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, 1999

                                       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, $.001 par value
                                (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,  1999,  the  Company's  revenue  was
$741,901.

     As of September 30, 1999, the number of shares of Common Stock  outstanding
was 5,970,607.  The aggregate market value of the Company's Common Stock held by
non-affiliates  of the  registrant as of September 30, 1999,  was  approximately
$8,574,055 (based upon 5,964,560 shares at $1.4375 per share).
<PAGE>
                       DOCUMENTS INCORPORATED BY REFERENCE

     The  following  documents  are  incorporated   herein  by  reference:   (a)
Registration  Statement on Form S-1, as amended (Registration No. 33-24554),  is
incorporated  in Part III,  Item 13(a);  (b) Forms  10-KSB for the fiscal  years
ended June 30, 1992,  1993,  1994, and 1995, are  incorporated in Part III, Item
13(a); (c) Current Report on Form 8-K, filed with the SEC on September 27, 1995,
(File No.  001-10196) is incorporated in Part III, Item 13(a) ; (d) Registration
Statement  on Form S-8,  filed with the SEC on June 14, 1996  (Registration  No.
333-06679),  is incorporated in Part III, Item 13(a);  and (e) Current Report on
Form 8-K,  filed with the SEC on  October  21,  1997,  (File No.  001-10196)  is
incorporated in Part III, Item 13(a).

                                        2
<PAGE>
                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

GENERAL

Dimensional  Visions  Incorporated (the "Company")  creates and delivers special
value-added & integrated  product/packaging  solutions and integrated  marketing
solutions  called  "HALOGraphix*  MarketingLenses(SM)  Solutions" utilizing its
unique patent pending Multi-Dimensional Digital Design and Production Processing
System.

     *HALOGraphix      (Holographic     Alternative     Lenticulated     Optics)
     MarketingLenses(SM)  Solutions" are very dramatic  Multi-Dimensional Visual
     Effects. These Multi-Dimensional  Visual Effects may be produced in varying
     sizes to specified  customer  applications for leading visionary  companies
     who  want to  differentiate  their  products  from  the  competition  while
     increasing their sales and profits.

     Lenticulated  (also called  lenticular) - There is a layer of lenticles (or
     lenses) in front of the image.  They 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)  not only do they  allow the  viewer to see the
     proper stereo views, but also fluid animation simultaneously.

The Company's objective is to become a dominant marketer, developer and producer
of   HALOGraphix   MarketingLenses(SM)   Solutions  in  the  United  States  and
internationally.

The Company believes its HALOGraphix  MarketingLenses(SM) Solutions offer unique
selling solutions  demanded by leading companies and select visionary leaders in
the "Promotion Marketing Industry," "Advertising & Graphic Design Industry," and
Original Equipment Manufacturers throughout the United States.

The Company's sole active subsidiary,  InfoPak, Inc., manufactures and markets a
hardware/software  packaged  product line called the  "InfoPakSystem(TM)."  This
system was designed to handle substantial offline information and databases that
may require frequent updating.

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

The  Company  has  decided  to focus  all of its  resources  on its  HALOGraphix
MarketingLenses(SM) Solutions product line. During Fiscal Year 1999, the Company
retained  an  investment-banking  firm to assist the  Company in the sale of its
InfoPak,  Inc.  subsidiary.  The Company has been unable to secure a buyer.  The
Company will continue to support the operations of InfoPak until such time as it
is either sold or management decides to discontinue operations.

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

FISCAL YEARS 1998-1999

In January 1998, the Company  established  its current  headquarters in Phoenix,
AZ. Under the leadership of a totally new executive management team, the Company
was completely restructured including changing its corporate name to Dimensional
Visions Incorporated and modifying its stock trading symbol from DVGL to "DVUI."

FISCAL YEARS 1995-1997

In  1995,  Dimensional  Visions  acquired  InfoPak,  Incorporated  (of  Phoenix,
Arizona)  which  is  currently  a  wholly  owned   subsidiary.   InfoPak,   Inc.
manufactures    and   markets   a    hardware/software    package   called   the
"InfoPakSystem(TM)".  It was  marketed  to  mobile  business  professionals  and
delivered  to  carefully  targeted  companies in the  automobile  appraisal  and
real-estate businesses.

                                       3
<PAGE>
From 1995 to 1997, the Company  utilized the software  development  resources of
InfoPak,  Incorporated  to develop the  patent-pending  software and  systematic
digital process for its HALOGraphix MarketingLenses(SM) Solutions.

FISCAL YEARS 1988-1994

In 1988,  Dimensional  Visions  Group,  Ltd.  (OTC  Bulletin  Board:  DVGL)  was
incorporated  in the  state  of  Delaware.  The  Company  was  headquartered  in
Philadelphia,   PA.  The  Company  was  in  the  "robotic   camera   controlled"
three-dimensional  photographic  imaging and  lenticular  lithographic  printing
business. The entire complicated process utilized during this timeframe was very
expensive and extremely  difficult to consistently  reproduce  quality images to
meet the price and  delivery  demands  of the  product  promotion  markets.  The
Company, during this timeframe,  tried unsuccessfully to perfect the complicated
"robotic camera" process.

Note: In January 1998, the Company sold all of the original robotic photographic
equipment to concentrate on the new  HALOGraphix  MarketingLenses(SM)  Solutions
(utilizing  very high-end  Intel based graphic  design  computers).  The Company
believes  that the new  process is much more cost  effective  and best meets the
demands of today's quick changing market.

STRATEGY

MARKET & PENETRATION

Multi-dimensional  marketing promotion,  once considered a novelty, is a growing
part  of  the  marketing  communication  mainstream.  The  nation's  most  savvy
marketing groups and decision-makers are adopting multi-dimensional solutions as
means for  reaching  and  influencing  readers  who simply  ignore even the most
sophisticated, "flat" marketing communications.  HALOGraphix MarketingLenses(SM)
Solutions are dramatic. You can combine depth and movement to excite the senses,
command  attention,  and  leave a lasting  impression.  Statistics  continue  to
demonstrate the  effectiveness  of  multi-dimension.  Consider the Time magazine
study of a mass-circulation dimensional advertisement:

     - 96 percent of Time readers recalled seeing the  advertisement.  It caught
     practically everyone's attention.

     - 91  percent  reported  reading  half or more of the  advertisement.  This
     compares to the 30-40  percent  readership  that is typical of a flat print
     advertisement.

     - 72 percent  retained  a  distinct  association  between  the  dimensional
     advertisement,  the corporation that produced the ad, and the services that
     firm represented.

     - 69 percent were favorably  disposed  toward the  dimensional  advertiser,
     compared to a 14 percent  favorable  rating  among those not exposed to the
     ad.

HALOGraphix  MarketingLenses(SM)  Solutions have and will be (a) integrated onto
products,  (b)  integrated  onto  product  packaging,  and (c)  integrated  onto
marketing communications for products and services.

The Company defines the market for its HALOGraphix MarketingLenses(SM) Solutions
as the following major vertical  markets in the United States as further defined
and segmented below:

     - Specially selected Original Equipment Manufacturers (OEM's)

     - Specially selected Promotional Marketing Firms.

     - Specially selected  Advertising & Graphics Design Firms. (less newspaper,
     radio and TV)

                                       4
<PAGE>
The  Company  believes  that  the  market  for  HALOGraphix  MarketingLenses(SM)
Solutions is in its infancy  particularly  with the advent of new very  high-end
Intel based graphic  design  computers and vastly  improved  lenticular  plastic
extrusion  capabilities.  With these advances,  coupled with the best-integrated
software  methodology and marketing  strategy,  the Company believes it can be a
market leader.

