<PAGE>
 
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
(Mark One)

(X)  ANNUAL REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934

     For the fiscal year ended April 30, 1998

( )  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1934

     For the transition period from __________________ to __________________

                           Commission File No. 0-24454

                      WAVE TECHNOLOGIES INTERNATIONAL, INC.
                      -------------------------------------
                 (Name of small business issuer in its charter)

          Missouri                                       43-1481443
 -------------------------------            ------------------------------------
 (State or other jurisdiction of            (I.R.S. Employer Identification No.)
 incorporation or organization)

           10845 Olive Boulevard, Suite 250, St. Louis, Missouri 63141
           -----------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                     Issuer's telephone number: 314/995-5767


                  Securities registered under to Section 12(b) of the Act:

      Title of each class             Name of each exchange on which registered
      -------------------             -----------------------------------------
 Common Stock, $.0.50 par value             The Nasdaq National Market

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

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of Exchange Act during the past 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. 
                                                               [X] Yes  [_] No

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

     The issuer's revenues for the fiscal year ended April 30, 1998 were
$36,144,224.

     At May 31, 1998, there were 3,371,547 shares of Common Stock held by
non-affiliates. The aggregate market value of such shares held by
non-affiliates, based on the last sale price on July 15, 1998, was $13,486,188.
The number of shares outstanding of the issuer's Common Stock, $.50 par value,
as of July 15, 1998 was 4,158,311 shares.

                      DOCUMENTS INCORPORATED BY REFERENCE:

     Certain portions of the registrant's definitive Proxy Statement to be filed
pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended,
in connection with the Annual Meeting of Shareholders of the registrant to be
held on September 9, 1998, are incorporated by reference into Part III of this
report.
<PAGE>
 
ITEM 1.  DESCRIPTION OF BUSINESS

General

     Wave Technologies International, Inc. ("Wave" or the "Company") designs,
develops and delivers training and instructional products addressing data
communications, networking and client/server computing technologies. Wave
delivers these products and services through instructor-led courses,
informational seminars and published products and the Internet. The Company
markets its courses and published products to management information
professionals, systems integrators, value-added resellers and others with
systems management responsibilities.

     The Company produces and distributes course books, self-study guides,
training videotapes, CD-ROM and CBT (computer-based training) materials. The
Company offers instructor-led courses and sells integrated training programs at
its eleven leased training centers in the United States through its Open
Certification Solutions division, and at its two training centers in the United
Kingdom. Wave's UK operations along with international distributors comprise its
international division. Wave's custom solutions services assist technology
manufacturers in introducing and promoting emerging information technologies
through informational seminars and training fulfillment services on behalf of
manufacturers. Wave's services include designing, developing and/or delivering
manufacturers' product-specific training.

     While all of Wave's business units sell programs that utilize
internet-based deliveries, the delivery of these programs is managed through the
Company's Web- Based Training division.

     A growing factor in the technology training market is the development of
technical certification standards. A number of manufacturers and associations,
including Microsoft, CompTIA and Novell have established certification programs
for their hardware or software products. Wave currently provides certification
training for Microsoft's MCSE and MCSD programs, and Novell's CNE and CompTIA's
A+ certifications. The certification sponsoring organizations set certification
standards that are satisfied by passage of standardized tests, but do not
dictate the methods that students may use to prepare for the tests. Typically,
students prepare by taking courses or undertaking self-study. In addition to the
knowledge gained in studying for certification tests, students obtaining
certification generally have increased credibility in the industry and enhanced
job possibilities. The Company believes that demand for courses and programs to
help information systems professionals achieve certification will increase and
is actively monitoring these trends to identify opportunities.

     Wave's training strategy includes four key elements that it believes
differentiate it from its competitors:

    . Wave's training focus is on certification programs. Because certification
requires actual learning it differs from other programs that might be sold based
on ease of deployment or the "edutainment" value of a live experience, such as a
seminar or workshop.

    . Wave integrates its self-study media products with its instructor-led and
on-line distance learning services, based upon research that indicates that
adult learning requires significant interaction with instructors/other students
combined with independent study.
<PAGE>
 
     . Wave utilizes assessment tools to prescribe training programs specific to
individual needs rather than a standardized offering for an entire
organization's staff. It then provides the training content materials, which are
owned or licensed by the Company to provide individualized portfolio of
media-based and instructor-led training. The Company's ability to create modular
learning units which are then referenced by its assessment tool provide a unique
and enhanced training solution.

     . Wave's multi-vendor product line allows it to better meet customer's
technology training needs, as virtually all information systems today
incorporate technology from several different manufacturers/vendors.

     Wave, a Missouri corporation, was formed in 1988. The principal offices of
the Company are located at 10845 Olive Boulevard, Suite 250, St. Louis, Missouri
63141, and its telephone number is (314) 995-5767.

Publishing

     The Company's typical sale includes solutions utilizing instructor-led,
publishing and web-based elements. Historically, the Company has reported its
revenues in three segments, Publishing, ILT and Custom Solutions. Beginning in
fiscal 1999, Wave has realigned its business units and segment reporting to
reflect its sales and distribution structure.

     The Company offers self-study materials and course materials for
instructor-led classes. As a part of its publishing business, the Company
produces video training materials, software simulations, computer-based
assessment materials, books and on-line electronic documents (via Intranet or
CD-ROM).

     The Company derives many of its titles from either its instructor-led
training or custom solutions materials, but continues to add titles for targeted
market niches developed from other sources. The Company also updates certain
titles periodically and offers these "upgrades" to holders of the titles at
special prices or on a subscription basis.

     Wave distributes its published products as stand-along offerings directly
to information technology professionals and to independent training companies.
In addition, Wave sells its published products as integrated components of a
complete training solution.

Instructor-Led Training

     The Company's instructor-led training consists of courses and class
materials for students and instructors on information technologies. The Company
currently offers a core program of standard courses that it has designed for
information systems professionals. In addition to its standard courses, Wave
offers several complete curricula that combine self-study materials with on-line
tutorials and classroom training, under the name "Integrated Solution Program"
(ISP). Wave also provides customized offerings to meet a customer's needs by
tailoring one or more standard courses or by creating an entirely new course.
The Company typically delivers 
<PAGE>
 
customized courses at the customers' facilities and often prepares customized
courseware or other published products to accompany the instruction.

     The Company offers a bundled set of services and products that it markets
to individual information systems professionals under the name Club Wave(TM),
and to corporations and other organizations as the corporate Club Wave program.
For a flat fee, Club Wave customers obtain access to Wave courses and typically
enroll in a core curriculum and attend additional courses on a space-available
basis for up to one year. Club Wave customers receive the same support services
as other Wave customers, including telephone technical support and access to
on-line network bulletin boards and electronic mail messaging systems. At the
time of payment, Club Wave customers also receive Wave published products,
including videotapes, CBT materials and other courseware.

Locations. Wave currently conducts its U.S. training operations at its leased
training centers in the following metropolitan areas: St. Louis; Washington,
D.C.; Los Angeles; Dallas; Chicago; San Jose; Atlanta; Boston; Minneapolis; New
York City; and Philadelphia. Wave offers instructor-led training in the London
area through its United Kingdom subsidiary, in two locations, Richmond and
London's financial district.

     The Company utilizes its centers both as sales offices and for local
delivery of its most popular offerings. These centers typically have two or more
sales representatives, an education coordinator to provide classroom assistance
and sales and registration support, and one or more local trainers, supervised
by a regional manager.

Custom Solutions

     The Company develops educational seminars and promotional programs to
assist manufacturers in marketing new technologies. Wave also assists
manufacturers in providing training for their internal staffs as well as
addressing their need to train customers. The Company also administers entire
technical training programs for large corporations, including needs assessment,
curriculum design and updating, development or procurement of all training
materials, and cataloguing, scheduling and delivery of media and live training.
The Company has developed a range of programs designed to meet these needs.

     GTE University, a program to introduce and demonstrate various
telecommunications technologies, historically was Wave's largest custom
solutions program. That program gradually migrated into a promotional rather
than an educational event, requiring substantial subcontracting of services. As
a result, Wave will not continue this segment of its custom solutions business
in fiscal 1998. Instead, the Company intends to focus on custom solutions
projects with higher margins and more direct linkage to Wave's core
competencies.

     The Company also presents a variety of seminars, including its Technology
Solutions Workshop. Wave also provides training fulfillment programs on behalf
of manufacturers that sell training along with a product. The Company may
fulfill the manufacturer's training commitment using the manufacturer's program
and materials and Wave trainers.
<PAGE>
 
Sales and Marketing

     The Company markets its services and products through a three-tier sales
strategy: direct-response mailings and telemarketing, a sales force that
develops major accounts and third party distributors. Wave markets its published
products and instructor-led training services through Company catalogs mailed to
information systems professionals and independent training companies as well as
through trade publication advertising. The Company's corporate sales force 
focuses on larger transactions, often structured as licenses of published
products, usually combined with customized development, assessment, instructor-
led training, Web-based training, or other services. Wave also uses resellers to
distribute its published products. The Company has distribution agreements with
ComputerPrep, Inc., Ingram Micro Inc., Merisel Americas, Inc., and Tech Data
Product Management, Inc., and also uses other distributors to resell its
published products to information systems professionals. Wave markets its custom
solutions primarily through direct contacts with manufacturers and other large
corporations.

