<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, 1998

                             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 $23,829,033.

     The number of shares outstanding of each of the issuer's classes of 
common stock is 3,547,123 (as of October 23, 1998).

     The aggregate market value of the voting stock held by nonaffiliates of 
the Registrant is $6,463,107 (as of October 23, 1998).

                      DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the definitive Proxy Statement for the Annual meeting of 
Shareholders to be held on January 21, 1999 (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 material-handling equipment and systems. Recent 
acquisitions have diversified the Company's revenue base and positioned SI 
Technologies as a consolidator of technologies, products and companies that 
are enabling SI to become a leading global provider of devices, equipment and 
systems that handle, inspect and measure goods and materials. SI products are 
used throughout the world in a wide variety of industries, including 
aerospace, agriculture, aviation, food processing, 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 the 
$70-billion industrial sensor, weighing and material handling equipment 
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, Seattle, 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 consolidator in the 
$70-billion industrial sensor, weighing and material-handling equipment 
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 
the past several years, internal investment has primarily been focused on 
expansion of existing product lines and installation of a company-wide 
marketing information system. In 1999, the Company expects to shift a portion 
of its internal growth focus to the integration of technologies across 
product lines and business units, and to the expansion and training of 
distribution channels to effectively cross-sell products to key 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 
consolidators of businesses in those markets. In general, the Company pursues 
the acquisition of businesses that meet the following criteria:

        -    Well-managed companies serving niche industrial markets
        -    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 consolidation 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 in the near term primarily with 
debt, relieved subsequently by capital raised through the sale of equity. As 
the momentum of the consolidation 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. The most recent 
of these were the purchases of Revere Transducers and Allegany Technology, 
Inc. in July of 1998. Revere Transducers is a manufacturer of industrial 
sensors and static weighing equipment. Allegany is a manufacturer of dynamic 
weighing equipment and systems.

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

AeroGo, Inc.          1997         Load Handling &     Aviation/aerospace, automotive,
                                   Moving Systems      manufacturing, general industry

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

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

Revere Transducers,   1998         Sensors & Static    Aviation/aerospace, food,
Inc.                               Weighing Equipment  general industry

</TABLE>

Further acquisition detail may be found under the ACQUISITION HISTORY section.

                                       3
<PAGE>

CURRENT ACQUISITION ACTIVITIES

In pursuit of the Company's consolidation 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

WEIGHING EQUIPMENT & 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 
material-handling 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 consolidation 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 ALLEGANY, AIRSCALE, 
CHECKMATE, 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 transportation, 
manufacturing, mining, steel 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, 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 meters (instrumentation). The meter 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.

                                       4
<PAGE>

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 LODEC, ROAD GUARDIAN, AIR GUARDIAN, ROAD 
RUNNER, JET WEIGH AND  MTSERIES 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.

MATERIAL HANDLING EQUIPMENT AND SYSTEMS

SI's material handling equipment 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 AEROGO, AEROCASTER, 
AEROPLANKS and AEROPALLETS, are the world leaders in practical and efficient 
methods of alignment, location, movement, rotation and transfer of materials 
and products weighing from several hundred pounds to more than 6,000 tons.

The Company's load-handling, moving and positioning 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 load-handling and moving 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 and precision movement and positioning.

SENSORS

The Company's industrial sensor product line consists of a wide range of 
force measurement devices (FMDs). FMDs, a core SI technology, are 
electromechanical components that convert a physical force  to an electrical 
signal. When matched with microprocessor-controlled digital electronics, FMDs 
measure forces such as pressure, weight, mass and torque. Commercially, force 
measurement devices are used in electronic scales and a wide range of 
machinery and equipment. SI 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

                                       5
<PAGE>

systems operational information other than weight information. In this 
expanded capacity, SI instrumentation becomes a critical link between 
operations and management information systems.

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, 
Georgia, Indiana, Oregon, Pennsylvania, Texas, 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 call 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 sensors, weighing and 
material-handling equipment and systems have averaged about $70 billion in 
recent years, with domestic spending accounting for approximately 30% of the 
total. The industry is mature and overall growth is negligible. 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 consolidation 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 moving 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

                                       6
<PAGE>

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.

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 sensor, weighing and material-handling 
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 all 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 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 moving 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-

                                       7
<PAGE>

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 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, waste management and general industrial companies. 
Over the past few years, as a result of the Company's consolidation 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, Chrysler, Continental Airlines, 
Ford, Hyundai, Kraft Foods, Lockheed, Michelin, Mitsubishi, NASA, Siemens, 
Waste Management and Weyerhaeuser.

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. System utilization benefits 
include increased operations efficiency, lower equipment maintenance costs, 
better safety records, reduced manual report generation and improved customer 
service.

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,

                                       8
<PAGE>

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 consolidated into the Company's Weighing Systems Division in 
Seattle in June of 1997.

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 and positioning 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 material-handling 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 
material-handling equipment industry where additional acquisitions of 
complementary products and businesses will be pursued. In October 1997, the 
Company consolidated the manufacture of all Company-fabricated products into 
the AeroGo operation in Seattle, Washington.

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 relocated from Las Vegas, Nevada to the Company's Weighing System 
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.

                                       9
<PAGE>

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.

BACKLOG

At July 31, 1998, the Company's backlog was $7,819,506, compared with 
$2,277,738 on July 31, 1997.  The Company's backlog consists of written 
orders and commitments believed to be firm and shippable in fiscal 1999, and, 
in comparison to 1997, includes backlog attributable to companies acquired 
during 1998; Allegany Technology, Inc. and Revere Transducers.  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, 1998, the Company employed 441 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 24 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.

FINANCIAL INFORMATION ABOUT FOREIGN OPERATIONS AND EXPORT SALES

FOREIGN OPERATIONS

Included in the consolidated balance sheet at July 31, 1998 are the 
identifiable assets of the Company's subsidiary, Revere Transducers Europe 
B.V., which total approximately $5,787,000.  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 $1,116,192 and operating profits of $73,731 for the one month 
included in the year ended July 31, 1998.