The  Company   estimates   that  the  market   universe   for  its   HALOGraphix
MarketingLenses(SM) Solutions is as follows:

     Original Equipment  Manufacturers:  The estimated total annual revenues for
original  equipment  manufacturers is approximately 3.8 trillion dollars with an
estimated marketing  communications 1-year universe of 38 billion dollars and an
estimated marketing communications 5-year universe of 190 billion dollars.

     Promotion  Marketing Industry:  According to PROMO MAGAZINE,  the estimated
1997 revenues for the promotion marketing industry was 79.5 billion dollars. The
Company  believes  that the  Premium/Incentives,  Point of  Purchase,  Specialty
Printing,  and  Agencies Net Revenues  categories,  which  account for over 43.7
billion  dollars,  are  potential  users  of  the  HALOGraphix   MarketingLenses
Solutions.

     Advertising  Industry:  According to ADVERTISING  AGE, the 1997 advertising
revenues in the U.S.  totaled over 187.6 billion  dollars.  The Company believes
that Newspapers,  Magazines,  Direct Mail,  Business Papers,  and  Miscellaneous
other advertising methods are potential users of the HALOGraphix MarketingLenses
Solutions.  These  categories  make up over 116.4 billion  dollars or 62% of the
total advertising revenues.

PRODUCTION

The  Company  controls  or  supervises  all  phases  of  the  production  of its
HALOGraphix   MarketingLenses(SM)  Solutions  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.

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 product. 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 filed a patent  application on February 15, 1999 for its HALOGraphix
(Holographic  Alternative   Lenticulated   Optics)-  DV3D(R)  and  Animotion(TM)
Software  and Print  System.  The  Company  believes  that the patent will issue
within two years.

                                       5
<PAGE>
The  Company has  received  trademark  registration  approval of DV3D(R) and has
submitted a trademark  application for Animotion(TM)  which the Company believes
will issue within the next 24 months as well.

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 that 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.

EMPLOYEES

As of June  30,  1999,  the  Company  had  four  employees,  including  three in
management,  one of whom is  involved in  manufacturing,  one in  marketing  and
sales, one in finance,  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.

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, 1999  June 30, 1998  June 30, 1997  June 30, 1996  June 30, 1995
                            -----------    -----------    -----------    -----------    -----------
<S>                         <C>            <C>            <C>            <C>            <C>
Operation revenue           $   741,901    $   609,392    $   551,517    $ 1,083,897    $   134,028
Net Loss                    $(1,465,812)   $  (421,659)   $(2,162,134)   $(2,035,647)   $(1,192,332)
Net Loss per share of
common stock                $      (.37)   $      (.14)   $     (1.11)   $     (2.98)   $     (1.81)
Balance Sheet Data:
Working Capital (deficit)   $  (603,946)   $  (235,920)   $  (107,952)   $     9,528    $  (138,013)
Total Assets                $   530,973    $   920,841    $   529,520    $ 1,408,919    $   451,237
Total Liabilities           $ 1,118,740    $   713,539    $   613,947    $   673,058    $ 2,502,230
Stockholders' equity
(deficiency)                $  (587,767)   $   207,302    $   (84,427)   $   735,861    $(2,050,993)
</TABLE>

ITEM 2. DESCRIPTION OF PROPERTY.

The Company  leases  approximately  4,364 square feet of office space at 2301 W.
Dunlap Avenue,  Suites 207 and 201 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 total lease  payments  for fiscal year 2000 will be $66,600.  The
lease also requires the Company to pay all taxes and insurance.

                                       6
<PAGE>
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. The case
was transferred to the United States District Court,  District of Arizona,  case
number CIV 97-1383 PHX RGS. Mr.  Wright  claimed he was damaged by the Company's
refusal to register  warrants  owned by Mr. Wright in the amount of  $1,549,375.
The Company filed a Motion for Summary  Judgement  which prevailed and this case
was dismissed on September 30, 1999.

In July 1996, the Company filed a complaint in the United States  District Court
for the  Eastern  District of  Pennsylvania,  case  number  96-CV-5259,  against
Dimensional  Graphic  Sales,  Inc. The Company  sought  damages in the amount of
$213,522  for  breach of  contract.  Dimensional  Graphic  Sales,  Inc.  filed a
counter-claim  against the Company  seeking an  unspecified  amount in excess of
$100,000.  The matter was moved to deferred  status while the parties engaged in
settlement negotiations. There has been no action in this matter by either party
and the Company will no longer pursue this claim.

In June 1999,  Electronic Pricing Guides,  Inc., an Arizona corporation ("EPG"),
filed a claim against InfoPak,  Inc., a Delaware  corporation and the Company at
the American Arbitration  Association,  Dallas,  Texas branch,  arbitration file
number 76 Y 181 00146 99. EPG claimed breach of contract and InfoPak, Inc. filed
a counter-claim  also seeking breach of contract and breach of promissory  note.
EPG seeks money  damages for lost  business in an  undiscerned  amount.  InfoPak
seeks money  damages in the amount of $85,500 plus  interest  from March 1, 1998
and $8,000. The Company does not believe that this legal proceedings will have a
material  adverse  effect on the  Company's  financial  condition  or  operating
results.

To the best  knowledge of  management,  there are no other  material  litigation
matters pending or threatened against the Company.

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 1998.

                                     PART II

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 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 11/32    27/64
  Second Quarter.............................................    21/32      1/4
  Third Quarter..............................................     7/16     3/16
  Fourth Quarter.............................................    27/32     3/16

FISCAL 2000
  First Quarter..............................................   2 3/16      3/8

                                       7
<PAGE>
HOLDERS

     As of September 30, 1999, the number of stockholders of record was 438, 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  on its Common Stock 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 Series B Convertible  Preferred  stock, a 8% annual  dividend is due and
owing.  As of June 30, 1999, the Company has not declared  dividends on Series A
or B preferred  stock. The unpaid  cumulative  dividends  totaled  approximately
$88,000. See Note 10 of Notes to Consolidated Financial Statements.

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

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 was  precarious.  The
Company  needed  funding in order to maintain  current  operations.  The Company
funded its operations by selling its securities in private  placements,  through
short-term borrowing, and from the sale of its products.

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 was 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 were only
slightly higher than fiscal 1997, the product mix was  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.

                                       8
<PAGE>
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.

FISCAL YEARS 1998 AND 1999

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 1999,  the Company had a working  capital  deficiency of $603,946
compared with a working capital  deficiency of $235,920 as of June 30, 1998. The
decrease  in  working  capital is largely  the  result of  increased  short-term
borrowings used as operating funds, the write-off of certain bad debts (see Note
3 to the  Consolidated  Financial  Statements),  and the  reduction  of accounts
receivable. During the period ended June 30, 1999, the Company raised a total of
$720,000 before debt issuance costs of approximately $57,450 through the sale of
long and short term debentures.

As of June 30, 1999, 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 long-term and short-term borrowing, and from the sale of its
products.

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, 1999,  was  $1,465,812  compared
with a net loss of  $421,659  for the  fiscal  year  ended  June 30,  1998.  The
substantial  increase of the net loss is the result of the gain  recognized from
the sale of the  product  line of  $410,000  for the fiscal  year ended June 30,
1998,  and the  subsequent  recognition  of bad debt  totaling  $402,006 for the
fiscal year ended June 30, 1999.  Interest expense and  administrative  expenses
were also significantly higher for the fiscal year ended June 30, 1999.