     Using trade lists, compilations of prior Wave students and other sources,
the Company has developed databases containing the names, addresses and other
information about information systems professionals. Wave believes that its
emphasis on database marketing gives it greater market coverage and an advantage
over instructor-led training competitors that rely only on referrals from
manufacturers or a direct sales force to generate sales in such a dispersed
market.


Competition

     Each area of the Company's business is highly competitive, and there are
few economic barriers to market entry in any of them. The Company not only faces
competition from many other companies offering similar services and products,
but it must also compete with the internal training, marketing and publishing
units of large corporations. Many of Wave's competitors have access to greater
resources and capital than currently available to the Company. The Company
believes, however, that no single company competes with Wave in all of its lines
of business. The Company believes that being involved in all of its business
units gives it certain competitive advantages. For example, unlike most of its
competitors, the Company offers programs that utilize both self-study and
instructor-led training. Further, Wave can use the knowledge and experience it
gains from its custom solutions business to reduce the cost of developing new
instructor-led training courses and published products. Similarly, the insights
the Company gains in its instructor-led training assist it in producing
published materials that are responsive to its customers' needs.


Regulation

     All the jurisdictions in which the Company operates its training centers
regulate and license certain kinds of vocational, trade, technical or other
post-secondary education. The Company believes that employer-funded or
reimbursed information technology training is exempt from such requirements in
many of these states. To the extent that Wave desires to participate in programs
funded by government entities, it will apply for licensing in jurisdictions in
which it operates training centers. If the Company were found to be in violation
of a state's licensing 
<PAGE>
 
or other regulatory requirements, it could be subject to civil or criminal
sanctions, including monetary penalties.

     The Company is also subject to federal, state and local regulations
concerning the environment, occupational safety and health. The Company has not
experienced significant difficulty in complying with such regulations and
compliance has not had a material impact on the Company's business or its
financial results.

Trademarks and Intellectual Property

     The Company's only federally registered trademark is the "Wave" name and
design, which is registered with the United States Patent and Trademark office,
although the Company is in the process of registering other marks. The Company's
material intellectual property consists of copyrighted published products.

Employees

     As of June 30, 1998, the Company had 206 employees, including 205 full-time
employees. There were 64 trainers and support personnel, four employees engaged
in providing custom solutions, 30 in full-time development and production of
published products, 85 in sales and marketing and 23 in general and
administrative services. None of the Company's employees are represented by
unions. The Company considers its employee relations to be satisfactory.

ITEM 2.  DESCRIPTION OF PROPERTY

     The Company's corporate headquarters is located in St. Louis, Missouri. The
leased property consists of 26,167 square feet and contains the Company's
executive offices, four classrooms and production facilities for courseware,
videotapes and other published products and advertising materials. The Company's
lease expires on March 31, 2004, with a five-year renewal option. The monthly
base rent is $42,521 through March 31, 2002, and $43,612 for the remainder of
the initial lease term.

     The Company also leases 6,360 square feet of warehouse space at an annual
rent of $36,576. The Company uses this space for its mailing and distribution
operations, equipment maintenance, and for storage.

     The following table sets forth the date the Company first leased space in a
market and certain information about each of the Company's current leased
training centers (other than St. Louis) at which the Company has classrooms:

<TABLE>
<CAPTION>
                                   Date               Square         Current Annual        Lease
Location                       of First Lease          Feet            Base Rental        Term Ends
--------                       --------------          ----            -----------        ---------
<S>                            <C>                    <C>             <C>                     <C> 
Reston, Virginia........        August 1989            8,182           $192,358           June 2003
Dallas, Texas...........        June 1990              5,659            104,691           May 2002
</TABLE>
<PAGE>
 
<TABLE>
<CAPTION>

                                        Date               Square         Current Annual        Lease
Location                            of First Lease          Feet            Base Rental        Term Ends
--------                            --------------          ----            -----------        ---------
<S>                                 <C>                    <C>             <C>                <C> 
San Jose, California........         March 1993             7,915            266,294           December 2000
Chicago, Illinois...........         August 1993            7,082             89,655           July 2000
Atlanta, Georgia............         June 1994              7,124            106,860           June 2001
London, United Kingdom......         August 1994            4,300            167,220           July 1999
London, United Kingdom......         September 1997         8,500            166,805           December 2001
Los Angeles, California.....         October 1994           6,999            142,392           June 1999
Philadelphia, Pennsylvania..         October 1994           6,613            116,276           December 2001
Boston, Massachusetts.......         November 1994          5,439             61,678           January 2000
Minneapolis, Minnesota......         January 1995           7,462            121,415           March 2001
New York, New York..........         March 1995             6,000            148,090           July 2005
</TABLE>

ITEM 3.  LEGAL PROCEEDINGS

     The Company is not a party to any material lawsuits. The Company is subject
to claims arising in the ordinary course of its business which the Company
believes will not have, either individually or in the aggregate, a material
adverse effect on the Company's business.


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

     Not applicable

                                    PART II
ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Company's Common Stock is quoted on the Nasdaq National Market under
the symbol "WAVT." The following table sets forth the high and low reported
sales prices for the Common Stock as quoted on the Nasdaq National Market for
the periods indicated.


===============================================================================
        Quarter Ended                    High                      Low         
===============================================================================
July 31, 1996                          $ 7 1/8                    $4 1/2       
-------------------------------------------------------------------------------
October 31, 1996                       $ 6 1/8                    $4 1/2       
-------------------------------------------------------------------------------
January 31, 1997                       $ 6 7/8                    $4 3/4       
-------------------------------------------------------------------------------
April 30, 1997                         $ 7 1/4                    $5 5/8       
-------------------------------------------------------------------------------
July 31, 1997                          $ 8 3/4                    $5 5/8       
-------------------------------------------------------------------------------
October 31, 1997                       $10 1/4                    $7 1/4       
-------------------------------------------------------------------------------
January 31, 1998                       $ 8 3/8                    $6 1/2       
-------------------------------------------------------------------------------
April 30, 1998                         $ 7 3/4                    $6 1/2       
===============================================================================
<PAGE>
 
     As of July 15, 1998, the Company had approximately 235 shareholders of
record. Based on the number of annual reports requested by brokers, the Company
estimates that it has approximately 1800 beneficial owners of its Common Stock.
On July 15, 1998, the last reported sale price of the Common Stock on the Nasdaq
National Market was $4 per share.

     The Company has not declared or paid any cash dividends on the Common
Stock. The Company currently anticipates that it will retain any earnings to
finance its growth and does not intend to pay cash dividends on its Common Stock
in the foreseeable future. The payment and rate of future cash dividends on the
Common Stock, if any, will be subject to review by the Company's Board of
Directors in light of the Company's financial condition, results of operations
and capital requirements, as well as other factors the Board of Directors deems
relevant.

     On January 22, 1998, the Company issued 20,000 shares of its Common Stock
in exchange for substantially all the assets of QA Training, Inc. ("QA"). In
addition to the acquisition, the Company also entered into a perpetual license
agreement with QA Training, Ltd. ("QA Ltd.") of the United Kingdom in exchange
for the issuance of 130,000 shares of the Company's Common Stock. The Company
relied upon an exemption from registration under Section 4(2) of the Securities
Act of 1933, as amended, based on, among other things (i) the fact that the
issuance was to only two entities who are related to each other and (ii)
representations by QA and QA Ltd. as to their net worth, sophistication and
experience with evaluating, managing and holding investments and as to their
intent to hold the securities for investment. In addition, prior to the exchange
of shares, the Company made available to QA and QA Ltd., among other
information, the most recent public filings of the Company under the Securities
Exchange Act of 1934.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Overview

     Wave designs, develops and delivers technical training programs addressing
data communications, networking, Internet/Intranet, and client/server computing
technologies, with a focus on IT certification programs. The Company provides
both published self-study and instructor-led programs. By integrating these
delivery formats with its proprietary assessment products and providing on-line
distance learning support, the Company believes it has developed a unique and
highly effective approach to IT certification programs.

Review of Financial Results

     Wave recognizes revenues from technology training based on actual
attendance. When individuals buy a curriculum of courses, income is recognized
as customers attend individual classes. The Company recognizes publishing
revenues at the time 
<PAGE>
 
products are shipped. Custom solutions revenues and product support and
maintenance revenues are recognized as specific services are fulfilled.

     The Company's costs of services, products and development include payroll,
payroll taxes, and travel and living expenses for trainers and custom solutions
personnel, expenses for the production of published products, and rental of
Company-operated and third-party facilities for training and manufacturing
service programs. Sales and marketing expenses include direct response mail
expenses, other advertising expenses and payroll and related taxes for sales
staff. Key components of general and administrative expense include management
compensation, depreciation and amortization, corporate headquarters rent and
telephone expenses. While the Company operates a subsidiary in England, all
revenues and expenses from international operations are consolidated in the
Company's financial statements.

Results of Operations - Fiscal 1998 Compared to Fiscal 1997

     Revenues. Total revenues for fiscal 1998 increased $5,318,000 or 17% to
$36,144,000 from $30,826,000 in fiscal 1997.