                                       10

<PAGE>

EXPORT SALES

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

<TABLE>
<CAPTION>

                                                  1998           1997           1996
                                               ----------     ----------     ----------
  <S>                                          <C>            <C>            <C>
  Americas                                     $2,477,000     $2,459,000     $2,756,000
  Asia/Pacific                                  2,316,000      2,351,000        497,000
  Europe/Africa                                   969,000        628,000        689,000
                                               ----------     ----------     ----------
                                               $5,762,000     $5,438,000     $3,942,000
                                               ----------     ----------     ----------
                                               ----------     ----------     ----------

</TABLE>

ITEM 2.  PROPERTIES

<TABLE>
<CAPTION>

                                              Square
Location                 Utilization         Footage      Leased or Owned    Lease Termination
--------                 -----------         -------      ---------------    -----------------
<S>               <C>                        <C>          <C>                <C>
UNITED STATES
Tukwila, WA       Corporate offices and 
                  manufacturing and sales
                  offices for the Weighing 
                  Systems Division            30,000          Leased            April 2004

Tustin, CA        Manufacturing and sales 
                  for the U.S. operations 
                  of Revere Transducers       93,000          Leased            November 2004

Tukwila, WA       Manufacturing and sales 
                  offices for AeroGo, Inc.    55,000          Leased            April 2004

Cumberland, MD    Manufacturing and sales 
                  offices for Allegany
                  Technology, Inc.            35,000          Owned

Cumberland, MD    Aircraft hanger              5,000          Owned

INTERNATIONAL
Breda, the        Manufacturing and 
Netherlands       sales offices for the 
                  European operations of 
                  Revere Transducers          22,000          Leased            June 2007

Kelowna, B.C.,    Sales and distribution 
Canada            center                       3,000          Leased            May 2001

</TABLE>

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.

                                       11
<PAGE>

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, 1998.

                                       12
<PAGE>

                                   PART II

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

As of October 23, 1998, there were 233 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 1998 
and fiscal 1997:

                         Price Range of Common Shares

<TABLE>
<CAPTION>
                                          1998                      1997
                                   --------------------      --------------------
                                    HIGH          LOW         HIGH           LOW
                                   -----        -------      -----          -----
<S>                                <C>          <C>          <C>            <C>
1st Quarter                        7 1/4        4            3 1/2          2 3/8
2nd Quarter                        8 1/4        4 13/16      3 3/8          2 1/8
3rd Quarter                        7            5            2 3/4          1 1/2
4th Quarter                        8 1/2        5 1/4        4 5/8          1 7/8

</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.

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

<TABLE>
<CAPTION>

                                     1998        1997(1)      1996(1)      1995(1)      1994(1)
                                     ----        -------      -------      -------      -------
<S>                               <C>          <C>          <C>          <C>          <C>
Net sales                         $23,829,033  $14,123,243  $12,385,777  $10,603,692  $8,383,531

Net earnings                          830,379      499,276      666,546      361,462     121,709

Net earnings per share
  basic                                  0.30         0.20         0.26         0.14        0.05

Net earnings per share
  diluted                                0.28         0.19         0.25         0.14        0.05

Total assets                       39,997,005   17,604,726   10,131,990    7,921,466   7,505,022

Long-term debt, less 
  current portion                  12,134,989    4,348,405    1,952,162      670,792     867,529

Other long-term obligations         1,932,607      178,300      468,000      407,200     412,400

</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)
                                                                       1998 vs.      1997 vs.
                                  1998         1997          1996        1997          1996
                                  ----         ----          ----      --------      --------
<S>                              <C>          <C>           <C>        <C>           <C>
Net Sales                        100.0%       100.0%        100.0%       68.7%         14.0%

Cost of sales                     57.4         57.8          54.6        67.6          20.5
                                 --------------------------------

Gross profit                      42.6         42.2          45.4        70.2           6.2

Selling, general and 
  administrative                  26.1         27.2          25.8        61.8          20.2

Research, development 
  and engineering                  5.2          5.8           9.7        50.6         (31.2)

Amortization of intangibles        1.4          1.0           0.9       130.5          31.7
                                  -------------------------------
Operating expense                 32.7         34.0          36.4        62.0           6.8
                                  -------------------------------
Operating profit                   9.9          8.2           9.0       104.3           3.9

Interest expense                  (4.0)        (2.3)         (1.1)      195.9         128.3

Other income                       -            0.1            .3       (64.7)        (65.0)
                                   ------------------------------
Earnings before income tax         5.9          6.0           8.2        66.7         (16.3)

Income tax                        (2.4)        (2.5)         (2.8)       67.2           0.5
                                   ------------------------------
Net earnings                       3.5          3.5           5.4        66.3         (25.1)
                                   ------------------------------
                                   ------------------------------

</TABLE>

                                       14
<PAGE>

RESULTS OF OPERATIONS

The Company grew significantly in 1998.  Sales, earnings and cash flow 
increased to record levels.  This performance is reflective of the 
acquisitions completed in 1997 and 1998.  Due to the magnitude of these 
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, 1998 increased $9,705,790 or 69% to 
$23,829,033 from $14,123,243 for the year ended July 31, 1997.  The increase 
in sales is primarily attributable to the acquisitions of AeroGo, Inc., 
Allegany Technology, Inc., NV Technology, Inc. and Revere Transducers.

Net sales from load-handling, moving and positioning systems increased by 
approximately $7.4 million, industrial sensors net sales increased 
approximately $2.5 million and weighing systems net sales decreased 
approximately $.2 million.  The growth in load-handling and moving systems 
reflects the incorporation of AeroGo sales for a full year in 1998 as 
compared to one month in 1997.  The growth in industrial sensors sales 
reflects both acquisition related increases from Revere Transducers products 
as well as organic sales growth of new and existing products in the NV 
Technology line. Weighing systems sales continued to be affected by the weak 
forestry market. For the third consecutive year, sales to the depressed 
forestry markets have decreased.  This result has been offset by higher sales 
to the waste market, which recovered in 1998 as compared to 1997, and from 
increased sales of portable scale products.  Weighing systems sales also 
benefited from the results of the Allegany Technology acquisition, which were 
included from the July 1, 1998 acquisition date.  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 1997 increased by $1,737,466 or 14% over the 1996 net sales of 
$12,385,777.  Revenues from new weighing systems and load-handling and moving 
products, and increased sales to new markets for weighing systems more than 
offset decreased weighing system sales to the Company's traditional forestry 
and waste management markets. Since early 1996, the forestry and waste 
management industries have decreased capital equipment expenditures as a 
direct result of declining pulp prices.

