<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                F O R M 10 - KSB
        Annual Report Pursuant to Section 13 or 15 (d) of the Securities
                              Exchange Act of 1934


For the Fiscal Year Ended                         Commission File Number 0-12370
July 31, 1999

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

          Delaware                                   95-3381440
      ---------------                              ---------------
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
incorporation or organization)

                4611 South 134th Place, Tukwila, Washington 98168
 -----------------------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (206) 244-6100
   --------------------------------------------------------------------------
               Registrant's telephone number, including area code

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

                Securities registered pursuant to Section 12 (g):
                     Common Stock, par value $.01 per share
        -----------------------------------------------------------------
                                (Title of Class)

         Check whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.


                            Yes    X     No
                                ------      -------

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

         Issuer's revenues for most recent fiscal year              $44,688,775

         The number of shares outstanding of each of the issuer's classes of
         common stock is 3,547,123

         The aggregate market value of the voting stock held by nonaffiliates of
         the Registrant is $9,311,198 (as of October 21, 1999).


                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the definitive Proxy Statement for the Annual meeting of
Shareholders to be held on January 20, 2000 (the "Proxy Statement") are
incorporated by reference into Part III.


                                       1

<PAGE>

                                     PART I

ITEM 1.  BUSINESS

GENERAL

SI Technologies, Inc. and Subsidiaries ("SI" or the "Company") is a rapidly
growing designer, manufacturer and marketer of high-performance industrial
sensors, weighing and factory automation systems, and related products. Recent
acquisitions have diversified the Company's revenue base and positioned SI
Technologies as an integrator of technologies, products and companies that are
enabling SI to become a leading global provider of devices, equipment and
systems that handle, measure and inspect goods and materials. SI products are
used throughout the world in a wide variety of industries, including aerospace,
agriculture, aviation, food processing and packaging, forestry, manufacturing,
mining, transportation/distribution and waste management.

In recent years, the Company has been capitalizing on its technology and
existing customer relationships through product and market expansion in selected
segments of a $70-billion industrial measurement and automation industry.
Driving SI's business expansion are both an aggressive internal product
development program and the acquisition of businesses with technology and
revenue synergy.

The Company was incorporated in California on May 29, 1979 as IDEA, Invention,
Design, Engineering Associates, Inc. and was reincorporated in Delaware on April
20, 1983. In February 1996, the Company changed its name to SI Technologies,
Inc. The name SI Technologies serves to preserve a loyal customer following in
the Company's dynamic weighing systems business while at the same time
representing the broader technologies and business interests of the Company.

The Company's principal executive offices and headquarters are located at 4611
South 134th Place, Tukwila, Washington. Headquarters communication information
is as follows: telephone, 206-244-6100, fax, 206-246-7195, e-mail address,
sitech@sitechnologies.com, Web site, www.sitechnologies.com.


BUSINESS STRATEGY

The Company aspires to become a leading provider of manufactured devices,
equipment, engineered systems and services used in the niche industrial markets
in which it operates and to expand its markets through acquisition of
complementary product and service lines as an industry integrator in the
$70-billion industrial measurement and automation industry. SI Technologies has
experienced significant growth since 1990 through a combination of internal
growth and strategic acquisitions.


INTERNAL GROWTH

The Company expects to continue generating organic growth through internal
product development, entrance into new markets and geographic expansion. In
recent years, internal growth has been hampered by reduced market demand for the
Company's onboard scale product line and elimination of several low margin
product lines. Current internal growth activities are focused on the integration
of technologies across product lines and business units, expansion and training
of distribution channels to effectively cross-sell products to key markets and a
restructuring of sales operations to improve the Company's ability to enter new
markets.


                                       2

<PAGE>

ACQUISITION STRATEGY

SI Technologies pursues a strategy of acquiring leading providers of
complementary manufactured products and services in highly fragmented industrial
equipment markets, with a view to further consolidating those markets. SI
Technologies believes it is one of the few domestic acquirers and integrators of
businesses in those markets. In general, the Company pursues the acquisition of
businesses that meet the following criteria:

          -    Well-managed companies serving the industrial measurement and
               automation market

          -    Products utilizing technology compatible with SI core
               technologies

          -    Significant installed product base and successful operating
               history

          -    Complementary products and services that offer cross-selling
               opportunities

          -    Potential for international business expansion

          -    Predictable cash flow and earnings potential

SI believes its integration strategy will allow it to achieve greater
efficiencies in acquired companies through elimination of redundant cost and by
leveraging economies of scale in manufacturing operations, and procurement of
materials and services. Past the early stages of assimilating acquired
companies, SI expects to capitalize on revenue synergies developed through
cross-selling, joint market development, and sharing and integration of
technology across product lines and business units.

The Company intends to finance acquisitions primarily with debt, relieved
subsequently by capital raised through the sale of equity. As the momentum of
the growth plan increases, the Company expects to utilize equity on an
increasing basis as currency in acquisition and merger transactions.

Since 1990, SI Technologies has completed eight acquisitions.

<TABLE>
<CAPTION>

                           Date
Acquired Company           Acquired         Primary Products          Industries Served
----------------           --------         ----------------          -----------------------------
<S>                        <C>              <C>                       <C>
Lodec, Inc.                1990             Dynamic & Static          Agriculture, forestry,
                                            Weighing Systems          government

Advanced Recording         1995             Data Recording            Transportation, distribution
Instruments, Inc.                           Instrumentation

Load Measurement           1996             Sensors & Dynamic         Agriculture, waste management
Corporation                                 Weighing Systems

Evergreen Weigh, Inc.      1996             Dynamic & Static          Aviation, mining,
                                            Weighing Systems          transportation

AeroGo, Inc.               1997             Factory Automation        Aviation/aerospace, automotive,
                                            Equipment & Systems       manufacturing, general industry

NV Technology, Inc.        1998             Sensors                   General industry, food,
                                                                      transportation

Allegany Technology, Inc.  1998             Sensors & Dynamic         Aerospace, transportation,
                                            Weighing Systems          general industry

Revere Transducers, Inc.   1998             Sensors & Static          Aviation/aerospace, food,
                                            Weighing Equipment        general industry
</TABLE>
Further acquisition detail may be found under the ACQUISITION HISTORY section.

                                       3

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CURRENT ACQUISITION ACTIVITIES
In pursuit of the Company's growth strategy, management is continuously
evaluating acquisition/merger opportunities with numerous companies ranging in
size from $5 million to $50 million in annual revenue. Companies of interest are
leading manufacturers, distributors and service providers who compete with
technology advantage, are generating internal growth, and show potential for
strong synergy with the Company's technology, manufacturing operations and
marketing and sales organization.

PRODUCTS AND SERVICES

INDUSTRIAL MEASUREMENT
The Company's industrial sensor and control products consist of a wide range of
NTEP and OIML approved, EX, Factory Mutual and IP rated load cells, transducers,
translators and sensors. These devices, representing a core SI technology, are
electromechanical components that convert a physical force to an electrical
signal. When matched with microprocessor-controlled digital electronics, they
measure forces such as pressure, weight, mass and torque. Commercially, the
products are used for measurement, inspection and control. SI sensor and control
products are principally used in electronic weighing equipment; batching,
blending, mixing, fill-by-weight and product inspection operations and,
machinery operation and control systems. SI controls/instrumentation is normally
designed as an integral part of a complete weighing system. In recent years, SI
instrumentation has been expanded to provide users with the ability to acquire,
record in memory and download to management information systems operational
information other than weight information. In this expanded capacity, SI
instrumentation becomes a critical link between operations and management
information systems.

SI designs and manufactures dynamic and static electronic weighing equipment and
systems for use in a wide array of industrial applications. As a result of the
uniqueness of the Company's combined sensor, weighing and automation system
technologies, SI is one of few manufacturers in the industry who design and
manufacture all three of the primary components of an electronic scale. These
components are the load-handling structure, sensors and instrumentation. Many
manufacturers of conventional scale systems manufacture only load-handling
structures, outsourcing to industry suppliers their sensor and instrumentation
requirements. The Company utilizes its expertise and manufacturing know-how in
each of these critical components to competitive advantage and believes our
broad expertise can be exploited through our acquisition/integration growth
strategy.

Dynamic weighing systems are installed on transportation vehicles,
material-handling equipment and in manufacturing process systems for weight
measurement of goods and materials. Weight information generated by these
systems has broad application including loading, transporting and delivery
payload management; manufacturing process, inventory and quality control; and
operations automation. Key products marketed under the AIRSCALE, ALLEGANY,
CHECKMATE, EVERGREEN WEIGH, STRUCTURAL INSTRUMENTATION, ROUTEMAN, SMARTPIN, THE
LOGGER, TROJAN, and TUFFER trade names are dynamic "weigh-in-motion" and mobile
on-board vehicle and material-handling equipment scales, pallet weighers, crane
scales and engineered system scales. SI systems are available as standard
products for use with most major original equipment manufacturer (OEM) trucks,
trailers, forklifts, loaders, cranes and lifting devices. Products are marketed
predominately to the agriculture, construction, forestry, foundry, freight,
manufacturing, mining, steel, transportation and waste management industries.

Depending on application, specific economic benefit is derived from reduced
overweight vehicle fines and delays; reduced time loading, checkweighing and
adjusting loads to maximum legal limits; reduced mileage and driving time to
checkweighing locations such as commercial in-ground truck scales; immediate
measurement and recording of pick-up and delivery weights; reduced equipment
abuse,


                                       4

<PAGE>

maintenance downtime and expense; and higher capital equipment capacity
utilization. Additionally, the weight information produced by these systems is
often the critical measurement in controlling, batching, blending and mixing
operations in the manufacture of materials.

All systems include force measurement sensors and microprocessor-based
electronic instrumentation. The instrumentation supplies power to the sensors,
provides all operator interface and controls, processes sensor electronic
signals to determine weights, and displays and records in memory weight
information and other inputs from the system and/or the operator. Force
measurement sensors employing electronic strain gage technology measure force
values. The electrical resistance of force measurement sensors changes
proportionally to the force applied; thus the return signal to the meter varies
by load or force.

The company's static weighing system product line consists of scales designed
for numerous industrial and aviation weighing applications. Key products
marketed under the trade names AIR GUARDIAN, JET WEIGH, LODEC, MTSERIES, ROAD
GUARDIAN, AND ROAD RUNNER are permanent and portable axle scales, wheel-load
weighers, canister load cell systems and heavy-capacity platform scales. Much
like dynamic weighing systems, the static weighing systems have broad industrial
application. Key markets in which these products enjoy significant market share
include aggregate, aviation, construction, freight terminals, land remediation,
mining and weight enforcement. Static weighing systems utilize the same
technology as dynamic weighing systems; however, they are designed to weigh
loads in a static or stationary mode.

INDUSTRIAL AUTOMATION
SI's industrial automation products consist of load handling, moving and
positioning equipment and systems. These products often utilize highly
specialized air-bearing movement systems to move loads of any weight efficiently
and with extreme precision. Air bearings are air-cushion devices that are used
to "float" heavy loads on a thin film of air. Additionally, the Company
manufactures systems utilizing water bearings for use in large outdoor
applications where water is used as the flotation medium rather than air. These
products, marketed under the trade names AEROCASTER, AEROGO, AEROPALLETS,
AEROPLANKS and AIRSHUTTLE are the world leaders in practical and efficient
methods of movement, transfer, location, rotation and alignment of materials and
products weighing from several hundred pounds to more than 6,000 tons.

The Company's industrial automation product line comprises two distinct
categories. The first is a standard product line of rugged, industrial,
off-the-shelf air-cushion devices that allow a single person to easily and
safely move loads weighing from a few hundred pounds to many tons. Standard
products routinely move manufacturing fixtures, printing press bulky paper
rolls, jet engines, and other heavy loads. The other category of the product
line consists of engineered products. Engineered products and specialized
systems designed and manufactured by the Company in recent years are currently
moving 100,000-pound dies, launching ships, moving 4,500-ton stadium sections,
transporting aerospace booster rockets and moving large assemblies in and out of
assembly line operations in numerous heavy equipment manufacturing facilities.

Additional examples of engineered products include: automated guided vehicle
systems, transporters, assembly line turntable systems, precision handling and
positioning fixtures, quick die/mold changing carts, caisson manufacturing and
moving systems, and aircraft inspection turntables.

SI industrial automation products commonly represent significant economic
benefit in comparison to conventional material handling equipment through lower
capital investment in manufacturing site construction, preparation and system
installation, and greater operating efficiencies based on system versatility
(not limited to following rails or tracks, as typically required with cranes and
conveyors). These systems often represent the most viable means for handling
extreme material handling applications involving very heavy loads, precision
movement and positioning, and high efficiency assembly line automation.


