<HTML>

<head>
<TITLE>FORM 10-K</TITLE>
</head>

<body LINK="#0000FF">
<font SIZE="4"><b>

<p ALIGN="CENTER">FORM 10-K</p>
</b></font>

<p ALIGN="CENTER">SECURITIES AND EXCHANGE COMMISSION</p>

<p ALIGN="CENTER">Washington, D. C. 20549</p>
<font SIZE="2">

<p ALIGN="CENTER">(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF</font><font SIZE="3"> 1934</p>
</font><b>

<p ALIGN="CENTER">for the fiscal year ended March 31, 1999</p>
</b><font SIZE="2">

<p ALIGN="CENTER">( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934</p>
</font>

<p ALIGN="CENTER">for the transition period from to </p>

<p><font SIZE="2">Commission File Number: 0-12716</p>
</font><font FACE="Signet Roundhand ATT" SIZE="6">

<p ALIGN="CENTER">Novitron International, Inc.</p>
</font><font SIZE="2">

<p ALIGN="CENTER">(Exact name of registrant as specified in its charter)</p>
</font><b>

<p>Delaware 04-2573920</p>
</b><font SIZE="2">

<p>(State of incorporation) (IRS Employer ID Number)</p>
</font><b>

<p>One Gateway Center, Suite 411, Newton, Massachusetts 02458 </p>
</b><font SIZE="2">

<p>(Address of principal executive offices) (Zip Code)</p>

<p>Registrant’s telephone number, including area code: </font><b>(617) 527-9933</p>
</b>

<p> </p>
<font SIZE="3">

<p>Securities registered pursuant to Section 12(b) of the Act: None</p>

<p>Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01 par
value</p>

<p ALIGN="JUSTIFY">Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirement for the past 90
days. Yes <u>x </u>No __<u> </p>
</u>

<p ALIGN="JUSTIFY">Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]</p>
</font>

<p ALIGN="JUSTIFY">The aggregate market value of the voting Common Stock held by
non-affiliates of the registrant was approximately $1,484,769 based on the average price
of the Common Stock as reported by NASDAQ on June 21, 1999.</p>

<p ALIGN="JUSTIFY">As of June 21, 1999, there were 1,440,125 shares of the
Registrant’s Common Stock issued and outstanding.</p>

<p ALIGN="JUSTIFY">Documents Incorporated by Reference: Portions of the Company’s
Proxy Statement for its 1999 Annual Meeting into Part III of Form 10-K.</p>
<font FACE="Signet Roundhand ATT" SIZE="6">

<p ALIGN="CENTER">Novitron International, Inc<b>.</p>
</b></font>

<p ALIGN="CENTER">ANNUAL REPORT ON FORM 10-K</p>

<p ALIGN="CENTER">For the Year Ended March 31, 1999</p>

<p ALIGN="CENTER">Table of Contents </p>

<p ALIGN="CENTER"> </p>

<table border="1" cellspacing="1" cellpadding="8" width="683">
  <tr>
    <td height="19" width="475"><p align="center"><font SIZE="3"><b>PART I</b></font></td>
    <td valign="top" width="168" height="19"><p ALIGN="right"><u><font SIZE="3">Page</font></u></td>
  </tr>
  <tr>
    <td valign="top" width="475" height="19"><font SIZE="3">Item 1 Business </font></td>
    <td valign="top" width="168" align="right" height="19"><font SIZE="3">                      1</font></td>
  </tr>
  <tr>
    <td valign="top" width="475" height="19"><font SIZE="3">Item 2 Properties   </font></td>
    <td valign="top" width="168" align="right" height="19"><font SIZE="3">                              
       9</font></td>
  </tr>
  <tr>
    <td valign="top" width="475" height="19"><font SIZE="3">Item 3 Legal Proceedings </font></td>
    <td valign="top" width="168" align="right" height="19"><font SIZE="3">                              
        9</font></td>
  </tr>
  <tr>
    <td valign="top" width="475" height="19"><font SIZE="3">Item 4 Submission of Matters to a
    Vote of Security Holders </font></td>
    <td valign="top" width="168" align="right" height="19"><font SIZE="3">  9</font></td>
  </tr>
  <tr>
    <td valign="top" width="475" height="19"><p ALIGN="CENTER"><font SIZE="3"><b>PART II</b></font></td>
  </tr>
  <tr>
    <td valign="top" width="475" height="38"><font SIZE="3">Item 5 Market Price for
    Registrant’s Common Equity and Related Stockholder Matters   </font></td>
    <td valign="top" width="168" align="right" height="38"><font SIZE="3">10</font></td>
  </tr>
  <tr>
    <td valign="top" width="475" height="19"><font SIZE="3">Item 6 Selected Financial Data
                          
       </font></td>
    <td valign="top" width="168" align="right" height="19"><font SIZE="3">11</font></td>
  </tr>
  <tr>
    <td valign="top" width="475"><font SIZE="3">Item 7 Management’s Discussion and
    Analysis of Financial Condition and Results of Operations   </font></td>
    <td valign="top" width="168" align="right" height="55"><font SIZE="3">12</font></td>
  </tr>
  <tr>
    <td valign="top" width="475" height="38"><font SIZE="3">Item 8 Financial Statements and
    Supplementary Data </font></td>
    <td valign="top" width="168" align="right" height="38"><font SIZE="3">15</font></td>
  </tr>
  <tr>
    <td valign="top" width="475" height="38"><font SIZE="3">Item 9 Changes in and
    Disagreements with Accountants on Accounting and Financial Disclosure   </font></td>
    <td valign="top" width="168" align="right" height="38"><font SIZE="3">16</font></td>
  </tr>
  <tr>
    <td valign="top" width="475" height="19"><p ALIGN="CENTER"><font SIZE="3"><b>PART III</b></font></td>
  </tr>
  <tr>
    <td valign="top" width="475" height="19"><font SIZE="3">Item 10 Directors and Executive
    Officers of the Registrant      </font></td>
    <td valign="top" width="168" align="right" height="19"><font SIZE="3">  16</font></td>
  </tr>
  <tr>
    <td valign="top" width="475" height="38"><font SIZE="3">Item 11 Executive Compensation
         </font></td>
    <td valign="top" width="168" align="right" height="38"><font SIZE="3">16</font></td>
  </tr>
  <tr>
    <td valign="top" width="475" height="38"><font SIZE="3">Item 12 Security Ownership of
    Certain Beneficial Owners and Management   </font></td>
    <td valign="top" width="168" align="right" height="38"><font SIZE="3">   16</font></td>
  </tr>
  <tr>
    <td valign="top" width="475" height="38"><font SIZE="3">Item 13 Certain Relationships and
    Related Transactions </font></td>
    <td valign="top" width="168" align="right" height="38"><font SIZE="3">   16</font></td>
  </tr>
  <tr>
    <td valign="top" width="475" height="19"><p ALIGN="CENTER"><font SIZE="3"><b>PART IV</b></font></td>
  </tr>
  <tr>
    <td valign="top" width="475" height="38"><font SIZE="3">Item 14 Exhibits, Financial
    Statement Schedules and Reports on Form 8-K</font> <font SIZE="3"> </font></td>
    <td valign="top" width="168" align="right" height="38"><font SIZE="3">   16</font></td>
  </tr>
  <tr>
    <td valign="top" width="475" height="38"><b>Signatures</b><font SIZE="3">             
       </font></td>
    <td valign="top" width="168" align="right" height="38"><font SIZE="3">17</font></td>
  </tr>
</TABLE>
<b>

<p>PART I</p>

<p ALIGN="JUSTIFY">Item 1. Business</p>
</b>

<p ALIGN="JUSTIFY">Novitron International, Inc. (the "Company") is a
multinational corporation focusing on scientific instrumentation used in medical,
veterinary, and analytical laboratories and in industrial process monitoring.<i> </i>The
Company’s Dutch subsidiary, Vital Scientific NV ("Vital Scientific"),
designs and manufactures scientific and clinical laboratory instrumentation marketed
worldwide through distributors and strategic partnerships which include Dade Behring, Scil
Animal Care Company, Hycor Biomedical, AVL List, and the Wiener Lab Group.<i> </i>The
Company’s Australian subsidiary, Clinical Data (Australia) Pty. Ltd. ("Clinical
Data Australia"), distributes diagnostic instruments and assays in the South Pacific
and has entered into a strategic alliance with Medical Innovations Limited for the
development of immunoassay diagnostics. The Company’s Dutch subsidiary, NovaChem BV
("NovaChem"), develops and markets process monitors with applications in
petrochemical and pharmaceutical production and in environmental monitoring. </p>
<b>

<p ALIGN="JUSTIFY">Company History</p>
</b>

<p ALIGN="JUSTIFY">Novitron International, Inc. was established in 1972 as Clinical Data,
Inc. to offer ambulatory electrocardiographic monitoring for clinical and research
applications. In the 1980’s, through a series of strategic acquisitions, the Company
grew to over $14 million in revenue. As the Company believed that future growth was
limited, these businesses were divested in the early 1990’s.</p>

<p ALIGN="JUSTIFY">In 1984, the Company acquired a thirty-three percent (33%) equity
interest in Vital Scientific. From 1985 to 1991, the Company increased its equity position
in this Dutch company to ninety-four percent (94%); in October 1997, Vital Scientific
became a wholly owned subsidiary.</p>

<p ALIGN="JUSTIFY">In June 1992, the Company invested in NovaChem, a Dutch company formed
to develop and market spectrophotometric process monitoring technology. In March 1995,
NovaChem became a wholly owned subsidiary of the Company.</p>

<p ALIGN="JUSTIFY">In April 1994, to better reflect the Company’s international scope
and diversification, the Company’s name was changed from Clinical Data, Inc. to
Novitron International, Inc.</p>

<p ALIGN="JUSTIFY"> </p>
<b>

<p>VITAL SCIENTIFIC NV</p>
</b>

<p ALIGN="JUSTIFY">Established in 1956 and headquartered in Spankeren/Dieren, The
Netherlands, Vital Scientific is the nucleus of the Company’s operations. Vital
Scientific designs, develops, manufactures, and distributes scientific instrumentation for
medical, veterinary and industrial applications.</p>

<p ALIGN="JUSTIFY">The subsidiary’s principal products, marketed under the
"Vitalab" tradename, are automated and semi-automated analytical instruments
used in medical and veterinary laboratories. These include the Vitalab Selectra II and
Vitalab Flexor "walk-away" clinical chemistry analyzers, the Vitalab Viva, a
dedicated system designed for therapeutic drug monitoring ("TDM") and for the
detection of drugs of abuse ("DOA"), and the HYTEC-288, an enzyme immunoassay
analyzer used in the allergy testing and in the detection of autoimmune diseases.</p>

<p ALIGN="JUSTIFY">To develop new products, Vital Scientific maintains a research team of
fifteen (15) professionals augmented by contract personnel, and further supported by the
staff of the TNO Product Centre, the Netherlands organization for applied scientific
research. The Company has in-house expertise in the disciplines of mechanical design,
electronic engineering and systems programming. Its mechanical prototyping and assembly
operations are highly automated. </p>

<p ALIGN="JUSTIFY">In July 1997, Vital Scientific signed an agreement with Dade Behring
for the distribution of a fully automated instrument. Tradenamed the Vitalab Viva, this
analyzer is dedicated specifically for use with the Dade Behring Emit line of diagnostic
assays for TDM and DOA. </p>

<p ALIGN="JUSTIFY">In March 1998,Vital Scientific received FDA approval, under Section
510(k) of the Food, Drug and Cosmetic Act, to market the Vitalab Viva and Vitalab Flexor
instruments in the United States. The Company is continuing to seek an appropriate
distribution channel for these instruments domestically. </p>

<p ALIGN="JUSTIFY">During fiscal 1998, Vital Scientific was awarded ISO 9001
certification.</p>

<p ALIGN="JUSTIFY">In January 1999, Vital Scientific signed an agreement with Scil Animal
Care Company GmbH of Viernheim, Germany to develop and manufacture a fully automated
clinical chemistry and immuno-diagnostic laboratory instrument designed primarily for the
veterinary market. The OEM analyzer, scheduled for introduction in 2000, will be
distributed worldwide by Scil; it will be designed to exclusively run the Scil brand of
diagnostic assays. The agreement, which covers the cost of development, also provides a
purchase commitment valued at approximately 20 million Deutsche Marks ($11 million) for
the first two years of production. Vital Scientific will assist in the technical support
of these analyzers. </p>
<b>

<p ALIGN="JUSTIFY">Marketing and Distribution</p>
</b>

<p ALIGN="JUSTIFY">In 1997, a major customer, E. Merck, restructured its diagnostic
division and presented a major challenge to the profitability of the Company. Sales to E.
Merck represented approximately seventy-five percent (75%) of the Company’s revenues
during fiscal 1997 versus only eighteen percent (18%) of sales revenue in fiscal 1999.</p>

<p ALIGN="JUSTIFY">Vital Scientific has been actively cultivating a new distribution
network for its technology base. Vital Scientific has expanded its dealer network for
marketing certain of the company’s products in Europe, the Far East, Latin America
and China. Sales at Vital Scientific have increased 27% from fiscal 1998’ revenue
level representing the success of this effort.</p>

<p ALIGN="JUSTIFY">In December 1997, Vital Scientific entered into an agreement with AVL
List GmbH of Graz, Austria for the exclusive distribution of certain of the Company’s
products in the medical markets of Eastern Europe, Scandinavia, and the countries of the
former Soviet Union. Privately held AVL is a leading supplier of Blood Gas and Ion
Selective Electrode technology. </p>

<p ALIGN="JUSTIFY">In June 1998, Vital Scientific signed an agreement with the Wiener
Laboratorios SAIC of Rosario, Argentina for the exclusive distribution for Latin America
of the Vitalab series of clinical chemistry analyzers. Established in 1960, Wiener Lab is
the leading independent manufacturer of reagents in South America and is a major marketer
of clinical chemistry instrumentation and reagents in the region. Wiener Lab will be
responsible for both the sales and service of Vital Scientific instrumentation in the
territory.</p>

<p ALIGN="JUSTIFY">During fiscal 1999, contacts with the North African and Middle Eastern
markets were expanded in a relationship with a London based company. </p>

<p ALIGN="JUSTIFY">A complete description of the products can be found at the
company’s website, "www.vitalscientific.com".</p>
<b>

<p ALIGN="JUSTIFY">Product Development</p>
</b>

<p ALIGN="JUSTIFY">During fiscal 1999, 1998, and 1997, the Company spent approximately
$1,825,000, $1,482,000, and $1,698,000, respectively, on research and development at Vital
Scientific.</p>

<p ALIGN="JUSTIFY">In the past three years the company has introduced three new analyzers:
the Vitalab Flexor, the Vitalab Viva and the HYTEC-288. The top-of-the-line Vitalab Viva
and Vitalab Flexor are patient selective, high throughput clinical chemistry analyzers,
capable of a wide range of routine, immunologic and esoteric testing. These instruments,
designed for use with reagent diagnostics from different sources, target the hospital and
alternative care markets. Vital Scientific believes that the unique robotic features, the
user-friendly interface and the wide range of applicable reagents for these instruments
provide its target markets with state-of-the-art affordable "walk-away" testing
capability.</p>

<p ALIGN="JUSTIFY">The HYTEC-288 is a fully automated Enzyme Immuno-Assay system designed
for allergy and autoimmune disease testing. This "walk-away" instrument permits
the processing of fifty (50) patient samples and two hundred eighty-eight (288) test
results in a single run. </p>

<p ALIGN="JUSTIFY">As mentioned above, in January 1999, Vital Scientific signed an
agreement with Scil Animal Care Company GmbH to develop and manufacture a fully automated
clinical chemistry and immuno-diagnostic laboratory instrument designed primarily for the
veterinary market.</p>

<p ALIGN="JUSTIFY">Research and development efforts at Vital Scientific are expected to be
maintained at a constant level during fiscal 2000. The Company intends to develop new
products where the Company perceives a demand and believes the product may be effectively
marketed. There is no assurance that any developments or enhancements will be successfully
completed or that, if developed, any of the products will be successfully marketed.</p>
<b>

<p ALIGN="JUSTIFY">Competition</p>
</b>

<p ALIGN="JUSTIFY">In developing instruments for dual-label and private label sales by
third parties, and in marketing directly to distributors, the Company competes with
numerous other companies. These include the Kollsman division of the Sequa Corporation,
Integrated Technologies Ltd., Medical Innovations, Inc. and many other smaller European
and American companies. The Company believes that it competes on its capabilities, the
quality of its products, and its ability to produce in a timely fashion.</p>

<p ALIGN="JUSTIFY">In the sale of clinical chemistry and immuno-assay analyzers, the
Company experiences intense competition in the marketplace. Worldwide there are over
fifteen companies, many of which have substantially greater resources than Vital
Scientific. The Company competes on the basis of specialized features of its technology,
added value, simplicity of operation, high performance-to-cost ratio, compatibility of
instruments with reagents of various manufacturers, and strategic marketing alliances. </p>

<p ALIGN="JUSTIFY"> </p>
<b>

<p ALIGN="JUSTIFY">CLinical Data (Australia) Pty. Ltd.</p>
</b>

<p ALIGN="JUSTIFY">Clinical Data Australia was formed in July 1992 to distribute
diagnostic products in Australia, New Zealand and the South Pacific. In addition, Clinical
Data Australia provides the Company with strategic access to the diagnostics market for
market research purposes. Australian medicine provides an ideal blend of the
characteristics found in Europe and the United States and is, therefore, an excellent site
to develop and test product concepts. </p>

<p ALIGN="JUSTIFY">Although initially established to support the strategic marketing
activities, the Company has aggressively expanded its product line and has cultivated a
growing diagnostics distribution business that is ideally positioned to represent European
and U.S. companies. </p>

<p ALIGN="JUSTIFY">Clinical Data Australia currently represents the following companies:</p>

<ul>
  <ul>
    <li>Hycor Biomedical - Urinalysis systems and consumables</li>
    <li>Sigma Diagnostics - Wide range of diagnostics </li>
    <li>Nycomed Pharma - QC sera and cell biology products</li>
    <li>R&R Mechatronics - ESR analyzers</li>
    <li>Vital Scientific - Clinical chemistry analyzers</li>
    <li>E. Merck - Clinical chemistry reagents</li>
    <li>AI Analysinstrument AB – Closed tube ESR products</li>
    <li>ABX Hematologie – Cell counters and related reagents</li>
    <li>Medical Innovations Ltd. – Tumor markers and autoimmune assays</li>
    <li>MarDx Diagnostics - Autoimmune and infectious disease diagnostics</li>
  </ul>
</ul>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="JUSTIFY">The HycorTM Biomedical line was launched in 1995 and has proven
highly successful. The product is the leading urinalysis system in Australia with a market
share of over 90 per cent (90%). </p>

<p ALIGN="JUSTIFY">A detailed review of the product offerings of Clinical Data Australia
may be found on their website, "www.clinicaldata.com.au".</p>

<p ALIGN="JUSTIFY">In March, 1999, Clinical Data Australia and Medical Innovations Limited
("MIL") of Sydney, Australia, entered into a global strategic alliance for the
distribution of MIL’s current immunoassay diagnostics and for the development of an
diagnostic system based on instrumentation to be developed by Vital Scientific. MIL has
developed a range of unique tumor marker assays used in the management of breast and
ovarian cancers and in the diagnosis of autoimmune diseases. MIL has an extensive
knowledge base in the formulation and production of immuno-diagnostic assays. The
distribution agreement with Clinical Data Australia covers the full range of MIL’s
existing tumor markers and autoimmune assays which had 1998 sales exceeding A$850,000
(US$535,000). Clinical Data Australia will distribute the MIL range of products directly
in Australia and will manage and expand the international distribution network built by
MIL over the past five years.</p>

<p ALIGN="JUSTIFY"> </p>
<b>

<p>NOVACHEM BV</p>
</b>

<p ALIGN="JUSTIFY">Established in 1992, NovaChem has developed and markets the IPM-Mark II
Process Analyzer. This instrument which employs fiber-optic and diode-array spectroscopic
technology, was specifically designed for on-line process control applications of both
gases and liquids.</p>

<p ALIGN="JUSTIFY">Using the IPM-Mark II, NovaChem has developed a series of applications
which include the monitoring of Claus Plant sulfur recovery, chlorine production, and the
measurement of sulfur dioxide, oxides of nitrogen, and ammonia in stack emissions. The
technology has also been proven effective in controlling ethylene glycol manufacture, and
in monitoring the production of pharmaceuticals. NovaChem’s products are production
engineered and manufactured by Vital Scientific.</p>

<p ALIGN="JUSTIFY">A complete description of the products may be found on the
company’s website, "www.novachembv.com".</p>

<p ALIGN="JUSTIFY">During fiscal 1999, NovaChem successfully introduced its products into
the United States with applications in the chemical industry. </p>
<b>

<p ALIGN="JUSTIFY">Marketing and Distribution</p>
</b>

<p ALIGN="JUSTIFY">The market for process monitoring instrumentation has evolved from a
demand for on-line, real-time analytical techniques similar to those employed in the
industrial laboratory. The market, international in scope, is driven by solving specific
processing application problems. The market is characterized by many small niches with
specialized vendors. Success factors in this market include an in-depth knowledge of
end-user processing, active product development, international market targeting, a
reputation for stability and service, and strategic planning.</p>

<p ALIGN="JUSTIFY">NovaChem’s technology is primarily marketed from NovaChem’s
Internet website and links from technical exposition web services and through established
dealers and manufacturer’s representatives worldwide.</p>
<b>

<p ALIGN="JUSTIFY">Product Development</p>
</b>

<p ALIGN="JUSTIFY">During fiscal 1999, 1998 and 1997, NovaChem spent approximately
$54,000, $107,000 and $124,000, respectively, on research and development. Resources were
also employed for the development of related sampling systems necessary for the coupling
of the diode-array monitor to the process line.</p>
<b>

<p ALIGN="JUSTIFY">Competition</p>
</b>

<p ALIGN="JUSTIFY">In developing and marketing instruments for process monitoring,
NovaChem competes with many companies in Europe and the United States. These include
Ametek, Western Research, Zeiss and numerous others. The Company believes that it competes
on the basis of specialized features of its technology, simplicity of operation, high
performance-to-cost ratio, and quality of its products. Many of its competitors, however,
have greater financial and marketing resources than NovaChem.</p>
<b>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="JUSTIFY">OTHER BUSINESS MATTERS</p>