Revenue  for the fiscal  year ended June 30,  1999,  was  $741,901  compared  to
revenue of  $609,392  for the fiscal  year  ended June 30,  1998.  Approximately
$614,000  of total  revenue for the fiscal  year ended June 30,  1999,  was from
print  products  compared to $323,000 of total revenue for the fiscal year ended
June 30, 1998.  The Company is  continuing  to increase the  percentage of print
revenue as a part of total  revenue.  Sales of products and  licensing  fees for
InfoPak, Inc. are continuing to diminish.

On March 1, 1998, the Company sold computer  hardware through its InfoPak,  Inc.
subsidiary  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 Company has not been
able to collect the required monthly payments due on this note. The customer has
filed for an arbitration hearing on the basis that the Company failed to provide
data to support their  customer base (see Note 3 to the  Consolidated  Financial
Statements). The Company has filed a counter-claim for full payment of the note.

EVENTS SUBSEQUENT TO JUNE 30, 1999

The Company  has  received  subscription  agreements  for the sale of  1,125,000
shares of its Common Stock totaling $875,000. As of October 7, 1999, the Company
has received $750,000.

                                       9
<PAGE>
The Company  extended an offer to the long and short term  debenture  holders to
convert their debt into shares of the Company's  common stock at $.375 per share
which was the market  closing price the day the offer was made. As of October 7,
1999,  all of the  debenture  holders have agreed to convert the  principal  and
interest  into shares of the Company's  Common Stock.  The Company has agreed to
register  these  shares  with  the SEC on the  appropriate  form.  Additionally,
certain   accounts  payable  were  offered  the  opportunity  to  convert  their
receivables  into  shares of the  Company's  Common  Stock at $.375  per  share.
Approximately  $62,000 of accounts  payable were  converted.  See Note 17 to the
Consolidated  Financial  Statements for a pro forma  statement of the changes to
the Company's Balance Sheet.

YEAR 2000 COMPLIANCE

Many currently  installed  computer  systems and software  products are coded to
accept only  two-digit  entries in the date code  field.  These date code fields
will need to accept  four-digit  entries to distinguish  21st century dates from
20th  century   dates.   This  problem  could  result  in  system   failures  or
miscalculations  causing  disruptions  of  business  operations.  As  a  result,
computer  systems and/or software used by many companies may need to be upgraded
to comply with such "Year 2000" requirements.  Significant uncertainty exists in
the software  industry  concerning the potential  effects  associated  with such
compliance.

The Company believes its key internal software systems are either compliant, the
vendors claim  compliance,  or the problems can be corrected by purchasing small
amounts of hardware,  software or software upgrades,  where necessary.  Based on
its assessments and current  knowledge,  the Company  believes it will not, as a
result of the Year 2000 issue,  experience any material  disruptions in internal
processes,  information processing or services from outside  relationships.  The
Company  presently  believes that the Year 2000 issue will not pose  significant
operational  problems and the Company will be able to manage its total Year 2000
transition without any material effect on the Company's results of operations or
financial condition.

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.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(a) OF THE EXCHANGE ACT.

The directors and executive officers of the Company are as follows:

      Name                 Age                    Position
      ----                 ---                    --------
John D. McPhilimy          56      Director, Chairman of the Board of Directors
                                   and Chief Executive Officer

Roy D. Pringle             31      Vice President and Chief Financial Officer

Bruce D. Sandig            40      Senior Vice President Engineering

Susan A. Gunther           49      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.

                                       10
<PAGE>
     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.  Susan A. Gunther has served as 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.

     On March 11,  1999,  Mr.  Ray  Quadt and Mr.  Lawrence  Olson  resigned  as
directors of the Company,  and on June 25, 1999,  Mr. George Smith resigned as a
Director of the Company.

     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

                                       11
<PAGE>
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.

     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 for the fiscal year ended June 30, 1999.
No officer of the  Company  earned  more than  $100,000 in the fiscal year ended
June 30, 1999.
<TABLE>
<CAPTION>
                                                                Long Term Compensation
                                                          -----------------------------------
                                 Annual Compensation              Awards              Payouts
                           -----------------------------  -------------------------   -------
                                                                        Securities
                                            Other Annual  Restricted    Underlying     LTIP     All Other
                           Salary    Bonus  Compensation    Stock      Options/SARs   Payouts  Compensation
                    Year     ($)      ($)       ($)        Awards ($)      (#)          ($)        ($)
                    ----   -------   -----  ------------  -----------  ------------   -------  ------------
<S>                 <C>    <C>       <C>    <C>           <C>          <C>            <C>      <C>
John D. McPhilimy   1999   $89,250    $0        $0            $0            --          $0         $0
</TABLE>

                   OPTIONS/SAR GRANTS IN THE FISCAL YEAR 1999
                                INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
                            Number of
                            Securities       % of Total
                            Underlying   Options/SARs Granted
                            Option/SARs    to Employees in      Exercise or Base  Expiration
      Name            Year  Granted (#)       Fiscal Year        Price ($/Share)     Date
      ----            ----   --------    --------------------   ----------------  ----------
<S>                   <C>   <C>          <C>                    <C>               <C>
John D. McPhilimy     1999      0                 --                   --             --
</TABLE>

       AGGREGATED OPTIONS/SAR EXERCISES IN THE FISCAL YEAR 1999 AND FY-END
                                OPTION/SAR VALUES
<TABLE>
<CAPTION>
                                                   Number of Securities
                              Shares               Underlying Exercised       Value of
                             Acquired             Options/ SARs at FY-End    Unexercised
                                on                          (#)             In-the-Money
                             Exercise    Value          Exercisable/       Options/SARs at
      Name            Year      (#)     Realized       Unexercisable         FY-End ($)
      ----            ----   --------   --------  -----------------------  ---------------
<S>                   <C>    <C>        <C>       <C>                      <C>
John D. McPhilimy     1999      --          0         450,000(E)/0(U)         $191,250
</TABLE>
                                       12
<PAGE>
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 June 30, 1999 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.

                                             Amount and Nature of     Percent
Name and Address of Beneficial Owners(1)   Beneficial Ownership(2)  Ownership(2)
----------------------------------------   -----------------------  ------------
George S. Smith (3)                                280,141              5.32
3688 N. Littlerock Drive
Provo, UT 84604

John D. McPhilimy (4)                              450,000              8.05
1340 W. Elgin Street
Chandler, AZ 85224

Bruce D. Sandig (5)                                270,962              5.04
13247 N. 3rd Place
Phoenix, AZ 85022

Roy D. Pringle (6)                                 216,047              4.04
7186 W. Topeka Drive
Glendale, AZ 85308

Susan A. Gunther (7)                                40,000              0.77
26210 S. Lime Drive
Queen Creek, AZ 85242

All executive officers and directors
as a group (4 persons) (8)                         977,009             16.07

----------
(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.

(2)  The  percentages  shown are calculated  based upon the 5,138,192  shares of
     Common  Stock  outstanding  on June 30, 1999.  The numbers and  percentages
     shown include the shares of Common Stock actually owned as of June 30, 1999
     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 155,141 shares of the Company's Common Stock. Also included
     in the amount are  warrants to  purchase  125,000  shares of the  Company's
     Common Stock at an exercise price of $.20 until October 28, 2003.

(4)  Mr.  McPhilimy  has warrants to purchase  450,000  shares of the  Company's
     Common Stock at an exercise price of $.20 until October 28, 2003.

(5)  Mr. Sandig owns 30,962 shares of the Company's Common Stock.  Also included
     in the amount are common stock purchase warrants to purchase 240,000 shares
     of the  Company's  Common Stock at an exercise  price of $.20 until October
     28, 2003.