     Publishing revenues in fiscal 1998 increased $2,360,000, or 15%, to
$17,921,000 from $15,561,000 in the prior year, and remained stable as a
percentage of total revenues at 50%. The dollar increase included an initial
$1,000,000 fee from a licensing agreement with IBM, and approximately $400,000
in ongoing revenues as IBM resold Wave's MCSE training program. The remainder of
the increase resulted primarily from two large license agreements for published
products. Domestic direct sales of published products decreased by almost $2
million in fiscal 1998 compared to 1997, as the Company spent a smaller
percentage of its sales and marketing budget on direct mail. That decrease was
more than offset by increases in direct sales in the United Kingdom and domestic
and international corporate licenses. As Wave's sales of large corporate
licenses of published products continued to increase, the percentage of
published products sales through distributors decreased, to 28% from 33% in
fiscal 1997.

     Fiscal 1998 instructor-led training ("ILT") revenues increased $1,538,000,
or 15%, to $11,539,000 from $10,001,000 in fiscal 1997. Revenues related to the
acquisition of QA contributed $267,000 of the increase. Wave's two London
training centers accounted for $522,000, or 34%, of the growth in ILT revenues.
ILT revenues from the Club Wave and corporate Club Wave programs increased 19%,
to $3,341,000, compared to $2,801,000 for fiscal 1997, primarily from corporate
Club Wave as the Company's field sales force increased sales of corporate
programs.

     Custom solutions revenues in fiscal 1998 increased $1,419,000 or 27%, to
$6,684,000 from $5,265,000 in fiscal 1997. Revenues from GTE and the GTE
University program increased by $1,910,000 to $3,956,000, in fiscal 1998. A
significant portion of this increase, however, was offset by increased costs for
delivery of the program. In light of the inadequate margins and the lack of
consistent 
<PAGE>
 
focus on or linkage to Wave's core competencies, the Company will not continue
the GTE University program in fiscal 1998. While Wave hopes to continue to
perform custom solutions projects for GTE, those programs will be selected
initiatives more closely aligned with Wave's overall strategy.

     Costs and Expenses. Total costs and expenses in fiscal 1998 increased
$6,223,000, or 21%, to $35,718,000 from $29,495,000 in fiscal 1997. Total costs
and expenses represented 99% of total revenues for the fiscal year, compared to
96% of total revenues in fiscal 1997.

     Costs of services, products and development represented 53% of total
revenues in fiscal 1998, compared to 48% in fiscal 1997, increasing 28%, to
$19,032,000 from $14,880,000 in fiscal 1997. Total payroll and other employee
benefits increased $999,000, or 15%, from $6,523,000 in fiscal 1997, to
$7,522,000. Production costs for publishing rose $367,000, or 15%, in fiscal
1998, to $2,810,000 from $2,443,000 in fiscal 1997. Amortization of development
costs for Wave's expanded product portfolio increased $357,000 compared to
fiscal 1997. Royalty fees increased significantly, by $265,000, compared to
fiscal 1997, primarily for costs of licensed materials for a one-time contract
with an international corporate customer. Outside equipment expenses also
increased significantly, by $240,000, or 475%, in fiscal 1998, primarily for
payments on equipment leases used to finance updated hardware and software for
Wave's training centers. Costs for student food and beverage increased by
$111,000, or over 100%, in connection with the opening of the new London
training center and increased attendance at Wave's domestic centers. Freight
costs associated with the shipping of published materials and study kits rose
slightly, by $58,000, in fiscal 1998.

     Sales and marketing expenses in fiscal 1998 increased $1,093,000, or 14%,
to $9,113,000 from $8,020,000 in fiscal 1997 and represented 25% of total
revenues in fiscal 1998, compared to 26% in the prior fiscal year. Most of the
dollar increase, $818,000, or 18%, related to increased payroll costs as the
Company continued expansion of its outside sales force and paid additional
commissions on increased revenues. Direct mail expenses in fiscal 1998 increased
only slightly, by $12,000, from fiscal 1997, but were $516,000 below fiscal 1996
levels, and decreased as a percentage of total sales and marketing expense to
25% from 28% in fiscal 1997 and 43% in fiscal 1996. The Company anticipates
higher direct mail expenses in fiscal 1999, as it plans to increase its direct
mail initiatives and outbound telemarketing sales efforts. Other advertising,
promotional and trade show expenses in fiscal 1998 increased $185,000, or 22%,
for expanded Web and trade journal advertisements.

     General and administrative expenses increased $979,000, or 15%, to
$7,573,000, from $6,594,000 in fiscal 1997, and remained stable as a percentage
of revenues at 21%. Employment-related expenses for administrative personnel in
fiscal 1998 increased $125,000, or 6%, from fiscal 1997. Real estate and
equipment rental increased $126,000, or 27%, as Wave added its second London
training center. Depreciation in fiscal 1998 increased $491,000, or 44%, from
fiscal 1997, including $115,000 for equipment
<PAGE>
 
for the new London center and $376,000 for upgraded computer equipment for
corporate headquarters and the centers. The Company also amortized $67,000 of
goodwill in fiscal 1998 associated with the asset acquisitions from ETI and QA.
Expenses for outside professional services, primarily in the employment
consulting area, rose $108,000, or 26%, in fiscal 1998. Taxes and license fees
increased $67,000, or 43%, in fiscal 1998, as the result of property taxes for
the new U.K. training center.

Income from Operations. Income from operations in fiscal 1998 was $426,000, or
1% of revenues, compared to $1,332,000, or 4% of revenues, in fiscal 1997.

Income Tax (Credit) Expense. Income tax expense was $213,000 in fiscal 1998,
compared to a credit of $250,000 in fiscal 1997. The increase in income tax
expense reflects the continued profitability of the Company, and the reversal of
the tax valuation allowance in fiscal 1997.

Net Income. Wave's net income for fiscal 1998 was $113,000 or $0.03 per share,
compared to $1,528,000, or $0.39 per share, in fiscal 1997.

Results of Operations - Fiscal 1997 Compared to Fiscal 1996

     Revenues. Total fiscal 1997 revenues increased 26% to $30,826,000, from
$24,369,000, as Wave experienced revenue growth in all three segments of its
business.

     Publishing revenues increased by $3,364,000, or 28%, compared to fiscal
1996 to $15,561,000 and represented approximately 50% of total revenues in both
fiscal 1996 and fiscal 1997. Much of the growth in publishing revenues related
to sales to large corporate clients, both domestic and international. Sales of
Wave's Microsoft NT products and A+ Certification products experienced the most
significant increases, 94% and 89%, respectively. The percentage of published
products sales through Wave's domestic and international distributors remained
fairly constant, at 33% in fiscal 1997, compared to 32% in fiscal 1996.

     ILT revenues increased 14%, or $1,228,000, to $10,001,000 in fiscal 1997.
Fiscal 1997 ILT revenues decreased to 32% of total revenues, compared to 36% in
the prior fiscal year. The growth in ILT resulted primarily from sales in the
UK, which increased $1,358,000. Domestic ILT revenues declined 2% to $6,988,000
in fiscal 1997. The Company attributes this to an increased proportion of sales
to major corporate accounts that purchase training solutions that integrate live
training with self-study and custom training programs. A significant portion of
these revenues are recognized as publishing and custom solutions revenue.

     Custom solutions revenues increased 55% or $1,865,000 from fiscal 1996,
and increased as a percentage of total revenues to 17% from 14%.
<PAGE>
 
     Costs and Expenses. Fiscal 1997 total costs and expenses increased
$4,479,000, or 18%.

     Cost of services, products and development increased 17%, or $2,180,000,
but decreased as a percentage of revenues, to 48% in fiscal 1997, compared to
52% in fiscal 1996. The Company's increased use of consultants in both ILT
delivery and development accounted for most of the dollar increase, $1,098,000.
Payroll and related costs increased by 14%, to $6,523,000 in fiscal 1997 from
$5,724,000 fiscal 1996.

     In fiscal 1997, the Company also amortized $1,244,000 of development costs
capitalized in prior periods, an increase of $472,000, or 61%, over fiscal 1996.

     Variable costs associated with published products increased slightly, by
$43,000, but decreased as a percentage of revenues from 10% to 8% as Wave
focused on more cost-effective production methods. Shipping costs increased
$162,000, or 33%, largely as the result of continued growth in sales of
published products, and, to a lesser extent, shipments of materials for
classroom training and general intracompany shipments. Wave's royalty payments
decreased significantly in fiscal 1997, by $260,000, or 90%, as it completed
payments related to product acquisitions in prior years.

     Costs of services also include outside facility and equipment rentals where
permanent Company facilities are not available, and rent for Wave's training
centers. The Company decreased expenses for outside facilities rental by
$53,000, or 94%, in fiscal 1997, and maintained rent expense for its own
facilities at $1,377,000, slightly above the level in fiscal 1996 of $1,320,000.
Equipment rental expenses increased $34,000, or 208%, as the Company implemented
its planned financing of computer hardware purchases through equipment leases.

     Total sales and marketing expenses increased 25% in fiscal 1997, but
remained stable as a percentage of revenues, at 26%. Payroll related items,
including commissions, increased $1,804,000, or 66%, as Wave continued to expand
its field sales force, and to increase incentive-based compensation to its sales
and marketing team. Employee travel and entertainment costs for sales and
marketing personnel also increased significantly, by 62%, or $101,000, in fiscal
1997 compared to the prior year.