<p ALIGN="JUSTIFY">Government Regulation</p>
</b>

<p ALIGN="JUSTIFY">Where necessary, the Company has obtained government approval to market
its products and may have to obtain prior approval of certain European regulatory bodies
("EN46001") or the Food and Drug Administration ("FDA") to market
products that it may develop. Domestically, certain of the Company’s products are
classified as medical devices under the Federal Food, Drug and Cosmetics Act. As such, if
and when these products are offered for sale in the United States, these products are
subject to regulation by the FDA. The cost of obtaining such approvals may be high and the
process lengthy, with no assurance that such approvals will be obtained.</p>

<p ALIGN="JUSTIFY">To date, neither the FDA nor the European medical regulatory bodies
have developed industry-wide performance standards with respect to the safety and
effectiveness of the products presently marketed by the Company. Although the Company
intends to use reasonable efforts to comply with international standards, when and if
developed, there can be no assurance that all the Company’s products will so comply.
Any failure to receive approvals for the Company’s future products, or noncompliance
with any international performance standards promulgated in the future, could have a
material adverse effect on the Company. Furthermore, any material change in the existing
rules and regulations or any new regulations developed might adversely affect the Company.</p>

<p ALIGN="JUSTIFY">The Company’s subsidiaries comply with European CE regulations and
Vital Scientific is ISO 9001 and 9002 approved.</p>

<p ALIGN="JUSTIFY">The instruments developed by NovaChem for the environmental market may
now or in the future require certification by governmental authorities. Any failure to
receive approvals for such products could have a material adverse effect on this
investment.</p>
<b>

<p ALIGN="JUSTIFY">Patents</p>
</b>

<p ALIGN="JUSTIFY">The Company or its subsidiaries either<i> </i>own or have applied for
patents and trademarks on certain of their products. However, the Company does not believe
that its business as a whole is or will be materially dependent upon the protection
afforded by such patents or trademarks, and a substantial majority of the Company’s
revenues are attributable to products without patent protection. </p>
<b>

<p ALIGN="JUSTIFY">Warranty and Product Liability</p>
</b>

<p ALIGN="JUSTIFY">Warranty expenses were approximately four-tenths of one percent (0.40%)
during fiscal 1999 and one-quarter percent (0.25%) for fiscal 1998.</p>

<p ALIGN="JUSTIFY">Vital Scientific maintains product liability insurance in the amount of
NLG10 million ($5 million) for the international sales of its laboratory instrumentation.
The Company believes that this level of coverage is adequate, given its past sales levels
and its anticipated sales levels for the fiscal year ending March 31, 2000. The Company
will reevaluate the adequacy of this coverage when and if its sales level substantially
increases. No product liability claims have been brought against the Company to date.
However, there can be no assurance that product liability insurance will continue to be
available to the Company on acceptable terms, or that product liability claims in excess
of the Company’s insurance coverage, if any, will not be successfully asserted
against the Company.</p>
<b>

<p ALIGN="JUSTIFY">Year 2000</p>
</b>

<p ALIGN="JUSTIFY">The Company has completed the process of evaluating its product lines
and information technology infrastructure to assess its exposure to the "Year 2000
compliance" issue. "Year 2000 compliance" means that the date-based
performance and functionality of the product or system so identified will be the same for
dates prior to, during, and after the year 2000, including the recognition of the year
2000 as a leap-year.</p>

<p ALIGN="JUSTIFY">The Company believes that based on its evaluation, no critical software
or hardware systems will be impacted by the compliance issue. To date the costs associated
with its "Year 2000 compliance" have been under $50,000. The Company does not
anticipate any significant future costs to be incurred with respect to "Year
2000" compliance.</p>

<p ALIGN="JUSTIFY">In the first quarter of fiscal year 1999, the Company and its operating
subsidiaries developed a testing and compliance program to determine whether and to what
extent the Company needed to update its product lines and operations to become "Year
2000 compliant". Based upon that work completed in the period ended December 31,
1998, the Company has determined that the basic functionality of all tested products,
including all of the products presently being sold as well as certain discontinued
products, is not affected by the "Year 2000" date change. The Company’s
newly introduced products have been determined to be "Year 2000 compliant". In a
few instances, certain minor problems in the least significant category of the standard
classification of "Year 2000" problems, which is designated as "noticeable
and inconvenient", were found in certain older instruments. For these, easy
"work around" instructions have been prepared and were made available to users.
The Company does not intend to modify discontinued products, and does not foresee any
material financial exposure arising from this decision.</p>

<p ALIGN="JUSTIFY">The financial reporting systems currently used by the Company are
"Year 2000 compliant".</p>

<p ALIGN="JUSTIFY">The Company is accumulating information regarding the "Year 2000
compliance" status of its main customers and suppliers. Based on information to date,
the Company’s major customers and suppliers are assessing and implementing programs
to deal with the "Year 2000" problem. There can be no assurance, however, that
the Company’s customers and suppliers will not be adversely affected by the
"Year 2000" problem, which will in turn adversely effect the Company. </p>

<p ALIGN="JUSTIFY">In order to avoid such material adverse effects, the Company will
continue to seek business relationships only with those entities that are actively and
successfully addressing "Year 2000" issues. In the inability of certain existing
vendors or customers to successfully address "Year 2000" issues begins to
present adverse business effects for the Company, management may elect to suspend such
business relationships until such time that such vendors or customers become fully
compliant.</p>

<p ALIGN="JUSTIFY">Based on the foregoing, the Company presently believes that the
"Year 2000" issue will not have a material impact on the Company’s business
operations or financial condition. There are no assurances, however, that as yet
unidentified "Year 2000" problems will not cause the Company to incur material
expenses in responding to such problems or otherwise have a material adverse effect on the
Company’s business, operating results, or financial condition.</p>
<b>

<p ALIGN="JUSTIFY">Production and Availability of Raw Materials</p>
</b>

<p ALIGN="JUSTIFY">The Company’s manufacturing operations require a variety of
purchased components. The Company purchases these components in sufficient quantities to
take advantage of price discounts and currently has an adequate inventory. Most of the
components are available from multiple sources and the Company anticipates that they will
continue to be readily available. Certain components and supplies are available from
single sources only. If such suppliers should fail in deliveries, delays in production
could result. However, these components and supplies are generally not manufactured to the
Company’s specifications, but are produced for other applications, and the Company
believes that they will continue to be available in the foreseeable future. In addition,
the Company, where appropriate, has placed scheduled blanket purchase orders, has placed a
sufficient number of such components in inventory, or has provided vendors with greater
lead time for filling orders for such components.</p>
<b>

<p ALIGN="JUSTIFY">Backlog</p>
</b>

<p ALIGN="JUSTIFY">At the close of the fiscal year ended March 31, 1999, the Company had a
backlog of approximately $1,589,000 as compared to $3,792,000, in 1998. It is anticipated
that all of the existing backlog will be filled by shipments during fiscal 2000.
Deliveries are generally made within 30 days after the receipt of an order.</p>
<b>

<p ALIGN="JUSTIFY">Seasonality</p>
</b>

<p ALIGN="JUSTIFY">The Company does not believe that its business has any significant
seasonal factors.</p>
<b>

<p ALIGN="JUSTIFY">Employees</p>
</b>

<p ALIGN="JUSTIFY">The Company had ninety-eight (98) full, part-time, and contract
employees as of March 31, 1999. Eighty-eight (88) of these employees are employed by Vital
Scientific, one (1) by NovaChem, eight (8) by Clinical Data Australia and one (1) by
Novitron International, Inc.</p>
<b>

<p ALIGN="JUSTIFY">Environmental matters</p>
</b>

<p ALIGN="JUSTIFY">The Company does not believe that compliance with Federal, State or
Local regulations relating to the protection of the environment have any material effect
on the Company’s financial or competitive position.</p>
<b>

<p ALIGN="JUSTIFY">Significant Customers</p>
</b>

<p ALIGN="JUSTIFY">The loss of any of the Company’s major customers would have a
significant material adverse impact on the Company.</p>
<b>

<p ALIGN="JUSTIFY">Industry Segments</p>
</b>

<p ALIGN="JUSTIFY">The information required by this section is specified in Note 15 in the
accompanying notes to consolidated financial statements.</p>
<b>

<p ALIGN="JUSTIFY">Executive Officers of the Registrant</p>
</b>

<p ALIGN="JUSTIFY">Subject to the discretion of the Board of Directors, officers serve for
a one (1) year term expiring with the meeting of the Board of Directors following the next
Annual Meeting of Stockholders and until their respective successors are elected and
qualified.</p>

<p ALIGN="JUSTIFY">Israel M. Stein, M.D., 56, has served as Chairman of the Board since
1972 and as President from 1972 until February 1988, and again since February 1989. Dr.
Stein is a graduate of the Albert Einstein College of Medicine, a member of Alpha Omega
Alpha, and is a Salk Scholar of the City University of New York. Before joining the
Company, Dr. Stein served as Senior Assistant Surgeon at the National Institutes of Health
and as a resident at Harvard Medical School.</p>

<p ALIGN="JUSTIFY">Adrian Tennyenhuis, 48, Senior Vice President of the Company is
currently also the Managing Director of Clinical Data (Australia) Pty. Ltd. Mr.
Tennyenhuis was formerly the Managing Director of Vital Scientific NV from 1989 to 1991.
Before joining the Company, he held increasingly senior sales and marketing positions with
Behring Diagnostics.</p>

<p ALIGN="JUSTIFY">Emile Hugen, 54, has been the Managing Director of Vital Scientific NV
since October 1991. With over 25 years of increasing management responsibility in
manufacturing and operations at Vital Scientific, Mr. Hugen is an experienced operating
officer of the Company.</p>
<b>

<p ALIGN="JUSTIFY">Item 2. Properties</p>
</b>

<p ALIGN="JUSTIFY">The Company leases approximately 500 square feet of office space in
Newton, Massachusetts under a lease expiring in December 1999.</p>

<p ALIGN="JUSTIFY">Vital Scientific leases approximately 35,000 square feet in Dieren, The
Netherlands. The facility was designed specifically for the Company’s needs, but was
financed entirely by an unrelated third party. The facility is leased until the year 2008
with renewal and expansion options. </p>

<p ALIGN="JUSTIFY">NovaChem occupies approximately 500 square feet of office space in
Newton and in Dieren, The Netherlands under a series of short-term leases.</p>

<p ALIGN="JUSTIFY">Clinical Data Australia occupies approximately 3,000 square feet of
office and warehousing space in Castle Hill, New South Wales under a lease expiring in
January 2000.</p>

<p ALIGN="JUSTIFY">The Company believes its current facilities are adequate for its
planned needs in the near future.</p>
<b>

<p ALIGN="JUSTIFY">Item 3. Legal Proceedings</p>
</b>

<p ALIGN="JUSTIFY">None.</p>
<b>

<p ALIGN="JUSTIFY">Item 4. Submission of Matters to a Vote of Security Holders</p>
</b>

<p ALIGN="JUSTIFY">None.</p>
<b>

<p ALIGN="JUSTIFY">PART II</p>

<p ALIGN="JUSTIFY">Item 5. Market for Registrant’s Common Equity and Related Security
Holder Matters</p>
</b>

<p ALIGN="JUSTIFY">a) Market information: The Company’s Common Stock trades on the
NASDAQ Stock Market under the symbol NOVI. The following table sets forth the range of
high and low sale prices per share of Common Stock for each quarter in fiscal 1999 and
1998 as reported by the NASDAQ Stock Market.</p>

<p ALIGN="JUSTIFY"><u>Prices</p>
</u>

<p ALIGN="JUSTIFY">Fiscal Year Ended March 31, 1999    <u></p>
</u><div align="center"><center>

<table CELLSPACING="1" BORDER="1" CELLPADDING="7" WIDTH="361">
  <tr>
    <td WIDTH="51%" VALIGN="TOP"><p ALIGN="JUSTIFY"> </td>
    <td WIDTH="28%" VALIGN="TOP"><p ALIGN="center">High     </td>
    <td WIDTH="20%" VALIGN="TOP"><p ALIGN="center">Low</td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="TOP">First Quarter</td>
    <td WIDTH="28%" VALIGN="TOP">$ 4.00</td>
    <td WIDTH="20%" VALIGN="TOP">$ 1.12</td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="TOP"><p ALIGN="JUSTIFY">Second Quarter</td>
    <td WIDTH="28%" VALIGN="TOP"><p ALIGN="JUSTIFY">$ 3.00</td>
    <td WIDTH="20%" VALIGN="TOP"><p ALIGN="JUSTIFY">$ 1.75</td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="TOP"><p ALIGN="JUSTIFY">Third Quarter</td>
    <td WIDTH="28%" VALIGN="TOP"><p ALIGN="JUSTIFY">$ 3.12</td>
    <td WIDTH="20%" VALIGN="TOP"><p ALIGN="JUSTIFY">$ 0.50</td>
  </tr>
  <tr>
    <td WIDTH="51%" VALIGN="TOP"><p ALIGN="JUSTIFY">Fourth Quarter</td>
    <td WIDTH="28%" VALIGN="TOP"><p ALIGN="JUSTIFY">$ 2.75</td>
    <td WIDTH="20%" VALIGN="TOP"><p ALIGN="JUSTIFY">$ 1.12</td>
  </tr>
</TABLE>
</center></div>

<p ALIGN="JUSTIFY">Fiscal Year Ended March 31, 1998<u></p>
</u><div align="center"><center>

<table CELLSPACING="1" BORDER="1" CELLPADDING="7" WIDTH="360">
  <tr>
    <td WIDTH="52%" VALIGN="TOP"><p ALIGN="JUSTIFY"> </td>
    <td WIDTH="28%" VALIGN="TOP"><p ALIGN="center">High</td>
    <td WIDTH="20%" VALIGN="TOP"><p ALIGN="center">Low</td>
  </tr>
  <tr>
    <td WIDTH="52%" VALIGN="TOP">First Quarter</td>
    <td WIDTH="28%" VALIGN="TOP">$ 3.52</td>
    <td WIDTH="20%" VALIGN="TOP">$ 1.82</td>
  </tr>
  <tr>
    <td WIDTH="52%" VALIGN="TOP"><p ALIGN="JUSTIFY">Second Quarter</td>
    <td WIDTH="28%" VALIGN="top"><p ALIGN="JUSTIFY">$ 3.75</td>
    <td WIDTH="20%" VALIGN="TOP"><p ALIGN="JUSTIFY">$ 2.16</td>
  </tr>
  <tr>
    <td WIDTH="52%" VALIGN="TOP"><p ALIGN="JUSTIFY">Third Quarter</td>
    <td WIDTH="28%" VALIGN="TOP"><p ALIGN="JUSTIFY">$ 2.84</td>
    <td WIDTH="20%" VALIGN="TOP"><p ALIGN="JUSTIFY">$ 1.36</td>
  </tr>
  <tr>
    <td WIDTH="52%" VALIGN="TOP"><p ALIGN="JUSTIFY">Fourth Quarter</td>
    <td WIDTH="28%" VALIGN="TOP"><p ALIGN="JUSTIFY">$ 3.88</td>
    <td WIDTH="20%" VALIGN="TOP"><p ALIGN="JUSTIFY">$ 1.48</td>
  </tr>
</TABLE>
</center></div>

<p ALIGN="JUSTIFY">b) The approximate number of holders of record and beneficial owners of
the Company’s Common Stock at March 31, 1999 and March 31, 1998 were 236 and 598 and
252 and 1,175, respectively.</p>

<p ALIGN="JUSTIFY">c) The Company presently intends to reinvest earnings, if any, for use
in its business and therefore does not expect to pay any cash dividends in the foreseeable
future.</p>
<b>

<p ALIGN="JUSTIFY">Item 6. Selected Financial Data</p>
</b>

<p ALIGN="JUSTIFY">The following table summarizes certain selected consolidated data and
should be read in conjunction with the consolidated financial statements and related notes
appearing elsewhere in this Form 10-K. No cash dividends have been declared during the
periods presented below.</p>

<p ALIGN="JUSTIFY"><u><b>Fiscal Year Ended March 31</p>
</b></u><font SIZE="3">

<p ALIGN="JUSTIFY">(In thousands, except per share amounts)</p>
</font>

<table CELLSPACING="1" BORDER="1" CELLPADDING="5" WIDTH="612" height="675">
  <tr>
    <td WIDTH="167" VALIGN="TOP" height="22"></td>
    <td WIDTH="63" VALIGN="top" height="22"><font SIZE="3"><u><b><p ALIGN="RIGHT">1999</b></u></font></td>
    <td WIDTH="62" VALIGN="top" height="22"><font SIZE="3"><u><b><p ALIGN="RIGHT">1998</b></u></font></td>
    <td WIDTH="73" VALIGN="top" height="22"><font SIZE="3"><u><b><p ALIGN="RIGHT">1997</b></u></font></td>
    <td WIDTH="72" VALIGN="top" height="22"><font SIZE="3"><u><b><p ALIGN="RIGHT">1996<sup>a</sup></b></u></font></td>
    <td WIDTH="91" VALIGN="top" height="22"><font SIZE="3"><u><b><p ALIGN="RIGHT">1995<sup>a</sup></b></u></font></td>
  </tr>
  <tr>
    <td WIDTH="167" VALIGN="TOP" height="40"><font SIZE="3"><u><b><p ALIGN="JUSTIFY">Income
    Statement Data</b></u></font></td>
    <td WIDTH="63" VALIGN="top" height="40"></td>
    <td WIDTH="62" VALIGN="top" height="40"></td>
    <td WIDTH="73" VALIGN="top" height="40"></td>
    <td WIDTH="72" VALIGN="top" height="40"></td>
    <td WIDTH="91" VALIGN="top" height="40"></td>
  </tr>
  <tr>
    <td WIDTH="167" VALIGN="TOP" height="17"><font SIZE="2"><p ALIGN="JUSTIFY">Revenues</font></td>
    <td WIDTH="63" VALIGN="top" height="17"><font SIZE="2"><p ALIGN="RIGHT">$15,418</font></td>
    <td WIDTH="62" VALIGN="top" height="17"><font SIZE="2"><p ALIGN="RIGHT">$11,802</font></td>
    <td WIDTH="73" VALIGN="top" height="17"><font SIZE="2"><p ALIGN="RIGHT">$13,845</font></td>
    <td WIDTH="72" VALIGN="top" height="17"><font SIZE="2"><p ALIGN="RIGHT">$17,908</font></td>
    <td WIDTH="91" VALIGN="top" height="17"><font SIZE="2"><p ALIGN="RIGHT">$16,818</font></td>
  </tr>
  <tr>
    <td WIDTH="167" VALIGN="TOP" height="21"></td>
    <td WIDTH="63" VALIGN="top" height="21"></td>
    <td WIDTH="62" VALIGN="top" height="21"></td>
    <td WIDTH="73" VALIGN="top" height="21"></td>
    <td WIDTH="72" VALIGN="top" height="21"></td>
    <td WIDTH="91" VALIGN="top" height="21"></td>
  </tr>
  <tr>
    <td WIDTH="167" VALIGN="TOP" height="17"><font SIZE="2"><p ALIGN="JUSTIFY">Gross profit</font></td>
    <td WIDTH="63" VALIGN="top" height="17"><font SIZE="2"><p ALIGN="RIGHT">$4,153</font></td>
    <td WIDTH="62" VALIGN="top" height="17"><font SIZE="2"><p ALIGN="RIGHT">$3,277</font></td>
    <td WIDTH="73" VALIGN="top" height="17"><font SIZE="2"><p ALIGN="RIGHT">$3,713</font></td>
    <td WIDTH="72" VALIGN="top" height="17"><font SIZE="2"><p ALIGN="RIGHT">$5,002</font></td>
    <td WIDTH="91" VALIGN="top" height="17"><font SIZE="2"><p ALIGN="RIGHT">$5,220</font></td>
  </tr>
  <tr>
    <td VALIGN="top" width="167"> </td>
    <td VALIGN="top" width="63"> </td>
    <td VALIGN="top" width="62"> </td>
    <td VALIGN="top" width="73"> </td>
    <td VALIGN="top" width="72"> </td>
    <td VALIGN="top" width="91"> </td>
  </tr>
  <tr>
    <td VALIGN="top" width="167"><font SIZE="2"><p ALIGN="JUSTIFY">Net income (loss)</font></td>
    <td VALIGN="top" width="63"><font SIZE="2"><p ALIGN="RIGHT">$(470)</font></td>
    <td VALIGN="top" width="62"><font SIZE="2"><p ALIGN="RIGHT">$104</font></td>
    <td VALIGN="top" width="73"><font SIZE="2"><p ALIGN="RIGHT">$(583)</font></td>
    <td VALIGN="top" width="72"><font SIZE="2"><p ALIGN="RIGHT">$(1,506)</font></td>
    <td VALIGN="top" width="91"><font SIZE="2"><p ALIGN="RIGHT">$(228)</font></td>
  </tr>
  <tr>
    <td VALIGN="top" width="167"> </td>
    <td VALIGN="top" width="63"> </td>
    <td VALIGN="top" width="62"> </td>
    <td VALIGN="top" width="73"> </td>
    <td VALIGN="top" width="72"> </td>
    <td VALIGN="top" width="91"> </td>
  </tr>
  <tr>
    <td VALIGN="top" width="167"><font SIZE="2"><p ALIGN="JUSTIFY">Basic and diluted</font></td>
    <td VALIGN="top" width="63"> </td>
    <td VALIGN="top" width="62"> </td>
    <td VALIGN="top" width="73"> </td>
    <td VALIGN="top" width="72"> </td>
    <td VALIGN="top" width="91"> </td>
  </tr>
  <tr>
    <td VALIGN="top" width="167"><font SIZE="2"><p ALIGN="JUSTIFY">net income (loss) per share</font></td>
    <td VALIGN="top" width="63"><font SIZE="2"><p ALIGN="RIGHT">$(.32)</font></td>
    <td VALIGN="top" width="62"><font SIZE="2"><p ALIGN="RIGHT">$.08</font></td>
    <td VALIGN="top" width="73"><font SIZE="2"><p ALIGN="RIGHT">$(.44)</font></td>
    <td VALIGN="top" width="72"><font SIZE="2"><p ALIGN="RIGHT">$(1.14)</font></td>
    <td VALIGN="top" width="91"><font SIZE="2"><p ALIGN="RIGHT">$(.17)</font></td>
  </tr>
  <tr>
    <td VALIGN="top" width="167"> </td>
    <td VALIGN="top" width="63"> </td>
    <td VALIGN="top" width="62"> </td>
    <td VALIGN="top" width="73"> </td>
    <td VALIGN="top" width="72"> </td>
    <td VALIGN="top" width="91"> </td>
  </tr>
  <tr>
    <td VALIGN="top" width="167"><font SIZE="2"><p ALIGN="JUSTIFY">Weighted average common </font></td>
    <td VALIGN="top" width="63"> </td>
    <td VALIGN="top" width="62"> </td>
    <td VALIGN="top" width="73"> </td>
    <td VALIGN="top" width="72"> </td>
    <td VALIGN="top" width="91"> </td>
  </tr>
  <tr>
    <td VALIGN="top" width="167"><font SIZE="2"><p ALIGN="JUSTIFY">shares outstanding</font></td>
    <td VALIGN="top" width="63"><font SIZE="2"><p ALIGN="RIGHT">1,453</font></td>
    <td VALIGN="top" width="62"><font SIZE="2"><p ALIGN="RIGHT">1,323</font></td>
    <td VALIGN="top" width="73"><font SIZE="2"><p ALIGN="RIGHT">1,322</font></td>
    <td VALIGN="top" width="72"><font SIZE="2"><p ALIGN="RIGHT">1,322</font></td>
    <td VALIGN="top" width="91"><font SIZE="2"><p ALIGN="RIGHT">1,327</font></td>
  </tr>
  <tr>
    <td VALIGN="top" COLSPAN="6" width="598"><font SIZE="2">a Per share amounts have been
    retroactively adjusted to reflect the 1:3 reverse stock split on December 4, 1996.</font></td>
  </tr>
  <tr>
    <td VALIGN="top" width="167"><font SIZE="3"><u><b><p ALIGN="JUSTIFY">Balance Sheet Data</b></u></font></td>
    <td VALIGN="top" width="63"> </td>
    <td VALIGN="top" width="62"> </td>
    <td VALIGN="top" width="73"> </td>
    <td VALIGN="top" width="72"> </td>
    <td VALIGN="top" width="91"> </td>
  </tr>
  <tr>
    <td VALIGN="top" width="167"><font SIZE="2"><p ALIGN="JUSTIFY">Working Capital</font></td>
    <td VALIGN="top" width="63"><font SIZE="2"><p ALIGN="RIGHT">$2,595</font></td>
    <td VALIGN="top" width="62"><font SIZE="2"><p ALIGN="RIGHT">$3,099</font></td>
    <td VALIGN="top" width="73"><font SIZE="2"><p ALIGN="RIGHT">$4,206</font></td>
    <td VALIGN="top" width="72"><font SIZE="2"><p ALIGN="RIGHT">$5,277</font></td>
    <td VALIGN="top" width="91"><font SIZE="2"><p ALIGN="RIGHT">$5,575</font></td>
  </tr>
  <tr>
    <td VALIGN="top" width="167"><font SIZE="2"><p ALIGN="JUSTIFY">Total Assets</font></td>
    <td VALIGN="top" width="63"><font SIZE="2"><p ALIGN="RIGHT">$9,659</font></td>
    <td VALIGN="top" width="62"><font SIZE="2"><p ALIGN="RIGHT">$9,405</font></td>
    <td VALIGN="top" width="73"><font SIZE="2"><p ALIGN="RIGHT">$8,568</font></td>
    <td VALIGN="top" width="72"><font SIZE="2"><p ALIGN="RIGHT">$12,294</font></td>
    <td VALIGN="top" width="91"><font SIZE="2"><p ALIGN="RIGHT">$15,075</font></td>
  </tr>
  <tr>
    <td VALIGN="top" width="167"><font SIZE="2"><p ALIGN="JUSTIFY">Long-Term Debt Obligations </font></td>
    <td VALIGN="top" width="63"><font SIZE="2"><p ALIGN="RIGHT">$23</font></td>
    <td VALIGN="top" width="62"><font SIZE="2"><p ALIGN="RIGHT">$30</font></td>
    <td VALIGN="top" width="73"><font SIZE="2"><p ALIGN="RIGHT">$41</font></td>
    <td VALIGN="top" width="72"><font SIZE="2"><p ALIGN="RIGHT">$54</font></td>
    <td VALIGN="top" width="91"><font SIZE="2"><p ALIGN="RIGHT">$98</font></td>
  </tr>
  <tr>
    <td VALIGN="top" width="167"><font SIZE="2"><p ALIGN="JUSTIFY">Stockholders’
    Investment </font></td>
    <td VALIGN="top" width="63"><font SIZE="2"><p ALIGN="RIGHT">$4,300</font></td>
    <td VALIGN="top" width="62"><font SIZE="2"><p ALIGN="RIGHT">$4,641</font></td>
    <td VALIGN="top" width="73"><font SIZE="2"><p ALIGN="RIGHT">$4,973</font></td>
    <td VALIGN="top" width="72"><font SIZE="2"><p ALIGN="RIGHT">$6,192</font></td>
    <td VALIGN="top" width="91"><font SIZE="2"><p ALIGN="RIGHT">$7,981</font></td>
  </tr>
</TABLE>
<b>