                                       5

<PAGE>

MARKETING AND SALES

The Company's products are marketed throughout the world primarily through 400
distributors and manufacturer representatives, each operating in a specific
trade area and serving industrial customers, engineering firms and various
government agencies. In addition to headquarters marketing and sales personnel,
and subsidiary business unit marketing and sales operations, the Company
maintains North American regional sales offices in California, Illinois,
Maryland, Michigan, North Carolina, Oregon, Washington and British Columbia and
Alberta, Canada; and European regional sales offices in France, Germany, the
United Kingdom and the Netherlands. Company regional sales personnel assist
distributors and representatives, make direct sales calls on potential customers
in areas not covered by distribution, and support the Company's direct major
accounts.

The Company generates leads through a full complement of marketing practices,
including advertisement in industry publications, direct-mail advertising,
direct-fax advertising, trade show participation and telemarketing. Headquarters
and subsidiary personnel initiate the Company's sales process on all inquiries
by providing the inquirer with information on Company products and services and
qualifying the lead. After qualification, inquiries are either maintained in
sales for follow-up by Company sales personnel and distribution, or dispatched
to engineering for design, cost estimating and preparation of price quotations
or bid packages.

Due to the Company's mix of standard off-the-shelf products and
custom-engineered products, the time period between initial inquiry, purchase
order receipt and shipment varies widely. Standard product orders are normally
shipped within one to three days of purchase order receipt at published prices
and with trade terms of FOB factory and 30 days net. Engineered products and
projects are subject to specific contract terms negotiated between the Company
and customer. Typically, contract terms provide for progress payments, provision
for change orders and, on longer-term projects, provision for inflation-based
price adjustment. On certain projects, the Company provides complete site
preparation, system installation, start-up and customer training services. In
this capacity, from time to time, the company serves as a contractor on a time
and material basis.


MARKET CONDITIONS AND COMPETITION

MARKET CONDITIONS

Worldwide capital expenditures for industrial measurement and automation
equipment and systems have averaged about $70 billion in recent years, with
domestic spending accounting for approximately 30% of the total. Overall
industry growth approximates inflation. Although the overall industry is mature,
the Company believes our unique products, diversity of markets and worldwide
geographic presence present significant opportunities for internal growth within
the industry. Additionally, the high fragmentation of the industry provides
similar opportunities for execution of the Company's acquisition strategy.

Product uniqueness (niche products) is a competitive advantage for SI.
Manufacturers of conventional mature products competing for market share with
non-differentiated products normally compete primarily on product price and
availability. SI's unique products such as dynamic weighing and air-bearing
load-handling and factory automation systems frequently compete within the
industry as substitute products or as an alternative means for meeting the
customers' needs. As a result of this high level of product differentiation and
the application versatility of SI's unique products, the Company believes demand
for SI products is more elastic than demand for conventional products within the
industry. Also, as expected with highly differentiated products, SI products
have historically produced gross margins higher than the industry average.


                                       6

<PAGE>

Market diversity is a growing competitive advantage for SI. Over the past few
years, SI has been redirecting its focus to new markets in an effort to mitigate
a sharp capital spending downturn in the Company's traditionally strong forestry
and waste management markets. Since the 1996 acquisition of Evergreen Weigh and
Load Measurement Corporation, cross-selling of products and integration of
Company sales organizations have steadily increased revenues in the aggregate,
agriculture, aviation, construction and mining industries. With the acquisition
of AeroGo late in fiscal 1997, and the acquisitions of NV Technology, Allegany
Technology and Revere Transducers in fiscal 1998, the Company has further
expanded its market diversity and potential for revenue synergies. The Company
intends to capitalize on its growing market diversity, worldwide presence and
cross-selling opportunities with an expanding product line to create internal
growth.

SI maintains inventories of raw materials, work-in-process and finished goods.
To supply products with competitive availability, the Company carries
approximately 35% of inventory in finished goods. While the Company
manufacturers the majority of its value-added components, certain components,
manufacturing processes and sub-assemblies are outsourced. Outsourced items are
normally purchased on fixed price contracts on a just-in-time basis. Should the
need arise, the Company believes that any supplier and/or subcontractor could be
replaced without significant disruption to its business.


COMPETITION

Competition in the industrial measurement and automation equipment and system
industry is extremely fragmented with approximately 6,000 manufacturers and a
greater number of distributors and service companies. To the Company's
knowledge, there are no competitors with the same product mix as SI. Direct
competitors (competing head-to-head with similar products) normally compete on a
single product line and are smaller and have less financial resources than SI.
General industry-wide competitors (competing with alternative conventional
products) range from very small, local companies to large, international
companies with greater financial resources than SI.

In the dynamic and static weighing systems product line, direct competitors are
all smaller, privately held companies. Occasionally and on specific
applications, the weighing systems product line competes as an alternative
product with larger companies that manufacture conventional weighing systems.
These companies include Cardinal Scale Manufacturing Company, Fairbanks Scale
Company, Mettler-Toledo Holding, Inc. and Weigh-Tronix, Inc. Competition among
larger manufacturers of conventional weighing systems, due to lack of product
differentiation, is principally based on price, local dealer trade-area presence
and relationships, and product availability.

Competition in the industrial sensor and control product line varies widely
depending on customer type and application. Industry standard sensors sold
directly to large industrial scale manufacturers compete primarily on price,
quality and service. Standard and custom sensors sold to OEMs of other types of
products and equipment, and to user customers in process industries, primarily
compete on the supplier's ability to provide engineering expertise and
assistance, quality, and on-going customer support and service. Competitors
range from small, local companies to large, international companies.

Competition in load handling and factory automation products is similar to
weighing system products. In the air and water bearing product line, all
competitors are smaller, privately held companies with less financial resources
than the Company. Direct competitors include Airfloat, Hovair, and Aircaster. In
custom-engineered products and projects, the Company normally competes as a
substitute or alternative product versus conventional material-handling
equipment manufactured by companies ranging in size from much smaller to
significantly larger than the Company.

International markets vary widely in competitive issues. In some countries,
price competition is more intense than in North America, while in others prior
relationships and product quality receive more


                                       7

<PAGE>

customer emphasis than do marginal pricing differentials, thus price competition
is less intensive. As a result of product uniqueness, innovative design
solutions, quality of product and dependability, SI products and services are
frequently sold in situations where the Company is not the low bidder.

SIGNIFICANT CUSTOMERS

Historically the Company's primary customers have been transportation,
agriculture, forestry, manufacturing, waste management and general industrial
companies. Over the past few years, as a result of the Company's growth
strategy, the customer base has expanded to include the aviation/aerospace,
automotive, food processing, construction and maritime industries. Significant
customers in recent years include Boeing, Caterpillar, Carrier, Chrysler, Ford,
Hyundai, Kraft Foods, Lockheed, Michelin, Mitsubishi, NASA, Siemens, and
Thiokol.

While a significant portion of the Company's annual revenues represent repeat
business from its customers, no individual customer represents 10% or more of
the Company's revenues.

ACQUISITION HISTORY

ACQUISITION OF LODEC, INC.

In March 1990, the Company acquired Lodec, Inc., a Washington corporation. As a
manufacturer of dynamic and static weighing systems, Lodec was a direct
competitor of the Company at the time of acquisition. Lodec's primary product at
the time of acquisition was an on-board weighing system. The acquisition of
Lodec increased the Company's market share in on-board weighing systems,
expanded the product line through the addition of Lodec portable axle scales,
and brought the Company an international dealer organization in Latin America,
Europe and Asia. In January of 1991, the Company consolidated all Lodec
operations into the Weighing Systems Division operation in Seattle, Washington.

ASSET PURCHASE FROM ADVANCED RECORDING INSTRUMENTS, INC.

In October 1995, the Company purchased the assets of Advanced Recording
Instruments, Inc. (ARI). The asset purchase included the ARI on-board data
recorder and operations information system product lines, all related
technology, trade names, inventory and fixed assets. Acquisition of the ARI
product line strengthened the Company's ability to serve a growing customer
demand for operations information useful for improving the performance of
material-handling and transportation operations.

ACQUISITION OF EVERGREEN WEIGH, INC.

In April 1996, the Company acquired Evergreen Weigh, Inc. (Evergreen), a
Washington corporation. Evergreen is a manufacturer of dynamic and static
weighing systems. Evergreen's primary products include weigh-in-motion on-board
scales for material-handling equipment, axle scales and wheel-load weighers. Key
markets served by Evergreen products include the aviation, heavy construction,
mining, quarry and transportation industries. The acquisition of Evergreen
expanded the Company's product line and increased the number of markets in which
the Company sells products. SI and Evergreen sales organizations merged into one
integrated sales organization shortly after the acquisition. Evergreen
operations were integrated into the Company's Weighing Systems Division in
Seattle in June of 1997.


                                       8

<PAGE>

ASSET PURCHASE FROM LOAD MEASUREMENT CORPORATION

In June 1996, the Company purchased the assets of Load Measurement Corporation
(LMC). The asset purchase included the LMC on-board weighing system product
lines, all related technology, trade names and inventory. LMC products are
designed for and marketed primarily to the agriculture industry.

ACQUISITION OF AEROGO, INC.

In July 1997 the Company acquired AeroGo, Inc., a Washington corporation. AeroGo
is a world leader in the design and manufacture of load-handling, moving,
positioning and factory automation systems. AeroGo products, utilizing both
standard and highly specialized air bearing movement systems, are marketed
chiefly to aviation/aerospace, automotive, construction, manufacturing, maritime
and general industry. AeroGo's factory automation expertise lies in the design
and manufacturing of heavy load moving equipment, die carts, automated guided
vehicle systems, transport skates, sideloaders, step conveyors and flexible
manufacturing systems.

The acquisition of AeroGo provided the Company with an entrance to the
industrial automation industry where additional acquisitions of complementary
products and businesses will be pursued.

ACQUISITION OF NV TECHNOLOGY, INC.

In February 1998, the Company acquired NV Technology, Inc. (NV), a Nevada
corporation. The transaction, which was a tax-free merger, was accounted for as
a pooling-of-interest. NV is a manufacturer of high-performance, stainless steel
sensors. The addition of NV's National Institute of Science & Technology (NIST)
certified products expanded the Company's business in legal-for-trade, weighing
and process control applications. NV operations were integrated into the
Company's Weighing Systems Division in Seattle in June of 1998.

ACQUISITION OF ALLEGANY TECHNOLOGY, INC.

In July 1998, the Company acquired Allegany Technology, Inc. (Allegany), a
Delaware corporation. Allegany is a leading designer and manufacturer of
specialty sensors, industrial crane, and lift truck scales, along with billet
weighing systems. Allegany's unique billet weighing systems increase
productivity and profitability in the steel and heavy metals industries. Other
major markets for Allegany products include aerospace, distribution,
manufacturing, transportation and warehousing. Allegany products expanded the
Company's strong position as a manufacturer of weighing products for niche
markets.

ACQUISITION OF REVERE TRANSDUCERS

In July 1998, the Company acquired Revere Transducers, Inc. and Revere
Transducers Europe B.V. from Harnischfeger Industries (NYSE-HPH). Revere is
headquartered in Tustin, California, with operations in Tustin and Breda, the
Netherlands. Revere is one of the four largest manufacturers of electronic
weighing load cells, sensors and related devices in the industry, with world
wide market share estimated at 8%. In addition to a highly recognized brand
name, the acquisition of Revere brings the Company new technology and
manufacturing capability in the design and manufacture of proprietary strain
gages and a manufacturing facility and marketing organization in Europe.


                                       9

<PAGE>

1999 BUSINESS COMBINATION AND FACILITY CONSOLIDATION

In the third quarter of 1999 the company announced plans to combine four
business units and to restructure manufacturing operations resulting in the
closure of one manufacturing facility. In recognition of the expenses associated
with this restructuring, the Company established an $850,000 reserve in the
third quarter of 1999 to cover expenses related to implementation of the plan.
Upon announcement of the plan, the Company estimated future savings of
approximately $1.3 million annually due to lower manufacturing overhead and
operating expenses as a result of the restructuring.

Under the Plan, Allegany Technology of Cumberland, Maryland and the Weighing
Systems Division, of Seattle, Washington were combined to form SI/Allegany.
SI/Allegany will operate from a Cumberland, Maryland headquarters, with it's
western US markets served from a Seattle based Sales & Service Center.
Additionally, the Company combined its two sensor businesses, Revere
Transducers, of Tustin, California and NV Technology, of Seattle, Washington.
The newly formed sensor business unit will operate from a Tustin, California
headquarters and will retain the name Revere Transducers.