     Expenses related to direct mail in fiscal 1997 decreased 19%, or $528,000,
as the Company increased its emphasis on field sales. Other advertising and
promotional expenses increased $293,000 in fiscal 1997. This increase was
attributable to increased printing and advertising costs associated with
advertising coop programs with distributors, advertising of Wave's ISW and TSW
programs and general corporate advertising. Outside marketing consultant fees
also increased $90,000 from fiscal 1996.
<PAGE>
 
     Total general and administrative expenses increased 11% in fiscal 1997, but
decreased as a percentage of revenues, to 21% compared to 24% in fiscal 1996.
Employee compensation expenses increased 19%, or $330,000, primarily for
international employees to support the growth in international revenues.
Employee travel expenses also increased in fiscal 1997, by $110,000, or 143%,
for domestic management travel to support the growth in international revenues.
Depreciation expense increased significantly, by 26%, or $232,000, as Wave added
hardware and software to accommodate its growth. Telephone expense increased
$122,000, or 19%, as the Company upgraded its phone and computer systems. Legal
fees increased $50,000, or 27%, in fiscal 1997, but were more than offset by a
significant decrease in outside accounting and other professional expenses, of
$263,000, or 58%.

     One significant, non-recurring event in the fourth quarter of fiscal 1997
negatively impacted financial results. The Company expensed $165,000 for the
judgment in a lawsuit tried and lost during the quarter.

     Income/Loss From Operations. Operating income for fiscal 1997 was
$1,332,000, or 4% of revenues, compared to an operating loss of $646,000, or 3%
of revenues, in fiscal 1996.

     Other Income/Expense and Provision for Taxes. Other expense, net, for
fiscal 1997 was $53,000, a $25,000 decrease compared to fiscal 1996, primarily
as the result of decreased total borrowings during the fiscal year. Wave
recorded a tax credit of $250,000 in the fourth quarter of fiscal 1997, to
account for the loss carry forward remaining at year-end.

     Net Income/Loss. Net income for fiscal 1997 was $1,528,000, or $.39 per
share, compared to a net loss in fiscal 1996 of $724,000, or $.19 per share.

Liquidity and Capital Resources

     The Company had net cash from operating activities of $1,827,000 in fiscal
1998 compared to $1,494,000 in fiscal 1997. The Company's cash and cash
equivalents increased to $1,498,000 at April 30, 1998, from $948,000 at April
30, 1997. Accounts receivable increased slightly, from $7,177,000 at April 30,
1997, to $7,262,000 at April 30, 1998. Inventory increased 15% from $785,000 at
April 30, 1997, to $905,000 at April 30, 1998. Prepaid expenses increased 43%,
to $680,000 at April 30, 1998, from $476,000 at April 30, 1997, for a variety of
items, including prepayments of $92,000 related to the Company's planned
participation in an industry sales conference in September of 1998.

     As of April 30, 1998, the Company had total deferred revenue of $3,947,000,
reflecting sales not yet recognized as revenue, compared to deferred revenue at
April 30, 1997, of $4,099,000.
<PAGE>
 
     At fiscal year-end, Wave had the full $2,500,000 available on its line of
credit. See Note 5 of Notes to Consolidated Financial Statements.

     The Company used $1,212,000 of cash in fiscal 1998 for capital
expenditures, primarily for computer equipment and related software, compared to
$815,000 in fiscal 1997. The Company's current commitments for operating lease
obligations of $2,478,000 in fiscal 1999 consist primarily of the leases for the
Company's headquarters and training centers. The Company believes that cash
generated from operations, together with existing cash balances and its credit
line, should be sufficient to satisfy the Company's cash requirements for the
foreseeable future. The Company also plans to consider additional equipment
leasing alternatives to fund acquisition of updated hardware and software.

Year 2000

     The Company is performing an analysis of its systems and continuing to work
with its software vendors to determine the impact of Year 2000 issues on its
operations. Management has determined that Year 2000-compliant upgrades are
available for all of its programs at minimal costs.

Forward-Looking Statements

     Certain forward-looking statements are included in this Form 10-KSB. They
use such words as "may," "will," "expect," "anticipate," "believe," "plan," and
other similar terminology. These statements reflect management's current
expectations and involve a number of risks and uncertainties. Actual results
could differ materially due to changes in the market acceptance of Wave's
integrated program, market delays related to anticipated or new releases of
NetWare5 and NT5, the speed and success of new direct mail initiatives, global
and local business and economic conditions, legislation and governmental
regulations, competition, the Company's ability to effectively maintain and
update its product portfolio, shifts in technology, political or economic
instability in local markets, and currency and exchange rates.

ITEM 7.  FINANCIAL STATEMENTS

                         LIST OF FINANCIAL STATEMENTS

The following consolidated financial statements of Wave Technologies
International, Inc. and subsidiaries are included at the end of Part III of this
Annual Report on Form 10-KSB:

     Consolidated Balance Sheets - April 30, 1997 and 1998
     Consolidated Statements of Operations - Years Ended April 30, 1997 and 1998
     Consolidated Statements of Common Shareholders' Equity - Years Ended
      April 30, 1997 and 1998 
     Consolidated Statements of Cash Flows - Years Ended April 30, 1997 and 1998
<PAGE>
 
     Notes to Consolidated Financial Statements


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

     Not applicable.

                                   PART III

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

     Pursuant to General Instruction E(3) to Form 10-KSB, the information
required by this Item is set forth in the section entitled "Election of
Directors" in the definitive proxy statement involving the election of directors
in connection with the Annual Meeting of Shareholders of the registrant to be
held on September 9, 1998 (the "Proxy Statement"), which section is incorporated
herein by reference. The Proxy Statement will be filed with the Securities and
Exchange Commission not later than 120 days after April 30, 1998, pursuant to
Regulation 14A of the Securities Exchange Act of 1934, as amended.

     The information required with respect to Section 16(a) of the Securities
Exchange Act of 1934 is included under the caption "Compliance with Section
16(a) of the Securities Exchange Act of 1934" in the Proxy Statement, which
section is incorporated herein by reference.

ITEM 10. EXECUTIVE COMPENSATION

     Pursuant to General Instruction E(3) to Form 10-KSB, the information
required by this Item is set forth in the section entitled "Election of
Directors" in the Proxy Statement, which section is incorporated herein by
reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Pursuant to General Instruction E(3) to Form 10-KSB, the information
required by this Item is set forth in the section entitled "Voting Rights" and
"Security Ownership of Management" in the Proxy Statement, which sections are
incorporated herein by reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Pursuant to General Instruction E(3) to Form 10-KSB, the information
required by this Item is set forth in the section entitled "Election of
Directors" in the Proxy Statement, which section is incorporated herein by
reference.
<PAGE>
 
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

(a)  Exhibits.

     Reference is made to the Index to Consolidated Financial Statements and the
Consolidated Financial Statements following such index.

     All schedules have been omitted because the required information in such
schedules is not present in amounts sufficient to require submission of the
schedule or because the required information is included in the consolidated
financial statements or is not required.

(b)   Reports on Form 8-K - The registrant did not file any reports on Form 8-K
      during the fiscal year ended April 30, 1998.

(c)   Exhibits required to be filed by Item 601 of Regulation S-K are listed in
the Exhibit Index attached hereto, which is incorporated by reference. Set forth
below is a list of management contracts and compensatory plans and arrangements
required to be filed as exhibits by Item 14(c).

     Service Agreement dated June 1, 1994, by and between the Company and John
     A. Kirkham (filed as Exhibit 10.2 to Registrant's Registration Statement on
     Form SB-2 (file No. 33-80556).

     Employment Agreement dated June 25, 1997 between the Company and J. Michael
     Bowles (filed as Exhibit 10.1 to Registrant's Annual Report on Form 10-KSB
     for the fiscal year ended April 30, 1997).

     Amended and Restated 1993 Stock Option Plan (filed as Exhibit 10.3 to
     Registrant's Registration Statement on Form SB-2 (File No. 33-80556)).

     1995 Stock Option Plan (filed as Exhibit 4.3 to Registrant's Registration
     Statement on Form S-8 (File No. 33-98462)).

     Wave Technologies International, Inc. Outside Directors Stock Option Plan
     (filed as Exhibit 10.4 to Registrant's annual report on Form 10-KSB for the
     fiscal year ended April 30, 1997).

                                  SIGNATURES

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

                     WAVE TECHNOLOGIES INTERNATIONAL, INC.
<PAGE>
 
Dated:  July 28, 1998          By: /s/ Kenneth W. Kousky
                                  ---------------------------------------------
                                  Kenneth W. Kousky, President

     In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and on
the dates indicated.