<p>Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations</p>

<p ALIGN="JUSTIFY">Liquidity and Capital Resources</b>The Company generated approximately
$626,000 of cash from operations during the fiscal year ended March 31, 1999. The increase
in funds generated comes from the increase in accounts payable, customer advances and
accrued expenses and the decrease in inventory levels offset by an increase in the level
of accounts receivable and a decrease in the level of accrued income taxes. During fiscal
year 1999, approximately $500,000 of cash was used by the Company in its investing
activities chiefly for the purchase of equipment. Approximately $69,000 was used during
the year ended March 31, 1999 for financing activities. The funds were primarily used to
pay down the short-term notes payable.</p>

<p ALIGN="JUSTIFY">In April 1998, the Company entered a new relationship with a major
Dutch bank, which provides for a 4,000,000 Dutch Guilder (approximately $1,950,000) line
of credit. Interest on this facility is set at 1.25% above the base rate as reported by
the Netherlands Central Bank, presently 3.75%. Trade receivables and inventory of Vital
Scientific are provided as security for this facility. The line continues as long as
certain capital covenants are met. As of March 31, 1999, the Company is in full compliance
with all capital covenants of the credit line and no amounts are outstanding.</p>

<p ALIGN="JUSTIFY">In May 1999, Clinical Data Australia entered into an agreement for a
450,000 Australian dollar (approximately $285,000) line of credit with an Australian bank.
Interest on this facility is set at prime plus 3.0%; the prime rate is presently 8.5%.
Trade receivables and inventory of Clinical Data Australia are provided as security for
this facility; the line also requires the maintenance of certain capital ratios.</p>

<p ALIGN="JUSTIFY">The Company’s sources of cash include cash balances and the
aforementioned lines of credit from Dutch and Australian banks. The Company believes that
available funds will provide it with sufficient working capital through fiscal year 2000.</p>

<p ALIGN="JUSTIFY">The effect of foreign currency transaction exchange on the results of
operations is included in other income (expense) and is not material to the financial
statements. (See Note 11 in Notes to the Consolidated Financial Statements.) Any impact on
the Company’s liquidity is largely dependent on the exchange rates in effect at the
time the Company’s predominant foreign functional currency, the Dutch Guilder, is
translated into U.S. dollars. Approximately $253,000 of the March 31, 1999 balance of
$1,287,000 of cash and cash equivalents is denominated in U.S. dollars. The effect of
translation into U.S. dollars is reflected as a separate component of stockholders’
investment on the balance sheet. The cumulative translation adjustment in
stockholders’ investment is approximately two percent (2%) of total assets on the
March 31, 1999 consolidated balance sheet. The effects of currency exchange rates on
future quarterly or fiscal periods on the results of operations are difficult to estimate.</p>

<p ALIGN="JUSTIFY">There are no formal hedging procedures employed by the Company. The
primary risk is to monetary assets and liabilities denominated in currencies other than
the U.S. dollar. Approximately $7.66 million of $7.76 million of current assets reside in
the Company’s foreign subsidiaries.</p>
<b>

<p ALIGN="JUSTIFY">Results of Operations</p>
<u>

<p>Fiscal Year Ended March 31, 1999 Compared to Fiscal Year Ended March 31, 1998</p>
</u></b>

<p ALIGN="JUSTIFY">Consolidated revenues for fiscal year 1999 were $15,418,000 versus
$11,802,000 for fiscal year 1998, an increase of approximately 30.6%. The increase is due
to an aggregate 28.3% increase in sales at each of the Company’s operating
subsidiaries coupled with a 1.8% strengthening of the Company’s primary functional
currency, the Dutch Guilder, against the United States dollar.</p>

<p ALIGN="JUSTIFY">For the entire year, the gross margin declined from 27.8% in fiscal
year 1998 to 26.9% in fiscal year 1999. The decrease principally results from competitive
pricing pressure combined with a product mix of instruments with lower margins.</p>

<p ALIGN="JUSTIFY">Sales and marketing expenses increased $273,000 or 37.5% from fiscal
year 1998. $115,000 of the increase is because of a one-time release of certain reserves
during fiscal year 1998 related to the settlement of a dispute with a customer that is
described in Note 11 to the Consolidated Financial Statements. The remainder is primarily
attributable to expenses associated with the training of new distributors and a new
product introduction.</p>

<p ALIGN="JUSTIFY">Research and development expenses, as shown on the fiscal year 1999
consolidated statements of operations, increased $510,000 or 38.1% from fiscal year 1998.
During fiscal years 1999 and 1998, the Company spent an additional $32,000 and $242,000,
respectively, which were capitalized onto the balance sheet pursuant to the precepts of
Statement of Financial Accounting Standards No. 86 (See Note 1(m) in the Notes to the
Consolidated Financial Statements). The overall increase in research and development
expenses is, therefore, $300,000 or 18.9% when compared to the prior year. This increase
in R&D expense is primarily related to new product concept and development activities.
</p>

<p ALIGN="JUSTIFY">General and administrative expenses increased $70,000 or 3.9% from
fiscal year 1998. The increase is primarily due to exchange rate fluctuations.</p>

<p ALIGN="JUSTIFY">In the fourth quarter of fiscal 1999, the Company began implementation
of a restructuring plan at its Vital Scientific subsidiary. As of March 31, 1999, the
Company had terminated three employees, one in sales and two in research and development
and plans to complete the restructuring in the first half of fiscal year 2000. Management
anticipates the future amount of the restructuring charge to be approximately $81,000. At
March 31, 1999, the entire amount of the accrual is remaining and is comprised entirely of
severance related costs. The total cash impact of the restructuring related to fiscal year
1999 was $50,946, which will be paid during fiscal year 2000.</p>

<p ALIGN="JUSTIFY">Interest expense increased primarily from expenses related to the
credit financing grant received by Vital Scientific from the Dutch government for new
product development. The grant is repaid from product sales with interest accruing on the
unpaid balance. </p>

<p ALIGN="JUSTIFY">Interest income decreased from fiscal year 1998 because funds were used
to payoff the deficit balance in cash at the Company’s former bank before opening a
relationship with a new bank. For fiscal year 1999, other income and expense, as
illustrated in Note 11 in the Notes to Consolidated Financial Statements, is largely
comprised of foreign currency transaction gains and losses on the results of operations.
In fiscal year 1998, the account was predominantly consisted of the gains from the
settlement of a dispute with a customer and from the sale of certain assets at Vital
Scientific.</p>

<p ALIGN="JUSTIFY">The minority interest, as shown on the fiscal year 1998 and 1997
statements of operations is attributable to the 6% of Vital Scientific that was not owned
by the Company. On October 21, 1997, Vital Scientific became a wholly owned subsidiary.</p>
<u><b>

<p ALIGN="JUSTIFY">Fiscal Year Ended March 31, 1998 Compared to Fiscal Year Ended March
31, 1997</p>
</b></u>

<p ALIGN="JUSTIFY">Consolidated revenues for fiscal year 1998 were $11,802,000 versus
$13,845,000 for fiscal year 1997, a decrease of approximately 14.8%. The decline is
principally due to the 14.8% strengthening of the U.S. dollar against the Company's
primary functional currency, the Dutch Guilder.</p>

<p ALIGN="JUSTIFY">The gross margin improved from 26.8% to 27.8% from fiscal year 1997 to
fiscal year 1998. The increase reflects improved material costs, cost containment and a
change in the product mix.</p>

<p ALIGN="JUSTIFY">Sales and marketing expenses decreased $424,000 or 36.8 % from fiscal
year 1997. A reduction in expenses was responsible for 27.4% of the decline and the
weakening of the Dutch Guilder against the U.S. dollar accounted for the rest. The
decrease in expenses resulted from cost containment, reduced sales commissions and reduced
technical service expenses.</p>

<p ALIGN="JUSTIFY">Research and development expenses, as shown on the 1998 consolidated
statement of operations, increased $58,000 or 4.6% from fiscal year 1997. During fiscal
years 1998 and 1997, the Company spent an additional $242,000 and $502,000, respectively,
in research and development which were capitalized onto the consolidated balance sheet
pursuant to the precepts of Statement of Financial Accounting Standards No. 86 (see Note
l(m) in the Notes to Consolidated Financial Statements). When expressed in the
Company’s primary functional currency, the Dutch Guilder, the spending on research
and development was essentially constant for fiscal years 1997 and 1998. The decrease in
the spending, when expressed in U.S. dollars, is wholly attributable to the strengthening
of the U.S. dollar against the Dutch Guilder.</p>

<p ALIGN="JUSTIFY">General and administrative expense in fiscal year 1998 decreased
$169,000 or 8.7% from fiscal year 1997. The expense increased 4.7% when expressed in the
Company’s functional currency; the weakening of the Dutch Guilder against the U.S.
dollar caused the decrease as reported. The increased costs are primarily attributable to
employee recruitment expenses, temporary contract personnel and one-time consulting
expenses.</p>

<p ALIGN="JUSTIFY">Interest expense increased primarily from expenses related to the
credit financing grant received by Vital Scientific from the Dutch government for new
product development. The grant is repaid from product sales with interest accruing on the
unpaid balance. Shipments of the new product commenced in the fourth quarter of fiscal
year 1998.</p>

<p ALIGN="JUSTIFY">Interest income increased from invested funds. Other income and
expense, as illustrated in Note 11 in the Notes to Consolidated Financial Statements, is
largely comprised of the gain from the settlement with E. Merck and the gain on the sale
of certain assets at Vital Scientific. The remainder of the balance shows the effect of
foreign currency transaction gains and losses on the results of operations.</p>

<p ALIGN="JUSTIFY">As noted above, on October 21, 1997, Vital Scientific became a wholly
owned subsidiary of the Company. The minority interest on the consolidated statement of
operations reflects the 6% of Vital Scientific’s operations held by a minority
shareholder until October 21, 1997.</p>

<p ALIGN="JUSTIFY">The effect of foreign currency transaction exchange on the results of
operations is included in other income (expense) and is not material to the financial
statements. (See Note 11 in Notes to Consolidated Financial Statements.) Any impact on the
Company's liquidity is largely dependent on the exchange rates in effect at the time the
Company’s predominant foreign functional currency, the Dutch Guilder, is translated
into U.S. dollars. Approximately $191,000 of the March 31, 1998 balance of $1,230,000 of
cash and cash equivalents is denominated in U.S. dollars. The effect of translation into
U.S. dollars is reflected as a separate component of stockholders’ investment on the
balance sheet. The cumulative translation adjustment in stockholders’ investment is
approximately three percent (3 %) of total assets on the March 31, 1998 consolidated
balance sheet. The effects of currency exchange rates on future quarterly or fiscal
periods on the results of operations are difficult to estimate.</p>

<p ALIGN="JUSTIFY">There are no formal hedging procedures employed by the Company. The
primary risk is to monetary assets and liabilities denominated in currencies other than
the U.S. dollar. Approximately $7.57 million of $7.74 million of current assets reside in
the Company’s foreign subsidiaries.</p>
<b>

<p ALIGN="JUSTIFY">Item 7A. Quantitative and Qualitative Disclosure about Market Risk</p>
</b><i>

<p ALIGN="JUSTIFY">Foreign Exchange</i> The accounts of the Company’s foreign
subsidiaries are translated in accordance with SFAS No. 52, Foreign Currency Translation.
In translating the accounts of the foreign subsidiaries into U.S. dollars, assets and
liabilities are translated at the rate of exchange in effect at year-end, while
stockholders’ equity is translated at historical rates. Revenue and expense accounts
are translated using the weighted average exchange rate in effect during the year. Gains
and losses from translating assets and liabilities that are denominated in currencies
other than the subsidiaries’ respective functional currency are included in other
expense in the consolidated statements of operations. The translation adjustment required
to report those subsidiaries whose functional currency is other than the United States
dollar into U.S. dollars is credited or charged to cumulative translation adjustment,
included as a separate component of stockholders’ investment in the accompanying
consolidated balance sheets. Substantially all of the Company’s sales were
denominated in foreign currencies during fiscal 1999. The Company recognized a gain of
approximately $148,000 related to such foreign currency transactions and translations in
1999. which is included in cumulative translation adjustment in the accompanying
consolidated statements of stockholders’ investment.</p>
<i>

<p ALIGN="JUSTIFY">Investment Portfolio</i> The Company does not invest in derivative
financial instruments that meet the high quality standards, as specified in the
Company’s investment policy guidelines; the policy also limits the amount of credit
exposure of any issue, issuer, and type of investment. See Note 1 – Summary of
Significant Accounting Policies – in the Notes to Consolidated Financial Statements.</p>
<b>

<p ALIGN="JUSTIFY">Item 8. Financial Statements and Supplementary Data</p>
</b>

<p ALIGN="JUSTIFY">See Index to the Company’s Financial Statements filed as part of
this Form 10-K.</p>
<b>

<p ALIGN="JUSTIFY">Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure</p>
</b>

<p ALIGN="JUSTIFY">None.</p>
<b>

<p ALIGN="JUSTIFY">PART III</p>

<p ALIGN="JUSTIFY">Item 10. Directors and Executive Officers of the Registrant</p>
</b>

<p ALIGN="JUSTIFY">The information required by this item is contained in part under the
caption "Executive Officers of the Registrant" in Part I hereof and the
remainder is incorporated herein by reference to the table appearing under the caption
"Election of Directors" in the Company’s definitive 1999 Proxy Statement
for its Annual Meeting of Stockholders to be held on September 14, 1999.</p>
<b>

<p ALIGN="JUSTIFY">Item 11. Executive Compensation</p>
</b>

<p ALIGN="JUSTIFY">The information required by this item is incorporated herein by
reference to the section entitled "Compensation of Executive Officers" in the
Company’s definitive 1999 Proxy Statement for its Annual Meeting of Stockholders to
be held on September 14, 1999.</p>
<b>

<p ALIGN="JUSTIFY">Item 12. Security Ownership of Certain Beneficial Owners and Management</p>
</b>

<p ALIGN="JUSTIFY">The information required by this item is incorporated herein by
reference to the tables appearing under the captions "Principal and Management
Stockholders" in the Company’s definitive 1999 Proxy Statement for its Annual
Meeting of Stockholders to be held on September 14, 1999.</p>
<b>

<p ALIGN="JUSTIFY">Item 13. Certain Relationships and Related Transactions</p>
</b>

<p ALIGN="JUSTIFY">The information required by this item is incorporated herein by
reference to the section entitled "Certain Transactions and Relationships" in
the Company’s definitive 1999 Proxy Statement for its Annual Meeting of Stockholders
to be held on September 14, 1999.</p>
<b>

<p ALIGN="JUSTIFY">PART IV</p>

<p ALIGN="JUSTIFY">Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K<u> </p>
</u></b>

<p ALIGN="JUSTIFY">(a) <u>Documents filed as part of this Form 10-K </p>

<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        </u><p ALIGN="JUSTIFY">1. <u>Financial Statements.</u> The Financial Statements listed in
        the Index to Consolidated Financial Statements are filed as part of this Form 10-K.</p>
        <p ALIGN="JUSTIFY">2. <u>Financial Statement Schedules.</u> The Financial Statement
        Schedules listed in the Index to Consolidated Financial Statements are filed as part of
        this Form 10-K.</p>
        <p ALIGN="JUSTIFY">3. <u>Exhibits.</u> The exhibits which are filed with this Report or
        which are incorporated herein by reference are listed in the Exhibit Index filed as part
        of this Form 10-K.</p>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>

<p ALIGN="JUSTIFY">(b) <u>Reports on Form 8-K</p>
</u>

<p ALIGN="JUSTIFY">                                       
None.</p>
<b>

<p ALIGN="JUSTIFY">SIGNATURES</p>
</b>

<p ALIGN="JUSTIFY">Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.</p>

<p ALIGN="JUSTIFY"><u>NOVITRON INTERNATIONAL, INC.</p>

<p ALIGN="JUSTIFY" style="line-height: 1px"></u>                                  
                                          
                                     <u>Israel
M. Stein, M.D.</u></p>

<p ALIGN="JUSTIFY" style="line-height: 1px">                                   
                                          
                                    Israel
M. Stein, M.D<br>
Dated: June 28, 1999
                                          
                                     Chairman
of the Board</p>

<p ALIGN="JUSTIFY" style="line-height: 0px"> </p>

<p ALIGN="JUSTIFY">Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the Registrant in
the capacities and on the dates indicated.</p>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="JUSTIFY">Date: June 28, 1999
                                          
                                       
<u>Israel M. Stein, M.D.</u> <u></p>
</u>

<p ALIGN="JUSTIFY">                                       
                                          
                                Israel
M. Stein, M.D.<br>
                                          
                                          
                             Chairman
of the Board<br>
                                          
                                          
                             Principal
Executive Officer</p>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="JUSTIFY">Date: June 28, 1999
                                          
                                       <u>Arthur
B. Malman</u></p>

<p ALIGN="JUSTIFY">                                       
                                          
                                Arthur
B. Malman<br>
                                          
                                          
                             Director</p>

<p ALIGN="JUSTIFY"><u> </p>

<p ALIGN="JUSTIFY"></u>Date: June 28, 1999
                                          
                                       <u>Gordon
Baty, Ph.D</u>.</p>

<p ALIGN="JUSTIFY">                                       
                                          
                                Gordon
Baty, Ph.D.<br>
                                          
                                          
                             Director<u></p>

<p ALIGN="JUSTIFY"> </p>
</u><font FACE="Signet Roundhand ATT" SIZE="6">

<p ALIGN="CENTER">Novitron International, Inc</font> <font FACE="Signet Roundhand ATT"
SIZE="5">. </font><font SIZE="2">AND SUBSIDIARIES</p>
</font>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="CENTER">INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</p>

