TOTAL CONTROL PRODUCTS INC, S-1/A, 1997-02-05

TOTAL CONTROL PRODUCTS INC
S-1/A, 1997-02-05
INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 5, 1997

REGISTRATION NO. 333-18539

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
--------------------------

AMENDMENT NO. 1
TO
REGISTRATION STATEMENT ON
FORM S-1
UNDER
THE SECURITIES ACT OF 1933

--------------------------

TOTAL CONTROL PRODUCTS, INC.
(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C> <C>
Illinois 3823 36-3209178
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code) Identification
organization) Number)
</TABLE>

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2001 North Janice Avenue
Melrose Park, Illinois 60160
(708) 345-5500
(Address, including zip code and telephone number, including area code,
of Registrant's principal executive offices)

Nicholas Gihl
President and Chief Executive Officer
Total Control Products, Inc.
2001 North Janice Avenue
Melrose Park, Illinois 60160
Tel: (708) 345-5500
Fax: (708) 345-5670
(Address, including zip code and telephone number, including area code, of agent
for service)
--------------------------

WITH COPIES TO

Michel J. Feldman, Esq. John A. Burgess, Esq.
Arthur Don, Esq. Brent B. Siler, Esq.
D'ANCONA & PFLAUM HALE AND DORR
30 North LaSalle Street 60 State Street
Suite 2900 Boston, Massachusetts 02109
Chicago, Illinois 60602 Tel: (617) 526-6000
Tel:(312) 580-2000 Fax: (617) 526-5000
Fax: (312) 580-0923

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Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / _______

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / _______

If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>

SUBJECT TO COMPLETION, DATED FEBRUARY 5, 1997

2,750,000 SHARES

[LOGO]

COMMON STOCK
------------

Of the 2,750,000 shares of Common Stock offered hereby, 1,650,000 shares are
being sold by the Company and 1,100,000 shares are being sold by the Selling
Shareholders. See "Principal and Selling Shareholders." The Company will not
receive any of the proceeds from the sale of shares by the Selling Shareholders.
Upon consummation of this offering, the directors, executive officers and
principal shareholders of the Company and their family members collectively will
beneficially own approximately 56.4% of the outstanding shares of Common Stock.

Prior to this offering, there has been no public market for the Common Stock
of the Company. It is currently estimated that the initial public offering price
will be between $8.00 and $10.00 per share. See "Underwriting" for a discussion
of the factors to be considered in determining the initial public offering
price. The Common Stock has been approved for quotation and trading on the
Nasdaq National Market under the symbol "TCPS."

SEE "RISK FACTORS" COMMENCING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.

-----------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
PRICE UNDERWRITING PROCEEDS PROCEEDS
TO DISCOUNTS AND TO TO SELLING
PUBLIC COMMISSIONS (1) COMPANY (2) SHAREHOLDERS
<S> <C> <C> <C> <C>
Per Share.............................. $ $ $ $
Total (3).............................. $ $ $ $

(1) The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities under the Securities Act of 1933,
as amended. See "Underwriting."

(2) Before deducting expenses payable by the Company estimated at $700,000.

(3) The Company has granted the Underwriters a 30-day option to purchase up to
412,500 additional shares of Common Stock solely to cover over-allotments,
if any. If such option is exercised in full, the total Price to Public,
Underwriting Discounts and Commissions and Proceeds to Company will be
$ , $ and $ , respectively. See "Underwriting."

------------------------

The shares of Common Stock are offered by the several Underwriters, subject
to receipt and acceptance by them and to their right to reject any order in
whole or in part. It is expected that delivery of the shares of Common Stock
will be made at the offices of Adams, Harkness & Hill, Inc., Boston,
Massachusetts, on or about , 1997.

Adams, Harkness & Hill, Inc. A.G. Edwards & Sons, Inc.

The date of this Prospectus is , 1997.
<PAGE>

[Graphic omitted: Company logo and series of depictions of the Company's
products, including software screen shots, packaging materials and pictures of
Company products in use on factory machinery, all under the caption
"Productivity Products and Tools for Manufacturing."]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

2
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PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO
APPEARING ELSEWHERE IN THIS PROSPECTUS. INVESTORS SHOULD CAREFULLY CONSIDER THE
RISK FACTORS RELATED TO THE PURCHASE OF COMMON STOCK OF THE COMPANY. SEE "RISK
FACTORS."

THE COMPANY

Total Control Products, Inc. ("Total Control" or the "Company") designs,
develops and markets products and technology for the control segment of the
industrial automation market. The Company's broad range of products are used to
define, monitor and maintain the operation, sequencing and safety of industrial
equipment and machinery on the factory floor. These products range from closed
architecture programmable logic controller ("PLC") operator interfaces to open
architecture control software and systems, and are sold primarily through an
international network of independent distributors with over 200 sales locations.
End-users of the Company's products include Abbott Laboratories, The Boeing
Company, The Coca-Cola Company, The Dow Chemical Company, Eastman Kodak Company,
Ford Motor Company, General Motors Corporation, Nabisco, Inc. and USX
Corporation.

The market for control segment products has been dominated by large
manufacturers selling proprietary products. These proprietary products have many
inherent limitations including fixed, vendor-defined functionality, closed
architectures and limited networking capabilities, all of which result in a high
cost of ownership. The Company believes that a migration is occurring gradually
in this marketplace towards open systems-based products. Open systems allow
manufacturers to benefit from standard networking protocols, intuitive graphical
user interfaces, enhanced application software functionality and the continued
cost reductions and performance increases associated with standards-based
products. Furthermore, the availability of a standardized, easy-to-support
operating system, such as Windows NT, allows industrial automation products to
be based upon an open architecture platform with widespread market acceptance.

To serve the diverse needs of this marketplace, the Company offers a broad
range of control segment products. The Company's principal product line,
QuickPanel and similar products, has gained a leadership position in the
operator interface market and accounted for over 62% of the Company's net sales
in the nine months ending December 31, 1996. The Company believes that this
product line delivers price/performance leadership and has allowed the Company
to gain greater visibility and an enhanced reputation both with its independent
distributors and with end-users. The Company is beginning to invest substantial
resources in developing future generations of the QuickPanel product line aimed
at giving it the functionality of an open standards, interoperable network
computer.

The Company believes that industrial automation products for the control
segment are best marketed and sold through independent distributors. The Company
seeks to establish and maintain relationships with the leading industrial
automation distributors in each of the geographic areas in which it competes.
The Company's strategy for growth includes expanding its network of distributors
as well as continuing to develop products that, from price, performance and
support perspectives, satisfy the selling requirements of its distributors.

The industrial automation marketplace continues to be highly competitive and
fragmented and the Company believes that opportunities exist to acquire
companies, assets and product lines which will allow it to expand its product
portfolio and to leverage its operating infrastructure and distributor network.
In September 1996, the Company acquired a controlling interest in Taylor
Industrial Software Inc. ("Taylor"), a developer of PC-control software,
client/server program management software, graphical operator interface software
and PLC configuration and support software (the "Taylor Transaction"). In
January 1996, the Company acquired Cincinnati Dynacomp, Inc. ("Cincinnati"), a
manufacturer of lower-end operator interface products (the "Cincinnati
Transaction").

The Company believes that its broad product line, its international network
of independent distributors and its substantial base of end-users position it to
become a leading worldwide provider of products in the control segment of the
industrial automation market.

3
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THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by:
The Company.................................................. 1,650,000 shares
The Selling Shareholders..................................... 1,100,000 shares
Common Stock to be outstanding after the offering.............. 7,653,576 shares(1)
Use of proceeds................................................ For repayment of certain indebtedness, including
indebtedness owed to certain officers,
directors and existing shareholders of the
Company, and for working capital and general
corporate purposes
Nasdaq National Market symbol.................................. TCPS
</TABLE>

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(1) Excludes 965,974 shares of Common Stock reserved for issuance under the
Company's stock option plans, of which 295,974 shares were subject to
outstanding options as of January 31, 1997 at a weighted average exercise
price of $2.85 per share and 300,000 shares will be subject to options to be
granted immediately after the effectiveness of this offering at an exercise
price equal to the initial public offering price per share in this offering,
and 250,000 shares of Common Stock reserved for issuance under the Company's
discount stock purchase plan. See "Management -- Stock Compensation Plans."

SUMMARY CONSOLIDATED FINANCIAL INFORMATION

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED MARCH 31, ENDED DECEMBER 31,
---------------------------------------------- -----------------------------------
PRO FORMA PRO FORMA
AS ADJUSTED AS ADJUSTED
1994 1995 1996 1996(1) 1995 1996 1996(1)
--------- --------- --------- ------------- --------- --------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................. $ 11,723 $ 17,063 $ 25,743 $ 39,553 $ 17,645 $ 28,814 $ 31,851
Cost of goods sold........................ 6,304 9,689 15,370 21,718 10,588 15,199 15,510
--------- --------- --------- ------------- --------- --------- -------------
Gross profit.............................. 5,419 7,374 10,373 17,835 7,057 13,615 16,341
Operating expenses:
Sales and marketing..................... 2,904 3,486 4,989 8,093 3,398 6,184 7,416
Research and development................ 1,188 1,517 1,952 4,245 1,367 2,591 3,275
General and administrative.............. 1,167 1,238 1,601 4,440 997 2,912 4,303
Change in estimated useful life of
software development costs............ 466 -- -- -- -- -- --
Charge for purchased research and
development........................... -- -- -- -- -- 4,893 --
--------- --------- --------- ------------- --------- --------- -------------
Income (loss) from operations............. (306) 1,133 1,831 1,057 1,295 (2,965) 1,347
Interest (expense) and other income,
net..................................... (96) (164) (169) (72) (59) (387) 48
--------- --------- --------- ------------- --------- --------- -------------
Income (loss) before income taxes and
minority interest....................... (402) 969 1,662 985 1,236 (3,352) 1,395
Provision for (benefit from) income
taxes................................... (155) 247 665 548 494 599 696
--------- --------- --------- ------------- --------- --------- -------------
Income (loss) before minority interest.... (247) 722 997 437 742 (3,951) 699
Minority interest in loss of subsidiary... -- -- -- 245 -- 1,852 190
--------- --------- --------- ------------- --------- --------- -------------
Net income (loss)......................... (247) 722 997 682 742 (2,099) 889
Accretion to redemption value of common
stock................................... (76) (208) (1,606) -- (1,446) (9,061) --
--------- --------- --------- ------------- --------- --------- -------------
Net income (loss) available to common
shareholders............................ $ (323) $ 514 $ (609) $ 682 $ (704) $ (11,160) $ 889
--------- --------- --------- ------------- --------- --------- -------------
--------- --------- --------- ------------- --------- --------- -------------
Net income (loss) per share available to
shareholders(2)......................... $ (0.07) $ 0.09 $ (0.11) $ (0.12) $ (1.97)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Weighted average number of common and
common equivalent shares
outstanding(2).......................... 4,343 5,972 5,633 5,633 5,679
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Pro forma net income (loss)(3)............ $ 1,006 $ (2,093)
--------- ---------
--------- ---------
Pro forma net income (loss) per
share(4)................................ $ 0.16 $ (0.35)
--------- ---------
--------- ---------
Pro forma weighted average number of
common and common equivalent shares
outstanding(4).......................... 6,107 6,041
--------- ---------
--------- ---------
Pro forma as adjusted net income per
share(5)................................ $ 0.09 $ 0.11
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Pro forma as adjusted weighted average
number of common and common equivalent
shares outstanding(5)................... 7,819 7,797
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</TABLE>

4
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<TABLE>
<CAPTION>
DECEMBER 31, 1996
-------------------------------------------------
PRO FORMA AS
ACTUAL PRO FORMA(6) ADJUSTED(6)(7)
--------------- --------------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents...................................... $ 703 $ 703 $ 703
Working capital................................................ 5,870 4,260 10,249
Total assets................................................... 31,480 31,480 31,215
Long-term debt, net of current maturities...................... 9,414 7,414 292
Redeemable common stock........................................ 17,272 -- --
Shareholders' equity (deficit)................................. (9,249) 8,413 21,524
</TABLE>

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(1) Gives effect to the following transactions as if they had occurred at the
beginning of fiscal 1996, as further described in the introduction and Notes
to the Unaudited Pro Forma As Adjusted Condensed Consolidated Financial
Statements included elsewhere in this Prospectus: (i) the Cincinnati
Transaction and Taylor Transaction and the related purchase accounting
effects; and (ii) the sale by the Company of 1,650,000 shares of Common
Stock offered by it hereby, and the application of the estimated net
proceeds thereof to repay certain indebtedness as described under "Use of
Proceeds," and the elimination of the accretion to redemption value of
common stock resulting from the Put Elimination. See "Pro Forma Combined"
data in the Unaudited Pro Forma As Adjusted Condensed Consolidated Financial
Statements for pro forma information giving effect solely to the Cincinnati
Transaction and Taylor Transaction and the related purchase accounting
effects.

(2) Computed on the basis described in Note 1 of Notes to Consolidated Financial
Statements.

(3) Gives effect to the elimination of the accretion to redemption value of
common stock resulting from the Put Elimination and the elimination of
interest expense related to the Debenture Conversion.

(4) Computed based upon (i) the pro forma net income (loss) described in Note 3
above and (ii) the pro forma weighted average number of common and common
equivalent shares outstanding computed on the basis described in Note 1 of
Notes to Consolidated Financial Statements.

(5) Pro forma as adjusted net income (loss) per share is computed based upon (i)
the pro forma as adjusted net income (loss) available to common shareholders
calculated as described in Note 1 above and (ii) the weighted average number
of common and common equivalent shares outstanding, as further adjusted to
reflect the following transactions as if they had occurred at the beginning
of fiscal 1996: (a) the sale by the Company of 1,650,000 shares of Common
Stock offered by it hereby and the application of the net proceeds therefrom
to repay certain indebtedness as described under "Use of Proceeds" and (b)
the issuance of Common Stock upon the Debenture Conversion.

(6) Gives effect to the Put Elimination, the Debenture Conversion, the PIK
Issuance and the reclassification from long-term to short-term of a $2.0
million note payable, which becomes due 10 days after the closing of the
offering.

(7) Adjusted to give effect to the sale by the Company of the 1,650,000 shares
of Common Stock offered by it hereby and the application of the estimated
net proceeds therefrom to repay certain indebtedness as described under "Use
of Proceeds."
------------------------------

The Company was incorporated in Illinois in 1983. Since its incorporation,
the Company has focused on designing, developing and marketing products for the
control segment of the industrial automation industry, and has not been engaged
in any other material lines of business. Unless the context otherwise requires,
references in this Prospectus to "Total Control" and the "Company" refer to
Total Control Products, Inc. and its subsidiaries. Unless the context otherwise
indicates, references to the Company also include Taylor, a company of which
61.0% of the voting shares are owned by the Company. The Company's executive
offices are located at 2001 North Janice Avenue, Melrose Park, Illinois, 60160,
and its telephone number is 708-345-5500.

------------------------

EXCEPT AS OTHERWISE NOTED, ALL INFORMATION IN THIS PROSPECTUS (I) ASSUMES NO
EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION; (II) GIVES EFFECT TO A
THREE-FOR-ONE STOCK SPLIT OF THE COMMON STOCK AND THE CLASS C EXCHANGEABLE
SHARES OF TAYLOR (THE "TAYLOR EXCHANGEABLE SHARES") EFFECTED IN DECEMBER 1996;
(III) ASSUMES THE CONVERSION OF THE TAYLOR EXCHANGEABLE SHARES INTO AN AGGREGATE
OF 767,112 SHARES OF THE COMMON STOCK OF THE COMPANY (THE "TAYLOR CONVERSION");
(IV) GIVES EFFECT TO THE ISSUANCE OF 27,999 SHARES OF COMMON STOCK REQUIRED TO
BE ISSUED UPON REPAYMENT OF A $2.0 MILLION PROMISSORY NOTE THAT WILL BE PAID
UPON THE CLOSING OF THIS OFFERING (THE "PIK ISSUANCE"); AND (V) GIVES EFFECT TO
THE ISSUANCE OF 339,366 SHARES OF COMMON STOCK UPON CONVERSION OF A CONVERTIBLE
DEBENTURE OF THE COMPANY THAT WILL OCCUR UPON THE CLOSING OF THIS OFFERING (THE
"DEBENTURE CONVERSION"). CERTAIN PORTIONS OF THIS PROSPECTUS ALSO GIVE EFFECT TO
THE AUTOMATIC TERMINATION UPON THE CLOSING OF THIS OFFERING OF THE RIGHTS OF
CERTAIN SHAREHOLDERS TO REQUIRE THE COMPANY TO REPURCHASE THEIR SHARES OF COMMON
STOCK OR TAYLOR EXCHANGEABLE SHARES (THE "PUT ELIMINATION"). SEE "USE OF
PROCEEDS," "DESCRIPTION OF CAPITAL STOCK -- TAYLOR EXCHANGEABLE SHARES," AND "--
CONVERTIBLE SUBORDINATED DEBENTURE" AND NOTE 7 OF NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS.

5
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RISK FACTORS

THE FOLLOWING RISK FACTORS SHOULD BE CONSIDERED CAREFULLY IN ADDITION TO THE
OTHER INFORMATION IN THIS PROSPECTUS BEFORE PURCHASING THE COMMON STOCK OFFERED
BY THIS PROSPECTUS.

QUARTERLY VARIATIONS IN OPERATING RESULTS. Results of the Company's
operations have fluctuated from quarter to quarter in the past, and may
fluctuate significantly in the future. Such fluctuations may result from a
variety of factors, including the timing of new product introductions by the
Company, its competitors or third parties, the loss of any of its significant
distributors, currency fluctuations, disruption in the supply of components for
the Company's products, changes in product mix or capacity utilization, the
timing of orders from major customers, personnel changes, production delays or
inefficiencies, seasonality and other factors affecting sales and results of
operations. Such quarterly fluctuations in results of operations may adversely
affect the market price of the Common Stock. A substantial portion of the
Company's sales for each quarter results from orders received in that quarter.
Consequently, the Company is dependent upon obtaining orders for shipment in a
particular quarter to achieve its sales objectives for that quarter.
Furthermore, the Company has often recognized a substantial portion of its sales
in the last month of a quarter, with sales frequently concentrated in the last
weeks or days of a quarter. A substantial portion of the Company's operating
expenses are primarily related to personnel, development of new products,
marketing programs and facilities. The level of spending for such expenses
cannot be adjusted quickly, and is based, in significant part, on the Company's
expectations of future revenue. If actual revenue levels are below management's
expectations, the Company's business, financial condition and results of
operations may be materially adversely affected. The Company believes that
period-to-period comparisons of its results of operations are not necessarily
meaningful and should not be relied upon as indicators of future performance.

DEPENDENCE UPON DIGITAL ELECTRONICS CORPORATION. The Company is
substantially dependent upon its relationship with Digital Electronics
Corporation, a corporation located in Osaka, Japan ("Digital Electronics"),
which is the Company's sole supplier of the flat panel displays that are the
principal hardware component incorporated in the graphics-based operator
interface products that represent the Company's best selling product line. For
fiscal 1994, 1995 and 1996 and for the nine months ended December 31, 1996,
sales from this product line accounted for 45.9%, 61.9%, 70.7% and 62.1%,
respectively, of the Company's net sales. The Company has no contractual
arrangement obligating Digital Electronics to continue to supply these
components to the Company or setting prices for the purchase of these
components. The inability of the Company to obtain this hardware platform from
Digital Electronics, significant delays or shortages in production or
significant price increases by Digital Electronics would have a material adverse
effect on the Company. The Company currently has no identified alternative
supplier for the products supplied by Digital Electronics. Although the Company
has the exclusive right in North and South America to market and distribute all
hardware products manufactured by Digital Electronics pursuant to the terms of a
distribution agreement, which expires in April 2005, there can be no assurance
that Digital Electronics will continue to manufacture such products. At any
time, Digital Electronics could become a direct competitor of the Company
outside of North and South America and, upon expiration of the distribution
agreement in April 2005, Digital Electronics could become a direct competitor of
the Company in North America and South America. The Company is also dependent on
the ability of Digital Electronics to continue to develop its hardware
technology to meet rapidly changing customer requirements and competing
technologies. The Company is currently engaged in certain product development
efforts with Digital Electronics which are important to the Company's future
strategic position. The historic business relationship between the Company and
Digital Electronics has been based to a significant extent on personal
relationships between members of the management of the two companies and the
previous dealings of the entities. If those relationships were to change, or if
the management of the Company or Digital Electronics were to change, this could
result in a material adverse effect on the relationship between the Company and
Digital Electronics and, in turn, on the business, financial condition and
results of operations of the Company. The Company believes that the relationship

6
<PAGE>

between Digital Electronics and the Company has been and remains good. However,
there can be no assurance that the relationship will continue on a satisfactory
basis. Digital Electronics is not affiliated with Digital Equipment Corporation.
Digital Electronics is also a shareholder of the Company and Taylor, and has
certain other relationships with the Company. See "Recent Acquisitions -- Taylor
Transaction" and "Certain Transactions."

DEPENDENCE ON DISTRIBUTORS. The Company derives substantially all of its
revenue from sales of its products through its network of distributors. The
Company expects that sales through its distributors will continue to account for
a substantial portion of its revenue for the foreseeable future. In particular,
sales to one distributor, McNaughton-McKay Electric Company, accounted for
13.9%, 9.5% and 8.7% of the Company's net sales in fiscal 1995 and 1996 and the
nine months ended December 31, 1996, respectively. None of the Company's
distributors are under the control of the Company or sell the Company's products
on an exclusive basis, and there can be no assurance that future sales by
distributors will continue at present levels or increase. Each of the Company's
distributors may cease marketing the Company's products with limited notice and
with little or no penalty. There can be no assurance that the Company's
independent distributors will continue to offer the Company's products, or that
the Company will be able to recruit additional or replacement distributors. The
loss of one or more of the Company's major distributors could have a material
adverse effect on the Company's business, financial condition and results of
operations. Many of the Company's distributors offer industrial automation
products that compete with products offered by the Company. For example, the
Company believes that approximately 25% of the Company's net sales for fiscal
1996 resulted from sales by distributors that also offer products manufactured
by Allen-Bradley Co. ("Allen-Bradley"), a direct competitor of the Company.
There can be no assurance that the Company's distributors will give priority to
the marketing of the Company's products as compared to competitors' products.
Any reduction or delay in sales of the Company's products by its distributors
would have a material adverse effect on the business, financial condition and
results of operations of the Company.

PRODUCT CONCENTRATION. Sales from the Company's QuickPanel product and
similar products represented 70.7% and 62.1% of the Company's net sales in
fiscal 1996 and for the nine months ended December 31, 1996, respectively. The
Company expects that sales of these products will continue to account for a
substantial portion of the Company's net sales. Declines in demand for these
products, whether as a result of competition, technological change or otherwise,
would have a material adverse effect on the Company's business, financial
condition and results of operations. See "Business -- Products."

CURRENCY EXCHANGE RATE FLUCTUATIONS. The Company experiences foreign
currency exchange gains and losses in the ordinary course of its business due to
exchange rate fluctuations among a variety of currencies. Purchases of flat
panel screens from Digital Electronics, which constituted 61.1% and 47.4% of the
Company's cost of goods sold for fiscal 1996 and for the nine months ended
December 31, 1996, respectively, are transacted in Japanese Yen. As a result,
fluctuations in the exchange rate between the U.S. Dollar and the Yen may have a
material impact on the ability of the Company to maintain its gross margins. In
addition, Taylor is located in Edmonton, Alberta and, although most of its sales
are denominated in U.S. Dollars, most of its expenses are incurred in Canadian
Dollars. The Company currently attempts to hedge a portion of its potential risk
with respect to fluctuations in the Yen, and is investigating hedging Canadian
Dollars. While such foreign currency hedging transactions may moderate the
overall effect of currency fluctuations, the Company expects that such
fluctuations will continue, and there can be no assurance that the Company will
be successful in its hedging activities or that exchange rate fluctuations will
not otherwise have a material adverse effect on the Company's financial
condition or results of operations, or cause significant fluctuations in
quarterly results of operations.

EFFECT OF RECENT ACQUISITIONS; RISKS ASSOCIATED WITH FUTURE
ACQUISITIONS. In 1996, the Company acquired Cincinnati and a controlling
interest in Taylor (collectively, the "Acquired Businesses"). The

7
<PAGE>
Company has no significant history of operations on a combined basis with either
of the Acquired Businesses. There can be no assurance that the Company will be
successful in integrating the operations and personnel of the Acquired
Businesses into its business, incorporating acquired technologies into its
product lines, establishing and maintaining uniform standards, controls,
procedures and policies, avoiding the impairment of relationships with employees
and customers as a result of changes in management or overcoming other problems
that may be encountered in connection with the integration of the Acquired
Businesses. Accordingly, the historical financial statements and pro forma
financial information presented in the Prospectus may not be indicative of the
results that would have been obtained had the acquisitions occurred on the date
assumed therein. In connection with the acquisition of the Acquired Businesses,
the Company recorded goodwill, which will be amortized over future periods, and
recognized certain one-time acquisition-related charges.

A part of the Company's business strategy is to continue its growth through
strategic acquisitions. Identifying and pursuing future acquisition
opportunities and integrating acquired products and businesses will require a
significant amount of management time and skill. There can be no assurance that
the Company will be able to identify suitable acquisition candidates, consummate
any acquisition on acceptable terms or successfully integrate any acquired
business into the Company's operations. If the Company were to proceed with one
or more significant future acquisitions in which the consideration consists of
cash, a substantial portion of the Company's available cash (possibly including
a portion of the proceeds of this offering) could be used to consummate the
acquisitions. If the Company were to consummate one or more significant
acquisitions in which the consideration consists of stock, shareholders of the
Company could suffer a significant dilution of their interests in the Company.
Many business acquisitions must be accounted for as a purchase. Most of the
businesses that might become attractive acquisition candidates for the Company
are likely to have significant goodwill and intangible assets, and acquisition
of these businesses, if accounted for as a purchase, would typically result in
substantial goodwill amortization charges to the Company. In addition, such
acquisitions could involve acquisition-related charges. See "Selected
Consolidated Financial Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Recent Acquisitions" and Unaudited Pro
Forma As Adjusted Condensed Consolidated Statements and the Notes thereto.

EFFECT OF OBLIGATION TO MAKE CONTINGENT PAYMENTS. Beginning in fiscal 1998,
the Company may become obligated under the terms of the Taylor Transaction and
the Cincinnati Transaction to make payments of contingent consideration which
could be substantial in amount. The Taylor Transaction requires contingent
payments based on Taylor's revenue for the twelve month periods ending September
30, 1997 and 1998, of up to $4.0 million for each of these twelve month periods.
The Cincinnati Transaction requires contingent payments based on calendar year
1997 revenues of Cincinnati-related product sales in excess of historic sales
volumes equal to 10.0% for the first $1.0 million of such excess and 4.0% of any
further excess. Additionally, the Cincinnati Transaction requires a contingent
payment equal to 1.25% of the Company's net sales in excess of $32.0 million for
each of the calendar years 1998, 1999 and 2000. Of such contingent payments with
respect to the Cincinnati Transaction, approximately half are payable in shares
of the Company's Common Stock valued at its fair market value at such time, with
the remainder payable in cash. The Company has a buy-out right with respect to
the contingent payments for the Cincinnati Transaction for the years 1998, 1999
and 2000, ranging from $1.0 million to $2.0 million depending on the timing of
the exercise of such right. These contingent payments may require the Company to
borrow against its existing credit facility or to seek additional equity or debt
financing, which could materially adversely affect the Company's business and
financial position. There can be no assurance that such capital will be
available to the Company on favorable terms, if at all. See "Recent
Acquisitions."

RISKS OF SERVING CYCLICAL INDUSTRIES. The end-users of the Company's
products include manufacturers in a number of industries which are cyclical in
nature, including the automotive and packaging industries. Such industries have
historically experienced periodic downturns as well as short-term

8
<PAGE>
fluctuations which often have had an adverse effect on the demand for industrial
machinery and equipment in those industries and on the related demand for
products like those of the Company that are used to control such machinery and
equipment. Downturns in these industries could have a material adverse effect on
the Company's business, financial condition and results of operations.

EFFECT OF RAPID GROWTH ON EXISTING RESOURCES. The Company has grown rapidly
in recent years. A continuing period of rapid growth could place a significant
strain on the Company's management, operations and other resources. The
Company's ability to manage its growth will require it to continue to invest in
its operational, financial and management information systems, and to attract,
retain, motivate and effectively manage its employees. The inability of the
Company's management to attract such new employees and manage its growth
effectively could have a material adverse effect on the business, financial
condition and results of operations of the Company.

TECHNOLOGICAL CHANGE; DIFFICULTIES AND RISKS ASSOCIATED WITH NEW PRODUCT
DEVELOPMENT AND INTRODUCTION. The market for the Company's products is
characterized by rapidly changing technology, evolving industry standards and
frequent new product introductions. The Company's near-term success and future
growth are substantially dependent upon continuing market acceptance of its
existing products, and on the Company's ability to develop new products to meet
changing customer requirements and emerging industry standards. In addition, the
Company's growth is in part dependent on the ability of Digital Electronics to
maintain its development and supply of advanced hardware platforms for the
Company's graphics-based operator interface products. There can be no assurance
that products or technologies of the Company's competitors will not render the
Company's products or technologies noncompetitive or obsolete. The Company's
future success is dependent to a significant degree on its ability to develop
products in a timely manner that operate in an open architecture environment.
There can be no assurance that the Company will be successful in developing new
products or product extensions, that unanticipated problems or delays in future
development and production will not be encountered, or that, once developed, the
Company's products will meet the requirements of its customers or gain market
acceptance. See "Business -- Strategy," "-- Products," and "-- Product
Development."

SIGNIFICANCE OF DEVELOPING MARKET. The market for standards-based,
interoperable software tools and products in the industrial automation industry
is new and rapidly evolving. The Company's future success is dependent to a
significant degree upon broad market acceptance of the type of open architecture
products on which the Company is focusing its development efforts. There can be
no assurance that the market for such products will continue to develop or grow,
that the Company's product offerings will gain market acceptance, that the
Company will be able to offer in a timely manner, if at all, further product
developments utilizing open architecture technology or that the Company's
end-users will choose the Company's products for use. The failure of any of
these events to occur would have a material adverse effect on the business,
financial condition and results of operations of the Company. See "Business --
Strategy," "-- Products" and "-- Product Development."

PARTIALLY OWNED SUBSIDIARY. The Company owns 61.0% of the Class A Shares of
Taylor (the "Taylor Class A Shares"), and Digital Electronics owns the remaining
39.0% of such shares. Digital Electronics, as the minority shareholder of
Taylor, will be entitled to a portion of the economic benefits of the business
operated by Taylor and will have influence over the business and operations of
Taylor, including certain fundamental corporate transactions requiring
supermajority shareholder approval. Both the Company and Digital Electronics pay
a royalty to Taylor based on their sales of Taylor software products. Although
the Company owns a majority interest of the outstanding Taylor Class A Shares,
and although Taylor's financial results are consolidated with those of the
Company, the Company will not receive the full economic benefit from Taylor's
sales and operations. Moreover, the Company may not be able to unilaterally
control decisions regarding the conduct of Taylor's business and affairs.

9
<PAGE>
DEPENDENCE ON OUTSIDE SUPPLIERS. The Company is dependent on outside
vendors to manufacture many of the components and subassemblies used in the
Company's products. Although substantially all of the components used in the
Company's products are available from multiple sources (other than the flat
panel screens supplied by Digital Electronics), the Company may experience
shortages in supply from its suppliers due to various factors, including
increases in market demand for certain components which occur from time to time
and the limited capacity of certain suppliers. The Company believes that the
partial or complete loss of one or more of its suppliers is not likely to have a
material long-term impact on its operations. Such a loss, however, could in the
short term result in significant production delays, require the Company to seek
alternative sources of supply and increase its cost of goods sold and,
therefore, could have a material adverse effect on the Company's business,
financial condition and results of operations.

COMPETITION. Competition in the industrial automation industry is intense
and characterized by rapidly advancing technologies. The Company faces
substantial competition in all of its product lines and competition may increase
if new competitors enter the market or if existing competitors expand their
product offerings. The Company believes that over time this competition may have
the effect of reducing average selling prices of comparable products offered by
competitors, and thus, in order to maintain sales, the Company may be forced to
increase unit volumes or increase the performance of its products in order to
offset or reduce any decreases in selling prices. In the event such price
reductions become necessary, the Company's ability to maintain gross margins
will depend on its ability to reduce its cost of goods sold in an amount
sufficient to compensate for any decreases in selling prices. Certain of the
Company's competitors and potential competitors have substantially greater name
recognition and financial, technical, marketing and other resources than the
Company. Such competitors or potential competitors may be able to exert leverage
or other competitive pressures on distributors to give priority to their own
products at the expense of the Company's products. To the extent the Company is
unable to compete effectively against its competitors, its business, financial
condition and results of operations could be materially adversely affected. The
Company believes its ability to effectively compete in the industrial automation
market depends on factors both within and outside its control, including the
ability of the Company to meet evolving market requirements, the timing and
success of new products developed by the Company and its competitors, product
performance and price, distribution and customer support, product reputation,
customers' assessment of the Company's financial resources and its technical and
service expertise. There can be no assurance that the Company will be able to
compete successfully with respect to these and other factors, and such
competitive pressures could adversely affect the Company's business, financial
condition and results of operations.

PRODUCT LIABILITY EXPOSURE. The use of the Company's products in systems
that interact directly on the factory floor, where the failure of the system
could cause substantial property damage or personal injury, could expose the
Company to significant product liability claims. Although the Company has not
experienced product liability claims to date, the sale and support of its
products may entail the risk of such claims. A successful product liability
claim brought against the Company, or product recall involving the Company's
products, could have a material adverse effect upon the Company's business,
financial condition and results of operations. The Company maintains product
liability insurance, but there can be no assurance that such insurance will be
sufficient to cover any claims or that it will continue to be available on
reasonable terms, if at all. The Company's contracts typically contain
limitations of liability, disclaimers of warranties, damage limitations, and
indemnifications against third party claims, which provisions may not be
effective in all circumstances and jurisdictions. Taylor's software license
agreements with its customers typically contain similar limitations and
provisions but consist of "shrink wrap" licenses that are not signed by
licensees and, therefore, it is possible that such licenses may be unenforceable
under the laws of certain jurisdictions.

DEPENDENCE ON CHIEF EXECUTIVE OFFICER AND OTHER EXECUTIVE OFFICERS. The
Company depends to a significant degree on its senior management and other
officers and key employees, especially its Chief

10
<PAGE>
Executive Officer, Nicholas Gihl. The loss of Mr. Gihl's services, the loss of
service of one or more of the Company's other executive officers or the
inability to hire or retain qualified personnel could adversely affect the
Company's business, financial condition and results of operations. See
"Management."

PROPRIETARY TECHNOLOGY AND PRODUCT PROTECTION; POTENTIAL INFRINGEMENT. The
Company's success depends in part on its ability to maintain the proprietary and
confidential aspects of its products. The Company does not own any significant
patents, and relies on a combination of copyrights, non-disclosure agreements
with certain employees and other means to establish and protect its proprietary
rights. There can, however, be no assurance that the precautions taken by the
Company adequately protect the Company's technology. In addition, many of the
Company's competitors have obtained or developed, and may be expected to obtain
or develop in the future, patents, copyrights or other proprietary rights that
cover or affect products that perform functions similar to those performed by
products offered by the Company. The inability of the Company for any reason to
protect existing technology or otherwise acquire necessary technology could
prevent distribution or licensing of the Company's products, which would have a
material adverse effect on the business, financial condition and results of
operations of the Company. In addition, although the Company believes that its
products do not infringe patents, copyrights, or other proprietary rights of
third parties, there can be no assurance that the Company is aware of all
patents, copyrights or other proprietary rights that may be infringed by the
Company's products, that infringement does not exist or that infringement may
not be alleged by third parties in the future. If infringement is alleged, there
can be no assurance that the necessary licenses would be available on acceptable
terms, if at all, or that the Company would prevail in any related litigation.
Intellectual property litigation can be extremely protracted and expensive even
if the Company ultimately prevails, and involvement in such litigation could
have a material adverse effect on the business, financial condition and results
of operations of the Company. See "Business -- Intellectual Property."

NO PRIOR PUBLIC MARKET FOR COMMON STOCK; POSSIBLE VOLATILITY OF STOCK
PRICE. Prior to the offering contemplated hereby, there has been no public
market for the Common Stock, and there can be no assurance that an active public
market for the Common Stock will develop or be maintained after this offering.
The initial public offering price will be determined solely by negotiations
between the Company and the Underwriters, and may not bear any relationship to
the market price of the Common Stock after this offering. The stock market has
from time to time experienced extreme price and volume fluctuations, which often
have been unrelated to the operating performance of particular companies. Any
announcement with respect to any variance in net sales or earnings from levels
generally expected by securities analysts for a given period could have an
immediate and significant effect on the trading price of the Common Stock. In
addition, factors such as announcements of technological innovations or new
products by the Company, its competitors or other third parties, as well as
changing market conditions in the industrial automation industry, may have a
significant impact on the market price of the Common Stock. See "Underwriting."

PREFERRED STOCK; STAGGERED BOARD AND ANTI-TAKEOVER EFFECTS OF CORPORATE
PROVISIONS. The Board of Directors of the Company (the "Board of Directors")
has the authority to issue, without vote or action of the shareholders,
1,000,000 shares of Preferred Stock, no par value ("Preferred Stock"), in one or
more series; to fix the rights, preferences, privileges and restrictions
thereof, including dividend rights, conversion rights, voting rights, terms of
redemption, redemption prices and liquidation preferences; and to determine the
designation and the number of shares constituting any series. The issuance of
any Preferred Stock may have the effect of delaying, deferring or preventing a
change in control of the Company and may adversely affect the voting and other
rights of the holders of Common Stock. At present, the Company has no plans to
issue any Preferred Stock. The Company has also implemented a staggered Board of
Directors consisting of three three-year classes. These and other provisions in
the Company's Articles of Incorporation and By-laws and of Illinois law could
delay or make more difficult a merger, tender offer or proxy contest involving
the Company. See "Description of Capital Stock -- Certain Statutory Provisions"
and "-- Certain Charter and By-law Provisions."

11
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE. Future sales of shares of Common Stock in
the public market after this offering could have a negative impact on the market
price of the Common Stock, and could adversely affect the Company's ability to
raise additional capital in the future. See "Shares Eligible for Future Sale."

CONTROL BY EXISTING SHAREHOLDERS. Upon the completion of this offering, the
current executive officers, directors and principal shareholders of the Company
will beneficially own approximately 52.7% of the outstanding shares of the
Common Stock of the Company. In addition, members of the Sparacino family,
including Julius J. Sparacino, the co-founder of the Company and the Chairman
Emeritus of the Board of Directors, his children and their spouses, including
Nicholas Gihl, the Chairman, President and Chief Executive Officer of the
Company, will own approximately 29.4% of the outstanding shares of the Common
Stock of the Company. Accordingly, such persons, if they act together, will have
effective control over the Company through their ability to control the election
of directors and all other matters that require action by the Company's
shareholders, irrespective of how other shareholders may vote. Among other
things, such persons could prevent or delay a change in control of the Company
which may be favored by a majority of the remaining shareholders. Such ability
to prevent or delay such a change in control of the Company also may have an
adverse effect on the market price of Common Stock. See "Management -- Executive
Officers and Directors" and "Principal and Selling Shareholders."