BACKLOG

At July 31, 1999, the Company's backlog was $8,433,983, compared with $7,819,506
on July 31, 1998. The Company's backlog consists of written orders and
commitments believed to be firm and shippable in fiscal 2000. Purchase orders
and contracts for products and services are from time to time modified and/or
canceled by mutual consent between the Company and the customer. Therefore, the
backlog on any specific date may not be indicative of the Company's future
performance.

EMPLOYEES

At July 31, 1999, the Company employed 415 full time employees.

SOURCES OF SUPPLY

The materials and components used by the Company to manufacture its products are
available from a variety of sources. The Company believes that it is not
dependent at this time on any particular supplier for either its materials or
components and has experienced no difficulty in obtaining supplies.

PATENTS AND TRADEMARKS

The Company holds 35 patents on various force measurement devices and weighing
system design applications. The patents have expiration dates ranging from 1999
to 2016. The company also has patent license agreements to build force
measurement devices under patents held by others. The license agreements are
fully paid up and irrevocable for the lifetime of these patents. The Company has
no reason to believe its patents are not valid. However, if the patents were
successfully contested, management does not believe it would have a material
adverse impact on the Company.


                                       10

<PAGE>

FINANCIAL INFORMATION ABOUT FOREIGN OPERATIONS AND EXPORT SALES

FOREIGN OPERATIONS

Included in the consolidated balance sheet at July 31, 1999 are the identifiable
assets of the Company's subsidiary, Revere Transducers Europe B.V., which total
approximately $5,118,000. Revere Transducers Europe was acquired by the Company
at July 1, 1998 and was included in the results of operations from that date.
The subsidiary is located in the Netherlands, and had sales of $10,316,189 and
operating profits of $834,882 for the year ended July 31, 1999.

EXPORT SALES

The Company sells its products throughout the world. Net export sales by foreign
geographic area are as follows:

<TABLE>
<CAPTION>

                                    1999            1998             1997
                                  ---------      ----------        ----------
<S>                              <C>             <C>               <C>
          Americas               $4,369,700      $2,477,000        $2,459,000
          Asia/Pacific            2,011,500       2,316,000         2,351,000
          Europe/Africa           1,467,400         969,000           628,000
                                  ---------      ----------        ----------

                                 $7,848,600      $5,762,000        $5,438,000
                                  ---------      ----------        ----------
                                  ---------      ----------        ----------
</TABLE>

ITEM 2.  PROPERTIES

<TABLE>
<CAPTION>

<S>                        <C>               <C>                              <C>       <C>           <C>
                                                                              SQUARE    LEASED OR        LEASE
LOCATION                    SEGMENT                UTILIZATION                FOOTAGE    OWNED        TERMINATION
UNITED STATES
Tukwila, WA                Industrial         Corporate offices and
                           Measurement        manufacturing and sales
                                              offices for the Weighing
                                              Systems Division                 30,000    Leased         April 2004
Tustin, CA                 Industrial         Manufacturing and sales for
                           Measurement        the U.S. operations of
                                              Revere Transducers               93,000    Leased         November 2004
Tukwila, WA                Industrial         Manufacturing and sales
                           Automation         offices for AeroGo, Inc.         55,000    Leased         April 2004
Cumberland, MD             Industrial         Manufacturing and sales
                           Measurement        offices for Allegany
                                              Technology, Inc.                 33,000    Leased         May 2006
Cumberland, MD             Industrial         Aircraft hanger                   4,200    Owned
                           Measurement

INTERNATIONAL
Breda, the Netherlands     Industrial         Manufacturing and sales
                           Measurement        offices for the European
                                              operations of Revere
                                              Transducers                      22,000    Leased         June 2007
Kelowna, B.C., Canada      Industrial         Sales and distribution center
                           Measurement                                          3,000    Leased         May 2001
</TABLE>


                                       11

<PAGE>

The Company believes that its properties have been adequately maintained, are in
generally good condition and are suitable for the Company's business as
presently conducted. The Company believes its existing facilities provide
sufficient production capacity for its present needs and for its anticipated
needs in the foreseeable future. The Company also believes that upon the
expiration of its current leases, it either will be able to secure renewal terms
or enter into leases for alternative locations at market terms.

ITEM 3. LEGAL PROCEEDINGS

The Company is engaged in various legal actions. In the opinion of management,
based upon the advice of counsel, the ultimate outcome of these actions will not
have a material impact on the Company's consolidated financial statements.

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

No matters were submitted to a vote of Security Holders during the quarter ended
July 31, 1999.


                                       12

<PAGE>

                                     PART II

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

As of October 26, 1999, there were 226 shareholders of record. Management
believes this represents approximately 600 beneficial owners of SI common stock.
SI's common stock is traded on the over-the-counter market on the NASDAQ system
under the symbol "SISI." The Company has not declared nor paid any dividends
since its inception. The following chart describes the price range of Common
Shares of SI, as quoted by NASDAQ, by quarter for fiscal 1999 and fiscal 1998:

<TABLE>
<CAPTION>

                                                      Price Range of Common Shares
                                            1999                                     1998
                                  HIGH              LOW                    HIGH               LOW
                               ------------     ------------           ------------       -----------
<S>                                <C>               <C>                  <C>                 <C>
1st Quarter                        7                 4                      7 1/4              4
2nd Quarter                        4 11/16           3 5/16                 8 1/4              4 13/16
3rd Quarter                        4 1/2             2 7/8                  7                  5
4th Quarter                        3 7/8             2 3/4                  8 1/2              5 1/4
</TABLE>

DIVIDEND POLICY

         The Company has never declared nor paid cash dividends on the Common
Stock. The Company intends to retain all future earnings for reinvestment in its
business and does not plan to pay dividends in the foreseeable future.
Furthermore, the Company is prohibited from declaring and/or paying cash
dividends on its capital stock under the terms of certain indebtedness.

<TABLE>
<CAPTION>

                              SI TECHNOLOGIES, INC.
                      Selected Consolidated Financial Data
                               Year ended July 31

                                     1999              1998            1997(1)        1996(1)         1995(1)
                                     ----              ----            ----           ----            ----
<S>                              <C>               <C>             <C>             <C>             <C>
Net sales                        $ 44,688,775      $23,829,033     $14,123,243     $12,385,777     $10,603,692

Net earnings (loss)                 (229,715)          830,379         499,276         666,546         361,462

Net earnings (loss) per
share basic                             (.07)             0.30            0.20            0.26            0.14

Net earnings (loss) per
share diluted                           (.07)             0.28            0.19            0.25            0.14

Total assets                       37,667,762       39,997,005      17,604,726      10,131,990       7,921,466

Long-term debt, less current
portion                            11,418,485       12,134,989       4,348,405       1,952,162         670,792

Other long-term obligations         1,422,865        1,773,475         178,300         468,000         407,200
</TABLE>
---------------------
(1) as restated for the NV Technology acquisition


                                       13

<PAGE>



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

As an aid to understanding the Company's operating results, the following table
indicates the percentage of revenues that each income statement item represents
and the percentage increase or decrease in such items for the years indicated.
Since 1990, the Company has acquired eight businesses. As a result of the impact
of these acquisitions, and the integration of the acquired operations on the
Company's business, results of operations for prior periods are not necessarily
comparable with or indicative of operations for current or future periods.

<TABLE>
<CAPTION>

                                                                                    Percent
                                                  Year ended July 31           Increase/(Decrease)

                                                                               1999 vs.     1998 vs.
                                             1999        1998        1997        1998        1997
                                             ----        ----        ----        ----        ----
<S>                                         <C>         <C>         <C>        <C>          <C>
Net sales                                   100.0%      100.0%      100.0%       87.5%       68.7%

Cost of sales                                61.7        57.4        57.8       101.7        67.6
                                           --------------------------------
Gross profit                                 38.3        42.6        42.2        68.4        70.2

Selling, general and administrative          25.4        26.1        27.2        82.9        61.8

Research, development and engineering         6.4         5.2         5.8       130.7        50.6

Amortization of intangibles                   1.0         1.4         1.0        31.2       130.5

Restructuring charges                         1.9         -           -         100.0         -
                                           --------------------------------
Operating expenses                           34.7        32.7        34.0        99.2        62.0
                                           --------------------------------
Operating profit                              3.5         9.9         8.2       (33.1)      104.3

Interest expense                             (3.7)       (4.0)       (2.3)       74.3       195.9

Other income                                  0.1         -           0.1       386.8       (64.7)
                                           --------------------------------
Earnings (loss) before income tax            (0.1)        5.9         6.0      (103.4)       66.7)

Income tax                                   (0.4)       (2.4)       (2.5)      (69.1)       67.2
                                           --------------------------------
Net earnings (loss)                          (0.5)        3.5         3.5      (127.7)       66.3
                                           --------------------------------
                                           --------------------------------
</TABLE>


                                       14

<PAGE>

RESULTS OF OPERATIONS

The Company grew significantly in 1999. Sales and cash flow, as measured by
EBITDA, increased to record levels. This performance is reflective of the new
products acquired in recent years and the new markets that the company has
entered. Due to the magnitude of recent acquisitions, and the integration of the
acquired operations with the Company's existing businesses, results of
operations for prior periods are not necessarily comparable with or indicative
of results of operations for current or future periods.

NET SALES

Net sales for the year ended July 31, 1999 increased $20,859,742 or 88% to
$44,688,775 from $23,829,033 for the year ended July 31, 1998. The increase in
sales is primarily attributable to the addition of new product lines and the
entry into new markets that resulted from sales generated by companies acquired
in recent years.

Net sales from industrial measurement products increased approximately $20.5
million, industrial automation products net sales increased approximately $0.3
million. The growth in measurement products reflects sales of new weighing
system product lines sold into the aerospace, distribution, manufacturing,
transportation and warehousing markets and the addition of new markets for
sensor products. The growth of industrial automation products reflects a higher
level of engineered systems revenue as compared to last year. Standard
industrial automation products sales decreased from 1998 to 1999. Industrial
measurement products sales reflect the results of the Allegany Technology and
the Revere Transducer acquisitions, which were included for all twelve months of
1999 as compared to one month in 1998. The increased revenue base has resulted
in a more diverse customer universe that reduces the Company's dependence on any
single product line, market or geographic region.

Net sales for 1998 increased by $9,705,790 or 69% over the 1997 net sales of
$14,123,243. The increase in sales is primarily attributable to the added
product lines resulting from the acquisitions of AeroGo, Inc., Allegany
Technology, Inc., NV Technology, Inc. and Revere Transducers.

International sales increased to $18.2 million in 1999 from $6.9 million in
1998. International sales accounted for 41% and 29% of total Company sales in
1999 and 1998 respectively. The increased proportion of international sales is
due primarily to the incorporation of Revere Transducers' European operation for
a full year in 1999 as compared to one month in 1998. International sales are
transacted both in U.S. dollars and in local currency. Sales in local foreign
currency are generally in Canadian and European markets. Sales in other markets
are generally conducted in U.S. dollars. There has not been a significant impact
on the financial statements due to changes in currency rates.

GROSS PROFIT

Gross profit for the year ended July 31, 1999 increased $6,951,165 or 68% to
$17,107,819 from $10,156,654 for the year ended July 31, 1998. The increase in
gross profit is attributable to the new measurement products and markets entered
as a result of the sales growth generated by companies acquired in recent years.
The corresponding gross margins for the periods were 38.3% and 42.6%,
respectively. The year over year decrease in gross margin is the result of the
changing mix of products resulting from newly acquired product lines. Gross
margin was also negatively impacted by excess capacity in the industrial
measurement production facilities. The excess manufacturing capacity was reduced
during the first quarter of fiscal 2000 as a production facility was closed and
that manufacturing activity transferred to other facilities within the
measurements product segment.


                                       15

<PAGE>

Gross profit for the year ended July 31, 1998 increased $4,189,162 or 70% to
$10,156,654 from $5,967,492 for the year ended July 31, 1997. This increase in
gross profit is directly attributable to higher sales volume resulting from
acquisitions completed in later fiscal 1997, and in fiscal 1998. The
corresponding gross margins for the periods were 42.6% and 42.2%, respectively.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses for the years ended July 31, 1999
and 1998 were $11,364,869 and $6,212,443, respectively. This is an increase of
$5,152,426 or 83%. The increase is related to the acquisitions discussed above.
Selling, general and administrative expenses as a percentage of sales were 25%
in 1999 as compared to 26% in 1998.