International sales increased to $6.9 million in 1998 from $5.4 million in 
1997. International sales accounted for 29% and 38% of total Company sales in 
1998 and 1997 respectively.  The decreased proportion of international sales 
reflects a reduced proportion of sales to Canadian and Asia Pacific markets. 
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.  Due to the acquisition of Revere Transducers' European operations, 
future sales are likely to have a larger component that are conducted in 
non-U.S. dollar currencies. 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, 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 late fiscal 1997, and in fiscal 1998.  The 
corresponding gross margins for the periods were 42.6% and 42.2%, 
respectively.

                                       15
<PAGE>

The gross profit margins of future periods are likely to be lower than the 
levels of recent years.  Some products and markets of recently acquired 
companies experience lower average margins that those that the Company has 
historically recorded.  Consequently, the Company anticipates these products 
will lower the gross margin percentage reported in the future.

Gross profit for the year ended July 31, 1997 increased $348,590 or 6% to 
$5,967,492 from $5,618,902 for the year ended July 31, 1996.  Corresponding 
gross margins for the periods were 42.2% and 45.4%.  The decrease in gross 
margin resulted from increased price pressure for products serving the 
forestry and waste management industries and start-up efficiencies associated 
with relocating the manufacturing of the acquired Evergreen Weigh products 
into the Company's primary manufacturing facility.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

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 was 26% in 1998 as compared to 27% in 1997.  This 
decrease as a percentage of sales is the result of administrative savings 
derived from combining acquired operations with the Company's existing 
businesses.

Selling, general and administrative expenses for the years ended July 31, 
1997 and 1996 were $3,838,825 and $3,193,852, respectively.  This is an 
increase of $644,973 or 20%.  The increase is primarily related to the 
inclusion of acquired companies.  As a percentage of sales, S,G&A expenses 
were 27.2% in 1997 as compared to 25.8% in 1996.

RESEARCH AND DEVELOPMENT EXPENSES

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%.  Spending as a percentage of sales was 5.2% in 
1998 and 5.8% in 1997.  The increase in dollar amount is attributable to the 
acquisitions noted earlier.

Research, development and engineering expenses for the years ended July 31, 
1997 and 1996 were $825,312 and $1,200,412, respectively.  This is a decrease 
of $375,100 or 31%.  Expenses decreased as a result of the Company completing 
several product development projects early in 1997.  These decreases more 
than offset the increased spending resulting from the incorporation of 
acquired company operations during the year.

AMORTIZATION EXPENSES

Intangible amortization expenses amounted to $339,114 in 1998 as compared to 
$147,126 in 1997.  This is an increase of $191,988 or 130%.  In 1997 
intangible amortization increased $35,382 over the amount recorded in the 
year ended July 31, 1996 of $111,744.  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.

                                       16
<PAGE>

INTEREST AND OTHER INCOME

Interest expense for 1998 increased $629,294, or 196%, to $950,601 from 
$321,307 in 1997.  This increase in interest reflects the costs of additional 
borrowings required to finance the AeroGo, Allegany Technology and Revere 
Transducers acquisitions.  Interest expense in 1996 was $140,764.

Other income was $5,416 in 1998 as compared to $15,354 in 1997.  In 1996 
other income was $43,832.  The amount in 1996 includes the non-recurring 
recovery of a previously written off bad debt.

INCOME TAXES

Income tax expense for the years ended July 31, 1998 and 1997 was $587,000 
and $351,000, respectively.  The Company's effective tax rate was 41% in both 
1998 and 1997.  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 1997 of $351,000 increased by $1,584 as compared to the 
$349,416 recorded in 1996.  The Company's effective tax rate in 1996 was 34%.

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, 1998 the Company's cash position was $573,863 compared to 
$155,826 at July 31, 1997.  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 $6,889,483 from $704,176 at 
July 31, 1997.  This increase reflects the impact of incorporating the 
acquisitions discussed earlier.

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 1998 was $1,024,768.  During 1997, 
cash provided by operations was $141,358.  In April 1998, the Company sold 
839,664 shares of common stock and used the net proceeds (approximately 
$3,653,000) 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 $350,000 in 1999 as compared to $217,000 in 1998.  Excluding 
payments under the Company's lines of credit, principal payments made under 
notes payable totaled approximately $4,098,000 for the year ended July 31, 
1998.  In 1999, approximately $4,430,000 in principal will be due on notes 
payable.

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 $1,628,571 as of July 31, 1998.  The amended credit

                                       17
<PAGE>

agreement includes a requirement that the Company obtain additional equity 
financing of no less than $3,000,000 no later than July 1, 1999.  The 
Company's credit facility requires the Company to maintain certain levels of 
working capital, stockholders' equity, and other covenants.

The Company's $8,000,000 line of credit, maturing November 1999, continues to 
be extended as requested.  As of July 31, 1998, the Company had borrowings of 
$5,911,009 under the line of credit.

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, 1998, 
the Company had borrowings of $1,993,200 under the line of credit.

Except with respect to funding any future acquisitions, the Company believes 
that cash flow from operations, funds available under its bank facilities and 
the anticipated equity financing will be sufficient to meet the Company's 
working capital needs, anticipated capital expenditures and payments required 
under its credit facilities.  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, although 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 working 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.  However, the Company is 
dependent on numerous vendors and customers who may incur disruptions as a 
result of year 2000 software issues.  The Company is taking steps to assess 
the year 2000 status of its significant customers and suppliers.  The Company 
has not yet developed a contingency plan to operate in the event that any 
critical systems are not year 2000 compliant, or if failure of vendors, 
suppliers or third party systems have a material effect on the Company.  
Accordingly, no assurances can be given that the Company's results of 
operations will not be affected by this global issue.