DILUTION. Investors who purchase shares of Common Stock in this offering,
at an assumed initial public offering price of $9.00 per share, will incur
immediate dilution in pro forma net tangible book value of $7.60 per share. See
"Dilution."

12
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the 1,650,000 shares of
Common Stock offered by it hereby at an assumed initial public offering price of
$9.00 per share, after deducting the estimated underwriting discount and
estimated offering expenses payable by the Company, are estimated to be
approximately $13.1 million. The Company will not receive any proceeds from the
sale of shares by the Selling Shareholders in this offering.

The Company intends to use the net proceeds of the offering to repay
approximately $13.1 million of indebtedness, consisting of (a) indebtedness of
approximately $5.6 million owed to certain shareholders of the Company, (b)
approximately $7.1 million of the outstanding balance of the Company's revolving
line of credit facility (which had a total outstanding balance of $7.4 million
as of December 31, 1996) and (c) other indebtedness of approximately $400,000.
The indebtedness to shareholders to be repaid includes the following
indebtedness incurred by the Company and Taylor in order to finance a portion of
the Taylor Transaction in September 1996, all of which will become due and
payable upon the closing of this offering: (i) a $2.2 million promissory note
payable by Taylor to Neil R. Taylor which bears interest at a rate of 12.5% per
annum until March 19, 1997, and 15.0% per annum thereafter, payable monthly,
(ii) a $2.0 million promissory note payable by the Company to A.B. Siemer which
bears interest at a rate of 20.0% per annum (13.0% of which is payable in cash
and 7.0% of which is payable in shares of Common Stock of the Company), payable
monthly after December 1996 and (iii) a $1.0 million promissory note payable by
the Company to Digital Electronics which bears interest at a rate of 5.0% per
annum, payable quarterly. Additionally, the shareholder indebtedness to be
repaid includes a $200,000 promissory note payable to Julius Sparacino, due
December 1997, bearing interest at 10.0%, and indebtedness of Taylor owed to Mr.
Taylor and his spouse of approximately $230,000, bearing interest at the
Canadian prime rate. See "Recent Acquisitions -- Taylor Transaction" and
"Certain Transactions."

Any remaining net proceeds of the offering would be used by the Company for
working capital and other general corporate purposes, including potential future
acquisitions of products or businesses that expand, complement or otherwise
relate to the Company's current business and products. The Company does not
presently have any agreements or commitments with respect to any potential
acquisitions or investments, nor are any negotiations regarding any such
transactions ongoing. Pending any such uses, the Company will invest the net
proceeds in short-term, investment grade, interest-bearing securities.

DIVIDEND POLICY

The Company has never declared or paid any cash dividends on its Common
Stock. The Company currently intends to retain future earnings, if any, to fund
the development and growth of its business and does not anticipate paying any
cash dividends in the foreseeable future. In addition, the Company's line of
credit facility includes covenants regarding maintenance of net worth, a net
worth to debt ratio and a cash flow ratio, which could be breached if a dividend
was declared, and therefore could have the effect of limiting the Company's
ability to pay cash dividends on its Common Stock.

13
<PAGE>
CAPITALIZATION

The following table sets forth the short-term debt and capitalization of the
Company as of December 31, 1996 on an actual, pro forma and pro forma as
adjusted basis. The information set forth in the table below is qualified by the
Consolidated Financial Statements and Notes thereto included elsewhere in this
Prospectus, and should be read in conjunction with such Consolidated Financial
Statements and Notes thereto.

<TABLE>
<CAPTION>
DECEMBER 31, 1996
------------------------------------------
PRO FORMA AS
ACTUAL PRO FORMA(1) ADJUSTED(1)(2)
----------- ------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
Short-term debt and current portion of long-term debt................... $ 4,239 $ 5,989 $ --
----------- ------------- --------------
----------- ------------- --------------
Long-term debt, net of current portion:
Revolving notes payable to bank....................................... $ 7,353 $ 7,353 $ 292
Subordinated notes payable to shareholders............................ 2,000 -- --
Other................................................................. 61 61 --
----------- ------------- --------------
Total long-term debt, net......................................... 9,414 7,414 292
----------- ------------- --------------
Minority interest in subsidiary......................................... 1,522 1,522 1,522
Redeemable common stock:
Common Stock, no par value, 22,500,000 shares authorized, 1,604,658
shares outstanding(3)............................................... 12,442 -- --
Class C Exchangeable common stock of subsidiary, no par value,
convertible into Common Stock of the Company, 767,112 shares issued
and outstanding(4).................................................. 4,830 -- --
Shareholders' equity (deficit):
Common Stock, no par value, 22,500,000 shares authorized, 3,264,441,
5,236,464 and 6,886,464 shares issued and outstanding, actual, pro
forma and pro forma as adjusted, respectively(3).................... 594 13,426 26,537
Class C Exchangeable common stock of subsidiary, no par value,
convertible into Common Stock of the Company, 767,112 shares issued
and outstanding, pro forma and pro forma as adjusted(4)............. -- 4,830 4,830
Retained deficit........................................................ (9,830) (9,830) (9,830)
Foreign currency translation adjustment................................. (13) (13) (13)
----------- ------------- --------------
Total shareholders' equity (deficit).............................. (9,249) 8,413 21,524
----------- ------------- --------------
Total capitalization............................................ $ 18,960 $ 17,350 $ 23,339
----------- ------------- --------------
----------- ------------- --------------
</TABLE>

- ----------------

(1) Gives effect to the Put Elimination, the Debenture Conversion, the PIK
Issuance and the reclassification from long-term to short-term of a $2.0
million note payable, which becomes due 10 days after the closing of the
offering.

(2) As adjusted to reflect the sale of 1,650,000 shares of Common Stock offered
by the Company hereby at an assumed initial public offering price of $9.00
per share and the application of the estimated net proceeds therefrom to
repay certain indebtedness as described under "Use of Proceeds."

(3) Excludes 965,974 shares of Common Stock reserved for issuance under the
Company's stock option plans, of which 295,974 shares were subject to
outstanding options as of December 31, 1996 and 300,000 shares will be
subject to options to be granted immediately after the effectiveness of this
offering, and 250,000 shares of Common Stock reserved for issuance under the
Company's discount stock purchase plan. See "Management-- Stock Compensation
Plans."

(4) The Taylor Exchangeable Shares, which are exchangeable at any time for
Common Stock of the Company, are non-voting and have no rights to the
earnings, assets or dividends of Taylor. See Note 7 of Notes to Consolidated
Financial Statements.

14
<PAGE>
DILUTION

The net tangible book deficit of the Common Stock as of December 31, 1996
was approximately $(20.0 million) or $(6.15) per share. The pro forma net
tangible book deficit of the Common Stock as of December 31, 1996 was
approximately $(2.4 million) or $(0.40) per share. The pro forma net tangible
book deficit per share represents the excess of the Company's total liabilities
over total tangible assets, divided by the total number of shares of Common
Stock outstanding, after giving effect to the Put Elimination, the Taylor
Conversion, the PIK Issuance and the Debenture Conversion.

After giving effect to the sale by the Company of the 1,650,000 shares of
Common Stock offered hereby at an assumed initial public offering price of $9.00
per share, and the receipt of the net proceeds therefrom, the pro forma net
tangible book value of the Company (total tangible assets less total
liabilities) as of December 31, 1996 would have been approximately $10.7
million, or $1.40 per share. This represents an immediate increase in pro forma
net tangible book value of $1.80 per share to existing shareholders and an
immediate dilution in pro forma net tangible book value of $7.60 per share to
purchasers of Common Stock in this offering, as illustrated in the following
table:

<TABLE>
<CAPTION>
Assumed initial public offering price per share............. $ 9.00
<S> <C> <C>
Net tangible book deficit per share as of December 31,
1996.................................................... $ (6.15)
Increase per share attributable to pro forma
adjustments............................................. 5.75
---------
Pro forma net tangible book deficit per share as of
December 31, 1996....................................... (0.40)
Increase per share attributable to new shareholders....... 1.80
---------
Pro forma net tangible book value per share as of December
31, 1996 after the offering............................... 1.40
---------
Dilution per share to new shareholders...................... $ 7.60
---------
---------
</TABLE>

The following table summarizes as of December 31, 1996, after giving effect
to the Taylor Conversion, the PIK Issuance and the Debenture Conversion, the
number of shares of Common Stock purchased from the Company, the total
consideration paid and the average price per share paid by existing shareholders
and by new shareholders.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
------------------------ --------------------------- PRICE PAID
NUMBER PERCENT AMOUNT PERCENT PER SHARE
----------- ----------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Existing shareholders.............................. 6,003,576 78.4% $ 7,384,251 33.2% $ 1.23
New shareholders................................... 1,650,000 21.6 14,850,000 66.8 9.00
----------- ----- -------------- -----
Total.......................................... 7,653,576 100.0% $ 22,234,251 100.0%
----------- ----- -------------- -----
----------- ----- -------------- -----
</TABLE>

The foregoing table assumes no exercise of any stock options subsequent to
December 31, 1996, or the Underwriters' over-allotment option. As of December
31, 1996, an aggregate of 965,974 shares were reserved under the Company's stock
option plans, of which options to purchase an aggregate of 295,974 shares at a
weighted average exercise price of $2.85 per share were outstanding and options
to purchase 300,000 shares at an exercise price equal to the initial public
offering price per share will be granted immediately after the effectiveness of
this offering, and 250,000 shares of Common Stock were reserved for issuance
under the Company's discount stock purchase plan. To the extent such options are
exercised, there will be further dilution to new shareholders.

The sale of shares by the Selling Shareholders in this offering will reduce
the number of shares held by existing shareholders to 4,903,576 shares, or
approximately 64.1% of the total number of shares of Common Stock outstanding
immediately after this offering (60.8% if the Underwriters' over-allotment
option is exercised in full), and will increase the number of shares held by new
shareholders to 2,750,000 shares, or 35.9% of the total number of shares of
Common Stock outstanding immediately after this offering (3,162,500 shares or
39.2% if the Underwriter's over-allotment option is exercised in full). See
"Principal and Selling Shareholders."

15
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The following selected statement of operations data for each of the three
years in the period ended March 31, 1996 and the nine months ended December 31,
1996 and balance sheet data at March 31, 1995 and 1996 and December 31, 1996
have been derived from the consolidated financial statements of the Company
included elsewhere in this Prospectus that have been audited by Arthur Andersen
LLP, independent public accountants, as indicated by their report thereon
contained elsewhere herein. The selected statement of operations data for the
two years in the period ended March 31, 1993 and balance sheet data as of March
31, 1992, 1993 and 1994 has been derived from consolidated financial statements
of the Company not included in the Prospectus that have been audited by Arthur
Andersen LLP, independent public accountants. The selected statement of
operations data for the nine months ended December 31, 1995 have been derived
from the Company's unaudited consolidated financial statements for such period
included elsewhere in this Prospectus which, in the opinion of management, have
been prepared on the same basis as the audited financial statements and contain
all adjustments, consisting only of normal recurring adjustments necessary for a
fair presentation of the results of operations for such period. The selected
consolidated financial data should be read in conjunction with the Consolidated
Financial Statements and Notes thereto, the Unaudited Pro Forma As Adjusted
Condensed Consolidated Financial Statements and Notes thereto and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Prospectus. The pro forma financial data are provided
for comparative purposes only and may not be indicative of the results that
would have been achieved if the transactions reflected therein had occurred at
the beginning of fiscal 1996.

16
<PAGE>

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED MARCH 31, ENDED DECEMBER 31,
-------------------------------------------------------------------- --------------------
PRO FORMA
AS ADJUSTED
1992 1993 1994 1995 1996 1996(1) 1995 1996
--------- --------- --------- --------- --------- ------------- --------- ---------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales......................... $ 7,546 $ 10,582 $ 11,723 $ 17,063 $ 25,743 $ 39,553 $ 17,645 $ 28,814
Cost of goods sold................ 3,321 5,365 6,304 9,689 15,370 21,718 10,588 15,199
--------- --------- --------- --------- --------- ------------- --------- ---------
Gross profit...................... 4,225 5,217 5,419 7,374 10,373 17,835 7,057 13,615
Operating expenses:
Sales and marketing............. 2,103 2,688 2,904 3,486 4,989 8,093 3,398 6,184
Research and development........ 1,106 1,217 1,188 1,517 1,952 4,245 1,367 2,591
General and administrative...... 608 933 1,167 1,238 1,601 4,440 997 2,912
Change in estimated useful life
of software development
costs......................... -- -- 466 -- -- -- -- --
Charge for purchased research
and development............... -- -- -- -- -- -- -- 4,893
--------- --------- --------- --------- --------- ------------- --------- ---------
Income (loss) from operations..... 408 379 (306) 1,133 1,831 1,057 1,295 (2,965)
Interest (expense) and other
income, net..................... (33) (78) (96) (164) (169) (72) (59) (387)
--------- --------- --------- --------- --------- ------------- --------- ---------
Income (loss) before income taxes
and minority interest........... 375 301 (402) 969 1,662 985 1,236 (3,352)
Provision for (benefit from)
income taxes.................... 146 128 (155) 247 665 548 494 599
--------- --------- --------- --------- --------- ------------- --------- ---------
Income (loss) before minority
interest........................ 229 173 (247) 722 997 437 742 (3,951)
Minority interest in loss of
subsidiary...................... -- -- -- -- -- 245 -- 1,852
--------- --------- --------- --------- --------- ------------- --------- ---------
Net income (loss)................. 229 173 (247) 722 997 682 742 (2,099)
Accretion to redemption value of
common stock.................... -- -- (76) (208) (1,606) -- (1,446) (9,061)
--------- --------- --------- --------- --------- ------------- --------- ---------
Net income (loss) available to
common shareholders............. $ 229 $ 173 $ (323) $ 514 $ (609) $ 682 $ (704) $ (11,160)
--------- --------- --------- --------- --------- ------------- --------- ---------
--------- --------- --------- --------- --------- ------------- --------- ---------
Net income (loss) per share
available to shareholders (2)... $ 0.06 $ 0.04 $ (0.07) $ 0.09 $ (0.11) $ (0.12) $ (1.97)
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Weighted average number of common
and common equivalent shares
outstanding (2)................. 4,330 4,330 4,343 5,972 5,633 5,633 5,679
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Pro forma net income (loss)(3).... $ 1,006 $ (2,093)
--------- ---------
--------- ---------
Pro forma net income (loss) per
share (4)....................... $ 0.16 $ (0.35)
--------- ---------
--------- ---------
Pro forma weighted average number
of common and common equivalent
shares outstanding (4).......... 6,107 6,041
--------- ---------
--------- ---------
Pro forma as adjusted net income
per share (5)................... $ 0.09
-------------
-------------
Pro forma as adjusted weighted
average number of common and
common equivalent shares
outstanding (5)................. 7,819
-------------
-------------

PRO FORMA
AS ADJUSTED
1996(1)
-------------

<S> <C>
STATEMENT OF OPERATIONS DATA:
Net sales......................... $ 31,851
Cost of goods sold................ 15,510
-------------
Gross profit...................... 16,341
Operating expenses:
Sales and marketing............. 7,416
Research and development........ 3,275
General and administrative...... 4,303
Change in estimated useful life
of software development
costs......................... --
Charge for purchased research
and development............... --
-------------
Income (loss) from operations..... 1,347
Interest (expense) and other
income, net..................... 48
-------------
Income (loss) before income taxes
and minority interest........... 1,395
Provision for (benefit from)
income taxes.................... 696
-------------
Income (loss) before minority
interest........................ 699
Minority interest in loss of
subsidiary...................... 190
-------------
Net income (loss)................. 889
Accretion to redemption value of
common stock.................... --
-------------
Net income (loss) available to
common shareholders............. $ 889
-------------
-------------
Net income (loss) per share
available to shareholders (2)...

Weighted average number of common
and common equivalent shares
outstanding (2).................

Pro forma net income (loss)(3)....

Pro forma net income (loss) per
share (4).......................

Pro forma weighted average number
of common and common equivalent
shares outstanding (4)..........

Pro forma as adjusted net income
per share (5)................... $ 0.11
-------------
-------------
Pro forma as adjusted weighted
average number of common and
common equivalent shares
outstanding (5)................. 7,797
-------------
-------------
</TABLE>

17
<PAGE>

<TABLE>
<CAPTION>
DECEMBER 31, 1996
MARCH 31, ---------------------------------------
----------------------------------------------------- PRO PRO FORMA AS
1992 1993 1994 1995 1996 ACTUAL FORMA(6) ADJUSTED(6)(7)
--------- --------- --------- --------- --------- --------- ----------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents..... $ 66 $ 74 $ 89 $ 62 $ 19 $ 703 $ 703 $ 703
Working capital............... 1,972 1,894 2,651 3,590 7,391 5,870 4,260 10,249
Total assets.................. 4,540 5,006 5,462 7,584 15,983 31,480 31,480 31,215
Long-term debt, net of current
maturities.................. 555 530 510 500 6,201 9,414 7,414 292
Redeemable common stock....... -- -- 1,000 1,455 3,561 17,272 -- --
Shareholders' equity
(deficit)................... 2,351 2,487 1,940 2,454 1,843 (9,249) 8,413 21,524
</TABLE>

- ------------------

(2) Computed on the basis described in Note 1 of Notes to Consolidated Financial
Statements.

18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The Company designs, develops and markets products and technology for the
control segment of the industrial automation market. The Company's broad range
of products are used to define, monitor and maintain the operation, sequencing
and safety of industrial equipment and machinery on the factory floor. These
products range from closed architecture PLC operator interfaces to open
architecture control software and systems, and are sold primarily through an
international network of independent distributors with over 200 sales locations.
End-users of the Company's products include Abbott Laboratories, The Boeing
Company, The Coca-Cola Company, The Dow Chemical Company, Eastman-Kodak Company,
Ford Motor Company, General Motors Corporation, Nabisco, Inc. and USX
Corporation.

The Company's net sales include revenues from sales of products, software
license fees, software maintenance and services. The Company's principal product
line, QuickPanel and similar products, has gained a leadership position in the
operator interface market. It has been the Company's most successful product
line, accounting for 70.7% and 62.1% of net sales in fiscal 1996 and the nine
months ended December 31, 1996, respectively. This product line delivers
price/performance leadership and has allowed the Company to gain visibility and
enhance its reputation both with distributors and with end-users.

A key element of the Company's strategy has been to expand the breadth of
products offered through its distributor network in order to maximize operating
leverage. In September 1996, the Company acquired a controlling interest in
Taylor, an Edmonton, Alberta-based developer of PC-control software,
client/server program management software, graphical operator interface software
and PLC configuration and support software. This acquisition expanded the
Company's product line, allowing it to capitalize on the growing trends towards
interoperable technology products, and gave the Company a platform from which to
develop new products incorporating this software technology into the Company's
traditional products. In January 1996, the Company acquired Cincinnati, which
strengthened the Company's product offerings in the lower-end of the operator
interface market. In connection with both of these acquisitions, the Company may
become obligated to make payments of contingent consideration which could be
substantial in amount. See "-- Liquidity and Capital Resources." Both of these
acquisitions were accounted for as a purchase in accordance with Accounting
Principles Board Opinion No. 16. In connection with the Taylor Transaction,
approximately $4.9 million was charged as an expense at the acquisition date
related to the purchase of incomplete research and development projects and
other acquisition costs. In connection with the Taylor Transaction and the
Cincinnati Transaction, the Company recorded approximately $2.5 million and $2.3
million, respectively, of goodwill (which will be increased in the event any
future contingent consideration is paid), which is being amortized on a
straight-line basis over 7 and 15 years, respectively. Following the Taylor
Transaction, the Company engaged a broker to commence the sale of Taylor's labor
scheduling software product line. The revenues, expenses and resulting net loss
associated with this product line since the date of acquisition have not been
reflected in the Company's statement of operations. See "Recent Acquisitions."

All of the Company's purchases of flat panel displays are from Digital
Electronics and are transacted in Japanese Yen, while substantially all of the
Company's sales are in U.S. Dollars. These purchases from Digital Electronics
accounted for 61.1% and 47.4%, respectively, of the Company's total cost of
goods sold for fiscal 1996 and the nine months ended December 31, 1996. The
Company's financial performance, including its gross margin, may be
substantially impacted by changes in the Yen/Dollar exchange rate. The Company
attempts to hedge a portion of this exchange rate risk, but there can be no
assurance that the Company will be successful in its hedging activities or that
certain exchange rate fluctuations will not otherwise have a material adverse
effect on the Company's financial condition or results of operations, or cause
significant fluctuations in results of operations.

19
<PAGE>
RESULTS OF OPERATIONS

The following table summarizes the Company's operating results as a
percentage of net sales for each of the periods indicated.

<TABLE>
<CAPTION>
NINE MONTHS
ENDED DECEMBER 31,
YEAR ENDED MARCH 31,
------------------------------- --------------------
1994 1995 1996 1995 1996
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net sales.................................................. 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold......................................... 53.8 56.8 59.7 60.0 52.7
--------- --------- --------- --------- ---------
Gross profit............................................... 46.2 43.2 40.3 40.0 47.3
Operating expenses:
Sales and marketing...................................... 24.8 20.4 19.4 19.3 21.5
Research and development................................. 10.1 8.9 7.6 7.7 9.0
General and administrative............................... 10.0 7.3 6.2 5.7 10.1
Change in estimated useful life of software development
costs.................................................. 4.0 -- -- -- --
Charge for purchased research and development............ -- -- -- -- 17.0
--------- --------- --------- --------- ---------
Income (loss) from operations.............................. (2.7) 6.6 7.1 7.3 (10.3)
Interest expense and other income, net..................... (0.8) (1.0) (0.7) (0.3) (1.3)
--------- --------- --------- --------- ---------
Income (loss) before income taxes and minority interest.... (3.5) 5.6 6.4 7.0 (11.6)
Provision for (benefit from) income taxes.................. (1.3) 1.4 2.6 2.8 2.1
--------- --------- --------- --------- ---------
Income (loss) before minority interest..................... (2.2) 4.2 3.8 4.2 (13.7)
Minority interest in loss of subsidiary.................... -- -- -- -- 6.4
--------- --------- --------- --------- ---------
Net income (loss).......................................... (2.2) 4.2 3.8 4.2 (7.3)
Accretion to redemption value of common stock.............. (0.6) (1.2) (6.2) (8.2) (31.4)
--------- --------- --------- --------- ---------
Net income (loss) available to common shareholders......... (2.8)% 3.0% (2.4)% (4.0)% (38.7)%
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

NINE MONTHS ENDED DECEMBER 31, 1996 AND DECEMBER 31, 1995

NET SALES. Net sales increased 63.3% to $28.8 million for the nine months
ended December 31, 1996 compared to $17.6 in the comparable period of the prior
fiscal year. This increase resulted primarily from the growth in sales of the
Company's graphics-based operator interface products and from sales of products
acquired as a result of the Cincinnati Transaction. To a lesser extent, the
increase reflects the results of Taylor for the three months ended December 31,
1996 of approximately $2.0 million.

GROSS PROFIT. Cost of goods sold consists primarily of expenses for
components and subassemblies, subcontracted labor, direct labor, manufacturing
overhead, and provisions for excess and obsolete inventory. Gross profit
increased 92.9% to $13.6 million for the nine months ended December 31, 1996
from $7.1 million in the comparable prior period. Gross margin increased to
47.3% for the nine months ended December 31, 1996 from 40.0% in the comparable
prior period. This increase was attributable to a reduction in the material cost
primarily in the QuickPanel product line due to favorable Yen fluctuations,
partially offset by increases in direct labor and manufacturing overhead costs
as a percentage of sales related to the Cincinnati acquisition. In addition, the
Company benefited from three month's sales of higher gross margin Taylor
software products.

SALES AND MARKETING. Sales and marketing expenses consist primarily of
personnel costs, sales commissions paid to the Company's independent sales
representatives, advertising, product literature,

20
<PAGE>

trade shows, distributor promotions and depreciation on equipment used for sales
related activities. Sales and marketing expenses increased 82.0% to $6.2 million
for the nine months ended December 31, 1996 from $3.4 million in the comparable
prior period. Approximately half of the increase resulted from increased
commissions due to higher sales volume, and increased advertising and
distributor promotional programs. Approximately $1.0 million of the increase
resulted from costs associated with the operations of Cincinnati and Taylor and
the remaining increase was due to increased salary, benefits and related costs
attributable to increased sales support personnel.

RESEARCH AND DEVELOPMENT. Research and development expenses consist
primarily of personnel costs, engineering supplies, development equipment,
depreciation and overhead costs. Research and development expenses increased
89.6% to $2.6 million for the nine months ended December 31, 1996 from $1.4
million in the comparable prior period. The increase resulted primarily from
increased salary, related benefits and employee procurement expenses due to
increases in personnel headcount, including approximately $600,000 of product
development costs related to Cincinnati and Taylor.

GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of personnel costs related to finance, information systems, and
general management functions, as well as professional fees related to legal,
audit and tax services. General and administrative expenses increased 192.0% to
$2.9 million for the nine months ended December 31, 1996 from $1.0 million for
the comparable prior period. Approximately $1.3 million of the increase related
primarily to additional personnel and facility costs and goodwill amortization
resulting from the operations of Cincinnati and the three month's operating
results of Taylor, with the remaining increase resulting from higher personnel
and associated overhead costs necessary to support the growth of the Company.

CHARGE FOR PURCHASED RESEARCH AND DEVELOPMENT. Purchased research and
development and other acquisition expenses relating to the acquisition of Taylor
totaled approximately $4.9 million and were charged to expense at the
acquisition date in September 1996. Of this expense, $4.7 million represents the
estimated fair value of Taylor's incomplete research and development projects as
determined by independent appraisal.

INTEREST EXPENSE AND OTHER, NET. Interest expense and other, net increased
to $387,000 for the nine months ended December 31, 1996 from $59,500 in the
comparable prior period. The increase primarily related to an increase in
average debt outstanding used to fund the acquisition of Cincinnati and
increased working capital needs.

PROVISION FOR (BENEFIT FROM) INCOME TAXES. Provision for income taxes
increased to $599,000 for the nine months ended December 31, 1996 from $494,000
in the comparable prior period. The effective tax rate for the period ended
December 31, 1996 was 44.4%, after giving effect to the impact on taxable income
of the charge for purchased research and development of approximately $4.7
million, as compared to the effective tax rate of approximately 40.0% in the
comparable prior period. This increase was primarily due to non-deductible
goodwill amortization.

MINORITY INTEREST IN LOSS OF SUBSIDIARY. A minority interest representing
Digital Electronic's 39.0% share of the net income or loss of Taylor is recorded
on the Company's statements of operations. The Company's ownership of Taylor
Class A Shares may increase by up to 4.0% based on the amount of contingent
consideration paid by the Company in connection with the acquisition. To the
extent the equity interest of the Company in Taylor increases, the percentage
applied to calculate minority interest will be reduced by a corresponding
amount. The minority interest benefit of $1.9 million recorded for the nine
months ended December 31, 1996 represents the minority interest share of the
loss recorded by Taylor, primarily incurred as a result of the charge for
purchased research and development of $4.7 million recorded at the acquisition
date in September 1996.

21
<PAGE>

ACCRETION TO REDEMPTION VALUE OF COMMON STOCK. The Company has issued
redeemable Common Stock and Taylor has issued redeemable Taylor Exchangeable
Shares. The redemption rights will automatically terminate upon the closing of
this offering. The Company recorded these redeemable shares at their estimated
redemption values at the date of issuance and subsequent changes in such
redemption value in each reporting period are being accreted. The accretion to
redemption value of Common Stock increased to $9.1 million for the nine months
ended December 31, 1996 from $1.4 million in the comparable prior period.
Approximately $8.9 million of the accretion recorded for the nine months ended
December 31, 1996 was attributable to an increase in the estimated fair value of
the Common Stock from $2.33 per share to $9.00 per share. The remaining
accretion was due to the increase in redemption value using the effective
interest method for the 767,112 redeemable Taylor Exchangeable Shares issued in
connection with the Taylor Transaction. The accretion recorded for the prior
period ended December 31, 1995 is based on the accretion on a straight line
basis of the increase in the estimated fair market value of the Common Stock
from $1.00 per share to $2.33 per share.

FISCAL YEARS ENDED MARCH 31, 1996 AND MARCH 31, 1995

NET SALES. Net sales increased 50.9% to $25.7 million for fiscal 1996
compared to $17.1 million for fiscal 1995. This increase resulted primarily from
the growth in sales of the Company's graphics-based operator interface products
and the increase in net sales from products acquired as a result of the
Cincinnati Transaction in January 1996.

GROSS PROFIT. Gross profit increased 40.7% to $10.4 million for fiscal 1996
from $7.4 million for fiscal 1995. Gross margin decreased to 40.3% for fiscal
1996 compared to 43.2% for fiscal 1995. This decrease in gross margin was
attributable primarily to growth in sales of the QuickPanel product line and an
increase in material cost as a percentage of net sales for such product line due
to unfavorable Yen variances, partially offset by benefits gained through direct
labor and fixed manufacturing leverage.

SALES AND MARKETING. Sales and marketing expenses increased 43.1% to $5.0
million for fiscal 1996 from $3.5 million for fiscal 1995. Of the increase,
approximately $900,000 resulted from increased salary, benefits and commissions
related to increased personnel and higher sales volume, with the balance related
to increased advertising and distributor promotional programs.

RESEARCH AND DEVELOPMENT. Research and development expenses increased 28.7%
to $2.0 million for fiscal 1996 from $1.5 million for fiscal 1995. The increase
related primarily to additional costs associated with an increase in engineering
personnel and contract engineering costs, as well as additional personnel costs
related to two month operating results of Cincinnati of approximately $100,000.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
29.4% to $1.6 million for fiscal 1996 from $1.2 million for fiscal 1995. The
increase related to additional costs associated with the two month operating
results of Cincinnati, including goodwill amortization, along with additional
personnel and associated overhead costs necessary to support the overall growth
of the Company.

INTEREST EXPENSE AND OTHER, NET. Interest expense and other, net increased
3.0% to $169,000 for fiscal 1996 from $164,000 for fiscal 1995. The increase
relates to an increase in the amount outstanding under the Company's line of
credit and a term loan payable to its bank primarily used to finance both the
acquisition of Cincinnati and increases in working capital needs. Other, net for
fiscal 1995 includes costs related to terminated acquisition activities.

PROVISION FOR (BENEFIT FROM) INCOME TAXES. Provision for income taxes
increased to $665,000 for fiscal 1996 from $247,000 for fiscal 1995. The
effective tax rate for fiscal 1996 was 40.0% compared to 25.5% for fiscal 1995.
The increase in the effective tax rate was primarily due to the recognition of
research and development credits which were fully utilized in fiscal 1995.

22
<PAGE>
ACCRETION TO REDEMPTION VALUE OF COMMON STOCK. The accretion to redemption
value of common stock increased to $1.6 million for fiscal 1996 from $208,000
for fiscal 1995. This increase was attributable to an increase in the estimated
fair value of the Common Stock from $1.00 per share to $2.33 per share.

FISCAL YEARS ENDED MARCH 31, 1995 AND MARCH 31, 1994

NET SALES. Net sales increased 45.6% to $17.1 million for fiscal 1995
compared to $11.7 million for fiscal 1994. This increase resulted principally
from growth in sales of the Company's QuickPanel product line and other
graphics-based operator interface products.

GROSS PROFIT. Gross profit increased 36.1% to $7.4 million for fiscal 1995
from $5.4 million for fiscal 1994. Gross margin decreased to 43.2% for fiscal
1995 compared to 46.2% for fiscal 1994. This decrease was attributable primarily
due to growth in the sales of the QuickPanel product line, which contributed a
lower gross margin than the product mix in the prior period, partially offset by
decreases in material costs and direct labor and fixed manufacturing leverage.

SALES AND MARKETING. Sales and marketing expenses increased 20.1% to $3.5
million for fiscal 1995 from $2.9 million for fiscal 1994. Of the increase,
approximately $400,000 resulted from increased sales commissions related to
higher sales volume, with the remaining increase resulting from advertising and
distributor promotional programs.

RESEARCH AND DEVELOPMENT. Research and development expenses increased 27.6%
to $1.5 million for fiscal 1995 from $1.2 million for fiscal 1994. The increase
related to increases in engineering personnel and the associated salaries and
benefits.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
6.1% to $1.24 million for fiscal 1995 from $1.17 million for fiscal 1994. The
increase related primarily to additional personnel costs and professional fees.

CHANGE IN ESTIMATED USEFUL LIFE OF SOFTWARE DEVELOPMENT COSTS. As a result
of a change in the Company's estimate of the useful life of its capitalized
software development costs, as well as management's belief that the amount of
costs incurred from the time technological feasibility is established for the
Company's internally developed software and the time to market are not material,
a non-recurring charge of $466,000 was incurred in fiscal 1994 to write-off the
remaining portion of internally developed software costs which had been
capitalized in March 1993.

INTEREST EXPENSE AND OTHER, NET. Interest expense and other, net increased
69.8% to $163,000 for fiscal 1995 from $96,000 for fiscal 1994. The increase
relates primarily to costs related to terminated acquisition activities
partially offset by a decrease in the amount outstanding on the Company's line
of credit.

PROVISION FOR (BENEFIT FROM) INCOME TAXES. Provision for (benefit from)
income taxes was $247,000 for fiscal 1995 and ($155,000) for fiscal 1994. The
effective tax rate for fiscal 1995 was 25.5% compared to (38.6)% for fiscal
1994. This change in the effective tax rate is primarily due to the utilization
of certain research and development tax credits during fiscal 1995.

ACCRETION TO REDEMPTION VALUE OF COMMON STOCK. The accretion to redemption
value of Common Stock increase is attributable to an increase in the estimated
fair value of the Common Stock.

23
<PAGE>
SELECTED QUARTERLY RESULTS OF OPERATIONS

The following tables set forth certain unaudited consolidated quarterly
statement of operations data for each of the eight quarters ending with the
quarter ended December 31, 1996. In the opinion of management, this information
has been prepared on the same basis as the audited consolidated financial
statements contained herein and includes all adjustments, consisting only of
normal recurring adjustments, that the Company considers necessary to present
fairly this information in accordance with generally accepted accounting
practices. This information should be read in conjunction with the Consolidated
Financial Statements and Notes thereto appearing elsewhere in this Prospectus.
The Company's operating results for any one quarter are not necessarily
indicative of the results to be expected for any future period.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------------------------------------------------
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30,
1995 1995 1995 1995 1996 1996
----------- ----------- ----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales..................................... $ 4,886 $ 5,368 $ 5,946 $ 6,331 $ 8,098 $ 9,077
Cost of goods sold............................ 2,818 3,170 3,633 3,785 4,782 5,167
----------- ----------- ----------- ----------- ----------- -----------
Gross profit.................................. 2,068 2,198 2,313 2,546 3,316 3,910
Operating expenses:
Sales and marketing......................... 996 1,040 1,137 1,221 1,591 1,716
Research and development.................... 432 406 468 493 585 695
General and administrative.................. 333 316 317 364 604 853
Charge for purchased research and
development............................... -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Income (loss) from operations................. 307 436 391 468 536 646
Interest expense and other, net............... (106) (14) (15) (30) (110) (103)
----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before income taxes and minority
interest.................................... 201 422 376 438 426 543
Provision for (benefit from) income taxes..... 52 169 150 175 171 218
----------- ----------- ----------- ----------- ----------- -----------
Income (loss) before minority interest........ 149 253 226 263 255 325
Minority interest in loss of subsidiary....... -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Net income (loss) before accretion............ $ 149 $ 253 $ 226 $ 263 $ 255 $ 325
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------

SEPT. 30, DEC. 31,
1996 1996
----------- -----------

<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales..................................... $ 8,218 $ 11,519
Cost of goods sold............................ 4,633 5,398
----------- -----------
Gross profit.................................. 3,585 6,121
Operating expenses:
Sales and marketing......................... 1,731 2,737
Research and development.................... 765 1,131
General and administrative.................. 834 1,225
Charge for purchased research and
development............................... 4,893 --
----------- -----------
Income (loss) from operations................. (4,638) 1,028
Interest expense and other, net............... (128) (156)
----------- -----------
Income (loss) before income taxes and minority
interest.................................... (4,766) 872
Provision for (benefit from) income taxes..... (26) 407
----------- -----------
Income (loss) before minority interest........ (4,740) 465
Minority interest in loss of subsidiary....... 1,835 16
----------- -----------
Net income (loss) before accretion............ $ (2,905) $ 481
----------- -----------
----------- -----------
</TABLE>

The following table sets forth certain unaudited quarterly results of
operations expressed as a percentage of net sales for each of the eight quarters
ending with the quarter ended December 31, 1996.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------------------------------------------------
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30,
1995 1995 1995 1995 1996 1996
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
AS A PERCENTAGE OF NET SALES:
Net sales..................................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold............................ 57.7 59.1 61.1 59.8 59.1 56.9
----- ----- ----- ----- ----- -----
Gross profit.................................. 42.3 40.9 38.9 40.2 40.9 43.1
Operating expenses:
Sales and marketing......................... 20.4 19.4 19.1 19.3 19.6 18.9
Research and development.................... 8.8 7.6 7.9 7.7 7.2 7.7
General and administrative.................. 6.8 5.8 5.3 5.8 7.5 9.4
Charge for purchased research and
development............................... -- -- -- -- -- --
----- ----- ----- ----- ----- -----
Income (loss) from operations................. 6.3 8.1 6.6 7.4 6.6 7.1
Interest expense and other, net............... (2.2) (0.3) (0.3) (0.5) (1.3) (1.1)
----- ----- ----- ----- ----- -----
Income (loss) before income taxes and minority
interest.................................... 4.1 7.8 6.3 6.9 5.3 6.0
Provision for (benefit from) income taxes..... 1.1 3.1 2.5 2.8 2.1 2.4
----- ----- ----- ----- ----- -----
Income (loss) before minority interest........ 3.0 4.7 3.8 4.1 3.2 3.6
Minority interest in loss of subsidiary....... -- -- -- -- -- --
----- ----- ----- ----- ----- -----
Net income (loss) before accretion............ 3.0% 4.7% 3.8% 4.1% 3.2% 3.6%
----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- -----

SEPT. 30, DEC. 31,
1996 1996
----------- -----------
<S> <C> <C>
AS A PERCENTAGE OF NET SALES:
Net sales..................................... 100.0% 100.0%
Cost of goods sold............................ 56.4 46.9
----- -----
Gross profit.................................. 43.6 53.1
Operating expenses:
Sales and marketing......................... 21.1 23.8
Research and development.................... 9.3 9.8
General and administrative.................. 10.0 10.6
Charge for purchased research and
development............................... 59.6 --
----- -----
Income (loss) from operations................. (56.4) 8.9
Interest expense and other, net............... (1.6) (1.3)
----- -----
Income (loss) before income taxes and minority
interest.................................... (58.0) 7.6
Provision for (benefit from) income taxes..... (0.3) 3.5
----- -----
Income (loss) before minority interest........ (57.7) 4.1
Minority interest in loss of subsidiary....... 22.3 0.1
----- -----
Net income (loss) before accretion............ (35.4)% 4.2%
----- -----
----- -----
</TABLE>

24
<PAGE>
Results of the Company's operations have fluctuated from quarter to quarter
in the past, and may fluctuate significantly in the future. Such fluctuations
may result from a variety of factors, including the timing of new product
introductions by the Company, its competitors or third parties, the loss of any
of its significant distributors, currency fluctuations, disruption in the supply
of components for the Company's products, changes in product mix or capacity
utilization, the timing of orders from major customers, personnel changes,
production delays or inefficiencies, seasonality and other factors affecting
sales and results of operations. A substantial portion of the Company's sales
for each quarter results from orders received in that quarter. Consequently, the
Company is dependent upon obtaining orders for shipment in a particular quarter
to achieve its sales objectives for that quarter. Furthermore, the Company has
often recognized a substantial portion of its sales in the last month of a
quarter, with sales frequently concentrated in the last weeks or days of a
quarter. A substantial portion of the Company's operating expenses are related
to personnel, development of new products, marketing programs and facilities.
The level of spending for such expenses cannot be adjusted quickly, and is
based, in significant part, on the Company's expectations of future revenue. If
actual revenue levels are below management's expectations, the Company's
business, financial condition and results of operations may be materially
adversely affected. The Company believes that period-to-period comparisons of
its results of operations are not necessarily meaningful and should not be
relied upon as indicators of future performance.