Selling, general and administrative expenses for the years ended July 31, 1998
and 1997 were $6,212,443 and $3,838,825, respectively. This is an increase of
$2,373,618 or 62%. The increase is primarily related to the acquisitions
discussed above. Selling, general and administrative expenses as a percentage of
sales were 26% in 1998 as compared to 27% in 1997.

RESEARCH, DEVELOPMENT AND ENGINEERING EXPENSES

Research, development and engineering expenses for the years ended July 31, 1999
and 1998 were $2,866,494 and $1,242,533, respectively. This is an increase of
$1,623,961 or 131%. Spending as a percentage of sales was 6% in 1999 and 5% in
1998. The increase in dollar amount is attributable to the acquisitions noted
earlier.

Research, development and engineering expenses for the years ended July 31, 1998
and 1997 were $1,242,533 and $825,312, respectively. This is an increase of
$417,221 or 51%. The increase in dollar amount is attributable to the
acquisitions noted earlier.

AMORTIZATION EXPENSES

Intangible amortization expenses amounted to $444,889 in 1999 as compared to
$339,114 in 1998. This is an increase of $105,775 or 31%. In 1998 intangible
amortization increased $191,988 over the amount recorded in the year ended July
31, 1997 of $147,126. The increases in amortization in both years were the
results of increases in the costs in excess of assets acquired recorded for the
acquisitions completed during those years.

RESTRUCTURING CHARGES

In 1999 the Company recorded restructuring charges totaling $850,000 in
connection with a plan to combine four business units and to restructure
manufacturing operations resulting in the closure of one manufacturing facility.
The charges related to severance and other related benefits and costs of exiting
the facility to be closed, including lease termination costs, and write-down of
existing assets to their expected net realizable value. When complete, the
consolidations are expected to result in annual cost savings estimated at
approximately $1.3 million.

INTEREST AND OTHER INCOME

Interest expense for 1999 increased $705,951 or 74%, to $1,656,552 from $950,601
in 1998. Interest expense in 1997 was $321,307. These increases in interest
expense reflect the costs of additional borrowings required for financing the
AeroGo, Allegany Technology and Revere Transducers


                                       16

<PAGE>

acquisitions. Other income was $26,366 in 1999 as compared to $5,416 in 1998. In
1997 other income was $15,354.

INCOME TAXES

Income tax expense for the years ended July 31, 1999 and 1998 was $181,096 and
$587,000, respectively. The Company's effective tax rate (income tax expense as
a percentage of pretax income) was 41% in 1998. An effective tax rate is not
calculable in 1999 due to the recording of a loss before income taxes. The
effective tax rate exceeds the U.S. federal corporate income tax rate due
primarily to the amortization of intangible assets that are not deductible for
income tax purposes and due to state income taxes.

Income tax expense in 1998 of $587,000 increased by $236,000 as compared to the
$351,000 recorded in 1997. The Company's effective tax rate in 1997 was 41%.

INFLATION

Historically, the impact of inflation has been negligible, as the Company has
been able to offset the effects through efficiency and price adjustments.

LIQUIDITY AND CAPITAL RESOURCES

At July 31, 1999 the Company's cash position was $32,042 compared to $573,863 at
July 31, 1998. Cash available in excess of that required for general corporate
purposes is used to reduce borrowings under the Company's line of credit.
Working capital increased to $7,474,841 from $6,730,351 at July 31, 1998.

The Company's existing capital resources consist of cash balances, cash provided
by operating activities and funds available under its line of credit. Cash
provided by operations in 1999 was $942,912. During 1998, cash provided by
operations was $1,024,768. In April 1998, the Company sold 839,664 shares of
common stock and used the net proceeds (approximately $3,683,000) to reduce debt
incurred with the acquisition of AeroGo, Inc.

The Company's cash requirements consist of its general working capital needs,
capital expenditures, obligations under its leases, notes payable and capital
required for future acquisitions. Working capital requirements include the
salary costs of employees and related overhead and the purchase of material and
components. The Company anticipates capital expenditures of approximately
$500,000 in 2000 as compared to $536,869 in 1999. Excluding payments under the
Company's lines of credit, principal payments made under notes payable and
long-term debt totaled approximately $2,133,730 for the year ended July 31,
1999. In 2000, approximately $4,281,146 in principal and long-term debt will be
due on notes payable and debt obligations.

In July 1998, the Company amended its principal credit agreement with its bank
for the purpose of financing the acquisitions of Allegany Technology, Inc. and
Revere Transducers. This agreement included an increase to the Company's
existing line of credit from $4,000,000 to $8,000,000, a one-year note in the
amount of $3,000,000, a seven-year note in the amount of $5,000,000 and the
continuation of a seven-year note (due in 2004) with a balance of $1,357,143 as
of July 31, 1999. The Company's credit facility requires the Company to maintain
certain levels of working capital, stockholders' equity, and other covenants.
The Company's covenants were modified on September 30, 1999. The Company
obtained a waiver from the bank specifying that the covenants in effect on July
31, 1999 were waived and replaced with amended covenants.


                                       17

<PAGE>

The Company's $8,000,000 line of credit, maturing November 2000, continues to be
extended as requested. As of July 31, 1999, the Company had borrowings of
$6,754,529 under the line of credit. In July 1998 the maturity date of the
Company's one-year note of $3,000,000 was extended. The current maturity date is
April 2000.

In addition to its principal credit agreement, the Company maintains a second
line of credit to support the working capital requirements of its European
operations. This line of credit amounts to $3,250,000. As of July 31, 1999, the
Company had borrowings of $1,525,000 under the line of credit.

The Company believes that cash flow from operations and funds available under
its bank facilities will be sufficient to meet the Company's working capital
needs and principal payments on long term debt. Repayment of the $3,000,000 note
due April 2000 will require capital from an equity financing or negotiation of
revised terms with the bank. The Company believes that it could obtain the
capital necessary to make additional acquisitions primarily through either
issuances of common or preferred stock or debt. No assurance can be given with
respect to whether such financing would be available when required or whether
such financing can be obtained on terms acceptable to the Company.

YEAR 2000 INITIATIVES

The Company is currently completing projects to resolve the potential impact of
"Year 2000" issues on the processing of date-sensitive information by the
Company's information processing systems. The Company regularly updates its
information systems capabilities and has evaluated all significant computer
software applications for compatibility with the year 2000. With the system
changes implemented to date and other planned changes, the Company anticipates
that its computer software applications will be compatible with the year 2000.
Expenditures specifically related to software modifications for year 2000
compatibility are not expected to have a material effect on the Company's
operations or financial position.

The Company has also communicated with suppliers and customers to assess the
potential impact on our operations if those parties fail to become Year 2000
compliant. Based on responses to date, it appears that many of these parties
have only indicated that they have in place Year 2000 readiness programs,
without specifically confirming that they will be Year 2000 compliant in a
timely manner.

The Company is developing a contingency plan to protect our business and
operations from Year 2000 related interruptions. There can be no assurances,
however, that any of our contingency plans will be sufficient to handle all
problems or issues that may arise. Accordingly, no assurances can be given that
this global issue will not affect the Company's results of operations.

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-KSB includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. All statements other than statements of
historical facts included in the preceding discussion regarding the Company's
financial position, business strategy and plans of management for future
operations are forward-looking statements. Although the Company believes that
the expectations reflected in such forward-looking statements are reasonable; it
can give no assurance that such expectations will prove to be correct.


                                       18

<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                                                                  (FORM 10-KSB)
                                                                                       Pages(s)
<S>                                                                                <C>
            Report of Independent Certified Public Accountants.  . . . . . . . . . .         21
            Consolidated Balance Sheets. . . . . . . . . . . . . . . . . . . . . . .         22
            Consolidated Statements of Operations . . . . . .  . . . . . . . . . . .         23
            Consolidated Statement of Stockholders' Equity . . . . . . . . . . . . .         24
            Consolidated Statements of Cash Flows  . . . . . . . . . . . . . . . . .         25
            Notes to Consolidated Financial Statements  .  . . . . . . . . . . . . .      26-39
</TABLE>


                                       19

<PAGE>

                        Consolidated Financial Statements

                              SI TECHNOLOGIES, INC.
                                AND SUBSIDIARIES

                          July 31, 1999, 1998 and 1997


                                       20

<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS




Board of Directors
SI Technologies, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of SI Technologies,
Inc. and Subsidiaries as of July 31, 1999 and 1998 and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended July 31, 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 financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of SI Technologies,
Inc. and Subsidiaries as of July 31, 1999 and 1998, and the consolidated results
of their operations and their consolidated cash flows for each of the three
years in the period ended July 31, 1999, in conformity with generally accepted
accounting principles.


   /s/ Grant Thornton LLP
  ----------------------------
       Grant Thornton LLP

Seattle, Washington
September 30, 1999


                                       21

<PAGE>

                     SI Technologies, Inc. and Subsidiaries
                           CONSOLIDATED BALANCE SHEETS
                                    July 31,

<TABLE>
<CAPTION>

                                     ASSETS
                                                                                   1999                    1998
                                                                                ------------           -----------
CURRENT ASSETS
<S>                                                                             <C>                   <C>
    Cash                                                                        $    32,042           $    573,863
    Trade accounts receivable, less allowance
       for doubtful accounts of $339,744 in 1999
       and $466,134 in 1998                                                       8,635,695              7,391,120
    Unbilled revenues                                                               126,859                373,327
    Inventories                                                                  10,087,125             11,026,104
    Deferred tax asset                                                            1,423,900              1,245,000
    Income taxes receivable                                                          85,894                      -
    Other current assets                                                            508,961                498,533
                                                                                 ----------             ----------

                Total current assets                                             20,900,476             21,107,947

PROPERTY AND EQUIPMENT, less accumulated depreciation and
    amortization                                                                  6,516,834              8,049,006

OTHER ASSETS
    Intangible assets, net                                                        9,977,856             10,217,389
    Other                                                                           272,596                622,663
                                                                                 ----------             ----------

                                                                               $ 37,667,762           $ 39,997,005
                                                                                 ----------             ----------
                                                                                 ----------             ----------
</TABLE>

<TABLE>
<CAPTION>

                                       LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
<S>                                                                            <C>                    <C>
    Notes payable                                                              $  4,767,128           $  5,104,411
    Current maturities of long-term debt                                          1,039,018              1,319,060
    Accounts payable                                                              3,559,770              3,758,849
    Customer advances                                                               109,140                      -
    Income taxes payable                                                                  -                134,280
    Accrued liabilities                                                           3,950,579              4,060,996
                                                                                -----------            -----------

                Total current liabilities                                        13,425,635             14,377,596

LONG-TERM DEBT, less current maturities                                          11,418,485             12,134,989
OTHER LIABILITIES                                                                 1,021,265              1,226,175
DEFERRED TAXES                                                                      401,600                547,300

STOCKHOLDERS' EQUITY
    Preferred stock, par value $.01 per share; authorized, 2,000,000                      -                      -
       shares; none outstanding
    Common stock, par value $.01 per share; authorized, 10,000,000;
       issued and outstanding 3,547,123                                              35,471                 35,471
    Additional paid-in capital                                                   10,294,071             10,320,765
    Retained earnings                                                             1,108,637              1,338,352
    Accumulated other comprehensive income                                          (37,402)                16,357
                                                                               -------------           -----------

                                                                                 11,400,777             11,710,945
                                                                                 ----------             ----------

                                                                               $ 37,667,762           $ 39,997,005
                                                                                 ----------             ----------
                                                                                 ----------             ----------
</TABLE>

The accompanying notes are an integral part of these statements.


                                       22

<PAGE>

                     SI Technologies, Inc. and Subsidiaries
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                  Year ended July 31,

                                                                           1999                 1998                 1997
                                                                       ------------         ------------         --------
<S>                                                                    <C>                 <C>                  <C>
Net sales                                                              $ 44,688,775        $ 23,829,033         $ 14,123,243
Cost of sales                                                            27,580,956          13,672,379            8,155,751
                                                                         -----------          ---------            ---------
             Gross profit                                                17,107,819          10,156,654            5,967,492

Operating expenses:
    Selling, general and administrative                                  11,364,869           6,212,443            3,838,825
    Research, development and engineering                                 2,866,494           1,242,533              825,312
    Amortization of intangibles                                             444,889             339,114              147,126
    Restructuring charges                                                   850,000                   -                    -
                                                                         -----------          ---------            ---------
                                                                         15,526,252           7,794,090            4,811,263
                                                                         -----------          ---------            ---------

             Earnings from operations                                     1,581,567           2,362,564            1,156,229

Interest expense                                                         (1,656,552)           (950,601)            (321,307)
Other income, net                                                            26,366               5,416               15,354
                                                                          ----------           --------             --------

             Net earnings (loss) before income taxes                        (48,619)          1,417,379              850,276

Income tax expense                                                         (181,096)           (587,000)            (351,000)
                                                                          ----------           --------             --------

             NET EARNINGS (LOSS)                                        $  (229,715)         $  830,379           $  499,276
                                                                          ----------           --------             --------
                                                                          ----------           --------             --------
Earnings (loss) per common share                                         $   (.07)            $    .30             $   .20
                                                                          --------             -------              ------
                                                                          --------             -------              ------
Earnings (loss) per common share, assuming dilution                      $   (.07)            $    .28             $   .19
                                                                          --------             -------              ------
                                                                          --------             -------              ------
</TABLE>


The accompanying notes are an integral part of these statements.


