographic  process  severely  limited the Company's
ability to  economically  and  repetitively  transform  current  two-dimensional
images into multi-dimensional images to meet the demands of today's market.

         In 1997,  after two years of refinement  and  development,  the Company
developed  a  proprietary  software  and  printing  processes  system to convert
existing  client  provided and newly  created  materials  into  lithographically
printed  three-dimensional  and animated  images.  This new system  provided the
basis  for  the  Company's   new   management  to  create  and  market  the  new
MARKETINGLENSES(SM) product line of DV3D(R) and Animotion(TM)  Multi-Dimensional
Images.  Consequently,  the Company  sold all of its  photographic  equipment in
December 1997.

         However,  the Company has  generated  only limited sales from these new
MARKETINGLENSES(SM)   products.   There   can   be   no   assurance   that   the
MARKETINGLENSES(SM)  products will achieve market acceptance.  During the period
of  development  of  the  MARKETINGLENSES(SM)  products,  the  Company  incurred
significant  losses.   Given  the  history  of  substantial  losses  during  the
developmental  stage of its products,  and the failure of the Company to achieve
profitability at anytime during its ten year history,  there can be no assurance
that  the  Company  will be  profitable  or will be able to  satisfy  any of its
obligations.

CONTINUING LOSSES; QUALIFIED REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

         The Company has incurred net losses since inception of $19,341,796, and
reported a net loss of  approximately  $2,162,000 for the fiscal year ended June
30, 1997, and $422,000 for the fiscal year ended June 30, 1998. Operating losses
before other income and expenses were  approximately  $1,331,000  for the fiscal
year ended June 30, 1997 and  $325,000  for the fiscal year ended June 30, 1998.
Losses  incurred since  inception are  attributable  primarily to start-up costs
incurred in developing a now obsolete  photographic  imaging system,  developing
the  Company's  MARKETINGLENSES(SM)  Multi-Dimensional  Imaging  System  and the
Company's INFOPAKSYSTEM(TM),  the costs of introducing these products to market,
and the administrative  costs associated with the business.  To date,  operating
revenue has not been  sufficient  to cover these  costs.  Moreover,  the Company
expects its losses to continue for at least the next three to six months.  There
can be no assurance that the Company will generate sufficient operating revenue,
expand sales of its products,  or control its costs  sufficiently  to achieve or
sustain  profitability.  In addition,  the report by the  Company's  independent
certified public accountants on the Company's financial  statements for the year
ended June 30, 1998 states that the Company's  recurring  losses from operations
and limited sales of its products  raise  substantial  doubt about the Company's
ability to continue as a going concern. See "Consolidated  Financial Statements"
and "Management's  Discussion and Analysis of Financial Condition and Results of
Operations" contained in this Report.

POTENTIAL NEED FOR ADDITIONAL FUNDING

         At  September  30, 1998,  the Company had $32,178 in cash.  The Company
will need  additional  funding to expand  its  business  even if it can  achieve
profitability.  The Company will be seeking additional funding through public or
private financing to repay indebtedness and for working capital. There can be no
assurance  that  additional  financing  will be available,  or if available,  on
acceptable  terms.  The  Company's  inability to raise capital when needed could
have a material adverse effect on the Company's business,  financial  condition,
and results of operations.

RECENT CHANGE IN MANAGEMENT

         The  Company   experienced  a  significant  change  in  its  management
beginning in November  1997.  Mr. John  McPhilimy  was  appointed as a Director,
President,  and  Chief  Executive  Officer  of the  Company  in  November  1997,
replacing Mr. George S. Smith. Mr. McPhilimy was appointed Chairman of the Board
in January 1998, also replacing

                                        7
<PAGE>
Mr. Smith, who continues to serve the Company as a Director.  Mr. Roy D. Pringle
was appointed as Vice President,  Chief Financial Officer, and Chief Information
Officer of the Company in November  1997,  Mr. Bruce D. Sandig was  appointed as
the Senior Vice  President of Creative  Design and  Engineering in November 1997
and also as a Director in January  1998,  and Ms.  Ronnie  Matlock was appointed
Vice President of Customer Service and Operations in November 1997. In addition,
in January 1998, three prior Directors of the Company resigned and were replaced
by  three  new  Directors.  Although  the  Company  believes  these  changes  in
management will be beneficial to the Company's  operations,  significant changes
in management often cause serious disruptions to businesses. No assurance can be
given that the new  management  of the  Company  will be able to turn around the
Company and cause it to achieve profitability.

CERTAIN FACTORS AFFECTING OPERATING RESULTS

         The  Company's  operating  results may be affected by a wide variety of
factors that could adversely affect its total revenue and  profitability.  These
factors,  many of which are beyond the control of the Company,  include creating
and    continuing    interest   by   customers   in   the    MARKETINGLENSES(SM)
Multi-Dimensional  Images  products  and the  INFOPAKSYSTEM(TM);  the  Company's
ability to establish and maintain  strong and  long-lasting  relationships  with
customers, including a sufficient number of national customers which can provide
substantial  orders  for  the  Company's  products;  the  Company's  success  in
obtaining and maintaining  customer  satisfaction  with its  MARKETINGLENSES(SM)
MultiDimensional Images products and the INFOPAKSYSTEM(TM)  products and related
services;   the   level   and   timing   of  the   demand   for  the   Company's
MARKETINGLENSES(SM) Multi-Dimensional Images products and the INFOPAKSYSTEM(TM);
the Company's  ability to expand its personnel,  equipment,  and  administrative
support  functions,  including  particularly  its  ability to place in service a
sufficient number of MARKETINGLENSES(SM)  Multi-Dimensional  Images products and
INFOPAKSYSTEM(TM)  products  to  achieve  profitability;  changes  in the mix of
services it provides;  technological  changes;  and  competition and competitive
pressures on prices. The Company's revenue and results of operations also may be
subject to fluctuations based upon general economic conditions. If there were to
be a general economic downturn or a recession, there would be a material adverse
effect on the Company's business, operating results, and financial condition.

LACK OF DIVERSIFICATION; RISKS OF INVESTING IN LIMITED PRODUCTS

         The success of the  Company's  business  will depend  primarily  on the
market acceptance of the MARKETINGLENSES(SM) Multi- Dimensional Images products.
The  plan  of  operation,  therefore,  subjects  the  Company  to  the  economic
fluctuations  within the imaging industry and increases the risk associated with
its operations.  This primary dependence on one type of product (a situation the
Company  expects will continue for the  foreseeable  future) renders the Company
more vulnerable than companies with a more diversified product line. Significant
delays in development could greatly affect the Company's competitiveness.  There
can be no assurance that the Company's products will not become obsolete earlier
than  anticipated.  Nor can there be any assurance that the Company will be able
to devote sufficient  resources to the research and development  effort required
to enable the Company to meet future technological changes. An investment in any
aspect of the imaging  industry is speculative and  historically  has involved a
high degree of risk.

FLUCTUATING QUARTERLY RESULTS

         The   Company  has   experienced   significant   quarterly   and  other
fluctuations in revenue and operating  results.  The Company believes that these
fluctuations  have  been  attributable  primarily  to its  changes  in  business
strategies and to a lesser extent to the budgeting and  purchasing  practices of
its customers. Future revenue and operating results may fluctuate as a result of
these and other factors,  including the demand for the Company's  products,  the
timing and cost of new  product  introductions,  changes in the mix of  products
sold, and in the mix of sales by distribution  channels,  the size and timing of
customer orders,  changes in pricing policies by the Company or its competitors,
execution  of  agreements  with  distributors,  competitive  conditions  in  the
industry, and general economic conditions.

         The Company has a sales backlog of  approximately  $250,000 at June 30,
1998. Historically, however the Company has had minimal sales backlog. Quarterly
revenue and  operating  results  therefore  depend  primarily  on the volume and
timing of orders received during the quarter, which are difficult to forecast. A
significant  portion of the Company's  operating  expenses is relatively  fixed,
since personnel  levels and other expenses are based upon  anticipated  revenue.
Many of the factors that could result in quarterly  fluctuations  are not within
the Company's control. Accordingly, the Company believes that quarter to quarter
comparisons  of its financial  results may not  necessarily  be  meaningful  and
should not be relied upon as an indication of future performance.

                                        8
<PAGE>
COMPETITION

         The  Company  faces  competition  from  two  major  competitors  in the
multi-dimensional   imaging  market.  The  Company  is  aware  that  competitors
currently  are  developing  competing  products and the Company  faces  indirect
competition  from various types of imaging  products.  The Company  expects that
direct and indirect  competition is likely to intensify in the future. There can
be no assurance that the Company will be able to compete successfully.

DEPENDENCE ON NEW PRODUCTS AND TECHNOLOGIES

         The  Company's  future  operating  results will depend to a significant
extent on its ability to continue to develop and introduce on a timely basis new
products,  which compete  effectively on the basis of price and  performance and
address customer needs and requirements. The success of new product introduction
depends on various  factors,  including  proper new  product  selection,  timely
completion  and  introduction  of new  product  designs,  and the use and market
acceptance  of  customers'  end  products.  The  Company's  inability to design,
develop,  and introduce  competitive  products on a timely basis could adversely
affect its future operating results. Some of the Company's products also require
compatibility with products manufactured by third-party vendors. There can be no
assurance the Company will be able to maintain  compatibility  in the event such
vendors  modify  their  products.  In addition,  there can be no assurance  that
products  or  technologies  developed  by others  will not render the  Company's
products  noncompetitive or obsolete.  In fiscal years 1997 and 1998 the Company
has  expended  approximately  $300,000  on  research  and  development  for  its
MARKETINGLENSES(SM) products. There can be no assurance that the Company's level
of  expenditure  on  research  and  development  will be adequate to develop new
products required by the Company to remain competitive.

TECHNOLOGICAL OBSOLESCENCE

         The   industries   that  the   Company   serves  are  marked  by  rapid
technological change. The Company must continuously modify its existing products
and seek to develop new products in order to remain competitive. There can be no
assurance  that new  technological  developments  will not adversely  affect the
Company.  Specifically,  the Company was forced to completely  abandon its prior
development of  photographic-based  imaging and replace it with a computer-based
digital  printing  process.   Changes  in  computer-based  design  and  printing
technology could render the Company's current products obsolete. In fiscal years
1997 and 1998 the Company has  expended  approximately  $300,000 on research and
development for its MARKETINGLENSES(SM) products. There can be no assurance that
the Company's level of expenditure on research and development  will be adequate
to avoid technological obsolescence of the Company's products.

LIMITED PROPRIETARY TECHNOLOGY

         The Company's current patented  technology is based on its now obsolete
and abandoned photographic printing process. Thus, unless the Company is able to
obtain a patent on its new technology, the Company will have only limited useful
patented technology.  It regards aspects of its manufacturing processes as trade
secrets and seeks to protect this know-how with secrecy agreements. There can be
no assurance, however, that these agreements will be enforceable in the event of
a breach.  Therefore,  even if the  Company  is able to develop  successful  new
products,  the Company may be limited in its ability to prevent competitors from
copying these  products.  In addition,  the Company has only limited  registered
trademarks,  and products  manufactured by the Company may not develop any value
from these trademarks.

DEPENDENCE ON THIRD-PARTY SUPPLIERS

         The Company  historically  has purchased its  components  from multiple
suppliers.  The  Company  does  not  have  supply  agreements  with any of these
suppliers. Although the Company has not experienced any material difficulties in
obtaining  supplies  in the  past  and  the  Company  believes  that  additional
suppliers are readily identifiable, any reduction or interruption in supply from
its vendors or suppliers could adversely affect the Company's  ability to supply
orders for certain of its products.

                                        9
<PAGE>
RISK OF PRODUCT RETURNS

         The Company's  MARKETINGLENSES(SM)  products are based on the Company's
recently developed  technology.  Although the Company believes its products will
meet  with a high  level of  satisfaction  from  customers,  as with  any  newly
developed products,  it is difficult to estimate the rates of return. There is a
risk, however,  that such returns could be substantial.  A significant number of
returns could have a material adverse effect upon the Company's business.

MANAGEMENT OF GROWTH

         The Company plans to expand its business significantly over the next 12
months.  The expansion of the Company's  business will require it to enhance its
operational,  financial,  and  information  systems,  to motivate and manage its
existing personnel and to attract and retain additional  managerial,  technical,
and marketing personnel,  to enhance its technical equipment,  and to expand the
manufacture  and  distribution  of its  products.  The failure of the Company to
expand its systems,  personnel,  equipment,  and administrative  resources on an
effective basis could have a material adverse effect on the Company's  business,
operating results, and financial condition.

DEPENDENCE ON KEY PERSONNEL

         The  Company's  success  depends  to  a  significant  degree  upon  the
technical and management skills of its officers and key employees,  including in
particular those of Mr. John McPhilimy,  the Company's  President,  Chairman and
Chief  Executive  Officer and Mr. Bruce D.  Sandig,  the  Company's  Senior Vice
President of Creative Design and Production  Engineering.  The Company currently
maintains a "key-man"  life insurance  policy on Mr.  McPhilimy in the amount of
$1,000,000.  In  addition,  the Company has been  approved  for, but has not yet
received,  a  "key-man"  life  insurance  policy on Mr.  Sandig in the amount of
$1,000,000. The loss of the services of either Mr. McPhilimy or Mr. Sandig could
have a  material  adverse  effect  on the  Company.  Although  the  Company  has
employment  agreements with Mr. McPhilimy and Mr. Sandig,  the Company currently
has only eight employees,  including Mr. McPhilimy and Mr. Sandig. The Company's
success  also will  depend  upon its  ability to attract  and retain  additional
qualified management,  marketing, technical, and sales executives and personnel.
Competition for such  executives and other  qualified  personnel is intense as a
result of a limited  number of persons with  knowledge of and  experience in the
Company's  industry.  There  can  be no  assurance  that  the  Company  will  be
successful in attracting or retaining such executives and personnel.

PREFERRED STOCK

         The Company's Certificate of Incorporation authorizes the issuance of a
maximum of  10,000,000  shares of  preferred  stock,  par value  $.001 per share
("Preferred  Stock").  The Board has the authority to divide the Preferred Stock
into series and to fix and determine the relative  rights and preferences of the
shares of any such series.  Currently,  the Company has issued  Preferred  Stock
designated as the Series A, Series B, Series C, Series P, and Series S Preferred
Stock (collectively,  the "Outstanding Preferred Stock"). The Company may in the
future  issue other series of  Preferred  Stock and the terms of any  additional
series of  Preferred  Stock may  operate to the  disadvantage  of holders of the
Common Stock.

OUTSTANDING PREFERRED STOCK

         The Outstanding  Preferred Stock have certain  dividend and liquidation
rights  which may impact the  Company's  ability to pay  dividends on its Common
Stock or make any payments to the holders of the shares in the event of

                                       10
<PAGE>
liquidation.  At June 30,  1998,  the Company owed  $78,300 in  accumulated  and
unpaid  dividends  on its Series A  Preferred  Stock and its Series B  Preferred
Stock.  Additionally,  the holders of the  Outstanding  Preferred Stock have the
right to convert their shares into  98,928shares  of Common  Stock,  which could
serve to  dilute  the  Common  Stock  rights.  In the event of  dissolution  and
liquidation,  holders of the Preferred Stock would be entitled to payment before
holders of the Company's Common Stock.