LIQUIDITY AND CAPITAL RESOURCES

Prior to the acquisition of a majority interest in Taylor, the Company had
historically funded its operations, including its acquisition of Cincinnati,
primarily through cash flow from operations, private placements of securities
and proceeds from borrowings under its bank line of credit.

In order to finance the Taylor Transaction, the Company entered into a $2.0
million subordinated shareholder note payable, which is due on the earlier of
September 20, 1999 or 10 days after the completion of an initial public
offering. The note bears interest at 20.0%, of which 13.0% is payable in cash on
a monthly basis after December 1996 and 7.0% is payable in Common Stock valued
at $5.00 per share, with a minimum of 27,999 shares issuable even if the note is
repaid within the first year. Additionally, the Company entered into a $2.2
million note with the former principal shareholder of Taylor. The note bears
interest at 12.5% per annum until March 19, 1997, and at 15.0% per annum
thereafter, payable on a monthly basis. The note is required to be paid in full
following the closing of a registered initial public offering of any class of
stock of the Company or upon the sale of Taylor's labor scheduling software
product line currently held for sale by the Company. Finally, the Company
entered into a loan agreement with Digital Electronics, whereby Digital
Electronics loaned the Company $5.0 million. In September 1996, $4.0 million of
such loan was converted into 39.0% of the outstanding Taylor Class A Shares. The
remaining $1.0 million of the Digital Electronics indebtedness is represented by
an unsecured promissory note, accruing interest at a rate of 5.0% per annum and
is due upon the earlier of the completion of an initial public offering or
August 31, 1997. See "Recent Acquisitions -- Taylor Transaction" and "Certain
Transactions."

Beginning in fiscal 1998, the Company may become obligated under the terms
of the Taylor Transaction and the Cincinnati Transaction to make payments of
contingent consideration which could be substantial in amount. The Taylor
Transaction requires contingent payments based on Taylor's revenue for the
twelve month periods ending September 30, 1997 and 1998, of up to $4.0 million
for each of these twelve month periods. The Cincinnati Transaction requires
contingent payments based on calendar year 1997 revenues of Cincinnati-related
product sales in excess of historic sales volumes equal to 10.0% of the first
$1.0 million of such excess and 4.0% of any further excess. Additionally, the
Cincinnati Transaction requires a contingent payment equal to 1.25% of the
Company's net sales in excess of $32.0 million for each of the calendar years
1998, 1999 and 2000. Of such contingent payments with respect to the Cincinnati
Transaction, approximately half are payable in shares of the Company's Common
Stock valued at the then fair market value, with the remainder payable in cash.
The Company

25
<PAGE>

has a buy-out right with respect to the contingent payments for the Cincinnati
Transaction for the years 1998, 1999 and 2000, ranging from $1.0 million to $2.0
million depending on the timing of the exercise of such right. Depending on the
magnitude of the contingent payments and the amount of the proceeds from the
sale of the assets held for sale acquired in connection with the Taylor
Transaction, these contingent payments may require the Company to borrow against
its current credit facilities or may require the Company to seek additional
equity or debt financing, which could materially adversely affect the Company's
business and financial position. See "Recent Acquisitions."

The Company has bank lines of credit aggregating $10.0 million. The amount
that the Company is entitled to borrow under such lines of credit is based on
80.0% to 85.0% of eligible trade accounts receivable and 50.0% of eligible
inventory, up to $4.5 million, of its respective operations. Based on this
formula, the Company would have had approximately $350,000, $869,000 and
$850,000 of available borrowings under its line of credit at March 31, 1994,
1995 and 1996, respectively. All funds advanced pursuant to the lines of credit
are secured by substantially all of the assets of the Company, and such lines of
credit expire on July 1998. The interest rate on borrowings under the lines of
credit is the bank's prime lending rate or LIBOR plus 2.0%, at the option of the
Company or, in the case of $1.0 million of the line of credit, the bank's prime
lending rate. See Note 4 to Consolidated Financial Statements.

The Company is substantially dependent upon its relationship with Digital
Electronics, the sole supplier of the flat panel displays that are the principal
hardware component incorporated in the graphics-based operator interface
products that represent the Company's best selling product line. For fiscal 1996
and the nine months ended December 31, 1996, sales from this product line
accounted for 70.7% and 62.1%, respectively, of the Company's net sales. The
Company has no contractual arrangement obligating Digital Electronics to
continue to supply these components to the Company or setting prices for the
purchase of the components. The inability of the Company to obtain this hardware
platform from Digital Electronics would have a material adverse effect upon the
operating results and liquidity of the Company.

Cash (used in) provided by operating activities was $(140,000) in fiscal
1994, $75,000 in fiscal 1995, $(411,000) in fiscal 1996 and $(977,000) for the
nine months ended December 31, 1996. In fiscal 1994, 1995 and 1996 and the nine
months ended December 31, 1996, the Company experienced increases in receivables
and inventory as a result of increases in the Company's sales volume, which was
partially offset by increases in accounts payable and accrued expenses in fiscal
1994, 1995 and the nine months ended December 31, 1996.

Net cash used in investing activities totaled $207,000, $295,000, $1.9
million and $6.1 million for fiscal 1994, 1995, 1996 and the nine months ended
December 31, 1996, respectively. These activities consisted primarily of
purchases of personal property and equipment and other assets. In addition, for
fiscal 1996 and the nine months ended December 31, 1996, cash used for investing
activities related to the Cincinnati Transaction and Taylor Transaction,
respectively.

Management believes the proceeds from this offering, together with cash flow
from operations and borrowings available under the existing bank credit
facilities or replacement facilities will be sufficient to finance the Company's
operations for at least the next 12 months. In the event the Company acquires
one or more businesses or products, the Company's capital requirements could
increase substantially, and there can be no assurance that additional capital
will be available on terms acceptable to the Company, if at all.

NEW ACCOUNTING PRONOUNCEMENTS

In March 1995, the Financial Accounting Standards Board (the "FASB") issued
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of." This statement requires long-lived assets
and certain intangible assets to be carried at the lower of cost or fair value
less cost to sell if recoverability is determined to be questionable. The
Company adopted this

26
<PAGE>

statement effective April 1, 1996, and such adoption did not have a material
impact on the Company's results of operations.

In November 1995, the FASB issued Statement No. 123, "Accounting for
Stock-Based Compensation." This statement is effective for fiscal years
beginning after December 15, 1995. Companies have a choice to include a
reasonable estimate of expense for all stock-based compensation in the statement
of operations, or to disclose the effect of adopting the provisions of the
statement on a pro forma basis in a footnote to the financial statements. The
Company adopted this statement during the nine months ended December 31, 1996.
See Note 8 of Notes to Consolidated Financial Statements.

27
<PAGE>
BUSINESS

Total Control designs, develops and markets products and technology for the
control segment of the industrial automation market. The Company's broad range
of products are used to define, monitor and maintain the operation, sequencing
and safety of industrial equipment and machinery on the factory floor. These
products range from closed architecture programmable logic controller operator
interfaces to open architecture control software and systems, and are sold
primarily through an international network of independent distributors with over
200 sales locations. End-users of the Company's products include Abbott
Laboratories, The Boeing Company, The Coca-Cola Company, The Dow Chemical
Company, Eastman Kodak Company, Ford Motor Company, General Motors Corporation,
Nabisco, Inc. and USX Corporation.

THE INDUSTRIAL AUTOMATION INDUSTRY

Industrial manufacturing processes have become increasingly complex and
difficult to manage, especially at the factory floor level. While trying to
respond to such complexities, manufacturers are simultaneously under increased
competitive pressures to lower costs, increase quality and efficiency and meet
customer delivery deadlines. These pressures are often further complicated by
the additional burden of compliance with governmental regulations, safety
procedures and internal information reporting needs. To manage the complexity of
the manufacturing environment and to satisfy these requirements, manufacturers
must collect and analyze large amounts of data concerning their operations on a
timely, comprehensive and efficient basis. Industrial automation provides
solutions to these challenges.

The industrial automation industry can be divided into three segments:
planning, execution and control. Products in the PLANNING segment translate
information, such as customer orders and material purchases, into a
comprehensive plan for the manufacture of products. Products in the EXECUTION
segment schedule and monitor plant resources to ensure that machines produce
products in accordance with the production plan. Products in the CONTROL
segment, upon which the Company primarily focuses, allow users to define,
monitor and maintain the operation, sequencing and safety of industrial
equipment and machinery on the factory floor.

Specifically, control segment functions include supervisory controls, which
allow individual machines to interact with each other; operator interfaces,
which allow a human operator to communicate with an individual machine; and
controllers, including programmable logic controllers ("PLCs") and industrial
computers, which intelligently control the operation of a machine. Harbor
Research, Inc., a technology industry market research firm, projects that annual
sales of control segment products in those categories in which the Company
currently offers products will grow from $8.6 billion in 1995 to over $12.8
billion in 2000. This market is presently dominated by proprietary control
products from manufacturers of PLCs such as Allen-Bradley, Siemens Energy and
Automation, Inc. and GE Fanuc Automation North America, Inc.

Proprietary control products have many inherent limitations, including
fixed, vendor-defined functionality and difficulty in programming, integrating
and networking with other proprietary products and systems. As manufacturers
benefited from the increasing automation of individual machines, difficulties
remained in integrating proprietary control segment products into different
parts of the manufacturing process. With little communication ability among
these products, multiple "islands of information" within a manufacturing
operation resulted as products from one vendor could not easily share
information with products from another vendor, forcing a manufacturer to depend
upon a single vendor. For the manufacturer, this resulted in a high cost of
ownership and the inability to take advantage of the inherent cost and
performance benefits associated with standards-based products.

28
<PAGE>
In response to these problems, the Company believes end-users in the control
segment of the industrial automation marketplace are beginning to migrate
towards open systems-based products. This migration is occurring gradually as
manufacturers build new facilities and replace or upgrade existing facilities.
By moving to interoperable products, manufacturers can benefit from standard
networking protocols which provide enhanced connectivity, intuitive graphical
user interfaces, enhanced application software functionality and the continued
cost reductions associated with general purpose hardware. The availability of a
standardized, easy-to-support operating system, such as Windows NT, allows
industrial automation products to be based upon an open architecture platform
with widespread market acceptance. In addition, the Company believes the advent
of relatively low cost network computers, linked together through Internet or
intranet protocols and technologies, will allow manufacturers and end-users
greater communication and functionality in automation systems. Eventually, the
Company believes these trends may result in the development of network computer
systems which combine PLC and operator interface functionality to control the
actions of machines on the factory floor.

Distributors are an integral part of the technological evolution occurring
in the industrial automation marketplace. Traditionally, a substantial portion
of industrial automation products have been sold through the use of independent
distributors because they provide vendors with broad geographic and account
coverage. Distributors also provide customers with a broad product line and
local support and service and generally have well established, long-standing
relationships with customers. As competitive pressures force distributors to
limit the number of vendors and product lines they represent, the Company
believes distributors will seek to represent vendors who offer a comprehensive
line of products that will fill the needs of customers who have not migrated
towards open systems as well as those who demand a line of products based on
interoperable software and hardware. Because distributors base their business on
satisfying the demands of their customer base, they need to offer a migration
path from traditional industrial automation technology to products based on open
systems technology.

The technology shift in the market for control products is similar to the
transition in the office environment towards open client/server computing. The
Company believes that an opportunity exists for vendors that can offer, through
distribution, control segment products which span the range from proprietary,
closed architecture products to standards-based open-system products.

THE TOTAL CONTROL ADVANTAGE

Total Control believes that it offers to its distributors one of the most
complete and versatile lines of control segment products available, ranging from
lower-end operator interface products to sophisticated open architecture control
software and systems. The Company's graphics-based operator interfaces have the
ability to communicate with most major proprietary systems on the factory floor,
as well as to communicate among each of these major proprietary systems.

As manufacturers begin to introduce sophisticated, networked information
management systems, the ability to communicate with each machine on the factory
floor becomes critical, making the Company's products a natural bridge between
old and new technology. The availability and cost advantage of open systems
technology is accelerating the introduction of new products on the factory
floor, and in turn accelerating the requirement for distributors to carry a line
of products that spans the functionality spectrum. The Company believes that its
broad line of control segment products, its international network of independent
distributors and its substantial base of end-users position it to become a
leading worldwide provider of products and technology in the control segment of
the industrial automation market.

29
<PAGE>
STRATEGY

The Company's goal is to become a leading worldwide provider of products and
technology in the control segment of the industrial automation market. Key
elements of the Company's strategy are as follows:

LEVERAGE THE SUCCESS OF QUICKPANEL. The Company's principal product line,
QuickPanel and other similar products, has gained a leadership position in its
market. It has been the Company's most successful product line, accounted for
70.7% and 62.1% of net sales in fiscal 1996 and the nine months ended December
31, 1996, respectively. The Company believes that this product line delivers
price/ performance leadership and has allowed the Company to gain visibility and
enhance its reputation both with distributors and with end-users. The Company is
beginning to invest substantial resources in developing future generations of
the QuickPanel product line aimed at giving it the functionality of a
standards-based interoperable network computer and allowing the Company to
extend the functionality of the product into the open systems environment.

DEVELOP PRODUCTS FOR SALE THROUGH INDEPENDENT DISTRIBUTORS. The Company
utilizes an international network of independent distributors with over 200
sales locations that specialize in sales of industrial automation products. The
Company believes that, because distributors are seeking to make their operations
more efficient by reducing the number of approved vendors from which they buy
products, they have come to expect that the Company will provide a broad range
of products which serve the control segment of the market. The Company is
focused on developing industrial automation products that, from price,
performance and support perspectives, satisfy the selling requirements of its
distributors, and the Company does not currently anticipate designing or
marketing products that are not suitable for its existing independent
distributors. As the industrial automation industry moves from proprietary
systems to open architecture technology, the Company anticipates that a wide
variety of new and existing hardware and software technologies will converge,
providing a broader range of sales opportunities for both the Company and its
distributors.

EXPAND THE NETWORK OF INDEPENDENT DISTRIBUTORS. Since the Company's
decision in 1994 to channel its sales efforts through distributors, the Company
has increased the number of distributor sales locations from approximately 130
in October 1994 to approximately 200 in December 1996. The Company seeks to
establish and maintain relationships with the leading industrial automation
product distributors in each of the geographic market areas in which it competes
and periodically evaluates its distributors' market positions. The Company
believes that by offering a comprehensive migration path from closed to open
architecture products in the industrial automation industry, its mindshare among
distributors will continue to be enhanced, making it an attractive choice for
distributors.

LEVERAGE THE TREND TOWARDS OPEN SYSTEMS. The Company believes it is
positioned to gain a leadership position in the next generation of industrial
automation technologies. Because the Company is migrating its products to
object-oriented software products that run in the Microsoft operating
environment, the Company believes it will be in a position to benefit from the
expected rapid acceptance of Microsoft Windows NT on the factory floor. The
Company's goal is to provide cost effective distributed client/server products
that can improve factory productivity and enhance business management and
control.

SEEK PRODUCT PORTFOLIO EXPANSION OPPORTUNITIES. The industrial automation
industry continues to be highly competitive and fragmented. The Company believes
that this fragmentation will allow it to continue to acquire companies, assets
and product lines in this market, although the Company does not currently have
any planned acquisitions. This strategy will allow the Company to continue to
expand its product portfolio and leverage its distribution channel in order to
continue to build market share. The Company's acquisition strategy has been and
will continue to be to seek companies, assets and products

30
<PAGE>
that are attractive to the Company's current end-user base, require
technological understanding similar to the Company's current products, and can
be easily marketed through its independent distributors.

FOCUS RESOURCES ON STRATEGIC AREAS. The Company's strategy is to maximize
flexibility and efficiency in the development of its products in order to
quickly and inexpensively bring them to market. The Company seeks to use the
most efficient methods available to implement this strategy, including building
strategic alliances, such as the Company's relationship with Digital
Electronics. The Company intends to continue to limit spending in non-strategic
areas by using third party suppliers for most of its hardware and manufacturing
needs, thereby eliminating the need to build and maintain costly manufacturing
infrastructures.

PRODUCTS

The Company's products are used to define, monitor and maintain the
operation, sequencing and safety of industrial equipment and machinery on the
factory floor. The Company offers a wide range of products, from proprietary PLC
operator interfaces to open architecture control software and systems. The
Company designs these products to satisfy the price and performance
characteristics demanded by its distributors and end-users, and sells products
to its distributors at a discount from the end-user list price for such
products. The table below summarizes the Company's principal product offerings
and the typical list price range for the products:

<TABLE>
<CAPTION>
REPRESENTATIVE U.S.
PRODUCT CLASS PRODUCTS OFFERED END-USER LIST PRICES
- -------------------------------------- ------------------------------------------------ -----------------------
<S> <C> <C>
Graphics-based Operator QuickPanel and QuickPanel Junior $1,240 - $ 6,995
Interfaces Smart Panel and Smart Panel Plus 3,750 - 6,000
SmartScreen 3,750 - 7,850
SmartTouch 2,000 - 7,000

Software Tools ProcessWindow (MMI software) 280 - 2,100
ProWorx (PLC support software) 750 - 3,500
Waltz (PC-based control software) 175 - 3,290
SecurWorx (version control software) 7,000 - 42,750
QuickDesigner (configuration software) 595 - 895

Text-based Operator Interfaces MessageCenter 400 - 1,100
Grey-Line 600 - 1,000
SmartMarquee and QuickMarquee 3,500 - 13,500
Keypad panels 300 - 1,000

Industrial Computer Workstations TCS Family 3,500 - 15,000
</TABLE>

GRAPHICS-BASED OPERATOR INTERFACE PRODUCTS. These products are easy-to-use
displays which allow human machine operators to monitor and program industrial
equipment by receiving and inputting information through a display screen. The
Company has sold over 30,000 units in this class since 1989, and sales from
these graphics-based product lines represented 70.7% and 62.1% of the Company's
net sales in fiscal 1996 and for the nine months ended December 31, 1996,
respectively.

The Company's products in this category consist of monochrome and color
graphical displays on either a flat panel or a cathode ray tube ("CRT") based
screen. These products offer graphical touchscreen operator interfaces that are
cost-effective replacements to a variety of discrete devices, from push buttons
to message centers. The trend in this product class is towards smaller, flat
panel-based displays as opposed to the more bulky CRT screens. The QuickPanel
flat panel product line has eight separate models, while the CRT-based
SmartScreen is sold in a variety of screen sizes and configurations. All of

31
<PAGE>
these units are designed for single operator stations and include connectivity
technology to communicate with proprietary PLCs. The Company's graphics-based
operator interface products can communicate with over 20 major PLCs and PLC
networks including Allen-Bradley Remote I/O-TM-, Data Highway PLUS-TM-, Modicon
Modbus Plus-TM-, and GE Genius I/O-TM-. Consequently, these products are capable
of serving as bridges to open systems products and technology.

SOFTWARE TOOLS. The Company's software tools are described below:

PROCESSWINDOW. ProcessWindow is a graphical operator interface software
program that enhances the man-machine interface ("MMI") that occurs between
a human operator and a particu-
lar piece of factory equipment. The product provides a variety of
information management and display capabilities that can be programed by the
user, runs under Windows 3.1 and NT and is capable of communicating with
many different control systems. In addition, it can be linked to the
Company's ProWorx and Waltz software products.

PROWORX. ProWorxPlus and ProWorx IV are software tools which support the
operation of PLCs. These products allow a human operator to easily and
efficiently program a PLC to control the parameters of a machine's
operation. Each of the products in this class run on DOS- or Windows-
compatible PCs, and support PLCs manufactured by Allen-Bradley and Modicon.

WALTZ. The Company's Waltz control software is a PC-based control
product that allows a machine operator to have direct PC control over the
operation of a machine without the necessity of a PLC. Waltz runs on Windows
NT and includes an IEC 1131-3 compatible editor, a controller, communication
drivers to various types of input/output systems, and an operator interface
based on the Company's ProcessWindow software. By utilizing general purpose
computers and high-performance, real-time operating systems, such as Windows
NT, this software tool allows manufacturers to reduce dependency on
proprietary PLCs and shift their operations to open systems technology.

SECURWORX. Users of multiple PLCs and other programmable devices may be
faced with hundreds of controllers on a particular site, each containing
unique application programs, connected by means of a local area network. As
human operators make changes to the programming of a particular PLC, the
Company's SecurWorx client/server database management software provides
version control management as well as password protection. SecurWorx
produces an audit trail of the controller program changes and is integrated
with the Company's ProWorx software.

QUICKDESIGNER. QuickDesigner is a Windows compatible software design
tool used with the Company's flat panel operator interface products. This
software tool allows users to configure the display features on the
graphical flat panel touchscreen to meet their individual needs.

TEXT-BASED OPERATOR INTERFACES. These products, such as Grey-Line,
MessageCenter and QuickMarquee, report on the operation of industrial equipment
by sending textual messages to the machine operator through the use of a digital
display apparatus, with display sizes ranging from one quarter inch to eight
inches. This allows the machine operator to review messages as needed, rather
than having to constantly monitor a complicated control panel filled with push
buttons, pilot lights and selector switches. These products, although the most
basic types of operator interfaces, are still widely popular and allow the
Company to provide a broad range of products for the control segment of the
industrial automation market.

INDUSTRIAL COMPUTER WORKSTATIONS. The Company offers the TCS family of
ruggedized, open architecture computers, workstations and stand alone computers
and monitors specifically designed for the harsh requirements of the factory
floor. The products vary based on size, mounting configurations, display types,
memory, storage devices, key pads and touchscreen options. In addition, the TCS
family of industrial computers is also available bundled with the Company's
software products.

32
<PAGE>

PRODUCTS UNDER DEVELOPMENT. The Company intends to focus its product
development efforts on incorporating the high-end functionality of the Company's
software tools into its existing text-based and graphics-based operator
interface products. This development would allow the graphics-based products to
offer the same control and networking functionality that is currently available
in the software tools. The Company believes the resulting products would provide
enhanced price/performance leadership, allowing open architecture to be
available at the lower end of the product spectrum and providing the end-user
the benefit of enhanced flexibility, connectivity and functionality without
having to convert its control systems to PC-based systems. In particular, the
Company is beginning to invest substantial resources in developing future
generations of the QuickPanel product line aimed at giving it the functionality
of an open standards, interoperable network computer.

SERVICE AND SUPPORT. The Company maintains an inventory of spare parts and
service stock. The shipment of spare parts and the performance of repair service
on out-of-warranty products is a small, but high margin part of the Company's
business. For its software products, the Company offers annual customer support
contracts that entitle the purchaser to free phone support and software upgrades
during the length of the contract.

END-USERS

The Company has an installed base of over 33,000 operator
interface/industrial computer products, and an installed base for its software
tools consisting of over 7,000 licensees, which have over 33,000 authorized
licensed seats. The following list provides a selection of the Company's
end-user base.

<TABLE>
<CAPTION>
AEROSPACE BEVERAGE METALS/GLASS
<S> <C> <C>
The Boeing Company The Coca-Cola Company Aluminum Company of North
National Aeronautics and Miller Brewing Company America
Space Administration The Stroh Brewery Company Ball Container Corporation
AUTOMOTIVE Tetra Pak Inc. Kaiser Aluminum and Chemical,
Allied Signal Inc. CONSUMER PRODUCTS Inc.
BMW of North America, Inc. Eastman Kodak Company LTV Steel Company, Inc.
Chrysler Corporation Kimberly-Clark Corporation Reynolds Metals Company
Cooper Tire & Rubber Company Lever Brothers Company USX Corporation
Ford Motor Company Ralston Purina Company PETROCHEMICAL
General Motors Corporation Scott Paper Company Chevron Corporation
Goodyear Tire & Rubber Weyerhaeuser Company, Inc. The Dow Chemical Company
Company FOOD E.I. Dupont de Nemours and
Saturn Corporation American Crystal Sugar Company
TRW, Inc. Company H.B. Fuller Company
Frito-Lay, Inc. PHARMACEUTICALS
Nabisco, Inc. Abbott Laboratories
Phillip Morris Companies, Baxter International, Inc.
Inc. Eli Lilly and Company
Quaker Oats Company Pfizer Inc.
The Upjohn Company
</TABLE>

The Company believes that it has a broad end-user base, with none of its
end-users, including those listed above, accounting for a material portion of
its overall sales.

33
<PAGE>
SALES, MARKETING AND SUPPORT

The Company's products are sold in more than 25 countries, primarily through
an international network of independent distributors having approximately 200
sales locations. The Company seeks to establish and maintain relationships with
the leading industrial automation distributors in each of the geographic market
areas in which it competes, and periodically evaluates its distributors' market
positions. The Company's distributors typically provide customer training,
application engineering and support. The Company believes that its commitment to
service and support has been and will continue to be a significant factor in its
success. Sales to one distributor, McNaughton-McKay Electric Company, accounted
for 13.9%, 9.5% and 8.7% of the Company's net sales in fiscal 1995 and 1996 and
the nine months ended December 31, 1996. As of December 31, 1996, the Company's
sales, marketing and technical support organization consisted of 75 employees
and 45 independent sales representatives. This organization is managed by
regional sales managers located in Atlanta, Georgia; Cincinnati, Ohio; San
Francisco, California; Pittsburgh, Pennsylvania; Melrose Park, Illinois;
Edmonton, Alberta; Sao Paulo, Brazil; and Birmingham, England. This organization
supports the Company's independent distributors and complements their selling
efforts by targeting large end-users, system integrators, original equipment
manufacturers and others.

In addition to its network of independent distributors, the Company
maintains a 40.0%-owned joint venture investment in Pro-face, HMI B.V.
("ProFace"), a distributor located in the Netherlands. ProFace is the European
distributor of both the Company's and Digital Electronics' products.

PRODUCT DEVELOPMENT

The Company maintains an active product development program, including a
joint development arrangement with Digital Electronics for certain projects. The
Company's strategy is to develop new product offerings and existing product
extensions which are responsive to customer demands and satisfy the needs of the
Company's distributors. A significant portion of the Company's product
development expenses are targeted to developing products that will provide
additional functionality requested by the Company's end-users.

As of December 31, 1996, the Company had a product development staff of 80
full-time employees, including software, electronic and mechanical design
engineers, product managers, application engineers and directly associated staff
members involved in technical documentation and product support. During fiscal
1994, 1995 and 1996 and the nine months ended December 31, 1996, research and
development expenses were 10.1%, 8.9%, 7.6% and 9.0% of net sales, respectively.
The Company anticipates that it will continue to commit substantial resources to
product development efforts in the future.

SUPPLY RELATIONSHIP WITH DIGITAL ELECTRONICS

Digital Electronics is the Company's sole supplier of the flat panel screens
that are the principal hardware component incorporated in its graphics-based
operator interface products, the Company's best selling product class. During
fiscal 1994, 1995 and 1996 and for the nine months ended December 31, 1996,
sales from this product class accounted for 45.9%, 61.9%, 70.7% and 62.1%,
respectively, of the Company's net sales. Digital Electronics is not under a
contractual obligation to continue to supply the flat panel screens and there is
no formal agreement between the Company and Digital Electronics with respect to
pricing. A disruption in the supply of products from Digital Electronics or a
significant price increase could have a material adverse impact on the Company's
business, financial condition and results of operations until an alternative
source of supply could be established. The Company has the exclusive right to
market and distribute in North and South America all hardware products
manufactured by Digital Electronics pursuant to the terms of a distribution
agreement, which expires in April 2005. See "Risk Factors -- Dependence Upon
Digital Electronics Corporation" and "Certain Transactions."

34
<PAGE>
MANUFACTURING AND SUPPLY

The Company performs final assembly and testing for substantially all of its
products at its Melrose Park and Edmonton facilities, which are certified under
ISO-9001, an international quality standard. The assembly process encompasses
the assembly of sheet metal parts, keyboards, displays and electronic circuit
boards into finished goods and the duplication of software products on disks or
other electronic media. The Company subcontracts the assembly of circuit boards
and the fabrication of sheet metal and front panel bezels. The Company uses a
number of firms for these subcontracted services and is not materially dependent
upon any third party that performs these services.

Except for the flat panel displays purchased from Digital Electronics,
substantially all of the components used in the Company's products are available
from multiple sources and the Company maintains more than one source of supply
for all material components. However, the Company may experience supply
shortages due to various factors, including increases in market demand for
certain components and the limited capacity of certain suppliers. Although the
Company believes that the partial or complete loss of one or more of its
suppliers, other than Digital Electronics, is not likely to have a material
long-term impact on its operations, such a loss could in the short term result
in significant production delays, require the Company to seek alternative
sources of supply and increase its cost of goods sold and, therefore, could have
a material adverse effect on the Company's business, financial condition and
results of operations.

COMPETITION

Competition in the industrial automation industry is intense and
characterized by rapidly advancing technologies. The Company faces substantial
competition in all of its product lines and competition may increase if new
competitors enter the market or if existing competitors expand their product
offerings. Competitors include large PLC manufacturers, including Allen-Bradley
(a subsidiary of Rockwell International, Inc.), Eaton Corp., GE Fanuc Automation
North America, Inc. (a joint venture between General Electric Corporation and
Fanuc Limited), Groupe Schneider S.A. (consisting of Modicon, Inc., Schneider
S.A., Square D Co. and Telemechanique, Inc.) and Siemens Energy and Automation,
Inc. (the U.S. subsidiary of Siemens A.G.). Competitors also include software
developers, such as IDT, Inc. (a subsidiary of Eaton Corp.), Intellution Inc. (a
subsidiary of Emerson Electric Corporation), Nematron, Inc. and Wonderware, Inc.
Many of these competitors are larger and have significantly greater resources
than the Company. These competitors, as well as potential future competitors,
may have greater name recognition and a larger installed base than the Company.
The Company believes that over time this competition may have the effect of
reducing average selling prices of comparable products, and thus, in order to
maintain sales, the Company may be forced to increase unit volumes or increase
the performance of its products in order to offset or reduce any decreases in
selling prices. In the event such price reductions become necessary, the
Company's ability to maintain gross margins will depend on its ability to reduce
cost of goods sold in an amount sufficient to compensate for any decreases in
selling prices. The Company's competitors could in the future introduce products
with more features and lower prices than the Company's product offerings, bundle
existing or new products with other products or systems to compete with the
Company or exert leverage or other competitive pressures on distributors to give
priority to their own products at the expense of the Company's products. As the
market for industrial automation and process control solutions develops, a
number of companies with significantly greater resources than the Company may
attempt to increase their presence in the market by acquiring and/or forming
strategic alliances with competitors of the Company. The Company competes on the
basis of the reliability, price and ease of use of its products, the quality and
breadth of its distributor network and its customer service. The Company
believes that it competes favorably with respect to these factors.

INTELLECTUAL PROPERTY

The Company's success depends in part on its ability to maintain the
proprietary and confidential aspects of its products as they are released. The
Company does not own any significant patents, and relies on a combination of
copyrights, employee non-disclosure agreements and other means to establish and

35
<PAGE>
protect its proprietary rights. There can be no assurance that the precautions
taken by the Company adequately protect the Company's technology. In addition,
many of the Company's competitors have obtained or developed, and may be
expected to obtain or develop in the future, patents, copyrights or other
proprietary rights that cover or affect products that perform functions similar
to the products offered by the Company. The inability of the Company for any
reason to protect existing technology or otherwise acquire necessary technology
could prevent distribution or licensing of the Company's products, which would
have a material adverse effect on the business, financial condition and results
of operations of the Company. The Company licenses its software products
primarily under "shrink wrap" license agreements that are not signed by
licensees and, therefore, may be unenforceable under the laws of certain foreign
jurisdictions. In addition, in some instances the Company licenses its software
products under agreements that give licensees limited access to the source code
of the Company's products. Accordingly, despite precautions taken by the
Company, it may be possible for unauthorized third parties to copy certain
portions of the Company's products or to obtain and use information that the
Company regards as proprietary.

Certain technology used in the Company's products is licensed from third
parties. These licenses generally require the Company to pay royalties and to
fulfill confidentiality obligations. In the future, it may be necessary or
desirable for the Company to seek additional licenses of intellectual property
rights held by third parties. There can be no assurance that such licenses will
be available on favorable terms, if at all.

The Company believes that, due to the rapid pace of innovation within its
industry, factors such as the technological and creative skills of its personnel
are more important to establishing and maintaining a technology leadership
position than are the various legal protection of its technology. The Company
believes that its products and technology do not infringe any existing
proprietary rights of others, although there can be no assurance that third
parties will not assert infringement claims in the future.

EMPLOYEES

As of December 31, 1996, the Company had a total of 240 full-time employees,
of which 80 were in product development, 75 were in sales and marketing, 54 were
in manufacturing and operations and 31 were in general and administrative
functions. The Company also hires temporary employees as needed. None of the
employees are represented by a labor union or subject to a collective bargaining
agreement. The Company believes that its employee relations are good.

FACILITIES

The Company's headquarters and principal manufacturing facilities are
located in Melrose Park, Illinois, in a 39,000 square foot leased facility, of
which approximately 24,000 square feet is used for manufacturing and storage.
The facility is owned by a partnership which is controlled by officers and major
shareholders of the Company. See "Certain Transactions." This facility is leased
through April 2002. In addition, the Company leases a 22,000 square foot
facility in Edmonton, Alberta. The Company also leases sales offices. As part of
the acquisition of Cincinnati, the Company became the primary obligor of a
29,670 square foot facility in Cincinnati, Ohio. The Company is currently
involved in negotiations for the sublease of this facility through the remainder
of the original lease term, which expires in August 2000. The Company
anticipates that it will be necessary in the near future to lease additional
inventory storage space, and management believes suitable space is available to
meet this need in the Melrose Park vicinity. With the exception of such
additional inventory storage space, the Company believes that its facilities are
adequate for its current needs.

LEGAL PROCEEDINGS

The Company is not involved in any material legal proceedings.

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<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth the name, age as of December 31, 1996, and
position of the executive officers and directors of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION
- -------------------------------- ----------- ---------------------------------------------------------------------
<S> <C> <C>
Nicholas T. Gihl(1)............. 40 Chairman, Chief Executive Officer and President, Director
Dennis Marrano.................. 47 Senior Vice President of Operations
Peter A. Nicholson.............. 33 Senior Vice President and Chief Financial Officer, Treasurer,
Secretary
Kevin O'Connor.................. 36 Senior Vice President of Sales
Neil R. Taylor.................. 47 Senior Vice President of Software Development, Director
Frank Wood...................... 49 Senior Vice President of Product Development and Marketing
Julius J. Sparacino(1).......... 59 Chairman Emeritus, Director
A.B. Siemer(1)(3)............... 59 Director
Edward T. Hurd(2)(3)............ 58 Director Nominee(4)
Donald J. Kramer(2)(3).......... 64 Director Nominee(4)
</TABLE>

- --------------

(1) Member of the Executive Committee.

(2) Member of the Compensation Committee.

(3) Member of the Audit Committee.

(4) Term will become effective upon the closing of this offering.

Mr. Gihl co-founded the Company in 1982, along with Mr. Sparacino, and has
served as President of the Company since April 1994. From the Company's founding
in 1982 to March 1994, Mr. Gihl served as Executive Vice President. Mr. Gihl has
served as a director of the Company since the Company's founding. Mr. Gihl
became Chairman in December 1996. Prior to co-founding the Company, from October
1979 to November 1982, Mr. Gihl served in several design engineering and
electronic development positions and as a Design Supervisor at Mark Controls, a
manufacturer of energy management systems. Mr. Gihl is married to the daughter
of Mr. Sparacino.

Mr. Marrano joined the Company in April 1985 as Director of Manufacturing
and has served in various positions with the Company since that time, most
recently as the Senior Vice President of Operations since April 1996.

Mr. Nicholson has served as Senior Vice President and Chief Financial
Officer, Treasurer and Secretary of the Company since June 1996. From June 1995
to May 1996, Mr. Nicholson served as Vice President of Finance of Mama Tish's
Italian Specialties, Inc., a manufacturer and marketer of frozen dessert
products. From July 1985 to May 1995, Mr. Nicholson was employed by Arthur
Andersen LLP, most recently as a manager in the audit and business advisory
practice area. Mr. Nicholson is a Certified Public Accountant.

Mr. O'Connor has served as the Company's Senior Vice President of Sales
since February 1996. Mr. O'Connor served as the Company's Vice President of
Sales and Marketing from March 1994 to February 1996 and as a regional sales
manager from December 1992 to March 1994. From August 1983 to December 1992, Mr.
O'Connor served as a Regional Sales Engineer for McNaughton-McKay Electric
Company, a distributor of industrial automation products.

Mr. Taylor has served as Senior Vice President of Software Development and a
director of the Company since the consummation of the Taylor Transaction in
September 1996. Mr. Taylor co-founded Taylor, a developer and marketer of
industrial automation software products, in 1979. Mr. Taylor served

37
<PAGE>
as the Chairman of the Board of Taylor from inception to September 1996, and
President of Taylor from inception to September 1991.

Mr. Wood has served as Senior Vice President of Product Development and
Marketing of the Company since February 1996. From September 1995 to February
1996, and May 1993 to July 1993, Mr. Wood served as a consultant in the
industrial automation market. From August 1993 to September 1995, Mr. Wood
served as Vice President of Sales and Marketing of Promise Systems Corp., a
developer and marketer of software. From October 1988 to April 1993, Mr. Wood
served as Vice President of Marketing for AEG Modicon, Inc., a developer,
manufacturer and marketer of programmable logic controllers and other industrial
automation products.