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 Earnings . . . . . . . . . . . . . .        23
  Consolidated Statement of Stockholders' Equity  . . . . . . . .        24
  Consolidated Statements of Cash Flows . . . . . . . . . . . . .        25
  Notes to Consolidated Financial Statements . . . .  . . . . . .       26-38

</TABLE>

                                       19
<PAGE>


                       Consolidated Financial Statements

                             SI TECHNOLOGIES, INC.
                               AND SUBSIDIARIES

                         July 31, 1998, 1997 and 1996


                                       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, 1998 and 1997 and the 
related consolidated statements of earnings, stockholders' equity, and cash 
flows for each of the three years in the period ended July 31, 1998.  These 
financial statements are the responsibility of the Company's management.  Our 
responsibility is to express an opinion on these financial statements based 
on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards.  Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the 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, 1998 and 1997, and the 
consolidated results of their operations and their consolidated cash flows 
for each of the three years in the period ended July 31, 1998, in conformity 
with generally accepted accounting principles.

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

Seattle, Washington
October 23, 1998

                                       21
<PAGE>

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

                                    ASSETS

<TABLE>
<CAPTION>

                                                           1998           1997
                                                       ------------   ------------
<S>                                                    <C>            <C>
CURRENT ASSETS
  Cash                                                 $    573,863   $    155,826
  Trade accounts receivable, less allowance
    for doubtful accounts of $466,134 in 1998
    and $147,714 in 1997                                  7,764,447      2,969,852
  Inventories                                            11,026,104      3,465,316
  Deferred tax asset                                      1,245,000        262,100
  Refundable income taxes                                         -        702,546
  Other current assets                                      498,533        301,856
                                                       ------------   ------------
      Total current assets                               21,107,947      7,857,496

PROPERTY AND EQUIPMENT, less accumulated
  depreciation and amortization                           8,049,006      1,477,401

OTHER ASSETS
  Intangible assets, net                                 10,217,389      7,613,787
  Other                                                     622,663        656,042
                                                       ------------   ------------
                                                      $  39,997,005  $  17,604,726
                                                       ------------   ------------
                                                       ------------   ------------

<CAPTION>
                       LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Notes payable                                        $  5,104,411   $  3,085,000
  Current maturities of long-term debt                    1,319,060        515,552
  Put option obligations                                          -        385,000
  Trade accounts payable                                  3,758,849      1,974,507
  Income taxes payable                                      134,280              -
  Accrued liabilities                                     3,901,864      1,193,261
                                                       ------------   ------------
    Total current liabilities                            14,218,464      7,153,320

LONG-TERM DEBT, less current maturities                  12,134,989      4,348,405
OTHER LIABILITIES                                         1,385,307              -
DEFERRED TAXES                                              547,300        178,300
COMMITMENTS and CONTINGENCIES                                     -              -

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 in 1998 and 2,547,240 in 1997                  35,471         25,472
  Additional paid-in capital                             10,320,765      5,391,256
  Retained earnings                                       1,338,352        507,973
  Cumulative translation adjustment                          16,357              -
                                                       ------------   ------------
                                                         11,710,945      5,924,701
                                                       ------------   ------------
                                                      $  39,997,005  $  17,604,726
                                                       ------------   ------------
                                                       ------------   ------------
</TABLE>

The accompanying notes are an integral part of these statements.

                                       22
<PAGE>

                    SI Technologies, Inc. and Subsidiaries
                      CONSOLIDATED STATEMENTS OF EARNINGS

                              Year ended July 31,

<TABLE>
<CAPTION>

                                                         1998           1997           1996
                                                    -------------  -------------  -------------
<S>                                                 <C>            <C>            <C>
Net sales                                           $  23,829,033  $  14,123,243  $  12,385,777
Cost of sales                                          13,672,379      8,155,751      6,766,875
                                                    -------------  -------------  -------------
    Gross profit                                       10,156,654      5,967,492      5,618,902

Operating expenses:
  Selling, general and administrative                   6,212,443      3,838,825      3,193,852
  Research, development and engineering                 1,242,533        825,312      1,200,412
  Amortization of intangibles                             339,114        147,126        111,744
                                                    -------------  -------------  -------------
                                                        7,794,090      4,811,263      4,506,008
                                                    -------------  -------------  -------------
    Earnings from operations                            2,362,564      1,156,229      1,112,894

Interest expense                                         (950,601)      (321,307)      (140,764)
Other income, net                                           5,416         15,354         43,832
                                                    -------------  -------------  -------------
    Net earnings before income taxes                    1,417,379        850,276      1,015,962

Income tax expense                                       (587,000)      (351,000)      (349,416)
                                                    -------------  -------------  -------------

NET EARNINGS                                           $  830,379     $  499,276     $  666,546
                                                    -------------  -------------  -------------
                                                    -------------  -------------  -------------
Earnings per common share                              $      .30     $      .20     $      .26
                                                    -------------  -------------  -------------
                                                    -------------  -------------  -------------

Earnings per common share, assuming dilution           $      .28     $      .19     $      .25
                                                    -------------  -------------  -------------
                                                    -------------  -------------  -------------
</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, 1998, 1997 and 1996

<TABLE>
<CAPTION>

                                                     Common Stock          Additional      Retained    Cumulative       Total
                                                                             Paid-in       earnings    translation   stockholders'
                                                Shares         Amount        Capital      (deficit)     adjustment      equity
                                              ---------       --------     ----------     ---------    -----------   -------------
<S>                                           <C>             <C>          <C>            <C>          <C>           <C>
Balance, August 1, 1995, as 
  previously reported                         2,347,240        $23,472     $4,769,268     $(403,487)     $       -     $4,389,253

Adjustment for pooling of 
  interest merger                               200,000          2,000        621,988      (254,362)             -        369,626
                                              ---------       --------     ----------     ---------    -----------   -------------
Balance, August 1, 1995, as restated          2,547,240         25,472      5,391,256      (657,849)             -      4,758,879

Net earnings                                          -              -              -       666,546              -        666,546
                                              ---------       --------     ----------     ---------    -----------   -------------
Balance, July 31, 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
                                              ---------       --------     ----------     ---------    -----------   -------------
                                              ---------       --------     ----------     ---------    -----------   -------------