SHARES ELIGIBLE FOR FUTURE SALE

         Approximately  3,612,101  shares of  Common  Stock of the  Company  are
outstanding as of June 30, 1998.  Approximately  3,013,261 shares of such Common
Stock are freely tradeable shares and only 598,840 are "restricted  securities,"
as that term is defined in Rule 144  promulgated  under the Securities  Act, and
may be sold only in compliance with Rule 144, pursuant to registration under the
Securities  Act,  or  pursuant  to an  exemption  therefrom.  Thus,  most of the
Company's  outstanding  Common Stock may be immediately  sold by stockholders of
the Company. Sales of substantial amounts of Common Stock by stockholders of the
Company or even the  potential  of such sales,  are likely to have a  depressive
effect on the market price of the Common  Stock and could  impair the  Company's
ability to raise capital through the sale of its equity securities.

RIGHTS TO ACQUIRE SHARES

         A total of  4,166,617  shares of Common  Stock  has been  reserved  for
issuance upon exercise of various non-public  warrants and options issued by the
Company  at a  weighted  average  exercise  price of  $1.09  per  share  and the
Company's  currently  outstanding  Preferred  Stock is  convertible  into 98,928
shares of Common  Stock.  During the terms of such  options  and  warrants,  the
holders  thereof  will have the  opportunity  to profit  from an increase in the
market price of Common Stock with resulting  dilution in the interest of holders
of Common Stock. The existence of such options and warrants,  and the conversion
of the Preferred  Stock, may adversely affect the terms on which the Company can
obtain additional financing, and the holders of such options and warrants can be
expected to exercise  such options and  warrants at a time when the Company,  in
all likelihood, would be able to obtain additional capital by offering shares of
its Common Stock on terms more  favorable to the Company than those  provided by
the exercise of such options or warrants. Moreover, most of the shares which may
be acquired pursuant to such exercises or conversions are subject to "demand" or
"piggy-back"  "registration  rights" and thus may be sold in a manner  which may
have a depressive effect on the market price of the Company's Common Stock.

NASDAQ LISTING

         The Company's  Common Stock currently trades on the OTC Bulletin Board.
The Bulletin  Board  provides a very illiquid  trading  market for the Company's
Common  Stock.  The  Company's  Common  Stock  currently  does not  qualify  for
inclusion and is not quoted on the National  Association of Securities  Dealers'
Automated  Quotation System  ("NASDAQ").  The Company's Common Stock can qualify
for  inclusion  on NASDAQ only if the Company  meets the entry  criteria,  which
require that the Company has total assets of at least  $4,000,000,  at least 300
holders of its Common Stock, at least  1,000,000  publicly held shares of Common
Stock having a market value of at least  $5,000,000,  three market  makers and a
minimum bid price of its Common Stock of $4.00 per share.

         There  can be no  assurance  that the  Company  will  meet the  listing
criteria as of the date hereof or  thereafter or that the Common Stock will ever
be quoted on NASDAQ. The failure to qualify the Company's Common Stock on NASDAQ
will  adversely  affect the liquidity  and market price of the Company's  Common
Stock.

LACK OF DIVIDENDS

         The Company has never paid any  dividends  on its Common Stock and does
not anticipate that it will pay dividends in the foreseeable  future.  Moreover,
at  June  30,  1998,  the  Company  currently  owed  approximately   $78,300  in
cumulative, unpaid dividends in arrears on its Outstanding Preferred Stock.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

         Certain  statements and information  contained in this Report under the
headings "Business," "Special  Considerations," and "Management's Discussion and
Analysis of Financial Conditions and Results of Operations,"

                                       11
<PAGE>
concerning future,  proposed, and anticipated activities of the Company, certain
trends  with  respect  to the  Company's  revenue,  operating  results,  capital
resources  and  liquidity  or with  respect to the  markets in which the Company
competes or the promotional  marketing industry in general, and other statements
contained in this Report  regarding  matters that are not  historical  facts are
forward-looking  statements,  as such term is  defined  in the  Securities  Act.
Forward-looking   statements,   by  their  very   nature,   include   risks  and
uncertainties,  many of which are beyond  the  Company's  control.  Accordingly,
actual  results may  differ,  perhaps  materially,  from those  expressed  in or
implied by such  forward-looking  statements.  Factors  that could cause  actual
results to differ materially  include those discussed  elsewhere under this Item
1, "Business - Special Considerations."

SELECTED CONSOLIDATED FINANCIAL DATA

         Set forth below is selected  financial  data derived from the Company's
Consolidated  Financial  statements,  some of  which  appear  elsewhere  in this
Report. This data should be read in conjunction with the Consolidated  Financial
statements, included elsewhere in this Report.
<TABLE>
<CAPTION>
                             Year Ended      Year Ended       Year Ended      Year Ended      Year Ended
                            June 30, 1998   June 30, 1997   June 30, 1996   June 30, 1995   June 30, 1994
                            -------------   -------------   -------------   -------------   -------------
<S>                          <C>            <C>              <C>             <C>             <C>         
Operation revenue             $609,392         $551,517       $1,083,897        $134,028         $ -0-
Net Loss                     ($421,659)     ($2,162,134)     ($2,035,647)    ($1,192,332)    ($1,069,642)
Net Loss per share of
common stock                     ($.14)          ($1.11)         ($2.98)          ($1.81)         ($1.68)
Balance Sheet Data:
Working Capital (deficit)    ($235,920)       ($107,952)          $9,528       ($138,013)       ($85,149)
Total Assets                  $920,841         $529,520       $1,408,919        $451,237        $449,725
Total Liabilities             $713,539         $613,947         $673,058      $2,502,230      $1,464,861
Stockholders' equity
(deficiency)                  $207,302         ($84,427)        $735,861     ($2,050,993)    ($1,015.136)
</TABLE>

ITEM 2. DESCRIPTION OF PROPERTY.

         The Company leases  approximately  3,100 square feet of office space at
2301 W. Dunlap Avenue,  Suite 207 in Phoenix,  Arizona.  This location serves as
the Company's  principal  executive offices and the Company's current design and
production  facilities.  The lease covering this property terminates on December
31, 2000. The lease provides for escalating monthly rental payments ranging from
approximately  $44,950  annually  during  the first  year of the  lease  term to
approximately  $48,000  annually in the third year of the lease term.  The lease
also requires the Company to pay all taxes and insurance.

ITEM 3. LEGAL PROCEEDINGS.

         On March 12,  1997,  Douglas  J.  Wright  filed a lawsuit in the United
States District Court,  Eastern District of  Pennsylvania,  against the Company.
Mr. Wright is a former  officer and employee of the Company.  In the  complaint,
Mr.  Wright  alleges  that he was damaged by the  Company's  refusal to register
warrants to purchase  stock in the Company.  Mr. Wright  alleges  damages in the
amount of $1,549,375,  representing  the alleged  difference  between the market
price of the Company's  stock and Mr. Wright's costs of exercising the warrants.
Mr.  Wright   alternatively  seeks  an  injunction  against  the  Company  "from
withdrawing or completing its registration statement without including the stock
of the  plaintiff."  The Company  moved to dismiss the  compliant  for  improper
venue,  or in the  alternative,  to transfer to United  States  District  Court,
District of Arizona. The court granted the Company's motion to transfer. On July
17, 1997 the Company filed its answer,  affirmative  defenses and  counterclaim.
Mr.  Wright did not answer the  counterclaim  in a timely  fashion and the court
entered a default  judgement against Mr. Wright on the counterclaim on September
9, 1997.  The Company is seeking  summary  judgement  against Mr. Wright on this
claim.

     In July 1996,  the Company filed a complaint in the United States  District
Court  for  the  Eastern  District  of  Pennsylvania  (No.  96-CV-5259)  against
Dimensional Graphic Sales, Inc. ("DGS"). In the complaint the Company

                                       12
<PAGE>
alleges that it delivered an order to DGS and properly  invoiced DGS pursuant to
a sales and  marketing  agreement.  DGS  attempted to pay the invoice in full by
tendering  a check for an amount  less than the full  amount of the  invoice and
placing a  restrictive  endorsement  on the check which  purported to constitute
payment  in full  for the  invoice.  The  Company  crossed  out the  restrictive
endorsement and attempted to deposit the check only to  subsequently  learn that
DGS had stopped  payment on the check.  In its  complaint the Company is seeking
$213,522 the full amount of the invoice  together with  interest  costs and such
other  relief as the  court  deems  just and  proper.  DGS filed a  counterclaim
against the Company for an unspecified amount in excess of $100,000.  The matter
has  moved  to  a  deferred  status  while  the  parties  engage  in  settlement
negotiation.

         The  Company  does not believe  that either of these legal  proceedings
will have a material  adverse  effect on the  Company's  financial  condition or
operating results.

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

         No matters  were  submitted  to a vote of security  holders  during the
fourth fiscal quarter of 1997.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED 
        STOCKHOLDER MATTERS.

         The  Company's  Common Stock has been quoted on the OTC Bulletin  Board
(the "Bulletin  Board") under the symbol "DVUI" since January 12, 1998. Prior to
January 12, 1998, the Company's Common Stock traded under the symbol "DVGL." The
following  table  sets  forth  the  quarterly  high  and low bid  prices  of the
Company's  Common Stock for the periods  indicated,  after adjusting such prices
for the  Company's  1-for-25  reverse  Common  Stock split  which was  effective
January 15, 1998. Bid quotations represent interdealer prices without adjustment
for retail markup, markdown and/or commissions and may not necessarily represent
actual transactions.
                                                      HIGH               LOW
                                                      ----               ---
FISCAL 1997
     First Quarter.........................              8             2 3/4
     Second Quarter........................          6 7/8             2 5/8
     Third Quarter.........................          4 3/4             1 3/8
     Fourth Quarter........................              4             1 1/8

FISCAL 1998
     First Quarter.........................          2 1/2             1 1/8
     Second Quarter........................          2 1/2               1/2
     Third Quarter.........................          2 1/4               1/2
     Fourth Quarter........................          1 5/8               3/4

FISCAL 1999
     First Quarter.........................          1 3/8               3/8

HOLDERS

         As of September 30, 1998, the number of stockholders of record was 443,
not  including  beneficial  owners whose  shares are held by banks,  brokers and
other  nominees.   The  Company  estimates  that  it  has  approximately   3,000
stockholders in total.

DIVIDENDS

         The  company has paid no  dividends  since its  inception  and does not
anticipate or contemplate paying cash dividends in the foreseeable future.

         Pursuant to the terms of the Company's  Series A Convertible  Preferred
Stock,  a 5% annual  dividend  is due and  owing.  Pursuant  to the terms of the
Company's Series B Convertible Preferred stock, an 8% annual dividend is due and

                                       13
<PAGE>
owing.  As of June 30, 1998, the Company has not declared  dividends on Series A
or B preferred  stock. The unpaid  cumulative  dividends  totaled  approximately
$78,300. See Note 9 of Notes to Consolidated Financial Statements.

                                       14
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS.

FISCAL YEARS 1996 AND 1997

LIQUIDITY AND CAPITAL RESOURCES

         As of June 30, 1997,  the Company had a working  capital  deficiency of
$107,952  compared  with a working  capital of $9,528 as of June 30,  1996.  The
decrease  in  working  capital  was a  result  of  the  Company  not  generating
sufficient  revenues  from  operations  or  securing  funds from  other  sources
sufficient to cover its cost  structure.  During the period ended June 30, 1997,
the Company raised a total of $944,000 through the sale of its equity securities
and debt in various private  placements and offshore  transactions,  and through
the exercise of warrants.

         As of June 30, 1997, the Company's  financial  position was precarious.
The Company needed funding in order to maintain current operations.  The Company
funded its operations by selling its securities in private placements,  offshore
transactions,  short-term  borrowing and sale of its products.  The Company also
had certain employees and consultants defer a portion of their compensation.

         The Company's  independent  auditors  report  contained an  explanatory
paragraph regarding the ability of the Company to continue as a going concern.

RESULTS OF OPERATIONS

         The net loss for the fiscal  year ended  June 30,  1997 was  $2,162,134
compared with a net loss of $2,035,647  for the fiscal year ended June 30, 1996.
The  increase in the loss was caused  primarily by the write down of goodwill of
$619,172.  The write down was  associated  with the sale of the  Company's  real
estate  data  delivery  system  product  line and the  Company  redirecting  its
marketing efforts to its print products. The Company continued during the period
to  decrease  expenses  by  reducing  consulting  fees,  professional  fees  and
salaries.  For the fiscal year ended June 30,  1997,  administrative  costs were
approximately   $850,000  of  which   salaries  were   approximately   $244,000.
Engineering  and  Development  costs  were  approximately   $397,400,  of  which
approximately  $197,500 was salaries.  Marketing  costs for the fiscal year were
$328,792 of which approximately $187,000 was salaries. Legal and accounting fees
for the fiscal year totaled approximately $110,500.

         Revenues for the fiscal year ended June 30, 1997 were $551,517 compared
to revenues of $1,083,897 for the fiscal year ended June 30, 1996. Approximately
$98,800 of total revenues for the fiscal year ended June 30, 1997 was from print
products.  The balance of the  revenues was  substantially  all derived from the
real estate  multiple  listing data  delivery  system,  which system was sold in
October  1997.  The decrease in revenues was the result of the Company not being
able to sell its DV3D(R) print  products and not being able to increase sales of
its data delivery system products.  In November 1996,  management  determined to
convert  the  imaging  compositing  process  used in its print  products  from a
photographic  base to a computer  software  base.  This process was not complete
until March 1997. During the period of the conversion there were no new sales of
print products

FISCAL YEARS 1997 AND 1998

LIQUIDITY AND CAPITAL RESOURCES

         As of June 30, 1998,  the Company had a working  capital  deficiency of
$235,920  compared with a working capital  deficiency of $107,952 as of June 30,
1997. The decrease in working capital was a result of the Company not generating
sufficient  revenues  from  operations  or  securing  funds from  other  sources
sufficient to cover its cost  structure.  During the period ended June 30, 1998,
the Company raised a total of $802,000  before  offering costs of  approximately
$203,000  through the sale of its equity  securities and debt in various private
placements and offshore transactions, and through the exercise of warrants.

         As of  June  30,  1998,  the  Company's  financial  position  is  still
precarious.  The Company needs funding in order to maintain current  operations.
The Company is  continuing to fund its  operations by selling its  securities in
private  placements,  through  short-term  borrowing,  and  from the sale of its
products.

                                       15
<PAGE>
         On October 14, 1997, the Company  entered into a letter  agreement with
Capital West Investment Group, Inc.  ("CWIG").  In fiscal 1998 CWIG raised funds
amounting to $647,000 in proceeds  before paying  expenses and  commissions.  In
exchange  for CWIG's  agreement  to raise  funds for the  Company,  the Board of
Directors  recommended to the  stockholders a 25 to 1 reverse stock split on all
outstanding classes of stock which was approved on January 15, 1998.

         The Company's  independent  auditors  report  contained an  explanatory
paragraph regarding the ability of the Company to continue as a going concern.

RESULTS OF OPERATIONS

         The net loss for the  fiscal  year ended June 30,  1998,  was  $421,659
compared with a net loss of $2,162,134  for the fiscal year ended June 30, 1997.
The reduction of the net loss is the result of the gain recognized from the sale
of the  product  line  of  $410,000,  the  elimination  of the  amortization  of
goodwill,  the  forgiveness  of  accrued  compensation,  and  the  reduction  in
operating  expenses  of  approximately   $700,000  which  consisted  largely  of
compensation, consulting fees, travel, and stock related costs.