<p ALIGN="JUSTIFY"> </p>

<table border="1" width="639">
  <tr>
    <td width="533"><u><b>Consolidated Financial Statements</b></u>        </td>
    <td><p ALIGN="right">                        
    <u>Page</u></td>
  </tr>
  <tr>
    <td width="533"><p ALIGN="JUSTIFY">Report of Independent Public Accountants
                          
       </td>
    <td><p ALIGN="right">19</td>
  </tr>
  <tr>
    <td width="533"><p ALIGN="JUSTIFY">Consolidated Balance Sheets at March 31, 1999 and 1998
        </td>
    <td><p ALIGN="right">20</td>
  </tr>
  <tr>
    <td width="533"><p ALIGN="JUSTIFY">Consolidated Statements of Operations for the Years
    Ended March 31, 1999, 1998 and 1997</td>
    <td><p ALIGN="right">22</td>
  </tr>
  <tr>
    <td width="533"><p ALIGN="JUSTIFY">Consolidated Statements of Stockholders’
    Investment for the Years Ended March 31, 1999, 1998 and 1997   </td>
    <td><p ALIGN="right">23</td>
  </tr>
  <tr>
    <td width="533"><p ALIGN="JUSTIFY">Consolidated Statements of Cash Flows for the Years
    Ended March 31, 1999, 1998 and 1997     </td>
    <td><p ALIGN="right">24</td>
  </tr>
  <tr>
    <td width="533"><p ALIGN="JUSTIFY">Notes to Consolidated Financial Statements </td>
    <td><p ALIGN="right">26</td>
  </tr>
  <tr>
    <td width="533"><p ALIGN="JUSTIFY"><u><b>Consolidated Financial Statement Schedule</b></u></td>
  </tr>
  <tr>
    <td width="533"><p ALIGN="left">Schedule II - Valuation and Qualifying Accounts
                         
       </td>
    <td><p ALIGN="right">39</td>
  </tr>
</TABLE>
<u>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER">REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS</p>
</u>

<p ALIGN="JUSTIFY">To Novitron International, Inc.:</p>

<p ALIGN="JUSTIFY">We have audited the accompanying consolidated balance sheets of
Novitron International, Inc. (a Delaware corporation) and subsidiaries as of March 31,
1999 and 1998, and the related consolidated statements of operations, stockholders’
investment and cash flows for each of the three years in the period ended March 31, 1999.
These financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on our audits.
</p>

<p ALIGN="JUSTIFY">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.</p>

<p ALIGN="JUSTIFY">In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Novitron International, Inc.
and subsidiaries as of March 31, 1999 and 1998, and the results of their operations and
their cash flows for each of the three years in the period ended March 31, 1999, in
conformity with generally accepted accounting principles.</p>

<p ALIGN="JUSTIFY">Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The schedule listed in the index to
the consolidated financial statements is presented for purposes of complying with the
Securities and Exchange Commission’s rules and is not part of the basic financial
statements. The schedule has been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, fairly states, in all
material respects, the financial data required to be set forth therein in relation to the
basic financial statements taken as a whole.</p>

<p ALIGN="RIGHT">/s/ ARTHUR ANDERSEN LLP</p>

<p ALIGN="JUSTIFY">Boston, Massachusetts</p>

<p ALIGN="JUSTIFY">June 10, 1999</p>
<b>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER">CONSOLIDATED BALANCE SHEETS</p>

<p ALIGN="CENTER">MARCH 31, 1999 AND 1998</p>
</b>

<p ALIGN="left"><font SIZE="4"><b>ASSETS</b></font></p>

<table CELLSPACING="1" BORDER="1" CELLPADDING="7" WIDTH="566" height="928">
  <tr>
    <td WIDTH="59%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="CENTER">1999</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="CENTER">1998</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP" HEIGHT="19"><b>CURRENT ASSETS:</b></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"></td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP" HEIGHT="19"><p ALIGN="JUSTIFY">Cash and cash equivalents</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">$ 1,287,073</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">$ 1,229,918</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP" HEIGHT="19"><p ALIGN="JUSTIFY">Accounts receivable,<br>
      less reserves of $79,000 and $49,000 in 1999 and   1998, respectively</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">2,883,384</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">2,412,725</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP" HEIGHT="19"><p ALIGN="JUSTIFY">Inventories </td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">3,018,573</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">3,719,698</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP" HEIGHT="19"><p ALIGN="JUSTIFY">Prepaid expenses </td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">408,479</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">347,118</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP" HEIGHT="19">Other current assets</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">163,275</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">28,971</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP" HEIGHT="19">Total current assets</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">7,760,784</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">7,738,430</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"></td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP" HEIGHT="19"><b><p ALIGN="JUSTIFY">EQUIPMENT</b>, at cost: </td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"></td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP" HEIGHT="19"><p ALIGN="JUSTIFY">Manufacturing and computer
    equipment</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">2,440,124</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">2,010,683</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP" HEIGHT="19"><p ALIGN="JUSTIFY">Furniture and fixtures</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">388,471</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">386,090</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP" HEIGHT="19">Leasehold improvements</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">338,380</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">247,868</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP" HEIGHT="19">Vehicles</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">63,503</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">65,787</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">3,230,478</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">2,710,428</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP" HEIGHT="19"><p ALIGN="JUSTIFY">Less: Accumulated depreciation</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"></td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP" HEIGHT="19">and amortization</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">2,262,255</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">1,944,063</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">968,223</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">766,365</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"></td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP" HEIGHT="19"><b>OTHER ASSETS</b>, net</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">929,803</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">899,929</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP" HEIGHT="19"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">$ 9,658,810</td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="19"><p ALIGN="RIGHT">$ 9,404,724</td>
  </tr>
</TABLE>
<font SIZE="1"><i>

<p ALIGN="left">The accompanying notes are an integral part of these consolidated
financial statements.</p>
</i></font>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>
<b>

<p ALIGN="CENTER">CONSOLIDATED BALANCE SHEETS</p>

<p ALIGN="CENTER">MARCH 31, 1999 AND 1998</p>
</b><font SIZE="1">

<p ALIGN="CENTER">(Continued)</p>
</font>

<p ALIGN="CENTER"> </p>

<p ALIGN="left"><font size="3"><b>LIABILITIES AND STOCKHOLDERS’ INVESTMENT</b></font></p>

<table CELLSPACING="1" BORDER="1" CELLPADDING="7" WIDTH="552">
  <tr>
    <td WIDTH="59%" VALIGN="TOP"> </td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="CENTER">1999</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="CENTER">1998</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP"><b>CURRENT LIABILITIES:</b></td>
    <td WIDTH="21%" VALIGN="TOP"> </td>
    <td WIDTH="21%" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP"><p ALIGN="JUSTIFY">Short-term notes payable and current
    portion of<br>
      long-term debt</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">$ 3,735</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">$ 52,113</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP"><p ALIGN="JUSTIFY">Accounts payable</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">2,842,104</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">2,598,755</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP"><p ALIGN="JUSTIFY">Accrued expenses</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">2,205,531</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">1,884,036</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP"><p ALIGN="JUSTIFY">Customer advances</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">114,913</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">-      </td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP">Accrued income taxes</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">-      </td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">105,010</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP">Total current liabilities</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">5,166,283</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">4,639,914</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP"><b>LONG-TERM DEBT</b>, net of current portion</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">23,272</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">30,028</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP"><b>DEFERRED TAXES</b></td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">169,000</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">93,844</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP"> </td>
    <td WIDTH="21%" VALIGN="TOP"> </td>
    <td WIDTH="21%" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP"><b>COMMITMENTS AND CONTINGENCIES:</b> (Note 6)</td>
    <td WIDTH="21%" VALIGN="TOP"> </td>
    <td WIDTH="21%" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP"> </td>
    <td WIDTH="21%" VALIGN="TOP"> </td>
    <td WIDTH="21%" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP"><b><p ALIGN="JUSTIFY">STOCKHOLDERS’ INVESTMENT:</b></td>
    <td WIDTH="21%" VALIGN="TOP"> </td>
    <td WIDTH="21%" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP"><p ALIGN="JUSTIFY">Preferred stock, $.01 par value, <br>
    Authorized: 1,000,000 shares<br>
    Issued and outstanding: none<br>
    </td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">        -
          </td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">-     </td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP">Common stock, $.01 par value,<br>
    Authorized: 6,000,000 shares<br>
    Issued and outstanding: 1,454,425<br>
    and 1,454,211 in 1999 and 1998,<br>
    respectively (Note 3)</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT"> </p>
    <p ALIGN="RIGHT"> </p>
    <p ALIGN="RIGHT">14,544</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT"> </p>
    <p ALIGN="RIGHT"> </p>
    <p ALIGN="RIGHT">14,542</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP"><p ALIGN="JUSTIFY">Capital in excess of par value</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">4,881,066</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">4,881,068</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP"><p ALIGN="JUSTIFY">Cumulative translation adjustment</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">(147,736)</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">(287,384)</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP"><p ALIGN="JUSTIFY">Retained (deficit) earnings</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">(437,442)</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">32,712</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP">Treasury stock, 5,500 shares at cost</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">(10,177)</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="right">-      </td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP">Total stockholders’ investment</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">4,300,255</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">4,640,938</td>
  </tr>
  <tr>
    <td WIDTH="59%" VALIGN="TOP"> </td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">$ 9,658,810</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">$ 9,404,724</td>
  </tr>
</TABLE>

<p ALIGN="left"><font SIZE="1"><i>The accompanying notes are an integral part of these
consolidated financial statements.</i></font></p>
<u>

<p ALIGN="CENTER"> </p>
</u>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>
<b>

<p ALIGN="CENTER">CONSOLIDATED STATEMENTS OF OPERATIONS</p>

<p ALIGN="CENTER">FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997</p>
</b>

<table CELLSPACING="1" BORDER="1" CELLPADDING="7" WIDTH="596" height="946">
  <tr>
    <td WIDTH="231" VALIGN="TOP" height="19"></td>
    <td WIDTH="85" VALIGN="TOP" height="19"></td>
    <td WIDTH="122" VALIGN="TOP" height="19"></td>
    <td WIDTH="114" VALIGN="TOP" height="19"></td>
  </tr>
  <tr>
    <td WIDTH="231" VALIGN="TOP" height="19"></td>
    <td WIDTH="85" VALIGN="TOP" height="19"><p ALIGN="CENTER">1999</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="CENTER">1998</td>
    <td WIDTH="114" VALIGN="TOP" height="19"><p ALIGN="CENTER">1997</td>
  </tr>
  <tr>
    <td WIDTH="231" VALIGN="TOP" height="19"></td>
    <td WIDTH="85" VALIGN="TOP" height="19"></td>
    <td WIDTH="122" VALIGN="TOP" height="19"></td>
    <td WIDTH="114" VALIGN="TOP" height="19"></td>
  </tr>
  <tr>
    <td WIDTH="231" VALIGN="TOP" height="19">REVENUES</td>
    <td WIDTH="85" VALIGN="TOP" height="19"><p ALIGN="RIGHT">$15,417,896</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">$11,802,250</td>
    <td WIDTH="114" VALIGN="TOP" height="19"><p ALIGN="RIGHT">$13,845,483</td>
  </tr>
  <tr>
    <td WIDTH="231" VALIGN="TOP" height="20">COST OF REVENUES </td>
    <td WIDTH="122" VALIGN="TOP" height="20"><p ALIGN="RIGHT">11,265,352</td>
    <td WIDTH="122" VALIGN="TOP" height="20"><p ALIGN="RIGHT">8,525,040</td>
    <td WIDTH="122" VALIGN="TOP" height="20"><p ALIGN="RIGHT">10,132,189</td>
  </tr>
  <tr>
    <td WIDTH="231" VALIGN="TOP" height="19">Gross profit</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">4,152,544</td>
    <td WIDTH="122" VALIGN="top" height="19"><p ALIGN="RIGHT">3,277,210</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">3,713,294</td>
  </tr>
  <tr>
    <td WIDTH="231" VALIGN="TOP" height="19">OPERATING EXPENSES:</td>
    <td WIDTH="122" VALIGN="TOP" height="19"></td>
    <td WIDTH="122" VALIGN="TOP" height="19"></td>
    <td WIDTH="122" VALIGN="TOP" height="19"></td>
  </tr>
  <tr>
    <td WIDTH="231" VALIGN="TOP" height="19">Sales and marketing</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">1,002,107</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">728,996</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">1,153,302</td>
  </tr>
  <tr>
    <td WIDTH="231" VALIGN="TOP" height="19">Research and development</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">1,845,813</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">1,336,306</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">1,277,960</td>
  </tr>
  <tr>
    <td WIDTH="231" VALIGN="TOP" height="19">General and administrative</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">1,851,910</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">1,781,378</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">1,950,567</td>
  </tr>
  <tr>
    <td WIDTH="231" VALIGN="TOP" height="19">Restructuring</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">50,946</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT"> 
    -      </td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">-      </td>
  </tr>
  <tr>
    <td WIDTH="231" VALIGN="TOP" height="19"></td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">4,750,776</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">3,846,680</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">4,381,829</td>
  </tr>
  <tr>
    <td WIDTH="231" VALIGN="TOP" height="19">Loss from operations </td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">(598,232)</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">(569,470)</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">(668,535)</td>
  </tr>
  <tr>
    <td WIDTH="231" VALIGN="TOP" height="19">Interest expense</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">(126,280)</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">(75,409)</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">(38,154)</td>
  </tr>
  <tr>
    <td WIDTH="231" VALIGN="TOP" height="19">Interest income </td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">22,327</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">57,317</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">52,579</td>
  </tr>
  <tr>
    <td WIDTH="231" VALIGN="TOP" height="19">Other (expense) income, net</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">(3,969)</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">711,009</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">(18,545)</td>
  </tr>
  <tr>
    <td WIDTH="231" VALIGN="TOP" height="19"></td>
    <td WIDTH="85" VALIGN="TOP" height="19"><p ALIGN="RIGHT">(706,154)</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">123,447</td>
    <td WIDTH="114" VALIGN="TOP" height="19"><p ALIGN="RIGHT">(672,655)</td>
  </tr>
  <tr>
    <td WIDTH="231" VALIGN="TOP" height="19">(Benefit from) provision for</td>
    <td WIDTH="85" VALIGN="top" height="19"></td>
    <td WIDTH="122" VALIGN="top" height="19"></td>
    <td WIDTH="114" VALIGN="top" height="19"></td>
  </tr>
  <tr>
    <td WIDTH="231" VALIGN="TOP" height="19">income taxes </td>
    <td WIDTH="85" VALIGN="TOP" height="19"><p ALIGN="RIGHT">(236,000)</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">26,000</td>
    <td WIDTH="114" VALIGN="TOP" height="19"><p ALIGN="RIGHT">(78,000)</td>
  </tr>
  <tr>
    <td WIDTH="231" VALIGN="TOP" height="19"></td>
    <td WIDTH="85" VALIGN="TOP" height="19"><p ALIGN="RIGHT">(470,154)</td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">97,447</td>
    <td WIDTH="114" VALIGN="TOP" height="19"><p ALIGN="RIGHT">(594,655)</td>
  </tr>
  <tr>
    <td WIDTH="231" VALIGN="TOP" height="19">Minority interest</td>
    <td WIDTH="85" VALIGN="TOP" height="19"><p ALIGN="right">-      
    </td>
    <td WIDTH="122" VALIGN="TOP" height="19"><p ALIGN="RIGHT">6,503</td>
    <td WIDTH="114" VALIGN="TOP" height="19"><p ALIGN="RIGHT">12,105</td>
  </tr>
  <tr>
    <td WIDTH="231" VALIGN="top" height="19">Net (loss) income</td>
    <td WIDTH="85" VALIGN="top" height="19"><p ALIGN="RIGHT">$ (470,154)</td>
    <td WIDTH="122" VALIGN="top" height="19"><p ALIGN="RIGHT">$ 103,950</td>
    <td WIDTH="114" VALIGN="top" height="19"><p ALIGN="RIGHT">$ (582,550)</td>
  </tr>
  <tr>
    <td WIDTH="224" VALIGN="top" height="38"><p align="left">Basic and dilutednet (loss)
    income per share</td>
    <td WIDTH="85" VALIGN="top" height="38"><p align="right">$ (0.32)</td>
    <td WIDTH="126" VALIGN="top" height="38"><p align="right">$ 0.08</td>
    <td WIDTH="114" VALIGN="top" height="38"><p align="right">$ (0.44)</td>
  </tr>
  <tr>
    <td WIDTH="224" VALIGN="top" height="57"><p align="left">Weighted average common shares
    outstanding</td>
    <td WIDTH="85" VALIGN="top" align="right" height="57"><p align="right">1,453,091</p>
    <p ALIGN="RIGHT"> </td>
    <td WIDTH="126" VALIGN="top" align="right" height="57"><p align="right">1,323,092</p>
    <p ALIGN="RIGHT"> </td>
    <td WIDTH="114" VALIGN="top" align="right" height="57"><p align="right">1,322,005</td>
  </tr>
</TABLE>

<p ALIGN="left"><font SIZE="1"><i>The accompanying notes are an integral part of these
consolidated financial statements.</i></font></p>
<b><font size="3">

<p ALIGN="CENTER"> </p>
</font>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER">CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ INVESTMENT</p>

<p ALIGN="CENTER">FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997</p>
</b><font SIZE="1">

<blockquote>
  <blockquote>
    <blockquote>
      <blockquote>
        <blockquote>
          <blockquote>
            <blockquote>
              <p>                                       
                                          
      </p>
            </blockquote>
          </blockquote>
        </blockquote>
      </blockquote>
    </blockquote>
  </blockquote>
</blockquote>
</font>

<table BORDER="1" CELLSPACING="1" WIDTH="690" height="562" cellpadding="7">
  <caption align="left">                                  
            <small>Common Stock</small></CAPTION>
  <tr>
    <td VALIGN="top" width="121"> </td>
    <td VALIGN="top" align="center" width="50"><font SIZE="1"><p ALIGN="CENTER">Number of
    Shares</font></td>
    <td VALIGN="top" align="center" width="55"><font SIZE="1"><p ALIGN="CENTER">Par Value</font></td>
    <td VALIGN="top" align="center" width="59"><font SIZE="1">Capital in Excess of  Par
    Value</font></td>
    <td VALIGN="top" align="center" width="59"><font SIZE="1"><p ALIGN="CENTER">Treasury 
    Stock</font></td>
    <td VALIGN="top" align="center" width="67"><p ALIGN="CENTER"><font SIZE="1">Accumulated
    Retained   Earnings   (Deficit)</font></td>
    <td VALIGN="top" align="center" width="75"><font SIZE="1">Other Comprehensive Income
    (Loss)</font></td>
    <td VALIGN="top" align="center" width="75"><font SIZE="1">Comprehensive Income (Loss)</font></td>
  </tr>
  <tr>
    <td VALIGN="top" width="121"><font SIZE="1">BALANCE at March 31, 1996</font></td>
    <td VALIGN="top" width="50" align="right"><font SIZE="1">1,322,005</font></td>
    <td VALIGN="top" width="55" align="right"><font SIZE="1">$ 13,220</font></td>
    <td VALIGN="top" width="59" align="right"><font SIZE="1">$ 4,882,390</font></td>
    <td VALIGN="top" width="59" align="right"><font SIZE="1">$
               - </font></td>
    <td VALIGN="top" width="67" align="right"><font SIZE="1">$ 511,312</font></td>
    <td VALIGN="top" width="75" align="right"><font SIZE="1"><p ALIGN="RIGHT">$785,223 </font></td>
    <td VALIGN="top" width="75" align="right"><font SIZE="1"><p ALIGN="RIGHT">$
                      