</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>

                                                         1998            1997           1996
                                                      -----------     ----------     ----------
<S>                                                   <C>             <C>            <C>
Increase (Decrease) in Cash
Cash flows from operating activities:
  Net earnings                                        $   830,379     $  499,276     $  666,546
  Adjustments to reconcile net earnings to net cash
    provided by operating activities:
    Depreciation and amortization                         996,069        552,731        390,670
    Deferred income taxes                                  32,344        171,500         70,400
    Changes in operating assets and liabilities:
      Increase in trade accounts receivable              (646,309)       (11,374)      (323,869)
      Decrease (increase) in inventories                 (634,615)       545,253       (549,299)
      Decrease in refundable income taxes                 702,546         22,431              -
      Decrease (increase) in other current assets          43,749        (83,390)       (88,190)
      Increase (decrease) in trade accounts payable      (264,320)    (1,307,814)       358,869
      Decrease in accrued liabilities                    (283,691)      (101,225)      (374,684)
      Increase (decrease) in income taxes payable         248,616       (146,030)      (114,285)
                                                      -----------     ----------     ----------
        Net cash provided by operating activities       1,024,768        141,358         36,158

Cash flows from investing activities:
  Increase in other assets                                (61,828)      (341,065)      (250,950)
  Purchase of property and equipment                     (216,870)      (427,060)      (450,804)
  Acquisition of subsidiaries (net of $260,297
    cash acquired in 1998, $1,159,395 in 1997
    and $2,181 in 1996)                               (10,286,722)    (4,840,605)      (997,819)
                                                      -----------     ----------     ----------
        Net cash used in investing activities         (10,565,420)    (5,608,730)    (1,699,573)

Cash flows from financing activities:
  Borrowings on notes payable                           3,088,290      3,079,452              -
  Borrowings on line of credit, net                     2,197,852        516,787        339,131
  Proceeds from long-term debt                          5,000,000      3,000,000      1,000,000
  Proceeds from sale of common stock                    3,682,512              -              -
  Payments on notes payable                            (3,323,129)             -              -
  Payments on long-term debt                             (775,193)    (1,138,305)      (372,782)
  Other                                                    72,000        100,000        225,910
                                                      -----------     ----------     ----------
        Net cash provided by financing activities       9,942,332      5,557,934      1,192,259

Foreign currency translation adjustment                    16,357              -              -
                                                      -----------     ----------     ----------
Net increase (decrease) in cash                           418,037         90,562       (471,156)
Cash at beginning of year                                 155,826         65,264        536,420
                                                      -----------     ----------     ----------
Cash at end of year                                   $   573,863     $  155,826     $   65,264
                                                      -----------     ----------     ----------
                                                      -----------     ----------     ----------
Cash paid during the year for:
  Interest                                            $   778,539     $  236,776     $  136,901
  Income taxes                                        $   567,866     $  297,801     $  383,575

Noncash investing and financing activities:
In conjunction with the acquisition, as described
in Note B, liabilities were assumed as follows:

  Fair value of assets acquired                       $22,331,983     $8,873,558     $1,455,689
  Consideration given                                  11,347,015      6,000,000      1,000,000
                                                      -----------     ----------     ----------
  Liabilities assumed                                 $10,984,968     $2,873,558     $  455,689
                                                      -----------     ----------     ----------
                                                      -----------     ----------     ----------

</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, 1998, 1997 and 1996

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 follows.

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:

<TABLE>

     <S>                                           <C>
     Machinery and equipment                       2 to 10 years
     Buildings                                          35 years
     Leasehold improvements                        2 to 10 years

</TABLE>

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 $1,302,162 and $963,048 
at July 31, 1998 and 1997, respectively.

5.   CAPITALIZED COMPUTER SOFTWARE COSTS

Capitalized computer software costs with an unamortized cost of $383,380 and 
$450,700 at July 31, 1998 and 1997, 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 
$92,700, $39,700 and $23,700 for the years ended July 31, 1998, 1997 and 
1996, 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.  Accounts receivable include 
$373,327 and $346,830 at July 31, 1998 and 1997 respectively, of excess costs 
and related profits over amounts billed.  Such billings are generally made 
and collected in the subsequent year.

8.   FOREIGN CURRENCY TRANSLATION

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 1996 and 1997 consolidated 
financial statements to conform to the 1998 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 with 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.

                                       27
<PAGE>

NOTE B - BUSINESS COMBINATIONS - Continued

The results of operations for the separate companies and the combined amounts 
presented in the consolidated financial statements follow.

<TABLE>
<CAPTION>

                                                   (Unaudited)
                                                 Six Months Ended    Year Ended     Year Ended
                                                     1/31/98           7/31/97        7/31/96
                                                 ----------------   ------------   -------------
<S>                                              <C>                <C>            <C>
Net sales
  SI Technologies                                  $  9,976,607     $ 12,894,711   $  11,087,537
  NV Technology                                         835,567        1,228,532       1,298,240
                                                   ------------     ------------   -------------
  Combined                                         $ 10,812,174     $ 14,123,243   $  12,385,777
                                                   ------------     ------------   -------------
                                                   ------------     ------------   -------------

Net Earnings
  SI Technologies                                  $    405,928     $    582,685   $     581,189
  NV Technology                                          28,543          (83,409)         85,357
                                                   ------------     ------------   -------------
  Combined                                         $    434,471     $    499,276   $     666,546
                                                   ------------     ------------   -------------
                                                   ------------     ------------   -------------

</TABLE>

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 assets 
acquired exceeded the acquisition cost by $552,297.  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.

The following table reflects the unaudited pro forma consolidated results of 
operations of the acquisition of Revere as if it had occurred on August 1, 
1996.

<TABLE>
<CAPTION>

                                                     (Unaudited)    (Unaudited)
                                                       7/31/98        7/31/97
                                                     -----------    -----------
<S>                                                  <C>            <C>
Net sales                                            $43,144,471    $33,837,119

Net earnings (loss)                                  $   495,156    $(1,305,654)

Earnings (loss) per share                            $       .17    $      (.26)

</TABLE>

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 $2,810,537 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.

The following table reflects the unaudited pro forma consolidated results of 
operations of the acquisition of Allegany as if it had occurred on August 1, 
1996.