                                       23

<PAGE>

                     SI Technologies, Inc. and Subsidiaries
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                    Years ended July 31, 1999, 1998 and 1997

<TABLE>
<CAPTION>

                                                                                                      Accumulated
                                                                    Additional                           other             Total
                                          Common Stock                paid-in         Retained       comprehensive     stockholders'
                                     Shares           Amount          capital         earnings          income             equity
                                      ----------  ------------     -----------      ------------    ------------       ------------
<S>                                  <C>           <C>             <C>              <C>             <C>                <C>
Balance, August 1, 1996               2,547,240    $    25,472     $ 5,391,256      $      8,697    $          -       $  5,425,425

Net earnings                                                 -               -           499,276               -            499,276
                                      ----------  ------------     -----------      ------------    ------------       ------------

Balance, July 31, 1997                2,547,240         25,472       5,391,256           507,973               -          5,924,701

Expiration of put option
    obligations                               -              -         385,000                 -               -            385,000
Compensation associated with
    stock bonus                               -              -          72,000                 -               -             72,000
Proceeds from exercise of
    stock options                        18,000            180          29,632                 -               -             29,812
Proceeds from sale of common
    stock, net of issuance
    costs                               839,664          8,397       3,644,303                 -               -          3,652,700
Issuance of common stock
    related to acquisition              142,219          1,422         798,574                 -               -            799,996
Foreign currency  translation
    adjustment                                -              -               -                 -          16,357             16,357

Net earnings                                                 -                 -         830,379                -           830,379
                                      ----------  ------------     -----------      ------------    ------------       ------------

Balance, July 31, 1998                3,547,123         35,471      10,320,765         1,338,352          16,357         11,710,945

Cost associated with equity
    financing                               -                -          (26,694)              -               -           (26,694)
Foreign currency  translation
    adjustment                              -                -               -                -            (53,759)       (53,759)

Net earnings (loss)                           -               -                        (229,715)                -         (229,715)
                                      ----------  ------------     -----------      ------------    ------------       ------------

Balance, July 31, 1999                3,547,123       $ 35,471     $10,294,071        $1,108,637        $ (37,402)      $11,400,777
                                      ----------  ------------     -----------      ------------    ------------       ------------
                                      ----------  ------------     -----------      ------------    ------------       ------------
</TABLE>

The accompanying notes are an integral part of this statement.


                                       24

<PAGE>

                     SI Technologies, Inc. and Subsidiaries
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                               Year ended July 31,

<TABLE>
<CAPTION>

                                                                                      1999                1998             1997
                                                                                  ------------        ------------     -----------
<S>                                                                               <C>                  <C>              <C>
Increase (Decrease) in Cash
Cash flows from operating activities:
    Net earnings (loss)                                                           $  (229,715)         $  830,379       $  499,276
    Adjustments to reconcile net earnings (net loss) to net cash
       provided by operating activities:
          Loss on disposal of assets                                                    5,010                   -                -
          Depreciation and amortization                                             2,187,213             996,069          552,731
          Deferred lease costs                                                       (204,910)                  -                -
          Deferred income taxes                                                      (324,600)             32,344          171,500
          Changes in operating assets and liabilities:
                 Trade accounts receivable and unbilled revenues                     (998,107)           (646,309)         (11,374)
                 Inventories                                                          938,979            (634,615)         545,253
                 Income taxes receivable/payable                                     (220,174)            951,162         (123,599)
                 Other current assets                                                 (10,428)             43,749          (83,390)
                 Accounts payable                                                    (199,079)           (264,320)      (1,307,814)
                 Accrued liabilities and customer advances                             (1,277)           (283,691)        (101,225)
                                                                                   -----------        -----------      -----------
                        Net cash provided by operating activities                     942,912           1,024,768          141,358

Cash flows from investing activities:
    Other assets                                                                     (475,221)            (61,828)        (341,065)
    Purchase of property and equipment                                               (536,869)           (216,870)        (427,060)
    Proceeds from the disposition of property and equipment                           898,020                   -                -
    Acquisition of subsidiaries (net of $260,297 cash acquired in 1998
       and $1,159,395 in 1997)                                                              -         (10,286,722)      (4,840,605)
                                                                                   -----------        -----------      -----------
                        Net cash used in investing activities                        (114,070)        (10,565,420)      (5,608,730)

Cash flows from financing activities:
    Borrowings on notes payable                                                             -           3,088,290        3,079,452
    Borrowings on line of credit, net                                                 843,520           2,197,852          516,787
    Proceeds from long-term debt                                                            -           5,000,000        3,000,000
    Proceeds from sale of common stock                                                      -           3,682,512                -
    Payments on notes payable                                                        (293,664)         (3,323,129)               -
    Payments on long-term debt                                                     (1,840,066)           (775,193)      (1,138,305)
    Costs associated with equity financing                                            (26,694)                  -                -
    Other                                                                                    -             72,000          100,000
                                                                                   -----------        -----------      -----------
                        Net cash provided (used) by financing activities           (1,316,904)          9,942,332        5,557,934

Foreign currency translation adjustment                                               (53,759)             16,357                -
                                                                                   -----------        -----------      -----------

Net increase (decrease) in cash                                                      (541,821)            418,037           90,562
Cash at beginning of year                                                             573,863             155,826           65,264
                                                                                   -----------        -----------      -----------

Cash at end of year                                                              $     32,042       $     573,863    $     155,826
                                                                                   -----------        -----------      -----------
                                                                                   -----------        -----------      -----------

Cash paid during the year for:
    Interest                                                                     $  1,707,642         $   778,539      $   236,776
    Income taxes                                                                  $   736,934         $   567,866      $   297,801

Non-cash investing and financing activities:
    See Note R
</TABLE>


The accompanying notes are an integral part of these statements.


                                       25

<PAGE>

                     SI Technologies, Inc. and Subsidiaries
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                          July 31, 1999, 1998 and 1997


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     SI Technologies, Inc. designs, manufactures and markets high performance
     industrial sensors, weighing and material-handling equipment and systems,
     and related products. SI products incorporate devices, equipment and
     systems for the handling, inspection and measurement of goods and
     materials. Key markets served by SI include aerospace/aviation, food,
     forestry, manufacturing, mining, transportation/distribution and waste
     management. Sales are made to customers throughout the world. A summary of
     significant accounting policies consistently applied in the preparation of
     the accompanying consolidated financial statements follow.

     1.   PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts of SI
     Technologies, Inc. (SI or Company) and its subsidiaries; AeroGo, Inc.,
     Allegany Technology, Inc., Evergreen Weigh, Inc., Revere Transducers, Inc.,
     Revere Transducers Europe B.V., AeroGo Export, Inc., and IDEAutomation
     International, Inc. All significant intercompany accounts and transactions
     have been eliminated in consolidation.

     2.   INVENTORIES

     Inventories are stated at the lower of cost or market. Cost is determined
     using the first-in, first-out method. Uncompleted contracts are included in
     inventory at the accumulated cost of each contract not in excess of
     realizable value.

     3.   PROPERTY AND EQUIPMENT

     Property and equipment are stated at cost less accumulated depreciation and
     amortization. Depreciation and amortization are provided in amounts
     sufficient to relate the cost of depreciable assets to operations over
     their estimated service lives, principally on a straight-line basis.
     Leasehold improvements are amortized over the lives of the respective
     leases or the service lives of the improvements, whichever is shorter.
     Estimated service lives of property and equipment are as follows:

          Machinery and equipment           2 to 10 years
          Buildings                         35 years
          Leasehold improvements            2 to 10 years

     The straight-line method of depreciation is followed for substantially all
     assets for financial reporting purposes, but accelerated methods are used
     for tax purposes.

     4.   INTANGIBLE ASSETS

     Intangible assets represent the excess costs of acquiring subsidiaries over
     the fair value of net assets acquired at the date of acquisition, which are
     amortized using the straight-line method primarily over periods of 25 to 40
     years. The Company periodically reviews goodwill to assess recoverability.
     Impairment is recognized in operating results if expected future operating
     undiscounted cash flows of the acquired business are less than the carrying
     value of goodwill. Accumulated amortization totaled $1,748,579 and
     $1,302,162 at July 31, 1999 and 1998, respectively.

     5.   CAPITALIZED COMPUTER SOFTWARE COSTS

     Capitalized computer software costs with an unamortized cost of $53,837 and
     $383,380 at July 31, 1999 and 1998, respectively, are reflected as other
     assets in the accompanying consolidated balance sheets. These costs are
     being amortized over periods ranging from one to three years. Amortization
     expense charged to operations relating to these costs totaled approximately
     $333,500, $92,700 and $39,700 for the years ended July 31, 1999, 1998 and
     1997, respectively.


                                       26

<PAGE>

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

     6.   PRODUCT WARRANTY

     Product warranty costs are estimated and accrued at the time sales are
     recorded.

     7.   REVENUE RECOGNITION

     Sales are recorded at the time of shipment for equipment and for special
     orders with relatively short production time requirements. On long-term
     contracts, sales are recorded based on the percentage that incurred costs
     bear to the total estimated costs at completion. Estimated losses are
     recorded in total when they become evident. Such billings are generally
     made and collected in the subsequent year.

     8.   COMPREHENSIVE INCOME

     Foreign currency assets and liabilities are translated into their U.S.
     dollar equivalents based on year end exchange rates. Revenue and expense
     accounts are translated at average exchange rates for the appropriate
     fiscal year. Aggregate exchange gains and losses arising from the
     translation of foreign assets and liabilities are included in stockholders'
     equity. Transaction gains and losses are included in income and have not
     been significant in amount.

     9.   USE OF ESTIMATES

     In preparing the Company's financial statements, management is required to
     make estimates and assumptions that affect the reported amounts of assets
     and liabilities, the disclosure of contingent assets and liabilities at the
     date of the financial statements, and the reported amounts of revenues and
     expenses during the reporting period. Actual results could differ from
     those estimates.

     10.  RECLASSIFICATIONS

     Certain reclassifications have been made to the 1997 and 1998 consolidated
     financial statements to conform to the 1999 presentation.


NOTE B - BUSINESS COMBINATIONS

     1.   NV TECHNOLOGY, INC.

     Effective February 1998, the Company completed a merger with NV Technology,
     Inc. (NV) by exchanging 200,000 shares of its common stock for all of the
     common stock of NV. NV is engaged in the manufacture of industrial sensors.
     The merger constituted a tax-free reorganization and has been accounted for
     as a pooling of interests. Accordingly, all prior period consolidated
     financial statements presented have been restated to include the combined
     results of operations, financial position and cash flows as though NV had
     always been a part of the Company.

     Prior to the merger, NV's fiscal year ended on December 31. In recording
     the business combination, NV's prior period financial statements have been
     restated to a year ended July 31, to conform to the Company's year end.
     There were no transactions between the Company and NV prior to the
     combination, and adjustments were recorded to conform NV's accounting
     policies. Certain reclassifications were made to the NV financial
     statements to conform to the Company's presentation.

     2.   REVERE TRANSDUCERS

     Effective July 1, 1998, the Company purchased 100% of the common stock of
     Revere Transducers, Inc. and Revere Transducers Europe B.V. (jointly -
     Revere) for $8,282,000 in cash. Revere is engaged in the manufacture of
     industrial sensors and weighing equipment. The combination is accounted for
     under the purchase method of accounting. The fair value of net


                                       27

<PAGE>
NOTE B - BUSINESS COMBINATIONS - Continued

     2.   REVERE TRANSDUCERS - CONTINUED

     assets acquired exceeded the acquisition cost by $249,930, which was
     adjusted in 1999 from $552,297 for additional acquisition costs. This
     amount has been applied to reduce the fair value of recorded property and
     equipment. Earnings include the results of operations of Revere from the
     acquisition date, July 1, 1998. The purchase of Revere was funded by the
     net proceeds from the note payable from the bank and the term loan from the
     bank described in Notes E and G.