    - </font></td>
  </tr>
  <tr>
    <td VALIGN="top" width="121"><font SIZE="1">Translation adjustment</font></td>
    <td VALIGN="top" align="right" width="50"><font SIZE="1">- </font></td>
    <td VALIGN="top" align="right" width="55"><font SIZE="1">- </font></td>
    <td VALIGN="top" align="right" width="59"><font SIZE="1">- </font></td>
    <td VALIGN="top" align="right" width="59"><font SIZE="1">- </font></td>
    <td VALIGN="top" align="right" width="67"><font SIZE="1">- </font></td>
    <td VALIGN="top" align="right" width="75"><font SIZE="1"><p ALIGN="RIGHT">(636,527)</font></td>
    <td VALIGN="top" align="right" width="75"><font SIZE="1"><p ALIGN="RIGHT">(636,527)</font></td>
  </tr>
  <tr>
    <td VALIGN="top" width="121"><font SIZE="1">Net loss</font></td>
    <td VALIGN="top" align="right" width="50"><font SIZE="1">- </font></td>
    <td VALIGN="top" align="right" width="55"><font SIZE="1">- </font></td>
    <td VALIGN="top" align="right" width="59"><font SIZE="1">- </font></td>
    <td VALIGN="top" align="right" width="59"><font SIZE="1">- </font></td>
    <td VALIGN="top" align="right" width="67"><font SIZE="1">(582,550)</font></td>
    <td VALIGN="top" align="right" width="75"><font SIZE="1">- </font></td>
    <td VALIGN="top" align="right" width="75"><font SIZE="1">(582,550)</font></td>
  </tr>
  <tr>
    <td VALIGN="top" width="121"><font SIZE="1">Total comprehensive loss</font></td>
    <td VALIGN="top" align="right" width="50"> </td>
    <td VALIGN="top" align="right" width="55"> </td>
    <td VALIGN="top" align="right" width="59"> </td>
    <td VALIGN="top" align="right" width="59"> </td>
    <td VALIGN="top" align="right" width="67"> </td>
    <td VALIGN="top" align="right" width="75"> </td>
    <td VALIGN="top" align="right" width="75"><font SIZE="1">$(1,219,077)</font></td>
  </tr>
  <tr>
    <td VALIGN="top" width="121"><font SIZE="1">BALANCE at March 31, 1997</font></td>
    <td VALIGN="top" width="50" align="right"><font SIZE="1">1,322,005</font></td>
    <td VALIGN="top" width="55" align="right"><font SIZE="1">13,220</font></td>
    <td VALIGN="top" width="59" align="right"><font SIZE="1">4,882,390</font></td>
    <td VALIGN="top" width="59" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="67" align="right"><font SIZE="1">(71,238)</font></td>
    <td VALIGN="top" width="75" align="right"><font SIZE="1"><p ALIGN="RIGHT">148,696</font></td>
    <td VALIGN="top" width="75" align="right"> </td>
  </tr>
  <tr>
    <td VALIGN="top" width="121"> </td>
    <td VALIGN="top" width="50"> </td>
    <td VALIGN="top" width="55"> </td>
    <td VALIGN="top" width="59"> </td>
    <td VALIGN="top" width="59"> </td>
    <td VALIGN="top" width="67"> </td>
    <td VALIGN="top" width="75"> </td>
    <td VALIGN="top" width="75"> </td>
  </tr>
  <tr>
    <td VALIGN="top" width="121"><font SIZE="1">Issuance of common stock in connection with a
    10% stockdividend of March 27, 1998</font></td>
    <td VALIGN="top" width="50" align="right"><font SIZE="1">132,206</font></td>
    <td VALIGN="top" width="55" align="right"><font SIZE="1">1,322</font></td>
    <td VALIGN="top" width="59" align="right"><font SIZE="1">(1,322)</font></td>
    <td VALIGN="top" width="59" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="67" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="75" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="75" align="right"><font SIZE="1">- </font></td>
  </tr>
  <tr>
    <td VALIGN="top" width="121"><font SIZE="1">Translation adjustment</font></td>
    <td VALIGN="top" width="50" align="right"> </td>
    <td VALIGN="top" width="55" align="right"> </td>
    <td VALIGN="top" width="59" align="right"> </td>
    <td VALIGN="top" width="59" align="right"> </td>
    <td VALIGN="top" width="67" align="right"> </td>
    <td VALIGN="top" width="75" align="right"><font SIZE="1"><p ALIGN="RIGHT">(436,080)</font></td>
    <td VALIGN="top" width="75" align="right"><font SIZE="1"><p ALIGN="RIGHT">(436,080)</font></td>
  </tr>
  <tr>
    <td VALIGN="top" width="121"><font SIZE="1">Net income</font></td>
    <td VALIGN="top" width="50" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="55" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="59" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="59" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="67" align="right"><font SIZE="1">103,950</font></td>
    <td VALIGN="top" width="75" align="right"> </td>
    <td VALIGN="top" width="75" align="right"><font SIZE="1">103,950</font></td>
  </tr>
  <tr>
    <td VALIGN="top" width="121"><font SIZE="1">Total comprehensive loss</font></td>
    <td VALIGN="top" width="50" align="right"> </td>
    <td VALIGN="top" width="55" align="right"> </td>
    <td VALIGN="top" width="59" align="right"> </td>
    <td VALIGN="top" width="59" align="right"> </td>
    <td VALIGN="top" width="67" align="right"> </td>
    <td VALIGN="top" width="75" align="right"> </td>
    <td VALIGN="top" width="75" align="right"><font SIZE="1">$(332,130)</font></td>
  </tr>
  <tr>
    <td VALIGN="top" width="121"><font SIZE="1">BALANCE at March 31, 1998</font></td>
    <td VALIGN="top" width="50" align="right"><font SIZE="1">1,454,211</font></td>
    <td VALIGN="top" width="55" align="right"><font SIZE="1">14,542</font></td>
    <td VALIGN="top" width="59" align="right"><font SIZE="1">4,881,068</font></td>
    <td VALIGN="top" width="59" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="67" align="right"><font SIZE="1">32,712</font></td>
    <td VALIGN="top" width="75" align="right"><font SIZE="1"><p ALIGN="RIGHT">(287,384)</font></td>
    <td VALIGN="top" width="75" align="right"> </td>
  </tr>
  <tr>
    <td VALIGN="top" width="121"> </td>
    <td VALIGN="top" width="50"> </td>
    <td VALIGN="top" width="55"> </td>
    <td VALIGN="top" width="59"> </td>
    <td VALIGN="top" width="59"> </td>
    <td VALIGN="top" width="67"> </td>
    <td VALIGN="top" width="75"> </td>
    <td VALIGN="top" width="75"> </td>
  </tr>
  <tr>
    <td VALIGN="top" width="121"><font SIZE="1">Further issuance of common stockin connection
    with a 10% stock dividend of March 27, 1998</font></td>
    <td VALIGN="top" width="50" align="right"><font SIZE="1">214</font></td>
    <td VALIGN="top" width="55" align="right"><font SIZE="1">2</font></td>
    <td VALIGN="top" width="59" align="right"><font SIZE="1">(2)</font></td>
    <td VALIGN="top" width="59" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="67" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="75" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="75" align="right"><font SIZE="1">- </font></td>
  </tr>
  <tr>
    <td VALIGN="top" width="121"><font SIZE="1">Purchase of treasury stock</font></td>
    <td VALIGN="top" width="50" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="55" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="59" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="59" align="right"><font SIZE="1">(10,177)</font></td>
    <td VALIGN="top" width="67" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="75" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="75" align="right"><font SIZE="1">- </font></td>
  </tr>
  <tr>
    <td VALIGN="top" width="121"><font SIZE="1">Translation adjustment</font></td>
    <td VALIGN="top" width="50" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="55" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="59" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="59" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="67" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="75" align="right"><font SIZE="1"><p ALIGN="RIGHT">139,648</font></td>
    <td VALIGN="top" width="75" align="right"><font SIZE="1"><p ALIGN="RIGHT">139,648</font></td>
  </tr>
  <tr>
    <td VALIGN="top" width="121"><font SIZE="1">Net loss</font></td>
    <td VALIGN="top" width="50" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="55" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="59" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="59" align="right"><font SIZE="1">- </font></td>
    <td VALIGN="top" width="67" align="right"><font SIZE="1">(470,154)</font></td>
    <td VALIGN="top" width="75" align="right"> </td>
    <td VALIGN="top" width="75" align="right"><font SIZE="1">(470,154)</font></td>
  </tr>
  <tr>
    <td VALIGN="top" width="121"><font SIZE="1">Total comprehensive loss</font></td>
    <td VALIGN="top" width="50" align="right"> </td>
    <td VALIGN="top" width="55" align="right"> </td>
    <td VALIGN="top" width="59" align="right"> </td>
    <td VALIGN="top" width="59" align="right"> </td>
    <td VALIGN="top" width="67" align="right"> </td>
    <td VALIGN="top" width="75" align="right"> </td>
    <td VALIGN="top" width="75" align="right"><font SIZE="1"><p ALIGN="RIGHT">$(330,506)</font></td>
  </tr>
  <tr>
    <td VALIGN="top" width="121"><font SIZE="1">BALANCE at March 31, 1999</font></td>
    <td VALIGN="top" width="50" align="right"><font SIZE="1">1,454,425</font></td>
    <td VALIGN="top" width="55" align="right"><font SIZE="1">$ 14,544</font></td>
    <td VALIGN="top" width="59" align="right"><font SIZE="1">$ 4,881,066</font></td>
    <td VALIGN="top" width="59" align="right"><font SIZE="1">$ (10,177)</font></td>
    <td VALIGN="top" width="67" align="right"><font SIZE="1">$(437,442)</font></td>
    <td VALIGN="top" width="75" align="right"><font SIZE="1"><p ALIGN="RIGHT">$(147,736)</font></td>
    <td VALIGN="top" width="75" align="right"> </td>
  </tr>
</TABLE>
<font SIZE="1"><i>

<p ALIGN="left">The accompanying notes are an integral part of these consolidated
financial statements.</p>

<p ALIGN="CENTER"> </p>
</i></font><b>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER">CONSOLIDATED STATEMENTS OF CASH FLOWS</p>

<p ALIGN="CENTER">FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997</p>

<p ALIGN="CENTER"> </p>
</b>

<table CELLSPACING="1" BORDER="1" CELLPADDING="9" WIDTH="604">
  <tr>
    <td WIDTH="48%" VALIGN="TOP"> </td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="CENTER">1999</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="CENTER">1998</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="CENTER">1997</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP"><b><p ALIGN="JUSTIFY">CASH FLOWS FROM OPERATING<br>
    ACTIVITIES:</b></td>
    <td WIDTH="17%" VALIGN="TOP"> </td>
    <td WIDTH="17%" VALIGN="TOP"> </td>
    <td WIDTH="17%" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP"><p ALIGN="JUSTIFY">Net (loss) income </td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">$ (470,154)</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">$ 103,950</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">$ (582,550)</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP"><p ALIGN="JUSTIFY">Adjustments to reconcile<br>
    net (loss) income to net<br>
    cash provided by operating activities-</td>
    <td WIDTH="17%" VALIGN="TOP"> </td>
    <td WIDTH="17%" VALIGN="TOP"> </td>
    <td WIDTH="17%" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP"><p ALIGN="JUSTIFY">Depreciation and amortization</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">451,227</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">329,726</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">403,630</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP"><p ALIGN="JUSTIFY">Capitalization of research costs</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(33,115)</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(241,730)</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(544,765)</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP"><p ALIGN="JUSTIFY">Gain on sale of equipment</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(1,045)</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(111,243)</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">- </td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP"><p ALIGN="JUSTIFY">Release of certain indebtedness</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">- </td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(113,522)</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">- </td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP">Deferred income taxes</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(3,657)</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(230,995)</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">215,673</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP"><p ALIGN="JUSTIFY">Minority interest </td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">- </td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(6,503)</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(12,105)</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP">Changes in Current Assets and<br>
    Liabilities</td>
    <td WIDTH="17%" VALIGN="TOP"> </td>
    <td WIDTH="17%" VALIGN="TOP"> </td>
    <td WIDTH="17%" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP"><p ALIGN="JUSTIFY">Accounts receivable</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(457,278)</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(109,265)</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">1,756,560</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP">Inventories</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">788,504</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(1,490,514)</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">1,639,802</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP">Prepaid expenses</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(58,848)</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(95,983)</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(126,757)</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP">Other current assets</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(140,518)</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">48,493</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">44,540</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP"><p ALIGN="JUSTIFY">Accounts payable</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">217,587</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">1,324,810</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(1,184,244)</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP"><p ALIGN="JUSTIFY">Accrued expenses</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">308,526</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">804,576</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(174,659)</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP">Customer advances</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">120,288</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(69,390)</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">1,045</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP">Accrued income taxes</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(176,170)</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">84,007</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(126,673)</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP">     Net cash provided by operating
    activities</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">545,347</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">226,417</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">1,309,497</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP"> </td>
    <td WIDTH="17%" VALIGN="TOP"> </td>
    <td WIDTH="17%" VALIGN="TOP"> </td>
    <td WIDTH="17%" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP"><b><p ALIGN="JUSTIFY">CASH FLOWS FROM INVESTING<br>
    ACTIVITIES:</b></td>
    <td WIDTH="17%" VALIGN="TOP"> </td>
    <td WIDTH="17%" VALIGN="TOP"> </td>
    <td WIDTH="17%" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP"><p ALIGN="JUSTIFY">Marketable securities</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">- </td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">99,472</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">249,571</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP"><p ALIGN="JUSTIFY">(Increase) decrease in other assets </td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">36,906</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(37,664)</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(35,119)</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP"><p ALIGN="JUSTIFY">Purchase of equipment</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(500,336)</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(576,460)</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(226,682)</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP"><p ALIGN="JUSTIFY">Proceeds from sale of equipment</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">- </td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">151,360</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">60,528</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP"><p ALIGN="JUSTIFY">Purchase of minority interest</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">- </td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(200,140)</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">- </td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP">Other, including foreign exchange effects on<br>
      cash</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">44,334</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(62,820)</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(208,106)</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP">      Net cash used in investing
    activities</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(419,096)</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(626,252)</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">(159,808)</td>
  </tr>
</TABLE>
<font SIZE="1"><i>

<p ALIGN="CENTER">Continues on page 25</p>
</i></font><u>

<p ALIGN="CENTER"> </p>
</u><b>

<p ALIGN="CENTER">CONSOLIDATED STATEMENTS OF CASH FLOWS</p>

<p ALIGN="CENTER">FOR THE YEARS ENDED MARCH 31, 1999, 1998 AND 1997</p>
</b><font SIZE="1">

<p ALIGN="CENTER">(Continued)</p>
</font>

<table CELLSPACING="1" BORDER="1" CELLPADDING="9" WIDTH="604" height="497">
  <tr>
    <td WIDTH="48%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><p ALIGN="CENTER">1999</td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><p ALIGN="CENTER">1998</td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><p ALIGN="CENTER">1997</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP" height="38"><b><p ALIGN="JUSTIFY">CASH FLOWS FROM FINANCING<br>
    ACTIVITIES:</b></td>
    <td WIDTH="17%" VALIGN="TOP" height="38"></td>
    <td WIDTH="17%" VALIGN="TOP" height="38"></td>
    <td WIDTH="17%" VALIGN="TOP" height="38"></td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP" height="38"><p ALIGN="JUSTIFY">  (Payments on) proceeds
    from short-term<br>
          notes payable</td>
    <td WIDTH="17%" VALIGN="TOP" height="38"><p ALIGN="RIGHT">$ (51,406)</td>
    <td WIDTH="17%" VALIGN="TOP" height="38"><p ALIGN="RIGHT">$ 2,948</td>
    <td WIDTH="17%" VALIGN="TOP" height="38"><p ALIGN="RIGHT">$ 5,886</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP" height="19"><p ALIGN="JUSTIFY">  Payments on long-term
    debt</td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><p ALIGN="RIGHT">(7,513)</td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><p ALIGN="RIGHT">(7,465)</td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><p ALIGN="RIGHT">(6,334)</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP" height="19">  Purchase of treasury stock</td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><p ALIGN="RIGHT">(10,177)</td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><p ALIGN="CENTER">-</td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><p ALIGN="CENTER">-</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP" height="19">        Net cash
    used in financing activities</td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><p ALIGN="RIGHT">(69,096)</td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><p ALIGN="RIGHT">(4,517)</td>
    <td WIDTH="17%" VALIGN="TOP" height="19"><p ALIGN="RIGHT">(448)</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP" height="38"><p ALIGN="JUSTIFY">NET INCREASE (DECREASE) IN
    CASH     AND CASH EQUIVALENTS</td>
    <td WIDTH="17%" VALIGN="TOP" height="38"><p ALIGN="RIGHT">57,155</td>
    <td WIDTH="17%" VALIGN="TOP" height="38"><p ALIGN="RIGHT">(404,352)</td>
    <td WIDTH="17%" VALIGN="TOP" height="38"><p ALIGN="RIGHT">1,149,241</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"></td>
    <td WIDTH="17%" VALIGN="TOP" height="19"></td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP" height="38">CASH AND CASH EQUIVALENTS,
            BEGINNING OF YEAR</td>
    <td WIDTH="17%" VALIGN="TOP" height="38"><p ALIGN="RIGHT">1,229,918</td>
    <td WIDTH="17%" VALIGN="TOP" height="38"><p ALIGN="RIGHT">1,634,270</td>
    <td WIDTH="17%" VALIGN="TOP" height="38"><p ALIGN="RIGHT">485,029</td>
  </tr>
  <tr>
    <td WIDTH="48%" VALIGN="TOP" height="30">CASH AND CASH EQUIVALENTS, END OF YEAR</td>
    <td WIDTH="17%" VALIGN="TOP" height="30"><p ALIGN="RIGHT">$ 1,287,073</td>
    <td WIDTH="17%" VALIGN="TOP" height="30"><p ALIGN="RIGHT">$ 1,229,918</td>
    <td WIDTH="17%" VALIGN="TOP" height="30"><p ALIGN="RIGHT">$ 1,634,270</td>
  </tr>
</TABLE>

<table CELLSPACING="1" BORDER="1" CELLPADDING="7" WIDTH="606">
  <CAPTION> </CAPTION>
  <tr>
    <td WIDTH="280" VALIGN="TOP"> </td>
    <td WIDTH="91" VALIGN="TOP"><p ALIGN="CENTER">1999</td>
    <td WIDTH="91" VALIGN="TOP"><p ALIGN="CENTER">1998</td>
    <td WIDTH="88" VALIGN="TOP"><p ALIGN="CENTER">1997</td>
  </tr>
  <tr>
    <td WIDTH="280" VALIGN="TOP">Supplemental disclosure of cash flow information:</td>
    <td WIDTH="91" VALIGN="TOP"> </td>
    <td WIDTH="91" VALIGN="TOP"> </td>
    <td WIDTH="88" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="280" VALIGN="TOP">Cash paid during the year for:</td>
    <td WIDTH="91" VALIGN="TOP"> </td>
    <td WIDTH="91" VALIGN="TOP"> </td>
    <td WIDTH="88" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="280" VALIGN="TOP">     Interest</td>
    <td WIDTH="91" VALIGN="TOP"><p ALIGN="RIGHT">$ 271,683</td>
    <td WIDTH="91" VALIGN="TOP"><p ALIGN="RIGHT">$ 124,722</td>
    <td WIDTH="88" VALIGN="TOP"><p ALIGN="RIGHT">$ 33,417</td>
  </tr>
  <tr>
    <td WIDTH="280" VALIGN="TOP">     Income taxes</td>
    <td WIDTH="91" VALIGN="TOP"><p ALIGN="RIGHT">$ 2,551</td>
    <td WIDTH="91" VALIGN="TOP"><p ALIGN="RIGHT">$ 38,171</td>
    <td WIDTH="88" VALIGN="TOP"><p ALIGN="RIGHT">$ 2,180</td>
  </tr>
  <tr>
    <td WIDTH="280" VALIGN="TOP"> </td>
    <td WIDTH="91" VALIGN="TOP"> </td>
    <td WIDTH="91" VALIGN="TOP"> </td>
    <td WIDTH="88" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="280" VALIGN="TOP">Supplemental disclosure of noncash investing and financing
    activities:</td>
    <td WIDTH="91" VALIGN="TOP"> </td>
    <td WIDTH="91" VALIGN="TOP"> </td>
    <td WIDTH="88" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="280" VALIGN="TOP">Write-off of fully depreciated equipment</td>
    <td WIDTH="91" VALIGN="TOP"><p ALIGN="RIGHT">$ 2,000</td>
    <td WIDTH="91" VALIGN="TOP"><p ALIGN="RIGHT">$      -
         </td>
    <td WIDTH="88" VALIGN="TOP"><p ALIGN="RIGHT">$ 1,264,496</td>
  </tr>
</TABLE>
<font SIZE="2"><i>

<p ALIGN="left">The accompanying notes are an integral part of these consolidated
financial statements.</p>
</i></font>

<p ALIGN="CENTER"> </p>
<b>

<p ALIGN="CENTER">NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</p>

<p ALIGN="CENTER">MARCH 31, 1999</p>
</b>

<p ALIGN="CENTER"> </p>
<b>

<p>(1) Operations and Accounting Policies</p>
</b>

<p ALIGN="JUSTIFY">Novitron International, Inc. ("the Company") is a
multinational company which, through its subsidiaries, designs, manufactures and markets
instrumentation used in clinical and analytical laboratories and in process monitoring in
industry. The Company’s Dutch subsidiary, Vital Scientific NV, designs and
manufactures scientific instrumentation, including blood chemistry analyzers. NovaChem BV,
another Dutch subsidiary, develops and markets process analyzers used in the production of
petrochemicals and pharmaceuticals and in environmental monitoring.</p>

<p ALIGN="JUSTIFY">The accompanying consolidated financial statements reflect the
application of certain accounting policies described in this and other notes to the
consolidated financial statements.</p>
<font SIZE="2"><u>

<blockquote>
  <blockquote>
    <p>(a) Principles of Consolidation</p>
  </blockquote>
</blockquote>
</u></font>

<p ALIGN="JUSTIFY">The consolidated financial statements include the accounts of the
Company and its subsidiaries: Clinical Data BV, Clinical Data (Australia), Pty. Ltd.,
NovaChem BV, Spectronetics NV, and Vital Scientific NV (see Note 4). All significant
intercompany accounts and transactions have been eliminated in consolidation.</p>
<font SIZE="2"><u>

<blockquote>
  <blockquote>
    <p>(b) Cash and Cash Equivalents</p>
  </blockquote>
</blockquote>
</u></font>

<p ALIGN="JUSTIFY">Cash and cash equivalents are stated at cost, which approximates
market, and consist of cash and marketable financial instruments with original maturities
of 90 days or less.</p>
<font SIZE="2"><u>

<blockquote>
  <blockquote>
    <p>(c) Inventories</p>
  </blockquote>
</blockquote>
</u></font>

<p ALIGN="JUSTIFY">Inventories are stated at the lower of cost (first-in, first-out) or
market, include material, labor and manufacturing overhead, and consist of the following
at March 31, 1999 and 1998:</p>
<div align="center"><center>

<table CELLSPACING="1" BORDER="1" CELLPADDING="7" WIDTH="455">
  <tr>
    <td WIDTH="55%" VALIGN="TOP"> </td>
    <td WIDTH="22%" VALIGN="TOP"><p ALIGN="CENTER">1999</td>
    <td WIDTH="22%" VALIGN="TOP"><p ALIGN="CENTER">1998</td>
  </tr>
  <tr>
    <td WIDTH="55%" VALIGN="TOP"><p ALIGN="JUSTIFY">Raw materials</td>
    <td WIDTH="22%" VALIGN="TOP"><p ALIGN="RIGHT">$ 1,774,146</td>
    <td WIDTH="22%" VALIGN="TOP"><p ALIGN="RIGHT">$ 788,420</td>
  </tr>
  <tr>
    <td WIDTH="55%" VALIGN="TOP"><p ALIGN="JUSTIFY">Work-in-process</td>
    <td WIDTH="22%" VALIGN="TOP"><p ALIGN="RIGHT">421,680</td>
    <td WIDTH="22%" VALIGN="TOP"><p ALIGN="RIGHT">1,768,431</td>
  </tr>
  <tr>
    <td WIDTH="55%" VALIGN="TOP">Finished goods</td>
    <td WIDTH="22%" VALIGN="TOP"><p ALIGN="RIGHT">822,747</td>
    <td WIDTH="22%" VALIGN="TOP"><p ALIGN="RIGHT">1,162,847</td>
  </tr>
  <tr>
    <td WIDTH="55%" VALIGN="TOP"> </td>
    <td WIDTH="22%" VALIGN="TOP"><p ALIGN="RIGHT">$3,018,573</td>
    <td WIDTH="22%" VALIGN="TOP"><p ALIGN="RIGHT">$3,719,698</td>
  </tr>
</TABLE>
</center></div>

<blockquote>
  <blockquote>
    <font SIZE="2"><u><p>(d) Revenue Recognition</p>
  </blockquote>
</blockquote>
</u></font>