(6)  Mr. Pringle owns 6,047 shares of the Company's Common Stock.  Also included
     in the amount are common stock purchase warrants to purchase 210,000 shares
     of the  Company's  Common Stock at an exercise  price of $.20 until October
     28, 2003.

                                       13
<PAGE>
(7)  Ms. Gunther has warrants to purchase 20,536 shares of the Company's  Common
     Stock at an exercise price of $.50 until October 28, 2003.

(8)  Includes  common  stock  purchase  warrants to  purchase  in the  aggregate
     977,009 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 June 30, 1999, no options are outstanding under this plan.

1996 EQUITY INCENTIVE PLAN

     The  Company,  in June 1996.  adopted the 1996 Equity  Incentive  Plan (the
"1996 Plan") covering  10,000,000  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 June 30,  1999,  4,558,978  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 in November  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 $72,000 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 $84,000 per year.

                                       14
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

(a)  Exhibits

     3.1(f)    Articles of Incorporation, dated May 12, 1988

     3.2(a)    Bylaws

     4.1(b)    Certificate  of  Designation  of Series A  Convertible  Preferred
               Stock, dated December 12, 1992

     4.2(b)    Certificate  of  Designation  of Series B  Convertible  Preferred
               Stock, dated December 22, 1993

     4.3(c)    Certificate  of  Designation  of Series P  Convertible  Preferred
               Stock, dated September 11, 1995

     4.4(d)    Certificate  of  Designation  of Series S  Convertible  Preferred
               Stock, dated August 28, 1995

     4.5(d)    Certificate  of  Designation  of Series C  Convertible  Preferred
               Stock, dated November 2, 1995

     4.6(f)    Form of Warrant Agreement to debt holders, dated January 15, 1998

     4.7(f)    Form of Warrant Agreement to debt holders, dated April 8, 1998

     4.8(f)    Form of Warrant  Agreement to participants  in Private  Placement
               dated April 8, 1998

     4.9(f)    Series A Convertible Secured Debenture

     4.10(f)   Security Agreement for Series A Convertible Secured Debentures

     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.,
               DataNet Enterprises, LLC, and David and Staci Noles

     10.4      Lease Agreement, dated October 27, 1997

     21.0      Subsidiaries of the Registrant

     27.0      Financial Data Schedule

(b)  Reports on Form 8-K.

               None.

----------
(a)  Incorporated by reference from the Registrant's  Registration  Statement on
     Form S-1, as amended (Registration No. 33-24554).

(b)  Incorporated by reference from the Registrant's Forms 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,
     filed with the SEC on September 27, 1995.

(d)  Incorporated by reference from the Registrant's  Registration  Statement on
     Form S-8, filed with the SEC on June 14, 1996 (Registration No. 333-06679).

(e)  Incorporated by reference from the Registrant's Current Report on Form 8-K,
     filed with the SEC on October 21, 1997.

(f)  Incorporated by reference from the Registrant's  Form 10-KSB for the fiscal
     year ended June 30, 1998.

                                       15
<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 8, 1999                  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 8, 1999
--------------------------       Officer
John D. McPhilimy

/s/ Bruce D. Sandig              Vice President, Director        October 8, 1999
--------------------------
Bruce D. Sandig

/s/ Susan A. Gunther             Director                        October 8, 1999
--------------------------
Susan A. Gunther

                                       16
<PAGE>
                DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY

                                FINANCIAL REPORT

                       YEARS ENDED JUNE 30, 1999 AND 1998

            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'Deficiency                                     F-6

  Statements of Cash Flows                                                  F-10

  Notes to Consolidated Financial Statements                                F-14

Schedules

  Independent Auditors' Report                                              F-35

  Schedule IV - Property and Equipment                                      F-36

  Schedule V - Accumulated Depreciation and
    Amortization of Property and Equipment                                  F-37

                                       F-1
<PAGE>
                          INDEPENDENT AUDITORS' REPORT


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

We have  audited the  accompanying  consolidated  balance  sheet of  Dimensional
Visions Incorporated and Subsidiary (the "Company") as of June 30, 1999, 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, 1999.  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 Subsidiary as of June 30, 1999 and the results of their operations and their
cash  flows  for each of the two  years in the  period  ended  June 30,  1999 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 its ability to

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


(1)   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) achieve a level
of sales  adequate to support the Company's cost  structure,  and (4) 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.

Jenkintown, Pennsylvania
October 7, 1999

                                       F-3
<PAGE>
                 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 1999

                                     ASSETS
Current assets
  Cash                                                             $     20,019
  Notes receivable, net of allowance for bad
    debts of $402,006                                                    41,663
  Accounts receivable, trade, net of allowance for
    bad debts of $11,833                                                 78,068
  Inventory                                                               6,900
  Prepaid expenses                                                       17,896
                                                                   ------------
    Total current assets                                                164,546
                                                                   ------------
Equipment
  Equipment                                                             401,678
  Furniture and fixtures                                                 50,162
                                                                   ------------
                                                                        451,840
  Less accumulated depreciation                                         279,681
                                                                   ------------
                                                                       172,159
                                                                   ------------
Other assets
  Deferred costs                                                        158,567
  Patent rights and other assets                                         35,701
                                                                   ------------
                                                                        194,268
                                                                   ------------
    Total assets                                                   $    530,973
                                                                   ============

               LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

Current liabilities
  Short-term borrowings                                            $    213,767
  Current portion of obligations under capital leases                    20,552
  Accounts payable, accrued expenses and other
    liabilities                                                         534,173
                                                                   ------------
    Total current liabilities                                           768,492
                                                                   ------------
Long-term debt                                                          268,215
                                                                   ------------
Obligations under capital leases, net of current portion                 82,033
                                                                   ------------
    Total liabilities                                                 1,118,740
                                                                   ------------
Commitments and contingencies                                                --

Stockholders' equity (deficiency)
  Preferred stock - $.001 par value, authorized 10,000,000
    shares; issued and outstanding 130,810 shares                           131
  Additional paid-in capital                                            658,170
                                                                   ------------
                                                                        658,301
  Common stock - $.001 par value, authorized 100,000,000
    shares; issued and outstanding 5,138,192 shares                       5,138
  Additional paid-in capital                                         19,556,402
  Deficit                                                           (20,807,608)
                                                                   ------------
    Total stockholders' equity (deficiency)                            (587,767)
                                                                   ------------
    Total liabilities and stockholders' equity (deficiency)        $    530,973
                                                                   ============

                 See notes to consolidated financial statements.

                                       F-4
<PAGE>
                 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                       YEARS ENDED JUNE 30, 1999 AND 1998


                                                      1999              1998
                                                   -----------      -----------
Operating revenue                                  $   741,901      $   609,392
Cost of sales                                          562,711          473,147
                                                   -----------      -----------
Gross profit                                           179,190          136,245
Sale of product line                                        --          410,000
                                                   -----------      -----------
                                                       179,190          546,245
                                                   -----------      -----------
Operating expenses
  Engineering and development costs                    146,480          226,237
  Marketing expenses                                   301,630          249,607
  General and administrative expenses                  605,347          395,414
                                                   -----------      -----------
    Total operating expenses                         1,053,457          871,258
                                                   -----------      -----------
Loss before other income (expenses)                   (874,267)        (325,013)
                                                   -----------      -----------
Other income (expenses)
  Interest expense                                    (207,727)         (92,117)
  Interest income                                       18,188           30,806
  Loss on sale/abandonment of leasehold
    improvements and equipment                              --          (35,335)
  Bad debt expense on notes receivable                (402,006)              --
                                                   ===========      ===========
                                                      (591,545)         (96,646)
                                                   -----------      -----------
Net loss                                           $(1,465,812)     $  (421,659)
                                                   ===========      ===========
Loss per share
  Basic and diluted loss per common share          $      (.37)     $      (.14)
                                                   ===========      ===========
Shares used in computing net loss per share          3,973,118        3,073,650
                                                   ===========      ===========

                 See notes to consolidated financial statements.