         Revenue for the fiscal year ended June 30, 1998, was $609,392  compared
to revenue of $551,517  for the fiscal year ended June 30,  1997.  Approximately
$323,000  of total  revenues  for the fiscal  year ended June 30,  1998 was from
print  products.  Although  operating  revenues  for  fiscal  year 1998 are only
slightly  higher than fiscal 1997, the product mix is  significantly  different.
Prior to the sale of the real estate  product  line the majority of the revenues
was generated by InfoPak. Beginning in January 1998, the majority of the revenue
was generated through the sale of the Company's print products.

         In September  1997, the Company sold its real estate  multiple  listing
data delivery  system.  The purchase  price was $410,000 plus the  assumption of
$59,427 in contingent liabilities.  The purchase price did not include a $40,000
payment which was applied to outstanding accounts  receivable.  The $410,000 was
payable  ratably over a thirty-six  month  period at ten percent  interest.  The
terms were  subsequently  changed  to  forty-eight  months at eleven  percent In
connection with the sale the Company agreed to provide consulting services for a
period of one  hundred  and  twenty  days at no cost and  thereafter  at certain
prescribed rates.

         In December 1997 the Company sold all of its photographic equipment and
supplies for $10,000  resulting in a loss of $5,799.  Currently  all DV3D(R) and
Animotion(TM)  print  products are processed on high-end  Intel-based  graphical
work stations to improve the quality, time to market, and repeatability of these
images.

EVENTS SUBSEQUENT TO JUNE 30, 1998

         In July through September 1998, the Company raised $475,000 through the
issuance of its Series A 12% Convertible Secured Debentures.  The debentures are
convertible   into  Common   Stock  at  the  rate  of  $1.00  per  share.   Each
Debentureholder  also was issued a warrant to purchase one share of Common Stock
at $0.50 per share for each dollar of Debenture acquired.

ITEM 7. FINANCIAL STATEMENTS.

         The consolidated  financial statements required to be filed pursuant to
this Item 7 begin on page F-1 of this report.

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
        AND FINANCIAL DISCLOSURE.

         Not applicable.

                                       16
<PAGE>
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 as follows:

              NAME          AGE                     POSITION
              ----          ---                     --------
       John D. McPhilimy    55     Director, Chairman of the Board of Directors
                                   and Chief Executive Officer

       Roy D. Pringle       30     Vice President and Chief Financial Officer

       Bruce D. Sandig      39     Director and Senior Vice President
                                   Engineering

       Ronnie M. Matlock    48     Vice President Customer Service

       George S. Smith      64     Director

       Raymond A. Quadt     82     Director

       Lawrence G. Olson    62     Director

       Susan A. Gunther     48     Director
--------------------

         Mr. John  McPhilimy was appointed as a Director,  President,  and Chief
Executive  Officer of the  Company in November  1997.  In January  1998,  he was
appointed  Chairman of the Board.  From January 1995 until  November  1997,  Mr.
McPhilimy served as President of Selah Information Systems, Inc., Mesa, Arizona,
a company involved in information systems. From March 1992 to December 1995, Mr.
McPhilimy  served as President of Travel Teller,  Inc. Mr. McPhilimy has over 30
years of executive and marketing  experience in high-technology  industries such
as aerospace, air transportation, and electronic telecommunication networks with
Bell Helicopter  Textron,  Aerospatiale,  Executive Jet Aviation,  Travel Teller
Inc., Marketing Works, and Selah Information Systems.  Over the last 15 years he
has been responsible for implementing marketing strategies of NetJets and Travel
Teller, which created the new industries of "nationwide  fractional ownership of
business jets" and "electronic ticket delivery networks," respectively.

         Mr. Roy D. Pringle was  appointed as Vice  President,  Chief  Financial
Officer,  and Chief  Information  Officer of the Company in November  1997,  and
provides overall integrated enterprise-wide financial management systems for the
Company.  Mr.  Pringle has worked for InfoPak,  Inc. for more than the past five
years. Mr. Pringle holds a master's degree from the American  Graduate School of
International Management. Prior to joining InfoPak, he was President and founder
of a small software company, Signature Software.

         Mr.  Bruce D.  Sandig was  appointed  as a Director  of the  Company in
January  1998 and as  Senior-Vice  President of Creative  Design and  Production
Engineering of the Company in November 1997 and provides overall development and
integration of the DV3D(R) and Animotion(TM)  Multi-Dimensional  Images systems.
Mr.  Sandig was a co-founder  of InfoPak in 1992.  Mr.  Sandig has over 15 years
experience  in  electro-mechanical  and  software  engineering/design  with such
companies as Universal Propulsion Company,  Kroy, Inc., Dial Manufacturing,  and
Softie,  Inc.,  where he also created  several  proprietary  software  games for
Nintendo.

         Ms. Ronnie M. Matlock was appointed Vice President of Customer  Service
and Operations in November 1997,  and provides the overall  integrated  customer
support  and  production  deliveries  for its  MARKETINGLENSES  product  line of
DV3D(R)  and  Animotion(TM)  images.  Ms.  Matlock  served as  customer  service
director for the Company since 1993. She has over 20 years of customer solutions
experience   with  such   companies  as  Osage   Communications,   Arizona  Auto
Accessories, and Arrowhead Medical.

                                       17
<PAGE>
         Mr. George S. Smith has served as a Director of the Company since April
1992 and as Chairman of the Board from April 1992 until January 1998. From April
1992 until  September  1995 and from June 1996 until  November  1997,  Mr. Smith
served as the Chief Executive Officer of the Company. From 1988 to 1990 he was a
senior Vice President at Shearson Lehman Brothers.  From 1980 to 1988, Mr. Smith
was a Senior  Vice-President  at Drexel Burnham Lambert.  Mr. Smith is an honors
graduate  in  economics  with  a  minor  in  engineering  from  San  Jose  State
University.

         Mr. Lawrence  G. Olson has served as a Director  of the  Company  since
October  1997.  For more than the past five years,  Mr.  Olson has served as the
President and Chief Executive Officer of Olson Precast Inc.

         Ms.  Susan A. Gunther  has served as a Director  of the  Company  since
January 1998. Since January 1998 she has served as Managing Principal Consultant
for Oracle,  Inc. She served as Director of Business  Processing from March 1995
to December 1997 for AmKor Electronics.

         Mr.  Raymond  A. Quadt has served as a  Director of the  Company  since
January  1998.  Mr. Quadt was one of the founders of Republic  National  Bank of
Phoenix, where he served as a Director from January 1983 to January 1998.

         On January 12, 1998, three prior Directors, Robert L. Morris, Steven L.
Flint, and Hans Kaemmlein,  resigned as Directors of the Company and on February
9, 1998,  Mr. Sean Lee resigned as a Director of the  Company.  The Board filled
the vacancies  created by their  resignations  by  appointing  Susan A. Gunther,
Raymond L. Quadt, and Bruce D. Sandig as Directors effective January 16, 1998.

         There currently are no Committees on the Board of Directors.

         Directors serve until the next annual meeting or until their successors
are  qualified  and elected.  Officers  serve at the  discretion of the Board of
Directors.

         The Certificate of Incorporation and Bylaws of the Company provide that
the Company will indemnify and advance expenses, to the fullest extent permitted
by  the  Delaware  General  Corporation  Law,  to  each  person  who is or was a
director,  officer  or agent of the  Company,  or who serves or served any other
enterprise or organization at the request of the Company (an "Indemnitee").

         Under  Delaware  law, to the extent that an Indemnitee is successful on
the merits of a suit or proceeding  brought  against him or her by reason of the
fact that he or she was a director,  officer or agent of the Company,  or serves
or served any other  enterprise or  organization  at the request of the Company,
the Company will  indemnify him or her against  expenses  (including  attorneys'
fees) actually and reasonably incurred in connection with such action.

         If  unsuccessful  in defense of a third-party  civil suit or a criminal
suit,  or if such a suit is settled,  an  Indemnitee  may be  indemnified  under
Delaware law against both (i)  expenses,  including  attorneys'  fees,  and (ii)
judgments, fines and amounts paid in settlement if he or she acted in good faith
and in a manner he or she  reasonably  believed to be in, or not opposed to, the
best interests of the Company,  and, with respect to any criminal action, had no
reasonable cause to believe his other conduct was unlawful.

         If  unsuccessful in defense of a suit brought by or in the right of the
Company,  where the suit is settled,  an  Indemnitee  may be  indemnified  under
Delaware law only against  expenses  (including  attorneys'  fees)  actually and
reasonably  incurred in the defense or settlement of the suit if he or she acted
in good  faith and in a manner he or she  reasonably  believed  to be in, or not
opposed to, the best  interests of the Company  except that if the Indemnitee is
adjudged to be liable for negligence or misconduct in the  performance of his or
her duty to the Company, he or she cannot be made whole even for expenses unless
a  court  determines  that  he or  she  is  fully  and  reasonably  entitled  to
indemnification for such expenses.

         Also under Delaware law, expenses incurred by an officer or director in
defending  a civil or criminal  action,  suit or  proceeding  may be paid by the
Company in advance of the final  disposition  of the suit,  action or proceeding
upon  receipt of an  undertaking  by or on behalf of the  officer or director to
repay such amount if it is ultimately  determined that he or she is not entitled
to be indemnified by the Company. The Company may also advance expenses incurred
by other employees and agents of the Company upon such terms and conditions,  if
any, that the Board of Directors of the Company deems appropriate.

                                       18
<PAGE>
         Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors,  officers or persons  controlling the
Company pursuant to the foregoing  provisions,  in the opinion of the Securities
and  Exchange  Commission,  such  indemnification  is against  public  policy as
expressed in the Securities Act of 1933 and is therefore unenforceable.

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

         Section  16(a) of the  Securities  Exchange  Act of 1934,  as  amended,
requires  directors and certain officers of the Company,  as well as persons who
own more  than 10% of a  registered  class of the  Company's  equity  securities
("Reporting  Persons") to file reports of ownership  and changes in ownership of
Forms  3, 4 and 5 with the  Securities  and  Exchange  Commission.  The  Company
believes  that all  Reporting  Persons have  complied on a timely basis with all
filing requirements applicable to them.

ITEM 10. EXECUTIVE COMPENSATION.

SUMMARY COMPENSATION TABLE

         The following table sets forth the total compensation earned by or paid
to the Company's Chief Executive  Officer and its former Chief Executive Officer
for the fiscal year ended June 30, 1998.  No officer of the Company  earned more
than $100,000 in the fiscal year ended June 30, 1998.
<TABLE>
<CAPTION>
                                                                               LONG TERM COMPENSATION
                                  ANNUAL COMPENSATION                      Awards                 Payouts
                                                                   Restricted     Securities
                                                  Other Annual       Stock        Underlying        LTIP     All Other
                            Salary      Bonus     Compensation       Awards      Options/SARs     Payouts     Compens
                    Year      ($)        ($)           ($)            ($)             (#)           ($)      ation ($)
                            ------      -----     ------------       ------      ------------     -------     -------
<S>                 <C>     <C>          <C>           <C>             <C>            <C>            <C>        <C>
John D. McPhilimy   1998    $54,750      $0            $0              $0             --             $0         $0
CEO
George S. Smith     1998   $37,5001.     $0            $0              $0             --             $0         $0
CEO
</TABLE>
1.       Excludes approximately $5,000 of travel and living expenses and $10,000
         of consulting fees which were paid during the year.

                   OPTIONS/SAR GRANTS IN THE FISCAL YEAR 1998
                                INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
                            Number of     % of Total
                            Securities   Options/SARs
                            Underlying    Granted to
                           Option/SARs   Employees in   Exercise or Base     Expiration
       Name         Year   Granted (#)   Fiscal Year     Price ($/Share)        Date
       ----         ----   -----------   -----------     ---------------        ----
<S>                 <C>      <C>             <C>              <C>          <C>
John D. McPhilimy   1998     312,143         41%              $0.93        Jan. 15, 2003
CEO
George S. Smith     1998        0             0%               $0                --
CEO
</TABLE>
                                       19
<PAGE>
       AGGREGATED OPTIONS/SAR EXERCISES IN THE FISCAL YEAR 1998 AND FY-END
                                OPTION/SAR VALUES

                                          Number of Securities
                        Shares            Underlying Exercised       Value of
                       Acquired           Options/ SARs at FY-   Unexercised In-
                          on                    End (#)             the-Money
                       Exercise   Value       Exercisable/         Options/SARs
      Name        Year   (#)    Realized     Unexercisable        at FY-End ($)
      ----        ----   ---    --------     -------------        -------------
John D. McPhilimy 1998    --        0       312,143 (E)/0(U)            $0
CEO
George S. Smith   1998    --        0       102,679 (E)/0(U)            $0
CEO

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The following table sets forth certain information regarding the shares
of the Company's outstanding Common Stock beneficially owned as of September 30,
1998 by (i) each of the Company's  directors and  executive  officers,  (ii) all
directors and executive  officers as a group, and (iii) each other person who is
known by the Company to own  beneficially  more than 5% of the Company's  Common
Stock.

  Name and Address                        Amount and Nature of      Percent
of Beneficial Owners(1)                  Beneficial Ownership(2)  Ownership(2)
-----------------------                  -----------------------  ------------
George S. Smith (3)                               257,821              6.94
3688 N. Littlerock Drive
Provo, UT 84604

John D. McPhilimy (4)                             156,072              4.14
1340 W. Elgin Street
Chandler, AZ 85224

Bruce D. Sandig (5)                               157,641              4.22
13247 N. 3rd Place
Phoenix, AZ 85022

Roy D. Pringle (6)                                120,726              3.24
7186 W. Topeka Drive
Glendale, AZ 85308

Ronnie M. Matlock (7)                             126,160              3.39
19960 N. Denaro Drive
Glendale, AZ 85308

Susan A. Gunther (8)                               20,536              0.57
26210 S. Lime Drive
Queen Creek, AZ 85242

Lawrence G. Olson (9)                              20,536              0.57
214 W. Vista Avenue
Phoenix, AZ 85021

Raymond A. Quadt (10)                              20,536              0.57
6454 S. Willow Drive
Tempe, AZ 85283

All executive officers and directors 
 as a group (8 persons) (11)                      880,027             20.55

(1)      Each  person  named in the table has sole voting and  investment  power
         with  respect to all  Common  Stock  beneficially  owned by him or her,
         subject to  applicable  community  property  law,  except as  otherwise
         indicated.  Except as otherwise indicated,  each of such persons may be
         reached  through  the  Company  at 2301 W.  Dunlap  Avenue,  Suite 207,
         Phoenix, Arizona 85021.
                                       20
<PAGE>
(2)      The percentages shown are calculated based upon the 3,612,226 shares of
         Common Stock  outstanding on June 30, 1998. The numbers and percentages
         shown include the shares of Common Stock  actually owned as of June 30,
         1998 and the shares of Common Stock that the identified person or group
         had the right to acquire  within 60 days of such date.  In  calculating
         the  percentage  of  ownership,  all  shares of Common  Stock  that the
         identified  person or group had the right to acquire  within 60 days of
         June 30,  1998  upon the  exercise  of  options  and  warrants,  or the
         conversion of Preferred  Stock,  are deemed to be  outstanding  for the
         purpose of computing the percentage of the shares of Common Stock owned
         by such person or group,  but are not deemed to be outstanding  for the
         purpose of computing the percentage of the shares of Common Stock owned
         by any other person.