Mr. Sparacino co-founded the Company in 1982 and has served as a director
since that time. Mr. Sparacino served as the Chairman from 1982 to December
1996, when he became Chairman Emeritus. From 1982 to April 1994, Mr. Sparacino
served as President of the Company.

Mr. Siemer has served as a director of the Company since December 1993. Mr.
Siemer has been the President of Desco Corporation, an industrial and
manufacturing holding company, for over thirty years. Mr. Siemer was elected to
the Board of Directors pursuant to the terms of a Shareholders Agreement which
will expire upon the closing of this offering. See "Certain Transactions."

Mr. Hurd will become a director effective upon the closing of this offering.
From 1990 to February 1995, Mr. Hurd was President of Industrial Control, a
division of Honeywell Inc., a worldwide supplier of automation and control
products, systems and services, and served as Executive Vice President of
Honeywell Inc. from February 1995 to April 1996. Mr. Hurd has been an
independent consultant since April 1996. Mr. Hurd is also a director of Moore
Products Co., a manufacturer of industrial products for the process control
industry.

Mr. Kramer will become a director effective upon the closing of this
offering. From January 1990 to March 1996, Mr. Kramer was a Special Limited
Partner of TA Associates, a venture capital investing firm, and was a general
partner of TA Associates for the five years preceeding January 1990. Since March
1996, Mr. Kramer has been a private investor. Mr. Kramer is also a director of
Robotic Vision Systems, Inc., a designer, manufacturer and installer of machine
vision-based products, and Micro Component Technology, Inc., a supplier of
semi-conductor handling equipment.

Executive officers of the Company are appointed by the Board of Directors
and serve, subject to their removal or resignation, until their successors have
been duly elected and qualified.

EMPLOYMENT AGREEMENTS

The Company entered into written employment agreements with Mr. Gihl on
December 19, 1996, with Mr. Marrano as of September 30, 1996, with Mr. Nicholson
effective June 1, 1996, with Mr. Taylor as of September 19, 1996 and with Mr.
Wood effective February 9, 1996. The employment agreements for Messrs. Marrano
and Wood provide for an initial term of one year, while the initial term under
Mr. Gihl's employment agreement is approximately 54 weeks, Mr. Taylor's initial
employment term under his employment agreement is three years and Mr.
Nicholson's initial employment term under his employment agreement is nineteen
months. After the expiration of the initial term, the employment agreements
automatically renew for successive one year periods unless either party delivers
written notice of its desire to terminate the agreement at least 90 days prior
to the expiration of the term. The base salaries for Messrs. Gihl, Marrano,
Nicholson, Taylor and Wood under their respective employment agreements is
$200,000, $110,000, $110,000, $125,000 and $110,000, respectively. Mr. Gihl's
employment agreement provides that he will be granted, immediately following the
effectiveness of this offering, an option to purchase 50,000 shares of Common
Stock at an exercise price equal to the initial public offering price per share
in this offering.

Each of the employment agreements contains a noncompetition covenant whereby
the employee agrees that for a period lasting from the date of the agreement to
one year after the termination of his

38
<PAGE>
employment with the Company, he will not engage in any business that competes
with the Company anywhere in the United States. In addition, each employee has
agreed to be bound by the terms of a confidentiality provision requiring the
employee to hold the Company's confidential information in the strictest
confidence for the longest period permitted by law.

Under the terms of these agreements, the employee's employment with the
Company may be terminated prior to the expiration of the term for "cause," as
defined in the agreements. In the event of termination for cause or if the
employee voluntarily terminates his employment, the Company's obligations under
the agreement cease and the employee forfeits all his rights to receive any
compensation or benefits, except for salary and benefits for services already
performed as of the date of termination. In addition, if the Company terminates
an employee's employment for any reason other than death, disability or cause,
including the decision by the Company not to renew the term of employment, the
Company must pay the employee designated severance amounts. In the case of
Messrs. Gihl, Marrano and Nicholson, the employee may also become entitled to
severance under designated circumstances involving his decision to terminate his
employment with the Company.

Under the terms of these agreements, the employees are entitled to bonus
amounts based upon the Company meeting certain financial targets. Mr. Gihl's
agreement provides for a minimum bonus of $5,000 per quarter, Mr. Nicholson's
agreement provides for a minimum bonus of $25,000 for fiscal 1997, and Mr.
Wood's agreement provides for a minimum bonus of $4,000 per quarter. Mr.
Marrano's agreement provides for a special bonus of $7,500 payable for fiscal
1997 in addition to the formula bonus. Mr. Nicholson's agreement provides for a
signing bonus of $50,000, payable on the earlier of the completion of an initial
public offering by the Company or in installments of $13,333 on each anniversary
of his employment agreement. In addition, Mr. Nicholson is entitled to a
one-time $25,000 bonus upon the consummation of certain designated business
transactions, which was earned upon the consummation of the Taylor Transaction
and is payable upon the earlier of January 1, 1998 or the completion of an
initial public offering.

STAGGERED BOARD OF DIRECTORS

Pursuant to the Company's Articles of Incorporation, upon the closing of
this offering the Board of Directors will be divided into three classes of
directors serving staggered three-year terms. The terms of Class I directors
(Messrs. Siemer and Taylor) expire in 1998; the terms of Class II directors
(Messrs. Sparacino and Kramer) expire in 1999; and the terms of Class III
directors (Messrs. Gihl and Hurd) expire in 2000. All directors of each class
will hold their positions until the annual meeting of shareholders held during
the year in which the terms of the directors in such class expire, or until
their respective successors are elected and qualified.

COMPENSATION OF DIRECTORS

Directors are not currently paid fees, but are reimbursed for travel
expenses incurred in attending board meetings. Following completion of this
offering, non-employee directors will be reimbursed for their out of pocket
expenses incurred to attend each committee or board meeting, up to an amount not
to exceed $10,000 per director per year. In addition, non-employee directors
will participate in the 1996 Non-Employee Directors' Stock Option Plan. See
"Stock Compensation Plans -- 1996 Non-Employee Directors' Stock Option Plan."

DIRECTOR COMMITTEES

The Board of Directors has established an Executive Committee, an Audit
Committee and a Compensation Committee.

39
<PAGE>
The Executive Committee is empowered to act with all authority granted to
the Board of Directors between board meetings, except with respect to those
matters required by Illinois law or by the Company's By-laws to be subject to
the power and authority of the Board of Directors as a whole. Messrs. Gihl,
Siemer and Sparacino are the current members of the Executive Committee.

The functions of the Audit Committee are to recommend annually to the Board
of Directors the appointment of the independent public accountants of the
Company, to discuss and review the scope and the fees of the prospective annual
audit and to review the results thereof with the Company's independent public
accountants, to review and approve non-audit services of the independent public
accountants, to review compliance with existing major accounting and financial
policies of the Company, to review the adequacy of the financial organization of
the Company and to review management's procedures and policies relative to the
adequacy of the Company's internal accounting controls. Messrs. Hurd, Kramer and
Siemer will serve on the Audit Committee beginning immediately after the closing
of this offering.

The functions of the Compensation Committee are to review and approve annual
salaries and bonuses for all executive officers, to review, approve and
recommend to the Board of Directors the terms and conditions of all employee
benefit plans or changes thereto and to administer the Company's various stock
plans. Messrs. Hurd and Kramer will serve on the Compensation Committee
beginning immediately after the closing of this offering.

EXECUTIVE COMPENSATION

The following table sets forth a summary of all compensation paid by the
Company for fiscal 1996 to the Company's Chief Executive Officer and to the
other executive officers of the Company whose total annual salary and bonus for
such year exceeded $100,000 (together, the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------- ALL OTHER
NAME AND PRINCIPAL POSITION(1) SALARY BONUS COMPENSATION(3)
- ---------------------------------------------------------------------- ----------- --------- -----------------
<S> <C> <C> <C>
Nicholas T. Gihl
Chairman, President and Chief Executive Officer................. $ 130,000 $ -- $ 1,252

Julius J. Sparacino(2)
Chairman Emeritus............................................... 110,000 -- 1,111

Kevin O'Connor
Senior Vice President of Sales.................................. 101,250 32,375 1,081

Dennis Marrano
Senior Vice President of Operations............................. 101,250 32,375 1,011
</TABLE>

- ------------------

(1) Pursuant to the terms of their employment agreements with the Company, Mr.
Nicholson, who has served as Senior Vice President and Chief Financial
Officer, Treasurer and Secretary of the Company since June 1996, receives
annual base salary of $110,000, Mr. Taylor, Senior Vice President of
Software Development of the Company since September 1996, receives annual
base salary of $125,000, and Mr. Wood, who has served as Senior Vice
President of Product Development and Marketing of the Company since February
1996, receives annual base salary of $110,000.

(2) At March 31, 1996, Mr. Sparacino served as the Chairman of the Company.

(3) Other compensation for Mr. Gihl consisted of $1,029 of matching
contributions under the Company's 401(k) plan and $223 in Company-sponsored
life insurance. Other compensation for Mr. Sparacino consisted of $888 of
matching contributions under the Company's 401(k) plan and $223 in
Company-sponsored life insurance premiums. Other compensation for Mr.
O'Connor consisted of $858 of matching contributions under the Company's
401(k) plan and $223 in Company-sponsored life insurance premiums. Other
compensation for Mr. Marrano consisted of $788 of matching contributions
under the Company's 401(k) plan and $223 in Company-sponsored life insurance
premiums.

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<PAGE>
The following table provides certain specified information concerning
unexercised options held under the 1993 Stock Plan as of March 31, 1996 by the
Named Executive Officers. No options were granted to or exercised by any Named
Executive Officer in fiscal 1996.

FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT MARCH 31,1996(#) AT MARCH 31, 1996($)(1)
--------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
Nicholas T. Gihl............................. -- -- $ -- $ --
Julius J. Sparacino.......................... -- -- -- --
Kevin O'Connor............................... 66,396 33,198 542,455 271,228
Dennis Marrano............................... 14,574 29,148 116,592 233,184
</TABLE>

- ------------------

(1) There was no public trading market for the Common Stock on March 31, 1996.
Accordingly, solely for purposes of this table, the values in these columns
have been calculated on the basis of the assumed initial public offering
price of $9.00 per share (rather than a determination of the fair market
value of Common Stock on March 31, 1996), less the applicable option
exercise price.

STOCK COMPENSATION PLANS

1996 STOCK OPTION PLAN. The Company has adopted the 1996 Stock Option Plan
(the "1996 Plan"), under which the Compensation Committee may grant options to
purchase up to 550,000 shares of Common Stock to management, employees and
advisors of the Company. The 1996 Plan provides for the grant of incentive stock
options ("Incentive Options") within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), and non-statutory stock options
that do not qualify as incentive stock options under Section 422 of the Code
("Non-Statutory Options"). To date, no options have been granted under the 1996
Plan. The Board of Directors intends to grant, immediately following the
effectiveness of this offering, options to purchase an aggregate of 300,000
shares of Common Stock at an exercise price equal to the initial public offering
price per share in this offering. Mr. Gihl will receive options to purchase
50,000 shares of Common Stock pursuant to this grant.

1996 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN. The Company has adopted the
1996 Non-Employee Directors' Stock Option Plan (the "Directors' Plan"), under
which 120,000 shares of Common Stock have been authorized for issuance. All
non-employee directors will receive an option to purchase 12,000 shares of
Common Stock under the Directors' Plan on the day after each annual meeting of
the shareholders of the Company, provided that he or she then continues to serve
as a member of the Board of Directors. All such grants will be Non-Statutory
Options. The options granted under the Directors' Plan are exercisable beginning
six months from the date of grant. No options have been granted under the
Directors' Plan.

1996 DISCOUNT STOCK PURCHASE PLAN. The Company has established the 1996
Discount Stock Purchase Plan (the "Purchase Plan") and reserved 250,000 shares
of Common Stock for issuance thereunder. Pursuant to the Purchase Plan, eligible
employees of the Company may be given an opportunity to purchase Common Stock of
the Company through payroll deductions during purchase periods of six months or
such shorter periods as may be determined by the Board, with the first offering
period commencing on the first March 31 or September 30 occuring after the
closing of this offering. Eligible employees become participants in the Purchase
Plan by delivering to the Company, prior to the commencement of the purchase
period, an agreement authorizing a payroll deduction of up to 10.0% of such
employee's base compensation during the purchase period. The purchase price per
share at which shares are sold in an offering under the Purchase Plan is the
lesser of (i) 85.0% of the fair market value of a share of Common Stock on the
first day of the purchase period, or (ii) 85.0% of the fair market value of a

41
<PAGE>
share of Common Stock on the last day of that purchase period. Rights granted
under the Purchase Plan are intended to qualify for favorable federal income tax
treatment associated with rights granted under an employee stock purchase plan
under the provisions of Section 423 of the Code. No shares have been issued
under the Purchase Plan.

1993 STOCK OPTION PLAN. In 1993, the Company adopted the 1993 Stock Option
Plan, under which 375,000 shares of Common Stock have been reserved for issuance
(the "1993 Stock Plan"). There are currently options to purchase 295,974 shares
of Common Stock outstanding under the 1993 Stock Plan at a weighted average
price per share of $2.85, of which 159,194 will be exercisable as of February 9,
1997. The Company's Board of Directors has adopted a resolution that no future
grants of options may be made under the 1993 Stock Plan.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Board of Directors has not had a Compensation Committee prior to this
offering and the functions of the Compensation Committee have been performed by
the Board of Directors as a whole. Immediately following the closing of the
offering, the Compensation Committee will become effective and will be composed
of Messrs. Hurd and Kramer. For information concerning certain transactions and
relationships among the Company and the members of the Board of Directors, see
"Recent Acquisitions -- Taylor Transaction" and "Certain Transactions."

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<PAGE>
RECENT ACQUISITIONS

TAYLOR TRANSACTION

In September 1996, the Company completed a series of transactions resulting
in its holding 61.0% of the Class A Shares of Taylor. In the first step of this
transaction, the Company acquired all of the voting stock of Taylor in exchange
for aggregate consideration of $7.4 million, the right to receive contingent
consideration as described below and 767,112 Taylor Exchangeable Shares. Of the
$7.4 million, $2.2 million was in the form of a promissory note from Taylor to
Neil R. Taylor, the former majority shareholder of Taylor, and the remainder was
paid in cash at the closing. The 767,112 Taylor Exchangeable Shares are
convertible into 767,112 shares of Common Stock of the Company at any time at
the election of the holders of such shares. Taylor's Articles of Organization
provide that if the Company has not effected an initial public offering of any
class of its capital stock prior to September 19, 1997, the holders of the
Taylor Exchangeable Shares will have the right to sell their shares to Taylor or
the Company for an aggregate amount equal to $6.0 million payable over three
years. See "Description of Capital Stock -- Taylor Exchangeable Shares."

The $2.2 million promissory note issued to Neil R. Taylor accrues interest
on the principal sum outstanding from time to time at a rate of 12.5% per annum
until March 19, 1997, and at a rate of 15.0% per annum thereafter. The Company
has guaranteed repayment of all amounts due under this note. The Company is
required to pay all amounts outstanding under such promissory note following the
closing of a registered initial public offering of any class of stock of the
Company. The note is secured by the assets of Taylor's labor scheduling software
product line. Upon a default under this note by Taylor or the Company, Mr.
Taylor would have the right to retain this product line in full satisfaction of
amounts due under the note. The Company will use a portion of the net proceeds
of this offering (or, if earlier, the sale of the labor scheduling software
product line) to repay this note.

Mr. Taylor and the former shareholders of Taylor also hold certain
registration rights with respect to their shares of Common Stock issuable upon
conversion of their Taylor Exchangeable Shares. See "Description of Capital
Stock -- Registration Rights."

Under the Taylor Transaction, the former shareholders of Taylor are also
entitled to receive certain contingent consideration pursuant to an earn-out
formula. Under such formula, if the actual consolidated revenues of Taylor ("Net
Revenues") between October 1, 1996 and September 30, 1997 exceed $8.0 million,
Taylor will pay the former shareholders an aggregate amount equal to $1.0
million, and to the extent that Net Revenues during such period exceed $9.2
million, Taylor will pay to the former shareholders an aggregate amount, not to
exceed $3.0 million, equal to 50.0% of such excess. In addition, for the period
between October 1, 1997 and September 30, 1998, if Net Revenues exceed $8.0
million, Taylor will pay to the former shareholders an aggregate amount equal to
$1.0 million, and to the extent that Net Revenues during such period exceed
$10.6 million, the Company will pay to the former shareholders an aggregate
amount, not to exceed $3.0 million, equal to 50.0% of such excess. The Company
has guaranteed the payment of all amounts of contingent consideration by Taylor
to the former shareholders of Taylor.

Digital Electronics originally loaned the Company an aggregate of $5.0
million in order to consummate the Taylor Transaction. Immediately thereafter,
$4.0 million of the loan was converted into 3,900 Taylor Class A Shares,
representing 39.0% of the aggregate amount of such shares. The remaining $1.0
million of indebtedness is represented by an unsecured promissory note from the
Company payable to Digital Electronics, accruing interest at a rate of 5.0% per
annum, maturing on the earlier of August 31, 1997 or the completion of an
initial public offering of any class of capital stock of the Company. The
Company will use a portion of the net proceeds of this offering to repay this
note.

Pursuant to an arrangement with Digital Electronics, the Company agreed that
to the extent Taylor is required to make any payment of contingent consideration
to the former shareholders of Taylor, the Company will transfer funds to Taylor
in an amount equal to such contingent consideration. To the extent the Company
funds a portion of a contingent payout, the Company is permitted to cause Taylor
to issue additional Taylor Class A Shares to the Company in order to increase
the Company's ownership interest in the outstanding Taylor Class A Shares by the
following percentage: 2.0% multiplied by a fraction, the

43
<PAGE>
numerator of which is the entire contingent consideration payable to the
shareholders and the denominator of which is $4.0 million. If the entire amount
of contingent consideration is paid to the former Taylor shareholders, Digital
Electronics' ownership interest in Taylor will be decreased to 35.0% and the
Company's interest will be increased to 65.0%.

To provide additional financing for the Taylor Transaction, the Company
borrowed $2.0 million from A.B. Siemer, a director and significant shareholder
of the Company, pursuant to a promissory note dated as of September 19, 1996.
The outstanding principal amount under this note is due and payable on the
earlier of September 19, 1999, or ten days after the closing of an initial
public offering of any class of capital stock of the Company. The unpaid
principal balance of this note bears interest at a rate equal to 20.0% per
annum, 13.0% of which is payable in cash and 7.0% of which is payable in shares
of Common Stock of the Company, valued at $5.00 per share, with a minimum of
27,999 shares issuable even if the note is paid in the first year. The cash
portion of accrued and unpaid interest is due and payable monthly after December
31, 1996, while the stock portion of accrued and unpaid interest is due and
payable on the last day of each calendar year beginning on December 31, 1997.
The Company will use a portion of the net proceeds of this offering to repay
this note in full.

The Taylor Transaction was accounted for under the purchase method of
accounting. For a further discussion of the accounting treatment of the Taylor
Transaction and certain accounting charges in connection therewith, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Overview."

CINCINNATI TRANSACTION

In January 1996, a wholly owned subsidiary of the Company merged with
Cincinnati. As consideration for the transaction, the shareholders of Cincinnati
received $499,990 in cash and the right to receive contingent consideration as
described below. In addition, the majority shareholder of Cincinnati received
150,003 shares of the Company's Common Stock. Under the terms of this
transaction, the former majority shareholder of Cincinnati has the right after
January 29, 1998 to require the Company to purchase all, but not less than all,
of the 150,003 shares issued to him for their then fair market value. This
shareholder has agreed to waive this right effective upon the closing of this
offering.

As additional contingent consideration, the former shareholders of
Cincinnati are entitled to the payment of certain contingent consideration. To
the extent sales of Cincinnati products and certain similar products of the
Company during calendar years 1996 and 1997 exceed Cincinnati's historical sales
volume, the Company will pay the former Cincinnati shareholders an amount equal
to 10.0% of the first $1.0 million of such excess, and 4.0% of any additional
excess. All payments of such contingent consideration for calendar years 1996
and 1997 to the former majority shareholder, who will receive 53.6% of such
payments, shall be paid in shares of Common Stock valued at their then fair
market value. The remainder of this contingent consideration paid to the other
former shareholders shall be paid in cash. No contingent consideration was
earned with respect to 1996. To the extent net sales of the Company in calendar
years 1998, 1999 and 2000 exceed certain base targets, the former majority
shareholder of Cincinnati will receive 1.25% of such excess, 50.0% of which
shall be paid in cash and 50.0% of which shall be paid in shares of Common
Stock, valued at their then fair market value. The Company may, at its election,
buy-out the payments of future contingent consideration due to the former
majority shareholder for calendar years 1998, 1999 and 2000. The specified
payments range from $2.0 million to $1.0 million depending on the timing of such
a buy-out.

Pursuant to a registration rights agreement entered into in connection with
the Cincinnati Transaction, the Company granted certain piggy-back registration
rights to the former majority shareholder with respect to the shares of Common
Stock issued to him. See "Shares Eligible for Future Sale -- Registration
Rights."

The Cincinnati Transaction was accounted for under the purchase method of
accounting. For a further discussion of the accounting treatment of the
Cincinnati Transaction and certain accounting charges in connection therewith,
see "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Overview."

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<PAGE>
CERTAIN TRANSACTIONS

The Company is a party to a lease agreement, dated March 26, 1992, as
amended in December, 1996, with J&N Partnership, an Illinois general partnership
owned by Messrs. Sparacino and Gihl and Mr. Sparacino's sons and daughter (Mr.
Gihl's spouse), pursuant to which the Company leases its principal 39,000 square
foot office and manufacturing facility located in Melrose Park, Illinois. Annual
rent under the lease is $144,000 plus property taxes, insurance and utilities,
and the lease terminates in April 2002. The Company has also agreed pursuant to
the terms of the lease agreement to pay all expenses relating to occupancy and
maintenance of the leased premises.

At December 31, 1996, the Company was indebted to Mr. Sparacino, the
Company's co-founder and Chairman Emeritus, in the amount of $200,000, reflected
by an unsecured promissory note bearing interest at a rate equal to 10.0% per
annum. All principal and interest on this note is payable in December 1997.

At December 31, 1996, Mr. Gihl, an executive officer and significant
shareholder of the Company, was indebted to the Company in the amount of
$188,000 pursuant to two promissory notes bearing interest at a rate per annum
equal to 1.0% above the prime rate, maturing on December 16, 1998. Interest is
being accrued quarterly under these notes, and all amounts outstanding under
these notes are secured by a pledge of Mr. Gihl's shares of Common Stock.

The Company purchases all of the flat panel display screens that are the
principal hardware component incorporated in its graphics-based operator
interface product line from Digital Electronics, which owns 380,001 shares of
Common Stock, representing 7.8% of the outstanding Common Stock, and owns 39.0%
of the Taylor Class A Shares. Keizo Wada, the President and Chairman of Digital
Electronics, owns 18,000 shares of the Common Stock of the Company. Hardware
purchases by the Company from Digital Electronics totaled $3.1 million, $6.2
million, $8.8 million and $8.1 million for fiscal 1994, 1995 and 1996 and the
nine months ended December 31, 1996, respectively. Mr. Gihl is a member of the
Board of Directors of Digital Electronics. See "Risk Factors -- Dependence Upon
Digital Electronics Corporation."

In December 1996, Taylor entered into a two-year consulting agreement with
Digital Electronics whereby Digital Electronics has agreed to provide certain
product development and marketing consulting services to Taylor in exchange for
compensation of $200,000 per year. This agreement terminates in November 1998.

For information regarding certain transactions between the Company, Taylor,
Mr. Siemer and Digital Electronics in connection with the Taylor Transaction,
see "Recent Acquisitions -- Taylor Transaction."

Pursuant to a distribution agreement dated April 1, 1995, the Company has
the exclusive right to market and distribute in North and South America all of
Digital Electronics' hardware products. The distribution agreement expires on
April 1, 2005.

On July 22, 1994, Moritani America, Inc. ("Moritani America") and Digital
Electronics each purchased 125,001 shares of Common Stock of the Company for a
purchase price of $125,000 with a total of 250,002 shares of Common Stock being
sold for an aggregate purchase price of $250,000. Moritani America (which,
together with its parent, Moritani & Co., owns an aggregate of 291,501 shares of
the Company's Common Stock) acts as the import broker of Digital Electronics'
products on behalf of the Company. Under the terms of this transaction, Moritani
America and Digital Electronics have the right to require the Company at any
time to purchase all, but not less than all, of the shares purchased by each of
them under this transaction for a price equal to the lesser of (i) the original
purchase price, or (ii) the net book value per share as reflected on the
Company's consolidated balance sheet for the fiscal quarter most recently
completed. Moritani America and Digital Electronics have agreed to waive this
right effective upon the closing of this offering.

45
<PAGE>

In November 1995, the Company purchased a 40.0% interest in ProFace, a joint
venture among the Company, Digital Electronics and Moritani America. ProFace, an
industrial automation products distributor located in the Netherlands,
distributes the Company's and Digital Electronics' products in Europe. This
investment is accounted for by the Company under the equity method. ProFace did
not have significant operations during fiscal 1996. For the nine months ended
December 31, 1996, the Company's share of net earnings of the joint venture was
$79,000.

Neil Taylor, a director of the Company and its Senior Vice President of
Software Development, together with his wife, received a $2.2 million note, $3.7
million in cash, 575,334 Taylor Exchangeable Shares and the right to receive
certain contingent consideration in connection with the Taylor Transaction.
Prior to the Taylor Transaction, Neil Taylor and his wife loaned Taylor an
aggregate of $230,000. These loans bear interest at the Canadian prime rate. The
Company will repay this indebtedness with a portion of the proceeds of this
offering. See "Recent Acquisitions -- Taylor Transaction."

On December 16, 1993, the Company sold 1,204,653 shares of its Common Stock
to Mr. Siemer for a purchase price of $1.0 million. The agreement relating to
this purchase provides, among other things, that if the Company fails to effect
an initial public offering of its Common Stock or sale of the Company prior to
December 16, 1998, Mr. Siemer may require the Company to repurchase such
1,204,653 shares at their then fair market value. This right will terminate upon
the effectiveness of this offering. In connection with this transaction, the
Company entered into a shareholder agreement among the Company, Mr. Siemer and
the Company's other shareholders, pursuant to which, among other things, the
shareholders of the Company granted certain voting rights to Mr. Siemer. For so
long as Mr. Siemer owns a majority of the shares purchased in the transaction,
each of the shareholders agreed to vote all shares owned by them in favor of Mr.
Siemer's nominee to the Board of Directors. In addition, the shareholders agreed
to reciprocal rights of first refusal in the event of a proposed transfer of
shares and to certain preemptive rights with respect to the issuances of new
securities by the Company. The shareholder agreement and the rights granted to
Mr. Siemer pursuant to his stock purchase agreement will automatically terminate
upon the effectiveness of the registration statement filed in connection with
this offering. Mr. Siemer also holds certain registration rights with respect to
his shares of Common Stock. See "Description of Capital Stock -- Registration
Rights."

In July 1996, a company controlled by Mr. Siemer purchased from the Company
certain inventory and manufacturing rights relating to a text-based operator
interface product line for approximately $46,000. In addition, the Company and
Mr. Siemer have agreed to purchase arrangements permitting the company
controlled by Mr. Siemer to purchase designated Company products from time to
time at a prescribed mark-up from the Company's cost.

For information regarding other transactions between Mr. Siemer and the
Company, see "Recent Acquisitions -- Taylor Transaction."

The Company's Board of Directors has adopted a policy that any future
transactions between the Company and its officers, directors, affiliates or
controlling shareholders will be on terms which are considered to be no less
favorable to the Company than those obtainable in arm's length transactions with
unaffiliated third parties and must be approved by a majority of the
disinterested directors.

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<PAGE>
PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth certain information regarding beneficial
ownership of Common Stock as of December 31, 1996 (after giving effect to the
Debenture Conversion and the PIK Issuance), and as adjusted to reflect the sale
of the shares offered pursuant to this Prospectus, by (i) each Named Executive
Officer, (ii) each director and director nominee of the Company, (iii) all
executive officers and directors as a group, (iv) each person who is known by
the Company to own beneficially more than 5.0% of the outstanding Common Stock
and (v) each Selling Shareholder.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
OFFERING(1) NUMBER OFFERING(2)
EXECUTIVE OFFICERS, DIRECTORS ---------------------- OF SHARES ----------------------
AND DIRECTOR NOMINEES(3) NUMBER PERCENT OFFERED NUMBER PERCENT
- --------------------------------------------------- ------------ ----- ----------- ------------ -----
<S> <C> <C> <C> <C> <C>
Nicholas T. Gihl................................... 647,700(4) 12.4% -- 647,700 9.3%
Dennis Marrano..................................... 80,148(5) 1.5 -- 80,148 1.1
Peter A. Nicholson................................. -- -- -- -- --
Kevin O'Connor..................................... 99,594(6) 1.9 -- 99,594 1.4
Neil R. Taylor..................................... 575,334(7) 9.9 -- 575,334 7.6
Frank Wood......................................... 52,800(8) 1.0 -- 52,800 *
Julius J. Sparacino................................ 1,826,721(9) 34.9 515,000 1,311,721 18.9
A.B. Siemer........................................ 966,652(10) 18.5 -- 966,652 13.9
Edward T. Hurd..................................... -- -- -- -- --
Donald J. Kramer................................... -- -- -- -- --
All executive officers, directors and director
nominees as a group (10 persons)................. 4,248,949(11) 73.1 515,000 3,733,949 48.4

OTHER FIVE PERCENT SHAREHOLDERS
- ---------------------------------------------------
<S> <C> <C> <C> <C> <C>
Digital Electronics Corporation.................... 398,001(12) 7.6 -- 398,001 5.7
8-2-52 Nanko-Higashi
Suminoe-ku, Osaka, 559 Japan

Moritani & Co., Ltd................................ 291,501(13) 5.6 -- 291,501 4.2
1-4-22 Yaesu, Chuo-Ku
Tokyo, 104 Japan

F. Quinn Stepan.................................... 357,738(14) 6.8 240,000 117,738 1.7
200 Linden Street
Winnetka, Illinois 60093

The Al and Barbara Siemer Fund of the Columbus
Foundation....................................... 266,000(15) 5.1 266,000 -- --
1234 East Broad Street
Columbus, Ohio 43205
<CAPTION>

OTHER SELLING SHAREHOLDERS
- ---------------------------------------------------
<S> <C> <C> <C> <C> <C>
Dennis Radage...................................... 191,778(16) 3.5 64,000 127,778 1.8
John Sheridan...................................... 150,003(17) 2.9 15,000 135,003 1.9
</TABLE>

- --------------

* Less than 1%.

(1) Unless otherwise indicated in the footnotes to this table, the Company
believes the individuals named in this table have sole voting and investment
power with respect to all shares of Common Stock reflected in this table.

(2) Assumes no exercise of the Underwriters' over-allotment option.

(3) Unless otherwise indicated, address is c/o Total Control Products, Inc.,
2001 North Janice Avenue, Melrose Park, Illinois 60160.

47
<PAGE>
(4) Includes 575,700 shares held directly by Mr. Gihl, and 72,000 shares held
directly by Mr. Gihl's spouse.

(5) Includes 44,148 shares owned by Mr. Marrano, and 36,000 shares issuable upon
the exercise of options exercisable within 60 days after December 31, 1996.

(6) Represents 99,594 shares issuable upon the exercise of options, all of which
are currently exercisable.

(7) Represents 513,966 shares issuable upon the conversion of Mr. Taylor's
Taylor Exchangeable Shares, and 61,368 shares issuable upon the conversion
of Taylor Exchangeable Shares owned by Mr. Taylor's spouse. Mr. Taylor
disclaims beneficial ownership of the shares issuable upon the conversion of
Taylor Exchangeable Shares owned by his spouse.

(8) Represents 52,800 shares issuable upon the exercise of options, all of which
will become exercisable upon the closing of this offering.

(9) Does not include an aggregate of 360,000 shares owned by Mr. Sparacino's
children, all of whom are adults who do not reside with Mr. Sparacino.

(10) Includes 938,653 shares owned by Mr. Siemer, and 27,999 shares issuable to
Mr. Siemer upon the PIK Issuance. Does not include 266,000 shares
contributed by Mr. Siemer in February 1997 to the Columbus Fund. See Note
(15) below.

(11) Includes the shares identified in Notes (4) through (10) above.

(12) Includes 18,000 shares owned by Keizo Wada, the President of Digital
Electronics Corporation.

(13) Includes 125,001 shares owned by Moritani America.

(14) Includes 18,372 shares owned by Mr. Stepan, and 339,366 shares issuable to
Mr. Stepan upon the Debenture Conversion.

(15) Represents shares contributed by A.B. Siemer in February 1997.

(16) Mr. Radage served as the President of Taylor from September 1991 through
September 1996.

(17) Mr. Sheridan is the former president (serving through January 1996) and
majority shareholder of Cincinnati.

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<PAGE>
DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 22,500,000 shares of
Common Stock, no par value per share, and 1,000,000 shares of Preferred Stock,
no par value per share. Immediately prior to the closing of this offering, after
giving effect to the Taylor Conversion, the PIK Issuance and the Debenture
Conversion, there will be 6,003,576 shares of Common Stock issued and
outstanding and held by 18 shareholders of record. Upon the closing of this
offering, there will be no shares of Preferred Stock outstanding.

COMMON STOCK

The holders of shares of Common Stock are entitled to one vote for each
share held of record on all matters on which shareholders are entitled or
permitted to vote. Such holders may not cumulate votes in the election of
directors. Accordingly, holders of a majority of the shares of Common Stock
entitled to vote in any election of directors may elect all the directors
standing for election. The holders of Common Stock are entitled to receive such
dividends as may lawfully be declared by the Board of Directors out of funds
legally available therefor and to share pro rata in any other distribution to
the holders of Common Stock, subject to any preferential dividend rights of any
Preferred Stock then outstanding. See "Dividend Policy." The holders of Common
Stock are entitled to share ratably in the assets of the Company remaining after
payment of liabilities in the event of any liquidation, dissolution or winding
up of the affairs of the Company, subject to the prior rights of any Preferred
Stock then outstanding. The holders of Common Stock have no preemptive rights.
There are no conversion rights, redemption or sinking fund provisions or fixed
dividend rights with respect to the Common Stock. All outstanding shares of
Common Stock are fully paid and non-assessable, and the shares of Common Stock
to be issued in this offering, upon payment therefor, will be fully paid and
non-assessable. The rights, preferences and privileges of holders of Common
Stock are subject to, and may be adversely affected by, the rights of holders of
shares of any series of Preferred Stock which the Company may designate and
issue in the future.

PREFERRED STOCK

The Company's Articles of Incorporation authorize the Board of Directors,
without shareholder approval, to issue shares of Preferred Stock in classes or
series and to establish the designations, preferences, qualifications,
limitations or restrictions of any class or series with respect to the rate and
nature of dividends, the price and terms and conditions on which shares may be
redeemed, the terms and conditions for conversion or exchange into any other
class or series of the stock, voting rights and other terms. The Company may
issue, without approval of the holders of Common Stock, shares of Preferred
Stock which have voting, dividend or liquidation rights superior to the shares
of Common Stock and which may adversely affect the rights of holders of shares
of Common Stock. The issuance of shares of Preferred Stock, while providing
flexibility in connection with possible acquisitions and other corporate
purposes, could, among other things, adversely affect the voting power of the
holders of shares of Common Stock and could have the effect of discouraging,
delaying, deferring or preventing a change in control of the Company. The
Company has no present plan to issue any shares of Preferred Stock.

TAYLOR EXCHANGEABLE SHARES

As part of the Taylor Transaction, the Company caused Taylor to issue
767,112 shares of Class C Exchangeable Shares to the former shareholders of
Taylor (the "Taylor Exchangeable Shares"). The Taylor Exchangeable Shares have
no voting rights or any right to dividends or distributions or to share in the
assets of Taylor upon its liquidation. Each Taylor Exchangeable Share is
convertible at any time into one share of Common Stock of the Company.

49
<PAGE>
CONVERTIBLE SUBORDINATED DEBENTURE

In September 1987, the Company issued a 6.0% Convertible Subordinated
Debenture to a shareholder of the Company in the principal amount of $300,000
(the "Convertible Debenture"). Interest is payable monthly on the outstanding
principal amount of the Convertible Debenture at a rate of 6.0% per annum. At
any time prior to December 1, 1997, the holder of the Convertible Debenture may
convert all or part of the principal balance thereunder into Common Stock at a
price of $0.74 per share. In June 1996, the shareholder converted $50,000 of the
Convertible Debenture into 67,872 shares of Common Stock. The shareholder
holding the Convertible Debenture has agreed that, upon the closing of this
offering, the outstanding balance of the Convertible Debenture will be converted
into 339,366 shares of Common Stock.

CERTAIN STATUTORY PROVISIONS

The Company is subject to Section 7.85 of the Business Corporation Act of
Illinois ("Section 7.85"). Section 7.85 prohibits a publicly held Illinois
corporation from engaging in a "business combination" with an "interested
shareholder," unless the proposed "business combination" receives (i) the
affirmative vote of the holders of at least 80% of the combined voting power of
the then outstanding shares of all classes and series of the corporation
entitled to vote generally in the election of directors (the "Voting Shares")
voting together as a single class, and (ii) the affirmative vote of a majority
of the combined voting power of the then outstanding Voting Shares held by
disinterested shareholders voting together as a single class. For purposes of
Section 7.85, a "business combination" includes a merger, asset sale or other
transaction resulting in a financial benefit to the interested shareholder, and
an "interested shareholder" is a person who, together with affiliates and
associates, owns (or within two years, did own) 10% or more of the combined
voting power of the outstanding Voting Shares.

CERTAIN CHARTER AND BY-LAW PROVISIONS

The Company's Articles of Incorporation and By-laws contain a number of
provisions related to corporate governance and to the rights of shareholders. In
particular, the Company's By-laws provide that shareholders follow an advance
notification procedure for certain shareholder nominations of candidates for the
Board of Directors and for certain other shareholder business to be conducted at
any meeting of the shareholders. The existence of these provisions in the
Company's Articles of Incorporation and By-laws may have the effect of
discouraging a change in control of the Company and limiting shareholder
participation in certain transactions or circumstances by limiting shareholders'
participation to annual and special meetings of shareholders and making such
participation contingent upon adherence to certain prescribed procedures.

In addition, the Company's Articles of Incorporation and By-laws provide
that the number of directors of the Company will be fixed at six, and unless the
Board of Directors otherwise determines, a majority of the directors then in
office may fill any vacancies on the Board of Directors. Certain provisions of
the Company's Articles of Incorporation and By-laws may impede changes in
majority control of the Board of Directors. The Company's Articles of
Incorporation provide that the Board of Directors will be divided into three
classes, with directors in each class elected for three-year staggered terms.
Thus, it would take two annual elections to replace a majority of the Company's
Board of Directors. The Articles of Incorporation further provide that directors
may be removed prior to the expiration of their terms only for cause, and that
there are no cumulative voting rights in the election of directors. The By-laws
of the Company provide that any vacancy occurring in the Board of Directors,
including a vacancy created by an increase in the number of directors, shall be
filled for the remainder of the unexpired term by a majority vote of the
directors then in office.