     3.   ALLEGANY TECHNOLOGY, INC.

     Effective July 1, 1998, the Company purchased 100% of the common stock of
     Allegany Technology, Inc. (Allegany) for $2,888,290 in cash and SI common
     stock. Allegany is engaged in the manufacture of industrial sensors and
     weighing equipment and systems. The combination is accounted for under the
     purchase method of accounting. The excess of the total acquisition cost
     over the fair value of net assets acquired in the amount of $2,999,686,
     which was adjusted in 1999 from $2,810,537 for adjustments to the fair
     value of assets, is being amortized on a straight-line basis over
     twenty-five years. Earnings include the results of operations of Allegany
     from the acquisition date, July 1, 1998. The purchase of Allegany was
     funded by borrowings under the Company's line of credit and from the
     issuance of 142,219 shares of common stock.

     4.   AEROGO, INC.

     Effective July 1, 1997, the Company purchased 100% of the common stock of
     AeroGo, Inc. (AeroGo) for $6,000,000 in cash. AeroGo is engaged in the
     manufacture of material handling equipment and systems. The combination is
     accounted for under the purchase method of accounting. The excess of the
     total acquisition cost over the fair value of net assets acquired in the
     amount of $4,347,468 is being amortized on a straight-line basis over
     twenty-five years. Earnings include the results of operations of AeroGo
     from the acquisition date, July 1, 1997.

     The following table reflects the unaudited pro forma consolidated results
     of operations of the acquisitions of Revere, Allegany and AeroGo as if they
     had occurred on August 1, 1996.

<TABLE>
<CAPTION>
                                                    (Unaudited)              (Unaudited)
                                                      7/31/98                   7/31/97
                                                    -----------               ------------
<S>                                                 <C>                       <C>
     Net sales                                       $47,660,183               $46,292,942

     Net earnings (loss)                            $(1,248,340)              $(2,144,507)

     Earnings (loss) per share                        $    (.42)                 $  (.81)
</TABLE>


NOTE C - INVENTORIES

     Inventories consist of the following at July 31:

<TABLE>
<CAPTION>
                                                                 1999                            1998
                                                              ----------                       -------
<S>                                                         <C>                            <C>
     Raw materials                                          $  4,987,726                   $  4,782,003
     Work in process                                           1,536,066                      2,434,209
     Finished goods                                            3,563,333                      3,809,892
                                                             -----------                    -----------

                                                            $ 10,087,125                   $ 11,026,104
                                                             -----------                    -----------
                                                             -----------                    -----------
</TABLE>

                                       28

<PAGE>

NOTE D - PROPERTY AND EQUIPMENT

     Property and equipment consist of the following at July 31:

<TABLE>
<CAPTION>

                                                                 1999                           1998
                                                              ----------                       ------
<S>                                                           <C>                            <C>
     Machinery and equipment                                  $8,602,915                     $7,837,765
     Buildings                                                    83,600                        730,680
     Leasehold improvements                                    1,369,820                      1,485,153
                                                            ------------                    -----------
                                                              10,056,335                     10,053,598
     Less accumulated depreciation and
        amortization                                           3,539,501                      2,254,592
                                                            ------------                    -----------

                                                               6,516,834                      7,799,006

     Land                                                              -                        250,000
                                                            ------------                    -----------

                                                            $  6,516,834                   $  8,049,006
                                                            ------------                    -----------
                                                            ------------                    -----------
</TABLE>

NOTE E - NOTES PAYABLE

     In conjunction with the Revere Transducers acquisition described in Note B,
     the Company entered into a term loan payable to a bank for $3,000,000. The
     loan requires monthly interest only payments until when the loan is due in
     full on April 10, 2000. The interest rate on the note is 11.75%. The note
     is secured by all assets of the Company and is subject to the financial
     covenants described in Note G.

     The Company has a working capital line of credit with a bank for the
     purpose of financing the operations of its Revere Transducers Europe
     subsidiary. The line is available up to a maximum of approximately
     $3,250,000. As of July 31, 1999 the outstanding balance amounted to
     $1,525,000. The line of credit bears interest at 4.6%. The line of credit
     is secured by the inventories and accounts receivable of Revere Transducers
     Europe.

     A note payable in the amount of $242,128 is due to shareholders of an
     acquired company. The note bears interest at 5% and was paid August 1999.



NOTE F - ACCRUED LIABILITIES

     Accrued liabilities consist of the following at July 31:

<TABLE>
<CAPTION>

                                                                 1999                          1998
                                                               --------                       ------
<S>                                                           <C>                           <C>
     Accrued salaries, wages and
       other compensation                                     $1,770,293                    $2,522,981
     Product start up and warranty reserve                       386,566                       408,050
     Distributor commissions                                           -                        62,601
     Accrued legal and settlement costs                          367,502                       536,425
     Accrued restructuring costs                                 749,322                             -
     Deferred lease and rent cost - current                      204,907                       178,856
     Other                                                       471,989                       352,083
                                                                --------                      --------

                                                              $3,950,579                    $4,060,996
                                                              ----------                    ----------
                                                              ----------                    ----------
</TABLE>


                                       29

<PAGE>

NOTE G - LONG-TERM DEBT

     Long-term debt consists of the following at July 31:

<TABLE>
<CAPTION>

                                                                                                1999              1998
                                                                                               ------            ------
<S>                                                                                          <C>                <C>
     Revolving line of credit with a bank for up to $8,000,000 plus interest at the
         prime rate plus 1%, .5%, .25% or at LIBOR plus 3.25%, 2.75%, 2.5% or 2.25%
         depending on certain financial ratios of the Company (9% at July 31, 1999
         and 9.5% at July 31, 1998), secured by trade accounts receivable,
         inventories and certain equipment, due November 2000                                $6,754,529         $5,911,009

    Note payable to bank in monthly installments of $59,524 plus interest at the
         prime rate plus 1.125%, .6875%, .375% or at LIBOR plus 3.375%, 3%, 2.625% or
         2.375% depending on certain financial ratios of the Company (8.5% at July
         31, 1999 and 9.625% at July 31, 1998), secured by all assets, due July 2005          4,285,714          5,000,000

    Note payable to bank in monthly installments of $22,619 plus interest at the
         prime rate plus 1.125%, .6875% or .25% or LIBOR plus 3.375%, 3% or 2.625%,
         depending on certain financial ratios of the Company (8.5% at July 31, 1999
         and 9.625% at July 31, 1998), secured by all assets, due July 2004                   1,357,143          1,628,571

    Note payable to bank in monthly installments of $3,626 including interest at
         9.25%, secured by real estate, paid in full May, 1999                                        -            540,310

     Other unsecured notes payable, at interest rates ranging from 5%
         to 8%, due between 2000 and 2002                                                        60,117            374,159
                                                                                                 ------            -------

                                                                                             12,457,503         13,454,049
     Less current maturities                                                                  1,039,018          1,319,060
                                                                                           ------------       ------------

                                                                                            $11,418,485        $12,134,989
                                                                                           ------------       ------------
                                                                                           ------------       ------------
</TABLE>

     Aggregate maturities of long-term debt, excluding the revolving line of
     credit, are approximately as follows at July 31, 1999:

<TABLE>
<CAPTION>
                     Year Ending July 31,
                     --------------------
<S>                                                    <C>
                            2000                       $ 1,039,018
                            2001                           990,100
                            2002                           988,100
                            2003                           985,700
                            2004                           985,700
                            Thereafter                     714,356
                                                          --------

                                                        $5,702,974
                                                        ----------
                                                        ----------
</TABLE>

     The Company is required to maintain certain levels of working capital, net
     worth and cash flow ratios and may not pay any cash dividends under terms
     of its credit agreement. The Company's covenants were modified on September
     30, 1999. The Company obtained a waiver from the bank specifying that the
     covenants in effect on July 31, 1999 were waived and replaced with amended
     covenants.


                                       30

<PAGE>

NOTE H - OTHER LIABILITIES

     Other liabilities consist of the following at July 31:

<TABLE>
<CAPTION>

                                                      1999                         1998
                                                      ----                         ----
<S>                                                <C>                          <C>
         Deferred lease costs                      $ 663,065                    $ 822,200
         Deferred rent                               358,200                      403,975
                                                    --------                     --------

                                                  $1,021,265                   $1,226,175
                                                   ---------                    ---------
                                                   ---------                    ---------
</TABLE>

     Deferred lease costs arising from an acquisition represent the discounted
     operating lease costs for excess plant capacity acquired at the acquisition
     date totaling $994,593. The deferred lease cost is amortized over 62
     months, the remaining life of the lease. Aggregate maturities of deferred
     lease costs are as follows at July 31, 1999:

<TABLE>
<CAPTION>

         Year ending July 31,
         --------------------
<S>                                                <C>
         2000                                      $ 159,132
         2001                                        159,130
         2002                                        159,130
         2003                                        159,130
         2004                                        159,130
         Thereafter                                   26,545
                                                    --------

                                                   $ 822,197
         Less current portion                        159,132
                                                     -------
                                                   $ 663,065
                                                   ---------
                                                   ---------
</TABLE>


NOTE I - STOCKHOLDERS' EQUITY

     1.   COMMON STOCK

     As of January 1998, the authorized number of shares of common stock was
     increased from 5,000,000 shares to 10,000,000 shares.

     2.   PRIVATE PLACEMENT OF EQUITY

     In April 1998, the Company completed a private placement of securities. The
     offering consisted of 168 units, each unit consisting of 4,998 shares of
     common stock and two-year warrants to purchase 1,000 shares of common stock
     at $8.00 per share. The offering raised $4.2 million in gross proceeds of
     which the Company received approximately $3.7 million after commissions and
     expenses.

     In connection with the private placement offering, the Company also
     provided the underwriter with a warrant entitling the holder to purchase
     80,000 shares of common stock at $5.50 per shares, exercisable for five
     years.


NOTE J - COMMITMENTS AND CONTINGENCIES

     1.   LEASES

     The Company conducts a portion of its operations in leased facilities under
     noncancelable operating leases expiring at various dates through 2006. A
     portion of one manufacturing facility is subleased under a lease, which
     expires in 2005. Total future minimum sublease rentals amount to $552,420
     at July 31, 1999.


                                       31

<PAGE>

NOTE J - COMMITMENTS AND CONTINGENCIES - Continued

     The minimum rental commitments, excluding sublease income, under operating
     leases are as follows:

<TABLE>
<CAPTION>

                   Year ending July 31,
                   --------------------
<S>                                                   <C>
                          2000                        $1,244,600
                          2001                         1,227,100
                          2002                         1,254,100
                          2003                         1,251,300
                          2004                           968,000
                          Thereafter                     247,900
                                                      ----------

                                                      $6,193,000
                                                      ----------
                                                      ----------
</TABLE>

     Rent expense under noncancelable operating leases was approximately
     $1,110,000, $510,500 and $416,000 for the years ended July 31, 1999, 1998
     and 1997, respectively. Sublease income was approximately $53,500 for the
     year ended July 31, 1999.

     2.   CONSULTING AND NON-COMPETE AGREEMENTS

     Certain former executives of a company acquired in a prior year entered
     into consulting and non-compete agreements with the Company. The consulting
     agreements have a term of five years and the non-compete agreements have a
     term of ten years. Future payments under these agreements are as follows:

<TABLE>
<CAPTION>

                   Year ending July 31,
                   --------------------
<S>                                                     <C>
                          2000                          $122,500
                          2001                           107,500
                          2002                            62,500
                          2003                            62,500
                          2004                            62,500
                          Thereafter                     104,167
                                                        --------

                                                        $521,667
                                                        --------
                                                        --------
</TABLE>

     The expense associated with these agreements totaled $122,500, $122,500 and
     $122,500 for the years ended July 31, 1999, 1998 and 1997, respectively.

     3.   LITIGATION

     The Company is engaged in various legal actions. In the opinion of
     management, based upon advice of counsel, adequate accruals and settlements
     are provided for in the consolidated financial statements and the ultimate
     outcome of these actions will not have a material impact on the Company's
     consolidated financial statements.

NOTE K - INCOME TAXES

     The Company accounts for income taxes on the liability method as prescribed
     by Statement of Financial Accounting Standards No. 109, "Accounting for
     Income Taxes" (SFAS 109).