(3)      Mr.  Smith   owns 154,924  shares of the Company's  Common Stock.  Also
         included in the amount are options to  purchase  102,679  shares of the
         Company's  Common  Stock,  and  544  shares  of  Series  C  Convertible
         Preferred  Stock,  convertible  into 218 shares of the Company's Common
         Stock.

(4)      Mr.  McPhilimy has options to purchase  312,143 shares of the Company's
         Common Stock, of which 156,072 currently are exercisable.

(5)      Mr.  Sandig owns 30,962  shares of the  Company's  Common  Stock.  Also
         included in the amount are common stock  purchase  warrants and options
         to purchase  229,357  shares of the Company's  Common  Stock,  of which
         126,679 currently are exercisable.

(6)      Mr.  Pringle  owns 6,047 shares of the  Company's  Common  Stock.  Also
         included in the amount are common stock  purchase  warrants and options
         to purchase 114,679 shares of the Company's Common Stock.

(7)      Ms.  Matlock owns 17,481  shares of the Company's  Common  Stock.  Also
         included in the amount are common stock  purchase  warrants and options
         to purchase 108,679 shares of the Company's Common Stock.

(8)      Ms.  Gunther  has options to purchase  20,536  shares of the  Company's
         Common Stock.

(9)      Mr. Olson has options to purchase 20,536 shares of the Company's Common
         Stock.

(10)     Mr. Quadt has options to purchase 20,536 shares of the Company's Common
         Stock.

(11)     Includes  common stock  purchase  warrants to purchase in the aggregate
         929,145  shares  of  the  Company's  Common  Stock,  of  which  670,395
         currently are  exercisable,  and 544 shares of the  Company's  Series C
         Convertible  Preferred Stock which would be convertible into 218 shares
         of the Company's Common Stock.

STOCK OPTION PLAN

         The  Company  has adopted a stock  option  plan (the  "Plan")  covering
1,500,000 shares of the Company's post-split Common Stock (increased from 20,000
post-split  by the Board of  Directors  on January 13,  1998),  $.001 par value,
pursuant to which  officers,  directors,  key employees and  consultants  of the
Company are eligible to receive incentive as well as non-qualified stock options
and Stock Appreciation  Rights ("SAR'S").  The Plan, which has been extended for
10 years by the Board of Directors on January 13,  1998,  and expires  September
2008, is administered by the Board of Directors. Incentive stock options granted
under the Plan are  exercisable  for a period of up to 10 years from the date of
grant and at an exercise  price which is not less than the fair market  value of
the Common Stock on the date of the grant,  except that the term of an incentive
stock option granted under the Plan to a stockholder owning more than 10% of the
outstanding  Common Stock may not exceed five years and the exercise price of an
incentive  stock option granted to such a stockholder  may not be less than 110%
of the  fair  market  value  of the  Common  Stock  on the  date  of the  grant.
Non-qualified  stock options may be granted on terms  determined by the Board of
Directors. SAR's which give the holder the privilege of surrendering such rights
for the appreciation in the Company's Common Stock between the time of grant and
the surrender, may be granted on any terms determined by the Board of Directors.
No SAR's have been granted.

         As of September 30, 1998, 1,099,109 options have been granted under the
plan, at a weighted average exercise price of $0.93 per share.

                                       21
<PAGE>
1996 EQUITY INCENTIVE PLAN

         The Company,  in June 1996. adopted the 1996 Equity Incentive Plan (the
"1996 Plan") covering  400,000 shares of the Company's  Common Stock pursuant to
which employees, consultants and other persons or entities who are in a position
to make a significant contribution to the success of the Company are eligible to
receive  awards  in the  form  of  incentive  or  non-incentive  options,  stock
appreciation  rights,  restricted  stock or deferred  stock.  The 1996 Plan will
terminate  ten (10) years after June 12, 1996,  the  effective  date of the 1996
Plan.  The  1996  Plan  is  administered  by  the  Board  of  Directors.  In its
discretion,  the Board of  Directors  may  elect to  administer  the 1996  Plan.
Restricted  stock  entitles the  recipients  to receive  shares of the Company's
Common Stock  subject to such  restriction  and  condition  as the  Compensation
Committee  may  determine  for  no  consideration  or  such   considerations  as
determined by the Compensation Committee. Deferred stock entitles the recipients
to receive shares of the Company's Common Stock in the future.

         As of September 30, 1998,  121,572 shares have been issued  pursuant to
this plan.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         John D.  McPhilimy has an employment  agreement  with the Company.  The
term of the agreement is three years ending  November 1, 2000.  Mr.  McPhilimy's
base  compensation  is $90,000 per year. The agreement  renews by mutual written
consent on the thirtieth month of its term for a two year period without further
action by either party by either the Company or Mr. McPhilimy. The agreement may
be terminated by the Company for cause.

         Roy D. Pringle has an employment  agreement with the Company.  The term
of the  agreement is three years ending in November  2000.  Mr.  Pringle's  base
compensation is $60,000 per year.

         Bruce D. Sandig has an employment  agreement with the Company. The term
of the  agreement  is three years ending in November  2000.  Mr.  Sandig's  base
compensation is $65,000 per year.

         Ms. Ronnie M. Matlock has an employment agreement with the Company. The
term of the agreement is three years ending in November 2000. Ms. Matlock's base
compensation is $60,000 per year.

         Mr. George S. Smith has a consulting  agreement  with the Company.  The
agreement  terminates in December 1998.  Mr. Smith receives  $2,000 per month as
compensation for his efforts on behalf of the company. Additionally, the Company
is obligated to pay Mr. Smith's monthly medical insurance costs through June 30,
1999.

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

A.   The following documents are filed as part of this report:

         1.       The  consolidated  financial  statements filed as part of this
                  report  are  listed  under the  caption  "Index  to  Financial
                  Statements and Schedules", appearing elsewhere in this report.

         2.       The consolidated  financial schedules of the Company are filed
                  as part of this report:

                  SCHEDULE IV - Property and Equipment

                  SCHEDULE V -  Accumulated  Depreciation  and  Amortization  of
                  Property and Equipment

         3.       The following Exhibits are filed herein:

                                       22
<PAGE>
Exhibit
Number            Description
-------           -----------
3.1               Certificate of Incorporation

3.2(a)            By-Laws

4.1(b)            Form of  Certificate  of  Designation  - Series A  Convertible
                  Preferred Stock

4.2(b)            Form of  Certificate  of  Designation  - Series B  Convertible
                  Preferred Stock

4.3(c)            Form of  Certificate  of  Designation  - Series P  Convertible
                  Preferred Stock

4.4(d)            Form of  Certificate  of  Designation  - Series S  Convertible
                  Preferred Stock

4.5(d)            Form of  Certificate  of  Designation  - Series C  Convertible
                  Preferred Stock

4.6(a)            Warrant Agreement (including form of warrant)

4.7               Form of warrant

4.8               Form of warrant

4.9               Form of warrant

10.1(b)           Stock Option Plan

10.2(d)           1996 Equity Incentive Plan

10.3(e)           Agreement  dated  September  25, 1997 by and between  InfoPak,
                  Inc. and DataNet Enterprises, LLC and David and Staci Noles

21.0              Subsidiaries of the registrant

27.0              Financial Data Schedule

99.1              Form of Debenture

99.2              Security Agreement

B.   No  reports on Form 8-K were  filed  during the last  quarter of the period
covered by this Report.

----------
(a)               Incorporated by reference from the  registrant's  registration
                  statement on Form S-1 (No. 33-24554)

(b)               Incorporated by reference from the registrant's  Annual Report
                  on Form 10-KSB for the fiscal years ended June 30, 1992, 1993,
                  1994 and 1995

(c)               Incorporated by reference from the registrant's Current Report
                  on Form 8-K dated September 27, 1995.

(d)               Incorporated  by  reference from the registrant's registration
                  statement on Form S-8 (No. 333-06679).

(e)               Incorporated by reference from the registrant's current report
                  on Form 8-K dated October 21, 1997.

                                       23
<PAGE>
                                   SIGNATURES

         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
registrant  caused  this  report to be signed on its behalf by the  undersigned,
duly authorized.

                                           DIMENSIONAL VISIONS INCORPORATED

DATED: October 9, 1998                     By: /s/ John D. McPhilimy
                                               ---------------------
                                               John D. McPhilimy, Chairman and
                                               Chief Executive Officer

         In accordance with Section 13 or 15(d) of the Exchange Act, this report
has been signed by the following  persons on behalf of the registrant and in the
capacities and on the dates indicated.

     Signature                      Title                       Date
     ---------                      -----                       ----
                          
/s/ John D. McPhilimy      Chairman, Chief Executive      October 9, 1998
---------------------      Officer
John D. McPhilimy          
                          
/s/ Bruce D. Sandig        Vice President, Director       October 9, 1998
---------------------     
Bruce D. Sandig           
                          
/s/ George S. Smith        Director                       October 9, 1998
---------------------     
George S. Smith           
                          
/s/ Raymond A. Quadt       Director                       October 9, 1998
---------------------     
Raymond A. Quadt          
                          
/s/ Lawrence G. Olson      Director                       October 9, 1998
---------------------     
Lawrence G. Olson         
                          
/s/ Susan A. Gunther       Director                       October 9, 1998
---------------------     
Susan A. Gunther        

                                       24
<PAGE>








                        DIMENSIONAL VISIONS INCORPORATED
                                AND SUBSIDIARIES

                                FINANCIAL REPORT

                       YEARS ENDED JUNE 30, 1998 AND 1997


<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES

                       YEARS ENDED JUNE 30, 1998 AND 1997





            Index to Consolidated Financial Statements and Schedules
            --------------------------------------------------------


                                                                      Page
                                                                      ----

Independent Auditors' Report                                           F-2

Consolidated Financial Statements

         Balance Sheet                                                 F-4

         Statements of Operations                                      F-5

         Statements of Stockholders' Equity (Deficiency)               F-6

         Statements of Cash Flows                                     F-11

         Notes to Consolidated Financial Statements                   F-15

Schedules

         Independent Auditors' Report                                 F-36

         Schedule IV - Property and Equipment                         F-37

         Schedule V - Accumulated Depreciation and
           Amortization of Property and Equipment                     F-38

                                      F-1
<PAGE>
                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

To the Board of Directors and Stockholders
Dimensional Visions Incorporated and Subsidiaries
Phoenix, Arizona

We have  audited the  accompanying  consolidated  balance  sheet of  Dimensional
Visions  Incorporated and Subsidiaries  (the "Company") as of June 30, 1998, and
the  related  consolidated   statements  of  operations,   stockholders'  equity
(deficiency),  and cash flows for each of the two years in the period ended June
30, 1998.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our opinion,  such consolidated  financial  statements present fairly, in all
material respects,  the financial position of Dimensional  Visions  Incorporated
and  Subsidiaries  as of June 30, 1998 and the results of their  operations  and
their cash flows for each of the two years in the period  ended June 30, 1998 in
conformity with generally accepted accounting principles.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern.  The Company has financed its
operations primarily through the sale of its securities.  As described in Note 1
to the consolidated  financial  statements,  the Company has suffered  recurring
losses from  operations  and has limited  sales of its  products,  which  raises
substantial  doubt about the Company's  ability to continue as a going  concern.
The future of the Company as an operating business will depend on (1) its

                                      F-2
<PAGE>
To the Board of Directors and Stockholders
Dimensional Visions Incorporated and Subsidiaries

ability to  successfully  market its  products,  (2) obtain  sufficient  capital
contributions  and/or  financing  as may be  required  to  sustain  its  current
operations and fulfill its sales and marketing activities, (3) achieving a level
of sales adequate to support the Company's cost structure, and (4) to ultimately
achieve a level of profitability. Management's plan concerning these matters are
also described in Note 1. The consolidated  financial  statements do not include
any adjustments that might result from the outcome of this uncertainty.





                                                       GITOMER & BERENHOLZ, P.C.

Jen
kintown, Pennsylvania
September 15, 1998

                                      F-3
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 1998

                                     ASSETS
Current assets
  Cash                                                             $     15,910
  Current portion of notes receivable                                   119,461
  Accounts receivable, trade, net of allowance for
    bad debts of $215,743                                               144,620
  Inventory                                                              69,364
  Prepaid expenses                                                       25,678
                                                                   ------------
    Total current assets                                                375,033
                                                                   ------------
Equipment
  Equipment                                                             370,344
  Furniture and fixtures                                                 24,217
                                                                   ------------
                                                                        394,561
  Less accumulated depreciation                                         233,509
                                                                   ------------
                                                                        161,052
                                                                   ------------
Other assets
  Notes receivable net of current portion                               342,377
  Patent rights and other assets                                         42,379
                                                                   ------------
                                                                        384,756
                                                                   ------------

    Total assets                                                   $    920,841
                                                                   ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
  Short-term borrowings                                            $     79,500
  Current portion of long-term debt                                      75,000
  Current portion of obligations under capital leases                    16,476
  Accounts payable, accrued expenses and other
    liabilities                                                         439,977
                                                                   ------------
    Total current liabilities                                           610,953

Obligations under capital leases                                        102,586
                                                                   ------------
    Total liabilities                                                   713,539
                                                                   ------------
Commitments and contingencies                                              --   

Stockholders' equity
  Preferred stock - $.001 par value, authorized
    10,000,000 shares; issued and outstanding
    133,321 shares                                                          133
  Additional paid-in capital                                            683,278
                                                                   ------------
                                                                        683,411
                                                                   ------------
  Common stock - $.001 par value, authorized
    100,000,000 shares; issued and outstanding
    3,612,101 shares                                                      3,612
  Additional paid-in capital                                         18,862,075
  Deficit                                                           (19,341,796)
                                                                   ------------
    Total stockholders' equity                                          207,302
                                                                   ------------
    Total liabilities and stockholders'
      equity                                                       $    920,841
                                                                   ============

                 See notes to consolidated financial statements.

                                      F-4
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                       YEARS ENDED JUNE 30, 1998 AND 1997

                                                       1998             1997
                                                       ----             ----

Operating revenue                                  $   609,392      $   551,517
Cost of sales                                          473,147          306,190
                                                   -----------      -----------
Gross profit                                           136,245          245,327
Sale of product line                                   410,000             --
                                                   -----------      -----------
                                                       546,245          546,245
                                                   -----------      -----------
Operating expenses
  Engineering and development costs                    226,237          397,387
  Marketing expenses                                   249,607          328,792
  General and administrative expenses                  395,414          850,016
                                                   -----------      -----------
    Total operating expenses                           871,258        1,576,195
                                                   -----------      -----------
Loss before other income (expenses)                   (325,013)      (1,330,868)
                                                   -----------      -----------
Other income (expenses)
  Interest expense                                     (92,117)         (25,048)
  Interest income                                       30,806            7,102
  Loss on sale/abandonment of leasehold
    improvements and equipment                         (35,335)          (1,150)
  Amortization of goodwill                                --           (192,998)
  Goodwill writedown                                      --           (619,172)
                                                   -----------      -----------
                                                       (96,646)        (831,266)
                                                   -----------      -----------

Net loss                                           $  (421,659)     $(2,162,134)
                                                   ===========      ===========
Loss per share of common stock
  Net loss                                         $      (.14)     $     (1.11)
                                                   ===========      ===========
Weighted average shares of common stock
  Outstanding                                        3,073,650        1,950,642
                                                   ===========      ===========

                 See notes to consolidated financial statements.