As discussed above under "Preferred Stock," the Articles of Incorporation
authorize the creation and issuance of one or more series of Preferred Stock. In
the event of a proposed merger, tender offer or

50
<PAGE>
other attempt to gain control of the Company that the Board of Directors does
not approve, it might be possible for the Board of Directors to authorize the
issuance of a series of Preferred Stock with rights and preferences that would
impede the completion of such a transaction. An effect of the possible issuance
of Preferred Stock, therefore, may be to deter a future takeover attempt. The
Board of Directors has no present plans or understanding for the issuance of any
Preferred Stock.

The provisions of the Articles of Incorporation and the By-laws summarized
above may tend to deter any potential unsolicited or hostile takeover attempt or
other efforts to obtain control of the Company and thereby deprive some
shareholders of opportunities to sell shares of the Company at higher than
market prices.

LIMITATION ON LIABILITY AND INDEMNIFICATION MATTERS

The Company has adopted provisions in its Articles of Incorporation that, to
the fullest extent provided under Illinois law, limit the liability of its
directors and officers for monetary damages arising from a breach of their
fiduciary duties as directors or officers. Such limitation of liability does not
affect the availability of equitable remedies such as injunctive relief or
rescission, nor does it limit liability for (i) any breach of an officer or
director's duty of loyalty to the Company or its shareholders, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) a transaction from which an officer or director derives
an improper personal benefit or (iv) an unlawful distribution to the Company's
shareholders. The Company's By-laws provide that the Company shall indemnify its
directors to the fullest extent permitted by Illinois law, including
circumstances in which indemnification is otherwise discretionary to the Company
under Illinois law and permit the Company in its discretion to similarly
indemnify its officers, employees and agents.

There is no pending litigation or proceeding involving a director, officer,
employee or agent of the Company in which indemnification will be required or
permitted. The Company is not aware of any threatened litigation or proceeding
which may result in a claim for such indemnification.

REGISTRATION RIGHTS AGREEMENTS

Following this offering, the holders of certain shares of Common Stock will
have certain rights to cause the Company to register those shares under the
Securities Act of 1933, as amended (the "Securities Act"). By separate
agreements, these registration rights apply to the 966,652 shares held by A.B.
Siemer, the 135,003 shares held by the former majority shareholder of
Cincinnati, and the 671,112 shares issuable to the former shareholders of Taylor
upon the conversion of Taylor Exchangeable Shares (collectively, the "Rights
Holders"). All of such registration rights agreements provide that the Rights
Holders' registration rights are subject to certain notice requirements and to
the condition that, in the case of any piggyback registration rights, the
underwriters of any offering have the right to limit the number of shares
included in such registration. The Company has agreed to bear the expenses of
these registrations under these registration rights agreements, except for
underwriting discounts, selling commissions and underwriters' expense
allowances, which are to be paid by the respective Rights Holders.

Pursuant to his registration rights agreement with the Company, Mr. Siemer
was granted registration rights with respect to the 966,652 shares held by him.
At any time prior to June 1, 2003, Mr. Siemer, or the holders of 50.0% of the
shares originally purchased by Mr. Siemer, as the case may be, have the right to
require the Company to register all or part of such shares under the Securities
Act, and the Company is required to use its best efforts to effect such
registration, subject to certain conditions and limitations. The Company is
required to pay the cost for two demand registrations. In addition, Mr. Siemer's
registration rights agreement provides that in the event the Company proposes to
register any of its securities under the Securities Act at any time, Mr. Siemer
will be entitled to include all or a portion of such shares in such
registration, subject to certain exceptions. See "Certain Transactions."

51
<PAGE>
In connection with the acquisition of Cincinnati, the Company granted
certain piggyback registration rights to the former majority shareholder with
respect to his 135,003 shares of Common Stock. In general, such registration
rights agreement provides that in the event the Company proposes to register any
of its securities under the Securities Act at any time after January 29, 1998,
the former majority shareholder will be entitled to include all or a portion of
his shares in such registration, subject to certain exceptions. Such
registration rights only apply in the case of a registration effective on or
after January 29, 1998.

Finally, as part of the Taylor Transaction, the Company granted certain
registration rights to the holders of Taylor Exchangeable Shares, exercisable
upon the conversion of such shares into shares of Common Stock of the Company.
Such rights are exercisable commencing seven months after the effective date of
an initial public offering of any class of the Company's securities, and expire
five years thereafter. The former shareholders of Taylor are entitled to require
the Company, on up to four occasions during such period, to register all or a
portion of such shares under the Securities Act, provided that the amount of
stock to be offered in such registrations must constitute over 2% of the
Company's outstanding Common Stock and have a fair market value over $1.0
million. If the holding period for any Taylor Exchangeable Shares is determined
by the Company to be not identified with the holding period under Rule 144(d)
under the Securities Act for the shares issuable upon conversion of the Taylor
Exchangeable Shares, then certain former shareholders of Taylor are entitled to
an additional demand registration. The Company also granted to the former
shareholders of Taylor certain piggyback registration rights pursuant to which,
in the event the Company proposes to register any of its securities under the
Securities Act at any time, except in the Company's initial public offering,
such holders will be entitled to include all or a portion of their shares in
such registration, subject to certain exceptions. Finally, registration rights
for any of such shares subject to the registration rights agreement expire once
the holder of such shares is permitted to transfer all of his shares in any
three month period pursuant to Rule 144 under the Securities Act.

TRANSFER AGENT

The transfer agent and registrar for the Common Stock will be Norwest Bank
Minnesota, N.A.

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<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, the Company will have outstanding
7,653,576 shares of Common Stock. Of these shares, the 2,750,000 shares of
Common Stock sold in this offering will be freely tradeable without restriction
under the Securities Act except for any shares purchased by "affiliates" of the
Company (as that term is defined in Rule 144 under the Securities Act), which
may generally only be sold in compliance with Rule 144.

The remaining 4,903,576 shares (the "Restricted Shares") were issued and
sold by the Company in private transactions in reliance upon exemptions under
the Securities Act. Restricted Shares generally may be sold in the public market
only if registered under the Securities Act or sold in compliance with Rule 144.

Of the Restricted Shares, 288,000 shares will be eligible for sale in the
public market in reliance on Rule 144(k) immediately following the closing of
this offering; all of these shares are subject to the lock-up agreements
described below. An additional 3,192,224 Restricted Shares will be eligible for
sale in the public market pursuant to Rule 144 and Rule 701 under the Securities
Act beginning approximately 90 days after the date of this Prospectus; all of
these shares are subject to the lock-up agreements described below.

Each executive officer, director and director nominee and all of the current
shareholders of the Company, who will, upon the closing of this offering, hold
an aggregate of 6,003,576 shares of Common Stock, together with the holders of
stock options to purchase an aggregate of 295,974 shares of Common Stock, have
agreed that they will not, without the prior written consent of Adams, Harkness
& Hill, Inc., offer, sell, contract to sell or otherwise dispose of any shares
of Common Stock owned beneficially by them, other than as a bona fide gift or
gifts to or in trust for a person or entity who or which agrees in writing to be
bound by the foregoing restrictions, for a period of 180 days after the date of
this Prospectus.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including persons deemed to be affiliates of the
Company, whose Restricted Shares have been fully paid for and held for at least
two years from the later of the date of issuance by the Company or acquisition
from an affiliate of the Company, may sell such securities in brokers'
transactions or directly to market makers beginning approximately 90 days after
the date of this Prospectus, provided the number of shares sold in any
three-month period does not exceed the greater of 1% of the then outstanding
shares of the Common Stock (approximately 76,540 shares, based on the number of
shares to be outstanding after this offering) or the average weekly trading
volume in the public market during the four calendar weeks preceding the filing
of the seller's Form 144. Sales under Rule 144 are also subject to certain
notice of sale requirements and the availability of current public information
concerning the Company. After three years have elapsed from the later of the
issuance of Restricted Shares by the Company or their acquisition from an
affiliate of the Company, such shares may be sold without limitation, pursuant
to Rule 144(k), by persons who have not been affiliates of the Company for at
least three months. Rule 144 also provides that affiliates who are selling
shares that are not Restricted Shares must nonetheless comply with the same
restrictions applicable to Restricted Shares with the exception of the holding
period requirement.

Restricted Shares that have been issued in reliance on Rule 701 (such as
shares of Common Stock issued under the Company's 1993 Stock Option Plan) may be
resold by persons other than affiliates of the Company, beginning approximately
90 days after the date of this Prospectus, subject only to the manner of sale
provisions of Rule 144, and may be resold by affiliates of the Company under
Rule 144 without compliance with its two-year holding period requirement.

Rule 144A under the Securities Act would permit, subject to certain
conditions, the sale by the current holders of Restricted Shares of all or a
portion of their shares to certain "qualified institutional buyers," as defined
in Rule 144A.

53
<PAGE>
Certain shareholders of the Company hold registration rights. See
"Description of Capital Stock -- Registration Rights Agreements."

At January 31, 1997, the Company had outstanding options for 295,974 shares
of Common Stock, of which 159,194 will be exercisable as of February 9, 1997
(all of which are subject to lock-up agreements). In addition, the Company
intends to grant, immediately following the effectiveness of this offering,
options to purchase an aggregate of 300,000 shares of Common Stock at an
exercise price equal to the initial public offering price per share in this
offering. The Company intends to file Form S-8 registration statements under the
Securities Act to register all shares of Common Stock issuable under its stock
plans, which it has agreed not to file sooner than 180 days after the date of
this Prospectus without the consent of Adams, Harkness & Hill, Inc. Those
registration statements will become effective immediately upon filing. Shares
issued pursuant to those registration statements will be eligible for resale in
the public market, subject to the Rule 144 limitations applicable to affiliates
of the Company.

Prior to this offering there has been no public market for the Common Stock
of the Company and no prediction can be made as to the effect, if any, that
market sales of shares or the availability of shares for sale will have on the
market price of the Common Stock prevailing from time to time. Nevertheless,
sales of substantial numbers of shares of Common Stock in the public market
could adversely affect the market price of the Common Stock and could impair the
Company's ability to raise capital through a sale of its equity securities.

54
<PAGE>
UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Company and the Selling Shareholders have agreed to sell to each of the
Underwriters named below, and each of such Underwriters, for whom Adams,
Harkness & Hill, Inc. and A.G. Edwards & Sons, Inc. are acting as
representatives (the "Representatives"), has severally agreed to purchase from
the Company and the Selling Shareholders, the respective numbers of shares of
Common Stock set forth opposite each Underwriter's name below:

<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
UNDERWRITER COMMON STOCK
- ------------------------------------------------------------------------------------------------- ---------------
<S> <C>
Adams, Harkness & Hill, Inc......................................................................
A.G. Edwards & Sons, Inc.........................................................................

---------------
Total........................................................................................ 2,750,000
---------------
---------------
</TABLE>

Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all shares offered hereby, if any
are taken.

The Underwriters propose to offer the shares of Common Stock in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus, and in part to certain securities dealers at such
price less a concession not in excess of $ per share. The Underwriters may
allow, and such dealers may reallow, a concession not in excess of $ per
share to certain brokers and dealers. After the shares of Common Stock are
released for sale to the public, the offering price and other selling terms may
from time to time be varied by the Representatives.

The Company has granted the Underwriters an option exercisable for 30 days
after the date of this Prospectus to purchase up to an aggregate of 412,500
additional shares of Common Stock to cover over-allotments, if any. If the
Underwriters exercise their over-allotment option, the Underwriters have
severally agreed, subject to certain conditions, to purchase approximately the
same percentage thereof that the number of shares to be purchased by each of
them, as shown in the foregoing table, bears to the 2,750,000 shares of Common
Stock offered hereby. The Underwriters may exercise such option only to cover
over-allotments in connection with the sale of the 2,750,000 shares of Common
Stock offered hereby.

The Company has agreed not to offer, sell, contract to sell or otherwise
dispose of any shares of Common Stock for a period of 180 days after the date of
this Prospectus without the prior written consent of Adams, Harkness & Hill,
Inc., except for the shares of Common Stock offered hereby and except that the
Company may issue securities pursuant to the Company's stock plans. The
Company's officers, directors and certain other holders of Common Stock,
including the Selling Shareholders, who will hold in the aggregate 4,903,576
shares of Common Stock following the offering, have agreed with the Underwriters
not to offer, sell, contract to sell or otherwise dispose of any shares of
Common Stock owned beneficially by them, other than as a bona fide gift or gifts
to or in trust for a person or entity who or which agrees in writing to be bound
by the foregoing restrictions, for a period of 180 days after the date of this
Prospectus, without the prior written consent of Adams, Harkness & Hill, Inc.

The Representatives have advised the Company that the Underwriters do not
intend to confirm sales to any account over which they exercise discretionary
authority.

55
<PAGE>
Prior to this offering, there has been no public market for the Common
Stock. The initial public offering price will be negotiated among the Company
and the Representatives. Among the factors to be considered in determining the
initial public offering price of the Common Stock, in addition to prevailing
market conditions, will be the Company's historical performance, estimates of
the business potential and earnings prospects of the Company, an assessment of
the Company's management and the consideration of the above factors in relation
to market valuation of companies in related businesses.

The Common Stock has been approved for quotation and trading on the Nasdaq
National Market under the symbol "TCPS."

The Company and the Selling Shareholders have agreed to indemnify the
several Underwriters against or contribute to losses arising out of certain
liabilities, including liabilities under the Securities Act.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by D'Ancona & Pflaum, Chicago, Illinois. Certain legal
matters will be passed upon for the Underwriters by Hale and Dorr, Boston,
Massachusetts.

EXPERTS

The Consolidated Financial Statements of the Company and its subsidiaries
included in this Prospectus and elsewhere in this Registration Statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports. The
Consolidated Financial Statements of Taylor and its subsidiaries included in
this Prospectus and elsewhere in this Registration Statement have been audited
by Price Waterhouse, Chartered Accountants, as indicated in their report with
respect thereto, and are included herein in reliance upon the authority of said
firm as experts in giving said report. The Financial Statements of Cincinnati
included in this Prospectus and Registration Statement have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report appearing
herein, and have been so included in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (the "Registration
Statement") under the Securities Act with respect to the Common Stock offered
hereby. This Prospectus, which constitutes part of the Registration Statement,
omits certain of the information contained in the Registration Statement and the
exhibits and schedules thereto on file with the Commission pursuant to the
Securities Act and the rules and regulations of the Commission thereunder. The
Registration Statement, including exhibits and schedules thereto, may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington D.C. 20549, and at
the Commission's regional offices at Seven World Trade Center, 13th Floor, New
York, New York 10048 and the Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661, and copies may be obtained at prescribed rates
from the Public Reference Section of the Commission at its principal office in
Washington, D.C. In addition, electronic copies of the Registration Statement
and all related exhibits and schedules may be accessed on the World Wide Web via
the Commission's EDGAR database at its website (http://www.sec.gov/
edgarhp.htm). Statements contained in this Prospectus as to the contents of any
contract or other document are not necessarily complete and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference.

56
<PAGE>
The Company intends to furnish its shareholders with annual reports
containing audited financial statements and to furnish or make available
quarterly reports for the first three fiscal quarters of each fiscal year
containing certain unaudited interim financial information.

QuickPanel and Smart Panel Plus are registered trademarks of Total Control
Products, Inc. Grey-Line, QuickMarquee, QuickDesigner, Smart Panel, SmartTouch,
SmartMarquee and SmartScreen are trademarks of Total Control Products, Inc.
ProWorx, ProcessWindow, SecurWorx and Waltz are trademarks of Taylor Industrial
Software Inc., a subsidiary of the Company. All other trademarks used herein are
trademarks of their respective owners.

57
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
--------------
<S> <C>
Total Control Products, Inc. and Subsidiaries:
Report of Independent Public Accountants...................................................... F-3
Consolidated Balance Sheets as of March 31, 1995 and 1996 and December 31, 1996 and Pro Forma
December 31, 1996 (unaudited)............................................................... F-4
Consolidated Statements of Operations for the Years Ended March 31, 1994, 1995 and 1996 and
the Nine Months Ended December 31, 1995 (unaudited) and December 31, 1996................... F-6
Consolidated Statements of Shareholders' Equity (Deficit) for the Years Ended March 31, 1994,
1995 and 1996 and the Nine Months Ended December 31, 1996................................... F-7
Consolidated Statements of Cash Flows for the Years Ended March 31, 1994, 1995 and 1996 and
the Nine Months Ended December 31, 1995 (unaudited) and December 31, 1996................... F-8
Notes to Consolidated Financial Statements.................................................... F-10
Taylor Industrial Software Inc.:
Auditors' Report.............................................................................. F-30
Consolidated Balance Sheets as of March 31, 1995 and 1996..................................... F-31
Consolidated Statements of Operations and Retained Earnings for the Years Ended March 31,
1994, 1995 and 1996......................................................................... F-32
Consolidated Statements of Changes in Financial Position for the Years Ended March 31, 1994,
1995 and 1996............................................................................... F-33
Notes to Consolidated Financial Statments..................................................... F-34
Unaudited Condensed Consolidated Statements of Operations for the Six Months Ended September
26, 1995 and 1996........................................................................... F-44
Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended September
26, 1995 and 1996........................................................................... F-45
Notes to Unaudited Condensed Consolidated Financial Statements................................ F-46
Cincinnati Dynacomp, Inc.:
Independent Auditors' Report.................................................................. F-47
Statements of Operations for the Years Ended March 31, 1994 and 1995.......................... F-48
Statements of Cash Flows for the Years Ended March 31, 1994 and 1995.......................... F-49
Notes to Financial Statements................................................................. F-50
Unaudited Condensed Statements of Operations for the Ten Months Ended January 29, 1995 and
1996........................................................................................ F-54
Unaudited Condensed Statements of Cash Flows for the Ten Months Ended January 29, 1995 and
1996........................................................................................ F-55
Notes to Unaudited Condensed Financial Statements............................................. F-56
Unaudited Pro Forma As Adjusted Condensed Consolidated Financial Statements:
Unaudited Pro Forma As Adjusted Condensed Consolidated Financial Statements................... F-57
Unaudited Pro Forma As Adjusted Condensed Consolidated Statement of Operations for the Year
Ended March 31, 1996........................................................................ F-58
Unaudited Pro Forma As Adjusted Condensed Consolidated Statement of Operations for the Nine
Months Ended December 31, 1996.............................................................. F-59
Notes to Unaudited Pro Forma As Adjusted Condensed Consolidated Financial Statements.......... F-60
</TABLE>

F-1
<PAGE>

(This page has been left blank intentionally.)

F-2

<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of
Total Control Products, Inc.:

We have audited the accompanying consolidated balance sheets of Total
Control Products, Inc. (an Illinois Corporation) and Subsidiaries as of March
31, 1995 and 1996 and December 31, 1996 and the related consolidated statements
of operations, shareholders' equity (deficit) and cash flows for each of the
three years in the period ended March 31, 1996 and for the nine months ended
December 31, 1996. 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 principals used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Total Control Products, Inc.
and Subsidiaries as of March 31, 1995 and 1996 and December 31, 1996, and the
results of their operations and their cash flows for each of the three years in
the period ended March 31, 1996 and for the nine months ended December 31, 1996,
in conformity with generally accepted accounting principles.

ARTHUR ANDERSEN LLP

Chicago, Illinois
January 29, 1997

F-3
<PAGE>
TOTAL CONTROL PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
MARCH 31,
--------------------------- DECEMBER 31,
1995 1996 1996
------------ ------------- --------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................................ $ 61,516 $ 19,058 $ 702,812
Trade receivables, net of allowance of $38,000 and $40,000 March
31, 1995 and 1996, respectively, and $115,000 at December 31,
1996........................................................... 2,692,084 4,949,696 7,138,831
Inventory........................................................ 3,642,576 5,915,393 8,416,992
Prepaid and deferred expenses:
Taxes.......................................................... 99,493 460,310 1,273,820
Other.......................................................... 189,328 326,052 857,820
------------ ------------- --------------
Total current assets......................................... 6,684,997 11,670,509 18,390,275
------------ ------------- --------------
Property and equipment, net........................................ 537,602 1,435,254 2,309,234
Other assets:
Assets held for sale............................................. -- -- 4,885,780
Goodwill, net.................................................... -- 1,959,523 4,582,155
Investment in foreign joint venture.............................. -- 241,911 311,492
Receivable from officer.......................................... 163,434 177,926 188,188
Other long-term assets........................................... 197,662 498,198 812,496
------------ ------------- --------------
Total other assets........................................... 361,096 2,877,558 10,780,111
------------ ------------- --------------
$ 7,583,695 $ 15,983,321 $ 31,479,620
------------ ------------- --------------
------------ ------------- --------------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-4
<PAGE>
TOTAL CONTROL PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (CONTINUED)

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
--------------------------- -----------------------------
1995 1996 1996
------------ ------------- ------------- PRO FORMA
1996 (NOTE 1)
--------------
(UNAUDITED)
<S> <C> <C> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt.............. $ 10,345 $ 95,110 $ 580,183 $ 330,183
Notes payable:
Bank............................................ 750,000 -- -- --
Related parties................................. -- 150,000 3,428,632 5,428,632
Other........................................... -- 187,878 230,415 230,415
Accounts payable.................................. 1,519,226 2,674,886 4,503,139 4,503,139
Accrued expenses:
Income taxes.................................... 297,470 119,893 -- --
Commissions..................................... 220,370 314,000 508,587 508,587
Payroll......................................... 66,973 185,476 918,112 918,112
Other........................................... 230,782 552,451 1,381,781 1,241,781
Deferred revenue.................................. -- -- 969,709 969,709
------------ ------------- ------------- --------------
Total current liabilities..................... 3,095,166 4,279,694 12,520,558 14,130,558
------------ ------------- ------------- --------------
Long-term liabilities:
Notes payable to bank............................. -- 5,650,000 7,352,564 7,352,564
Long-term debt, net of current maturities:
Related parties................................. 200,000 200,000 2,000,000 --
Other........................................... 300,000 351,343 61,379 61,379
Other............................................. 80,000 97,947 -- --
------------ ------------- ------------- --------------
Total long-term liabilities................... 580,000 6,299,290 9,413,943 7,413,943
------------ ------------- ------------- --------------
Commitments and contingencies (Note 6)
Minority interest in subsidiary..................... -- -- 1,522,033 1,522,033
Redeemable common stock:
Common stock, no par value; 22,500,000 shares
authorized; 1,454,655, 1,604,658, and 1,604,658
shares outstanding at March 31, 1995 and 1996
and December 31, 1996, respectively, at
estimated redemption value...................... 1,454,653 3,560,867 12,441,904 --
Class C Exchangeable common stock of subsidiary,
no par value; unlimited shares authorized;
767,112 shares outstanding...................... -- -- 4,830,000 --
Shareholders' equity (deficit):
Common stock, no par value; 22,500,000 shares
authorized; 3,167,421, 3,167,421, 3,264,441 and
5,236,464 shares issued and outstanding at March
31, 1995 and 1996 and December 31, 1996 actual
and pro forma, respectively..................... 515,093 515,093 594,241 13,426,145
Class C Exchangeable common stock of subsidiary,
no par value; unlimited shares authorized;
767,112 shares issued and outstanding at
December 31, 1996 pro forma..................... -- -- -- 4,830,000
Retained earnings (deficit)......................... 1,938,783 1,329,819 (9,830,550) (9,830,550)
Foreign currency translation adjustment............. -- (1,442) (12,509) (12,509)
------------ ------------- ------------- --------------
Total shareholders' equity (deficit).......... 2,453,876 1,843,470 (9,248,818) 8,413,086
------------ ------------- ------------- --------------
$ 7,583,695 $ 15,983,321 $ 31,479,620 $ 31,479,620
------------ ------------- ------------- --------------
------------ ------------- ------------- --------------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-5
<PAGE>
TOTAL CONTROL PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED MARCH 31, ENDED DECEMBER 31,
------------------------------------- -------------------------
1994 1995 1996 1996
----------- ----------- ----------- 1995 -----------
------------
(UNAUDITED)

<S> <C> <C> <C> <C> <C>
Net sales................................... $11,722,671 $17,062,669 $25,742,519 $17,644,742 $28,813,616
Cost of goods sold.......................... 6,303,702 9,689,079 15,369,820 10,587,642 15,198,783
----------- ----------- ----------- ------------ -----------
Gross profit.......................... 5,418,969 7,373,590 10,372,699 7,057,100 13,614,833

Operating expenses:
Sales and marketing....................... 2,903,536 3,486,465 4,988,962 3,397,869 6,183,674
Research and development.................. 1,188,162 1,516,604 1,951,515 1,366,855 2,591,167
General and administrative................ 1,167,075 1,237,740 1,601,607 997,320 2,911,847
Change in estimated useful life of
software development costs.............. 465,852 -- -- -- --
Charge for purchased research and
development............................. -- -- -- -- 4,893,000
----------- ----------- ----------- ------------ -----------
Income (loss) from operations......... (305,656) 1,132,781 1,830,615 1,295,056 (2,964,855)
Other income (expense):
Interest expense, net..................... (95,726) (69,816) (189,864) (78,989) (435,683)
Earnings in foreign joint venture......... -- -- -- -- 78,907
Other income(expense), net................ (492) (93,541) 21,489 19,489 (30,168)
----------- ----------- ----------- ------------ -----------
Income (loss) before income taxes and
minority interest................... (401,874) 969,424 1,662,240 1,235,556 (3,351,799)
Provision for (benefit from) income taxes... (155,000) 247,200 665,000 494,000 599,000
----------- ----------- ----------- ------------ -----------
Income (loss) before minority interest...... (246,874) 722,224 997,240 741,556 (3,950,799)

Minority interest in loss of subsidiary..... -- -- -- -- 1,851,467
----------- ----------- ----------- ------------ -----------
Net income (loss)........................... (246,874) 722,224 997,240 741,556 (2,099,332)
Accretion to redemption value of common
stock..................................... (75,547) (208,037) (1,606,204) (1,445,584) (9,061,037)
----------- ----------- ----------- ------------ -----------
Net income (loss) available to common
shareholders.............................. $ (322,421) $ 514,187 (608,964) $ (704,028) (11,160,369)
----------- ----------- ------------
----------- ----------- ------------
Pro forma (Note 1)(unaudited):
Accretion to redemption value eliminated
as a result of the completion of initial
public offering......................... 1,606,204 9,061,037
Interest expense eliminated due to debt
conversion, net of tax benefit.......... 9,000 6,750
----------- -----------
Pro forma net income (loss)............... $ 1,006,240 $(2,092,582)
----------- -----------
----------- -----------
Net income (loss) per share available to
shareholders.............................. $ (0.07) $ 0.09 $ (0.11) $ (0.12) $ (1.97)
----------- ----------- ----------- ------------ -----------
----------- ----------- ----------- ------------ -----------
Weighted average number of common and common
equivalent shares outstanding............. 4,342,828 5,971,596 5,632,502 5,632,502 5,679,242
----------- ----------- ----------- ------------ -----------
----------- ----------- ----------- ------------ -----------
Pro forma net income (loss) per share....... $ 0.16 $ (0.35)
----------- -----------
----------- -----------
Pro forma weighted average number of common
and common equivalent shares
outstanding............................... 6,107,227 6,041,233
----------- -----------
----------- -----------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-6
<PAGE>
TOTAL CONTROL PRODUCTS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
PREFERRED STOCK,
CUMULATIVE, NO PAR
VALUE, 9%, SERIES A COMMON STOCK, NO PAR
VOTING, 40,000 VALUE, 22,500,000
SHARES AUTHORIZED SHARES AUTHORIZED FOREIGN TOTAL
-------------------- -------------------- RETAINED CURRENCY SHAREHOLDERS'
SHARES SHARES EARNINGS TRANSLATION EQUITY
ISSUED COST ISSUED COST (DEFICIT) ADJUSTMENT (DEFICIT)
--------- --------- --------- --------- ----------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1993.................. 40,000 $ 1,379 2,912,535 $ 713,524 $ 1,772,517 $ -- $ 2,487,420
Repurchase of common stock............. -- -- (240,735) (199,810) -- -- (199,810)
Issuance of common stock in exchange
for preferred stock.................. (40,000) (1,379) 495,621 1,379 -- -- --
Accretion of redeemable common stock... -- -- -- -- (75,547) -- (75,547)
Net loss for the year.................. -- -- -- -- (246,874) -- (246,874)
Dividends on preferred stock........... -- -- -- -- (25,500) -- (25,500)
--------- --------- --------- --------- ----------- ------------ --------------
Balance, March 31, 1994.................. -- -- 3,167,421 515,093 1,424,596 -- 1,939,689
Accretion of redeemable common stock... -- -- -- -- (208,037) -- (208,037)
Net income for the year................ -- -- -- -- 722,224 -- 722,224
--------- --------- --------- --------- ----------- ------------ --------------
Balance, March 31, 1995.................. -- -- 3,167,421 515,093 1,938,783 -- 2,453,876
Accretion of redeemable common stock... -- -- -- -- (1,606,204) -- (1,606,204)
Net income for the year................ -- -- -- -- 997,240 -- 997,240
Foreign currency translation loss...... -- -- -- -- -- (1,442) (1,442)
--------- --------- --------- --------- ----------- ------------ --------------
Balance, March 31, 1996.................. -- -- 3,167,421 515,093 1,329,819 (1,442) 1,843,470
Accretion of redeemable common stock... -- -- -- -- (9,061,037) -- (9,061,037)
Net loss for the period................ -- -- -- -- (2,099,332) -- (2,099,332)
Foreign currency translation loss...... -- -- -- -- -- (11,067) (11,067)
Issuance of common stock related to
option exercise...................... -- -- 29,148 29,148 -- -- 29,148
Issuance of common stock related to
conversion of subordinated
debentures........................... -- -- 67,872 50,000 -- -- 50,000
--------- --------- --------- --------- ----------- ------------ --------------
Balance, December 31, 1996............... -- $ -- 3,264,441 $ 594,241 $(9,830,550) $ (12,509) $ (9,248,818)
--------- --------- --------- --------- ----------- ------------ --------------
--------- --------- --------- --------- ----------- ------------ --------------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-7
<PAGE>
TOTAL CONTROL PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED MARCH 31, ENDED DECEMBER 31,
------------------------------------------- -----------------------------
1994 1995 1996 1996
------------ -------------- ------------- 1995 --------------
-------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) for the period............ $ (246,874) $ 722,224 $ 997,240 $ 741,556 $ (2,099,332)
Adjustments to reconcile net income (loss)
to net cash (used in) provided by
operating activities:
Minority interest in loss of subsidiary... -- -- -- -- (1,851,467)
Charge for purchased research and
development............................. -- -- -- -- 4,893,000
Depreciation and amortization............. 735,703 282,978 288,585 257,600 631,041
Earnings in foreign joint venture......... -- -- -- -- (78,907)
Provision (credit) for deferred income
taxes................................... (247,000) (64,000) (34,000) (45,089) 493,204
(Gain) loss on sale of property and
equipment............................... (9,004) 1,717 (11,515) -- --
Changes in operating assets and
liabilities:
Trade receivables....................... (224,370) (993,326) (1,365,948) (851,484) (594,590)
Inventory............................... (681,125) (1,026,260) (195,952) (1,326,330) (2,910,828)
Prepaid expenses and other assets....... 27,575 (54,831) (78,717) (139,054) (872,352)
Accounts payable, accrued expenses and
other liabilities..................... 504,661 1,206,941 (10,628) 1,167,393 1,388,527
Deferred revenue........................ -- -- -- -- 24,375
------------ -------------- ------------- ------------- --------------
Net cash (used in) provided by
operating activities................ (140,434) 75,443 (410,935) (195,408) (977,329)
------------ -------------- ------------- ------------- --------------
Cash flows from investing activities:
Cash paid for businesses acquired, net...... -- -- (792,350) -- (5,725,788)
Investment in foreign joint venture......... -- -- (243,353) -- --
Purchases of property and equipment......... (246,291) (323,032) (851,985) (384,596) (397,181)
Purchases of other assets................... (78,560) (59,100) (52,512) (22,512) (14,000)
Proceeds from asset disposals............... 21,701 28,745 15,616 -- 23,866
(Increase) decrease in receivable from
officer................................... 95,850 58,420 (14,492) (11,004) (10,262)
------------ -------------- ------------- ------------- --------------
Net cash used in investing
activities.......................... (207,300) (294,967) (1,939,076) (418,112) (6,123,365)
------------ -------------- ------------- ------------- --------------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-8
<PAGE>
TOTAL CONTROL PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED MARCH 31, ENDED DECEMBER 31,
------------------------------------------- -----------------------------
1994 1995 1996 1996
------------ -------------- ------------- 1995 --------------
-------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from financing activities:
Net increase (decrease) in notes payable to
bank...................................... (300,000) 50,000 2,336,073 800,000 1,414,753
Proceeds from issuance of debt.............. -- -- -- -- 3,000,000
Payments of debt............................ (50,123) (18,754) (28,520) (8,406) (630,305)
Proceeds from sale of common stock of
subsidiary................................ -- -- -- -- 4,000,000
Proceeds from sale of common
stock..................................... 924,453 246,616 -- -- --
Repurchase of common stock.................. (199,810) -- -- -- --
Dividends paid on preferred stock........... (12,000) (85,500) -- -- --
------------ -------------- ------------- ------------- --------------
Net cash provided by financing
activities.............................. 362,520 192,362 2,307,553 791,594 7,784,448
------------ -------------- ------------- ------------- --------------
Increase (decrease) in cash and cash
equivalents................................. 14,786 (27,162) (42,458) 178,074 683,754
Cash and cash equivalents, beginning of
period...................................... 73,892 88,678 61,516 61,516 19,058
------------ -------------- ------------- ------------- --------------
Cash and cash equivalents, end of period...... $ 88,678 $ 61,516 $ 19,058 $ 239,590 $ 702,812
------------ -------------- ------------- ------------- --------------
------------ -------------- ------------- ------------- --------------
Supplemental disclosure:
Cash paid during the year for:
Income taxes.............................. $ 77,225 $ 153,958 $ 873,140 $ 619,350 $ 570,000
Interest.................................. $ 113,449 $ 86,653 $ 201,259 $ 96,000 $ 523,000
------------ -------------- ------------- ------------- --------------
------------ -------------- ------------- ------------- --------------
Noncash investing and financing activities:
Issuance of common stock in exchange for
preferred stock........................... $ 1,379 $ -- $ -- $ -- $ --
Netting due to right of offset of principal
shareholder receivable and preferred
dividends payable......................... $ 18,833 $ -- $ -- $ -- $ --
Issuance of common stock related to business
acquired.................................. $ -- $ -- $ 500,010 $ -- $ --
Conversion of subordinated debentures into
67,872 shares of common stock............. $ -- $ -- $ -- $ -- $ 50,000
Issuance of 767,112 shares of Class C
Exchangeable common stock of subsidiary
and $2.2 million note in connection with
the business acquired..................... $ -- $ -- $ -- $ -- $ 6,850,000
------------ -------------- ------------- ------------- --------------
------------ -------------- ------------- ------------- --------------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-9
<PAGE>
TOTAL CONTROL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(AMOUNTS RELATED TO THE NINE MONTHS ENDED

DECEMBER 31, 1995 ARE UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) DESCRIPTION OF BUSINESS

Total Control Products, Inc., an Illinois corporation, together with its
wholly owned subsidiary, Tara Products, Inc., d/b/a Total Control - Cincinnati,
an Illinois corporation, and its majority-owned subsidiary, Taylor Industrial
Software Inc., an Alberta corporation ("Taylor"), (collectively the "Company"),
designs, develops and markets products and technology for the control segment of
the industrial automation marketplace.

(B) PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Total Control
Products, Inc. and its wholly owned subsidiary since its acquisition on January
29, 1996 and its majority-owned subsidiary since its acquisition on September
26, 1996. In connection with the Taylor transaction, the Company sold 39% of the
Taylor Class A Shares to Digital Electronics Corporation ("Digital
Electronics"), located in Osaka, Japan, which is the Company's largest supplier
(see Note 11), for an aggregate purchase price of $4.0 million. As a result, a
minority interest for 39% of the net income or loss of Taylor is recorded on the
Company's statement of operations. The Company's ownership of Taylor Class A
Common Shares may increase up to 4% based on the amount of contingent
consideration paid by the Company in connection with the acquisition. All
intercompany items and transactions have been eliminated in consolidation.

Additionally, the Company accounts for its 40% ownership interest in a
foreign joint venture on the equity method.

Net sales include revenues from operator interface products, software
license fees, software maintenance and services. Revenue from product sales and
software licenses are recognized upon shipment of the product to customers,
provided that there are no significant obligations remaining and collectibility
of the revenue is probable. The Company provides for estimated product returns
upon shipment of the products. Revenue from software maintenance contracts is
recognized ratably as it is earned over the term of the contract, generally one
year. Unearned software maintenance revenue is included in deferred revenue.
Service revenue is recognized as the service is provided. The Company recognizes
revenue from software license fees, service and maintenance in accordance with
the provisions of the American Institute of Certified Public Accountants,
Statement of Position No. 91-1 (SOP 91-1), Software Revenue Recognition.

(D) CASH AND CASH EQUIVALENTS

Cash and cash equivalents include all highly liquid investments (with
original maturities of three months or less), principally time deposits and
other short term securities which are stated at cost, which approximates fair
value.