<p ALIGN="JUSTIFY">The Company generally recognizes revenue from the sale of products and
supplies at the time of shipment.</p>

<p>(<b>1) Operations and Accounting Policies </b>(continued)</p>

<blockquote>
  <blockquote>
    <font SIZE="2"><u><p>(e) Depreciation and Amortization of Equipment and Intangibles</p>
  </blockquote>
</blockquote>
</u></font>

<p ALIGN="JUSTIFY">The Company provides for depreciation and amortization using the
straight-line method by charges to operations in amounts that allocate the cost of
equipment and intangibles over their estimated useful lives. The estimated useful lives,
by asset classification, are as follows:</p>
<div align="center"><center>

<table CELLSPACING="1" BORDER="1" CELLPADDING="7" WIDTH="396">
  <tr>
    <td WIDTH="73%" VALIGN="TOP"> </td>
    <td WIDTH="27%" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="73%" VALIGN="TOP"><u><p ALIGN="JUSTIFY">Asset Classification</u></td>
    <td WIDTH="27%" VALIGN="TOP"><u><p ALIGN="RIGHT">Useful Lives</u></td>
  </tr>
  <tr>
    <td WIDTH="73%" VALIGN="TOP"><p ALIGN="JUSTIFY">Manufacturing and computer equipment</td>
    <td WIDTH="27%" VALIGN="TOP"><p ALIGN="RIGHT">3-7 years</td>
  </tr>
  <tr>
    <td WIDTH="73%" VALIGN="TOP"><p ALIGN="JUSTIFY">Furniture and fixtures</td>
    <td WIDTH="27%" VALIGN="TOP"><p ALIGN="RIGHT">3-7 years</td>
  </tr>
  <tr>
    <td WIDTH="73%" VALIGN="TOP"><p ALIGN="JUSTIFY">Leasehold improvements</td>
    <td WIDTH="27%" VALIGN="TOP"><p ALIGN="RIGHT">Life of lease</td>
  </tr>
  <tr>
    <td WIDTH="73%" VALIGN="TOP"><p ALIGN="JUSTIFY">Vehicles</td>
    <td WIDTH="27%" VALIGN="TOP"><p ALIGN="RIGHT">3-5 years</td>
  </tr>
  <tr>
    <td WIDTH="73%" VALIGN="TOP"><p ALIGN="JUSTIFY">Goodwill</td>
    <td WIDTH="27%" VALIGN="TOP"><p ALIGN="RIGHT">20 years</td>
  </tr>
</TABLE>
</center></div>

<p ALIGN="JUSTIFY">Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of," requires the Company to continually evaluate whether events and
circumstances have occurred which indicate that the estimated remaining useful life of
long-lived assets and such intangibles as goodwill may warrant revision or that the
carrying value of these assets may be impaired. To compute whether assets have been
impaired, the estimated gross cash flows for the estimated remaining useful life of the
asset are compared to the carrying value. To the extent that the gross cash flows are less
than the carrying value, the assets are written down to the estimated fair value of the
asset. At March 31, 1999 and 1998, the Company’s remaining goodwill relates to its
investment in Vital Scientific NV. Based on an analysis of other assets at March 31, 1999,
the Company does not believe impairment exists.</p>
<font SIZE="2">

<blockquote>
  <blockquote>
    <u><p>(f) Net (Loss) Income Per Share </p>
  </blockquote>
</blockquote>
</u></font>

<p ALIGN="JUSTIFY">The Company applies the provisions of SFAS No. 128, "Earnings per
Share," for computing and presenting earnings per share. Basic net (loss) income per
share is determined by dividing net (loss) income by the weighted average shares of common
stock outstanding during the year. Diluted net (loss) income per share has been calculated
on the same basis as basic earnings per share because the Company’s potentially
dilutive securities, stock options, are antidilutive. In fiscal years 1999, 1998 and 1997,
118,035, 104,818, and 73,835 weighted average common equivalent shares, respectively, were
not included in the diluted weighted average shares outstanding, as they were
antidilutive.</p>

<p>(<b>1) Operations and Accounting Policies </b>(continued)</p>
<font SIZE="2"><u>

<blockquote>
  <blockquote>
    <p>(g) Foreign Currency Translation</p>
  </blockquote>
</blockquote>
</u></font>

<p ALIGN="JUSTIFY">The Company accounts for foreign currency transaction and translation
gains and losses in accordance with SFAS No. 52, "Foreign Currency Translation."
The functional currency of Clinical Data BV, Vital Scientific NV and Spectronetics NV is
the Dutch Guilder. The functional currency of Clinical Data Australia is the Australian
dollar and NovaChem BV uses the United States dollar as its functional currency. Gains and
losses from translating assets and liabilities that are denominated in currencies other
than the respective functional currency are included in other expense in the consolidated
statements of operations. The translation adjustment required to report those subsidiaries
whose functional currency is other than the United States dollar into U.S. dollars is
credited or charged to cumulative translation adjustment, included as a separate component
of stockholders’ investment in the accompanying consolidated balance sheets.</p>

<p ALIGN="JUSTIFY">Foreign currency transaction gains and losses are included in other
expense in the consolidated statements of operations.</p>
<font SIZE="2"><u>

<blockquote>
  <blockquote>
    <p>(h) Postretirement Benefits</p>
  </blockquote>
</blockquote>
</u></font>

<p ALIGN="JUSTIFY">The Company has no obligations for postretirement benefits.</p>
<font SIZE="2"><u>

<blockquote>
  <blockquote>
    <p>(i) Management’s Use of Estimates</p>
  </blockquote>
</blockquote>
</u></font>

<p ALIGN="JUSTIFY">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
revenues and expenses during the reporting period. Actual results could differ from those
estimates.</p>
<font SIZE="2"><u>

<p>(j) Warranty Policy</p>
</u></font>

<p ALIGN="JUSTIFY">The Company provides a one-year warranty on its manufactured products,
which covers parts and materials. The Company reserves for this warranty at the time of
sale.</p>
<font SIZE="2"><u>

<p ALIGN="JUSTIFY">(k) Financial Instruments</p>
</u></font>

<p ALIGN="JUSTIFY">The estimated fair value of the Company’s financial instruments,
which include cash equivalents, marketable securities, accounts receivable, accounts
payable and long-term debt, approximates their carrying value.</p>

<blockquote>
  <blockquote>
    <font SIZE="2"><u><p>(l) Concentration of Credit Risk</p>
  </blockquote>
</blockquote>
</u></font>

<p ALIGN="JUSTIFY">SFAS No. 105, "Disclosure of Information about Financial
Instruments with Off-Balance-Sheet Risk and Financial Instruments with Concentrations of
Credit Risk," requires disclosure of any significant off-balance-sheet and credit
risk concentrations. The Company has no significant off-balance-sheet credit risk such as
foreign exchange contracts, option contracts or other foreign hedging arrangements. The
Company maintains the majority of its cash balances with large financial institutions. See
Notes 10 and 15 for significant customers and financial information by segment,
respectively.</p>

<p ALIGN="CENTER"> </p>

<p>(<b>1) Operations and Accounting Policies </b>(continued)</p>
<font SIZE="2"><u>

<p ALIGN="JUSTIFY">(m) Software Development Costs</p>
</u></font>

<p ALIGN="JUSTIFY">In connection with the development of software included as a
significant component of a new analysis product, the Company has applied the provisions of
SFAS No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased or
Otherwise Marketed." SFAS No. 86 requires the Company to capitalize those costs
incurred for the development of computer software that will be sold, leased or otherwise
marketed once technological feasibility has been established up to the time at which the
product is available for sale to the customer. These capitalized costs are subject to an
ongoing assessment of the recoverability based on anticipated future revenues and changes
in hardware and software technologies.</p>

<p ALIGN="JUSTIFY">During the years ended March 31, 1999, 1998 and 1997, the Company
capitalized approximately $32,000, $242,000 and $502,000, respectively, under SFAS No. 86,
which is included as a component of other assets in the accompanying consolidated balance
sheet.</p>

<p ALIGN="JUSTIFY">Amortization of the capitalized software development costs begins when
the product is available for general release. Amortization is provided on a
product-by-product basis on either the straight-line method over periods not exceeding
five years or the sales ratio method. Unamortized capitalized software development costs
determined to be in excess of net realizable value of the product are expensed
immediately. The Company began to amortize the software costs capitalized during fiscal
years 1998 and 1997 over the sales ratio method during the year ended March 31, 1998.
During fiscal year 1999, the Company has begun to amortize the software costs capitalized
during 1999 over three years using the straight-line method. Total amortization recorded
during fiscal years 1999 and 1998 was approximately $141,000 and $11,000, respectively,
which is included in cost of revenues in the accompanying consolidated statements of
income.</p>
<font SIZE="2"><u>

<p ALIGN="JUSTIFY">(n) Comprehensive Income</p>
</u></font>

<p ALIGN="JUSTIFY">Effective April 1, 1998, the Company adopted SFAS No. 130,
"Reporting Comprehensive Income." SFAS No. 130 requires disclosure of all
components of comprehensive income on an annual and interim basis. Comprehensive income is
defined as the change in equity of a business enterprise during a period from transactions
and other events and circumstances from non-owner sources. </p>
<font SIZE="2"><u>

<p ALIGN="JUSTIFY">(o) Segment Information</p>
</u></font>

<p ALIGN="JUSTIFY">Effective for the year ended March 31, 1999, the Company adopted SFAS
No. 131, "Disclosures about Segments of an Enterprise and Related Information."
The requirements of this standard are presented in Note 15 of the Consolidated Financial
Statements.</p>

<p ALIGN="CENTER"> </p>
<b>

<p ALIGN="JUSTIFY">(2) Restructuring</p>
</b>

<p ALIGN="JUSTIFY">In the fourth quarter of fiscal 1999, the Company began implementation
of a restructuring plan at its Vital Scientific subsidiary. . As of March 31, 1999, the
Company had terminated three employees, one in sales and two in research and development
and plans to complete the restructuring in the first half of fiscal year 2000. Management
anticipates the future amount of the restructuring charge to be approximately $81,000. At
March 31, 1999, the entire amount of the accrual is remaining and is comprised entirely of
severance related costs. The total cash impact of the restructuring related to fiscal year
1999 was $50,946, which will be paid during fiscal year 2000.</p>
<b>

<p ALIGN="JUSTIFY">(3) Stock Dividend</p>
</b>

<p ALIGN="JUSTIFY">On March 7, 1998, the Company declared a 10% common stock dividend
payable on March 27, 1998 to the shareholders of record on March 13, 1998. No fractional
shares or cash were distributed and the common stock issued to each stockholder was
rounded up to the nearest whole number of shares. All option shares and prices for fiscal
1998 and 1997 have been adjusted to reflect this stock dividend.</p>
<b>

<p ALIGN="JUSTIFY">(4) Vital Scientific NV</p>
</b>

<p ALIGN="JUSTIFY">On October 21, 1997, the Company purchased the remaining 6% percent of
Vital Scientific NV from the minority shareholder for approximately $200,000. The
transaction has been recorded as a purchase and the resultant gain of approximately
$37,000 on the purchase of the minority interest has been reflected as a reduction of
goodwill relating to past purchases of prior investments in Vital Scientific. The
remaining goodwill is being amortized over seven years on a straight-line basis.</p>
<b>

<p>(5) Short-Term Notes Payable and Long-Term Debt</p>
</b>

<p ALIGN="JUSTIFY">The Company’s foreign debt obligations are as follows at March 31,
1999 and 1998:</p>
<div align="left">

<table BORDER="1" CELLPADDING="7" WIDTH="617" cellspacing="1">
  <tr>
    <td VALIGN="top" width="423"><p align="left"> </td>
    <td VALIGN="top" width="72"><p ALIGN="CENTER"><u>1999</u></td>
    <td VALIGN="top" width="68"><p ALIGN="CENTER"><u>1998</u></td>
  </tr>
  <tr>
    <td VALIGN="top" width="423"><p ALIGN="JUSTIFY">Short-term notes payable</td>
    <td VALIGN="top" width="72"><p ALIGN="RIGHT">$       
    -      </td>
    <td VALIGN="top" width="68"><p ALIGN="RIGHT">$ 47,246</td>
  </tr>
  <tr>
    <td VALIGN="top" width="423">Long-term debt -<br>
    Notes payable, interest ranging from 11.35% - 11.55%</td>
    <td VALIGN="top" width="72" align="right">27,007</td>
    <td VALIGN="top" width="68" align="right">34,895</td>
  </tr>
  <tr>
    <td VALIGN="top" width="423"> </td>
    <td VALIGN="top" width="72"><p ALIGN="RIGHT">27,007</td>
    <td VALIGN="top" width="68"><p ALIGN="RIGHT"> </td>
  </tr>
  <tr>
    <td VALIGN="top" width="423"><p ALIGN="JUSTIFY">Less: short-term notes payable and current
    portion of long-term debt</td>
    <td VALIGN="top" width="72"><p ALIGN="RIGHT">3,735</td>
    <td VALIGN="top" width="68"><p ALIGN="RIGHT">52,113</td>
  </tr>
  <tr>
    <td VALIGN="top" width="423"> </td>
    <td VALIGN="top" width="72"><p ALIGN="RIGHT">$ 23,272</td>
    <td VALIGN="top" width="68"><p ALIGN="RIGHT">$ 30,028</td>
  </tr>
</TABLE>
</div>

<p ALIGN="CENTER"> </p>
<b>

<p>(5) Short-Term Notes Payable and Long-Term Debt</b> (continued)</p>

<p ALIGN="JUSTIFY">In April 1998, the Company entered a new relationship with a major
Dutch bank, which provides for a 4,000,000 Dutch Guilder (approximately $1,950,000) line
of credit. Interest on this facility is set at 1.25% above the base rate as reported by
the Netherlands Central Bank (3.75% at March 31, 1999). Trade receivables and inventory of
Vital Scientific are provided as security for this facility. As of March 31, 1999, the
Company is in full compliance with all capital covenants of the credit line and no amounts
are outstanding.</p>

<p ALIGN="JUSTIFY">In May 1999, Clinical Data Australia entered into an agreement for a
450,000 Australian dollar (approximately $285,000) line of credit. Interest on this
facility is set at prime plus 3.0%; the prime rate is presently 8.5%. Trade receivables
and inventory of Clinical Data Australia are provided as security for this facility; the
line also requires the maintenance of certain capital ratios.</p>
<b>

<p>(6) Lease Commitments</p>
</b>

<p ALIGN="JUSTIFY">The Company leases facilities, vehicles and computer equipment under
operating leases. Future minimum lease payments under these leases as of March 31, 1999
are approximately as follows:</p>
<div align="center"><center>

<table CELLSPACING="1" BORDER="1" CELLPADDING="10">
  <tr>
    <td valign="top"><font size="3"><p ALIGN="RIGHT"
    style="line-height: 1px; letter-spacing: 1px">Year Ending March 31,</font></td>
    <td valign="top"><font size="3"><p ALIGN="RIGHT"
    style="line-height: 1px; letter-spacing: 1px">Amount</font></td>
  </tr>
  <tr>
    <td valign="top"><p ALIGN="CENTER" style="line-height: 1px; letter-spacing: 1px">2000</td>
    <td style="line-height: 3px" valign="top"><p ALIGN="RIGHT"
    style="line-height: 1px; letter-spacing: 1px">$ 389,000</td>
  </tr>
  <tr>
    <td valign="top"><p ALIGN="CENTER" style="line-height: 1px; letter-spacing: 1px">2001</td>
    <td valign="top"><p ALIGN="RIGHT" style="line-height: 1px; letter-spacing: 1px">328,000</td>
  </tr>
  <tr>
    <td valign="top"><p ALIGN="CENTER" style="line-height: 1px; letter-spacing: 1px">2002</td>
    <td valign="top"><p ALIGN="RIGHT" style="line-height: 1px; letter-spacing: 1px">326,000</td>
  </tr>
  <tr>
    <td valign="top"><p ALIGN="CENTER" style="line-height: 1px; letter-spacing: 1px">2003</td>
    <td valign="top"><p ALIGN="RIGHT" style="line-height: 1px; letter-spacing: 1px">303,000</td>
  </tr>
  <tr>
    <td valign="top"><p ALIGN="CENTER" style="line-height: 1px; letter-spacing: 1px">2004</td>
    <td valign="top"><p ALIGN="RIGHT" style="line-height: 1px; letter-spacing: 1px">301,000</td>
  </tr>
  <tr>
    <td VALIGN="top"><p ALIGN="CENTER" style="line-height: 1px; letter-spacing: 1px">Thereafter</td>
    <td VALIGN="top"><p ALIGN="RIGHT" style="line-height: 1px; letter-spacing: 1px">1,156,000</td>
  </tr>
  <tr>
    <td VALIGN="top"> </td>
    <td VALIGN="top"><p ALIGN="RIGHT">$2,803,000</td>
  </tr>
</TABLE>
</center></div>

<p ALIGN="JUSTIFY">Rent expense of approximately $353,000, $329,000 and $340,000 was
incurred during fiscal 1999, 1998 and 1997, respectively.</p>
<b>

<p>(7) Stock Option Plans</p>
</b>

<p ALIGN="JUSTIFY">The Company has established a 1991 Stock Option Plan ("the
Plan") and a 1991 Directors’ Stock Option Plan ("the Directors’
Plan") under which an aggregate of 120,000 shares and 60,000 shares of common stock
are reserved, respectively, for the purpose of granting incentive and nonstatutory stock
options.</p>

<p ALIGN="JUSTIFY">Under the terms of the Plan and the Directors’ Plan, all options
are granted at not less than the fair value of the stock on the date of grant. Options are
exercisable over various periods not exceeding four years; the options under the Plan
expire no later than seven years after the date of grant whereas the options granted under
the Directors’ Plan expire no later than ten years after the date of grant.</p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>
<b>

<p>(7) Stock Option Plans </b>(continued)</p>

<p ALIGN="JUSTIFY">In October 1998, the Company’s Board of Directors authorized the
repricing of certain options outstanding under the Plan and the Directors’ Plan.
Options for a total of 83,783 shares were surrendered under the repricing by employees and
directors and exchanged for options to purchase 97,000 shares at the new option exercise
price and vesting schedule. The exercise price is equal to the fair market value of the
Company’s common stock on October 21, 1998, $0.62 ($0.69 for options repriced to an
officer at 110% of the fair market value as of the grant date). These repriced options are
reflected as grants and cancellations in the stock activity below.</p>

<p ALIGN="JUSTIFY">The following table summarizes stock option activity.</p>

<table CELLSPACING="1" BORDER="1" CELLPADDING="4" WIDTH="622">
  <tr>
    <td WIDTH="39%" VALIGN="TOP"> </td>
    <td WIDTH="15%" VALIGN="TOP"> </td>
    <td WIDTH="46%" VALIGN="TOP" COLSPAN="3"><u><font size="3"><p ALIGN="center">Option Price</font></u></td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP"> </td>
    <td WIDTH="15%" VALIGN="TOP"><font size="3"><p ALIGN="CENTER">Number of Shares</font></td>
    <td WIDTH="16%" VALIGN="TOP"><font size="3"><p ALIGN="CENTER">Per Share</font></td>
    <td WIDTH="15%" VALIGN="TOP"><font size="3"><p ALIGN="CENTER">Total</font></td>
    <td WIDTH="15%" VALIGN="TOP"><font size="3"><p ALIGN="CENTER">Weighted-Average Price</font></td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP">Outstanding at March 31, 1996</td>
    <td WIDTH="15%" VALIGN="TOP" align="center">26,842</td>
    <td WIDTH="16%" VALIGN="TOP" align="center"><p ALIGN="CENTER">$10.91-14.25</td>
    <td WIDTH="15%" VALIGN="TOP" align="center">$ 353,981</td>
    <td WIDTH="15%" VALIGN="TOP" align="center"><p ALIGN="CENTER">$13.19</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP"><p ALIGN="JUSTIFY">Options granted</td>
    <td WIDTH="15%" VALIGN="TOP" align="center">88,550</td>
    <td WIDTH="16%" VALIGN="TOP" align="center"><p ALIGN="CENTER">2.73–7.50</td>
    <td WIDTH="15%" VALIGN="TOP" align="center">279,375</td>
    <td WIDTH="15%" VALIGN="TOP" align="center"><p ALIGN="CENTER">3.15</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP">Options canceled or expired</td>
    <td WIDTH="15%" VALIGN="TOP" align="center">(4,987)</td>
    <td WIDTH="16%" VALIGN="TOP" align="center"><p ALIGN="CENTER">12.95–13.64</td>
    <td WIDTH="15%" VALIGN="TOP" align="center">(67,111)</td>
    <td WIDTH="15%" VALIGN="TOP" align="center"><p ALIGN="CENTER">(13.46)</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP">Outstanding at March 31, 1997</td>
    <td WIDTH="15%" VALIGN="TOP" align="center">110,405</td>
    <td WIDTH="16%" VALIGN="TOP" align="center"><p ALIGN="CENTER">$2.73–14.25</td>
    <td WIDTH="15%" VALIGN="TOP" align="center">$ 566,245</td>
    <td WIDTH="15%" VALIGN="TOP" align="center"><p ALIGN="CENTER">$5.13</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP">Options canceled or expired</td>
    <td WIDTH="15%" VALIGN="TOP" align="center">(13,788)</td>
    <td WIDTH="16%" VALIGN="TOP" align="center"><p ALIGN="CENTER">10.91–14.25</td>
    <td WIDTH="15%" VALIGN="TOP" align="center">(181,110)</td>
    <td WIDTH="15%" VALIGN="TOP" align="center"><p ALIGN="CENTER">(13.14)</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP">Outstanding at March 31, 1998</td>
    <td WIDTH="15%" VALIGN="TOP" align="center">96,617</td>
    <td WIDTH="16%" VALIGN="TOP" align="center"><p ALIGN="CENTER">$2.73–13.30</td>
    <td WIDTH="15%" VALIGN="TOP" align="center">$ 385,135</td>
    <td WIDTH="15%" VALIGN="TOP" align="center"><p ALIGN="CENTER">$3.99</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP"><p ALIGN="JUSTIFY">Options granted</td>
    <td WIDTH="15%" VALIGN="TOP" align="center">97,000</td>
    <td WIDTH="16%" VALIGN="TOP" align="center"><p ALIGN="CENTER">0.62-0.69</td>
    <td WIDTH="15%" VALIGN="TOP" align="center">62,812</td>
    <td WIDTH="15%" VALIGN="TOP" align="center"><p ALIGN="CENTER">0.65</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP">Options canceled or expired</td>
    <td WIDTH="15%" VALIGN="TOP" align="center">(83,783)</td>
    <td WIDTH="16%" VALIGN="TOP" align="center"><p ALIGN="CENTER">2.73–13.30</td>
    <td WIDTH="15%" VALIGN="TOP" align="center">(350,136)</td>
    <td WIDTH="15%" VALIGN="TOP" align="center"><p ALIGN="CENTER">(4.18)</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP">Outstanding at March 31, 1999</td>
    <td WIDTH="15%" VALIGN="TOP" align="center">109,834</td>
    <td WIDTH="16%" VALIGN="TOP" align="center"><p ALIGN="CENTER">$0.62-2.73</td>
    <td WIDTH="15%" VALIGN="TOP" align="center">$ 97,811</td>
    <td WIDTH="15%" VALIGN="TOP" align="center">$0.89</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP"> </td>
    <td WIDTH="15%" VALIGN="TOP" align="center"> </td>
    <td WIDTH="16%" VALIGN="TOP" align="center"> </td>
    <td WIDTH="15%" VALIGN="TOP" align="center"> </td>
    <td WIDTH="15%" VALIGN="TOP" align="center"> </td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP">Exercisable at March 31, 1999</td>
    <td WIDTH="15%" VALIGN="TOP" align="center">59,501</td>
    <td WIDTH="16%" VALIGN="TOP" align="center"><p ALIGN="CENTER">$0.62-2.73</td>
    <td WIDTH="15%" VALIGN="TOP" align="center">$ 61,406</td>
    <td WIDTH="15%" VALIGN="TOP" align="center"><p ALIGN="CENTER">$1.03</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP">Exercisable at March 31, 1998</td>
    <td WIDTH="15%" VALIGN="TOP" align="center">36,485</td>
    <td WIDTH="16%" VALIGN="TOP" align="center"><p ALIGN="CENTER">$2.73 – 13.30</td>
    <td WIDTH="15%" VALIGN="TOP" align="center">$184,260</td>
    <td WIDTH="15%" VALIGN="TOP" align="center"><p ALIGN="CENTER">$5.05</td>
  </tr>
  <tr>
    <td WIDTH="39%" VALIGN="TOP">Exercisable at March 31, 1997</td>
    <td WIDTH="15%" VALIGN="TOP" align="center">17,068</td>
    <td WIDTH="16%" VALIGN="TOP" align="center"><p ALIGN="CENTER">$12.00–15.68</td>
    <td WIDTH="15%" VALIGN="TOP" align="center">$246,220</td>
    <td WIDTH="15%" VALIGN="TOP" align="center"><p ALIGN="CENTER">$14.42</td>
  </tr>
</TABLE>