                                      F-5
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                       YEARS ENDED JUNE 30, 1998 AND 1997

<TABLE>
<CAPTION>
                                              Preferred Stock      Additional        Common Stock        Additional
                                             ($.001 Par Value )     Paid-in        ($.001 Par Value)       Paid-in
                                            Shares       Amount     Capital      Shares        Amount      Capital    
                                            ------       ------     -------      ------        ------      -------    

<S>                                         <C>            <C>    <C>           <C>           <C>       <C>           
Balance, July 1, 1996                       632,207        $632   $3,503,161    26,711,657    $26,712   $13,963,359   
                                                          
Conversion  of 15,000  shares of Series A                 
convertible  preferred  stock  valued  at                 
$150,000  into  600,000   shares  of  the                 
Company's common stock                      (15,000)        (15)    (149,985)      600,000        600       149,400   
                                                          
Conversion  of  185,700  shares  Series B                 
convertible  preferred  stock  valued  at                 
$1,857,000 into 22,284,000  shares of the                 
Company's common stock                     (185,700)       (186)  (1,856,814)   22,284,000     22,284     1,834,716   
                                                          
Conversion   of  4,739  shares  Series  C                 
convertible  preferred  stock  valued  at                 
$47,390   into   47,390   shares  of  the                 
Company's common stock                       (4,739)         (5)     (47,385)       47,390         47        47,343   
                                                          
Conversion  of  206,390  shares  Series P                 
convertible  preferred  stock  valued  at                 
$515,975  into  2,063,900  shares  of the                 
Company's common stock                     (206,390)       (206)    (515,769)    2,063,900      2,064       513,911   
                                                          
Conversion   of  1,000  shares  Series  S                 
convertible  preferred  stock  valued  at                 
$10,000  into   100,000   shares  of  the                 
Company's common stock                       (1,000)         (1)      (9,999)      100,000        100         9,900   
                                                          
Conversion  of  $375,000  of  convertible                 
debentures  to  6,853,335  shares  of the                 
Company's  common stock  issued  pursuant                 
to a Regulation S offering                        -           -            -     6,853,335      6,853       368,147   
                                                          
Exercise   of   1,000,000   warrants   to                 
purchase the Company's common stock               -           -            -     1,000,000      1,000        99,000   
                                                          
Conversion   of  a  $15,000   advance  to                 
150,000  shares of the  Company's  common                 
stock                                             -           -            -       150,000        150        14,850   
                                                          
Issuance  of  1,625,700   shares  of  the                 
Company's  common  stock  to  consultants                 
for services valued at $144,247                   -           -            -     1,625,700      1,626       142,621   
                                                          
<CAPTION>
                                              Deficit        Total     
                                              -------        -----     
                                                                       
<S>                                        <C>             <C>         
Balance, July 1, 1996                      $(16,758,003)   $735,861    
                                                                       
Conversion  of 15,000  shares of Series A                              
convertible  preferred  stock  valued  at                              
$150,000  into  600,000   shares  of  the                              
Company's common stock                                -           -    
                                                                       
Conversion  of  185,700  shares  Series B                              
convertible  preferred  stock  valued  at                              
$1,857,000 into 22,284,000  shares of the                              
Company's common stock                                -           -    
                                                                       
Conversion   of  4,739  shares  Series  C                              
convertible  preferred  stock  valued  at                              
$47,390   into   47,390   shares  of  the                              
Company's common stock                                -           -    
                                                                       
Conversion  of  206,390  shares  Series P                              
convertible  preferred  stock  valued  at                              
$515,975  into  2,063,900  shares  of the                              
Company's common stock                                -           -    
                                                                       
Conversion   of  1,000  shares  Series  S                              
convertible  preferred  stock  valued  at                              
$10,000  into   100,000   shares  of  the                              
Company's common stock                                -           -    
                                                                       
Conversion  of  $375,000  of  convertible                              
debentures  to  6,853,335  shares  of the                              
Company's  common stock  issued  pursuant                              
to a Regulation S offering                            -     375,000    
                                                                       
Exercise   of   1,000,000   warrants   to                              
purchase the Company's common stock                   -     100,000    
                                                                       
Conversion   of  a  $15,000   advance  to                              
150,000  shares of the  Company's  common                              
stock                                                 -      15,000    
                                                                       
Issuance  of  1,625,700   shares  of  the                              
Company's  common  stock  to  consultants                              
for services valued at $144,247                       -     144,247    
</TABLE>

                                      F-6              
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997

<TABLE>
<CAPTION>
                                              Preferred Stock     Additional       Common Stock        Additional
                                             ($.001 Par Value )    Paid-in       ($.001 Par Value)       Paid-in
                                            Shares       Amount    Capital     Shares        Amount      Capital    
                                            ------       ------    -------     ------        ------      -------    

<S>                                         <C>        <C>         <C>        <C>           <C>       <C>           
Issuance   of   427,940   shares  of  the
Company's  common stock to employees  for
compensation  valued at $63,599 including
accrued compensation of $36,100
                                                  -           -           -      427,940        428        63,171   

Conversion    of   $50,000   of   accrued
consulting  fees to 312,500 shares of the
Company's  common  stock  valued  at $.16
per share                                         -           -           -      312,500        313        49,687   

The  Company  sold  through  two  private
placements   1,390,000   shares  of   the
Company's  common  stock  valued  at $.10
per share  and  2,100,000  shares  of the
Company's  common  stock  valued  at $.05
per share                                         -           -           -    3,490,000      3,490       240,510   

The  Company  sold  through  an  offshore
placement   2,500,000   shares   of   the
Company's  common  stock  valued  at $.14
per share and issued  350,000 warrants to
purchase   the   Company's  common  stock
at $.14 and  250,000 warrants to purchase
the  Company's  common  stock at $.15 for
three years commencing October 1996               -           -           -    2,500,000      2,500       347,500   

450,800    shares   of   the    Company's
restricted   stock  was   exchanged   for
450,800  shares from the  Company's  1996
Equity Incentive Plan                             -           -           -            -          -             -   

28,550  shares  of the  Company's  common
stock was  surrendered by the Chairman of
the Board/Chief Executive Officer                 -           -           -      (28,550)       (29)           29   

Net loss                                          -           -           -            -          -             -   
                                            -------    --------    --------   ----------    -------   -----------   

                                            219,378    $    219    $923,209   68,137,872    $68,138   $17,844,144   
                                            =======    ========    ========   ==========    =======   ===========   

<CAPTION>
                                               Deficit            Total   
                                               -------            -----   
                                                                          
<S>                                         <C>             <C>           
Issuance   of   427,940   shares  of  the                                 
Company's  common stock to employees  for                                 
compensation  valued at $63,599 including                                 
accrued compensation of $36,100                                           
                                                       -        63,599    
                                                                          
Conversion    of   $50,000   of   accrued                                 
consulting  fees to 312,500 shares of the                                 
Company's  common  stock  valued  at $.16                                 
per share                                              -        50,000    
                                                                          
The  Company  sold  through  two  private                                 
placements   1,390,000   shares  of   the                                 
Company's  common  stock  valued  at $.10                                 
per share  and  2,100,000  shares  of the                                 
Company's  common  stock  valued  at $.05                                 
per share                                              -       244,000    
                                                                          
The  Company  sold  through  an  offshore                                 
placement   2,500,000   shares   of   the                                 
Company's  common  stock  valued  at $.14                                 
per share and issued  350,000 warrants to                                 
purchase   the   Company's  common  stock                                 
at $.14 and  250,000 warrants to purchase                                 
the  Company's  common  stock at $.15 for                                 
three years commencing October 1996                    -       350,000    
                                                                          
450,800    shares   of   the    Company's                                 
restricted   stock  was   exchanged   for                                 
450,800  shares from the  Company's  1996                                 
Equity Incentive Plan                                  -             -    
                                                                          
28,550  shares  of the  Company's  common                                 
stock was  surrendered by the Chairman of                                 
the Board/Chief Executive Officer                      -             -    
                                                                          
Net loss                                      (2,162,134)   (2,162,134)   
                                            ------------    ----------    
                                                                          
                                            $(18,920,137)   $  (84,427)   
                                            ============    ==========    
</TABLE>

                                      F-7
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997

<TABLE>
<CAPTION>
                                              Preferred Stock    Additional        Common Stock        Additional
                                             ($.001 Par Value)    Paid-in        ($.001 Par Value)       Paid-in
                                            Shares      Amount    Capital      Shares        Amount      Capital    
                                            ------      ------    -------      ------        ------      -------    

<S>                                         <C>           <C>     <C>         <C>           <C>       <C>           
Balance, July 1, 1997                       219,378       $219    $923,209    68,137,872    $68,138   $17,844,144   

Conversion  of 2,500  shares  of Series A
convertible  preferred  stock  valued  at
$25,000 into 100,000  pre-split shares of
the Company's common stock                   (2,500)        (3)    (24,997)      100,000        100        24,900   

Conversion  of  81,407  shares  Series  P
convertible  preferred  stock  valued  at
$203,517  into 814,070  pre-split  shares
of the Company's common stock               (81,407)       (81)   (203,436)      814,070        814       202,703   

Conversion   of  2,150  shares  Series  S
convertible  preferred  stock  valued  at
$11,500 into 215,000  pre-split shares of
the Company's common stock                   (2,150)        (2)    (11,498)      215,000        215        11,285   

Conversion   of  50,000  of   convertible
debentures to 1,818,182  pre-split shares
of  the  Company's  common  stock  issued
pursuant to a Regulation S offering               -          -           -     1,818,182      1,818        48,182   

Exercise   of   1,000,000   warrants   to
purchase  1,000,000  post-split shares of
the  Company's  common  stock at $.10 per
share                                             -          -           -     1,000,000      1,000         9,000   
Issuance  of 50,000  pre-split  shares of
the   Company's   common   stock   to  an
employee  for   compensation   valued  at         -          -           -        50,000         50         2,700   
$2,750

Issuance of 180,000  pre-split  shares of
the    Company's    common    stock    to
consultants   for   services   valued  at         -          -           -       180,000        180        11,070   
$11,250

The  Company   sold   through  a  private
placement  1,400,000  pre-split shares of
the  Company's  common  stock  valued  at
$.05 per share                                -          -           -         1,400,000      1,400        68,600   

The  Company  sold  through  an  offshore
placement  1,666,666  pre-split shares of
the  Company's  common  stock  valued  at
$.045 per share                               -          -           -         1,666,666      1,667        73,333   

<CAPTION>
                                               Deficit         Total     
                                               -------         -----     
                                                                         
<S>                                         <C>              <C>         
Balance, July 1, 1997                       $(18,920,137)    $(84,427)   
                                                                         
Conversion  of 2,500  shares  of Series A                                
convertible  preferred  stock  valued  at                                
$25,000 into 100,000  pre-split shares of                                
the Company's common stock                             -            -    
                                                                         
Conversion  of  81,407  shares  Series  P                                
convertible  preferred  stock  valued  at                                
$203,517  into 814,070  pre-split  shares                                
of the Company's common stock                          -            -    
                                                                         
Conversion   of  2,150  shares  Series  S                                
convertible  preferred  stock  valued  at                                
$11,500 into 215,000  pre-split shares of                                
the Company's common stock                             -            -    
                                                                         
Conversion   of  50,000  of   convertible                                
debentures to 1,818,182  pre-split shares                                
of  the  Company's  common  stock  issued                                
pursuant to a Regulation S offering                    -       50,000    
                                                                         
Exercise   of   1,000,000   warrants   to                                
purchase  1,000,000  post-split shares of                                
the  Company's  common  stock at $.10 per                                
share                                                  -       10,000    
Issuance  of 50,000  pre-split  shares of                                
the   Company's   common   stock   to  an                                
employee  for   compensation   valued  at              -        2,750    
$2,750                                                                   
                                                                         
Issuance of 180,000  pre-split  shares of                                
the    Company's    common    stock    to                                
consultants   for   services   valued  at              -       11,250    
$11,250                                                                  
                                                                         
The  Company   sold   through  a  private                                
placement  1,400,000  pre-split shares of                                
the  Company's  common  stock  valued  at                                
$.05 per share                                         -       70,000    
                                                                         
The  Company  sold  through  an  offshore                                
placement  1,666,666  pre-split shares of                                
the  Company's  common  stock  valued  at                                
$.045 per share                                        -       75,000    
</TABLE>

                                      F-8
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997
<TABLE>
<CAPTION>
                                              Preferred Stock     Additional         Common Stock       Additional
                                             ($.001 Par Value )    Paid-in         ($.001 Par Value)      Paid-in
                                            Shares       Amount    Capital       Shares        Amount     Capital     
                                            ------       ------    -------       ------        ------     -------     

<S>                                              <C>         <C>         <C>   <C>             <C>        <C>         
Issuance   of    1,500,000    post-split
warrants to purchase 1,500,000 shares of
the  Company's  common stock at $.50 per
share for a five year period  commencing
January  1998 to the  investment  banker
connection with private placement of the
Company's securities                             -           -           -              -           -           -     

Issuance of 420,000 warrants to purchase
the  Company's  common  stock  at $1 per
share based on the post-split  price for
a five  year  period  commencing  during
October  1997  through  January  1998 in
connection  with a bridge  loan that was
converted to equity                              -           -           -              -           -           -     

Issuance of 297,000 post-split  warrants
to purchase the  Company's  common stock
at  prices  ranging  from  approximately
$.91 to $.93  per  share  in  connection
with the  issuance  of  debentures  that
were  converted  to  equity  for a three
year  period  commencing  April  1998 or
June  1998.   The   warrant   price  was
adjusted by the accrued  interest on the
debenture  that was applied  against the
warrant exercise price                           -           -           -              -           -       1,660     

The noteholders converted  substantially
all the short  term  loans  and  related
interest  through  a  private  placement
into 14,921,000  pre-split shares of the
Company's  common  stock valued at $1.50
per share based on the post-split  price
or $.06 per share at the pre-split price
and issued 298,808  post-split  warrants
to purchase the  Company's  common stock
at $1.50 per share  until  February  28,
1999 and $2.00 per share until  February
28, 2001                                         -           -           -     14,921,000      14,921     477,779     

<CAPTION>
                                            
                                            
                                            Deficit       Total 
                                            -------       ----- 
                                                                
<S>                                                     <C>     
Issuance   of    1,500,000    post-split                        
warrants to purchase 1,500,000 shares of                        
the  Company's  common stock at $.50 per                        
share for a five year period  commencing                        
January  1998 to the  investment  banker                        
connection with private placement of the                        
Company's securities                              -           - 
                                                                
Issuance of 420,000 warrants to purchase                        
the  Company's  common  stock  at $1 per                        
share based on the post-split  price for                        
a five  year  period  commencing  during                        
October  1997  through  January  1998 in                        
connection  with a bridge  loan that was                        
converted to equity                               -           - 
                                                                
Issuance of 297,000 post-split  warrants                        
to purchase the  Company's  common stock                        
at  prices  ranging  from  approximately                        
$.91 to $.93  per  share  in  connection                        
with the  issuance  of  debentures  that                        
were  converted  to  equity  for a three                        
year  period  commencing  April  1998 or                        
June  1998.   The   warrant   price  was                        
adjusted by the accrued  interest on the                        
debenture  that was applied  against the                        
warrant exercise price                            -       1,660 
                                                                
The noteholders converted  substantially                        
all the short  term  loans  and  related                        
interest  through  a  private  placement                        
into 14,921,000  pre-split shares of the                        
Company's  common  stock valued at $1.50                        
per share based on the post-split  price                        
or $.06 per share at the pre-split price                        
and issued 298,808  post-split  warrants                        
to purchase the  Company's  common stock                        
at $1.50 per share  until  February  28,                        
1999 and $2.00 per share until  February                        
28, 2001                                          -     492,700 
</TABLE>

                                       F-9
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997

<TABLE>
<CAPTION>
                                              Preferred Stock     Additional         Common Stock         Additional
                                             ($.001 Par Value )    Paid-in         ($.001 Par Value)        Paid-in
                                            Shares       Amount    Capital       Shares        Amount       Capital    
                                            ------       ------    -------       ------        ------       -------    

<S>                                         <C>          <C>      <C>            <C>           <C>       <C>           
Issuance of a warrant to  purchase  3.53
units each  consisting  of 16,000 shares
of the Company's  common stock and 8,000
redeemable    common   stock    purchase
warrants  to the  investment  banker  in
connection with the private placement of
the Company's  securities at $28,800 per
unit for a five year  period  commencing
April 1998                                        -           -          -               -          -             28   

1 for 25 reverse stock split                      -           -          -     (86,690,419)   (86,691)        86,691   

Net loss                                          -           -          -               -          -              -   
                                            -------      ------   --------      ----------     ------    -----------   

                                            133,321      $  133   $683,278       3,612,101     $3,612    $18,862,075   
                                            =======      ======   ========      ==========     ======    ===========   

<CAPTION>
                                               Deficit        Total     
                                               -------        -----     
                                                                        
<S>                                         <C>             <C>         
Issuance of a warrant to  purchase  3.53                                
units each  consisting  of 16,000 shares                                
of the Company's  common stock and 8,000                                
redeemable    common   stock    purchase                                
warrants  to the  investment  banker  in                                
connection with the private placement of                                
the Company's  securities at $28,800 per                                
unit for a five year  period  commencing                                
April 1998                                             -          28    
                                                                        
1 for 25 reverse stock split                           -           -    
                                                                        
Net loss                                        (421,659)   (421,659)   
                                            ------------    --------    
                                                                        
                                            $(19,341,796)   $207,302    
                                            ============    ========    
</TABLE>

                       See notes to financial statements.