<TABLE>
<CAPTION>

Signature                           Title                                              Date
---------                           -----                                              ----
<S>                                 <C>                                                <C> 
/s/  Kenneth W. Kousky              President, Chairman of the Board,                  July 28, 1998
------------------------------      and Chief Executive Officer (principal 
Kenneth W. Kousky                   executive officer)                      

/s/  J. Michael Bowles              Chief Financial Officer (principal                 July 28, 1998
------------------------------      financial officer and principal
 J. Michael Bowles                  accounting officer)

/s/  Maxine K. Clark                Director                                           July 28, 1998
------------------------------
 Maxine K. Clark

/s/  Raymond J. Kalinowski          Director                                           July 28, 1998
------------------------------
Raymond J. Kalinowski

/s/  David W. Kemper                Director                                           July 28, 1998
------------------------------
David Kemper

/s/  Robert E. Lefton               Director                                            July 28, 1998
------------------------------
David E. Lefton

/s/  Walter N. Torous               Director                                            July 28, 1998
------------------------------
David  N. Torous
</TABLE>

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>

Exhibit No.                            Exhibit                                                 Page No.
------------------------------------------------------------------------------------------------------------------
<S>             <C>                                                                       <C>    
3.1             Articles of Incorporation, as amended and restated (filed as
                Exhibit 3.1 to Registrant's Registration Statement on Form SB-2
                (File No. 33-80556) and incorporated herein by reference)

3.2             Restated Bylaws, as amended (filed as Exhibit 3.2 to
                Registrant's Annual Report on Form 10-KSB for the fiscal year
                ended April 30, 1997, and incorporated herein by reference)

4.1             Specimen Stock Certificate (filed as Exhibit 4.1 to Registrant's
                Registration Statement on Form SB-2 (File No. 33-80556) and
                incorporated herein by reference)
</TABLE>
<PAGE>
 
<TABLE>
<CAPTION>

Exhibit No.                            Exhibit                                                 Page No.
------------------------------------------------------------------------------------------------------------------
<S>             <C>                                                                       <C>    
10.1            Employment Agreement dated June 25, 1997, between the Company
                and J. Michael Bowles (filed as Exhibit 10.1 to Registrant's
                Annual Report on Form 10-KSB for the fiscal year ended April 30,
                1997, and incorporated herein by reference)

10.2            Service Agreement dated June 1, 1994, by and between the Company
                and John A. Kirkham (filed as Exhibit 10.2 to Registrant's
                Registration Statement on Form SB-2 (file No. 33-80556) and
                incorporated herein by reference)

10.3            Amended and Restated 1993 Stock Option Plan (filed as Exhibit
                10.3 to Registrant's Registration Statement on Form SB-2 (File
                No. 33-80556) and incorporated herein by reference)

10.4            Wave Technologies International, Inc. Outside Directors Stock
                Option Plan (filed as Exhibit 10.4 to Registrant's annual report
                on Form 10-KSB for the fiscal year ended April 30, 1995, and
                incorporated herein by reference)

10.5            Distribution Agreement between the Company and Ingram Micro,
                Inc., dated April 19, 1996 (filed as exhibit 10.8 to
                Registrant's annual report on Form 10-KSB for the fiscal year
                ended April 30, 1995, and incorporated herein by reference)

10.9            $2,500,000 Line of Credit Note to Commerce Bank, National
                Association, dated September 1, 1997 (filed as Exhibit 10.9 to
                Registrant's Quarterly Report on Form 10-QSB for the quarter
                ended October 31, 1996 and incorporated herein by reference)

10.10           General Loan and Security Agreement between Commerce Bank,
                National Association, and the Company, dated as of August 31,
                1995 (filed as Exhibit 10.15 to Registrant's Quarterly Report on
                Form 10-QSB for the quarter ended October 31, 1995, and
                incorporated herein by reference)
</TABLE>
<PAGE>
 
<TABLE>
<CAPTION>

Exhibit No.                            Exhibit                                                 Page No.
------------------------------------------------------------------------------------------------------------------
<S>             <C>                                                                       <C>    
10.11           First Amendment to General Loan and Security Agreement, dated as
                of January 5, 1996, between the Company and Commerce Bank,
                National Association (filed as Exhibit 10.13 to Registrant's
                Quarterly Report on Form 10-QSB for the quarter ended January
                31, 1996, and incorporated herein by reference)

10.12           $600,000 Note dated January 5, 1996, to Commerce Bank, National
                Association (filed as Exhibit 10.14 to Registrant's Quarterly
                Report on Form 10-QSB for the quarter ended January 31, 1996 and
                incorporated herein by reference)

10.13           Second Amendment to General Loan and Security Agreement between
                the Company and Commerce Bank, National Association, dated as of
                September 1, 1996 (filed as Exhibit 10.13 to Registrant's
                Quarterly Report on Form 10-QSB for the quarter ended October
                31, 1996, and incorporated herein by reference)

10.14           Wave Technologies International, Inc. 1995 Stock Option Plan
                (filed as Exhibit 4.3 to Registrant's Registration Statement on
                Form S-8 (File No. 33-98462) and incorporated herein by
                reference)

10.15           Waveware License Agreement between the Company and SHL
                Systemhouse Corp., dated as of January 30, 1996 (filed as
                Exhibit 10.19 to Registrant's Quarterly Report on Form 10-QSB
                for the quarter ended January 31, 1996 and incorporated herein
                by reference)

10.17           Courseware License Agreement effective as of July 31, 1997,
                between the Company and International Business Machines
                Corporation (filed as Exhibit 10.17 to Registrant's Quarterly
                Report on Form 10-QSB for the quarter ended October 31, 1997 and
                incorporated herein by reference)
</TABLE>
<PAGE>
 
<TABLE>
<CAPTION>

Exhibit No.                            Exhibit                                                 Page No.
------------------------------------------------------------------------------------------------------------------
<S>             <C>                                                                       <C>    
10.18           Wave Technologies International, Inc. 1997 Stock Option Plan
                (filed as Exhibit 10.18 to Registrant's Quarterly Report on Form
                10-QSB for the quarter ended October 31, 1997 and incorporated
                herein by reference)

10.19           Asset Purchase and License Agreement by and among QA Training,
                Inc., QA Training, Ltd. and Wave Technologies International,
                Inc. dated as of January 22, 1998 (filed as Exhibit 10.19 to
                Registrant's Quarterly Report on Form 10-QSB for the quarter
                ended January 31, 1998, and incorporated herein by reference)

10.20           Wave Distribution Agreement between Wave Technologies
                International, Inc. and QA Training, Ltd., dated as of January
                22, 1998. (filed as Exhibit 10.20 to Registrant's Quarterly
                Report on Form 10-QSB for the quarter ended January 31, 1998,
                and incorporated herein by reference)

11.1            Statement Regarding Computation of Per Share Earnings
                (Loss)--Included in Notes to Consolidated Financial Statements

21.1            List of Subsidiaries

23.1            Consent of Deloitte & Touche, LLP

27              Financial Data Schedule
</TABLE> 
<PAGE>
 
                              -------------------------------------------------
                              Wave Technologies
                              International, Inc.
                              Financial Statements for the
                              Years Ended April 30, 1998 and 1997 and
                              Independent Auditors' Report
<PAGE>
 
INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Shareholders of
  Wave Technologies International, Inc.:

We have audited the accompanying consolidated balance sheets of Wave
Technologies International, Inc. and Subsidiaries (the "Company") as of April
30, 1998 and 1997, and the related consolidated statements of operations, common
shareholders' equity, and cash flows for each of the years then ended. 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, such consolidated financial statements present fairly, in all
material respects, the financial position of Wave Technologies International,
Inc. and Subsidiaries at April 30, 1998 and 1997, and the results of their
operations and their cash flows for each of the years then ended in conformity
with generally accepted accounting principles.



/s/ Deloitte & Touche LLP

St. Louis, Missouri
June 11, 1998
<PAGE>
 
WAVE TECHNOLOGIES INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                        April 30,
                                                                          ----------------------------------
ASSETS                                                                           1997                1998
<S>                                                                            <C>              <C>        
CURRENT ASSETS:
 Cash and cash equivalents                                                  $    948,280       $  1,497,811
 Accounts receivable - less allowance for doubtful accounts of
  $446,000 and $397,000                                                        7,176,651          7,262,054
 Inventory                                                                       785,011            904,546
 Prepaid expenses                                                                475,949            680,476
                                                                            ------------       ------------

          Total current assets                                                 9,385,891         10,344,887

PROPERTY AND EQUIPMENT (Note 3)                                                3,956,964          3,365,768

PREPAID DIRECT MAIL COSTS                                                        558,025            408,195

DEFERRED COURSEWARE DEVELOPMENT COSTS                                          1,653,993          2,123,771

OTHER ASSETS (Note 4)                                                            939,653          2,053,463


                                                                            -------------      ------------ 
TOTAL                                                                       $ 16,494,526       $ 18,296,084
                                                                            =============      ============
</TABLE>

                                                                     (Continued)

                                      F-2
<PAGE>
 
WAVE TECHNOLOGIES INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                            April 30,
                                                                                    --------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY                                                    1997           1998
<S>                                                                                 <C>            <C> 
CURRENT LIABILITIES:
  Accounts payable                                                                  $ 2,489,814    $ 2,479,580
  Accrued expenses                                                                    1,408,946      2,346,899
  Deferred revenue                                                                    4,098,761      3,946,907
  Current portions of long-term debt and capital lease obligation:
    Notes payable (Note 5)                                                              280,099        163,366
    Capital lease obligations (Note 6)                                                   76,451         55,958
                                                                                    -----------    -----------

          Total current liabilities                                                   8,354,071      8,992,710
                                                                                    -----------    -----------

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS,
  Excluding current portions:
    Notes payable (Note 5)                                                              147,020              -
    Capital lease obligations (Note 6)                                                   94,766         41,070