<p ALIGN="JUSTIFY">In October 1995, the FASB released SFAS No. 123, "Accounting for
Stock-Based Compensation," which is effective for fiscal years beginning after
December 31, 1995. SFAS No. 123 encourages companies to adopt a fair value based method of
accounting for employee stock options, but allows companies to continue to account for
those plans using the accounting prescribed by Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" ("APB No. 25"). The Company
has adopted the disclosure-only requirements of SFAS No. 123 and plans to continue to
account for employee stock options using APB No. 25, making pro forma disclosures of net
income and earnings per share as if the fair value based method had been applied.</p>

<p ALIGN="CENTER"> </p>
<b>

<p>(7) Stock Option Plans</b> (continued)</p>

<p ALIGN="JUSTIFY">The Company has computed the pro forma disclosures required under SFAS
No. 123 for all stock options granted to employees of the Company and its subsidiaries in
the fiscal years ended March 31, 1999, 1998 and 1997 using the Black-Scholes option
pricing model prescribed by SFAS No. 123. </p>

<p ALIGN="JUSTIFY">The assumptions used to calculate the SFAS No. 123 pro forma disclosure
and weighted average information for the fiscal years ended March 31, 1999, 1998 and 1997
are as follows:</p>

<table BORDER="1" CELLSPACING="1" CELLPADDING="7" WIDTH="657">
  <tr>
    <td WIDTH="276" VALIGN="TOP"> </td>
    <td WIDTH="115" VALIGN="TOP"><p ALIGN="CENTER">1999</td>
    <td WIDTH="114" VALIGN="TOP"><p ALIGN="CENTER">1998</td>
    <td WIDTH="107" VALIGN="TOP"><p ALIGN="CENTER">1997</td>
  </tr>
  <tr>
    <td WIDTH="276" VALIGN="TOP">Risk-free interest rate</td>
    <td WIDTH="115" VALIGN="TOP"><p ALIGN="CENTER">4.18% - 6.73%</td>
    <td WIDTH="114" VALIGN="TOP"><p ALIGN="CENTER">6.30% - 6.73%</td>
    <td WIDTH="107" VALIGN="TOP"><p ALIGN="CENTER">6.30% - 6.73%</td>
  </tr>
  <tr>
    <td WIDTH="276" VALIGN="TOP">Expected dividend yield</td>
    <td WIDTH="115" VALIGN="TOP"><p ALIGN="CENTER">0</td>
    <td WIDTH="114" VALIGN="TOP"><p ALIGN="CENTER">0</td>
    <td WIDTH="107" VALIGN="TOP"><p ALIGN="CENTER">0</td>
  </tr>
  <tr>
    <td WIDTH="276" VALIGN="TOP">Expected lives</td>
    <td WIDTH="115" VALIGN="TOP"><p ALIGN="CENTER">6.12 years</td>
    <td WIDTH="114" VALIGN="TOP"><p ALIGN="CENTER">4.39 years</td>
    <td WIDTH="107" VALIGN="TOP"><p ALIGN="CENTER">6.43 years</td>
  </tr>
  <tr>
    <td WIDTH="276" VALIGN="TOP">Expected volatility</td>
    <td WIDTH="115" VALIGN="TOP"><p ALIGN="CENTER">50.93% - 110.50%</td>
    <td WIDTH="114" VALIGN="TOP"><p ALIGN="CENTER">50.93%-51.33%</td>
    <td WIDTH="107" VALIGN="TOP"><p ALIGN="CENTER">50.93%-51.33%</td>
  </tr>
  <tr>
    <td WIDTH="276" VALIGN="TOP">Weighted average grant date fair value per<br>
    share of options granted during the period</td>
    <td WIDTH="115" VALIGN="TOP"><p ALIGN="CENTER">$0.65</td>
    <td WIDTH="114" VALIGN="TOP"><p ALIGN="CENTER">-</td>
    <td WIDTH="107" VALIGN="TOP"><p ALIGN="CENTER">$1.91</td>
  </tr>
  <tr>
    <td WIDTH="276" VALIGN="TOP">Weighted average exercise price of <br>
    options granted during the period</td>
    <td WIDTH="115" VALIGN="TOP"><p ALIGN="CENTER">$0.65</td>
    <td WIDTH="114" VALIGN="TOP"><p ALIGN="CENTER">-</td>
    <td WIDTH="107" VALIGN="TOP"><p ALIGN="CENTER">$3.47</td>
  </tr>
  <tr>
    <td WIDTH="276" VALIGN="TOP">Weighted average remaining contractual<br>
    life of options outstanding</td>
    <td WIDTH="115" VALIGN="TOP"><p ALIGN="CENTER">5.43 years</td>
    <td WIDTH="114" VALIGN="TOP"><p ALIGN="CENTER">4.43 years</td>
    <td WIDTH="107" VALIGN="TOP"><p ALIGN="CENTER">5.87 years</td>
  </tr>
</TABLE>

<p ALIGN="JUSTIFY">The pro forma effect on the Company of applying SFAS No. 123 to
recognize certain compensation expense for the years ended March 31, 1999, 1998 and 1997
would be as follows:</p>

<table BORDER="1" CELLSPACING="1" CELLPADDING="7" WIDTH="659">
  <tr>
    <td WIDTH="255" VALIGN="TOP"> </td>
    <td WIDTH="112" VALIGN="TOP"><p ALIGN="CENTER">1999</td>
    <td WIDTH="110" VALIGN="TOP"><p ALIGN="CENTER">1998</td>
    <td WIDTH="110" VALIGN="TOP"><p ALIGN="CENTER">1997</td>
  </tr>
  <tr>
    <td WIDTH="255" VALIGN="TOP"><p ALIGN="JUSTIFY">Pro forma net (loss) income</td>
    <td WIDTH="112" VALIGN="TOP"><p ALIGN="RIGHT">$(499,113)</td>
    <td WIDTH="110" VALIGN="TOP"><p ALIGN="RIGHT">$45,812</td>
    <td WIDTH="110" VALIGN="TOP"><p ALIGN="RIGHT">$(594,708)</td>
  </tr>
  <tr>
    <td WIDTH="255" VALIGN="TOP"><p ALIGN="JUSTIFY">Pro forma net (loss) income per share</td>
    <td WIDTH="112" VALIGN="TOP"><p ALIGN="RIGHT">$(0.33)</td>
    <td WIDTH="110" VALIGN="TOP"><p ALIGN="RIGHT">$0.03</td>
    <td WIDTH="110" VALIGN="TOP"><p ALIGN="RIGHT">$(0.45)</td>
  </tr>
</TABLE>

<p ALIGN="JUSTIFY">The range of exercise prices for options outstanding and options
exercisable at March 31, 1999 is as follows:</p>

<table BORDER="1" CELLSPACING="1" CELLPADDING="7" WIDTH="657">
  <tr>
    <td WIDTH="101%" VALIGN="top" colspan="6"><p ALIGN="left">                                
          
    Outstanding
                                              
                   
    Exercisable</td>
  </tr>
  <tr>
    <td WIDTH="17%" VALIGN="TOP"> <p>Price Range</td>
    <td WIDTH="12%" VALIGN="TOP"><p ALIGN="CENTER"> </p>
    <p ALIGN="CENTER">Number of Shares</td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="CENTER">Weighted Average Remaining Contractual Life</td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="CENTER">Weighted Average Exercise Price</td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="CENTER">Number of Shares</td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="CENTER">Weighted Average Exercise Price</td>
  </tr>
  <tr>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">$0.62 - $0.69</td>
    <td WIDTH="12%" VALIGN="TOP"><p ALIGN="RIGHT">97,000</td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="RIGHT">5.56 years</td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="RIGHT">$ 0.65</td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="RIGHT">48,500</td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="RIGHT">$ 0.65</td>
  </tr>
  <tr>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">$2.73</td>
    <td WIDTH="12%" VALIGN="TOP"><p ALIGN="RIGHT">12,834</td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="RIGHT">4.47 years</td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="RIGHT">$ 2.73</td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="RIGHT">11,001</td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="RIGHT">$ 2.73</td>
  </tr>
  <tr>
    <td WIDTH="17%" VALIGN="BOTTOM"> </td>
    <td WIDTH="12%" VALIGN="BOTTOM"><p ALIGN="RIGHT">109,834</td>
    <td WIDTH="18%" VALIGN="BOTTOM"><p ALIGN="RIGHT">5.43 years</td>
    <td WIDTH="18%" VALIGN="BOTTOM"><p ALIGN="RIGHT">$ 0.89</td>
    <td WIDTH="18%" VALIGN="BOTTOM"><p ALIGN="RIGHT">59,501</td>
    <td WIDTH="18%" VALIGN="BOTTOM"><p ALIGN="RIGHT">$ 1.03</td>
  </tr>
</TABLE>

<p ALIGN="CENTER"> </p>
<b>

<p>(8) Income Taxes</p>
</b>

<p ALIGN="JUSTIFY">The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes." Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that includes
the enactment date.</p>

<p ALIGN="JUSTIFY">The (benefit from) provision for income taxes shown in the accompanying
consolidated statements of operations consists of the following:</p>

<table CELLSPACING="1" BORDER="1" CELLPADDING="9" WIDTH="572">
  <tr>
    <td WIDTH="46%" VALIGN="TOP"> </td>
    <td WIDTH="54%" VALIGN="TOP" COLSPAN="3"><font size="3"><p ALIGN="CENTER"><u>For the Years
    Ended March 31,</u></font></td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"> </td>
    <td WIDTH="18%" VALIGN="TOP"><font size="3"><p ALIGN="CENTER">1999</font></td>
    <td WIDTH="18%" VALIGN="TOP"><font size="3"><p ALIGN="CENTER">1998</font></td>
    <td WIDTH="19%" VALIGN="TOP"><font size="3"><p ALIGN="CENTER">1997</font></td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font size="3"><p ALIGN="JUSTIFY">Current:</font></td>
    <td WIDTH="18%" VALIGN="TOP"> </td>
    <td WIDTH="18%" VALIGN="TOP"> </td>
    <td WIDTH="19%" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font size="3"><p ALIGN="JUSTIFY">   Domestic</font></td>
    <td WIDTH="18%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">$
                 -</font></td>
    <td WIDTH="18%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">$ 2,000</font></td>
    <td WIDTH="19%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">$
                  - </font></td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font size="3">   Foreign</font></td>
    <td WIDTH="18%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">(232,000)</font></td>
    <td WIDTH="18%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">278,000</font></td>
    <td WIDTH="19%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">(265,000)</font></td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font size="3"><p ALIGN="JUSTIFY">Total Current</font></td>
    <td WIDTH="18%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">(232,000)</font></td>
    <td WIDTH="18%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">280,000</font></td>
    <td WIDTH="19%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">(265,000)</font></td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"> </td>
    <td WIDTH="18%" VALIGN="TOP"> </td>
    <td WIDTH="18%" VALIGN="TOP"> </td>
    <td WIDTH="19%" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font size="3"><p ALIGN="JUSTIFY">Deferred:</font></td>
    <td WIDTH="18%" VALIGN="TOP"> </td>
    <td WIDTH="18%" VALIGN="TOP"> </td>
    <td WIDTH="19%" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font size="3"><p ALIGN="JUSTIFY">    Domestic</font></td>
    <td WIDTH="18%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">- </font></td>
    <td WIDTH="18%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">- </font></td>
    <td WIDTH="19%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">- </font></td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font size="3">    Foreign</font></td>
    <td WIDTH="18%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">(4,000)</font></td>
    <td WIDTH="18%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">(254,000)</font></td>
    <td WIDTH="19%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">187,000</font></td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"><font size="3">Total Deferred</font></td>
    <td WIDTH="18%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">(4,000)</font></td>
    <td WIDTH="18%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">(254,000)</font></td>
    <td WIDTH="19%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">187,000</font></td>
  </tr>
  <tr>
    <td WIDTH="46%" VALIGN="TOP"> </td>
    <td WIDTH="18%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">$ (236,000)</font></td>
    <td WIDTH="18%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">$ 26,000</font></td>
    <td WIDTH="19%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">$ (78,000)</font></td>
  </tr>
</TABLE>

<p ALIGN="JUSTIFY">The (benefit from) provision for income taxes differs from the amount
computed by applying the statutory federal income tax rate to income before taxes due to
the following:</p>

<table CELLSPACING="1" BORDER="1" CELLPADDING="4" WIDTH="570">
  <tr>
    <td WIDTH="554" VALIGN="TOP" colspan="4"><font size="3"><u><p ALIGN="left"></u>                            
                                          
           
    <u>For the Years Ended March 31,</u></font></td>
  </tr>
  <tr>
    <td WIDTH="262" VALIGN="TOP"> </td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="CENTER">1999</font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="CENTER">1998</font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="CENTER">1997</font></td>
  </tr>
  <tr>
    <td WIDTH="262" VALIGN="TOP"><font size="3"><p ALIGN="JUSTIFY">(Benefit from) provision
    for taxes at statutory rate</font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">$ (247,000)</font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">$ 43,000</font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">$ (235,000) </font></td>
  </tr>
  <tr>
    <td WIDTH="262" VALIGN="TOP"><font size="3"><p ALIGN="JUSTIFY">Utilization of domestic net
    </font></td>
    <td WIDTH="92" VALIGN="TOP"> </td>
    <td WIDTH="92" VALIGN="TOP"> </td>
    <td WIDTH="92" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="262" VALIGN="TOP"><font size="3"><p ALIGN="JUSTIFY">operating loss carryforward</font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">(65,000)</font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">(166,000)</font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">(26,000)</font></td>
  </tr>
  <tr>
    <td WIDTH="262" VALIGN="TOP"><font size="3"><p ALIGN="JUSTIFY">Utilization of foreign net </font></td>
    <td WIDTH="92" VALIGN="TOP"> </td>
    <td WIDTH="92" VALIGN="TOP"> </td>
    <td WIDTH="92" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="262" VALIGN="TOP"><font size="3"><p ALIGN="JUSTIFY">operating loss carryforward</font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">(38,000)</font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">- </font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">(9,000)</font></td>
  </tr>
  <tr>
    <td WIDTH="262" VALIGN="TOP"><font size="3"><p ALIGN="JUSTIFY">Domestic operating loss not
    benefited</font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">75,000</font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">- </font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">- </font></td>
  </tr>
  <tr>
    <td WIDTH="262" VALIGN="TOP"><font size="3"><p ALIGN="JUSTIFY">Foreign operating loss not
    benefited</font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">9,000</font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">144,000</font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">211,000</font></td>
  </tr>
  <tr>
    <td WIDTH="262" VALIGN="TOP"><font size="3"><p ALIGN="JUSTIFY">Taxes resulting from higher</font></td>
    <td WIDTH="92" VALIGN="TOP"> </td>
    <td WIDTH="92" VALIGN="TOP"> </td>
    <td WIDTH="92" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="262" VALIGN="TOP"><font size="3">incremental foreign rate</font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">36,000</font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">4,000</font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">- </font></td>
  </tr>
  <tr>
    <td WIDTH="262" VALIGN="TOP"><font size="3">Tax benefit resulting from lower</font></td>
    <td WIDTH="92" VALIGN="TOP"> </td>
    <td WIDTH="92" VALIGN="TOP"> </td>
    <td WIDTH="92" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="262" VALIGN="TOP"><font size="3">statutory foreign rate</font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">(1,000)</font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">(15,000)</font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">(13,000)</font></td>
  </tr>
  <tr>
    <td WIDTH="262" VALIGN="TOP"><font size="3">Other </font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">(5,000)</font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">16,000</font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">(6,000)</font></td>
  </tr>
  <tr>
    <td WIDTH="262" VALIGN="TOP"> </td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">$ (236,000)</font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">$ 26,000</font></td>
    <td WIDTH="92" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">$ (78,000)</font></td>
  </tr>
</TABLE>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>
<b>

<p>(8) Income Taxes </b>(continued)</p>

<p>The approximate income tax effect of each type of temporary difference comprising the
net deferred tax asset at March 31, 1999 and 1998 is as follows:</p>

<table CELLSPACING="1" BORDER="1" CELLPADDING="7" WIDTH="489">
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="16"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="16"><font size="3"><p ALIGN="CENTER">1999</font></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="16"><font size="3"><p ALIGN="CENTER">1998</font></td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="16"><font size="3">Net operating loss carryforwards</font></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="16"><font size="3"><p ALIGN="RIGHT">2,662,764</font></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="16"><font size="3"><p ALIGN="RIGHT">2,422,492</font></td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="16"><font size="3">General business tax credit
    carryforwards</font></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="16"><font size="3"><p ALIGN="RIGHT">46,428</font></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="16"><font size="3"><p ALIGN="RIGHT">122,672</font></td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="16"><font size="3">Other, net</font></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="16"><font size="3"><p ALIGN="RIGHT">71,081</font></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="16"><font size="3"><p ALIGN="RIGHT">12,540</font></td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="16"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="16"><font size="3"><p ALIGN="RIGHT">2,780,273</font></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="16"><font size="3"><p ALIGN="RIGHT">2,557,704</font></td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="16"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="16"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="16"></td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="16"><font size="3">Less: valuation allowance</font></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="16"><font size="3"><p ALIGN="RIGHT">2,702,940</font></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="16"><font size="3"><p ALIGN="RIGHT">2,557,704</font></td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP" HEIGHT="16"></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="16"><font size="3"><p ALIGN="RIGHT">$ 77,333</font></td>
    <td WIDTH="20%" VALIGN="TOP" HEIGHT="16"><font size="3">$
              -</font></td>
  </tr>
</TABLE>

<p ALIGN="JUSTIFY">SFAS No. 109 requires the Company to assess whether it is more likely
than not that the Company will realize its deferred tax assets. The Company has determined
that, except for the net operating loss carryforward at Vital Scientific NV during fiscal
year 1999, it does not meet the "more likely than not" standard. Accordingly,
the Company has provided a valuation allowance against the deferred tax assets for all
items except for the aforementioned net operating loss carryforward in 1999.</p>

<p>The tax effect on the components of the deferred tax liability at March 31, 1999 and
1998 is as follows:</p>

<table CELLSPACING="1" BORDER="1" CELLPADDING="7" WIDTH="489">
  <tr>
    <td WIDTH="61%" VALIGN="TOP"> </td>
    <td WIDTH="20%" VALIGN="TOP"><font size="3"><p ALIGN="CENTER">1999</font></td>
    <td WIDTH="20%" VALIGN="TOP"><font size="3"><p ALIGN="CENTER">1998</font></td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP"><font size="3">Prior pension service costs</font></td>
    <td WIDTH="20%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">$ 15,905</font></td>
    <td WIDTH="20%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">$ 39,144</font></td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP"><font size="3">Depreciation</font></td>
    <td WIDTH="20%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">114,403</font></td>
    <td WIDTH="20%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">54,700</font></td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP"><font size="3">Restructuring</font></td>
    <td WIDTH="20%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">27,255</font></td>
    <td WIDTH="20%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">-
          </font></td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP"><font size="3">Education</font></td>
    <td WIDTH="20%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">17,450</font></td>
    <td WIDTH="20%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">-
          </font></td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP"><font size="3">Other`</font></td>
    <td WIDTH="20%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">(6,013)</font></td>
    <td WIDTH="20%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">-
          </font></td>
  </tr>
  <tr>
    <td WIDTH="61%" VALIGN="TOP"> </td>
    <td WIDTH="20%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">$169,000</font></td>
    <td WIDTH="20%" VALIGN="TOP"><font size="3"><p ALIGN="RIGHT">$ 93,844</font></td>
  </tr>
</TABLE>