                                      F-10
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                       YEARS ENDED JUNE 30, 1998 AND 1997

                                                         1998            1997
                                                         ----            ----

Operating activities
  Net loss                                          $  (421,659)    $(2,162,134)
  Adjustments to reconcile net loss to net
    cash used in operating activities
      Gain on sale of product line                     (410,000)           --
      Goodwill writedown                                   --           619,172
      Compensation paid to officers/
        employees through issuance of
        warrants and common stock                         2,750          27,499
      Consulting service paid through
        issuance of warrants and common
        stock                                            11,250         144,247
      Depreciation and amortization of
        property and equipment                           43,117          50,366
      Amortization of other assets and
        deferred costs                                   19,856          37,246
      Interest expense paid through
        reduction of warrant price to
        debenture holders                                 1,660            --
      Interest expense paid through
        issuance of common stock                         73,840            --
      Amortization of goodwill                             --           192,998
      Loss on sale/abandonment of leasehold
        improvements and equipment                       35,335           1,150
      Transfer of prepaid expenses to assets
        Sold                                            (10,002)           --
      Changes in assets and liabilities
        which provided (used) cash
          Accounts receivable, trade                    (62,319)        (49,693)
          Inventory                                     109,763         (89,669)
          Prepaid supplies and expenses                 (15,677)         22,446
          Other assets                                     --             6,542
          Accounts payable, accrued expenses
            and other liabilities                        26,030         166,989
                                                    -----------     -----------

  Net cash used in operating activities                (596,056)     (1,032,841)
                                                    -----------     -----------

Investing activities
  Payment of obligations under capital lease            (19,850)           --   
  Purchase of equipment                                 (10,200)         (4,666)
  Deposits                                               (4,100)           --   
  Notes receivable                                      (90,000)           --
  Proceeds from payments on notes receivable             38,162            --
                                                    -----------     -----------

  Net cash used in investing activities                 (85,988)         (4,666)
                                                    -----------     -----------

                                      F-11
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997

                                                            1998         1997
                                                            ----         ----

Financing activities
  Proceeds from
    Sale of
      Common stock                                         145,000      594,000
      Warrant right                                             28         --
    Debt obligation not converted to
     common stock                                           25,000         --
    Debt obligations converted to common
     stock net of offering costs of
      $203,140 in 1998                                     418,860         --
    Issuance of common stock in connection
      with the exercise of warrants                         10,000      100,000
    Proceeds from sale of equipment and
      supplies                                              10,000         --
    Borrowings from factor                                  79,500      250,000
    Payment of debt obligations                           (100,000)        --
                                                         ---------    ---------

  Net cash provided by financing activities                588,388      944,000
                                                         ---------    ---------

Net decrease in cash and cash equivalents                  (93,656)     (93,507)

Cash and cash equivalents, beginning of year               109,566      203,073
                                                         ---------    ---------

Cash, end of year                                        $  15,910    $ 109,566
                                                         =========    =========


Supplemental disclosure of cash flow information:

  Cash paid during the year for interest                 $   5,425    $    --
                                                         =========    =========

  Issuance of common stock in connection
    With
      Accrued compensation settled for
       common stock in lieu of cash payment              $    --      $  36,100
                                                         =========    =========
      Accrued consulting fee settled for
       common stock in lieu of cash
        payment                                          $    --      $  50,000
                                                         =========    =========
      Advance settled for common stock in
        lieu of cash payment                             $    --      $  15,000
                                                         =========    =========
      Consulting services                                $  11,250    $ 144,247
                                                         =========    =========
      Officers/employees compensation                    $   2,750    $  27,499
                                                         =========    =========

                                      F-12
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997

Supplemental  disclosure  of non-cash  investing and  financing  activities  for
fiscal year 1998:

     The Company recorded capital lease  obligations of $138,912 relating to the
     acquisition of equipment.

     In  connection  with the sale of a product  line for  $410,000  the Company
     recorded a note receivable.

     The  Company  issued  72,727  shares  (1,818,182  pre-split  shares) of the
     Company's  common stock in  connection  with the  conversion  of $50,000 of
     convertible  debentures  to common  stock under a  Regulation  S Securities
     Subscription Agreement.

     The Company  issued  596,840 shares  (14,921,000  pre-split  shares) of the
     Company's  common stock in connection with the conversion of $695,840 short
     term debt and related interest expense.

     The Company issued 45,163 post-split shares (1,129,070 pre-split shares) of
     the Company's common stock in connection with the conversion of convertible
     preferred stock valued at $240,018 as follows:

                                                                Converted to
                                                   Value        Common Stock
                                                   -----        ------------
       Series A Convertible Preferred Stock     $   25,000          100,000
       Series P Convertible Preferred Stock        203,518          814,070
       Series S Convertible Preferred Stock         11,500          215,000
                                                ----------       ----------

                                                $  240,018        1,129,070
                                                ==========       ==========



     The Company issued 7,200 shares (180,000 pre-split shares) of the Company's
     common stock to consultants for services valued at $11,250.

     The Company issued 2,000 shares (50,000  pre-split shares) of the Company's
     common stock to employees valued at $2,750 for compensation  and/or accrued
     compensation.

                                      F-13
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997

Supplemental  disclosure  of non-cash  investing and  financing  activities  for
fiscal year 1997:

     The  Company  issued  1,003,812  post-split  shares  (25,095,290  pre-split
     shares) of the Company's  common stock in connection with the conversion of
     convertible preferred stock valued at $2,580,365 as follows:

                                                                   Converted to
                                                      Value        Common Stock
                                                      -----        ------------
       Series A Convertible Preferred Stock        $  150,000          600,000
       Series B Convertible Preferred Stock         1,857,000       22,284,000
       Series C Convertible Preferred Stock            47,390           47,390
       Series P Convertible Preferred Stock           515,975        2,063,900
       Series S Convertible Preferred Stock            10,000          100,000
                                                   ----------       ----------

                                                   $2,580,365       25,095,290
                                                   ==========       ==========

     The Company issued 1,625,700 pre-split shares of the Company's common stock
     to consultants for services valued at $144,247.

     The Company issued 427,940  pre-split  shares of the Company's common stock
     to   employees   valued  at  $63,599  for   compensation   and/or   accrued
     compensation.

     The Company issued 462,500  pre-split  shares of the Company's common stock
     valued at $65,000 in connection with certain liabilities settled in lieu of
     a cash  payment  for  accrued  consulting  fee of $50,000 and an advance of
     $15,000.

                 See notes to consolidated financial statements.

                                      F-14
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       YEARS ENDED JUNE 30, 1998 AND 1997

Note 1:   Summary of Significant Accounting Policies

          DESCRIPTION  OF BUSINESS,  FINANCING AND BASIS OF FINANCIAL  STATEMENT
          PRESENTATION

          Dimensional   Visions   Incorporated  (the  "Company"  or  "DVI")  was
          incorporated  in Delaware on May 12,  1988.  The Company  produces and
          markets  lithographically  printed  stereoscopic  and animation  print
          products.  The  stockholders  of the  Company  approved a name  change
          effective  January 15, 1998 from  Dimensional  Visions Group,  Ltd. to
          Dimensional Visions Incorporated.

          The Company,  through a wholly-owned  subsidiary of InfoPak,  Inc. has
          developed a data delivery system that provides end users with specific
          industry printed materials by way of a portable hand-held reader. Data
          is acquired electronically from the data provided by mainframe systems
          and distributed through a computer network to all subscribers.

          The Company has financed its operations  primarily through the sale of
          its  securities.  The Company has had  limited  sales of its  products
          during the years ended June 30,  1998 and 1997.  Even though the sales
          during the past two years have significantly  increased over the prior
          years, the volume of business is not nearly  sufficient to support the
          Company's cost structure.

          LIQUIDITY AND CAPITAL RESOURCES

          The Company has incurred losses since inception of $19,341,796 and has
          a working  capital  deficiency  of $235,920 as of June 30,  1998.  The
          future of the Company as an operating  business will depend on (1) its
          ability to  successfully  market and sell its products,  (2) obtaining
          sufficient capital  contributions  and/or financing as may be required
          to  sustain  its  current  operations  and to  fulfill  its  sales and
          marketing  activities,  (3)  achieving  a level of sales  adequate  to
          support the Company's cost structure,  and (4) ultimately  achieving a
          level of  profitability.  Management's  plan to address  these  issues
          includes  (a)  redirecting  its  marketing  efforts  of the  Company's
          products and  substantially  increasing  sales results,  (b) continued
          exercise  of  tight  cost  controls  to  conserve  cash,  (c)  raising
          additional long term financing, and (d) selling of its subsidiary.


                                      F-15
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997

Note 1:   Summary of Significant Accounting Policies (Continued)

          LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

          The  consolidated  financial  statements have been prepared on a going
          concern basis which  contemplates  the  realization  and settlement of
          liabilities  and  commitments  in the normal  course of business.  The
          available  funds at June 30,  1998,  plus the  limited  revenue is not
          sufficient   to  satisfy  the  present  cost   structure.   Management
          recognizes  that the Company  must  generate  additional  resources to
          enable  it  to  continue  operations.  Management  plans  include  the
          continued  expansion  of the  sale of its  products  and  the  sale of
          additional securities.

          Further, there can be no assurances, assuming the Company successfully
          raises additional funds that the Company will achieve profitability or
          positive  cash  flow from the sale of its  products.  In the event the
          Company  is not able to  secure  sufficient  funds  on a timely  basis
          necessary to maintain its current operations, it may cease all or part
          of its existing operations and/or seek protection under the bankruptcy
          laws.

          CONSOLIDATION POLICY

          The consolidated  financial statements include the accounts of DVI and
          its  wholly-owned  subsidiaries,  InfoPak,  Inc., DVG Plastics,  Inc.,
          Digital  Dimensions,  Inc. and DV3D Images,  Inc. As of June 30, 1998,
          all  of the  wholly-owned  subsidiaries  were  dissolved,  except  for
          InfoPak,  Inc. All significant  intercompany balances and transactions
          have been eliminated in consolidation.

          INVENTORY

          Inventory is stated at the lower of cost or market. Cost is determined
          by the first-in, first-out method. Inventory consists of raw materials
          of $8,400 and finished goods of $60,964.

                                      F-16
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997

Note 1:   Summary of Significant Accounting Policies (Continued)

          EQUIPMENT, DEPRECIATION AND AMORTIZATION

          Equipment is stated at cost. Depreciation, which includes amortization
          of  assets  under  capital  lease  is  provided  by  the  use  of  the
          straight-line  method over the estimated useful lives of the assets as
          follows:

              Equipment                    5 - 7 years
              Furniture and fixtures       5 years

          PATENT RIGHTS

          Costs incurred to acquire patent rights and the related technology are
          amortized  over  the  shorter  of the  estimated  useful  life  or the
          remaining  term of the patent  rights.  In the event that the costs of
          patent rights and/or acquired technology are abandoned,  the write-off
          will be charged to expenses in the period the determination is made to
          abandon them.

          GOODWILL

          As of June 30,  1997,  the Company  recorded a goodwill  writedown  of
          $619,172.  This writedown eliminates all the remaining goodwill of the
          Company.  The asset of goodwill was  determined  to have been impaired
          because of the  current  financial  condition  of the  Company and the
          Company's  inability  to  generate  future  operating  income  without
          substantial sales volume increases,  which are uncertain. In addition,
          anticipated  future  cash  flows  of the  Company  indicate  that  the
          recoverability of the asset is not reasonably assured.

                                      F-17
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997

Note 1:   Summary of Significant Accounting Policies (Continued)

          GOODWILL (CONTINUED)

          The  Company  is  required  to  analyze  the  value  of  its  recorded
          intangible  assets on an ongoing basis to determine  that the recorded
          amounts are reasonable and are not impaired.  The Company's management
          considers  the  Company's  financial  condition  and  expected  future
          operating income in determining if goodwill is impaired at the balance
          sheet date. Upon  determination that goodwill was impaired at June 30,
          1997,  the amount of impairment  was  calculated by  determining  that
          portion of the  goodwill  which would not be expected to be  recovered
          against operating income during the remaining amortization period.

          ENGINEERING AND DEVELOPMENT COSTS

          The Company charges to engineering and development  costs all items of
          a non-capital nature related to bringing "significant"  improvement to
          its product. Such costs include salaries and expenses of employees and
          consultants,  the conceptual  formulation,  design, and testing of the
          products  and  creation  of  prototypes.  All such  costs of a capital
          nature are capitalized.

          INCOME TAXES

          Deferred  income  taxes  reflect  the  net  effect  of  (a)  temporary
          differences between the carrying amounts of assets and liabilities for
          financial  reporting  purposes  and the  amounts  used for  income tax
          purposes, and (b) operating loss carryforwards.

          NET LOSS PER SHARE OF COMMON STOCK

          Net loss per share of common stock is based on the weighted average of
          shares of common stock  outstanding.  Outstanding  warrants or options
          are not considered in the  calculation of net loss per share of common
          stock, as they would have an anti-dilutive effect.

                                      F-18
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997

Note 1:   Summary of Significant Accounting Policies (Continued)

          USE OF ESTIMATES

          The  preparation of financial  statements in conformity with generally
          accepted  accounting  principles requires management to make estimates
          and  assumptions  that  affect  the  reported  amounts  of assets  and
          liabilities and disclosure of contingent assets and liabilities at the
          dates of the financial  statements and the reported amounts of revenue
          and expenses during the reporting periods. Actual results could differ
          from those estimates.