ACCRUED RENT LIABILITY (Note 6)                                                         297,987        347,109

COMMON SHAREHOLDERS' EQUITY:
  Common stock, $.50 par value, authorized, 20,000,000 shares; issued, 3,933,459
    and 4,158,311 shares; outstanding, 3,926,102 and 4,150,953 shares                 1,966,729      2,079,155
  Treasury stock, at cost (7,357 shares)                                                (14,698)       (14,698)
  Additional paid-in capital                                                          7,038,285      8,082,620
  Accumulated deficit                                                                (1,468,461)    (1,355,143)
  Cumulative translation adjustment                                                      78,827        123,261
                                                                                    -----------    -----------
          Total common shareholders' equity                                           7,600,682      8,915,195
                                                                                    -----------    -----------

TOTAL                                                                               $16,494,526    $18,296,084
                                                                                    ===========    ===========
</TABLE>


See notes to consolidated financial statements.                      (Concluded)


                                      F-3
<PAGE>
 
WAVE TECHNOLOGIES INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                    Years Ended April 30,
                                                                    ---------------------
                                                                 1997                    1998
<S>                                                          <C>                     <C>         
REVENUES (Notes 11 and 12):
  Publishing                                                 $ 15,560,721            $ 17,921,269
  Instructor-led training                                      10,000,828              11,538,649
  Custom solutions                                              5,264,907               6,684,306
                                                             ------------            ------------

          Total revenues                                       30,826,456              36,144,224

COSTS AND EXPENSES:
  Cost of services, products and development                   14,880,312              19,032,345
  Sales and marketing                                           8,020,255               9,112,974
  General and administrative                                    6,594,101               7,573,062
                                                             ------------            ------------

          Total costs and expenses                             29,494,668              35,718,381
                                                             ------------            ------------

INCOME FROM OPERATIONS                                          1,331,788                 425,843

INTEREST EXPENSE                                                  (69,293)               (109,341)

OTHER INCOME - Net                                                 15,877                  10,285
                                                             ------------            ------------

NET INCOME BEFORE INCOME TAXES                                  1,278,372                 326,787

INCOME TAX (CREDIT) EXPENSE (Note 7)                             (250,000)                213,469
                                                             ------------            ------------

NET INCOME                                                    $ 1,528,372            $    113,318
                                                              ===========            ============

BASIC NET INCOME PER SHARE (Note 10)                          $      0.39            $       0.03
                                                              ===========            ============

BASIC WEIGHTED AVERAGE SHARES
  OUTSTANDING (Note 10)                                         3,928,141               4,012,087
                                                              ===========            ============

DILUTED NET INCOME PER SHARE (Note 10)                        $      0.39            $       0.03
                                                              ===========            ============

DILUTED COMMON SHARES (Note 10)                                 3,968,739               4,065,826
                                                              ===========            ============
</TABLE>


See notes to consolidated financial statements.

                                      F-4
<PAGE>
 
WAVE TECHNOLOGIES INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                                                         Total
                                                                               Additional                  Cumulative    Common
                                                   Common       Treasury        Paid-in    Accumulated    Translation  Shareholders'
                                                   Stock         Stock          Capital      Deficit       Adjustment    Equity

<S>                                              <C>           <C>            <C>           <C>            <C>           <C>        

BALANCE, MAY 1, 1996                             $ 1,960,497   $   (14,698)   $ 7,012,474   $(2,996,833)   $    22,109   $ 5,983,549


  Net income                                                                                  1,528,372                    1,528,372
  Options - warrants exercised                         6,232                       25,811                                     32,043
  Change in cumulative translation
    adjustment                                                                                                  56,718        56,718
                                                 -----------   -----------    -----------   -----------    -----------   -----------


BALANCE, APRIL 30, 1997                            1,966,729       (14,698)     7,038,285    (1,468,461)        78,827     7,600,682


  Net income                                                                                    113,318                      113,318
  Options - warrants exercised                        37,426                      252,335                                    289,761
  Issuance of common stock in
    connection with purchase
    of license (Note 4)                               65,000                      686,400                                    751,400
  Issuance of common stock in
    connection with QA acquisition
    (Note 13)                                         10,000                      105,600                                    115,600
  Change in cumulative translation
    adjustments                                                                                                 44,434        44,434
                                                 -----------   -----------    -----------   -----------    -----------   -----------


BALANCE, APRIL 30, 1998                          $ 2,079,155   $   (14,698)   $ 8,082,620   $(1,355,143)   $   123,261   $ 8,915,195
                                                 ===========   ===========    ===========   ===========    ===========   ===========

</TABLE>


See notes to consolidated financial statements.

                                      F-5
<PAGE>
 
WAVE TECHNOLOGIES INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                    Years Ended April 30,
                                                                            --------------------------------------
                                                                                1997                       1998
<S>                                                                         <C>                        <C>        
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                                $ 1,528,372                $   113,318
  Adjustments to reconcile net income to net cash provided by
    operating activities:
      Depreciation and amortization                                           1,892,687                  2,417,373
      Barter revenue                                                           (842,995)                  (311,125)
      Net changes in other assets and liabilities:
        Accounts receivable                                                  (2,063,180)                   (79,741)
        Inventory                                                               (85,097)                  (119,535)
        Prepaid expenses and other current assets                              (273,817)                  (204,527)
        Prepaid direct mail costs                                               (90,508)                   149,830
        Deferred courseware development                                         (36,359)                  (469,778)
        Other assets                                                             69,162                    (58,128)
        Deferred tax asset                                                     (250,000)                  (436,092)
        Accounts payable                                                        520,115                    (10,234)
        Accrued expenses                                                        148,368                    937,953
        Deferred revenue                                                        977,317                   (102,732)
                                                                            -----------                -----------
          Net cash provided by (used in) operating activities                 1,494,065                  1,826,582
                                                                            -----------                -----------

CASH FLOWS USED IN INVESTING ACTIVITIES:
  Capital expenditures                                                         (815,180)                (1,211,872)
  Acquisition of QA Training, Inc.                                                                         (17,000)
                                                                            -----------                -----------
          Net cash used in investing activities                                (815,180)                (1,228,872)
                                                                            -----------                -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from common stock issuance - net                                      32,043                    289,761
  Repayments under line-of-credit                                              (228,000)
  Repayments of notes payable                                                  (232,404)                  (263,752)
  Payments of capital lease obligation                                          (49,308)                   (74,188)
                                                                            -----------                -----------
          Net cash used in financing activities                                (477,669)                   (48,179)
                                                                            -----------                -----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                       201,216                    549,531

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                  747,064                    948,280
                                                                            -----------                -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                    $   948,280                $ 1,497,811
                                                                            ===========                ===========
</TABLE>
                                                                     (Continued)

                                      F-6
<PAGE>
 
WAVE TECHNOLOGIES INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                               Years Ended April 30,
                                                                           ----------------------------
                                                                               1997               1998
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
  INFORMATION:
<S>                                                                          <C>               <C>      
    Cash paid for interest                                                   $ 69,017          $ 110,437
                                                                             =========         =========
    Purchase of license through the issuance of common stock
      (See Note 4)                                                           $       -         $ 751,400
                                                                             =========         =========
    Acquisition of QA Training, Inc. through the issuance of
      common stock (See Note 13)                                             $       -         $ 115,600
                                                                             =========         =========

    Income tax payments                                                      $       -         $ 263,500
                                                                             =========         =========
</TABLE>



See notes to consolidated financial statements.                      (Concluded)

                                      F-7
<PAGE>
 
WAVE TECHNOLOGIES INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1.    THE COMPANY

      Wave Technologies International, Inc. ("Wave" or the "Company") is engaged
      in the business of developing, marketing, and delivering training and
      instructional products relating to sophisticated information technologies.
      The Company operates eleven training centers in the United States, and two
      in the United Kingdom.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      Revenue Recognition - Revenue is recognized for information technology
      training and custom solutions as the services are rendered. Revenue from
      the sale of published products is recognized at the time the product is
      shipped. Deferred revenue consists of fees paid for services which have
      not yet been rendered. The Company provides allowances for returns at the
      time of sale based on management estimates.

      Information Technology Training - Club Wave and Corporate Club Wave
      represent programs through which the Company provides an integrated set of
      services and products. The portion of revenue pertaining to products is
      recognized at the time the product is shipped. The remaining revenue is
      deferred and recognized as the services are provided over the term of the
      membership.

      Basis of Consolidation - The consolidated financial statements include the
      accounts of Wave and its wholly-owned subsidiaries. All intercompany
      accounts and transactions have been eliminated.

      Foreign Currency - Assets and liabilities of the Company's foreign
      operations are translated at current exchange rates, while revenue and
      expenses are translated at average rates prevailing during the year.
      Translation adjustments are reported as a component of shareholders'
      equity.

      Cash and Cash Equivalents - The Company considers all highly liquid debt
      instruments purchased with a maturity of three months or less at the date
      of purchase to be cash equivalents.

      Inventories - Inventories are primarily composed of published materials
      and are valued at the lower of cost or market using the first-in,
      first-out (FIFO) method of computing cost.

      Property and Equipment - Property and equipment is stated at cost, less
      accumulated depreciation and amortization. Depreciation is computed using
      the straight-line method over 3 years for computer equipment and software,
      7-10 years for furniture and fixtures and the term of the related lease
      for leasehold improvements.

      Advertising Costs - The Company expenses advertising costs as incurred,
      except for direct-response advertising, which is capitalized and amortized
      over its expected period of future benefits.