     Income tax expense consists of the following for the year ended July 31:

<TABLE>
<CAPTION>

                                                       1999                          1998                       1997
                                                    ----------                    ----------                  -------
<S>                                                 <C>                           <C>                       <C>
     Current expense                                 $505,696                      $462,700                  $179,500
     Deferred expense (benefit)                      (324,600)                      124,300                   171,500
                                                     ---------                      -------                   -------

                                                      $181,096                      $587,000                  $351,000
                                                     ---------                      -------                   -------
                                                     ---------                      -------                   -------
</TABLE>


                                       32

<PAGE>

NOTE K - INCOME TAXES - Continued

<TABLE>
<CAPTION>

     The income tax provision reconciled to the tax computed at the statutory
     federal rate was as follows for the year ended July 31:
                                                               1999                     1998                    1997
                                                            ----------               ----------              -------
<S>                                                          <C>                    <C>                      <C>
     Tax at statutory rate                                   $(16,500)              $481,900                 $293,800
     Nondeductible goodwill                                   147,800                108,400                   61,000
     State and foreign taxes                                  222,100                 41,000                    3,000
     Foreign sales corporation                               (121,500)               (13,400)                 (24,400)
     Credits and net operating losses utilized                (33,000)               (46,900)                  (4,400)
     Other                                                    (17,804)                16,000                   22,000
                                                              --------              --------                ---------

                                                             $181,096               $587,000                $ 351,000
                                                              --------              --------                ---------
                                                              --------              --------                ---------
</TABLE>

     The components of deferred taxes included in the balance sheet are as
     follows at July 31:

<TABLE>
<CAPTION>

                                                                         1999                       1998
                                                                      ----------                ----------
<S>                                                                  <C>                        <C>
     Deferred tax asset:
         Accrued vacation and warranty                               $  262,600                 $  268,500
         Provision for bad debts                                         65,900                     55,400
         Accrued liabilities not paid                                    76,800                    129,900
         Inventory reserve and capitalized overhead                     760,600                    785,800
         Restructuring accrual                                          254,800                          -
         Foreign currency adjustment                                      3,200                      5,400
                                                                       --------                   --------

                                                                     $1,423,900                 $1,245,000
                                                                       --------                   --------
                                                                       --------                   --------
     Deferred tax liability:
         Excess of tax over book depreciation                       $   627,000                $   880,900
         Deferred lease costs                                          (225,400)                  (333,600)
                                                                    ------------                 ---------

                                                                    $   401,600                $   547,300
                                                                       --------                   --------
                                                                       --------                   --------
</TABLE>

     The Company has recorded a deferred tax asset of $1,423,900 and $1,245,000
     as of July 31, 1999 and 1998, respectively. The Company has not recorded a
     valuation allowance against the asset as it believes it is more likely than
     not that all of the deferred tax assets will be realized through future
     taxable earnings or implementation of tax planning strategies.


NOTE L - STOCK OPTION PLAN

     The Company implemented a new stock option plan in 1995 and has authorized
     a total of 600,000 shares of common stock to be set aside for grants.
     Additionally, options are outstanding under the old plan that expired July
     31, 1994. The vesting and expiration dates of the stock options are at the
     discretion of the Board of Directors.

     The Company has adapted only the disclosure provisions of Statement of
     Financial Accounting Standards No. 123, "Accounting for Stock-Based
     Compensation" (SFAS 123). It applies APB Opinion No. 25, "Accounting for
     Stock Issued to Employees," in accounting for its plans which does not
     require recognition of compensation expense due to options being granted at
     fair value on the date of grant. If the Company had elected to recognize
     compensation expense based upon the fair value at the grant date for awards
     under these plans consistent with the methodology prescribed by SFAS 123,
     the Company's net earnings and earnings per share would be reduced to the
     pro forma amounts indicated below:


                                       33

<PAGE>

NOTE L - STOCK OPTION PLAN - Continued

<TABLE>
<CAPTION>

                                                         1999                         1998                        1997
                                                     ------------                 ------------                  --------
<S>                                                    <C>                            <C>                       <C>
     Net earnings (loss)
         As reported                                   $(229,715)                     $830,379                  $499,276
         Pro forma                                     $(387,216)                     $726,875                  $420,005

     Earnings per common share
         As reported - basic                               $(.07)                        $ .30                     $ .20
         Pro forma                                         $(.11)                        $ .26                     $ .17

         As reported - diluted                             $(.07)                        $ .28                     $ .19
         Pro forma                                         $(.11)                        $ .24                     $ .16
</TABLE>

     These pro forma amounts may not be representative of future disclosures
     because they do not take into effect pro forma compensation expense related
     to grants made before 1996.

     The fair value of these options was estimated at the date of grant using
     the Black-Scholes option-pricing model with the following assumptions for
     the periods ending July 31, 1999, 1998 and 1997, respectively: dividend
     yields are nil, expected volatility of 54, 54 and 52 percent; risk-free
     interest rate of 5.1%; and expected option lives of 6.6, 6.9 and 7.8 years,
     respectively. The weighted-average fair value of options granted during the
     periods ending July 31, 1999, 1998 and 1997, for which the weighted average
     exercise price equals the market price on the grant date was $3.93, $4.88
     and $3.63, respectively.

     The following tables summarize information concerning currently outstanding
     and exercisable stock options:

<TABLE>
<CAPTION>

                                                              Stock Options Outstanding            Weighted-Average Exercise Price
                                                              -------------------------            -------------------------------
<S>                                                           <C>                                  <C>
     Balance, July 31, 1996                                             242,500                                $2.75

     Granted                                                            125,000                                $2.15
     Exercised                                                                -                                $   -
     Expired/canceled                                                  (21,000)                                $3.90
                                                                      --------

     Balance, July 31, 1997                                             346,500                                $2.47

     Granted                                                             60,000                                $4.75
     Exercised                                                         (18,000)                                $1.66
     Expired/canceled                                                  (12,000)                                $2.13
                                                                      --------

     Balance, July 31, 1998                                             376,500                                $2.87

     Granted                                                             52,000                                $3.93
     Exercised                                                                -                                $   -
     Expired/canceled                                                         -                                $   -
                                                                      --------

     Balance, July 31, 1999                                             428,500                                $3.00
                                                                      --------
                                                                      --------
</TABLE>


                                       34

<PAGE>

NOTE L - STOCK OPTION PLAN - Continued

<TABLE>
<CAPTION>

<S><C>
                                                                       Weighted-Average
                                       Number of Shares           Remaining Contractual Life           Weighted-Average
     Range of Exercise Prices             Outstanding                      in Years                     Exercise Price
     ------------------------             -----------                      --------                     --------------
            $1-$2                           200,000                           5.9                             $1.70
            $2-$3                            50,500                           7.8                             $2.90
            $3-$4                            11,000                           9.0                             $3.48
            $4-$5                           157,000                           7.6                             $4.53
            $5-$6                            10,000                           8.8                             $5.88
                                         ----------

                                            428,500
                                            -------
                                            -------

                                       Number of Shares                Weighted-Average
     Range of Exercise Prices             Exercisable                   Exercise Price
     ------------------------             -----------                   --------------
            $1-$2                           164,000                          $1.66
            $2-$3                            38,400                          $2.95
            $3-$4                               600                          $3.25
            $4-$5                            75,000                          $4.51
            $5-$6                             2,000                          $5.88
                                          ---------

                                            280,000
                                            -------
                                            -------
</TABLE>

NOTE M - EARNINGS PER SHARE

     The Company uses Statement of Financial Accounting Standards (SFAS) No.
     128, "Earnings per Share" which established standards for computing and
     presenting earnings per share (EPS). Earnings per share are based on the
     average number of shares outstanding during each period and income
     available to common shareholders. Earnings per share assuming dilution is
     based on the assumption that outstanding stock options and warrants were
     exercised.

     The table below presents the information used to compute earnings per
     common share, with and without dilution:

<TABLE>
<CAPTION>

                                                                   For the Year Ended July 31, 1999
                                               Earnings (Loss)                 Shares                         Per Share
                                                (Numerator)                 (Denominator)                       Amount
                                                ----------                  -------------                       ------
<S>                                            <C>                          <C>                               <C>
     Earnings (loss) per common share
     Loss available to common stockholders
                                                 $(229,715)                  3,547,123                        $( .07)
                                                 ----------                  ---------                          -----
                                                 ----------                  ---------                          -----
</TABLE>

     The computation for loss per share assuming dilution for the year ended
     July 31, 1999 was anti-dilutive.


                                       35

<PAGE>

NOTE M - EARNINGS PER SHARE - Continued

<TABLE>
<CAPTION>

                                                               For the Year Ended July 31, 1998
                                                 Earnings                         Shares                        Per Share
                                               (Numerator)                    (Denominator)                       Amount
                                               ----------                     ------------                        ------
<S>                                            <C>                            <C>                               <C>
     Earnings per common share
     Earnings available to common
         stockholders                            $830,379                       2,801,431                          $ .30
                                                                                                                   -----
                                                                                                                   -----
     Effect of dilutive securities
         Stock options                                  -                         154,339
         Warrants                                       -                          33,688
                                                 --------                       ---------
     Earnings per common share
         assuming dilution
     Earnings available to
         common stockholders and
         effect of assumed
         conversions                             $830,379                       2,989,458                          $ .28
                                                 --------                       ---------                          -----
                                                 --------                       ---------                          -----
</TABLE>

<TABLE>
<CAPTION>

                                                              For the Year Ended July 31, 1997
                                             Earnings                         Shares                        Per Share
                                           (Numerator)                    (Denominator)                       Amount
                                           ----------                     -------------                       ------
<S>                                        <C>                            <C>                               <C>
     Earnings per common share
     Earnings available to common
         stockholders                       $499,276                        2,547,240                          $ .20
                                                                                                               -----
                                                                                                               -----
     Effect of dilutive securities
         Stock options                             -                          108,807
                                            --------                        ---------
     Earnings per common share
         assuming dilution
     Earnings available to
         common stockholders and
         effect of assumed
         conversions                        $499,276                        2,656,047                          $ .19
                                            --------                        ---------                          -----
                                            --------                        ---------                          -----
</TABLE>

     Warrants to purchase 168,000 shares of common stock at $8.00 per share were
     not included in the computation of diluted EPS because the exercise prices
     were greater than the average market price of the common shares.


NOTE N - INDUSTRY AND GEOGRAPHIC AREA SEGMENT INFORMATION

     In fiscal 1999, the Company adopted SFAS No. 131, "Disclosure about
     Segments of an Enterprise and Related Information." The Company operates in
     two reportable business segments - (1) industrial measurement, and
     (2) industrial automation. The Company's reportable segments are strategic
     business units that offer different products. They are managed separately
     based on the fundamental differences in their operations. The accounting
     policies of the segments are the same as those described in Note A Summary
     of Significant Accounting Policies. Segment data includes intersegment
     revenues.

     Included in the industrial measurement segment are industrial sensors
     and controls products consisting of a wide range of NTEP and OIML approved,
     EX, Factory Mutual and IP rated load cells, transducers, translators and
     sensors. When matched with microprocessor-controlled digital electronics,
     they measure forces such as pressure, weight, mass and torque. Weighing
     systems' products constitute the combination of load cells and
     microprocessor-controlled digital electronics that in combination provide
     for an integrated system providing weight data in both dynamic and static
     industrial weighing applications.


                                       36

<PAGE>

NOTE N - INDUSTRY AND GEOGRAPHIC AREA SEGMENT INFORMATION - Continued

     The industrial automation segment consists of load handling, moving and
     positioning equipment and systems for applications in manufacturing,
     construction and other environments in which heavy bulky materials are
     being transported and positioned.