          CONCENTRATION OF CREDIT RISK

          The Company is subject to credit risk through trade  receivables.  The
          Company  relies on a limited  number of customers  for its sales.  The
          Company is in the process of building a customer base for its products
          and, therefore,  the degree of risk is substantially  higher until the
          base grows.

          The Company also relies on several key vendors to supply  plastics and
          printing  services.  Although  there are a limited  number of  vendors
          capable of fulfilling the Company's  needs,  the Company believes that
          other  vendors  could  provide for the  Company's  needs on comparable
          terms. Abrupt changes could, however,  cause a delay in processing and
          a possible  inability  to meet sales  commitments  on  schedule,  or a
          possible  loss  of  sales,   which  would  affect  operating   results
          adversely.

Note 2:   Cash

          The Company considers all highly liquid investments,  with an original
          maturity  of  three  months  or  less  when  purchased,   to  be  cash
          equivalents.

          The Company maintains its cash in banks located in Arizona.  The total
          cash  balances  are insured by the FDIC up to $100,000  per  financial
          institution. As of June 30, 1998, there were no uninsured balances.

                                      F-19
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997

Note 3:   Notes Receivable

          Notes receivable consists of the following:

                                    Interest 
                                      Rate       Amount        Maturity
                                    --------     ------        --------
          Sale of Product Line (1)     11%      $374,338    September 2001
          Sale of inforeaders  (2)     10%        87,500       August 2001
                                                --------                  
                                                46 1,838
          Less current portion                   119,461
                                                --------
                                                $342,377
                                                ========
                                                        
     (1)  On September  25, 1997,  the Company sold one of its product lines for
          $410,000 (see Note 13).  During  February  1998, the terms of the note
          were modified.  The payment  period was changed to forty-eight  months
          and the interest rate was increased to 11%. Effective  September 1998,
          the modified terms provide for payments to be $11,533 per month.

     (2)  On March  1,  1998,  the  Company  sold  inforeaders  (hardware)  to a
          customer  for  $100,000  and agreed to accept a note for $90,000  with
          interest at 10%,  commencing on September 1, 1998. The monthly payment
          will be $2,904, including interest for thirty-six months.

Note 4:   Patent Rights and Other Assets

            Patent rights                                $ 58,426
            Organization costs                              2,000
            Deposits                                        4,100
            Trademark                                         225
            Deferred compensation                           2,604
                                                         --------
                                                           67,355
            Less accumulated amortization                  24,976
                                                         --------
              Total                                      $ 42,379
                                                         ========

Note 5:   Accounts Payable, Accrued Expenses and Other Liabilities

            Accounts payable                             $370,633
            Accrued expenses
              Interest                                     20,886
              Salaries                                     46,650
            Payroll taxes payable                           1,808
                                                         --------
              Total                                      $439,977
                                                         ========

                                     F-20
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997

Note 6:   Short-Term Borrowings

          On May 26,  1998,  the  Company  entered  into a  renewable  one  year
          agreement with a factor that provides advances up to $100,000 based on
          80% of the face value of accounts receivable  factored.  As collateral
          for this funding,  the Company has provided a security  interest under
          the Uniform  Commercial  Code in all of the  Company's  assets and has
          guaranteed the collection of the receivable  under recourse.  Interest
          is charged  at the rate of .0067 per day or 2% a month on  outstanding
          borrowings. As of June 30, 1998, the outstanding borrowings under this
          arrangement were $79,500.

          During October 1997 through January 1998, the Company  received bridge
          loans of  $350,000.  The  lenders  were  issued  Series A  convertible
          secured  promissory  notes that were due in full on February 28, 1998.
          Interest  on these  borrowings  was  calculated  at 5% per  month  and
          amounted to $79,264.  The lenders also  received  420,000  warrants to
          purchase  the  Company's  common stock at $1 per share for five years,
          commencing during October 1997 through January 1998. On April 8, 1998,
          $325,000 of the outstanding  bridge loan was converted to equity along
          with the  related  interest  due on the  obligation  of  $73,839.  The
          balance of  $25,000  and  interest  of $5,425 was paid off on April 8,
          1998. The lenders who converted received  approximately 24.93 units. A
          unit  consists of 16,000  post-split  shares of the  Company's  common
          stock and 8,000  post-split  warrants to purchase the Company's common
          stock (see Note 10, paragraph 12).

          During March through May 1998,  the Company sold $297,000 of unsecured
          12%  convertible  promissory  notes and  warrants to purchase  297,000
          shares of the Company's  common stock at $.93 per share  (post-split).
          The notes were due on June 30, 1998 and subject to a 90 day extension.
          On April 8 and June 12, 1998, $249,000 and $48,000 respectively,  were
          converted to common stock. The interest,  which amounted to $1,660 was
          treated as an adjustment to each lender's  warrant  exercise price and
          the new warrant prices range between $.91 and $.93 per share.

                                      F-21
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997

Note 6:   Short-Term Borrowings (Continued)

          The Company issued on the conversion dates 198,000 (post-split) shares
          of  the   Company's   common  stock  valued  at  $1.50  per  share  or
          approximately  12.4 units.  A unit  consists  of 16,000  shares of the
          Company's  common stock and 8,000  warrants to purchase the  Company's
          common stock (see Note 10, paragraph 12).

Note 7:   Long-Term Debt

          As of June 30, 1998, long-term debt consisted of the following:

            10% secured notes due in January
              and February, 1998                            $ 75,000(1)(2)

            Less current portion                              75,000
                                                            --------
                                                            $   -
                                                            ========


          (1)  On July 24,  1998,  the Company paid the 10% secured note holders
               the outstanding principal and accrued interest and all collateral
               was released by the note holders.

          (2)  As  collateral  for the  secured  notes,  the Company has given a
               security interest in all of the Company's tangible and intangible
               assets,  including all patents and proprietary technology,  which
               was evidenced by a uniform commercial code of living on March 24,
               1994.

          As of July 1, 1997,  the  outstanding  balance  on the 5%  convertible
          debentures was $125,000.  During July 1997, $50,000 of the outstanding
          debentures were converted to 1,818,182  shares of the Company's common
          stock at an average price of $.0275 per share.  The remaining  balance
          was paid  off;  $25,000  during  December  1997,  and  $50,000  during
          February 1998.

                                      F-22
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997

Note 8:   Leases

          The company leases certain  equipment under a master lease  agreement,
          which are classified as capital  leases.  The equipment  leases have a
          five year term with an option to acquire the  equipment  for $1 at the
          end of the lease term.  Leased capital assets included in equipment as
          of June 30, 1998, was as follows:

                       Equipment                          $138,912
                       Less accumulated
                         amortization                        l,654
                                                          --------
                                                          $137,258
                                                          ========
             
          Future  minimum  payments,  by  year  and  in  the  aggregate,   under
          noncancellable  capital leases and operating  leases with terms of one
          year or more consist of the following as of June 30, 1998:

            Years Ending                  Capital             Operating
              June 30,                    Leases               Leases
              --------                    ------               ------

                        1999             $ 39,400             $ 45,725
                        2000               39,400               47,275
                        2001               39,400               24,025
                        2002               39,000                 -
                        2003               29,550                 -    
                                           ------             ---------

                                          187,150             $117,025
                                                              ========
      Amounts representing interest        68,088
                                         --------
      Present value of net minimum     
        payments                          119,062
      Current portion                      16,476
                                         --------
      Long-term portion                  $102,586
                                         ========
                                       
          The  Company's  rental  expense for  operating  leases was $33,700 and
          $57,600  for the years  ended  approximately  June 30,  1998 and 1997,
          respectively.

                                      F-23
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997

Note 9:   ommitments and Contingencies

          The Company has outstanding  employment and consulting  contracts that
          expire through June 30, 2001 as follows:

                       Years Ending June 30,              Amount
                       ---------------------              ------
                               1999                      $270,000
                               2000                       270,000
                               2001                       112,500
                                                         --------

                                                         $652,500
                                                         ========

          During 1996, the Company's former  principal  distributor of its print
          products  refused to pay a certain sales invoice for goods shipped to,
          accepted and paid for by the distributor's  customer.  The Company had
          demanded  payment and the  distributor  has refused to pay the invoice
          for  $213,522.  In July 1996,  the Company  filed for  judgment on the
          $213,522 invoice  together with interest,  costs and such other relief
          the court  will  deem just and  proper.  The  distributor  has filed a
          counterclaim.  Management feels this matter will be resolved favorably
          and will not have a material adverse effect on its financial position.
          During  1997,  this  matter has moved to a deferred  status  while the
          parties engage in settlement negotiations.

          During 1996, the Company  provided an allowance for possible bad debts
          for the full amount of this sales transaction.

          There are no other legal  proceedings  which the Company believes will
          have a material adverse effect on its financial position.

          The Company has not declared  dividends  on Series A or B  Convertible
          Preferred Stock. The cumulative  dividends in arrears through June 30,
          1998 was approximately $78,300.

                                      F-24
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997

Note 10:  Common Stock

          The  shareholders  of record at the close of  business  on December 5,
          1997,  voted on January 15, 1998,  to approve a 1 for 25 reverse stock
          split effective that date. In this report,  all per share calculations
          have been  adjusted to give  retroactive  effect to a 1 for 25 reverse
          split.

          As of June 30, 1998,  there are  outstanding  4,166,617 of  post-split
          non-public warrants and options to purchase the Company's common stock
          at prices ranging from $.50 to $12.50 with a weighted average price of
          $1.09 per share.

          As of June 30, 1998,  there were 133,321 shares of various  classes of
          Convertible  Preferred  Stock  outstanding  which can be  converted to
          98,928 post-split shares of common stock (see Note 11).

          The total  number of shares of the  Company's  common stock that would
          have  been  issuable  upon  conversion  of the  outstanding  warrants,
          options and preferred  stock equaled  4,265,545  shares as of June 30,
          1998, and would be in addition to the 3,612,101 shares of common stock
          outstanding as of June 30, 1998.

          During July 1997, 1,400,000 shares (pre-split) of the Company's common
          stock was sold to third  parties in a private  placement  for  $70,000
          ($.05 per share).

          On July 14, 1997, the Company issued 1,818,182  (pre-split)  shares of
          the  Company's  common stock in  connection  with the  conversion of a
          $50,000  convertible  debenture  to common  stock under a Regulation S
          offering ($.0275 per share).

          On September 30, 1997, the Company issued 1,666,666 (pre-split) shares
          of the  Company's  common  stock to a third party for $75,000  under a
          Regulation S offering ($.045 per share).

          On December 30, 1997, the Company issued 1,000,000  (pre-split) shares
          of the  Company's  common  stock in  connection  with the  exercise of
          1,000,000 warrants (pre-split) at $.10 per share.

                                      F-25
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997

Note 10:  Common Stock (Continued)

          The Company issued 180,000  (pre-split) shares of the Company's common
          stock to consultants for services valued at $11,250 (average price per
          share $.0625).

          The Company  issued to an employee  50,000  (pre-split)  shares of the
          Company's  common stock for  compensation  valued at $2,750 ($.055 per
          share).

          The  Company  issued  1,128,800  (pre-split)  shares of the  Company's
          common stock in  connection  with the  conversion  of preferred  stock
          valued at $240,018.

          On April  8,  1998,  the  Company  issued  564,840  post-split  shares
          (14,121,000  pre-split  shares)  of  the  Company's  common  stock  in
          connection  with the  conversion of short-term  financing  into units.
          Each unit  consists  of 16,000  (post-split)  shares of the  Company's
          common stock and 8,000  (post-split)  redeemable common stock purchase
          warrants  which  provides  the right to purchase  8,000  shares of the
          Company's  common stock at $1.50 per share until February 28, 1999 and
          $2.00 per share until  February 28,  2001.  The unit price is $24,000.
          The Company sold 35.3 units.

          On June 12, 1998, the Company issued 800,000 (pre-split) shares of the
          Company's common stock in connection with the conversion of short-term
          financing  into units,  as described in the  previous  paragraph.  The
          Company sold 2 units for $48,000.

          The Company  raised,  through the sale of these  units,  approximately
          $695,840  less  offering  costs  of  approximately  $203,140  for  net
          proceeds to the Company of $492,700.

          During the year ended June 30, 1997, 3,490,000 shares of the Company's
          common stock was sold to third parties in two private  placements  for
          $244,000 (at an average price per share of $.07).

          On  October  16,  1996,  the  Company  sold  2,500,000  shares  of the
          Company's  common  stock  to  a  third  party  for  $350,000  under  a
          Regulation S offering.

                                      F-26
<PAGE>
Note 10:  Common Stock (Continued)

          On December  12,  1996,  the Company  issued  1,000,000  shares of the
          Company's  common stock in  connection  with the exercise of 1,000,000
          warrants at $.10 per share.

          The Company issued  6,835,335  shares of the Company's common stock in
          connection  with the conversion of $375,000 of convertible  debentures
          to common stock under a Regulation S offering.

          The Company issued  1,625,700  shares of the Company's common stock to
          consultants for services  valued at $144,247  (average price per share
          $.09).

          The Company  issued  427,940  shares of the Company's  common stock to
          employees  for  compensation  and/or  accrued  compensation  valued at
          $63,599 (average price per share $.15).

          On January  14,  1997,  the  Company  issued  1,000,000  shares of the
          Company's  common stock to a former  consultant which consisted of the
          issuance of 236,700 shares of the Company's common stock to the former
          consultant  in full release under a letter  agreement  dated March 15,
          1996,  valued at $37,872  (price per share $.16),  issuance of 312,500
          shares of the Company's  common stock in settlement of the outstanding
          accrued  consulting fee of $50,000 (price per share $.16) and exchange
          of  450,800  shares of  restricted  stock for  450,800  shares of free
          trading from the 1996 equity incentive plan.

          The Company  issued  150,000  shares of the Company's  common stock in
          order to pay a $15,000 advance ($.10 per share).

          The Chairman of the Board/Chief  Executive Officer  surrendered to the
          Company 28,550 shares of the Company's common stock.

                                      F-27
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997

Note 11:  Preferred Stock

          The Company has  authorized  10,000,000  shares of $.001 par value per
          share  Preferred  Stock,  which has been  allocated  to the  following
          Series and is outstanding as of June 30, 1998, as follows:

                                           Allocated         Outstanding
                                           ---------         -----------
            Series A Preferred               100,000            23,000
            Series B Preferred               200,000             5,000
            Series C Preferred             1,000,000            18,681
            Series P Preferred               600,000            86,640
            Series S Preferred                50,000              -  _
                                           ---------           -------
              Total Preferred
                Stock                      1,950,000           133,321
                                           =========           =======

          The  Company's  Series A  Convertible  5% Preferred  Stock  ("Series A
          Preferred"),  100,000 shares  authorized,  is convertible  into common
          stock at the rate of 1.6 (post-split)  shares of common stock for each
          share of the Series A  Preferred.  Dividends  from date of issue,  are
          payable from retained  earnings,  and have been accumulated on June 30
          each year, but have not been declared or paid (see Note 9).

          The  Company's  Series B  Convertible  8% Preferred  Stock  ("Series B
          Preferred"),  is convertible  at the rate of 4 (post-split)  shares of
          common stock for each share of Series B Preferred. Dividends from date
          of issue are payable on June 30 from retained  earnings at the rate of
          8% per annum and have not been declared or paid (see Note 9).

          The  Company's  Series  C  Convertible   Preferred  Stock  ("Series  C
          Preferred"),  is  convertible at a rate of .4  (post-split)  shares of
          common stock per share of Series C Preferred.