F-10
<PAGE>
TOTAL CONTROL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS RELATED TO THE NINE MONTHS ENDED

DECEMBER 31, 1995 ARE UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(E) TRADE RECEIVABLES

The following summarizes trade receivables allowance activity for fiscal
1994, 1995 and 1996 and the nine month period ended December 31, 1996:

<TABLE>
<CAPTION>
AMOUNT
----------
<S> <C>
March 31, 1993.................................................................... $ 9,152
Increase to operating expense................................................... 47,602
Charge to allowance............................................................. (26,754)
----------
March 31, 1994.................................................................... 30,000
Increase to operating expense................................................... 70,312
Charge to allowance............................................................. (62,312)
----------
March 31, 1995.................................................................... 38,000
Increase to operating expense................................................... 58,842
Charge to allowance............................................................. (56,842)
----------
March 31, 1996.................................................................... 40,000
Reserve related to acquired entity.............................................. 41,000
Increase to operating expense................................................... 34,000
----------
December 31, 1996................................................................. $ 115,000
----------
----------
</TABLE>

(F) INVENTORY

Inventory is stated at the lower of first-in, first-out cost or market.
Inventory at March 31, 1995 and 1996 and December 31, 1996 consisted of the
following:

<TABLE>
<CAPTION>
MARCH 31,
---------------------------- DECEMBER 31,
1995 1996 1996
------------- ------------- --------------
<S> <C> <C> <C>
Raw materials............................................ $ 1,506,917 $ 2,071,150 $ 2,870,354
Work in process and finished goods....................... 2,135,659 3,844,243 5,546,638
------------- ------------- --------------
Inventory............................................ $ 3,642,576 $ 5,915,393 $ 8,416,992
------------- ------------- --------------
------------- ------------- --------------
</TABLE>

F-11
<PAGE>
TOTAL CONTROL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS RELATED TO THE NINE MONTHS ENDED

DECEMBER 31, 1995 ARE UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(G) PROPERTY AND EQUIPMENT

Property and equipment are as follows:

<TABLE>
<CAPTION>
MARCH 31,
---------------------------- DECEMBER 31,
1995 1996 1996
------------- ------------- --------------
<S> <C> <C> <C>
Machinery and equipment.................................. $ 1,271,053 $ 2,245,366 $ 2,629,076
Furniture and fixtures................................... 35,885 82,861 287,640
Leasehold improvements................................... -- 52,619 136,908
------------- ------------- --------------
1,306,938 2,380,846 3,053,624
Less-- Accumulated depreciation and amortization......... (769,336) (945,592) (744,390)
------------- ------------- --------------
Property and equipment, net......................... $ 537,602 $ 1,435,254 $ 2,309,234
------------- ------------- --------------
------------- ------------- --------------
</TABLE>

Expenditures for maintenance and repairs are expensed as incurred. Property
and equipment are stated at cost and are depreciated using the straight-line
method over their estimated useful lives as follows:

<TABLE>
<CAPTION>
ASSET DESCRIPTION USEFUL LIFE
- ---------------------------------------------------------------------------- --------------------------
<S> <C>
Machinery and equipment..................................................... 3-10 Years
Furniture and fixtures...................................................... 5-10 Years
Leasehold improvements...................................................... Shorter of asset life or
life of lease
</TABLE>

(H) INTANGIBLE ASSETS

Intangible assets relating to acquired businesses consist primarily of the
cost of purchased businesses in excess of market value of net assets acquired
("goodwill"). Such goodwill is being amortized on a straight-line basis over a
period ranging from seven to fifteen years. The accumulated amortization of
intangible assets amounted to approximately $23,000 and $215,000 as of March 31,
1996 and December 31, 1996, respectively.

The Company reviews goodwill for impairment whenever events or changes in
circumstances indicate that its carrying amount may not be recoverable. To date,
no such events or changes in circumstances have occurred. If such events or
changes in circumstances occur, the Company will recognize an impairment loss if
the undiscounted future cash flows expected to be generated by the acquired
business are less than the carrying value of the related goodwill. The
impairment loss in such instances would adjust the goodwill to its fair value.

(I) FOREIGN CURRENCY TRANSLATION ADJUSTMENTS

The Company follows the translation principles established by Statement of
Financial Accounting Standards ("SFAS") No. 52, "Foreign Currency Translation".
The net assets of the Company's majority-owned subsidiary and the Company's
investment in its foreign joint venture are translated at the exchange rate in
effect at the end of the periods presented. The revenues and expenses of the
Company's

F-12
<PAGE>
TOTAL CONTROL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS RELATED TO THE NINE MONTHS ENDED

DECEMBER 31, 1995 ARE UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

majority-owned subsidiary and the Company's ownership percentage of the foreign
joint venture's net income are translated at the average rates in effect during
the period. The Company's foreign joint venture had no significant activity for
the year ended March 31, 1996. Included in other income is the Company's 40%
share of the earnings of the foreign joint venture for the nine months ended
December 31, 1996 of approximately $79,000. See Note 6 for a discussion of the
Company's policy regarding certain foreign currency hedging transactions.

(J) RESEARCH AND DEVELOPMENT

The Company records its software development costs in accordance with SFAS
No. 86. Accordingly, these costs are expensed until the technological
feasibility of the software has been established. Thereafter, all significant
software development costs are capitalized until the product is available for
general release to customers. Subsequently, these costs are reported at the
lower of unamortized cost or net realizable value. As a result of market and
other business conditions, the time between establishment of technological
feasibility and general release has not been significant since April 1, 1993.
Accordingly, the Company has not capitalized any software development costs
during this time. During fiscal 1994, because of technological, industry and
business changes, the Company shortened its estimate of the useful life of
software development costs that were capitalized at March 31, 1993. As a result,
the Company amortized the remaining net book value of these software development
costs during fiscal 1994, which resulted in an amortization expense of
approximately $466,000.

(K) INCOME TAXES

The Company accounts for income taxes under the provisions of SFAS No. 109,
"Accounting for Income Taxes." Deferred taxes are determined based on the
estimated future tax effects of differences between the financial statement and
tax basis of assets and liabilities under the provisions of the enacted tax
laws.

(L) MANAGEMENT'S USE OF ESTIMATES

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

(M) FINANCIAL INSTRUMENTS AND CONCENTRATION OF CREDIT RISK

Effective April 1, 1995, the Company adopted the provisions of SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." The adoption
of SFAS No. 115 did not have a material impact on the Company's financial
statements.

The carrying value for current assets and current liabilities reasonably
approximates fair value due to the short maturity of these items. Since the
Company's long-term debt is not publicly quoted, fair value

F-13
<PAGE>
TOTAL CONTROL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS RELATED TO THE NINE MONTHS ENDED

DECEMBER 31, 1995 ARE UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

estimates are based on each obligation's characteristics, including remaining
maturities, interest rate, credit rating, collateral, amortization schedule and
liquidity. The carrying amount for long-term debt other than the convertible
subordinated debentures approximates fair value. Recent company transactions
provide an indication that the fair value of the convertible subordinated
debentures is approximately $3.0 million.

Financial instruments that potentially subject the Company to concentration
of credit risk consist principally of cash investments and trade receivables.
The Company has cash investment policies that limit cash investments to
short-term low risk investments. With respect to trade receivables, the Company
grants unsecured credit to its customers. In doing so, the Company performs
ongoing credit evaluations of its customers' financial condition. A substantial
portion of accounts receivable is from customers located throughout the United
States. One customer accounted for approximately 14%, 14% and 10% of the
Company's net sales for fiscal 1994, 1995 and 1996, respectively, and
approximately 10% and 9% of the Company's net sales for the nine months ended
December 31, 1995 and 1996, respectively. Additionally, the Company establishes
accounts receivable allowances based upon factors relating to the credit risk of
specific customers, historical trends and other information.

(N) ACCRETION TO REDEMPTION VALUE OF COMMON STOCK

Accretion to redemption value of redeemable common stock represents the
change in the redemption value of outstanding common stock in each period. The
redemption values for certain common shares are based on (i) fair market values
of the class of stock or (ii) fixed amounts (See Note 7).

(O) STOCK SPLITS

In December 1996, the Company's Board of Directors declared a three-for-one
split of the Company's Common Stock, which has been retroactively reflected in
the accompanying consolidated financial statements. In December 1996, Taylor's
Board of Directors declared a three-for-one split of Taylor's Class C
Exchangeable Common Stock, which has been retroactively reflected in the
accompanying consolidated financial statements.

(P) NET INCOME (LOSS) PER SHARE AVAILABLE TO SHAREHOLDERS AND PRO FORMA AND
SUPPLEMENTAL PRO FORMA NET INCOME (LOSS) PER SHARE

Net income (loss) per share available to shareholders is based on the
weighted average number of shares of common stock and common stock equivalents
outstanding, as adjusted for the stock split described above for all periods
presented. Common stock equivalents represent options, convertible stock and
convertible debt using the treasury stock method for all periods presented. Any
common stock options and convertible stock issued from one year prior to the
initial public filing with a price below the estimated initial public offering
price have been included as outstanding shares for all periods presented reduced
by the number of shares which could be purchased with proceeds from the exercise
of the options.

F-14
<PAGE>
TOTAL CONTROL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS RELATED TO THE NINE MONTHS ENDED

DECEMBER 31, 1995 ARE UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Pro forma net income (loss) per share is computed based upon pro forma net
income (loss) as described below and the weighted average number of shares
adjusted for the conversion of $250,000 of convertible debentures into 339,366
shares of Common Stock and the dilutive effect of any common stock equivalents,
as appropriate.

Supplemental pro forma net income (loss) per share for fiscal 1996 and the
nine months ended December 31, 1996 of $0.18 and $(0.26), respectively, is
computed based upon (i) pro forma net income adjusted for the reduction in
interest expense, net of tax benefit of approximately $117,000 and $260,000 for
fiscal 1996 and the nine months ended December 31, 1996, respectively, resulting
from the application of the net proceeds of the contemplated offering to reduce
indebtedness of the Company and (ii) the pro forma weighted average number of
shares of Common Stock outstanding adjusted to reflect the sale by the Company
of approximately 292,000 and 1,040,000 shares of Common Stock in the offering
resulting in net proceeds sufficient to pay such indebtedness for fiscal 1996
and the nine months ended December 31, 1996, respectively.

(Q) INTERIM FINANCIAL DATA

In management's opinion, the unaudited interim financial statements for the
nine months ended December 31, 1995 are presented on a basis consistent with the
audited financial statements, and all adjustments, consisting only of normal
recurring adjustments, which are necessary to present fairly the operating
results have been reflected. The results of operations for interim periods are
not necessarily indicative of operations for the full fiscal year.

(R) PRO FORMA BALANCE SHEET AND STATEMENTS OF OPERATIONS

Pursuant to the rules and regulations of the Securities and Exchange
Commission, the accompanying unaudited pro forma consolidated statements of
operations for the year ended March 31, 1996 and the nine months ended December
31, 1996 reflect the change in net income available to common shareholders
resulting from the following events which will occur upon completion of the
offering contemplated by this prospectus: (i) the automatic termination of the
redemption provision of redeemable common stock; (ii) the conversion of $250,000
of subordinated debentures into 339,366 shares of the Company's Common Stock;
and (iii) the issuance of 27,999 shares of Common Stock required upon the
retirement of the $2.0 million shareholder note payable which will be repaid
with a portion of the proceeds of the offering. Additionally, the accompanying
pro forma balance sheet as of December 31, 1996 reflects the change in
capitalization attributable to the above pro forma adjustments as if the
offering had closed on December 31, 1996 (excluding the effects of the offering
proceeds), and including the reclassification from long-term to short-term of a
$2.0 million note payable, which becomes due 10 days after the completion of the
offering. See Notes 5 and 7.

(S) DEFERRED OFFERING COSTS

As of December 31, 1996, the Company had incurred approximately $265,000 in
costs related to the Company's proposed initial public offering. These costs
have been capitalized and are included in other

F-15
<PAGE>
TOTAL CONTROL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS RELATED TO THE NINE MONTHS ENDED

DECEMBER 31, 1995 ARE UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

long-term assets in the accompanying consolidated balance sheet at December 31,
1996. Upon completion of the Company's proposed initial public offering, the
deferred offering costs will be reclassified to Common Stock as a reduction to
the proceeds from the offering.

2. ACQUISITIONS

On January 29, 1996, Total Control Products, Inc. acquired 100% of the
outstanding stock of Cincinnati Dynacomp, Inc. ("Cincinnati"), a manufacturer
and distributor of text based operator interface products, for $499,990 and
150,003 shares of the Company's Common Stock (which was assigned a fair value of
$500,010) and merged Cincinnati into its wholly owned subsidiary. Additionally,
the former shareholders of Cincinnati are entitled to contingent cash and Common
Stock consideration. To the extent calendar year 1996 and 1997 sales of
Cincinnati and certain similar Company products exceed its historical sales
volume, the contingent consideration is equal to 10% for the first $1.0 million
of such excess and 4% of any further excess. There was no contingent
consideration earned for calendar 1996. All payments of such contingent
consideration for calendar year 1997 to the former majority shareholder, who
will receive 53% of such consideration, shall be paid in shares of Common Stock
valued at their then fair market value, and the remainder to be paid to the
other former shareholders shall be paid in cash. To the extent calendar year
1998, 1999 and 2000 sales of the Company exceed approximately $32.0 million in
any of those years, the former majority shareholder of Cincinnati receives 1.25%
of such excess of which 50% shall be paid in cash and 50% shall be paid in
shares of the Company valued at their then fair market value, with the agreement
providing the Company a buy-out option related to this contingent consideration
ranging from $1.0 million to $2.0 million depending on the timing of such
prepayment. All contingent consideration is due 90 days after the end of the
respective calendar years on which such consideration was based.

This acquisition was accounted for using the purchase method. Accordingly,
the purchase price was allocated to the net assets acquired based on their
estimated fair values. This treatment resulted in approximately $1.98 million of
cost in excess of net assets acquired at the date of acquisition. In December
1996, goodwill increased by approximately $300,000 primarily as a result of the
Company revising its estimate of the costs to exit the Cincinnati facility in
connection with the Company's integration plan established at the acquisition
date. Such excess (which will increase for any future contingent consideration
paid) is being amortized on a straight-line basis over 15 years. Cincinnati's
results of operations have been included in the consolidated results of
operations since the date of acquisition.

In fiscal 1996, the Company made an investment in a foreign joint venture,
which distributes industrial automation tools, including the Company's products.
The Company owns 40% of this joint venture, which is located in the Netherlands
and sells products throughout Europe, with the remaining 60% owned by the
Company's largest vendor (see Notes 7 and 11) and the distributor of this
vendor's product (see Note 7). This investment is accounted for under the equity
method.

On September 19, 1996, the Company entered into an agreement to acquire a
controlling interest in Taylor, a developer and marketer of industrial
automation software products located in Edmonton, Alberta. The transaction was
consummated on September 26, 1996 and the results of operations have

F-16
<PAGE>
TOTAL CONTROL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS RELATED TO THE NINE MONTHS ENDED

DECEMBER 31, 1995 ARE UNAUDITED)

2. ACQUISITIONS (CONTINUED)

been included since that date. In exchange for 100% of the outstanding voting
shares of common stock of Taylor, the Company paid $7,389,817, which included
$2.2 million in the form of a note payable to the former principal shareholder,
and 767,112 shares of Class C Exchangeable common stock of Taylor (convertible
into 767,112 shares of the Company's Common Stock; see Note 7 for a description
of the features of the stock). In addition, the agreement provides for the
payment of a contingent cash consideration based on future revenues of Taylor.
To the extent the revenues of Taylor exceed $8.0 million in any of the two 12
month periods following the acquisition, the Taylor shareholders will receive
$1.0 million due 90 days after that respective 12 month period. Additionally,
the Taylor shareholders will receive cash consideration in the amount of 50% of
the revenue of Taylor in excess of $9.2 million and $10.6 million for the first
and second 12 month period after the acquisition, respectively, with the total
consideration capped at $3.0 million for any 12 month period related to this
provision. As further discussed in Note 7, the 767,112 shares of Taylor Class C
Exchangeable common stock may be redeemed at the holders' option for $6.0
million (payable over a 3 year period) to the extent Total Control Products,
Inc. has not completed an initial public offering of its Common Stock within 12
months from the date of acquisition. The $4.65 million value assigned to the
767,112 shares of Class C Exchangeable common stock was based on management's
estimate of fair value, primarily based on the present value of the potential
redemption of the security as well as recent securities transactions. The
Company also incurred approximately $600,000 in direct expenses related to the
acquisition. The acquisition was accounted for using the purchase method.
Accordingly, the purchase price was allocated to assets acquired based on their
estimated fair values.

In connection with the transaction, the Company sold 39% of the Class A
voting shares of Taylor for $4.0 million to Digital Electronics. To the extent
the contingent consideration described above is earned, the Company is required
to contribute as equity into Taylor a portion of the earnout payment and receive
additional equity interest in Taylor up to a maximum of 4% based on a formula
outlined in a letter of understanding between the Company and Digital. The $4.0
million investment in Taylor by Digital was greater than 39% of the equity of
the subsidiary, and this difference of approximately $600,000 was charged
against goodwill to properly reflect the Company's cost of the Taylor
acquisition.

In connection with the acquisition of Taylor, the Company engaged a broker
to commence the sale of one of the developed software product lines acquired.
The purchase price value assigned to these assets held for sale of approximately
$4.7 million is based on management's estimate of the expected gross proceeds to
be received using similar market multiples of recent sales of comparable product
lines less estimated applicable tax and direct costs of the disposal. The net
expenses in excess of revenue, (including the interest expense on related debt
expected to be retired from the proceeds from the sale of the $2.2 million note
payable described above and a $2.0 million subordinated note payable (described
in Notes 4 and 5)) of approximately $24,000 incurred by the Company since the
acquisition has not been reflected in the statement of operations of the
Company, but rather has been included in the asset held for sale. It is
management's belief that the sale of this product line will be completed by June
30, 1997. The holder of the $2.2 million shareholder note payable issued in
connection with the acquisition has the right to prohibit the sale of this
product line if the net proceeds to the Company would be less than the principal
outstanding under the note.

F-17
<PAGE>
TOTAL CONTROL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS RELATED TO THE NINE MONTHS ENDED

DECEMBER 31, 1995 ARE UNAUDITED)

2. ACQUISITIONS (CONTINUED)

Purchased research and development expense and other related acquisition
expenses relating to the acquisition of Taylor totaled $4.9 million and was
charged to expense as of the acquisition date in September, 1996. Of this
expense, approximately $4.7 million of the purchase price was allocated to
incomplete research and development that had not yet reached technological
feasibility and did not have a future alternative use, and was charged to
expense as of the acquisition date. The amount allocated to the purchased
incomplete research and development projects represents the estimated fair value
related to those projects determined by an independent appraisal. Proven
valuation procedures and techniques were utilized in determining the fair market
value of each intangible asset. The purchased research and development projects
were individually identified and were valued based on estimates of discounted
future income. Consideration was given to the stage of development, the time and
resources required for completion, as well as the market potential and
associated risks. To bring these projects to technological feasibility,
high-risk developmental and testing issues needed to be resolved, which required
substantial additional effort and testing.

The remaining excess purchase price over the estimated fair value of
identified net assets (which will increase for any future contingent
consideration) of approximately $2.5 million was assigned to goodwill and is
being amortized over 7 years. These estimates are preliminary and may be changed
based on actual results.

The following unaudited pro forma results of operations data for fiscal 1995
and 1996 and the nine months ended December 31, 1996, assume the Cincinnati
acquisition occurred as of April 1, 1994 and the Taylor acquisition occurred as
of April 1, 1995 (in thousands except per share amounts):

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-------------------- NINE MONTHS ENDED
1995 1996 DECEMBER 31, 1996
--------- --------- --------------------
(U N A U D I T E D)
<S> <C> <C> <C>
Net sales...................................... $ 27,616 $ 39,553 $ 31,851
Net income (loss).............................. 584 325 616
Net income (loss) available to common
shareholders.................................. 376 (1,281) (8,445)
Net income (loss) per common share............. $ 0.06 $ (0.23) $ (1.49)
--------- --------- --------
--------- --------- --------
</TABLE>

F-18
<PAGE>
TOTAL CONTROL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS RELATED TO THE NINE MONTHS ENDED

DECEMBER 31, 1995 ARE UNAUDITED)

3. INCOME TAXES

The components of the provision for (benefit from) income taxes for fiscal
1994, 1995 and 1996 and the nine months ended December 31, 1995 and 1996 are as
follows:

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED MARCH 31, ENDED DECEMBER 31,
-------------------------------------- -------------------------
1994 1995 1996 1996
------------ ----------- ----------- 1995 -----------
------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CURRENT:
U.S. Federal................................ $ 78,000 $ 252,000 $ 556,000 $ 434,579 $ 86,088
State....................................... 14,000 59,200 143,000 104,510 19,708
------------ ----------- ----------- ------------ -----------
Total current............................... 92,000 311,200 699,000 539,089 105,796
------------ ----------- ----------- ------------ -----------
DEFERRED:
U.S. Federal................................ (215,000) (52,000) (28,000) (36,418) 320,011
State....................................... (32,000) (12,000) (6,000) (8,671) 76,193
Foreign..................................... -- -- -- -- 97,000
------------ ----------- ----------- ------------ -----------
Total deferred.............................. (247,000) (64,000) (34,000) (45,089) 493,204
------------ ----------- ----------- ------------ -----------
Total provision............................. $ (155,000) $ 247,200 $ 665,000 $ 494,000 $ 599,000
------------ ----------- ----------- ------------ -----------
------------ ----------- ----------- ------------ -----------
</TABLE>

F-19
<PAGE>
TOTAL CONTROL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS RELATED TO THE NINE MONTHS ENDED

DECEMBER 31, 1995 ARE UNAUDITED)

3. INCOME TAXES (CONTINUED)

The provision for (benefit from) income taxes differs from the amounts which
would result by applying the applicable Federal income tax rate before income
taxes for fiscal 1994, 1995 and 1996 and the nine months ended December 31, 1995
and 1996 as follows:

<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED MARCH 31, ENDED DECEMBER 31,
--------------------------------------- ----------------------------
1994 1995 1996 1996
------------ ------------ ----------- 1995 --------------
------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Provision for (benefit from)
income taxes computed at
Federal statutory rate......... $ (136,637) $ 329,604 $ 565,162 $ 419,919 $ (1,139,723)
State income taxes, net of
Federal tax benefit............ (19,893) 48,471 83,112 61,753 (167,606)
Impact of differences in foreign
statutory rates................ -- -- -- -- 4,734
Permanent differences:
Charge for purchased research
and development............. -- -- -- -- 1,833,000
Nondeductible goodwill
amortization................ -- -- -- -- 74,378
Nontaxable earnings in foreign
joint venture............... -- -- -- -- (30,774)
Other......................... 1,530 11,925 16,726 12,328 24,991
Utilization of research and
development tax credits........ -- (142,800) -- -- --
------------ ------------ ----------- ------------ --------------
$ (155,000) $ 247,200 $ 665,000 $ 494,000 $ 599,000
------------ ------------ ----------- ------------ --------------
------------ ------------ ----------- ------------ --------------
</TABLE>

In conjunction with the Company's acquisition of Cincinnati, the Company
acquired net deferred tax assets of $795,000. A portion of the acquired deferred
tax assets relates to net operating loss carry forwards ("NOLs") of
approximately $430,000, which begin to expire in 2006. These NOLs will be
limited to approximately $56,000 per year, and, at such level, it is
management's opinion that these NOLs will not expire without being fully
utilized.

F-20
<PAGE>
TOTAL CONTROL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS RELATED TO THE NINE MONTHS ENDED

DECEMBER 31, 1995 ARE UNAUDITED)

3. INCOME TAXES (CONTINUED)

Components of the net deferred income tax assets which are included in
current deferred tax assets and other long term assets on the accompanying
consolidated balance sheets, at March 31, 1995 and 1996 and December 31, 1996
are as follows:

<TABLE>
<CAPTION>
MARCH 31,
------------------------ DECEMBER 31,
1995 1996 1996
----------- ----------- --------------
<S> <C> <C> <C>
Cumulative temporary differences:
Net operating loss carry forward from acquired entities............... $ -- $ 180,000 $ 376,579
Accrued expenses...................................................... 21,740 18,639 424,861
Alternative minimum tax credit carryforward........................... 39,169 -- --
Inventory, primarily reserves......................................... 55,030 314,309 285,706
Allowances for accounts receivable.................................... 19,646 127,642 123,538
Deferred compensation................................................. 31,200 35,418 22,914
Depreciation............................................................ (3,862) 18,394 (116,103)
Basis difference in intangibles......................................... -- 99,863 5,525
Tax credits............................................................. -- -- 104,240
Other temporary differences............................................. 2,625 (265) 14,672
----------- ----------- --------------
Total deferred income tax asset..................................... $ 165,548 $ 794,000 $ 1,241,932
----------- ----------- --------------
----------- ----------- --------------
</TABLE>

Generally, undistributed earnings of foreign subsidiaries will not be
subject to U.S. tax until distributed as dividends. Since the earnings have been
or are intended to be indefinitely reinvested in foreign operations, no
provision has been made for any U.S. taxes on the Company's portion of
undistributed earnings. Furthermore, any taxes paid to foreign governments on
those earnings may be used, in whole or in part, as credits against the U.S. tax
on any dividends distributed from such earnings. The Company's share of
undistributed earnings of its foreign joint venture recorded as of December 31,
1996 is approximately $79,000. There were no undistributed earnings from the
Company's foreign subsidiary.

Because management believes that the deferred tax asset will be fully
realized based on current estimates of future taxable income, future reversals
of existing taxable temporary differences or available tax planning strategies,
no valuation allowance has been recorded against the deferred tax asset.

4. NOTES PAYABLE

(A) BANK

At March 31, 1996, the Company had a revolving line-of-credit agreement with
a bank which allowed borrowings up to $5.5 million ($850,000 was available at
March 31, 1996), which was due on July 31, 1997, was secured by virtually all of
the Company's assets and was personally guaranteed by certain shareholders,
limited to $2.0 million. The note carried interest at the bank's prime lending
rate (8.25% at March 31, 1996, which was also the average borrowing rate on all
short term borrowings as of March 31, 1996). Additionally, the Company had a
term loan with the bank for $1.0 million due September 30, 1996.

F-21
<PAGE>
TOTAL CONTROL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS RELATED TO THE NINE MONTHS ENDED

DECEMBER 31, 1995 ARE UNAUDITED)

4. NOTES PAYABLE (CONTINUED)

In July 1996, the Company entered into a new revolving line-of-credit
agreement with a bank which allows borrowings up to $9.0 million (approximately
$1.9 million was available at December 31, 1996) based on 85% of eligible
accounts receivable and 50% of eligible inventory up to a maximum of $4.5
million as specified in the agreement. This revolving credit line expires on
July 17, 1998. Interest is at LIBOR plus 2% or prime (8.25% at December 31,
1996), at the Company's option, and is due monthly. The Company retired the
previously outstanding bank loans discussed above with the proceeds from this
new bank agreement.

All amounts outstanding under this agreement are secured by inventory,
receivables and all other general assets of the Company. Among other things, the
agreement requires compliance with specific financial covenants related to
tangible net worth, debt to tangible net worth ratio and cash flow coverage. As
of December 31, 1996, the Company was in compliance with these covenants.

Additionally, in November 1996, the Company entered into a line-of-credit
agreement with a bank allowing for borrowing up to $1.0 million ($200,000
available at December 31, 1996) based on 80% of eligible accounts receivables of
its majority-owned subsidiary. This revolving credit line expires November 25,
1998 and bears interest at prime (8.25% at December 31, 1996) and is due
monthly. All amounts under this line are secured by the general assets of the
Company's majority-owned subsidiary. The Company retired the previously
outstanding bank line-of-credit with the proceeds from this line, which was due
on demand.

(B) NOTES PAYABLE TO RELATED PARTIES

In August 1996, the Company entered into a $1.0 million note payable with a
shareholder, Digital Electronics Corporation, which is due August 1997 or 10
days after the completion of an initial public offering of the Company's Common
Stock. Interest is at 5% per annum and is due quarterly.

Additionally, in connection with the acquisition of its majority-owned
subsidiary, Taylor, the Company entered into a $2.2 million note payable with
the former principal shareholder of Taylor. Scheduled principal payments are
$200,000 due March 1, 1997; $200,000 due October 1, 1997; $400,000 due each
March 1, 1998, 1999, 2000 and 2001; and $200,000 due September 1, 2001. The note
may be called earlier at the holder's option upon any of the following events:
(i) delivery of a 120-day notice after March 19, 1997; (ii) 10 days after the
completion of an initial public offering; (iii) the sale of a majority of the
common stock or substantially all of the assets of the Company; or (iv) upon the
sale of Taylor's labor scheduling software product line currently held for sale
by the Company. Interest is at 12.5% for the first six months and 15% thereafter
and is due monthly. This note is subordinated to the bank notes payable. This
shareholder also has a $230,000 note payable from Taylor, due on demand after
March 31, 1997. The note is secured by the intellectual property rights in the
software product line held for sale and provides for the holder to restrict the
sale of this product line to the extent that the sale proceeds are less than the
outstanding principal balance.

F-22
<PAGE>
TOTAL CONTROL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS RELATED TO THE NINE MONTHS ENDED

DECEMBER 31, 1995 ARE UNAUDITED)

4. NOTES PAYABLE (CONTINUED)
(C) OTHER

The Company has a $230,000 note payable to a Canadian governmental agency,
which bears interest at the Canadian prime rate (4.25% at December 31, 1996)
plus 3%. Scheduled monthly principal and interest payments of approximately
$16,000 are due through August 1, 1997, with the remaining due at September 1,
1997. This loan is guaranteed by the Company's Chief Executive Officer and the
former principal shareholder of Taylor.

5. LONG-TERM DEBT

Long-term debt at March 31, 1995 and 1996 and December 31, 1996, consists of
the following:

(A) RELATED PARTIES

<TABLE>
<CAPTION>
MARCH 31,
------------------------ DECEMBER 31,
1995 1996 1996
----------- ----------- --------------
<S> <C> <C> <C>
Note payable to shareholder, due earlier of (1) September 1999
or (2) 10 days after the completion of an initial public
offering of the Company's Common Stock, subordinate to bank
notes payable............................................... $ -- $ -- $ 2,000,000
Note payable to principal shareholder, 10%, subordinate to
convertible debentures, due December 1997................... 200,000 200,000 200,000
----------- ----------- --------------
200,000 200,000 2,200,000
Less current maturities....................................... -- -- 200,000
----------- ----------- --------------
Long-term debt................................................ $ 200,000 $ 200,000 $ 2,000,000
----------- ----------- --------------
----------- ----------- --------------
</TABLE>

The $2.0 million shareholder note payable bears interest at 20.0%, of which
13.0% is due in cash, due monthly after December 1996, and 7.0% is payable in
Common Stock based on a value of $5.00 per share (27,999 shares annually). If
the note is retired within the first year of issuance, the shareholder is
entitled to the full 27,999 shares.

As discussed in Note 2, as it is management's intent to retire this note
payable with a portion of the anticipated proceeds from the asset held for sale,
expected interest expense from this note payable (including the deferred
financing cost related to the share issuance) during the estimated period the
asset will be held for sale, was offset against the anticipated proceeds in
deriving the carrying value of the asset held for sale.

F-23
<PAGE>
TOTAL CONTROL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS RELATED TO THE NINE MONTHS ENDED

DECEMBER 31, 1995 ARE UNAUDITED)

5. LONG-TERM DEBT (CONTINUED)
(B) OTHER

<TABLE>
<CAPTION>
MARCH 31,
------------------------ DECEMBER 31,
1995 1996 1996
----------- ----------- --------------
<S> <C> <C> <C>
Convertible subordinated debentures payable to an individual,
6%, convertible, at holders' option, into Common Stock at
$0.74 per share, due December 1997.......................... $ 300,000 $ 300,000 $ 250,000
Capital lease obligations, interest at 10% to 12%, principal
and interest due in various monthly installments through
September 1997 secured by the related equipment............. -- 146,453 78,313
Other, 8.5%................................................... 10,345 -- 113,249
----------- ----------- --------------
Total long-term debt...................................... 310,345 446,453 441,562
Less current maturities....................................... 10,345 95,110 380,183
----------- ----------- --------------
Long-term debt............................................ $ 300,000 $ 351,343 $ 61,379
----------- ----------- --------------
----------- ----------- --------------
</TABLE>

Total debt at December 31, 1996 matures on a fiscal year basis as follows:

<TABLE>
<CAPTION>
FISCAL YEAR AMOUNT
- --------------------------------------------------------------------- -------------
<S> <C>
1997................................................................. $ 40,658
1998................................................................. 553,194
1999................................................................. 47,710
2000................................................................. 2,000,000
-------------
$ 2,641,562
-------------
-------------
</TABLE>

6. COMMITMENTS AND CONTINGENCIES

The Company has an operating lease with a partnership owned by the principal
shareholder and a shareholder/officer. Monthly rental payments of $12,000 plus
property taxes, insurance and utilities are due through April 1997. In December
1996, the lease was renewed through April 2002, on similar terms.

The Company leases various other office space and office equipment under
operating leases that expire in various years through 2000. Subsequent to March
31, 1996, the Company entered into an additional office lease which requires
monthly rental payments of $1,969 through October 1999. Rent expense for fiscal
1994, 1995 and 1996 was approximately $187,000, $164,000 and $243,000,
respectively; and $138,000 and $425,000 for the nine months ended December 31,
1995 and 1996, respectively. Included in the table below on a net basis is
sublease income of approximately $54,000 for fiscal 1997 and 1998 and $27,000
for fiscal 1999 for two office locations that were leased by Cincinnati.

F-24
<PAGE>
TOTAL CONTROL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS RELATED TO THE NINE MONTHS ENDED

DECEMBER 31, 1995 ARE UNAUDITED)

6. COMMITMENTS AND CONTINGENCIES (CONTINUED)

Minimum future lease payments under noncancelable operating leases as of
December 31, 1996 on a fiscal year basis are as follows:

<TABLE>
<CAPTION>
FISCAL YEAR AMOUNT
- --------------------------------------------------------------------- -------------
<S> <C>
1997................................................................. $ 199,907
1998................................................................. 773,857
1999................................................................. 744,680
2000................................................................. 334,482
2001................................................................. 192,117
-------------
$ 2,245,043
-------------
-------------
</TABLE>

Certain officers and employees of the Company have employment contracts
through 2000.

Under the terms of various agreements, the Company is obliged to pay
royalties on product sales at rates from 3.0% to 17.0%. The Company has made
certain advance payments in respect of future royalties. Prepaid royalties are
amortized to earnings based on actual sales realized over the term of the
applicable royalty agreement.

To manage its foreign currency risk related to its purchases of inventory
from a Japanese vendor (see Note 11), the Company hedges firm inventory purchase
commitments by entering into forward contracts to purchase Japanese Yen. This
hedging minimizes the impact of foreign exchange rate movements on the Company's
operating results. Gains and losses on the hedge positions are deferred and
included as a component of the transaction when it is completed. At January 29,
1997, the Company had outstanding forward contracts for the purchase of Japanese
Yen through April 15, 1997 of approximately $3.2 million to hedge equivalent
outstanding commitments transacted in Yen.

Following this offering, the holders of certain shares of Common Stock will
have certain rights to cause the Company to register those shares under the
Securities Act of 1933, as amended (the "Securities Act"). By separate
agreements, these registration rights apply to holders of 1,382,655 shares of
Common Stock of the Company, and the 767,112 shares issuable to the former
shareholders of Taylor upon the conversion of Taylor Class C Exchangeable common
stock (collectively, the "Rights Holders"). All of such registration rights
agreements provide that the Rights Holders' registration rights are subject to
certain notice requirements and to the condition that, in the case of any
piggyback registration rights, the underwriters of any offering have the right
to limit the number of shares included in such registration. The Company has
agreed to bear the expenses of all registrations under these registration rights
agreements, except for underwriting discounts, selling commissions and
underwriters' expense allowances, which are to be paid by the respective Rights
Holders.

The Company is not involved in any material legal proceedings.

7. REDEEMABLE COMMON STOCK ISSUANCES

During December 1993, the Company sold 1,204,653 shares of Common Stock for
$1.0 million. Included in the terms of the agreement related to this sale are
certain covenants, including a requirement

F-25
<PAGE>
TOTAL CONTROL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS RELATED TO THE NINE MONTHS ENDED

DECEMBER 31, 1995 ARE UNAUDITED)

7. REDEEMABLE COMMON STOCK ISSUANCES (CONTINUED)

that the Company use its best efforts to effect a sale to an unrelated third
party of all or substantially all of its assets or complete an initial public
offering of its stock by December 16, 1998. The shareholder has the right to put
the shares to the Company at fair market value, as defined in the agreement, for
a two-year period in the event the Company is in violation of any of these
covenants. The Company was in compliance with these covenants at December 31,
1996. This put right automatically terminates upon the closing of a qualified
initial public offering.

In connection with the acquisition of Cincinnati (see Note 2), the Company
issued 150,003 shares of Common Stock. Between January 29, 1998 and January 28,
2000, the shareholder has the right to put the shares to the Company at fair
value as defined in this agreement. This redemption right terminates upon the
closing of an initial public offering.

Although management has not obtained an appraisal of the fair market value
of the Company, certain equity transactions have occurred upon which management
has based its estimate of the potential redemption value of the aforementioned
shares. The estimated redemption values per share for the above referenced
shares were $0.83/share, $1.00/share and $2.33/share at March 31, 1994, 1995 and
1996, respectively, and $9.00/share at December 31, 1996.

During July 1994, the Company sold an aggregate of 250,002 shares of Common
Stock to Digital Electronics (see Note 11) and to a distributor of Digital
Electronics products in exchange for $250,000. The shareholders have the right
to put the shares at any time to the Company at the lesser of (a) the original
purchase price or (b) the net book value per share (on a fully diluted basis) as
reflected on the consolidated balance sheet of the Company for the fiscal
quarter most recently completed. Redeemable common stock of $250,000 which would
otherwise be classified as current liabilities has been classified as long-term
because the Company intends to refinance such borrowings on a long-term basis
with its committed long-term borrowing facilities which it has available. The
shareholders have agreed to terminate this right upon the closing of an initial
public offering. These shares are reflected at a redemption value of $250,000 on
the accompanying balance sheets.

In connection with the acquisition of Taylor, a portion of the consideration
exchanged by the Company was 767,112 shares of Class C Exchangeable common stock
of Taylor to the former holders of the voting common stock of Taylor. This
common stock is convertible at the holders' option into 767,112 shares of the
Company's Common Stock. This Class C Exchangeable common stock has no rights in
the assets or earnings of Taylor, has no voting rights and does not have the
right to the dividends of the Taylor Class A common stock outstanding. As a
result, this stock is not considered minority interest in Taylor; rather the
stock is treated as a redeemable stock of the Company. The Class C common
shareholders have the right to put the shares to the Company for $6.0 million
for a period of 10 days in the event the Company has not completed an initial
public offering of the Company's Common Stock by September 19, 1997.

The $6.0 million redemption amount is due quarterly over three years, with
interest at prime and is subordinated to the bank notes payable. This redeemable
stock has been recorded at $4.65 million, the present value of the redemption
price based on an approximate 15% discount rate and is being accreted to its
redemption value over the life of the security using the effective interest rate
method.

F-26
<PAGE>
TOTAL CONTROL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS RELATED TO THE NINE MONTHS ENDED

DECEMBER 31, 1995 ARE UNAUDITED)

8. STOCK OPTION PLANS

The Company has four fixed option plans which reserve shares of common stock
for issuance to management, employees, directors and advisors of the Company.
The Company has adopted the disclosure-only provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS
No. 123"). Accordingly, no compensation cost has been recognized for the stock
option plans. Consistent with the provisions of SFAS No. 123, had compensation
cost for the Company's four stock option plans been determined based on the fair
value at the grant date for awards during fiscal 1996 and the nine months ended
December 31, 1996, the Company's net loss and net loss per share available to
shareholders would have been reduced to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS ENDED
MARCH 31, 1996 DECEMBER 31, 1996
----------------- --------------------
<S> <C> <C>
Net loss available to shareholders--as reported................ $ (608,964) $ (11,160,369)
Net loss available to shareholders--pro forma.................. (726,156) (11,392,918)
Net loss per share--as reported................................ (0.11) (1.97)
Net loss per share--pro forma.................................. (0.13) (2.01)
</TABLE>

The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted average
assumptions for grants during fiscal 1996 and the nine months ended December 31,
1996: dividend yield of 0%; expected volatility of 60%; risk-free interest rate
of 6%; and expected lives of 3 years.

(A) 1993 STOCK OPTION PLAN

The Company's 1993 Stock Option Plan (the "1993 Plan") provides for the
grant of common stock options.