                                       F-5
<PAGE>
                 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                       YEARS ENDED JUNE 30, 1999 AND 1998

<TABLE>
<CAPTION>
                                           Preferred Stock                      Common Stock
                                          ($.001 Par Value)   Additional      ($.001 Par Value)
                                         -------------------    Paid-in     ---------------------
                                           Shares     Amount    Capital       Shares      Amount
                                           -------    -----    ---------    ----------    -------
<S>                                        <C>        <C>      <C>          <C>           <C>
Balance, July 1, 1997                      219,378    $ 219    $ 923,209    68,137,872    $68,138

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

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

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

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

Exercise of 1,000,000 warrants to
purchase 1,000,000 pre-split shares of
the Company's common stock at $.10 per
share                                           --       --           --     1,000,000      1,000

Issuance of 50,000 pre-split shares of
the Company's common stock to an
employee for compensation valued at $2,750      --       --           --        50,000         50

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

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

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

                                             Additional
                                               Paid-in
                                               Capital      Deficit       Total
                                               -------      -------       -----
Balance, July 1, 1997                        $17,844,144  $(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                        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                    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                        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               48,182            --     50,000

Exercise of 1,000,000 warrants to
purchase 1,000,000 pre-split shares of
the Company's common stock at $.10 per
share                                              9,000            --     10,000

Issuance of 50,000 pre-split shares of
the Company's common stock to an
employee for compensation valued at $2,750         2,700            --      2,750

Issuance of 180,000 pre-split shares of
the Company's common stock to consultants
for services valued at $11,250                    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                                    68,600            --     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                                   73,333            --     75,000
</TABLE>

                                       F-6
<PAGE>
                 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998

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

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


                                                   Additional
                                                    Paid-in
                                                    Capital      Deficit       Total
                                                  -----------  ------------   --------
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            --      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                                          477,779            --    492,700
</TABLE>

                                       F-7
<PAGE>
                 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998

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

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

Net loss                                        --      --          --           --        --
                                           -------    ----    --------  -----------  --------
Balance, June 30, 1998                     133,321    $133    $683,278    3,612,101  $  3,612
                                           =======    ====    ========  ===========  ========

                                             Additional
                                              Paid-in
                                              Capital       Deficit      Total
                                            -----------  ------------   --------
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            --         28

1 for 25 reverse stock split                     86,691            --         --

Net loss                                             --      (421,659)  (421,659)
                                            -----------  ------------   --------
Balance, June 30, 1998                      $18,862,075  $(19,341,796)  $207,302
                                            ===========  ============   ========
</TABLE>

                                       F-8
<PAGE>
                 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998

<TABLE>
<CAPTION>
                                           Preferred Stock                  Common Stock
                                          ($.001 Par Value)  Additional   ($.001 Par Value)
                                           ---------------    Paid-in    -------------------
                                           Shares    Amount   Capital      Shares    Amount
                                           -------   -----   ---------   ----------  -------
<S>                                        <C>       <C>     <C>         <C>         <C>
Balance, July 1, 1998                      133,321   $ 133   $ 683,278   3,612,101   $3,612

Conversion of 1,500 shares Series B
convertible preferred stock valued at
$15,000 into 6,000 shares of the
Company's common stock                      (1,500)     (1)    (14,999)      6,000        6

Conversion of 1,011 shares Series C
convertible preferred stock valued at
$10,110 into 47,390 shares of the
Company's common stock                      (1,011)     (1)    (10,109)        403       --

Issuance of 1,519,688 shares of the
Company's common stock to consultants
for services valued at $320,593                 --      --          --   1,519,688    1,520

Issuance of 485,000 warrants to purchase
485,000 shares of the Company's common
stock at $.50 per share for a three and
a half year period commencing January 16,
1998 in connection with the issuance of
convertible debentures due July 31, 2001
Black Scholes option pricing model was
used to value the warrants                      --      --          --          --       --

Issuance of 85,000 warrants to purchase
85,000 shares of the Company's common
stock at $.25 per share and issuance of
150,000 warrants to purchase 150,000
shares of the Company's common stock at
$.10 per share for a three year period
commencing January 25, 1999 in connection
with the issuance of convertible
debentures due July 1999 through October
1999. The Black Scholes option pricing
model was used to value the warrants            --      --          --          --       --

Net loss                                        --      --          --          --       --
                                          --------   -----   ---------   ---------   ------
Balance, June 30, 1999                     130,810   $ 131   $ 658,170   5,138,192   $5,138
                                          ========   =====   =========   =========   ======

                                            Additional
                                             Paid-in
                                             Capital      Deficit         Total
                                           -----------  ------------    --------
Balance, July 1, 1998                      $18,862,075  $(19,341,796)   $207,302

Conversion of 1,500 shares Series B
convertible preferred stock valued at
$15,000 into 6,000 shares of the
Company's common stock                          14,994            --          --

Conversion of 1,011 shares Series C
convertible preferred stock valued at
$10,110 into 47,390 shares of the
Company's common stock                          10,110            --          --

Issuance of 1,519,688 shares of the
Company's common stock to consultants
for services valued at $320,593                319,073            --     320,593

Issuance of 485,000 warrants to purchase
485,000 shares of the Company's common
stock at $.50 per share for a three and
a half year period commencing January 16,
1998 in connection with the issuance of
convertible debentures due July 31, 2001
Black Scholes option pricing model was
used to value the warrants                     310,850            --     310,850

Issuance of 85,000 warrants to purchase
85,000 shares of the Company's common
stock at $.25 per share and issuance of
150,000 warrants to purchase 150,000
shares of the Company's common stock at
$.10 per share for a three year period
commencing January 25, 1999 in connection
with the issuance of convertible
debentures due July 1999 through October
1999. The Black Scholes option pricing
model was used to value the warrants            39,300            --      39,300

Net loss                                            --    (1,465,812) (1,465,812)
                                           -----------  ------------   ---------
Balance, June 30, 1999                     $19,556,402  $(20,807,608)  $(587,767)
                                           ===========  ============   =========
</TABLE>

                       See notes to financial statements.

                                       F-9
<PAGE>
                 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                       YEARS ENDED JUNE 30, 1999 AND 1998


                                                        1999            1998
                                                    -----------     -----------
Operating activities:
  Net loss                                          $(1,465,812)    $  (421,659)
  Adjustments to reconcile net loss to net
    cash used in operating activities
      Gain on sale of product line                           --        (410,000)
      Allowance for bad debts on notes
        receivable                                      402,006              --
      Compensation paid to officers/
        employees through issuance of
        warrants and common stock                            --           2,750
      Consulting service paid through
        issuance of warrants and common
        stock                                            65,593          11,250
      Depreciation and amortization of
        property and equipment                           46,172          43,117
      Amortization of debt discount                     112,132              --
      Amortization of other assets and
        deferred costs                                   36,811          19,856
      Interest expense paid through
        reduction of warrant price to
        debenture holders                                    --           1,660
      Interest expense paid through
        issuance of common stock                             --          73,840
      Loss on sale/abandonment of leasehold
        improvements and equipment                           --          35,335
      Transfer of prepaid expenses to assets
        sold                                                 --         (10,002)
      Changes in assets and liabilities
        which provided (used) cash
          Accounts receivable, trade                     66,552         (62,319)
          Inventory                                      62,464         109,763
          Prepaid supplies and expenses                   7,782         (15,677)
          Accounts payable, accrued expenses
            and other liabilities                        94,196          26,030
                                                    -----------     -----------
  Net cash used in operating activities                (572,104)       (596,056)
                                                    -----------     -----------
Investing activities:
  Payment of obligations under capital lease            (16,477)        (19,850)
  Purchase of equipment                                 (57,279)        (10,200)
  Deposits                                                   --          (4,100)
  Notes receivable                                           --         (90,000)
  Proceeds from payments on notes receivable             18,169          38,162
                                                    -----------     -----------
  Net cash used in investing activities                 (55,587)        (85,988)
                                                    -----------     -----------