                                      F-28
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997

Note 11:  Preferred Stock (Continued)

          The  Company's  Series  P  Convertible   Preferred  Stock  ("Series  P
          Preferred"),  is  convertible at a rate of .4  (post-split)  shares of
          common stock for each share of Series P Preferred.

          The  Company's  Series  S  Convertible   Preferred  Stock  ("Series  S
          Preferred"),  is convertible  at the rate of 4 (post-split)  shares of
          common stock for each share of Series S Preferred.

          The Company's  Series A Preferred  and Series B Preferred  were issued
          for the purpose of raising operating funds. The Series C Preferred was
          issued to certain  holders of the  Company's 10% Secured Notes in lieu
          of  accrued  interest  and  also  will be held for  future  investment
          purposes.  The Series S Preferred  was issued to certain  stockholders
          consisting mainly of officers and directors of the Company in exchange
          for such  stockholders'  shares of common stock.  After this exchange,
          common  stock was sold on September 5, 1995 for the purpose of raising
          additional capital.

          The Series P  Preferred  was issued on  September  12, 1995 to InfoPak
          shareholders in exchange for (1) all of the outstanding  capital stock
          of  InfoPak,  (2) as  signing  bonuses  for  certain  employees  and a
          consultant of InfoPak,  and (3) to satisfy InfoPak's  outstanding debt
          obligations to certain shareholders.

          The  190,700  shares of Series B  Preferred  were issued to holders of
          warrants  to  purchase  such  preferred  stock.  The  funding  for the
          exercise of these warrants was the exchange of $1,907,000 of principal
          amount of secured and unsecured  notes.  On December 3, 1996,  185,700
          shares of Series B Preferred were  exchanged for 22,284,000  pre-split
          shares of the Company's common stock.

          The 26,275  shares of Series C Preferred  were also issued in exchange
          for  $262,750 of interest due under the secured and  unsecured  notes.
          Noteholders  of  7,594  shares  of  Series  C  Preferred   Stock  have
          subsequently converted their shares into the Company's common stock.

                                      F-29
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997

Note 12:  Stock Option Plan and Equity Incentive Plan

          The  Company has adopted a stock  option  plan (the  "Plan")  covering
          1,500,000 shares  post-split  (increased from 20,000 post-split by the
          Board of Directors on January 13, 1998) of the Company's  common stock
          $.001 par value, pursuant to which officers,  directors, key employees
          and consultants of the Company are eligible to receive  incentive,  as
          well as  non-qualified  stock  options and Stock  Appreciation  Rights
          ("SAR's"). The Plan, which has been extended for 10 years by the Board
          of Directors on January 13, 1998, and expires  September 2008, will be
          administered  by  the  Board  of  Directors  or  a  committee   chosen
          therefrom.  This plan must be formally approved by the stockholders of
          the  Company.  Incentive  stock  options  granted  under  the Plan are
          exercisable  for a period of up to 10 years  from the date of grant at
          an exercise price, which is not less than the fair market value of the
          common  stock on the date of the  grant,  except  that the terms of an
          incentive stock option granted under the Plan to a stockholder  owning
          more than 10% of the  outstanding  common  stock may not  exceed  five
          years and the exercise  price of an incentive  stock option granted to
          such a stockholder  may not be less than 110% of the fair market value
          of common stock on the date of the grant.  Non-qualified stock options
          may be  granted on terms  determined  by the Board of  Directors  or a
          committee  designated by the Board of Directors.  SAR's which give the
          holder the privilege of surrendering  such rights for the appreciation
          in the  Company's  common  stock  between  the time of  grant  and the
          surrender,  may be  granted  on any terms  determined  by the Board of
          Directors or committee designated by the Board of Directors.  No SAR's
          have been granted.

                                      F-30
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997

Note 12:  Stock Option Plan and Equity Incentive Plan (Continued)

          A summary of transactions under this Plan is as follows:

                                                                   Weighted
                                                                   Average 
                                                                   Exercise
                                                                    Price 
                                                   Shares         Per Share
                                                   ------         ---------

            Options outstanding
              July 1, 1996                          20,000           $.48
            Cancelled                              (20,000)           .48
                                                  --------               

            Options outstanding
              June 30, 1997                              -
            Grants                               1,300,000            .93
                                                 ---------               

            Options outstanding
              June 30, 1998                      1,300,000            .93
                                                 =========              

            Options exercisable   at end of
            year                                   985,000           $.93
                                                  ========               

          The Company on June 13, 1996  adopted the 1996 Equity  Incentive  Plan
          (the "Plan") covering  10,000,000 shares of the Company's common stock
          $.001 par value, pursuant to which officers,  directors, key employees
          and consultants of the Company are eligible to receive  incentive,  as
          well as non-qualified  stock options,  SAR's, and Restricted Stock and
          Deferred  Stock.  The  Plan,  which  expires  in  June  2006,  will be
          administered by the Compensation  Committee of the Board of Directors.
          Incentive  stock options  granted under the Plan are exercisable for a
          period of up to 10 years from the date of grant at an exercise  price,
          which is not less than the fair  market  value of the common  stock on
          the date of the grant,  except  that the terms of an  incentive  stock
          option granted under the Plan to a stockholder owning more than 10% of
          the  outstanding  common  stock  may not  exceed  five  years  and the
          exercise  price  of an  incentive  stock  option  granted  to  such  a
          stockholder

                                      F-31
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997

Note 12:  Stock Option Plan and Equity Incentive Plan (Continued)

          may not be less than 110% of the fair market  value of common stock on
          the date of the grant.  Non-qualified  stock options may be granted on
          terms  determined  by  the  Compensation  Committee  of the  Board  of
          Directors.  SAR's which give the holder the privilege of  surrendering
          such rights for the appreciation in the Company's common stock between
          the time of grant  and the  surrender,  may be  granted  on any  terms
          determined by the Compensation Committee of the Board of Directors.

          Restricted stock awards entitle the recipient to acquire shares for no
          cash consideration or for consideration determined by the Compensation
          Committee.  The award may be subject to  restrictions,  conditions and
          forfeiture  as the  Committee  may  determine.  Deferred  stock  award
          entitles  recipient  to receive  shares in the future.  As of June 30,
          1997, 2,859,290 shares of common stock has been issued under this plan
          at prices  ranging  from $.09 to $.26 per share,  except  for  450,800
          shares  that were  issued at zero  value in  exchange  for  restricted
          shares that were  cancelled.  In  addition,  as of June 30,  1997,  no
          options  or  SAR's  have  been  granted.  As of June 30,  1998,  7,200
          (post-split) shares of common stock has been issued under this plan at
          prices ranging from $1.50 to $2.00 per share. In addition,  as of June
          30, 1998, no options or SAR's have been granted.

          If the Company had elected to recognize  compensation expense based on
          the fair  value  of stock  plans as  prescribed  by FAS No.  123,  the
          Company's net loss and net loss per share would have been increased to
          the pro forma amounts indicated below:

                                                             1998
                                                             ----
            Net Loss - as reported                        $(421,659)
            Net Loss - pro forma                          $(855,464)
            Net Loss per share - as reported                  $(.14)
            Net Loss per share - pro forma                    $(.28)

          The  weighted-average  fair  value at the date of  grant  for  options
          granted  in 1998 was  $.93.  The fair  value of each  option  grant is
          estimated on the date of grant using the Black-Scholes  Option Pricing
          Model.  The  following  weighted  average  assumptions  were used:  no
          dividends;  expected  volatility factor of .99;  risk-free interest of
          6.25%; and

                                      F-32
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997

Note 12:  Stock Option Plan and Equity Incentive Plan (Continued)

          an expected life of five years. The compensation expense and pro forma
          net loss may not be  indicative  of amounts to be  included  in future
          periods.  All  references  to the  number of shares  under  option and
          option  prices have been  adjusted to reflect a 1 for 25 reverse stock
          split effective January 15, 1998.

Note 13:  Sale of Product Line

          On September 25, 1997, the Company sold one of its product lines,  the
          real estate multiple listing data delivery system.  The purchase price
          was $410,000 plus the assumption of a $59,247 contingent  liability to
          a third party. At closing a promissory note for $410,000 was delivered
          to  the  Company.  The  terms  of the  note  provided  for 36  monthly
          installments  of  $13,330,   including  interest  at  10%  per  annum,
          commencing on October 25, 1997. During February 1998, the terms of the
          note were  modified.  The payment  period was  changed to  forty-eight
          months and the interest rate was increased to 11%. Effective September
          1998, the modified terms provide for payments to be $11,533 per month.

Note 14:  Income Taxes

          The tax effects of  significant  items  comprising  the  Company's net
          deferred taxes as of June 30, 1998 were as follows:

            Deferred tax assets:
              Goodwill                                       $   339,000
              Net operating loss carryforwards                 5,766,000
                                                             -----------
                                                               6,105,000
                                                             -----------
            Deferred tax liabilities
              Equipment                                            1,000
              Patent rights                                        5,000
                                                             -----------
                                                                   6,000
                                                             -----------
            Net deferred tax asset                             6,111,000
            Valuation allowance                               (6,111,000)
                                                             -----------
            Net deferred tax asset reported                  $      -
                                                             ===========

                                      F-33
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997

Note 14:  Income Taxes (Continued)

          The change in valuation allowance for the year ended June 30, 1998 was
          increased by approximately $95,000.

          There was no  provision  for current  income taxes for the years ended
          June 30, 1998 and 1997.

          The  federal  net  operating  loss   carryforwards   of  approximately
          $16,539,000 expires in various years through 2018.

          The Company has had numerous  transactions  in its common stock.  Such
          transactions may have resulted in a change in the Company's ownership,
          as defined in the Internal  Revenue Code Section 382.  Such change may
          result in an annual  limitation on the amount of the Company's taxable
          income which may be offset with its net operating loss  carryforwards.
          The Company has not  evaluated  the impact of Section  382, if any, on
          its ability to utilize its net operating loss  carryforwards in future
          years.

                                      F-34
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1998 AND 1997

Note 15:  Segment of Business Reporting

          The operations of the Company are divided into the following  business
          segments for financial reporting purposes.

          o    Lithographically printed stereoscopic prints commonly referred to
               as  three-dimensional   prints  and  litho-  graphically  printed
               animation.

          o    Hardware and software  information and audio playback systems and
               method products and programs.

          There are no  intersegment or foreign sales.  Three customers  account
          for  approximately  58% of the lithographic  sales and three customers
          account for approximately 87% of the hardware and software information
          and playback systems.

          Financial information by business segments is as follows:

                                                      Hardware
                                                        and
                                    Lithographic      Software     Consolidated
                                    ------------      --------     ------------
            Net customer sales      $    322,940     $ 286,452     $   609,392
            Interest income                  422        30,384          30,806
            Interest expense              92,117             -          92,117
            Operating loss              (627,545)     (107,468)       (735,013)
            Segment assets               728,831       192,010         920,841
            Depreciation and
              amortization                 9,773        33,343          43,116
            Capitalized lease            149,112             -         149,112

Note 16:  Subsequent Events

          The  Company  raised  $475,000,  through  a private  placement  of 12%
          convertible debentures during July through September 1998.

                                      F-35
<PAGE>
                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------



To the Board of Directors and Stockholders
Dimensional Visions Incorporated and Subsidiaries
Phoenix, Arizona


We have audited, in accordance with generally accepted auditing  standards,  the
consolidated  financial  statements  of  DIMENSIONAL  VISIONS  INCORPORATED  AND
SUBSIDIARIES  included in this annual  report on Form 10-KSB and have issued our
report  thereon dated  September 15, 1998. Our audit was made for the purpose of
forming an opinion on the basic  consolidated  financial  statements  taken as a
whole. The schedules listed in the preceding index are the responsibility of the
Company's  management  and are  presented  for  purposes of  complying  with the
Securities  and  Exchange  Commission's  rules  and  are not  part of the  basic
consolidated  financial  statements.  These schedules have been subjected to the
auditing  procedures applied in the audits of the basic  consolidated  financial
statements  and, in our  opinion,  fairly  state in all  material  respects  the
consolidated  financial  data  required to be set forth in relation to the basic
consolidated financial statements taken as a whole.





                                                       GITOMER & BERENHOLZ, P.C.

Jenkintown, Pennsylvania
September 15, 1998

                                      F-36
<PAGE>
                                                                      Exhibit IV

                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
                     SCHEDULE IV - PROPERTY AND EQUIPMENT(1)

--------------------------------------------------------------------------------
   Column A       Column B    Column C     Column D     Column E    Column F
--------------------------------------------------------------------------------
                 Balance at                               Other
                 Beginning                              Changes -
                     of       Additions                    Add      Balance at
Classification     Period      at Cost   Retirements(2)  (Deduct) End of Period
--------------------------------------------------------------------------------
Year Ended
June 30, 1998
-------------
  Equipment      $1,527,776   $149,112   $1,306,544     $   -       $370,344
  Furniture and               
    fixtures        125,035       -         100,818         -         24,217
                 ----------    -------   -----------    --------    --------
                              
                 $1,652,811   $149,112   $1,407,362     $   -       $394,561
                 ==========   ========   ==========     ========    ========
Year Ended                    
June 30, 1997
-------------                 
  Equipment      $1,891,703   $  3,614     $367,541     $   -     $1,527,776
  Furniture and               
    fixtures        143,408      1,052       19,425         -        125,035
  Leasehold                   
    improvements    109,446       -         109,446         -           -
                 ----------   --------     --------     --------  ----------
                              
                 $2,144,557   $  4,666     $496,412     $   -     $1,652,811
                 ==========   ========     ========     ========  ==========
                                  
     (1)  Depreciation and amortization is computed by the straight-line  method
          over the estimated useful lives of the related assets as follows:

          Equipment                5 - 7 years
          Furniture and fixtures   5 years
          Leasehold improvements   Term of the initial operating lease (5 years)
         
     (2)  Represents equipment and leasehold improvements abandoned or sold

                                      F-37
<PAGE>
                                                                       Exhibit V

                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARIES
             SCHEDULE V - ACCUMULATED DEPRECIATION AND AMORTIZATION
                            OF PROPERTY AND EQUIPMENT

-------------------------------------------------------------------------------
   Column A       Column B  Column C    Column D     Column E      Column F
-------------------------------------------------------------------------------
                 Balance at                            Other
                 Beginning                           Changes -
                     of     Additions                   Add        Balance at
Classification     Period    at Cost  Retirements(2)  (Deduct)   End of Period
-------------------------------------------------------------------------------
Year Ended
June 30, 1998
-------------
  Equipment      $1,447,228   $ 40,919   $1,278,328   $  -          $209,819
  Furniture and
    fixtures        115,193      2,198       93,701      -            23,690
                 ----------   --------   ----------   --------      --------

                 $1,562,421   $ 43,117   $1,372,029   $  -          $233,509
                 ==========   ========   ==========   ========      ========
Year Ended
June 30, 1997
-------------
  Equipment      $1,767,977   $ 46,084     $366,833   $  -        $1,447,228
  Furniture and
    fixtures        130,188      4,092       19,087      -           115,193
  Leasehold
    improvements    109,152        190      109,342      -              -
                 ----------   --------     --------   --------     ------

                 $2,007,317   $ 50,366     $495,262   $  -        $1,562,421
                 ==========   ========     ========   ========    ==========

     (1)  Represents accumulated  depreciation and amortization written off as a
          result of abandonment or sale

                                      F-38