<TABLE>
<CAPTION>

                                                      (Unaudited)    (Unaudited)
                                                        7/31/98        7/31/97
                                                      -----------    -----------
<S>                                                   <C>            <C>
Net sales                                             $25,541,856    $17,821,645

Net earnings (loss)                                   $  (136,089)   $   256,168

Earnings (loss) per share                             $      (.05)   $       .10

</TABLE>

                                       28
<PAGE>

NOTE B - BUSINESS COMBINATIONS - Continued

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 acquisition of AeroGo as if it had occurred on August 1, 
1995.

<TABLE>
<CAPTION>

                                                      (Unaudited)    (Unaudited)
                                                        7/31/97        7/31/96
                                                      -----------    -----------
<S>                                                   <C>            <C>
Net sales                                             $21,652,000    $20,876,000

Net earnings                                          $   311,600    $   822,400

Earnings per share                                    $       .12    $       .31

</TABLE>

5.   EVERGREEN WEIGH, INC.

Effective April 1, 1996, the Company purchased 100% of the common stock of 
Evergreen Weigh, Inc. (Evergreen) for $1,000,000 in cash.  Evergreen is 
principally engaged in the manufacture of weighing equipment.  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 $467,482 is being amortized on a straight-line 
basis over twenty-five years. Earnings include the results of operations of 
Evergreen from the acquisition date, April 1, 1996.

The following table reflects the unaudited pro forma consolidated results of 
operations of the acquisition of Evergreen as if it had occurred on August 1, 
1995.

<TABLE>
<CAPTION>

                                                      (Unaudited)
                                                        7/31/96
                                                      -----------
<S>                                                   <C>
Net sales                                             $13,819,000

Net earnings                                          $   651,800

Earnings per share                                    $       .25

</TABLE>

NOTE C - INVENTORIES

Inventories consist of the following at July 31:

<TABLE>
<CAPTION>

                                                         1998           1997
                                                     ------------   ------------
<S>                                                  <C>            <C>
Raw materials                                        $  4,782,003   $  1,139,556
Work in process                                         2,434,209        786,474
Finished goods                                          3,809,892      1,539,286
                                                     ------------   ------------
                                                     $ 11,026,104   $  3,465,316
                                                     ------------   ------------
                                                     ------------   ------------
</TABLE>
                                       29
<PAGE>

NOTE D - PROPERTY AND EQUIPMENT

Property and equipment consist of the following at July 31:

<TABLE>
<CAPTION>

                                                          1998           1997
                                                       ----------     ----------
<S>                                                    <C>            <C>
Machinery and equipment                                $7,837,765     $3,052,691
Buildings                                                 730,680              -
Leasehold improvements                                  1,485,153        163,759
                                                       ----------     ----------
                                                       10,053,598      3,216,450
Less accumulated depreciation and amortization          2,254,592      1,739,049
                                                       ----------     ----------
                                                        7,799,006      1,477,401

Land                                                      250,000              -
                                                       ----------     ----------
                                                       $8,049,006     $1,477,401
                                                       ----------     ----------
                                                       ----------     ----------

</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 
balance outstanding at July 31, 1998 totaled $3,022,921 due to currency 
translation.  The loan requires monthly interest only payments until July 1, 
1999 when the loan is due in full.  The interest rate on the note is 11.75%. 
The Company has the option to convert this loan subject to the terms and 
conditions of the $5 million note payable to the bank described in Note G if 
the Company's funded debt ratio at April 30, 1999 is less than or equal to 
2:0 to 1.  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, 1998 the outstanding balance amounted to $1,993,200.  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 $88,290 is due to shareholders of an acquired 
company.  The note bears interest at 5% and is due July 1999.

The note payable as of July 31, 1997 was paid in full in April 1998.

NOTE F - ACCRUED LIABILITIES

Accrued liabilities consist of the following at July 31:

<TABLE>
<CAPTION>

                                                           1998           1997
                                                       ----------       --------
<S>                                                    <C>              <C>
Accrued salaries, wages and
  other compensation                                   $2,522,981       $450,209
Product start up and warranty reserve                     408,050        361,500
Distributor commissions                                    62,601        190,298
Accrued legal and settlement costs                        536,425              -
Customer advances in excess of costs incurred                   -         75,708
Other                                                     371,807        115,546
                                                       ----------       --------
                                                       $3,901,864     $1,193,261
                                                       ----------       --------
                                                       ----------       --------

</TABLE>

                                       30
<PAGE>

NOTE G - LONG-TERM DEBT

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

<TABLE>
<CAPTION>

                                                                   1998          1997
                                                               -----------   -----------
<S>                                                            <C>           <C>
Revolving line of credit with a bank for up to $8,000,000
  ($4,000,000 at July, 31 1997), interest at the prime rate
  plus 1%, .5%, .25% or at prime or LIBOR plus 3.25%, 2.75%,
  2.5% or 2.25% depending on certain financial ratios of the
  Company (9.5% at July 31, 1998 and July 31, 1997), secured
  by trade accounts receivable, inventories and certain
  equipment, due November 1999                                 $ 5,911,009   $ 2,174,836

Note payable to bank in monthly installments of $59,524 plus
  interest at the prime rate plus 1.125%, .6875%, .375% or at
  prime or LIBOR plus 3.375%, 3%, 2.625% or 2.375% depending 
  on certain financial ratios of the Company (9.625% at 
  July 31, 1998), secured by all assets, due July 2005           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 (9.625% at July 31, 1998 
  and 1997), secured by all assets, due July 2004                1,628,571     1,900,000

Note payable to bank in monthly installments of $3,626 
  including interest at 9.25%, secured by real estate, 
  due January 2011                                                 540,310             -

Note payable to bank, paid in full February 1998                         -       243,610

Other unsecured notes payable, at interest rates ranging 
  from 5% to 9%, due between 1999 and 2003                         374,159       545,511
                                                               -----------   -----------
                                                                13,454,049     4,863,957
Less current maturities                                          1,319,060       515,552
                                                               -----------   -----------
                                                               $12,134,989   $ 4,348,405
                                                               -----------   -----------
                                                               -----------   -----------
</TABLE>

Aggregate maturities of long-term debt are approximately as follows at July 
31, 1998:

<TABLE>
<CAPTION>

Year ending July 31,
--------------------
<S>                                                       <C>
     1999                                                 $  1,319,060
     2000                                                    7,000,900
     2001                                                    1,040,800
     2002                                                    1,035,900
     2003                                                    1,034,600
     Thereafter                                              2,022,789
                                                          ------------
                                                          $ 13,454,049
                                                          ------------
                                                          ------------
</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.