Under the 1993 Plan, incentive stock options ("ISOs") may be granted to any
officer or employee of the Company. Nonqualified stock options may be granted to
any officer, employee, consultant, director or other agent of the Company. In
the case of ISOs, the exercise price paid shall be at least 100% (110% in
certain cases) of the fair market value of the Common Stock on the date of
grant. Options become exerciseable generally over three years or as determined
by the Board. Certain acceleration provisions exist related to a change in
control of the Company or an initial public offering of the Company's Common
Stock.

F-27
<PAGE>
TOTAL CONTROL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS RELATED TO THE NINE MONTHS ENDED

DECEMBER 31, 1995 ARE UNAUDITED)

8. STOCK OPTION PLANS (CONTINUED)
The following summarizes option activity:

<TABLE>
<CAPTION>
SHARES EXERCISE PRICES
--------- ---------------
<S> <C> <C>
Outstanding at March 31, 1993.............................................. -- $ --
Granted.................................................................. 99,594 0.83
--------- ---------------
Outstanding at March 31, 1994.............................................. 99,594 0.83
Granted.................................................................. 43,722 1.00
--------- ---------------
Outstanding at March 31, 1995.............................................. 143,316 0.83 - 1.00
Granted.................................................................. 70,800 2.00 - 3.33
--------- ---------------
Outstanding at March 31, 1996.............................................. 214,116 0.83 - 3.33
Granted.................................................................. 111,006 3.33 - 6.66
Exercised................................................................ (29,148) 1.00
--------- ---------------
Outstanding at December 31, 1996........................................... 295,974 $ 0.83 - $6.66
--------- ---------------
--------- ---------------
</TABLE>

Subject to certain exceptions defined under the 1993 Plan related to an
employee's death, disability or termination, options expire ten years from the
date of grant. At March 31, 1996 and December 31, 1996, options to purchase
80,970 shares and 135,594 shares were exerciseable, respectively. In December
1996, the Board determined that no additional options will be granted under this
plan.

(B) 1996 STOCK OPTION PLAN

In December 1996, the Company adopted the 1996 Stock Option Plan under which
options may be granted to purchase up to 550,000 shares of Common Stock to
management, employees and advisors of the Company. This Plan provides for the
grant of ISOs and non-qualified stock options. No options have been granted
under this Plan.

In December 1996, the Company adopted the 1996 Non-Employees Directors'
Stock Option Plan under which 120,000 shares of Common Stock have been
authorized for issuance. All non-employee directors will receive a stock option
to purchase 12,000 shares of Common Stock on the day after each annual meeting
of shareholders of the Company, provided they are then serving as a director of
the Company. All grants will be non-qualified stock options. Options granted
under this Plan are exerciseable six months after the date of grant. No options
have been granted under this Plan.

(D) 1996 DISCOUNT STOCK PURCHASE PLAN

In December 1996, the Company adopted the 1996 Discount Stock Purchase Plan,
under which 250,000 shares of Common Stock have been reserved for issuance.
Eligible employees of the Company may purchase Common Stock of the Company
beginning on the first March 31 or September 30 following the closing of this
offering. Eligible employees participate in this Plan by authorizing payroll
deductions of up to 10% of their base compensation. The purchase price per share
is the lesser of (i) 85%

F-28
<PAGE>
TOTAL CONTROL PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(AMOUNTS RELATED TO THE NINE MONTHS ENDED

DECEMBER 31, 1995 ARE UNAUDITED)

8. STOCK OPTION PLANS (CONTINUED)
of the fair market value of a share of Common Stock on the date of the
commencement of the applicable offering period, or (ii) 85% of the fair market
value of a share of Common Stock on the date of the end of such period. No
shares have been issued under this plan.

9. SHAREHOLDERS' AGREEMENT

Total Control Products, Inc. and its shareholders are party to a
shareholders' agreement whereby all of the Company's common shareholders have
certain preemptive rights. Purchases of shares shall be on terms comparable to
the terms of purchase for the remaining authorized shares. This agreement will
terminate upon the closing of an initial public offering.

10. BENEFIT PLANS

The Company has a 401(k) plan covering all employees of Total Control
Products, Inc. Employees must complete one month of service to participate.
Employee contributions are supplemented by Company contributions as defined in
the plan agreement. Company contributions to the plan totaled approximately
$19,000, $17,000 and $29,000 for fiscal 1994, 1995 and 1996, respectively; and
approximately $5,500 and $69,000 for the nine months ended December 31, 1995 and
1996, respectively. Additionally, the Company can make discretionary
profit-sharing contributions. The Company did not make a discretionary
profit-sharing contribution in fiscal 1994, 1995 or 1996; nor the nine months
ended December 31, 1995 or 1996.

The Canadian employees of the Company's subsidiary, Taylor, may contribute
on a pre-tax basis to a benefit plan, which does not provide for employer
sponsored contributions.

11. SIGNIFICANT VENDOR

A significant portion of the Company's purchases are made from a related
party, Digital Electronics. During fiscal 1994, 1995 and 1996, and the nine
months ended December 31, 1995 and 1996, approximately 54%, 65%, 67%, 72% and
57%, respectively, of the Company's total raw material purchases were made from
this vendor. The raw material component of cost of sales for fiscal 1994, 1995
and 1996 and the nine months ended December 31, 1995 and 1996 was approximately
85%, 89%, 89%, 91% and 84%, respectively.

12. IPO REGISTRATION

In December 1996, the Company's Board of Directors authorized an amendment
to the Company's Articles of Incorporation increasing the number of authorized
shares of Common Stock to 22,500,000.

Additionally, the Board of Directors authorized management of the Company to
file a registration statement with the Securities and Exchange Commission
permitting the Company to sell Common Stock to the public.

13. RECLASSIFICATIONS

Certain balances in the accompanying consolidated financial statements have
been reclassified to conform to current year presentation.

F-29
<PAGE>
AUDITORS' REPORT

To the Directors of
Taylor Industrial Software Inc.

We have audited the consolidated balance sheets of Taylor Industrial
Software Inc. as at March 31, 1995 and 1996 and the consolidated statements of
operations and retained earnings and changes in financial position for each of
the three years in the period ended March 31, 1996. These consolidated financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these consolidated 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 an audit to obtain
reasonable assurance whether the consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.

In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the company as at March 31,
1995 and 1996 and the results of its operations and the changes in its financial
position for each of the three years in the period ended March 31, 1996 in
accordance with Canadian generally accepted accounting principles.

PRICE WATERHOUSE
Chartered Accountants
Edmonton, Canada

July 30, 1996, except for Notes 11 and 12 which are as of September 26, 1996

F-30
<PAGE>
TAYLOR INDUSTRIAL SOFTWARE INC.

CONSOLIDATED BALANCE SHEETS
(STATED IN CANADIAN DOLLARS, UNLESS OTHERWISE NOTED)

<TABLE>
<CAPTION>
MARCH 31,
----------------------------
1995 1996
------------- -------------
(RESTATED) (RESTATED)
<S> <C> <C>
ASSETS
Current assets:
Cash.............................................................................. $ 20,469 $ 68,867
Accounts receivable (Note 6)...................................................... 2,409,672 2,348,291
Inventory......................................................................... 121,417 125,148
Prepaid expenses.................................................................. 187,332 224,713
Refundable investment tax credits (Note 2)........................................ 420,402 385,664
------------- -------------
3,159,292 3,152,683
Capital assets (Note 3)............................................................. 1,318,176 958,816
Prepaid royalties (Note 9).......................................................... 238,000 231,700
Deferred income taxes............................................................... -- 74,000
------------- -------------
$ 4,715,468 $ 4,417,199
------------- -------------
------------- -------------

LIABILITIES
Current liabilities:
Bank advances..................................................................... $ 116,563 $ 203,093
Operating bank loans (Note 4)..................................................... -- 249,050
Accounts payable and accrued liabilities.......................................... 582,909 592,025
Bonus payable..................................................................... 229,084 102,667
Income taxes payable.............................................................. 16,967 3,436
Deferred revenue.................................................................. 1,281,123 1,306,999
Current portion of long-term debt................................................. 42,422 251,767
------------- -------------
2,269,068 2,709,037
Long-term debt (Note 5)............................................................. 879,802 628,035
Shareholder advances (Note 6)....................................................... 313,195 313,195
Deferred income taxes............................................................... 74,000 --

SHAREHOLDERS' EQUITY
Share capital (Note 10)............................................................. 200 200
Retained earnings................................................................... 1,179,203 766,732
------------- -------------
1,179,403 766,932
------------- -------------
$ 4,715,468 $ 4,417,199
------------- -------------
------------- -------------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-31
<PAGE>
TAYLOR INDUSTRIAL SOFTWARE INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(STATED IN CANADIAN DOLLARS, UNLESS OTHERWISE NOTED)

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
---------------------------------------------
1994 1995 1996
------------- -------------- --------------
(RESTATED) (RESTATED) (RESTATED)
<S> <C> <C> <C>
Software licences and other revenue............................... $ 8,523,708 $ 10,071,355 $ 10,364,600
Cost of revenue................................................... 743,504 805,385 703,032
------------- -------------- --------------
Gross margin...................................................... 7,780,204 9,265,970 9,661,568
Expenses:
Selling and marketing........................................... 2,637,865 3,424,084 3,984,638
General and administrative...................................... 2,381,147 2,887,330 2,592,445
Research and development (Note 7)............................... 2,568,258 3,077,857 3,404,856
------------- -------------- --------------
7,587,270 9,389,271 9,981,939
------------- -------------- --------------
Income (loss) from operations..................................... 192,934 (123,301) (320,371)
Other income (expenses):
Interest income................................................. 8,823 30,881 31,856
Interest expense................................................ (35,234) (34,494) (88,776)
Gain (loss) on foreign exchange................................. 115,326 (11,941) (132,034)
Gain (loss) on sale of capital assets........................... -- 1,217 (12,906)
------------- -------------- --------------
88,915 (14,337) (201,860)
------------- -------------- --------------
Income (loss) before income taxes................................. 281,849 (137,638) (522,231)
Provision for (recovery of) income taxes:
Current......................................................... 51,851 32,190 38,240
Deferred........................................................ 51,000 (34,000) (148,000)
------------- -------------- --------------
102,851 (1,810) (109,760)
------------- -------------- --------------
Net income (loss) for the year.................................... 178,998 (135,828) (412,471)
Retained earnings at beginning of year:
As previously reported.......................................... 1,568,499 1,597,448 1,479,956
Decrease in revenue due to change in accounting policy, net of
related income taxes (Note 12)................................ (224,454) (282,417) (300,753)
------------- -------------- --------------
As restated..................................................... 1,344,045 1,315,031 1,179,203
Dividends (Note 10)............................................... (208,012) -- --
------------- -------------- --------------
Retained earnings at end of year.................................. $ 1,315,031 $ 1,179,203 $ 766,732
------------- -------------- --------------
------------- -------------- --------------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-32
<PAGE>
TAYLOR INDUSTRIAL SOFTWARE INC.

CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION
(STATED IN CANADIAN DOLLARS, UNLESS OTHERWISE NOTED)

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
----------------------------------------
1994 1995 1996
------------ ------------ ------------
(RESTATED) (RESTATED) (RESTATED)
<S> <C> <C> <C>
Cash was provided by (used for) operations:
Net income (loss) for the year........................................ $ 178,998 $ (135,828) $ (412,471)
Add (deduct) non-cash items:
Amortization of capital assets...................................... 476,239 599,595 651,527
Loss (gain) on sale of capital assets............................... -- (1,217) 12,906
Deferred income taxes............................................... 51,000 (34,000) (148,000)
------------ ------------ ------------
706,237 428,550 103,962
Net change in non-cash working capital items (Note 13)............ (353,644) 509,728 (43,649)
------------ ------------ ------------
Total from operations................................................... 352,593 938,278 60,313
Investing activities:
Capital assets purchased.............................................. (646,202) (656,444) (312,073)
Proceeds from sale of capital assets.................................. -- 4,022 7,000
Advance payment on future royalties (Note 9).......................... -- (210,400) --
------------ ------------ ------------
(646,202) (862,822) (305,073)
Financing activities:
Loan repayments, Norsoft Inc.......................................... (120,000) (30,000) --
Loan proceeds -- Western Economic Diversification..................... 561,528 10,212 --
Loan repayments -- Western Economic Diversification................... -- -- (42,422)
Shareholder advances.................................................. 16,582 19,803 --
Dividends (Note 10)................................................... (208,012) -- --
------------ ------------ ------------
250,098 15 (42,422)
------------ ------------ ------------
Increase (decrease) in cash for the year................................ (43,511) 75,471 (287,182)
Cash at beginning of year............................................... (128,054) (171,565) (96,094)
------------ ------------ ------------
Cash at end of year..................................................... $ (171,565) $ (96,094) $ (383,276)
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

Cash is defined as cash net of bank advances and operating bank loans.
The accompanying notes are an integral part of these consolidated financial
statements.

F-33
<PAGE>
TAYLOR INDUSTRIAL SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(STATED IN CANADIAN DOLLARS, UNLESS OTHERWISE NOTED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) BASIS OF PRESENTATION

These financial statements have been prepared in Canadian dollars (the
company's functional currency) and in accordance with the accounting principles
generally accepted in Canada. These principles conform, in all material
respects, with accounting principles generally accepted in the United States,
except as disclosed in Note 13.

The consolidated financial statements include the accounts of the company
and its wholly-owned subsidiary companies, Taylor Industrial Software (USA) Inc.
and Taylor Industrial Software (UK) Limited. All significant intercompany
transactions have been eliminated.

(B) USE OF ESTIMATES

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

The company develops, licences and maintains productivity-enhancing
management and control software for manufacturing industries. Licence revenue
also includes revenue from the sale of certain software manufactured by third
parties. The company also provides training, consulting and post-contract
customer support for its products.

Licence revenue is recognized on shipment of the product. Revenues from
training and consulting are recognized at the time the service is performed.
Revenue from post-contract customer support is recognized ratably over the
period of the post-contract arrangement.

(D) RESEARCH AND DEVELOPMENT

All research and development costs are expensed as incurred.

(E) INVENTORY

Inventory is recorded at the lower of average cost and net realizable value.

F-34
<PAGE>
TAYLOR INDUSTRIAL SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(STATED IN CANADIAN DOLLARS, UNLESS OTHERWISE NOTED) (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(F) CAPITAL ASSETS

Capital assets are recorded at cost, net of investment tax credits, and are
amortized over the estimated useful lives of the capital assets using the
following rates and bases:

<TABLE>
<S> <C>
Office furniture and equipment 20% declining balance
Automotive equipment 30% declining balance
Computer equipment 33% straight-line
Computer software 33% straight-line
Development equipment 25% to 33% straight-line
Technology software 25% straight-line
Leasehold improvements 10% straight-line
</TABLE>

Development equipment consists primarily of industrial and computer
equipment which is used in the software development process. Technology software
consists primarily of licences for the use of third party software which has
alternative uses.

(G) INCOME TAXES

The company records items for income tax purposes in amounts which differ
from that reflected in the financial statements. The tax effect of these
differences are reflected in the financial statements as deferred income taxes.

(H) INVESTMENT TAX CREDITS

The company is entitled to scientific research and experimental development
("SRED") investment tax credits granted by the Canadian federal government. SRED
tax credits are received on qualified Canadian SRED expenditures (100%
refundable) and capital purchases (40% refundable, 60% non-refundable). As a
Canadian Controlled Private Corporation ("CCPC"), SRED tax credits are earned at
the rate of 35% on the first $2 million of qualified expenditures and 20% on
amounts in excess of $2 million. SRED tax credits reduce federal income taxes
currently payable and, to the extent these credits exceed income taxes currently
payable, may be received in cash from the federal government, subject to various
limitations which reduce the refundable amount relating to capital SRED
expenditures to 40%. The remaining 60% non-refundable portion of capital SRED
expenditures can be carried forward and applied to reduce federal taxes payable
in future years (NOTE 8).

The entitlement to SRED tax credits will change if the company loses its
CCPC status. CCPC status is lost when a company is public as defined in the
Income Tax Act (Canada), or is controlled by non-Canadian residents or a public
corporation. For federal tax purposes, non-CCPC corporations are entitled to
SRED tax credits at a rate of 20% of qualified expenditures, with no refundable
component available.

As a result of the purchase of the company on September 26, 1996 by Total
Control Products, Inc., a U.S. company (SEE NOTE 11), any subsequent SRED tax
credits will be earned at a rate of 20% of qualified expenditures, with no
refundable component available. This change in status has no effect on
investment tax credits earned for fiscal periods prior to September 26, 1996.

F-35
<PAGE>
TAYLOR INDUSTRIAL SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(STATED IN CANADIAN DOLLARS, UNLESS OTHERWISE NOTED) (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SRED tax credits are accounted for as a reduction of the related
expenditures. The refundable portion of SRED tax credits is recorded in the year
in which they are earned. The non-refundable portion of SRED tax credits is
recorded at such time as the company has reasonable assurance that the credits
will be realized.

(I) TRANSLATION OF FOREIGN CURRENCIES

The company's foreign operations' financial statements are translated from
the foreign entity currency using the method for integrated foreign operations;
monetary items are translated at the rates prevailing at the balance sheet date
and non-monetary items are translated at historic rates. Revenues and expenses
are translated at weighted-average rates throughout the year except for
amortization which is translated at the same rates as the related capital asset.
Foreign exchange gains and losses are included in income.

2. REFUNDABLE SRED INVESTMENT TAX CREDITS

The company has recorded anticipated refunds of federal SRED investment tax
credits in the amount of $385,664 resulting from scientific research and
experimental development activities. This amount consists of 1996 credits
totaling $95,091, 1995 credits totaling $220,355 and the unpaid balance of 1994
credits totaling $70,218.

F-36
<PAGE>
TAYLOR INDUSTRIAL SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(STATED IN CANADIAN DOLLARS, UNLESS OTHERWISE NOTED) (CONTINUED)

3. CAPITAL ASSETS
<TABLE>
<CAPTION>
MARCH 31, 1995
-------------------------------------------
ACCUMULATED NET BOOK
COST AMORTIZATION VALUE
------------- ------------- -------------
<S> <C> <C> <C>
Office furniture and equipment............................ $ 666,407 $ 297,112 $ 369,295
Automotive equipment...................................... 7,000 1,050 5,950
Computer equipment........................................ 834,002 628,625 205,377
Computer software......................................... 110,399 78,650 31,749
Development equipment..................................... 1,227,350 1,058,610 168,740
Technology software....................................... 930,222 495,959 434,263
Leasehold improvements.................................... 248,929 146,127 102,802
------------- ------------- -------------
$ 4,024,309 $ 2,706,133 $ 1,318,176
------------- ------------- -------------
------------- ------------- -------------

MARCH 31, 1996
-------------------------------------------
ACCUMULATED NET BOOK
COST AMORTIZATION VALUE
------------- ------------- -------------
<S> <C> <C> <C>
Office furniture and equipment............................ $ 707,910 $ 358,615 $ 349,295
Automotive equipment...................................... -- -- --
Computer equipment........................................ 986,350 805,905 180,445
Computer software......................................... 121,937 98,106 23,831
Development equipment..................................... 1,293,653 1,163,545 130,108
Technology software....................................... 930,222 728,515 201,707
Leasehold improvements.................................... 248,929 175,499 73,430
------------- ------------- -------------
$ 4,289,001 $ 3,330,185 $ 958,816
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

4. OPERATING BANK LOANS

The company has two operating bank loans with a Canadian chartered bank.

The Canadian dollar operating bank loan bears interest at bank prime rate
plus 0.5% and can be drawn to a maximum amount of $750,000.

The U.S. dollar operating bank loan bears interest at the bank's U.S. dollar
base rate plus 0.5% and can be drawn to a maximum amount of U.S. $200,000.

The operating loans are secured by a general assignment of book debts, a
general security agreement, a postponement agreement in the amount of $200,000,
and personal guarantees of the shareholders in the total amount of $330,000.

F-37
<PAGE>
TAYLOR INDUSTRIAL SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(STATED IN CANADIAN DOLLARS, UNLESS OTHERWISE NOTED) (CONTINUED)

5. LONG-TERM DEBT

<TABLE>
<CAPTION>
MARCH 31,
--------------------------
1995 1996
----------- -------------
<S> <C> <C>
Loan payable to Western Economic Diversification, repayable in four equal
semi-annual instalments of $21,211, beginning April 30, 1995. Interest on
unpaid instalments will be charged at 3% above the bank rate, starting 30
days after any due date................................................... $ 84,844 $ 42,422
Loan payable to Western Economic Diversification, repayable in 30 equal
monthly instalments of $20,259, beginning April 1, 1996, and one
instalment of $20,265 on October 1, 1999. 75% of any investment tax
credits received subsequent to March 31, 1996, to a maximum of $209,345,
are to be applied to the loan balance within 15 days of receipt. Interest
at 3% above the bank rate, starting 30 days after due date, on unpaid
amounts will be charged................................................... 837,380 837,380
----------- -------------
922,224 879,802
Less current portion........................................................ 42,422 251,767
----------- -------------
$ 879,802 $ 628,035
----------- -------------
----------- -------------
</TABLE>

Principal repayments are as follows:

6. SHAREHOLDER ADVANCES

Shareholder advances in the amount of $313,195 (1995 - $313,195) are
unsecured, are due on demand after March 31, 1997, and bear interest at bank
prime rate on March 31 of the preceding year. Interest in the amount of $30,537
(1995 - $36,414) was expensed during the year.

Loans to a shareholder in the amount of $34,800 (1995 - $45,000), included
in accounts receivable, are unsecured and have no fixed terms of repayment. An
amount of $20,000 bears interest at bank prime rate plus 1%. Interest in the
amount of $1,950 (1995 - $1,250) was earned during the year.

7. RESEARCH AND DEVELOPMENT COSTS

Research and development costs expensed in the year are made up as follows:

<TABLE>
<CAPTION>
MARCH 31,
-------------------------------------------
1994 1995 1996
------------- ------------- -------------
<S> <C> <C> <C>
Research and development expenditures...................... $ 2,781,949 $ 3,323,942 $ 3,526,187
Less SRED investment tax credits........................... 213,691 246,085 121,331
------------- ------------- -------------
$ 2,568,258 $ 3,077,857 $ 3,404,856
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

F-38
<PAGE>
TAYLOR INDUSTRIAL SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(STATED IN CANADIAN DOLLARS, UNLESS OTHERWISE NOTED) (CONTINUED)

8. NON-REFUNDABLE SRED INVESTMENT TAX CREDITS CARRIED FORWARD

The company has non-refundable SRED investment tax credits carried forward
amounting to $88,507 which can be used to reduce future federal Part I tax
payable. The benefit of these investment tax credits has not been recorded in
these financial statements. If not utilized, the SRED investment tax credits
will expire as follows:

9. COMMITMENTS

The company is obliged to make minimum payments for the use of its business
offices and office equipment for various terms up to May 2000. The payments
required during the next five fiscal years are as follows:

Rental expense on operating leases was $287,723 in 1994, $430,929 in 1995
and $447,163 in 1996.

Under the terms of various agreements, the company is obliged to pay
royalties on software sales at rates from 5% to 17%. The company has made
certain advance payments in respect of future royalties. Prepaid royalties are
amortized to earnings based on actual sales realized over the term of the
applicable royalty agreement.

10. SHARE CAPITAL

<TABLE>
<CAPTION>
MARCH 31,
--------------------
1995 1996
--------- ---------
<S> <C> <C>
Authorized
Unlimited number of Class "A" common voting shares.................................... -- --
Unlimited number of "First Preferred" non-voting redeemable and retractable shares.... -- --

Issued
100 Class "A" shares.................................................................. $ 100 $ 100
154,800 "First Preferred" shares...................................................... 100 100
--------- ---------
$ 200 $ 200
--------- ---------
--------- ---------
</TABLE>

F-39
<PAGE>
TAYLOR INDUSTRIAL SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(STATED IN CANADIAN DOLLARS, UNLESS OTHERWISE NOTED) (CONTINUED)

10. SHARE CAPITAL (CONTINUED)
The "First Preferred" shares are redeemable and retractable at $11.03 per
share. The "First Preferred" shares are entitled to an annual cumulative
dividend at the rate of 4/5 of the bank prime lending rate on April 1 of each
year.

Cumulative undeclared dividends in the amount of $218,624 (1995 - $85,400)
have not been recorded. The dividends will be recorded when declared.

11. SUBSEQUENT EVENTS

As at April 30, 1996, the company amended its issued and outstanding Class
"A" common shares from 100 to 1,000,000.

In addition, on April 30, 1996 the company established an employee share
option plan whereby eligible employees are entitled to acquire common shares of
the company under certain conditions and obligations specified within the plan
at "market value". Market value is set by the Board in June of each year or at
such other time as the Board deems appropriate. As at September 26, 1996,
options to acquire 20,002 shares had been granted to certain employees.

Effective September 26, 1996, the company repurchased all of the outstanding
share options for an amount of $275,155. On this date, all of the issued and
outstanding Class "A" common shares and "First Preferred" shares were purchased
by Total Control Products, Inc., a U.S. company. Under the terms of the stock
purchase agreement, the former shareholders of the company are entitled to
receive certain contingent compensation pursuant to an earn-out formula. Under
such formula, if the actual consolidated revenues of the company ("Net
Revenues") between November 1, 1996 and September 30, 1997 exceed $8.0 million,
the company will pay the former shareholders an aggregate amount equal to $1.0
million, and to the extent that Net Revenues during such period exceed $9.2
million, the company will pay to the former shareholders an aggregate amount,
not to exceed $3.0 million, equal to 50% of such excess. In addition, for the
period between November 1, 1997 and September 30, 1998, if Net Revenues exceed
$8.0 million, the company will pay to the former shareholders an aggregate
amount equal to $1.0 million and to the extent that Net Revenues during such
period exceed $10.6 million, the Company will pay to the former shareholders an
amount, not to exceed $3.0 million, equal to 50.0% of such excess.

As a result of the purchase by Total Control Products, Inc., the company
ceased to be a Canadian Controlled Private Corporation ("CCPC") on September 26,
1996. Because of this, from September 26, 1996 forward, the company's effective
income tax rate will increase to 43.5% from 20%, investment tax credits on
qualifying Canadian SRED expenditures will be reduced from 35% to 20% and there
will be no refundable portion of investment tax credits. In addition, the
repayment terms on the loans from Western Economic Diversification have been
accelerated such that the loans will be repaid by March 31, 1997.

In connection with the purchase of the company by Total Control Products,
Inc., the company entered into a two-year consulting agreement with Digital
Electronics Corporation whereby Digital Electronics Corporation has agreed to
provide certain product development and marketing consulting services to the
company in exchange for compensation of U.S. $200,000 per year. This agreement
terminates in November 1998.

F-40
<PAGE>
TAYLOR INDUSTRIAL SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(STATED IN CANADIAN DOLLARS, UNLESS OTHERWISE NOTED) (CONTINUED)

12. CHANGE IN ACCOUNTING POLICY

On September 26, 1996, the company retroactively changed its revenue
recognition policy to recognize the customer support portion of new licence
revenue ratably over the period of the post-contract arrangement. Previously,
revenue was recognized on shipment of the licence and the costs associated with
providing the post-contract customer support were accrued. Revenue was reduced
by $95,728 in 1994, and $31,336 in 1995 and was increased by $13,532 in 1996 to
reflect this change. This change in policy, net of related income taxes, had the
effect of reducing opening retained earnings in 1994 by $224,454, decreasing net
income in 1994 by $57,963 and in 1995 by $18,336, and increasing net income in
1996 by $8,148. The March 31, 1994, 1995 and 1996 opening retained earnings and
the financial statements for each of these periods have been restated to reflect
this change.

13. UNITED STATES ACCOUNTING PRINCIPLES

The financial statements of the company have been prepared in accordance
with accounting principles generally accepted in Canada ("Canadian GAAP"). These
principles conform, in all material respects, with accounting principles
generally accepted in the United States ("U.S. GAAP"), except for the items
discussed in the tables below. Under Canadian GAAP, the change in accounting
policy referred to in note 12 was a change from one acceptable method of
accounting for post-contract services to a more preferable method. The previous
accounting method used for Canadian GAAP would not have been in accordance with
U.S. GAAP. Financial statements for periods prior to the change prepared in
accordance with U.S. GAAP would have required a restatement. As the financial
statements prepared in accordance with Canadian GAAP were retroactively restated
due to the change in accounting principles under Canadian GAAP, this difference
would not have an effect on net income or shareholders' equity for the periods
presented.

CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

<TABLE>
<CAPTION>
1994 1995 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Retained earnings at end of year reported under Canadian
GAAP................................................... $ 1,315,031 $ 1,179,203 $ 766,732
Excess of redemption cost of redeemable retractable
"First Preferred" shares over carrying value, recorded
under U.S. GAAP(1)..................................... (1,707,900) (1,707,900) (1,707,900)
Cumulative undeclared dividends, recorded under U.S.
GAAP(2)................................................ -- (85,400) (218,624)
-------------- -------------- --------------
Deficit at end of year reported under U.S. GAAP......... $ (392,869) $ (614,097) $ (1,159,792)
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>

F-41
<PAGE>
TAYLOR INDUSTRIAL SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(STATED IN CANADIAN DOLLARS, UNLESS OTHERWISE NOTED) (CONTINUED)

13. UNITED STATES ACCOUNTING PRINCIPLES (CONTINUED)
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
1996
1995 ---------------------------
---------------------------- CANADIAN
CANADIAN GAAP U.S. GAAP GAAP U.S. GAAP
------------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
Dividends payable(2).................................. $ -- $ 85,400 $ -- $ 218,624
Redeemable retractable "First Preferred" shares(1).... -- 1,708,000 -- 1,708,000
Share capital(1)...................................... 200 100 200 100
Retained earnings (deficit)(1,2)...................... $ 1,179,203 $ (614,097) $ 766,732 $ (1,159,792)
------------- ------------- ----------- --------------
------------- ------------- ----------- --------------
</TABLE>

CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
----------------------------------------
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Cash from operations reported under Canadian GAAP....................... $ 352,593 $ 938,278 $ 60,313
Advance payment on future royalties reclassified from investing
activities(3).......................................................... -- (210,400) --
------------ ------------ ------------
Cash from operations under U.S. GAAP.................................... 352,593 727,878 60,313
Cash from investing activities reported under Canadian GAAP............. (646,202) (862,822) (305,073)
Advance payment on future royalties reclassified to operations(3)....... -- 210,400 --
------------ ------------ ------------
Cash from investing activities under U.S. GAAP.......................... (646,202) (652,422) (305,073)
Cash from financing activities reported under Canadian GAAP............. 250,098 15 (42,422)
Increase (decrease) in operating bank loans and bank advances(4)........ 193,511 (205,002) 335,580
------------ ------------ ------------
Cash from financing activities under U.S. GAAP.......................... 443,609 (204,987) 293,158
------------ ------------ ------------
Increase (decrease) in cash for the year under U.S. GAAP................ 150,000 (129,531) 48,398
Cash at beginning of year under U.S. GAAP............................... -- 150,000 20,469
------------ ------------ ------------
Cash at end of year under U.S. GAAP..................................... $ 150,000 $ 20,469 $ 68,867
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

- --------------

(1) Under Canadian GAAP, the redeemable retractable "First Preferred" shares are
included in shareholders' equity. Under U.S. GAAP, these shares are
classified as mandatorily redeemable shares outside of shareholders' equity
and are reported at full redemption amount. For years commencing on or after
January 1, 1996, Canadian GAAP would require the Company to present these
shares as liabilities measured at the redemption amount.

(2) Under Canadian GAAP, cumulative dividends on the redeemable retractable
"First Preferred" shares are not recorded until declared. Under U.S. GAAP,
cumulative dividends on mandatorily redeemable shares are accrued, even if
not declared, when they are payable at a future date.

(3) Under Canadian GAAP, cash outflows related to non-current assets may be
classified as investing activities. Under U.S. GAAP, cash outflows related
to investing activities are limited to disbursements

F-42
<PAGE>
TAYLOR INDUSTRIAL SOFTWARE INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(STATED IN CANADIAN DOLLARS, UNLESS OTHERWISE NOTED) (CONTINUED)

13. UNITED STATES ACCOUNTING PRINCIPLES (CONTINUED)
for loans, payments to acquire debt instruments or equity instruments of
other enterprises, or payments to acquire capital assets. Cash outflows not
meeting these criteria are classified as operating activities.

(4) Under Canadian GAAP, the statement of changes in financial position may be
based on cash net of bank advances and operating bank loans. Under U.S.
GAAP, the statement of cash flows is to be based on cash only, with
increases and decreases in bank advances and operating bank loans being
shown as financing activities.

The net change in non-cash working capital items is made up as follows:

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
----------------------------------------
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Decrease (increase) in:
Accounts receivable......................................... $ (628,399) $ 128,104 $ 61,381
Inventory................................................... (18,812) (16,062) (3,731)
Prepaid expenses............................................ (30,607) 5,985 (37,381)
Refundable investment tax credits........................... 17,063 17,222 34,738
Prepaid royalties........................................... 255,745 -- 6,300
Increase (decrease) in:
Accounts payable and accrued liabilities.................... 151,966 (3,382) 9,116
Bonus payable............................................... (31,136) 59,970 (126,417)
Income taxes payable........................................ 8,041 (2,653) (13,531)
Deferred revenue............................................ (77,505) 320,544 25,876
------------ ------------ ------------
Net change in non-cash working capital items.................. $ (353,644) $ 509,728 $ (43,649)
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

Other information related to cash payments during the year follows:

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
----------------------------------------
1994 1995 1996
------------ ------------ ------------
<S> <C> <C> <C>
Income taxes.................................................. $ 18,954 $ 9,114 $ 25,531
Interest...................................................... 18,626 14,689 55,239
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

* * * * * *

F-43
<PAGE>
TAYLOR INDUSTRIAL SOFTWARE INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(STATED IN CANADIAN DOLLARS)

<TABLE>
<CAPTION>
SIX MONTHS
ENDED SEPTEMBER 26,
----------------------------
1995 1996
------------- -------------
(UNAUDITED)
<S> <C> <C>
Net sales........................................................................... $ 4,568,390 $ 4,791,072
Cost of sales....................................................................... 383,007 427,522
------------- -------------
Gross profit........................................................................ 4,185,383 4,363,550
Research and development, selling, general, and adminstrative expenses.............. 4,847,992 5,303,261
------------- -------------
Income from operations.............................................................. (662,609) (939,711)
Interest expense, net............................................................... (17,971) (39,517)
------------- -------------
Net income (loss) before taxes...................................................... (680,580) (979,228)
------------- -------------
Provision for (recovery of) income taxes
Current........................................................................... 19,000 --
Deferred.......................................................................... (156,000) (130,000)
------------- -------------
(137,000) (130,000)
------------- -------------
Net loss for the period............................................................. $ (543,580) $ (849,228)
------------- -------------
------------- -------------
</TABLE>

The accompanying notes are an integral part of these condensed financial
statements.

F-44
<PAGE>
TAYLOR INDUSTRIAL SOFTWARE INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(STATED IN CANADIAN DOLLARS)

<TABLE>
<CAPTION>
SIX MONTHS
ENDED SEPTEMBER 26,
--------------------------
1995 1996
------------ ------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net loss for the period............................................................. $ (543,580) $ (849,227)
Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:
Deferred income taxes............................................................. (156,000) (130,000)
Loss (gain) on sale of capital assets............................................. 500 (3,029)
Depreciation and amortization..................................................... 318,079 277,246
Change in non-cash working capital items:
Accounts receivable............................................................. 773,628 655,990
Inventories..................................................................... (57,077) (142,014)
Prepaid expenses and other...................................................... 8,039 (5,849)
Accounts payable and accrued liabilities........................................ (546,320) 434,657
Deferred revenue................................................................ (237,816) (20,830)
------------ ------------
Net cash provided by (used in) operating activities........................... (440,547) 216,944
------------ ------------
Cash flows from investing activities:
Purchase of capital assets.......................................................... (290,052) (88,515)
Proceeds from sale of capital assets................................................ -- 3,029
------------ ------------
Net cash used in investing activities......................................... (290,052) (85,486)
------------ ------------
Cash flows from financing activities:
Repayment of long-term debt......................................................... (21,211) (109,210)
------------ ------------
Net cash used in financing activities......................................... (21,211) (109,210)
------------ ------------
Net change in cash.................................................................... (751,810) 22,248
Cash, beginning of period............................................................. (96,094) (383,276)
------------ ------------
Cash, end of period................................................................... $ (847,904) $ (361,028)
------------ ------------
------------ ------------
</TABLE>

Cash is defined as cash net of bank advances and operating bank loans.

The accompanying notes are an integral part of these condensed financial
statements.

F-45
<PAGE>
TAYLOR INDUSTRIAL SOFTWARE INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 26, 1996

(STATED IN CANADIAN DOLLARS)

NOTE 1. BASIS OF PRESENTATION

As noted in the audited financial statements of Taylor Industrial Software
Inc. ("Taylor") presented elsewhere in this Prospectus, the historical financial
statements of Taylor, including the accompanying unaudited condensed financial
statements have been prepared in accordance with accounting principles generally
accepted in Canada. These principles conform, in all material respects, with the
accounting principles generally accepted in the United States, except for the
items indicated in Note 13 of the audited financial statements of Taylor
included elsewhere in this Prospectus and as indicated below:

<TABLE>
<CAPTION>
SIX MONTHS
ENDED SEPTEMBER 26,
--------------------------
1995 1996
------------ ------------
<S> <C> <C>
Cash used in financing activities reported under Canadian GAAP.............. $ (21,211) $ (109,210)
Increase (decrease) in operating bank loans and bank
advances(1)............................................................... 553,912 (60,563)
------------ ------------
Cash provided by (used in) financing activities under U.S. GAAP............. 532,701 (169,773)
------------ ------------
Decrease in cash for the period under U.S. GAAP............................. (197,898) (38,315)
Cash at beginning of the period under U.S. GAAP............................. 20,469 68,867
------------ ------------
Cash at end of the period under U.S. GAAP................................... $ (177,429) $ 30,552
------------ ------------
------------ ------------
</TABLE>

- --------------

(1) Under Canadian GAAP, the statement of changes in financial position may be
based on cash net of bank advances and operating bank loans. Under U.S.
GAAP, the statement of cash flows is to be based on cash only, with
increases and decreases in bank advances and operating loans being shown as
financing activities.

The functional currency of Taylor is the Canadian dollar. As such, these
balances have not been translated into U.S. dollars.

Additionally, the accompanying unaudited condensed statements have been
prepared in accordance with generally accepted accounting practices for interim
periods. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. It is suggested that these condensed financial statements be read in
conjunction with the financial statements and notes thereto included elsewhere
in this prospectus.

F-46
<PAGE>
INDEPENDENT AUDITORS' REPORT

Stockholders and Directors
Cincinnati Dynacomp, Inc.
Milford, Ohio

We have audited the accompanying statements of operations and cash flows of
Cincinnati Dynacomp, Inc. for the years ended March 31, 1994 and 1995. 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 financial statements present fairly, in all material
respects, the results of operations and cash flows of Cincinnati Dynacomp, Inc.
for the years ended March 31, 1994 and 1995 in conformity with generally
accepted accounting principles.