                                      F-10
<PAGE>
                 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998



                                                            1999         1998
                                                         ---------    ---------
Financing activities:
  Proceeds from Sale of:
      Common stock                                              --      145,000
      Warrant right                                             --           28
  Short-term borrowings                                    235,000           --
  Long-term debt                                           485,000           --
  Reduction in deferred consulting fee contract
    originally paid in common stock                        100,000           --
  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
  Proceeds from sale of equipment and
    supplies                                                    --       10,000
  Borrowings from factor                                   195,560       79,500
  Payment of debt obligations                             (350,060)    (100,000)
  Disbursement of debt issuance costs                      (33,700)          --
                                                         ---------    ---------

Net cash provided by financing activities                  631,800      588,388
                                                         ---------    ---------

Net increase (decrease) in cash and cash equivalents         4,109      (93,656)
Cash and cash equivalents, beginning of year                15,910      109,566
                                                         ---------    ---------

Cash, end of year                                        $  20,019    $  15,910
                                                         =========    =========

Supplemental disclosure of cash flow information:

  Cash paid during the year for interest                 $  34,957    $   5,425
                                                         =========    =========
  Issuance of common stock in connection
    with consulting services                             $ 320,593    $  11,250
                                                         =========    =========

                                      F-11
<PAGE>
                 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998



Supplemental  disclosure  of non-cash  investing and  financing  activities  for
fiscal year 1999:

     The Company issued 6,403 shares of the Company's common stock in connection
     with the  conversion of  convertible  preferred  stock valued at $25,110 as
     follows:

                                                                    Converted to
                                                      Value         Common Stock
                                                      -----         ------------
     Series B Convertible Preferred Stock            $15,000            6,000
     Series C Convertible Preferred Stock             10,110              403
                                                     -------            -----

                                                     $25,110            6,403
                                                     =======            =====

     The  Company  issued  1,519,688  shares of the  Company's  common  stock to
     consultants for services valued at $320,593.

     The  Company  recorded  additional  paid-in  capital of  $350,150  with the
     issuance of warrants to purchase  920,000  shares of the  Company's  common
     stock in connection with the short and long-term debenture financing.

                                      F-12
<PAGE>
                 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998

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  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 SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       YEARS ENDED JUNE 30, 1999 AND 1998


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, 1999 and 1998.  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 $20,807,608  and has a
     working  capital  deficiency of $603,946 as of June 30, 1999. The future of
     the  Company as an  operating  business  will  depend on its ability to (1)
     successfully  market and sell its products,  (2) obtain sufficient  capital
     contributions  and/or  financing  as may be required to sustain its current
     operations and to fulfill its sales and marketing activities, (3) achieve a
     level of sales  adequate to support the Company's cost  structure,  and (4)
     ultimately  achieve 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-14
<PAGE>
                 DIMENSIONAL VISIONS INCORPORATED AND SUBSIDIARY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       YEARS ENDED JUNE 30, 1999 AND 1998


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, 1999, 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   subsidiary,   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 finished goods of
     $6,900.

                                      F-15
<PAGE>
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.

     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

     The Company accounts for income taxes under the liability method.  Deferred
     tax assets and liabilities are determined based on differences  between the
     financial  reporting  and tax bases of assets  and are  measured  using the
     enacted tax rates and laws that will be in effect when the  differences are
     expected to reverse.

                                      F-16
<PAGE>
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     LOSS PER SHARE

     The Company adopted Statement of Financial  Accounting  Standards Statement
     No. 128,  "Earnings  Per Share" (FAS 128"),  which is effective  for fiscal
     years ending after December 15, 1997.  FAS 128 replaced the  calculation of
     primary  and fully  diluted  earnings  per  share  with  basic and  diluted
     earnings per share.  Unlike primary earnings per share,  basic earnings per
     share excludes any dilutive  effects of options,  warrants and  convertible
     securities.  Dilutive  earnings per share is very similar to the previously
     reported fully diluted earnings per share.

     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.

                                      F-17
<PAGE>
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     STOCK-BASED COMPENSATION

     The Company accounts for stock-based awards to employees in accordance with
     Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
     Employees"  ("APB  Opinion No.  25") and has  adopted  the  disclosure-only
     alternative  of  Statement  of  Financial  Accounting  Standards  No.  123,
     "Accounting for Stock-Based Compensation" ("FAS 123").

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, 1999, there were no uninsured balances.

NOTE 3: NOTES RECEIVABLE

     Notes receivable consists of the following:

                                Interest
                                  Rate         Amount       Maturity
                                  ----         ------       --------
     Sale of Product Line (1)      11%        $360,506      September 2001
     Sale of InfoReaders  (2)      10%          83,163      August 2001
                                              --------
                                               443,669
     Less allowance for bad debts              402,006
                                              --------
                                              $ 41,663
                                              ========

     (1)  On September  25, 1997,  the Company sold one of its product lines for
          $410,000 (see Note 14).  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.  The
          Company  has been  unable to collect the  required  monthly  payments.
          During  the year ended  June 30,  1999,  the  Company  received  three
          installments  and a fee of  $10,000  which was  included  as  interest


                                      F-18
<PAGE>
NOTE 3: NOTES RECEIVABLE (CONTINUED)

     (1)  income.  Management has determined  that they are currently  unable to
          collect  the  amounts  due on the note.  Accordingly,  management  has
          established  a 100%  allowance  against  this note.  The  Company  has
          determined  that it does not make  economic  sense to take  back  this
          product line and operate this aspect of the business. The Company will
          continue to pursue the collection of this note.

     (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
          payments  commencing on September 1, 1998. The  monthly installment is
          $2,904, including interest at 10% per annum for thirty-six months. The
          Company has not been able to collect the required monthly payments due
          on this note. The customer has filed for an arbitration hearing on the
          basis  that the  Company  failed  to  provide  data to  support  their
          customer  base and is requesting  payment of  $1,000,000  for the lost
          business.  The  Company  made  provisions  to acquire the data for the
          customer.   However,  the  customer  was  unwilling  to  pay  for  the
          acquisition  cost  of  the  data  and  bring  their  account  current.
          Accordingly,   without  the  updated  data  and  failure  to  pay  the
          outstanding balance due the Company, there is no reason to support the
          system. No date has been set for the arbitration hearings. The Company
          has filed a  counter-claim  for full payment of the note.  The Company
          has taken a $41,500  allowance  against the balance due on the note as
          of June 30, 1999.

NOTE 4: DEFERRED COSTS

     Deferred costs as of June 30, 1999 consists of the following:

     Consulting contract                           $133,788
     Debt issuance costs                             24,779
                                                   --------
                                                   $158,567
                                                   ========

     On April 5, 1999,  the Company  entered into a contract  with a consultant.
     The fee for services for 36 months is $287,668 ($7,991 per month),  or upon
     signing of the contract,  the Company will issue  $255,000 of the Company's

                                      F-19
<PAGE>
NOTE 4: DEFERRED COSTS (CONTINUED)

     common  stock.  The market  value of the common  stock on April 5, 1999 was
     $.1875 per share and 1,360,000 shares of registered common stock was issued
     (registered  under Form S-8). In addition,  the warrant price on previously
     issued 500,000 warrants will be reduced to $.10 per share.