<TABLE>
<CAPTION>

     Foreign Operations
     ------------------
                                                               1999                   1998                 1997
                                                            ----------             ----------            -------
<S>                                                        <C>                 <C>                  <C>
     Identifiable Assets:
     --------------------
     Americas                                              $ 32,549,762        $   34,210,005       $  17,604,726
     Europe                                                $  5,118,000        $    5,787,000       $        -

     Sales:
     ------
     Americas                                             $  34,372,586        $   22,712,841       $  14,123,243
     Europe                                               $  10,316,189        $    1,116,192       $        -

     Operating Profits:
     ------------------
     Americas                                             $     746,685        $    2,288,833       $   1,156,229
     Europe                                               $     834,882        $       73,731       $        -

     Export Sales
     ------------

</TABLE>

     The Company sells its products throughout the world. Net export sales by
     foreign geographic area are as follows:

<TABLE>
<CAPTION>

                                                                1999                   1998                    1997
                                                             ----------             ----------              -------
<S>                                                          <C>                    <C>                      <C>
     Americas                                                $4,369,700             $2,477,000               $2,459,000
     Asia/Pacific                                             2,011,500              2,316,000                2,351,000
     Europe/Africa                                            1,467,400                969,000                  628,000
                                                             ----------             ----------               ----------

                                                             $7,848,600             $5,762,000               $5,438,000
                                                             ----------             ----------               ----------
                                                             ----------             ----------               ----------
</TABLE>


                                       37

<PAGE>
NOTE N - INDUSTRY AND GEOGRAPHIC AREA SEGMENT INFORMATION - Continued

     SEGMENT INFORMATION

<TABLE>
<CAPTION>
                                       Industrial         Industrial        Consolidation
                                       Measurement        Automation         Adjustments       SI Consolidated
                                       -----------        ----------         -----------       ---------------
<S>                                   <C>                 <C>               <C>                <C>
     Year ended July 31, 1999:
     Sales                            $ 35,377,809        $  9,976,220      $  (665,254)       $  44,688,775
     Cost of goods sold                 22,574,612           5,671,598         (665,254)          27,580,956
                                      ------------        ------------      -----------        -------------
     Gross profit                       12,803,197           4,304,622                -           17,107,819
     Gross profit %                            36%                 43%                -                  38%

     Operating expenses                 11,128,156           3,548,096                -           14,676,252
     Restructuring charges                 850,000                   -                -              850,000
                                      ------------                                               -----------
     Total expense                      11,978,156           3,548,096                -           15,526,252
                                      ------------        ------------                           -----------

     Operating profit                      825,041             756,526                             1,581,567

     Interest expense                                                                             (1,656,552)
     Other income, net                                                                                26,366

     Net loss before income taxes
                                                                                                     (48,619)

     Income tax expense                                                                             (181,096)

     Net loss                                                                                  $    (229,715)
                                                                                               -------------
                                                                                               -------------

     Assets                           $ 29,920,990        $  8,017,925      $  (271,153)       $  37,667,762
                                      ------------        ------------      -----------        -------------
                                      ------------        ------------      -----------        -------------
</TABLE>

     SEGMENT INFORMATION

<TABLE>
<CAPTION>
                                      Industrial           Industrial       Consolidation
                                      Measurement          Automation         Adjustments     SI Consolidated
                                      ------------         ------------     --------------    ---------------
<S>                                   <C>                  <C>              <C>               <C>
     Year ended July 31, 1998:
     Sales                            $ 14,193,335         $  9,635,698     $    -            $  23,829,033
     Cost of goods sold                  8,354,829            5,317,550          -               13,672,379
                                      ------------         ------------                       -------------
     Gross profit                        5,838,506            4,318,148          -               10,156,654
     Gross profit %                            41%                  45%          -                      43%

     Total expense                       4,619,672            3,174,418          -                7,794,090
                                      ------------         ------------                       -------------

     Operating profit                    1,218,834            1,143,730          -                2,362,564
     Interest expense                                                                              (950,601)

     Other income, net                                                                                5,416
                                                                                              -------------
     Net earnings before income
     taxes                                                                                        1,417,379

     Income tax expense                                                                            (587,000)
                                                                                              -------------
     Net earnings                                                                             $     830,379
                                                                                              -------------
                                                                                              -------------
     Assets                           $ 32,868,030         $ 7,142,074      $  (13,099)       $  39,997,005
                                      ------------         ------------     ----------        -------------
                                      ------------         ------------     ----------        -------------
</TABLE>

                                       38
<PAGE>

NOTE O - BENEFIT PLANS

     The Company has defined contribution 401(k) plans for each subsidiary. All
     employees are eligible for participation upon completion of a waiting
     period. The contribution expense associated with these plans totaled
     approximately $30,316, $111,600 and $19,400 for the years ended July 31,
     1999, 1998 and 1997, respectively.


NOTE P - FAIR VALUE OF FINANCIAL INSTRUMENTS

     In accordance with the requirements of Statement of Financial Accounting
     Standards No. 107 - "Disclosure About Fair Value of Financial Instruments",
     the following methods and assumptions were used to estimate the fair value
     of each class of financial instruments.

     1.   NOTES PAYABLE

     The carrying amount approximates fair value because of the short maturities
     of the notes payable and the fact that the term loan and working capital
     line of credit originated in July 1998.

     2.   LONG TERM DEBT

     Quoted market prices for the same or similar issues or the current rates
     offered to the Company for debt of the same remaining maturities are used
     to estimate the fair value of the Company's long-term debt. The estimated
     fair value approximated the carrying value at July 31, 1999.


NOTE Q - RESTRUCTURING CHARGE

     In fiscal 1999, the Company announced a plan to consolidate its two
     specialty scale products businesses, the Weighing Systems Division and
     Allegany Technology, and to consolidate its two load cell/sensor business
     units, Revere Transducers and NV Technology. These reorganizations will
     result in the closure of the Company's facility that currently houses the
     Weighing Systems Division. In conjunction with this reorganization, the
     Company established a restructuring reserve of $850,000. The reserve is
     composed of $404,500 for lease costs on vacated leased facilities, $228,800
     for the write-down of discontinued products, $126,700 for employee
     severance compensation for 42 employees and $90,000 for the write-down of
     redundant capital equipment. As of July 31, 1999, $100,678 of the reserve
     had been utilized, which primarily relates to employee severance
     compensation.

NOTE R - NON-CASH INVESTING AND FINANCING ACTIVITIES

     In conjunction with the acquisitions, as described in Note B, liabilities
     were assumed as follows at July 31:

<TABLE>
<CAPTION>

                                                               1998                      1997
                                                            ----------                 -------
<S>                                                         <C>                       <C>
      Fair value of assets acquired                         $22,331,983               $8,873,558
      Consideration given                                    11,347,015                6,000,000
                                                            -----------               ----------
      Liabilities assumed                                   $10,984,968               $2,873,558
                                                            -----------               ----------
                                                            -----------               ----------
</TABLE>

     In 1999, adjustments were made, related to the acquisitions described in
     Note B, to decrease the fair value of net assets acquired by approximately
     $60,000 and increase liabilities assumed by approximately $36,000.


                                       39

<PAGE>

                                    PART III

     The information required by ITEMS 9, 10, 11 AND 12 will be included in the
registrants proxy statement under the captions "Election of Directors,"
"Executive Officers," "Compensation," and "Principal Shareholders" and is
incorporated herein by reference. Such proxy statement will be filed within 120
days of the registrants' fiscal year end, July 31, 1999.

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

(a)                 Exhibits

                    The following documents are filed herewith for informational
                    purposes, but are not part of this Annual Report, except as
                    otherwise indicated.
        2(a)        Acquisition Agreement and Plan of Merger dated July 21, 1997
                    among SI Technologies, Inc., SI Acquisition Corporation,
                    AeroGo, Inc., Kurtis V. Kosty, Peter J Berger, Stanley B.
                    McDonald, Robert J. Behnke and T. Evans Wyckoff
                    (Incorporated by reference to the current report on Form 8-K
                    dated July 22, 1997)
        2(b)        Acquisition Agreement and Plan of Merger dated April 12,
                    1996 among SI Technologies, Inc., SI Acquisition
                    Corporation, Evergreen Weigh, Inc., Carl Harris and Ruth
                    Harris (Incorporated by reference to the current report on
                    Form 8-K dated April 12, 1996)
        2(c)        Acquisition Agreement and Plan of Merger dated February 12,
                    1998 among SI Technologies, Inc., NV Technology, Inc. (a
                    Washington corporation), NV Technology, Inc. (a Nevada
                    corporation), Marvin Moist and Ted Dawson (Incorporated by
                    reference to the current report on Form 8-K dated February
                    13, 1998)
        2(d)        Stock Purchase Agreement among Dobson Park Industries, Inc.,
                    HCHC, Inc., and SI Technologies, Inc. dated as of July 10,
                    1998 (Incorporated by reference to the current report on
                    Form 8-K dated July 14, 1998)
        2(e)        Acquisition Agreement and Plan of Merger among SI
                    Technologies, Inc., SI Acquisition of Delaware Corporation,
                    Allegany, Inc. and Mark Stern and Judy Stern dated as of
                    July 10, 1998 (Incorporated by reference to the current
                    report of Form 8-K dated July 14, 1998)
        3(a)        Certificate of Incorporation (Incorporated by reference to
                    the same exhibit number as the Company's Annual Report on
                    Form 10-KSB for the fiscal year ending July 31, 1993)
        3(b)        By-Laws (1)
        3(c)        Certificate of Amendment to the Certificate of Incorporation
                    of SI Technologies, Inc.(Incorporated by reference to the
                    Company's Quarterly Report on Form 10-QSB for the fiscal
                    quarter ended January 31, 1998)
        4(a)        Specimen certificate evidencing shares of Common Stock
                    (Incorporated by reference to the same exhibit number as the
                    Company's Annual Report on Form 10-KSB for the fiscal year
                    ending July 31, 1993)
        4(b)        Form of Subscription Agreement Supplement incorporated in
                    the Company's April 1998 financing (Incorporated by
                    reference to the Company's Registration Statement on Form
                    S-3 dated July 31, 1998)
        4(c)        Form of Subscription Agreement Supplement incorporated by
                    reference into the Company's Subscription Agreement
                    (Incorporated by reference to the Company's Registration
                    Statement on Form S-3 dated July 31, 1998)
        4(d)        Form of Warrant issued in connection with the Company's
                    April 1998 financing (Incorporated by reference to the
                    Company's Registration Statement on Form S-3 dated July 31,
                    1998)
        4(e)        Form of Placement Agent Warrant issued in connection with
                    the Company's April 1998 financing (Incorporated by
                    reference to the Company's Registration Statement on Form
                    S-3 dated July 31, 1998)


                                       40

<PAGE>

        4(f)        Registration Rights Agreement entered into by and between
                    the Company and participants in the Company's April 1998
                    financing (Incorporated by reference to the Company's
                    Registration Statement on Form S-3 dated July 31, 1998)
       10(a)        1994 Stock Option Plan (Incorporated by reference to the
                    Company's Proxy Statement for the annual meeting held
                    January 19, 1995)
       10(b)        Amended and Restated 1984-85 Stock Option Plan (Incorporated
                    by reference to the same exhibit number to the Company's
                    Annual Report on Form 10-KSB for the fiscal year ending July
                    31, 1994)
       10(c)        Lease between Halverson-Lindell and SI dated November 20,
                    1988, for the premises located at 4611 South 134th Place,
                    Tukwila, Washington. (Incorporated by reference to exhibit 1
                    to the Company's Annual Report on Form 10K for fiscal year
                    ending July 31, 1989)
         21         Subsidiaries of the Registrant
         23         Consent of Grant Thornton to incorporation by reference of
                    financial statements into Registration Statement on Form S-8
                    and Form S-3
     27             Financial Data Schedule             July 31, 1999
(1)  Incorporated by reference to the same exhibit number to the Company's
     Registration Statement of Form S-1 (File No. 2-83781), as amended.


                                       41

<PAGE>

                                   SIGNATURES

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


                                         SI TECHNOLOGIES, INC.


DATED:  October 28, 1999           /s/ Rick A. Beets
                            --------------------------------------
                            Rick A. Beets, President


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed as of October 28, 1999 by the following persons in the
capacities indicated:


                                   /s/ Rick A. Beets
                            --------------------------------------------
                            Rick A. Beets, President, CEO  and
                            Director (Principal Executive Officer)



                                   /s/ Paul V. Cavanaugh
                            --------------------------------------------
                            Paul V. Cavanaugh, Chief Financial Officer
                            (Principal Financial and Accounting Officer)



                                   /s/ Edward A. Alkire
                            --------------------------------------------
                            Edward A. Alkire, Director, Secretary



                                   /s/ Ralph E. Crump
                            --------------------------------------------
                            Ralph E. Crump, Chairman of the Board, Director,
                            Treasurer


                                   /s/ S. Scott Crump
                            --------------------------------------------
                            S. Scott Crump, Director



                                   /s/ D. Dean Spatz
                            --------------------------------------------
                            D. Dean Spatz, Director



                                   /s/ Heinz Zweipfennig
                            --------------------------------------------
                            Heinz Zweipfennig, Director


                                       42

<PAGE>

<TABLE>
<CAPTION>

<S>           <C>
(a)           EXHIBITS

              The following documents are filed for informational purposes, but
              are not part of this Annual Report, except as otherwise indicated.

21            Subsidiaries of the Registrant

23            Consent of Grant Thornton to incorporate by reference of financial
              statements into Registration Statement

27            Financial Data Schedule - Year ended July 31, 1999
</TABLE>


                                       43