DELOITTE & TOUCHE LLP

Cincinnati, Ohio

August 28, 1995

F-47
<PAGE>
CINCINNATI DYNACOMP, INC.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-----------------------------
1994 1995
------------- --------------
<S> <C> <C>
Net sales.......................................................................... $ 9,732,883 $ 10,553,408
Cost of sales...................................................................... 7,640,097 8,364,526
------------- --------------
Gross profit....................................................................... 2,092,786 2,188,882
Selling, general and administrative expenses....................................... 1,907,717 1,898,873
------------- --------------
Income from operations............................................................. 185,069 290,009
Other income (expense):
Interest expense............................................................... (249,084) (359,793)
Other income, net.............................................................. 59,631 76,416
------------- --------------
Net income (loss) before income taxes.............................................. (4,384) 6,632
Provision for income taxes......................................................... -- --
------------- --------------
Net income (loss).................................................................. $ (4,384) $ 6,632
------------- --------------
------------- --------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-48
<PAGE>
CINCINNATI DYNACOMP, INC.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
------------------------
1994 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)...................................................................... $ (4,384) $ 6,632
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating
activities:
Depreciation and amortization...................................................... 291,267 393,865
Gain on sale of assets............................................................. (2,097) (287)
Change in deferred income.......................................................... (43,447) --
Change in assets and liabilities, net of effects of merger (Note 1):
Accounts receivable.............................................................. 78,310 382,321
Inventories...................................................................... (101,178) (139,439)
Prepaid expenses and other....................................................... 40,580 13,666
Accounts payable................................................................. (66,884) (285,379)
Accrued liabilities.............................................................. (237,829) (86,472)
----------- -----------
Net cash provided by (used in) operating activities............................ (45,662) 284,907
----------- -----------
Cash flows from investing activities:
Additions to capitalized software, development costs, and other assets............. (22,286) (133,574)
Purchase of property and equipment................................................. (81,905) (78,561)
Proceeds from sale of assets....................................................... 11,845 3,050
----------- -----------
Net cash used in investing activities.......................................... (92,346) (209,085)
----------- -----------
Cash flows from financing activities:
Net borrowings (payments) under line-of-credit agreements.......................... 98,426 (423,657)
Net borrowings from stockholders................................................... 19,808 --
Proceeds from long-term debt....................................................... 150,000 500,835
Payment on long-term debt.......................................................... (130,226) (153,000)
----------- -----------
Net cash provided by (used in) financing activities............................ 138,008 (75,822)
----------- -----------
Net change in cash..................................................................... -- --
Cash, beginning of year................................................................ 300 300
----------- -----------
Cash, end of year...................................................................... $ 300 $ 300
----------- -----------
----------- -----------
Supplemental disclosure of cash flow information:
Cash paid during the year for interest............................................. $ 263,300 $ 351,200
----------- -----------
----------- -----------
Supplemental noncash investing and financing information:
Purchase of equipment by issuing notes payable..................................... $ 50,820 $ 48,479
Capital contribution through reduction of stockholder notes........................ 62,707 --
Purchase of the stock of Dynacomp by assuming net liabilities and issuing a $75,000
note payable..................................................................... $ 270,463 $ --
----------- -----------
----------- -----------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-49
<PAGE>
CINCINNATI DYNACOMP, INC.

NOTES TO FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) GENERAL

Cincinnati Dynacomp, Inc. (the "Corporation"), an Ohio corporation,
develops, manufactures and markets industrial automation tools. Its products
consist primarily of operator interfaces for programmable logic controllers.

(B) PROPERTY AND EQUIPMENT

Expenditures for repairs, maintenance and minor renewals are expensed as
incurred. Property and equipment are reported at cost and depreciated primarily
using the straight-line method over their estimated useful lives as follows:

<TABLE>
<S> <C>
Machinery and equipment.................................................. 5 years
Furniture and fixtures................................................... 5 years
Exhibits and demonstrators............................................... 3-5 years
Computer equipment....................................................... 3-4 years
</TABLE>

Leasehold improvements are depreciated over the life of the underlying asset
or the term of the lease, whichever is shorter.

Software development costs incurred internally to create computer software
products are charged to research and development expense until technological
feasibility has been established for the product. Thereafter, all software
production costs are capitalized and subsequently reported at the lower of
amortized cost or net realizable value. Capitalized costs are amortized based on
current and projected future revenue for each product with an annual minimum
amount equal to straight-line amortization over three years. Amortization
expense was $182,953 and $107,066 in 1994 and 1995, respectively.

(D) DEVELOPMENT COSTS

Development costs are capitalized costs relating to tailoring a product for
a specific customer. These costs are amortized over the actual units sold based
on the number of units expected to be sold.

(E) GOODWILL

The excess of the acquisition cost over the net assets of the Dynacomp
merger discussed below is being amortized using the straight-line method over 15
years. Amortization expense related to goodwill was $3,656 and $21,221, for the
years ended March 31, 1994 and 1995, respectively.

(F) INCOME TAXES

The Corporation adopted Statement of Financial Accounting Standards ("SFAS")
No. 109 effective April 1, 1993. Previously, the Corporation accounted for
income taxes using the deferred method set forth in Accounting Principles Board
Opinion No. 11. The cumulative effect resulting from the adoption of SFAS No.
109 was the recognition of a net deferred tax asset totaling $235,000 at April
1, 1993. However, because of recent losses and considering the amount of the
taxable income which would be generated in future years, the Corporation
provided a valuation allowance of $235,000 offsetting the effect of adopting
SFAS No. 109 on the financial statements at April 1, 1993.

F-50
<PAGE>
CINCINNATI DYNACOMP, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(G) REVENUE RECOGNITION

Revenues are recognized when the product is shipped.

(H) RESEARCH AND DEVELOPMENT EXPENSES

Engineering research and development expenses related to present and future
products are charged to expense as incurred. Total expenditures on research and
development were $117,406 and $181,946 in 1994 and 1995, respectively, and are
included in selling, general and administrative expenses.

(I) PROFIT-SHARING PLAN

The Corporation has a noncontributory profit-sharing plan covering
substantially all employees. Contributions to the profit-sharing plan are made
at the discretion of the Board of Directors. No contributions were declared in
1994 or 1995.

(J) CONCENTRATION OF CREDIT RISK

The Corporation designs and manufactures several lines of electronic
equipment and related software products for a variety of industries which are
located throughout the United States and overseas. The Corporation performs
periodic credit evaluations of its customers' financial condition and generally
does not require collateral.

(K) MERGER

Cincinnati Electrosystems, Inc. ("CEI") entered into a merger agreement with
Logan Blake Industrial Corporation (d/b/a Dynacomp) that provided for Dynacomp
to be merged into CEI which was renamed Cincinnati Dynacomp, Inc. The former
stockholders of Dynacomp were to receive shares of the Corporation in the
merger.

The operations were merged effective November 1, 1993 and are included in
the accompanying financial statement from that date. However, prior to the
shares in the Corporation being issued, the CEI stockholders asserted that the
financial condition of Dynacomp was not as represented prior to the merger and
refused to issue shares to the Dynacomp stockholders without an adjustment. One
of the Dynacomp stockholders agreed not to take any shares and, in August 1994,
the other settled for a $75,000 payment and forgiveness of a $20,000 obligation
to the Corporation in lieu of receiving shares of the Corporation. The
accompanying financial statements reflect the effects of the August 1994
settlement.

The merger has been accounted for as a purchase. Financial information
necessary to disclose pro forma results of operations for the years ended March
31, 1993 and 1994 is not available.

2. NOTE PAYABLE AND LONG-TERM DEBT

The Corporation's line-of-credit agreement contains various financial
covenants including minimum net worth and working capital requirements, and
current asset to current liability and total liability to net worth requirements
and dividend payment restrictions. The Corporation obtained waivers dated August
22, 1995 from the lender for covenants with which it did not comply at March 31,
1995. The

F-51
<PAGE>
CINCINNATI DYNACOMP, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

2. NOTE PAYABLE AND LONG-TERM DEBT (CONTINUED)
average interest rates during the years ended March 31, 1994 and 1995 were 9.0%
and 11.5%, respectively.

The Corporation also obtained waivers dated August 22, 1995 from the lender
for long term debt covenants with which it did not comply at March 31, 1995.
Aggregate maturities of long-term debt at March 31, 1995 are:

<TABLE>
<S> <C>
1996..................................................................... $ 237,337
1997..................................................................... 638,261
1998..................................................................... 30,000
1999..................................................................... 15,000
---------
Total.................................................................... $ 920,598
---------
---------
</TABLE>

3. LEASED PROPERTY

The Corporation leases office and plant facilities under a lease which
commenced February 15, 1993 with monthly installments of $4,417 from February
1993 through July 1993, $17,668 from August 1993 through March 1994, and $19,780
from April 1994 through July 2000. Lease expense is recorded based on the
average monthly lease payment computed over the life of the lease.

The Corporation also leases machinery and equipment under operating leases
which expire at various dates through 1995. Total lease expense under all
operating leases was $265,353 and $307,888 in 1994 and 1995, respectively.

Future minimum lease payments under operating leases having initial or
remaining noncancelable lease terms as of March 31, 1995 totaled $1,515,677 and
are payable as follows: $321,016 in 1996, $307,116 in 1997, $289,460 in 1998,
$261,360 in 1999, $237,825 in 2000 and $98,900 thereafter.

4. COMMON STOCK

The Corporation and its stockholders have entered into a stock purchase
agreement which provides for the purchase, by the stockholders or the
Corporation, of any shares of common stock which become available in the event
any stockholder dies, or terminates his employment with the Corporation. The
agreement requires the Corporation to purchase all shares owned by a stockholder
who dies, and any shares not purchased by remaining stockholders in the event a
stockholder terminates employment with the Corporation.

If the Corporation redeems the shares, the purchase price is to be paid by a
promissory note payable in annual installments bearing interest at the prime
rate; the total of such payments cannot exceed 5% of stockholders' equity each
year.

F-52
<PAGE>
CINCINNATI DYNACOMP, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. INCOME TAXES

The Corporation's income tax provision (benefit) at March 31, 1994 and 1995
consists of the following:

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
--------------------
1994 1995
--------- ---------
<S> <C> <C>
Current............................................................................ $ -- $ --
Deferred........................................................................... -- 3,700
--------- ---------
Total.............................................................................. -- 3,700
Change in valuation allowance...................................................... -- (3,700)
--------- ---------
Total.............................................................................. $ -- $ --
--------- ---------
--------- ---------
</TABLE>

The provision for income taxes differs from the amounts which would result
by applying the applicable Federal income tax rate before income taxes for the
fiscal years ended March 31, 1994 and 1995 as follows:

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
--------------------
1994 1995
--------- ---------
<S> <C> <C>
Provision computed at Federal statutory rate...................................... $ (1,491) $ 2,255
State income taxes, net of Federal tax benefit.................................... (217) 328
Other............................................................................. 1,708 (2,583)
--------- ---------
Provision for income taxes........................................................ $ -- $ --
--------- ---------
--------- ---------
</TABLE>

At March 31, 1995, the Corporation had net operating loss carryforwards
totaling $463,000 which may be carried forward for 15 years to offset future
taxable income. These carryovers will expire in fiscal years 2006 and 2008. In
addition, the Corporation had tax credits totaling $98,400 which may be carried
forward for 15 years to offset future tax liabilities, subject to certain
restrictions contained in the Internal Revenue Code. Such carryforwards expire
in fiscal years 2001 through 2009.

* * * * * *

F-53
<PAGE>
CINCINNATI DYNACOMP INC.

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
TEN MONTHS
ENDED JANUARY 29,
--------------------
1995 1996
--------- ---------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Net sales.................................................................................... $ 8,931 $ 7,324
Cost of sales................................................................................ 7,062 5,842
--------- ---------
Gross profit................................................................................. 1,869 1,482
Selling, general, and administrative expenses................................................ 1,629 1,439
--------- ---------
Income from operations....................................................................... 240 43
Other income (expense):
Interest expense........................................................................... (295) (312)
Other income, net.......................................................................... 4 (11)
--------- ---------
Loss before income taxes..................................................................... (51) (280)
Income tax provision......................................................................... -- --
--------- ---------
Net loss..................................................................................... $ (51) $ (280)
--------- ---------
--------- ---------
</TABLE>

The accompanying notes are an integral part of these condensed financial
statements.

F-54
<PAGE>
CINCINNATI DYNACOMP INC.

UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
TEN MONTHS
ENDED JANUARY 29,
--------------------
1995 1996
--------- ---------
<S> <C> <C>
(UNAUDITED)

<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................................................... $ (51) $ (280)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization............................................................. 248 262
Change in assets and liabilities:
Accounts receivable..................................................................... 417 609
Inventory............................................................................... (215) (147)
Prepaid expenses and other.............................................................. 33 (11)
Accounts payable........................................................................ 88 21
Accrued liabilities..................................................................... (79) 22
--------- ---------
Net cash provided by operating activities............................................. 441 476
--------- ---------

Cash flows from investing activities:
Additions to capiltalized software, development costs, and other assets..................... (115) (143)
Purchase of property and equipment.......................................................... (67) (62)
--------- ---------
Net cash used in investing activities................................................. (182) (205)
--------- ---------

Cash flows from financing activities:
Net borrowings (payments) under line-of-credit agreements................................... (149) 183
Return of capital paid to shareholders...................................................... -- (30)
Proceeds from long-term debt................................................................ 25 150
Payment on long-term debt................................................................... (135) (574)
--------- ---------
Net cash used in financing activities................................................. (259) (271)
--------- ---------

Net change in cash............................................................................ -- --
Cash, beginning of period..................................................................... -- --
--------- ---------
Cash, end of period........................................................................... $ -- $ --
--------- ---------
--------- ---------
</TABLE>

The accompanying notes are an integral part of these condensed financial
statements.

F-55
<PAGE>
CINCINNATI DYNACOMP INC.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION

The accompanying unaudited condensed statements have been prepared in
accordance with generally accepted accounting practices for interim periods.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
It is suggested that these condensed financial statements be read in conjunction
with the financial statements and notes thereto included elsewhere in this
prospectus.

In the opinion of management, the unaudited interim financial statements
reflect all adjustments, consisting of normal recurring adjustments, necessary
to present fairly the Company's consolidated results of operations and cash
flows for all periods presented.

F-56
<PAGE>
UNAUDITED PRO FORMA AS ADJUSTED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following Unaudited Pro Forma As Adjusted Condensed Consolidated
Statements of Operations are based on the historical Consolidated Financial
Statements of Total Control Products, Inc. ("Total Control") included elsewhere
in this Prospectus, adjusted to give effect to (i) the acquisition by Total
Control of Cincinnati Dynacomp, Inc. ("Cincinnati") and the acquisition by Total
Control of a controlling interest in Taylor Industrial Software Inc. ("Taylor")
and (ii) the sale by Total Control of 1,650,000 shares of Common Stock in the
offering to which this Prospectus relates and the application of the estimated
net proceeds therefrom to repay certain indebtedness as set forth under "Use of
Proceeds" and (a) the elimination upon the closing of the offering of certain
redemption rights of Common Stock and (b) the automatic conversion of
convertible debentures into shares of Common Stock upon completion of the
offering. The Unaudited Pro Forma As Adjusted Condensed Consolidated Financial
Statements assume these events occurred on April 1, 1995.

The Unaudited Pro Forma As Adjusted Condensed Consolidated Statement of
Operations for the year ended March 31, 1996 reflects the audited statement of
operations of Total Control and Taylor for the year ended March 31, 1996, and
the unaudited statement of operations of Cincinnati for the ten months ended
January 29, 1996 (the date of its acquisition), on a historical basis. The
Unaudited Pro Forma As Adjusted Condensed Consolidated Statement of Operations
for the nine months ended December 31, 1996 reflects the unaudited income
statement of Total Control for the nine months ended December 31, 1996, and the
unaudited income statements of Taylor for the six months ended September 26,
1996 (the date of its acquisition), on a historical basis.

The historical statements of operations of Taylor located elsewhere in this
Prospectus were prepared in accordance with accounting principles generally
accepted in Canada. These principles conform, in all material respects, with
accounting principles generally accepted in the United States, except for those
items disclosed in the notes to the financial statements of Taylor, none of
which impacted the historical statements of operations.

For the purpose of the preparation of the Unaudited Pro Forma As Adjusted
Condensed Consolidated Statements of Operations only, the historical statements
of operations for Taylor described above were translated from Canadian dollars
(Taylor's functional currency) to U.S. dollars at the approximate average
exchange rate for the respective periods.

The pro forma financial information is a presentation of historical results
with accounting and other adjustments. The pro forma financial information does
not reflect the effects of any of the anticipated changes to be made by the
Company in the operations from the historical operations.

The pro forma statements presented are provided for informational purposes
only and should not be construed to be indicative of the Company's results of
operations had the transactions been consummated on the date assumed and do not
project the Company's results of operations for any future period.

The Unaudited Pro Forma As Adjusted Condensed Consolidated Statements and
accompanying notes should be read in conjunction with the financial statements
and the financial information pertaining to Total Control, Cincinnati and Taylor
included elsewhere in this Prospectus.

F-57
<PAGE>
UNAUDITED PRO FORMA AS ADJUSTED CONDENSED CONSOLIDATED STATEMENT
OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1996

(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
HISTORICAL
-----------------------------------
CINCINNATI
(THROUGH
TOTAL JAN. 29, PRO FORMA PRO FORMA OFFERING
CONTROL 1996) TAYLOR ADJUSTMENTS COMBINED ADJUSTMENTS(G)
----------- ----------- --------- -------------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Net sales.......................... $ 25,743 $ 7,324 $ 7,615 $ (1,129)(a) $ 39,553 $ --
Cost of goods sold................. 15,370 5,842 517 (11 (a) 21,718 --
----------- ----------- --------- ------- ----------- -------
Gross profit....................... 10,373 1,482 7,098 (1,118 ) 17,835 --
Operating expenses:
Sales and marketing.............. 4,989 720 2,927 (543 ,b) 8,093 --
Research and development......... 1,952 80 2,502 (289 ,b) 4,245 --
General and administrative....... 1,601 639 1,904 296(a,b) 4,440 --
----------- ----------- --------- ------- ----------- -------
Income (loss) from operations...... 1,831 43 (235) (582 ) 1,057 --
Interest expense and other, net.... (169 ) (323 ) (147) (56 (d) (695 ) 623
----------- ----------- --------- ------- ----------- -------
Income (loss) before income taxes
and minority interest............ 1,662 (280 ) (382) (638 ) 362 623
Provision for (benefit from) income
taxes............................ 665 -- (80) (288 (e) 297 251
----------- ----------- --------- ------- ----------- -------
Income (loss) before minority
interest......................... 997 (280 ) (302) (350 ) 65 372
Minority interest in (income) loss
of subsidiary.................... -- -- -- 260(f) 260 (15 )
----------- ----------- --------- ------- ----------- -------
Net income (loss).................. 997 (280 ) (302) (90 ) 325 357
Accretion to redemption value of
common stock..................... (1,606 ) -- -- -- (1,606 ) 1,606
----------- ----------- --------- ------- ----------- -------
Net income (loss) available to
common shareholders.............. $ (609 ) $ (280 ) $ (302) $ (90 ) $ (1,281 ) $ 1,963
----------- ----------- --------- ------- ----------- -------
----------- ----------- --------- ------- ----------- -------
Net income (loss) per share
available to shareholders........ $ (0.11 ) $ (0.23 )
----------- -----------
----------- -----------
Weighted average number of common
shares outstanding............... 5,633 5,633 2,186(h)
----------- ----------- -------
----------- ----------- -------

PRO FORMA
AS ADJUSTED
-------------
<S> <C>
Net sales.......................... $ 39,553
Cost of goods sold................. 21,718
-------------
Gross profit....................... 17,835
Operating expenses:
Sales and marketing.............. 8,093
Research and development......... 4,245
General and administrative....... 4,440
-------------
Income (loss) from operations...... 1,057
Interest expense and other, net.... (72 )
-------------
Income (loss) before income taxes
and minority interest............ 985
Provision for (benefit from) income
taxes............................ 548
-------------
Income (loss) before minority
interest......................... 437
Minority interest in (income) loss
of subsidiary.................... 245
-------------
Net income (loss).................. 682
Accretion to redemption value of
common stock..................... --
-------------
Net income (loss) available to
common shareholders.............. $ 682
-------------
-------------
Net income (loss) per share
available to shareholders........ $ 0.09
-------------
-------------
Weighted average number of common
shares outstanding............... 7,819
-------------
-------------
</TABLE>

See accompanying notes to unaudited pro forma as adjusted
condensed consolidated statement of operations.

F-58
<PAGE>

UNAUDITED PRO FORMA AS ADJUSTED CONDENSED CONSOLIDATED STATEMENT
OF OPERATIONS FOR THE NINE MONTHS ENDED DECEMBER 31, 1996

(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
HISTORICAL
----------------------
TAYLOR
(THROUGH
TOTAL SEPT. 26, PRO FORMA PRO FORMA OFFERING PRO FORMA
CONTROL 1996) ADJUSTMENTS COMBINED ADJUSTMENTS(G) AS ADJUSTED
--------- ----------- ---------------- ----------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
$
Net sales............................. $ 28,814 $ 3,545 (508)(a) $ 31,851 $-- $ 31,851
Cost of goods sold.................... 15,199 317 (6 (a) 15,510 -- 15,510
--------- ----------- ------- ----------- --------------- ------------
Gross profit.......................... 13,615 3,228 (502 ) 16,341 -- 16,341
Operating expenses:
Sales and marketing................. 6,184 1,667 (435 ,c) 7,416 -- 7,416
Research and development............ 2,591 893 (209 ,c) 3,275 -- 3,275
General and administrative.......... 2,912 1,362 29(a,b,c) 4,303 -- 4,303
Charge for purchased research and
development....................... 4,893 -- (4,893 (c) -- -- --
--------- ----------- ------- ----------- --------------- ------------
Income (loss) from operations......... (2,965) (694 ) 5,006 1,347 -- 1,347
Interest expense and other, net....... (387) (30 ) --(d) (417 ) 465 48
--------- ----------- ------- ----------- --------------- ------------
Income (loss) before income taxes and
minority interest................... (3,352) (724 ) 5,006 930 465 1,395
Provision for (benefit from) income
taxes............................... 599 (96 ) 7(e) 510 186 696
--------- ----------- ------- ----------- --------------- ------------
Income (loss) before minority
interest............................ (3,951) (628 ) 4,999 420 279 699
Minority interest in (income) loss of
subsidiary.......................... 1,852 -- (1,656 (f) 196 (6 ) 190
--------- ----------- ------- ----------- --------------- ------------
Net income (loss) for the period...... (2,099) (628 ) 3,343 616 273 889
Accretion to redemption value of
common stock........................ (9,061) -- -- (9,061 ) 9,061 --
--------- ----------- ------- ----------- --------------- ------------
Net income (loss) available to common
shareholders........................ $ (11,160) $ (628 ) $ 3,343 $ (8,445 ) $9,334 $ 889
--------- ----------- ------- ----------- --------------- ------------
--------- ----------- ------- ----------- --------------- ------------
Net income (loss) per share available
to shareholders..................... $ (1.97) $ (1.49 ) $ 0.11
--------- ----------- ------------
--------- ----------- ------------
Weighted average number of common
shares outstanding.................. 5,679 5,679 2,118(h) 7,797
--------- ----------- --------------- ------------
--------- ----------- --------------- ------------
</TABLE>

See accompanying notes to unaudited pro forma as adjusted
condensed consolidated statement of operations.

F-59
<PAGE>
NOTES TO
UNAUDITED PRO FORMA AS ADJUSTED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following notes identify the pro forma adjustments made to the historical
amounts in the pro forma unaudited condensed consolidated financial statements:

(a) Represents the elimination of the revenues and related expenses of
Taylor's labor scheduling software product line, which is currently being
held for sale by the Company, including operating expenses of $973,000 and
$608,000 for the year ended March 31, 1996 and the nine months ended
December 31, 1996, respectively.

(b) Represents an increase in depreciation and amortization expense
based on the useful lives assigned in connection with the acquisition for
(i) the net decrease in depreciation expense of $14,000 related to the net
decrease in the depreciable basis of certain assets for the year ended March
31, 1996 and an increase in depreciation expense of $16,000 for the increase
in the depreciable basis of certain assets for the nine months ended
December 31, 1996, and (ii) an increase in amortization expense for the year
ended March 31, 1996 and the nine months ended December 31, 1996 of
approximately $451,000 and $179,000, respectively, related to the
amortization of goodwill related to the acquisitions of Cincinnati and
Taylor. These pro forma adjustments do not give effect to the impact on
goodwill amortization, if any, related to any future contingent earnout
payments for these acquisitions as none has been earned to date.

(c) Represents (i) the elimination of the non-recurring charge for
purchased research and development of $4,893,000 recorded by the Company in
the Total Control statement of operations for the nine months ended December
31, 1996, which was directly attributable to the Taylor acquisition and (ii)
a decrease in operating expenses to eliminate $202,000 of compensation
expense related to the purchase by Taylor of outstanding employee stock
option arrangements, which is included in the results of Taylor for the six
months ended September 26, 1996 results of Taylor, in connection with the
terms of the acquisition of Taylor. Except for $193,000, these non-recurring
items were recorded on the Taylor subsidiary financial statements, and
accordingly, 39% of this amount has been included in the pro forma
adjustment made to minority interest described in Note (f) below.

(d) Represents an increase in interest expense associated with the debt
incurred to finance the acquisition of Cincinnati for the year ended March
31, 1996. Additionally, interest expense on debt incurred in connection with
the acquisition of Taylor for the year ended March 31, 1996 and the nine
months ended December 31, 1996 of approximately $700,000 and $350,000,
respectively, was offset by a corresponding adjustment in the same amount to
reflect the anticipated repayment of the acquisition debt with the proceeds
anticipated to be received from the sale of Taylor's labor scheduling
software product line.

(e) Represents the income tax effects of the pro forma adjustments at an
assumed effective income tax rate of 40% for the pro forma adjustments,
except for pro forma adjustments related to Taylor, for which an effective
rate of 43% was assumed. The amortization expense and compensation expense
described above in Note (b) (ii) and Note (c) (ii) were not tax effected.
Additionally, the tax benefit of $112,000 for the loss incurred by
Cincinnati for the ten months ended January 29, 1996 was recorded. Finally,
adjustments of $93,000 and $110,000 were recorded to increase the tax
benefit recorded in the Taylor statements of operations for the year ended
March 31, 1996 and the nine months ended December 31, 1996, respectively, as
a result of the change in tax rate from 20% to 43% applied to the taxable
income of Taylor due to the change in ownership.

F-60
<PAGE>

NOTES TO
UNAUDITED PRO FORMA AS ADJUSTED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(f) Represents the minority interest of 39% in the pro forma loss of
Taylor Industrial Software Inc.

(g) Represents the impact of the offering. Interest expense is decreased
as a result of applying the net proceeds of the offering to repay certain
indebtedness as described under "Use of Proceeds." Provision for income
taxes is increased for the decrease in interest expense using the effective
tax rates as described in Note (e). Minority interest is increased by the
39% share of the decrease in the pro forma loss of Taylor resulting from
these adjustments. In addition, accretion to redemption value of common
stock is eliminated to reflect the automatic termination of the redemption
rights upon the closing of the offering.

(h) Represents the increase in weighted average shares outstanding for
(i) the issuance of 1,650,000 shares of common stock to be sold by the
Company in the offering contemplated by this Prospectus, (ii) the issuance
of 407,239 shares and 339,366 shares of Common Stock issuable for the year
ended March 31, 1996 and the nine months ended December 31, 1996,
respectively, upon the automatic conversion of convertible debentures upon
the closing of the offering and, in the case of the year ended March 31,
1996, the conversion of a portion of the debenture in June 1996 and (iii)
the dilutive effect of outstanding common stock options of 129,273 shares
calculated using the treasury stock method.

F-61
<PAGE>

[Graphic omitted: Company logo and depiction of world map illustrating locations
of sales offices maintained by the Company's distributors under the caption
"Global Sales and Support Offices" and over the caption "The Company's products
are sold in more than twenty five countries, primarily through an international
network of independent distributors having approximately two hundred sales
locations."]

<PAGE>
- ------------------------------------------------
------------------------------------------------
- ------------------------------------------------
------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, OR BY ANY UNDERWRITER.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN
ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.

---------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary............................. 3
Risk Factors................................... 6
Use of Proceeds................................ 13
Dividend Policy................................ 13
Capitalization................................. 14
Dilution....................................... 15
Selected Consolidated Financial Data........... 16
Management's Discussion and Analysis Of
Financial Condition and Results of
Operations................................... 19
Business....................................... 28
Management..................................... 37
Recent Acquisitions............................ 43
Certain Transactions........................... 45
Principal and Selling Shareholders............. 47
Description of Capital Stock................... 49
Shares Eligible for Future Sale................ 53
Underwriting................................... 55
Legal Matters.................................. 56
Experts........................................ 56
Additional Information......................... 56
Index to Financial Statements.................. F-1
</TABLE>

---------------------

UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS.THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.

2,750,000 SHARES

[LOGO]

COMMON STOCK
-----------------

PROSPECTUS
-----------------

Adams, Harkness & Hill, Inc.

A.G. Edwards & Sons, Inc.

, 1997

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the various expenses payable by the
Registrant in connection with the sale and distribution of the securities being
registered, other than underwriting discounts. All of the amounts shown are
estimated except the Securities and Exchange Commission registration fee, the
Nasdaq National Market filing fee and the NASD filing fee.

<TABLE>
<CAPTION>
TO BE PAID BY
THE REGISTRANT
- ------------------------------------------------------------------------------
<S> <C>
SEC registration fee.......................................................... $ 9,583
NASD filing fee............................................................... 3,663
Nasdaq National Market........................................................ 35,561
Blue Sky fees and expenses.................................................... *
Printing and engraving expenses............................................... *
Legal fees and expenses....................................................... *
Accounting fees and expenses.................................................. *
Transfer agent and registrar fees............................................. *
Miscellaneous................................................................. *
--------------
Total......................................................................... $ *
--------------
--------------
</TABLE>

- --------------

* To be completed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company has adopted provisions in its Articles of Incorporation that, to
the fullest extent provided under Illinois law, limit the liability of its
directors and officers for monetary damages arising from a breach of their
fiduciary duties as directors or officers. Such limitation of liability does not
affect the availability of equitable remedies such as injunctive relief or
rescission, nor does it limit liability for (i) any breach of the director's
duty of loyalty to the Company or its shareholders, (ii) acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) a transaction from which a director derives an improper personal
benefit or (iv) an unlawful distribution to the Company's shareholders. The
Company's By-laws provide that the Company shall indemnify its directors to the
fullest extent permitted by Illinois law, including circumstances in which
indemnification is otherwise discretionary to the Company under Illinois law,
and permit the Company in its discretion to similarly indemnify its officers,
employees and agents.

The form of Underwriting Agreement filed as Exhibit 1.1 provides for the
indemnification of the Company, its controlling persons, its directors and its
officers by the Underwriters against certain liabilities, including liabilities
under the Securities Act.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Since April 1, 1993, the Company has issued and sold the following
unregistered securities (as adjusted for the three-for-one stock split):

1. On December 16, 1993, the Company entered into an Agreement for the
Purchase and Sale of Stock with A.B. Siemer pursuant to which Mr. Siemer
purchased 1,204,653 shares of Common Stock for a total consideration of $1.0
million.

II-1
<PAGE>
2. On December 16, 1993, the Company exercised its option to redeem the
40,000 shares of outstanding Preferred Stock owned by Mr. Julius J. Sparacino.
Mr. Sparacino received 495,621 shares of Common Stock in exchange for the 40,000
shares of Preferred Stock.

3. On July 22, 1994, the Company entered into an Agreement for the Purchase
and Sale of Stock with Moritani America, Inc., pursuant to which Moritani
America, Inc. purchased 125,001 shares of Common Stock for total consideration
of $125,000.

4. On July 22, 1994, the Company entered into an Agreement for the Purchase
and Sale of Stock with Digital Electronics Corporation, pursuant to which
Digital Electronics Corporation purchased 125,001 shares of Common Stock for
total consideration of $125,000.

5. On January 29, 1996, Tara Products, Inc., a wholly owned subsidiary of
the Company, entered into a merger agreement with Cincinnati Inc., pursuant to
which John Sheridan was issued 150,003 shares of Common Stock.

6. On June 24, 1996, F. Quinn Stepan converted $50,000 of that certain 6%
Convertible Subordinated Debenture for 67,872 shares of Common Stock at a price
of $0.74 per share.

7. On September 19, 1996, the Company caused Taylor to issue 767,112 Class
C Exchangeable Shares which are convertible into 767,112 shares of Common Stock.

8. On December 30, 1996, Dennis Marrano exercised an incentive stock option
to purchase 29,148 shares of Common Stock at a price of $1.00 per share.

There were no underwriters employed in connection with any of the
transactions set forth in Item 15.

The Company has issued stock options to purchase an aggregate of 325,122
shares of its Common Stock to Company officers, employees and directors pursuant
to the 1993 Stock Plan.

The issuances described above were deemed to be exempt from registration
under the Securities Act in reliance on Section 4(2) of the Securities Act as
transactions by an issuer not involving a public offering. The recipients of
securities in each such transaction represented their intention to acquire the
securities for investment only and not with a view to or for sale in connection
with any distribution thereof and appropriate legends were affixed to the share
certificates and other instruments issued in such transactions. All recipients
either received adequate information about the Registrant or had access, through
employment or other relationships, to such information.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits:

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -------------------------------------------------------------------------
<C> <S>
*1.1 Form of Underwriting Agreement

3.1 Restated and Amended Articles of Incorporation of the Registrant

*3.2 Revised and Restated By-laws of the Registrant

4.1 Articles of Incorporation and By-laws of the Company (included in
Exhibits 3.1 and 3.2)

4.2 Form of Stock Certificate

+5.1 Opinion of D'Ancona & Pflaum

*10.1 1996 Employee Stock Option Plan

*10.2 1996 Non-Employee Director Stock Option Plan
</TABLE>

II-2
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -------------------------------------------------------------------------
<C> <S>
*10.3 1996 Employee Discount Stock Purchase Plan

*10.4 1993 Employee Stock Option Plan, as amended

*10.5 Employment Agreement by and between the Company and Nicholas Gihl

10.6 Employment Agreement by and between the Company and Neil R. Taylor

*10.7 Employment Agreement by and between the Company and Frank Wood

*10.8 Employment Agreement by and between the Company and Peter Nicholson

*10.9 Employment Agreement by and between the Company and Dennis Marrano

*10.10 Employment Agreement by and between Tara Products, Inc. and John
Sheridan, as amended

*10.11 Loan and Security Agreement by and between the Company and American
National Bank

*10.12 Promissory Note between American National Bank and Trust Company of
Chicago and Taylor Industrial Software Inc.

*10.13 Basic Agreement by and between the Company and Digital Electronics
Corporation

10.14 Development Agreement by and between the Company and Digital Electronics
Corporation

*10.15 Consulting Agreement by and between Taylor Industrial Software Inc. and
Digital Electronics Corporation

*10.16 Stock Purchase Agreement by and among the Company and the stockholders of
Taylor Industrial Software Inc.

*10.17 Exchange Agreement by and among the Company, Taylor Industrial Software
Inc., Neil R. Taylor, Dennis Radage and Merle Taylor, as amended

*10.18 Support Agreement by and between the Company and Taylor Industrial
Software Inc.

*10.19 $2,000,000 Promissory Note of the Company payable to A.B. Siemer

*10.20 Merger Agreement by and among Tara Products, Inc., the Company,
Cincinnati Dynacomp, Inc. and each of the stockholders of Cincinnati
Dynacomp, Inc.

*10.21 Registration Rights Agreement by and between the Company and A.B. Siemer.

*10.22 Registration Rights Agreement by and among the Company, Neil R. Taylor,
Dennis Radage and Merle Taylor.

*10.23 Registration Rights Agreement by and between the Company and John
Sheridan

*10.24 $200,000 Promissory Note of the Company payable to Julius J. Sparacino

*10.25 $111,486.36 Promissory Note of Nicholas Gihl payable to the Company

*10.26 $35,767.25 Promissory Note of Nicholas Gihl payable to the Company

*10.27 Lease Agreement, by and between First National Bank of La Grange, as
Trustee u/t/a #3081 and the Company, as extended

*10.28 Agreement by and between the Company and Digital Electronics Corporation

11.1 Statement regarding computation of per share earnings

*21.1 Subsidiaries of the Registrant

23.1 Consent of Arthur Andersen LLP
</TABLE>

II-3

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -------------------------------------------------------------------------
<C> <S>
23.2 Consent of Deloitte & Touche LLP

23.3 Consent of Price Waterhouse, Chartered Accountants

+23.4 Consent of D'Ancona & Pflaum (to be included in Exhibit 5.1)

*23.5 Consent of Edward Hurd

*23.6 Consent of Donald Kramer

*24.1 Powers of Attorney
</TABLE>

- --------------

* Previously filed.

+ To be filed by amendment.

All schedules are omitted since the required information is not present, or
is not present in amounts sufficient to require submission of the schedule, or
because the information required is included in the consolidated financial
statements or notes thereto.

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions (see response to Item 14 above),
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-4
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto authorized, in the City of Chicago and the
State of Illinois on the 4th day of February, 1997.

TOTAL CONTROL PRODUCTS, INC.
AN ILLINOIS CORPORATION

By: /s/ NICHOLAS T. GIHL
-----------------------------------------
Nicholas T. Gihl
President

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

NAME TITLE DATE
- ------------------------------ -------------------------- -------------------

Chairman, President, Chief
/s/ NICHOLAS T. GIHL Executive Officer and
- ------------------------------ Director (principal February 4, 1997
Nicholas T. Gihl executive officer)

Senior Vice President and
/s/ PETER NICHOLSON Chief Financial Officer
- ------------------------------ (principal financial and February 4, 1997
Peter Nicholson accounting officer)

*
- ------------------------------ Director February 4, 1997
Neil Taylor

*
- ------------------------------ Chairman Emeritus and February 4, 1997
Julius J. Sparacino Director

*
- ------------------------------ Director February 4, 1997
A.B. Siemer

<TABLE>
<S> <C>
*By: /s/ PETER NICHOLSON
----------------------------------------
Peter Nicholson
As Attorney-in-Fact
</TABLE>

II-5
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -------------------------------------------------------------------------
<C> <S>
*1.1 Form of Underwriting Agreement

3.1 Restated and Amended Articles of Incorporation of the Registrant

*3.2 Revised and Restated By-laws of the Registrant

4.1 Articles of Incorporation and By-laws of the Company (included in
Exhibits 3.1 and 3.2)

4.2 Form of Stock Certificate

+5.1 Opinion of D'Ancona & Pflaum

*10.1 1996 Employee Stock Option Plan

*10.2 1996 Non-Employee Director Stock Option Plan

*10.3 1996 Employee Discount Stock Purchase Plan