     In accordance with the terms of the agreement either party may terminate or
     change the terms of this agreement with 30 days written notice.  On May 28,
     1999 the term of this agreement was modified and the term was reduced to 22
     months. Under the provisions of the contract, the consultant is required to
     either  return  the  shares  or the  cash  equivalency  of  the  reduction.
     Accordingly on May 28, 1999, the Company  received a $100,000  payment from
     the consultant.

     The  Company  incurred  debt  issuance  costs  of  $33,700  which  is being
     amortized over 34 months, the term of the Series A convertible debentures.

NOTE 5: PATENT RIGHTS AND OTHER ASSETS

     Patent rights                                         $ 58,426
     Deposits                                                 4,100
     Trademark                                                  225
                                                           --------
                                                             62,751
     Less accumulated amortization                           27,050
                                                           --------
       Total                                               $ 35,701
                                                           ========

NOTE 6:  ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES

     Accounts payable                                      $403,837
     Accrued expenses
       Interest                                              61,465
       Salaries                                              63,159
     Payroll taxes payable                                    5,712
                                                           --------
       Total                                               $534,173
                                                           ========

                                      F-20
<PAGE>
NOTE 7: 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, 1999,  there
     were no outstanding borrowings under this arrangement.

     During  January  through  April  1999,  the  Company  received   short-term
     borrowings of $235,000. The loans were 12% convertible debentures, with due
     dates ranging from July 25, 1999 through October 29, 1999. The terms of the
     debenture  provide for a three month extension if the debenture is not paid
     on the  original  due  date.  During  the  extension  period,  interest  is
     calculated at the stated rate plus 3% through the extended due date (15%).

     As of June 30, 1999, the debentures are convertible  into 685,000 shares of
     the Company's common stock.

     The Company also issued to the debenture  holders three year warrants which
     expire January 25, 2002 to purchase the Company's  common stock at $.25 per
     share for 85,000 warrants and at $.10 per share for 150,000 warrants.

     The warrants were valued at $39,300 by Black Scholes  option pricing model.
     Accordingly,  the debentures were discounted for the value allocated to the
     warrants and additional paid-in capital was recorded.  As of June 30, 1999,
     additional  interest  expense of $18,067  was  recorded  and the  remaining
     unamortized discount was $21,233.

     As of June 30, 1999, the discounted value of the debenture was $213,767.

                                      F-21
<PAGE>
NOTE 8: LONG-TERM DEBT

     During July through September 1998, the Company through a private placement
     was  able  to  borrow  $485,000  through  the  issuance  of  Series  A  12%
     convertible  secured  debentures.  The  debentures  are due July 31,  2001.
     Interest  is  accrued  and  payable  on July 31 of each  year and the first
     interest  payment is due July 31, 1999.  In the event the Company  fails to
     pay the  debenture  holders any accrued  interest or principal  the default
     rate is 16% from the due date through the date paid.

     On July 15, 1998,  the Company  entered into a security  agreement with the
     debenture  holders that grants a security interest in substantially all the
     assets of the Company.

     As of June 30, 1999, the debentures are convertible  into 485,000 shares of
     the Company's common stock.

     The Company also issued to the debenture  holders three year warrants which
     expire January 15, 2001 to purchase the Company's  common stock at $.50 per
     share.

     The  warrants  were valued at $310,850  by using the Black  Scholes  option
     pricing model.  Accordingly,  the debentures  were discounted for the value
     allocated to the warrants and additional  paid-in capital was recorded.  As
     of June 30, 1999  additional  interest  expense of $94,065 was recorded and
     the remaining unamortized discount was $216,785.

     As of June 30, 1999, the discounted value of the debentures was $268,215.

                                      F-22
<PAGE>
NOTE 9: 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, 1999, was
     as follows:

               Equipment                    $138,912
               Less accumulated
                 amortization                 21,502
                                            --------
                                            $117,410
                                            ========

     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, 1999:

               Years Ending                  Capital             Operating
                 June 30,                    Leases                Leases
                 --------                    ------                ------
                  2000                      $  39,400             $ 66,600
                  2001                         39,400               33,800
                  2002                         39,400                   --
                  2003                         29,550                   --
                                            ---------             --------
                                              147,750             $100,400
                                                                  ========
         Amounts representing interest         45,165
                                            ---------
         Present value of net minimum
           payments                           102,585
         Current portion                       20,552
                                            ---------
         Long-term portion                  $  82,033
                                            =========

     The Company's rental expense for operating leases was approximately $69,100
     and  $33,700  for the years  ended  approximately  June 30,  1999 and 1998,
     respectively.

                                      F-23
<PAGE>
NOTE 10: COMMITMENTS AND CONTINGENCIES

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

               Years Ending June 30,              Amount
               ---------------------              ------
                      2000                       $246,000
                      2001                        102,500
                                                 --------
                                                 $348,500
                                                 ========

     On June 22,1999,  a customer filed a lawsuit  demanding a claim for loss of
     value  or  market   share  for   $1,000,000   under  the   provision  of  a
     distributorship contract that provides for arbitration on a material breach
     of contract.  The suit was amended by the customer on July 6, 1999. To date
     the  Company  was  never  notified  of a breach of  contract  for which the
     Company  has a period of time to remedy the  breach  under the terms of the
     distributorship contract. The customer has breached the contract by failing
     to pay for products, licensing fees and failing to provide the Company with
     information on the number of updates needed for the units.  The Company has
     filed a counter  claim for  payment  of the  entire  amount of the note for
     product  received by the customer and the outstanding  accounts  receivable
     balance.  Management  believes that this matter will be resolved  favorably
     and will not have an adverse effect on its financial position.

     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, 1999
     was approximately $88,000.

                                      F-24
<PAGE>
NOTE 11: 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, 1999, there are outstanding 4,746,710 of non-public warrants
     and options to purchase the Company's  common stock at prices  ranging from
     $.20 to $12.50 with a weighted average price of $.2339 per share.

     As of June 30,  1999,  there  were  130,810  shares of  various  classes of
     Convertible  Preferred Stock  outstanding  which can be converted to 92,524
     shares of common stock (see Note 11).

     As of June 30, 1999, there were short-term convertible debentures which can
     be converted to 685,000 shares of common stock.

     As of June 30, 1999,  there were Series A convertible  debentures which can
     be converted to 485,000 shares of common stock.

     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  6,009,234 shares as of June 30, 1999, and would be
     in addition to the 5,138,192 shares of common stock  outstanding as of June
     30, 1999.

     The Company issued during the year ended June 30, 1999, 1,519,688 shares of
     the Company's common stock to consultants for services  (including $133,788
     as deferred) valued at $320,593 (average price per share $.21).

     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).

                                      F-25
<PAGE>
NOTE 11: COMMON STOCK (CONTINUED)

     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.

     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.

                                      F-26
<PAGE>
NOTE 12: 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, 1999, as follows:

                                                 Allocated        Outstanding
                                                 ---------        -----------
          Series A Preferred                       100,000            23,000
          Series B Preferred                       200,000             3,500
          Series C Preferred                     1,000,000            17,670
          Series P Preferred                       600,000            86,640
                                                 ---------           -------
            Total Preferred Stock                1,900,000           130,810
                                                 =========           =======

     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 10).