                                       31
<PAGE>

NOTE H - OTHER LIABILITIES

Other liabilities consist of the following at July 31, 1998:

<TABLE>
   <S>                                                   <C>
   Deferred lease costs                                  $  981,331
   Deferred rent                                            403,976
                                                         ----------
                                                         $1,385,307
                                                         ----------
                                                         ----------
</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 74 months, 
the remaining life of the lease.  Aggregate maturities of deferred lease 
costs are as follows at July 31, 1998:

<TABLE>
<CAPTION>

 Year ending July 31,
 --------------------
 <S>                                                       <C>
     1999                                                  $  159,100
     2000                                                     159,100
     2001                                                     159,100
     2002                                                     159,100
     2003                                                     159,100
     Thereafter                                               185,831
                                                           ----------
                                                           $  981,331
                                                           ----------
                                                           ----------

</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 leases the majority of its manufacturing and office space and 
certain equipment under terms of noncancelable operating leases.

                                       32
<PAGE>

NOTE J - COMMITMENTS AND CONTINGENCIES - Continued

Future minimum lease payments under noncancelable operating leases as of July 
31, 1998 are approximately as follows:

<TABLE>
<CAPTION>

Year ending July 31,
--------------------
<S>                                                         <C>
     1999                                                   $1,065,900
     2000                                                      878,500
     2001                                                      855,900
     2002                                                      882,800
     2003                                                      891,500
     Thereafter                                                782,800
                                                            ----------
                                                            $5,357,400
                                                            ----------
                                                            ----------

</TABLE>

Rent expense, net of sublease income, under noncancelable operating leases 
was approximately $510,500, $416,000 and $319,900 for the years ended July 
31, 1998, 1997 and 1996, respectively.

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>
     1999                                                     $122,500
     2000                                                      122,500
     2001                                                      107,500
     2002                                                       62,500
     2003                                                       62,500
     Thereafter                                                166,700
                                                              --------
                                                              $644,200
                                                              --------
                                                              --------

</TABLE>

The expense associated with these agreements totaled $122,500, $122,500 and 
$44,833 for the years ended July 31, 1998, 1997and 1996, 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 prescibed 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>
                                                           1998           1997           1996
                                                         --------       --------       --------
<S>                                                      <C>            <C>            <C>
Current expense                                          $462,700       $179,500       $279,016
Deferred expense                                          124,300        171,500         70,400
                                                         --------       --------       --------
                                                         $587,000       $351,000       $349,416
                                                         --------       --------       --------
                                                         --------       --------       --------
</TABLE>

                                       33
<PAGE>

NOTE K - INCOME TAXES - Continued

The income tax provision reconciled to the tax computed at the statutory 
federal rate was as follows for the year ended July 31:

<TABLE>
<CAPTION>

                                                           1998           1997           1996
                                                         --------       --------       --------
<S>                                                      <C>            <C>            <C>
Tax at statutory rate                                    $481,900       $293,800       $345,400
Nondeductible goodwill                                    108,400         61,000         50,000
State and foreign taxes                                    41,000          3,000         16,000
Foreign sales corporation                                 (13,400)       (24,400)             -
Credits and net operating losses utilized                 (46,900)        (4,400)       (42,900)
Other                                                      16,000         22,000        (19,084)
                                                         --------       --------       --------
                                                         $587,000     $  351,000     $  349,416
                                                         --------       --------       --------
                                                         --------       --------       --------

</TABLE>

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

<TABLE>
<CAPTION>

                                                          1998           1997
                                                       ----------     ----------
<S>                                                    <C>            <C>
Deferred tax asset:
  Accrued vacation and warranty                        $  268,500     $  112,000
  Provision for bad debts                                  55,400         41,900
  Accrued liabilities not paid                            129,900          4,000
  Inventory reserve and capitalized overhead              785,800        100,400
  Foreign currency adjustment                               5,400          3,800
                                                       ----------     ----------
                                                       $1,245,000     $  262,100
                                                       ----------     ----------
                                                       ----------     ----------
Deferred tax liability:
  Excess of tax over book depreciation                 $  880,900     $  178,300
  Deferred lease costs                                   (333,600)             -
                                                       ----------     ----------
                                                       $  547,300     $  178,300
                                                       ----------     ----------
                                                       ----------     ----------

</TABLE>

NOTE L - STOCK OPTION PLAN

The Company implemented a new stock option plan in 1995 and has authorized a 
total of 300,000 shares of common stock to be set aside for grants. 
Additionally, options are outstanding under the old plan which expired July 
31, 1994.  The vesting and expiration dates of the stock options are at the 
discretion of the Board of Directors.

                                       34
<PAGE>

NOTE L - STOCK OPTION PLAN - Continued

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:

<TABLE>
<CAPTION>

                                        1998                    1997                 1996
                                      --------                --------             --------
<S>                                   <C>                     <C>                  <C>
Net earnings
  As reported                         $830,379                $499,276             $666,546
  Pro forma                           $726,875                $420,005             $640,595

Earnings per common share
  As reported - basic                 $    .30                $    .20             $    .26
  Pro forma                           $    .26                $    .17             $    .25

  As reported - diluted               $    .28                $    .19             $    .25
  Pro forma                           $    .24                $    .16             $    .14

</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 1995.