<p ALIGN="JUSTIFY">The Company has net operating loss carryforwards for U.S. federal and
state tax purposes of approximately $3,572,000 and $756,000, respectively; these
carryforwards will expire from 2000 to 2019. In addition, the Company has available U.S.
federal tax credit carryforwards of approximately $46,000. These carryforwards may be used
to offset future taxable income, if any. The federal tax credit carryforwards will expire
from 2000 to 2012 and are subject to review and possible adjustment by the Internal
Revenue Service. There are approximately $3,745,000 in U.S. alternative minimum tax net
operating loss carryforwards that between 2008 and 2019.</p>

<p ALIGN="JUSTIFY">The Company has foreign net operating loss carryforwards of
approximately $3,831,000 of which $612,000 are not subject to expiration and $3,219,000
which expire from 2001 to 2009.</p>

<p ALIGN="CENTER"> </p>
<b>

<p>(9) Pension Plan</p>
</b>

<p ALIGN="JUSTIFY">The Company’s subsidiary, Vital Scientific NV, participates in a
multiemployer defined benefit pension plan. Contributions and expenses incurred by the
Company amounted to approximately $119,000, $97,000 and $103,000 during fiscal 1999, 1998
and 1997, respectively.</p>
<b>

<p ALIGN="JUSTIFY">(10) Significant Customers</p>
</b>

<p ALIGN="JUSTIFY">During fiscal 1999 the Company had sales of scientific and process
monitoring instrumentation to two significant customers amounting to approximately 38% of
consolidated revenues; approximately 51% of accounts receivable at March 31, 1999 were
from these customers. During 1998 and 1997, the Company had sales of scientific and
process monitoring instrumentation to one customer amounting to approximately 56% and 75%
of consolidated revenues, respectively. At March 31, 1998, 57% of accounts receivable was
from this customer.</p>
<b>

<p>(11) Other (Expense) Income, net</p>
</b>

<p>Other (expense) income, net, consists of the following:</p>
<div align="left">

<table CELLSPACING="1" BORDER="1" CELLPADDING="7" WIDTH="520">
  <tr>
    <td WIDTH="45%" VALIGN="TOP"> </td>
    <td WIDTH="55%" VALIGN="TOP" COLSPAN="3"><p ALIGN="CENTER">For the Years Ended March 31,</td>
  </tr>
  <tr>
    <td WIDTH="45%" VALIGN="TOP"> </td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="CENTER">1999</td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="CENTER">1998</td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="CENTER">1997</td>
  </tr>
  <tr>
    <td WIDTH="45%" VALIGN="TOP" HEIGHT="16">Foreign exchange loss</td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="16"><p ALIGN="RIGHT">$(12,824)</td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="16"><p ALIGN="RIGHT">$(48,039)</td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="16"><p ALIGN="RIGHT">$ (22,842)</td>
  </tr>
  <tr>
    <td WIDTH="45%" VALIGN="TOP" HEIGHT="16">Settlement of a dispute</td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="16"><p ALIGN="CENTER">-</td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="16"><p ALIGN="RIGHT">625,741</td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="16"><p ALIGN="CENTER">-</td>
  </tr>
  <tr>
    <td WIDTH="45%" VALIGN="TOP" HEIGHT="16">Gain on sale of certain assets</td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="16"><p ALIGN="CENTER">-</td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="16"><p ALIGN="RIGHT">111,243</td>
    <td WIDTH="18%" VALIGN="TOP" HEIGHT="16"><p ALIGN="CENTER">-</td>
  </tr>
  <tr>
    <td WIDTH="45%" VALIGN="TOP">Other income, net</td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="RIGHT">8,855</td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="RIGHT">22,064</td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="RIGHT">4,297</td>
  </tr>
  <tr>
    <td WIDTH="45%" VALIGN="TOP"> </td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="RIGHT">$ (3,969)</td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="RIGHT">$711,009</td>
    <td WIDTH="18%" VALIGN="TOP"><p ALIGN="RIGHT">$ (18,545)</td>
  </tr>
</TABLE>
</div>

<p ALIGN="JUSTIFY">In December 1997, the Company amicably settled a dispute with E. Merck
of all outstanding issues related to the performance of each party under a series of
distribution agreements. The settlement, net of legal expenses, included a cash payment to
the Company and the release of certain indebtedness owed by the Company in the net amount
of $625,741.</p>
<b>

<p>(12) Accrued Expenses</p>
</b>

<p ALIGN="JUSTIFY">Accrued expenses consist of the following:</p>

<table CELLSPACING="1" BORDER="1" CELLPADDING="9" WIDTH="517">
  <tr>
    <td WIDTH="55%" VALIGN="TOP"> </td>
    <td WIDTH="22%" VALIGN="TOP"><p ALIGN="CENTER">1999</td>
    <td WIDTH="22%" VALIGN="TOP"><p ALIGN="CENTER">1998</td>
  </tr>
  <tr>
    <td WIDTH="55%" VALIGN="TOP">Payroll and payroll-related expenses </td>
    <td WIDTH="22%" VALIGN="TOP"><p ALIGN="RIGHT">$ 593,623</td>
    <td WIDTH="22%" VALIGN="TOP"><p ALIGN="RIGHT">$ 542,285</td>
  </tr>
  <tr>
    <td WIDTH="55%" VALIGN="TOP">Warranty and retrofit reserves</td>
    <td WIDTH="22%" VALIGN="TOP"><p ALIGN="RIGHT">162,376</td>
    <td WIDTH="22%" VALIGN="TOP"><p ALIGN="RIGHT">129,995</td>
  </tr>
  <tr>
    <td WIDTH="55%" VALIGN="TOP">Development credits</td>
    <td WIDTH="22%" VALIGN="TOP"><p ALIGN="RIGHT">1,171,195</td>
    <td WIDTH="22%" VALIGN="TOP"><p ALIGN="RIGHT">1,035,312</td>
  </tr>
  <tr>
    <td WIDTH="55%" VALIGN="TOP">Other</td>
    <td WIDTH="22%" VALIGN="TOP"><p ALIGN="RIGHT">278,337</td>
    <td WIDTH="22%" VALIGN="TOP"><p ALIGN="RIGHT">176,444</td>
  </tr>
  <tr>
    <td WIDTH="55%" VALIGN="TOP"> </td>
    <td WIDTH="22%" VALIGN="TOP"><p ALIGN="RIGHT">$ 2,205,531</td>
    <td WIDTH="22%" VALIGN="TOP"><p ALIGN="RIGHT">$ 1,884,036</td>
  </tr>
</TABLE>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>
<b>

<p>(12) Accrued Expenses </b>(continued)</p>

<p ALIGN="JUSTIFY">The Company has entered into a credit financing arrangement with a
Netherlands governmental agency in connection with the development of a new product. The
grant is to be repaid as long as the product is a commercial success. As of March 31,
1998, the Company began to ship this product, evidencing its commercial success. The
Company has accrued all funding received as development credits in the table above.</p>
<b>

<p>(13) Other Assets</p>
</b>

<p ALIGN="JUSTIFY">Other assets consist of the following:</p>

<table CELLSPACING="1" BORDER="1" CELLPADDING="9" WIDTH="502">
  <tr>
    <td WIDTH="57%" VALIGN="TOP"> </td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="CENTER">1999</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="CENTER">1998</td>
  </tr>
  <tr>
    <td WIDTH="57%" VALIGN="TOP"><p ALIGN="JUSTIFY">Goodwill, net of accumulated amortization
    of $411,000 and $454,000 at March 31, 1999 and 1998, respectively</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">$ 142,260</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">$ 85,524</td>
  </tr>
  <tr>
    <td WIDTH="57%" VALIGN="TOP"><p ALIGN="JUSTIFY">Capitalized software development costs,
    net of accumulated amortization of $152,000 and $11,000 at March 31, 1999 and 1998,
    respectively</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">594,104</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">687,197</td>
  </tr>
  <tr>
    <td WIDTH="57%" VALIGN="TOP">Other</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">193,439</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">127,208</td>
  </tr>
  <tr>
    <td WIDTH="57%" VALIGN="TOP"> </td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">$929,803</td>
    <td WIDTH="21%" VALIGN="TOP"><p ALIGN="RIGHT">$899,929</td>
  </tr>
</TABLE>
<b>

<p>(14) Subsequent Event with a Related Party</p>
</b>

<p ALIGN="JUSTIFY">On May 19, 1999, the Company, as a part of an incentive program entered
into a restricted stock purchase agreement whereby a Company officer may purchase up to
7.5% (16,575 shares of common stock)of the Company’s wholly-owned subsidiary,
Clinical Data Australia. Sale of such shares are at par-value.</p>
<b>

<p>(15) Segment Information</p>
</b>

<p ALIGN="JUSTIFY">Effective for the fiscal year ended March 31, 1999, the Company has
adopted SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information." SFAS No. 131 establishes standards for reporting information regarding
operating segments in annual financial statements and requires selected information for
those segments to be presented in interim financial reports issued to stockholders. SFAS
No. 131 also establishes standards for related disclosures about products and services and
geographic areas. Operating segments are identified as components of an enterprise about
which separate discrete financial information is available for evaluation by the chief
operating decision maker, or decision making group, in making decisions how to allocate
resources and assess performance. The Company’s chief decision-maker, as defined
under SFAS No. 131, is the Chief Executive Officer. To date, the Company has viewed its
operations and manages its business as principally three operating segments: the
manufacture and sale of scientific instrumentation (Vital Scientific), the design and
marketing of process monitoring instrumentation (NovaChem) and the sale of instruments and
consumables in Australia (Clinical Data Australia). The Company evaluates the performance
of its operating segments based on income before income taxes, accounting changes, and
nonrecurring items. Intersegment sales and transfers are not significant. The "All
Other" column includes corporate related items, results of insignificant operations
and, as it relates to segment profit (loss), income and expense not allocated to
reportable segments. </p>

<p ALIGN="JUSTIFY">The accounting policies of the segments are the same as those described
in the summary of significant accounting policies. The Company evaluates performance based
on the sales, operating costs, net income and total assets. Revenues are attributed to the
subsidiary from which derived. Segment information for the years ended March 31, 1999,
1998 and 1997 is as follows: </p>

<table BORDER="1" CELLSPACING="1" CELLPADDING="4" WIDTH="624">
  <CAPTION> </CAPTION>
  <tr>
    <td WIDTH="31%" VALIGN="TOP"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2"><p ALIGN="CENTER">Instrument</p>
    <p ALIGN="CENTER">Manufacture</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2"><p ALIGN="CENTER">Sales</p>
    <p ALIGN="CENTER">Distribution</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2"><p ALIGN="CENTER">Process</p>
    <p ALIGN="CENTER">Monitoring</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2"><p ALIGN="CENTER">All</p>
    <p ALIGN="CENTER">Other</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">Consolidated</font></td>
  </tr>
  <tr>
    <td WIDTH="31%" VALIGN="TOP"><font SIZE="2">Sales</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
  </tr>
  <tr>
    <td WIDTH="31%" VALIGN="TOP"><font SIZE="2">March 31, 1999</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">$13,800,115</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">$1,340,880</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">$ 276,901</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><p align="right"><font SIZE="2">$
              -</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">$15,417,896</font></td>
  </tr>
  <tr>
    <td WIDTH="31%" VALIGN="TOP"><font SIZE="2">March 31, 1998</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">10,626,944</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">1,107,523</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">67,783</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">-</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">11,802,250</font></td>
  </tr>
  <tr>
    <td WIDTH="31%" VALIGN="TOP"><font SIZE="2">March 31, 1997</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">11,851,992</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">1,836,859</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">130,387</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">26,245</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">13,845,483</font></td>
  </tr>
  <tr>
    <td WIDTH="31%" VALIGN="TOP"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
  </tr>
  <tr>
    <td WIDTH="31%" VALIGN="TOP"><font SIZE="2">Operating Costs</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
  </tr>
  <tr>
    <td WIDTH="31%" VALIGN="TOP"><font SIZE="2">March 31, 1999</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">$14,296,470</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">$1,291,628</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">$ 338,333</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">$ 89,697</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">$16,016,128</font></td>
  </tr>
  <tr>
    <td WIDTH="31%" VALIGN="TOP"><font SIZE="2">March 31, 1998</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">10,878,674</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">1,111,001</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">252,683</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">129,362</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">12,371,720</font></td>
  </tr>
  <tr>
    <td WIDTH="31%" VALIGN="TOP"><font SIZE="2">March 31, 1997</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">12,725,025</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">1,203,488</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">421,752</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">163,753</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">14,514,018</font></td>
  </tr>
  <tr>
    <td WIDTH="31%" VALIGN="TOP"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
  </tr>
  <tr>
    <td WIDTH="31%" VALIGN="TOP"><font SIZE="2">Net Income (Loss)</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
  </tr>
  <tr>
    <td WIDTH="31%" VALIGN="TOP"><font SIZE="2">March 31, 1999</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">$ (360,802)</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">$ 10,917</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">$ 61,121</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">$(181,390)</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">$ (470,154)</font></td>
  </tr>
  <tr>
    <td WIDTH="31%" VALIGN="TOP"><font SIZE="2">March 31, 1998</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">35,491</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">(37,039)</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">(308,326)</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">413,824</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">103,950</font></td>
  </tr>
  <tr>
    <td WIDTH="31%" VALIGN="TOP"><font SIZE="2">March 31, 1997</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">(829,224)</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">624,497</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">(433,434)</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">55,611</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">(582,550)</font></td>
  </tr>
  <tr>
    <td WIDTH="31%" VALIGN="TOP"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
  </tr>
  <tr>
    <td WIDTH="31%" VALIGN="TOP"><font SIZE="2">Total Assets</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
    <td WIDTH="14%" VALIGN="TOP" align="right"> </td>
  </tr>
  <tr>
    <td WIDTH="31%" VALIGN="TOP"><font SIZE="2">March 31, 1999</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">$ 8,841,020</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">$ 443,778</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">$ 75,238</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">$ 298,774</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">$ 9,658,810</font></td>
  </tr>
  <tr>
    <td WIDTH="31%" VALIGN="TOP"><font SIZE="2">March 31, 1998</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">8,537,780</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">600,323</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">(75,269)</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">341,890</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">9,404,724</font></td>
  </tr>
  <tr>
    <td WIDTH="31%" VALIGN="TOP"><font SIZE="2">March 31, 1997</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">7,839,944</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">534,194</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">(393,207)</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">586,902</font></td>
    <td WIDTH="14%" VALIGN="TOP" align="right"><font SIZE="2">8,567,833</font></td>
  </tr>
</TABLE>

<p ALIGN="CENTER">SCHEDULE II</p>

<p ALIGN="CENTER"> </p>
<b>

<p ALIGN="CENTER">VALUATION AND QUALIFYING ACCOUNTS</p>

<p ALIGN="CENTER">MARCH 31, 1999</p>
</b>

<table CELLSPACING="1" BORDER="1" CELLPADDING="7" WIDTH="589">
  <tr>
    <td WIDTH="34%" VALIGN="TOP"> <p>Item</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="CENTER">Balance at Beginning of Period</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="CENTER"> </p>
    <p ALIGN="CENTER">Additions</td>
    <td WIDTH="16%" VALIGN="TOP"><p ALIGN="CENTER"> </p>
    <p ALIGN="CENTER">Deductions</td>
    <td WIDTH="16%" VALIGN="TOP"><p ALIGN="CENTER">Balance at End of Period</td>
  </tr>
  <tr>
    <td WIDTH="34%" VALIGN="TOP"><p ALIGN="JUSTIFY">Allowance for<br>
    Doubtful Accounts</td>
    <td WIDTH="17%" VALIGN="TOP"> </td>
    <td WIDTH="17%" VALIGN="TOP"> </td>
    <td WIDTH="16%" VALIGN="TOP"> </td>
    <td WIDTH="16%" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="34%" VALIGN="TOP"><p ALIGN="CENTER">1999</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">$ 49,457</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">$ 29,542</td>
    <td WIDTH="16%" VALIGN="TOP"><p ALIGN="RIGHT">$
              - </td>
    <td WIDTH="16%" VALIGN="TOP"><p ALIGN="RIGHT">$ 78,999</td>
  </tr>
  <tr>
    <td WIDTH="34%" VALIGN="TOP"> </td>
    <td WIDTH="17%" VALIGN="TOP"> </td>
    <td WIDTH="17%" VALIGN="TOP"> </td>
    <td WIDTH="16%" VALIGN="TOP"> </td>
    <td WIDTH="16%" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="34%" VALIGN="TOP"><p ALIGN="CENTER">1998</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">$ 101,634</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="right">$  
            - </td>
    <td WIDTH="16%" VALIGN="TOP"><p ALIGN="RIGHT">$ 52,177</td>
    <td WIDTH="16%" VALIGN="TOP"><p ALIGN="RIGHT">$ 49,457</td>
  </tr>
  <tr>
    <td WIDTH="34%" VALIGN="TOP"> </td>
    <td WIDTH="17%" VALIGN="TOP"> </td>
    <td WIDTH="17%" VALIGN="TOP"> </td>
    <td WIDTH="16%" VALIGN="TOP"> </td>
    <td WIDTH="16%" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="34%" VALIGN="TOP"><p ALIGN="CENTER">1997</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">$ 118,707</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="right">$   
           - </td>
    <td WIDTH="16%" VALIGN="TOP"><p ALIGN="RIGHT">$ 17,073</td>
    <td WIDTH="16%" VALIGN="TOP"><p ALIGN="RIGHT">$ 101,634</td>
  </tr>
  <tr>
    <td WIDTH="34%" VALIGN="TOP"><p ALIGN="JUSTIFY">Restructuring Charge</td>
    <td WIDTH="17%" VALIGN="TOP"> </td>
    <td WIDTH="17%" VALIGN="TOP"> </td>
    <td WIDTH="16%" VALIGN="TOP"> </td>
    <td WIDTH="16%" VALIGN="TOP"> </td>
  </tr>
  <tr>
    <td WIDTH="34%" VALIGN="TOP"><p ALIGN="CENTER">1999</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">$
                -</td>
    <td WIDTH="17%" VALIGN="TOP"><p ALIGN="RIGHT">$ 50,946</td>
    <td WIDTH="16%" VALIGN="TOP"><p ALIGN="RIGHT">$
             - </td>
    <td WIDTH="16%" VALIGN="TOP"><p ALIGN="RIGHT">$ 50,946</td>
  </tr>
</TABLE>

<p ALIGN="JUSTIFY"> </p>
<b>

<p ALIGN="CENTER">EXHIBIT INDEX</p>
</b>

<p>Exhibit</p>
<u>

<p>Number Description</p>

<blockquote>
  <blockquote>
    <blockquote>
      </u><p>3.1* Certificate of Incorporation<br>
      3.2* Bylaws<br>
      3.3*** Form 10-C dated June 16, 1994 - Change in Name of Issuer effective April 12, 1994.<br>
      4.1* Article Fourth of the Certificate of Incorporation, as amended (included in Exhibit
      3.1)<br>
      10.25** 1991 Stock Option Plan and 1991 Directors’ Option Plan and forms of option
      agreement.<br>
      22.1 Subsidiaries of the Registrant <br>
      24.1 Consent of Arthur Andersen LLP</p>
      <p> </p>
    </blockquote>
    <font SIZE="1"><p>* Incorporated by reference to exhibits to the Registrant’s
    Registration Statement on Form S-1 (File No. 2-82494).<br>
    ** Incorporated by reference to exhibits to the Registration Statement on Form S-8 filed
    with the Commission on March 5, 1992.<br>
    *** Incorporated by reference to Form 10-C filed with the SEC on June 16, 1994.</p>
    </font>
  </blockquote>
</blockquote>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER"> </p>

<p ALIGN="CENTER">EXHIBIT 22.1</p>
<b>

<p ALIGN="CENTER">SUBSIDIARIES OF THE REGISTRANT</p>
</b>

<p ALIGN="CENTER"> </p>

<p ALIGN="JUSTIFY">The Registrant has the following subsidiaries, the financial statements
of which are included in the consolidated financial statements of the Registrant:</p>

<table CELLSPACING="1" BORDER="1" CELLPADDING="7" WIDTH="536">
  <tr>
    <td WIDTH="235" VALIGN="TOP">Name</td>
    <td WIDTH="153" VALIGN="TOP">Country of Incorporation</td>
    <td WIDTH="94" VALIGN="TOP"><p ALIGN="CENTER">Percentage Owned</td>
  </tr>
  <tr>
    <td WIDTH="235" VALIGN="TOP"><p ALIGN="JUSTIFY">Clinical Data (Australia) Pty. Ltd.</td>
    <td WIDTH="153" VALIGN="TOP"><p ALIGN="JUSTIFY">Australia</td>
    <td WIDTH="94" VALIGN="TOP"><p ALIGN="CENTER">100%</td>
  </tr>
  <tr>
    <td WIDTH="235" VALIGN="TOP"><p ALIGN="JUSTIFY">Clinical Data BV</td>
    <td WIDTH="153" VALIGN="TOP"><p ALIGN="JUSTIFY">Netherlands</td>
    <td WIDTH="94" VALIGN="TOP"><p ALIGN="CENTER">100%</td>
  </tr>
  <tr>
    <td WIDTH="235" VALIGN="TOP"><p ALIGN="JUSTIFY">NovaChem BV</td>
    <td WIDTH="153" VALIGN="TOP"><p ALIGN="JUSTIFY">Netherlands</td>
    <td WIDTH="94" VALIGN="TOP"><p ALIGN="CENTER">100%</td>
  </tr>
  <tr>
    <td WIDTH="235" VALIGN="TOP"><p ALIGN="JUSTIFY">Spectronetics NV</td>
    <td WIDTH="153" VALIGN="TOP"><p ALIGN="JUSTIFY">Curacao</td>
    <td WIDTH="94" VALIGN="TOP"><p ALIGN="CENTER">100%</td>
  </tr>
  <tr>
    <td WIDTH="235" VALIGN="TOP">Vital Scientific NV</td>
    <td WIDTH="153" VALIGN="TOP">Netherlands</td>
    <td WIDTH="94" VALIGN="TOP"><p ALIGN="CENTER">100%</td>
  </tr>
</TABLE>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="CENTER">EXHIBIT 24.1</p>
<b>

<p ALIGN="CENTER">CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS</p>
</b>

<p>As independent public accountants, we hereby consent to the incorporation of our report
included in this Form 10-K into the Company’s previously filed Registration
Statements on Form S-8 (File Nos. 33-25938, 33-25939, 33-46233 and 33-46234).</p>

<p ALIGN="JUSTIFY"> </p>

<p ALIGN="RIGHT">ARTHUR ANDERSEN LLP</p>

<p>Boston, Massachusetts</p>

<p>June 28, 1999</p>
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