      Direct-response advertising consists primarily of direct mail programs.
      The capitalized costs of the advertising are amortized over a period not
      exceeding six months following commencement of the 

                                      F-8
<PAGE>
 
      program. Advertising expense for the years ended April 30, 1997 and 1998
      was $3,081,501 and $3,243,942, respectively.

      Deferred Courseware Development - The Company capitalizes the direct labor
      and material costs incurred in connection with the development of
      courseware. Such capitalized costs are amortized over the estimated useful
      life, which is generally two years.

      Income Taxes - The Company provides for income taxes based on Statement of
      Financial Accounting Standards ("SFAS") 109, Accounting for Income Taxes.
      Deferred income taxes are computed based on the expected future tax
      consequences of temporary differences between the tax bases and financial
      reporting bases of assets and liabilities.

      Goodwill - Goodwill represents the excess of purchase price over the fair
      value of net assets acquired and is amortized using the straight-line
      method not to exceed 5 years. Management periodically reviews the value of
      its goodwill to determine if an impairment has occurred or whether changes
      have occurred that would require a revision to the remaining useful life.
      In making such determination, management evaluates the performance, on a
      discounted basis of the underlying operations or assets which give rise to
      such amount. Based on this review, management does not believe that any
      such impairment has occurred.

      Long-Lived Assets - The general requirements are applicable to the
      properties and intangible assets of the Company and require impairment to
      be considered whenever events or changes in circumstances indicate that
      the carrying amount of an asset may not be recoverable. No impairment
      losses have been identified by the Company.

      Stock-Based Compensation Plans - The Company recognizes and measures
      compensation for its stock rights and stock option plans in accordance
      with the provisions of Accounting Principles Board ("APB") Opinion No. 25,
      Accounting for Stock Issued to Employees. See Note 9 for pro forma
      disclosures of net income and earnings per share as if the fair
      value-based method prescribed by SFAS No. 123, Accounting for Stock-based
      Compensation, had been applied.

      Use of Estimates - The preparation of financial statements in conformity
      with generally accepted accounting principles requires management to make
      estimates and assumptions that affect the reported assets and liabilities
      and 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.

      Fair Value of Financial Instruments - The carrying amount of the Company's
      notes payable and long-term debt approximates the fair value based on
      quoted market prices for similar issues or current rates offered to the
      Corporation for debt with similar maturity schedules. The carrying amount
      of all other financial instruments, including cash and cash equivalents,
      accounts receivable and accounts payable approximates fair value due to
      the short-term nature of these investments.

      Reclassifications - Certain reclassifications have been made to the 1997
      financial statements to conform to the 1998 presentation.

      New Accounting Standards - In June 1997, the FASB issued Statement No. 
      130, Reporting Comprehensive Income, and Statement No. 131, Disclosures
      about Segments of an Enterprise and Related Information. These statements
      expand disclosure of changes in equity during the year resulting from
      transactions or other events from

                                      F-9
<PAGE>
 
      nonowner sources and modify disclosures about reportable segments of the
      Company's operations. Accordingly, they will have no impact on the
      Company's reported financial position, results of operations or cash
      flows. These statements are effective for fiscal periods beginning after
      December 15, 1997.

3.    PROPERTY AND EQUIPMENT

      Property and equipment consist of:

<TABLE>
<CAPTION>
                                                                       April 30,
                                                            -------------------------------
                                                                 1997               1998
<S>                                                         <C>                <C> 
Computer equipment and software                             $ 6,463,027        $ 6,757,776
Furniture and fixtures                                        2,131,322          2,658,482
Leasehold improvements                                          284,195          1,004,140
                                                            ------------       -----------
                                                              8,878,544         10,420,398
Less - Accumulated depreciation and amortization             (4,921,580)        (7,054,630)
                                                            ------------       -----------

                                                            $ 3,956,964        $ 3,365,768
                                                            ============       ===========
</TABLE> 

     The Company provides technology training to certain customers in exchange
     for computer hardware and software. Computer hardware and software of
     $842,995 and $311,125 was acquired in the years ended April 30, 1997 and
     1998, respectively, in connection with such nonmonetary transactions. The
     Company records such nonmonetary transactions at the lower of the fair
     market value of the assets received or the fair market price of the related
     training program.

4.   OTHER ASSETS

     Other assets consist of:

                                                   April 30,
                                        -------------------------------
                                            1997                1998
 
Goodwill (Note 13)                      $  524,756        $    467,796
License                                                        704,438
Other                                      164,897             195,136
Deferred tax asset                         250,000             686,093
                                        ----------        -------------

          Total                         $  939,653        $  2,053,463
                                        ==========        ============

     During the year, the Company entered into a perpetual license agreement
     with QA Training, Ltd. ("QA Ltd.") of the United Kingdom through the
     issuance of 130,000 shares of common stock, with a fair market value of
     $751,400. The perpetual license agreement gives the Company exclusive
     rights in the United States and non-exclusive rights worldwide, excluding
     the United Kingdom and Ireland, to distribute published products and
     provide instructor-led training based on training materials that are
     developed by QA Ltd. The license is being amortized on a straight-line
     basis over the estimated period of benefit, four years.

     Amortization of goodwill and license was $168,000 and $235,000 in the years
     ended April 30, 1997 and 1998, respectively.

    
                                  F-10
<PAGE>
 
5.   NOTES PAYABLE

<TABLE>
<CAPTION>
                                                                                                April 30,
                                                                                    ------------------------------
                                                                                       1997                 1998
         <S>                                                                        <C>                  <C>      
         Note payable to the bank, at 9.25%, payable in monthly payments
         of interest and principal of $19,187 through January 1999,
         collateralized by accounts receivable, equipment, inventory and
         other assets of the Company.                                               $ 368,379            $ 147,053
         
         Note payable to the bank, at 9%, payable in monthly payments
         of interest and principle of $4,155 through August 1998,
         collateralized by equipment of the Company.                                   58,740               16,313
                                                                                    ---------            ---------
         
                                                                                      427,119              163,366
         Current maturities                                                           280,099              163,366
                                                                                    ---------            ---------
         
                   Total long-term obligations                                      $ 147,020            $     -
                                                                                    =========            =========
</TABLE>

      In September 1997, the Company entered into a line-of-credit agreement
      with the bank that extends until August 1998. The Company has $2,500,000
      available under this line-of-credit agreement and had no borrowings as of
      April 30, 1997 and 1998. During the year ended 1998 the Company borrowed
      and repaid an aggregate of approximately $9,000,000 under this agreement.
      The line bears interest at the prime rate. The borrowings under the line-
      of-credit agreement are collateralized by accounts receivable, equipment,
      inventory and other assets of the Company. The line-of-credit agreement
      includes covenants which require the maintenance of a certain level of
      tangible net worth and precludes the payment of dividends.

                                      F-11
<PAGE>
 
6.   LEASING ARRANGEMENTS

     The Company leases equipment under noncancelable capital lease agreements.
     The equipment acquired under the leases have been capitalized and the
     related obligation is included in long-term debt and capital lease
     obligation in the financial statements. The Company leases facilities and
     other equipment under various noncancelable lease agreements. The following
     is a schedule of future minimum lease payments under the leases, together
     with the present value of net minimum lease payments for the capital leases
     as of April 30, 1998:


<TABLE>
<CAPTION>

        Year Ended                                                   Capital             Operating
        April 30,                                                    Leases                Leases
        <S>                                                         <C>                 <C>        
        1999                                                        $ 63,690            $ 2,477,792
        2000                                                          44,455              2,255,956
        2001                                                                              1,796,146
        2002                                                                              1,192,319
        2003                                                                                914,833
        Thereafter                                                                          878,308
                                                                    ---------           -----------
        
        Net minimum lease payments, April 30, 1998                   108,145            $ 9,515,354
                                                                                        ===========
        Less - Amount representing interest                           11,117
                                                                    --------
        
        Present value of net minimum lease payments                 $ 97,028
                                                                    ========
        
        Current portion of capitalized lease obligation             $ 55,958
        Long-term portion of capitalized lease obligation             41,070
                                                                    --------
        
                                                                    $ 97,028
                                                                    ========
</TABLE>

     During fiscal 1997, the Company entered into capital lease agreements to
     purchase $131,006 of equipment. As of April 30, 1997 and 1998, the total
     cost of equipment capitalized amounted to $268,781 and the corresponding
     accumulated depreciation amounted to approximately $94,883 and $145,937 at
     April 30, 1997 and 1998, respectively.

     Rent expense under operating leases was $1,621,041 and $2,003,053 for the
     years ended April 30, 1997 and 1998, respectively.

     Accrued rent liability consists of rent incentives received for leased
     operating facilities and is being amortized on a straight-line basis to
     offset rent expense over the life of the lease. Certain of the Company's
     leases include scheduled base rent increases over the term of the lease.
     The total amount of such base rent payments is being charged to expense on
     a straight-line basis over the term of the lease.

                                      F-12
<PAGE>
 
7.    INCOME TAXES

      The provision (credit) for income taxes consists of the following:


                                                             April 30,
                                                    ----------------------------
                                                        1997             1998
                                                                   
       Current income taxes                         $      -          $ 649,469
       Deferred income taxes                          (250,000)        (436,000)
                                                    -----------       ----------
                                                                  
       Provision (credit) for income taxes          $ (250,000)       $ 213,469
                                                    ===========       =========


      Deferred tax assets increased by $250,000 in 1997 as a result of the
      deferred tax benefits associated with the elimination of the Company's
      valuation allowance.