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, 1998, 1997 and 1996, respectively:  dividend yields 
are nil, expected volatility of 54, 52 and 40 percent; risk-free interest 
rate of 6.2%; and expected option lives of 6.9, 7.8 and 6.6 years, 
respectively. The weighted-average fair value of options granted during the 
periods ending July 31, 1998, 1997 and 1996, for which the weighted average 
exercise price equals the market price on the grant date was $4.88, $3.63 and 
$2.36, 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, August 1, 1995                     151,000                     $1.77

Granted                                     101,500                     $4.39
Exercised                                         -                     $   -
Expired/canceled                            (10,000)                    $4.50
                                            -------
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
                                            -------
                                            -------
</TABLE>

                                       35
<PAGE>

NOTE L - STOCK OPTION PLAN - Continued

<TABLE>
<CAPTION>
                                                     Weighted-Average
                              Number of Shares     Remaining Contractual     Weighted-Average
Range of Exercise Prices        Outstanding            Life in Years          Exercise Price
------------------------      ----------------     ---------------------     ----------------
<S>                           <C>                  <C>                       <C>
      $1-$2                       200,000                   6.9                    $1.70
      $2-$3                        40,500                   8.3                    $2.94
      $3-$4                         1,000                   7.3                    $3.25
      $4-$5                       125,000                   8.1                    $4.55
      $5-$6                        10,000                   9.8                    $5.88
                                  -------
                                  376,500
                                  -------
                                  -------

</TABLE>

<TABLE>
<CAPTION>

                              Number of Shares     Weighted-Average
Range of Exercise Prices         Exercisable        Exercise Price
------------------------      ----------------     ----------------
<S>                           <C>                  <C>
      $1-$2                        127,000              $1.64
      $2-$3                         36,300              $2.96
      $3-$4                            400              $3.25
      $4-$5                         45,000              $4.50
                                   -------
                                   208,700
                                   -------
                                   -------

</TABLE>

NOTE M - EARNINGS PER SHARE

In fiscal 1998, the Company adopted Statement of Financial Accounting 
Standards (SFAS) No. 128, "Earnings per Share" which established standards 
for computing and presenting earnings per share (EPS).  This statement 
simplified the standards for computing earnings per share previously found in 
APB Opinion No. 15, "Earnings per Share", and makes them comparable to 
international EPS standards.  In accordance with SFAS No. 128, all 
prior-period EPS data has been restated to conform with the provisions of the 
statement.

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 are 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, 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>

                                       36
<PAGE>

NOTE M - EARNINGS PER SHARE - Continued

<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
                                                       ----------       ---------      ------
                                                       ----------       ---------      ------

<CAPTION>
                                                          For the Year Ended July 31, 1996
                                                       ---------------------------------------
                                                         Earnings        Shares      Per Share
                                                       (Numerator)    (Denominator)    Amount
                                                       -----------    -------------  ---------
<S>                                                    <C>            <C>            <C>
Earnings per common share
Earnings available to common stockholders              $  666,546       2,547,240      $  .26
                                                                                       ------
                                                                                       ------
Effect of dilutive securities
  Stock options                                                 -          78,848
                                                       ----------       ---------
Earnings per common share
  assuming dilution
Earnings available to common stockholders
and effect of assumed conversions                      $  666,546      2,626,088       $  .25
                                                       ----------      ---------       ------
                                                       ----------      ---------       ------

</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 - GEOGRAPHIC CONCENTRATIONS

1    FOREIGN OPERATIONS

Included in the consolidated balance sheet at July 31, 1998 are the 
identifiable assets of the Company's subsidiary, Revere Transducers Europe 
B.V., which total approximately $5,787,000.  This subsidiary is located in 
the Netherlands, and had sales of $1,116,192 and operating profits of $73,731 
for the year ended July 31, 1998.

2    EXPORT SALES

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

<TABLE>
<CAPTION>

                                                          1998           1997           1996
                                                       ----------     ----------     ----------
<S>                                                    <C>            <C>            <C>
Americas                                               $2,477,000     $2,459,000     $2,756,000
Asia/Pacific                                            2,316,000      2,351,000        497,000
Europe/Africa                                             969,000        628,000        689,000
                                                       ----------     ----------     ----------
                                                       $5,762,000     $5,438,000     $3,942,000
                                                       ----------     ----------     ----------
                                                       ----------     ----------     ----------

</TABLE>

                                       37
<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 
$111,600, $19,400 and $17,000 for the years ended July 31, 1998, 1997 and 
1996, 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, 1998.

NOTE Q - FUTURE EFFECT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board issued Statement of 
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" which 
establishes standards for reporting and display of comprehensive income and 
its components (revenue, expenses, gains and losses) in a full set of general 
purpose financial statements.  This statement requires that an enterprise (a) 
classify items of other comprehensive income by their nature in a financial 
statement and (b) display the accumulated balance of other comprehensive 
income separately from retained earnings and additional paid-in capital in 
the equity section of a statement of financial position.  The statement is 
effective for fiscal years beginning after December 15, 1997.  The Company 
believes the adoption of SFAS No. 130 will have no significant impact on the 
Company's consolidated financial statements.

In June 1997, the Financial Accounting Standards Board issued Statement of 
Financial Accounting Standards No. 131, "Disclosures About Segments of an 
Enterprise and Related Information" (SFAS 131) which establishes standards 
for the way public business enterprises are to report information about 
operating segments in annual financial statements and requires those 
enterprises to report selected information about operating segments in 
interim financial reports issued to shareholders.  It also establishes the 
related disclosures about products and services, geographic areas, and major 
customers.  Provisions of SFAS 131 are effective for fiscal years beginning 
after December 15, 1997. The Company believes the adoption of SFAS 131 will 
have no significant impact on the Company's consolidated financial statements.

                                       38
<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, 1998.

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

<TABLE>
<CAPTION>

(a)                 Exhibits
<S>            <C>
               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)

                                       39
<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 (a)         Financial Data Schedule July 31, 1998
27 (b)         Financial Data Schedule Restated for NV Technology merger
(b)            Reports of Form 8-K
               The Company filed a Current Report on Form 8-K dated July 14, 1998 announcing the
               acquisition of Allegany, Inc., Revere Transducers, Inc. and
               Revere Transducers Europe B.V. by the Company and containing the
               related acquisition agreement and plan of merger and the stock
               purchase agreement.
</TABLE>

(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.

                                       40
<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, 1998               /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, 1998 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

                                       41
<PAGE>

(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 (a) Financial Data Schedule - Year ended July 31, 1998

27 (b) Financial Data Schedule - Restated for NV Technology merger


                                       42