     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 10).

     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-27
<PAGE>
NOTE 12: 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 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 P Preferred was issued 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.

NOTE 13: 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

                                      F-28
<PAGE>
NOTE 13: STOCK OPTION PLAN AND EQUITY INCENTIVE PLAN (CONTINUED)

     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.

     A summary of transactions under this Plan is as follows:

                                                                  Weighted
                                                              Average Exercise
                                                   Shares     Price Per Share
                                                   ------     ---------------
          Options outstanding
            July 1, 1997                                 --         $ --
          Grants                                  1,300,000          .93
          Cancelled                                      --           --
                                                 ----------         ----
          Options outstanding
            June 30, 1998                         1,300,000          .93
          Grants                                         --           --
          Cancelled                              (1,300,000)        (.93)
                                                 ----------         ----
          Options outstanding
            June 30, 1999                                --         $ --
                                                 ==========         ====
          Options exercisable
            at end of year                               --         $ --
                                                 ==========         ====

     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

                                      F-29
<PAGE>
NOTE 13: STOCK OPTION PLAN AND EQUITY INCENTIVE PLAN (CONTINUED)

     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 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.  Since inception of this plan in
     1996  through  June 30,  1999,  4,558,978  shares of common  stock has been
     issued. For the year ended June 30, 1999,  1,519,688 shares of common stock
     has been  issued at prices  ranging  from  $.1875 to $.6562 per  share.  In
     addition, as of June 30, 1999, 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.

                                      F-30
<PAGE>
NOTE 13: STOCK OPTION PLAN AND EQUITY INCENTIVE PLAN (CONTINUED)

     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:

                                                        1999           1998
                                                        ----           ----
          Net Loss - as reported                    $(1,465,812)    $(421,659)
          Net Loss - pro forma                      $(1,465,812)    $(855,464)
          Net Loss per share - as reported          $      (.37)    $    (.14)
          Net Loss per share - pro forma            $      (.37)    $    (.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 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 14: 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.  The Company has been unable to collect
     the required monthly payments (see Note 3).

                                      F-31
<PAGE>
NOTE 15: INCOME TAXES

     The tax effects of significant  items comprising the Company's net deferred
     taxes as of June 30, 1999 were as follows:

          Deferred tax assets:
            Goodwill                                           $   311,000
            Net operating loss carryforwards                     6,207,000
                                                               -----------
                                                                 6,518,000
                                                               -----------
          Deferred tax liabilities
            Allowance for bad debts                                173,000
            Equipment                                               79,000
            Patent rights                                            4,000
                                                               -----------
                                                                   256,000
                                                               -----------
          Net deferred tax asset                                 6,262,000
          Valuation allowance                                   (6,262,000)
                                                               -----------
          Net deferred tax asset reported                      $        --
                                                               ===========

     The change in  valuation  allowance  for the year  ended June 30,  1999 was
     increased by approximately $151,000.

     There was no  provision  for current  income taxes for the years ended June
     30, 1999 and 1998.

     The federal net operating loss  carryforwards of approximately  $17,632,000
     expires in various  years  through  2019. In addition the Company has state
     carryforwards of approximately $2,358,000.

     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-32
<PAGE>
NOTE 16: SEGMENT OF BUSINESS REPORTING

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

     *    Lithographically  printed  stereoscopic prints commonly referred to as
          three-dimensional prints and lithographically printed animation.

     *    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  47% of the lithographic  sales and two customers account for
     approximately  94% 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          $ 613,989       $ 127,912       $ 741,901
     Interest income                    --          18,188          18,188
     Interest expense              207,726              --         207,726
     Operating loss               (852,174)        (22,093)       (874,267)
     Segment assets                469,526          61,447         530,973
     Depreciation and
       amortization                 33,955          12,217          46,172
     Bad debt expense on
       notes receivable                 --         402,006         402,006

                                      F-33
<PAGE>
NOTE 17: SUBSEQUENT EVENTS

     The  Company  sold  1,250,000  shares  of the  Company's  common  stock for
     $787,500,  net of estimated  offering  costs of $87,500,  through a private
     placement of its common stock during August through October 7, 1999.

     The  Company  extended  an  offer  to the  debenture  holders  and  certain
     creditors to convert  their debt to equity in the Company.  The offer which
     expires on October 15, 1999 permits the  conversion  of debt into shares of
     the Company's  common stock at $.375 per share.  As of October 7, 1999, the
     entire  outstanding  balance of $720,000 of  debentures  (discounted  value
     $481,982  at June  30,  1999)  and  $60,748  of  accounts  payable  will be
     converted to 2,081,995  shares of the Company's  common stock.  Interest on
     the  debentures  continues to accrue at 12% per annum until the filing of a
     registration statement is completed.

     The following  pro-forma gives effect to the subsequent events as indicated
     in the above paragraphs as if the transactions occurred on June 30, 1999:

                                                 Actual           Pro-forma
                                                 ------           ---------

     Current liabilities                      $    768,492       $    493,977

     Long-term debt                                268,215                 --

     Obligations under capital lease net
       of current portion                           82,033             82,033
                                              ------------       ------------

     Total liabilities                           1,118,740            576,010
                                              ------------       ------------

     Stockholders' equity (deficiency)
       Preferred stock                                 131                131
       Additional paid-in capital                  658,170            658,170
                                              ------------       ------------
                                                   658,301            658,301

       Common stock                                  5,138              8,470
       Additional paid-in capital               19,556,402         21,121,318
       Deficit                                 (20,807,608)       (20,807,608)
                                              ------------       ------------

                                                  (587,767)           980,481
                                              ------------       ------------

     Total liabilities and stockholders'
       equity (deficiency)                    $    530,973       $  1,556,491
                                              ============       ============

                                      F-34
<PAGE>
                          INDEPENDENT AUDITORS' REPORT


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


We have audited, in accordance with generally accepted auditing  standards,  the
consolidated  financial  statements  of  DIMENSIONAL  VISIONS  INCORPORATED  AND
SUBSIDIARY  included  in this  annual  report on Form 10-KSB and have issued our
report  thereon  dated  October 7, 1999.  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
October 7, 1999

                                      F-35
<PAGE>
                                                                     Schedule IV

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


                                                          Other
                 Balance at                              Changes -
                Beginning of  Additions                    Add       Balance at
Classification     Period      at Cost   Retirements(2)  (Deduct)  End of Period
--------------------------------------------------------------------------------

Year Ended
June 30, 1999
-------------
  Equipment      $  370,344   $  31,334    $       --     $    --     $401,678
  Furniture and
    fixtures         24,217      25,945            --          --       50,162
                 ----------   ---------    ----------     -------     --------

                 $  394,561   $  57,279    $       --     $    --     $451,840
                 ==========   =========    ==========     =======     ========

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
                 ==========   =========    ==========     =======     ========

----------
(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

(2)  Represents equipment and leasehold improvements abandoned or sold

                                      F-36
<PAGE>
                                                                      Schedule V


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

                                                          Other
                  Balance at                             Changes -
                 Beginning of  Additions                   Add       Balance at
Classification      Period      at Cost   Retirements(1) (Deduct)  End of Period
--------------------------------------------------------------------------------

Year Ended
June 30, 1999
-------------
  Equipment       $  209,819   $  41,241    $       --    $    --     $251,060
  Furniture and
    fixtures          23,690       4,931            --         --       28,621
                  ----------   ---------    ----------    -------     --------

                  $  233,509   $  46,172    $       --    $    --     $279,681
                  ==========   =========    ==========    =======     ========


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

                                      F-37