Deferred tax assets and liabilities are comprised of the following:

<TABLE>
<CAPTION>
                                                                                   April 30,
                                                                       -------------------------------
                                                                          1997                  1998
       <S>                                                              <C>                  <C>      
       Deferred tax assets:
         Allowance for doubtful accounts                                $ 90,000             $ 108,000
         Courseware development costs                                     19,000               172,000
         Accruals not currently deductible for tax purposes              168,000               152,000
         Net operating loss carryforward and alternative
           minimum tax credits                                           135,000               116,000
         Other                                                            88,000               140,000
                                                                       ---------             ---------
       
                 Gross deferred tax assets                               500,000               688,000
                                                                       ---------             ---------
       
       Deferred tax liabilities:
         Depreciation                                                    (43,000)              141,000
         Prepaid advertising                                            (207,000)             (143,000)
                                                                       ---------             ---------
       
                 Gross deferred tax liabilities                         (250,000)                2,000
                                                                       ---------             ---------
       
       Net deferred tax assets                                         $ 250,000             $ 686,000
                                                                       =========             =========
</TABLE>

     The provision for income taxes represents an effective combined federal and
     state tax rate of 65% for 1998. The following is a reconciliation of the
     income tax provision (benefit) computed by applying the U.S. federal
     statutory rate of 34% to the recorded income tax provision:

                                                                      1998
                                                               
       Taxes on income at statutory rates                          $ 113,220
       Nondeductible portion of meals and entertainment               60,000
       State income taxes (net of federal benefit)                    53,000
       Other                                                         (12,220)
                                                                   ---------
                  Total tax expense                                $ 214,000
                                                                   =========


                                      F-13
<PAGE>
 
8.    EMPLOYEE BENEFIT PLAN

      The Company has a salary reduction defined contribution profit sharing
      plan, including features designed to qualify the plan under Section 401(k)
      of the Internal Revenue Code, which provides retirement benefits to
      substantially all of its employees. The Company's contribution to the plan
      is determined annually by the Board of Directors. The Company contributed
      $90,000 and $115,000 under this plan in the years ended April 30, 1997 and
      1998, respectively.

9.    STOCK COMPENSATION

      Under the Company's 1993, 1995 and 1997 Stock Option Plans, the Company
      may grant options for selected officers and employees of the Company and
      its subsidiaries for up to 990,000 shares of common stock. Under this
      plan, the exercise price of each option equals not less than fair market
      value of the Company's stock on the date of grant, and an option's maximum
      term is 10 years. Options are granted by the Board of Directors, its
      delegates or the President of the Company. The majority of options granted
      vest over three years, in equal installments. If the optionee's employment
      is terminated, this option remains exercisable for a period between 30 and
      90 days, unless the employee is terminated "for cause", then the options
      terminate immediately.

      The Company has elected to continue following the guidance of APB Opinion
      No. 25, Accounting for Stock Issued to Employees, for measurement and
      recognition of stock-based transactions with employees. Under the
      provisions of APB Opinion No. 25, no compensation cost has been recognized
      for the Company's option plans. Had the determination of compensation cost
      for these plans been based on the fair value of the grant dates for awards
      under these plans, consistent with the method of SFAS No. 123, Accounting
      for Stock-Based Compensation, the Company's net income and earnings per
      share would have been reduced to the pro forma amounts indicated below:

                                                         April 30,
                                            -----------------------------------
                                                1997                    1998
       Net income:                   
         As reported                        $ 1,528,000              $ 113,000
         Pro forma                            1,417,000                 33,000
                              
       Earnings per share:           
         As reported                               0.39                   0.03
         Pro forma                                 0.36                   0.01

     The resulting compensation expense may not be representative of
     compensation expense to be incurred on a pro forma basis in future years.


                                  F-14
<PAGE>
 
     For the purpose of this pro forma presentation, the fair value of each
     option grant is estimated on the date of grant by using the Black-Scholes
     option-pricing model. The following weighted-average assumptions were used
     for option grants in 1997 and 1998:

                                                            April 30,
                                                     ------------------------
                                                      1997              1998

       Expected dividend yield                        0.00%            0.00%
       Expected volatility                           68.00%           68.00%
       Risk-free interest rates                       6.87%            5.75%
       Expected option lives (years)                  5.00             5.00

     A summary of the status of the Company's stock option plan for the two-year
     period ended April 30, 1998 follows:


                                                               Outstanding
                                                          ---------------------
                                                                      Weighted-
                                                                      Average
                                          Exercisable                 Exercise
                                            Shares         Shares       Price

       Outstanding, May 1, 1996             135,314        353,749       5.52 
         Granted                                            74,700       5.30
         Exercised                                         (12,466)      2.57
         Expired                                           (81,866)      5.48
                                                           -------

       Outstanding, April 30, 1997          191,866        334,117       5.43
         Granted                                            99,600       6.50
         Exercised                                         (74,852)      3.87
         Expired                                           (45,424)      6.12
                                                           -------

       Outstanding, April 30, 1998          186,010        313,441       6.18 
                                                           =======

     The weighted-average fair values of options granted during 1997 and 1998
     were $2.80 and $3.37, respectively:

     The following tables summarize information about stock options outstanding
     as of April 30, 1998:

       Options Outstanding                           Weighted-        Weighted-
                                                      Average          Average
                                                     Remaining        Exercise
       Range of exercise price         Shares      Contractual Life     Price
                                                 
       $2.00 - $5.99                   121,326          7.86             $ 5.27
       $6.00 - $7.50                   192,115          8.27               6.75
                                                 
       Options Exercisable                           Weighted-
                                                      Average
       Range of exercise price         Shares       Exercise Price
                                                 
       $2.00 - $5.99                    84,301        $ 5.35
       $6.00 - $7.50                   101,709          6.80


                                      F-15
<PAGE>
 
     As of April 30, 1998, the Company has 478,704 shares available for future
     options under the Plans.

10.  EARNINGS PER SHARE 

     Effective January 31, 1998, Wave adopted SFAS No. 128, Earnings Per Share.
     SFAS No. 128 established standards for computing and presenting earning per
     share (EPS). The old standards, which required exhibiting primary and fully
     diluted EPS calculations was replaced by basic and diluted EPS
     calculations. Basic EPS measures operating performance assuming no dilution
     from securities or contracts to issue common stock. Diluted EPS measures
     operating performance after considering the dilution that would occur when
     securities or contracts to issue common stock are exercised or converted.

     Basic EPS calculations were computed using the weighted average number of
     common shares outstanding each year (4,012,087 in 1998 and 3,928,141 in
     1997). Diluted EPS calculations take into account the effect of dilutive
     potential common shares (53,739 in 1998 and 40,598 in 1997). Dilutive
     potential common shares consist of outstanding stock options. As of April
     30, 1998, outstanding options to purchase approximately 56,600 shares of
     common stock were not included in the computation of diluted EPS because
     the exercise prices of these options were greater than the average market
     price of the common shares. These options expire in 2005.

11.  GEOGRAPHIC SEGMENTS

     Information about the Company's operations in different geographic areas
     for the two years ended April 30, 1998 and 1997 is as follows:

<TABLE>
<CAPTION>

                                               United          Foreign
                                               States         Operations      Eliminations     Consolidated
       <S>                                  <C>              <C>             <C>               <C>      
       TOTAL REVENUE:
         1998                               $ 29,469,841     $ 7,733,645     $ (1,059,262)     $ 36,144,224
         1997                                 25,601,441       5,618,236         (393,220)       30,826,457
       
       INCOME (LOSS) FROM OPERATIONS:
         1998                                    629,823         (80,920)        (123,060)          425,843
         1997                                  1,209,581         146,003          (23,796)        1,331,788
       
       IDENTIFIABLE ASSETS:
         1998                                 16,262,308       2,156,836         (123,060)       18,296,084
         1997                                 14,016,285       2,502,037          (23,796)       16,494,526
</TABLE>

12.  BUSINESS CONCENTRATIONS

     A substantial portion of the Company's revenue is derived from the sale of
     published materials and instructor-led training relating to Microsoft and
     Novell technology. In fiscal year 1997 and 1998 approximately $1,462,000
     (6%) and $3,995,000 (11%) of revenues were from one customer.

13.  ACQUISITION

     On January 22, 1998, the Company purchased substantially all of the assets
     of QA Training, Inc. ("QA") through the issuance of 20,000 shares of common
     stock and cash payments for direct transaction cost of approximately
     $17,000. QA was a wholly owned U.S. subsidiary of QA Ltd. of the United
     Kingdom that provided information technology training in the United States.
     The acquisition of 

                                      F-16
<PAGE>
 
     QA has been accounted for as a purchase transaction in accordance with the
     Accounting Principles Board Opinion No. 16. The purchase price was
     allocated to tangible and intangible assets acquired based on estimated
     fair values at January 22, 1998. The allocation is summarized as follows:

        Property                                            $  55,788
        Goodwill                                               76,812
                                                            ---------
                                
                                                            $ 132,600
                                                            =========

     The portion allocated to goodwill will be amortized on a straight-line
     basis over four years.

                                   * * * * * *


                                     F-17