<PAGE>


                                    FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended JUNE 30, 2001
                                                 -------------

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the transition period from       to
                                                 -----     -----

                          Commission File Number 1-6549

                     AMERICAN SCIENCE AND ENGINEERING, INC.
             ------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

<TABLE>
<S>                                                                              <C>

          MASSACHUSETTS                                                                   04-2240991
----------------------------------                                                   -------------------
(State or other jurisdiction of                                                      (I.R.S. Employer
incorporation or organization)                                                       Identification No.)


   829 MIDDLESEX TURNPIKE
   BILLERICA, MASSACHUSETTS                                                              01821
-------------------------------                                                      -------------
(Address of principal executive offices)                                             (Zip Code)
</TABLE>


                                 (978) 262-8700
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


              ----------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

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, and (2) has been subject to such filing requirements
for the past 90 days.

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

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date

                                                        OUTSTANDING AT
      CLASS OF COMMON STOCK                              JUNE 30, 2001
      ---------------------                              -------------
       $.66 2/3 par value                                  5,027,496


                               Page 1 of 11 Pages
                     The Exhibit Index is Located at Page 11


<PAGE>


                     AMERICAN SCIENCE AND ENGINEERING, INC.
                         PART I - FINANCIAL INFORMATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>

Dollars in thousands                                                         June 30, 2001           March 31, 2001
                                                                             -------------           --------------
                                                                              (Unaudited)
<S>             <C>                                                       <C>                   <C>

ASSETS           Current assets:
                 Cash and cash equivalents                                   $      5,474          $         1,206
                 Accounts receivable, net of allowances of $117 at
                    June 30, 2001 and $134 at March 31, 2001                        9,677                    9,726
                 Unbilled costs and fees, net of allowances
                    of $437 at June 30, 2001 and March 31, 2001                     5,785                    8,907
                 Inventories                                                       13,205                   13,999
                 Deferred income taxes                                              2,475                    2,475
                 Prepaid expenses and other current assets                            850                      951
                                                                             ------------          ---------------
                 Total current assets                                              37,466                   37,264
                                                                             ------------          ---------------

                 Non-current assets:
                 Non-current deferred income taxes                                    823                      823
                 Other assets                                                         159                      175
                 Patents and other intangibles, net of accumulated
                    amortization of $289 at June 30, 2001 and $265
                    at March 31, 2001                                                 178                      200
                 Property and equipment, net of accumulated
                    depreciation of $13,650 at June 30, 2001
                    and $13,071 at March 31, 2001                                   5,495                    5,848
                                                                             ------------          ---------------

                                                                             $     44,121          $        44,310
                                                                             ============          ===============
</TABLE>


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


                                      -2-
<PAGE>


                     AMERICAN SCIENCE AND ENGINEERING, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (CONTINUED)


<TABLE>
<CAPTION>

Dollars in thousands                                                         June 30, 2001           March 31, 2001
                                                                             -------------           --------------
                                                                              (Unaudited)
<S>                 <C>                                                  <C>                    <C>

LIABILITIES &         Current liabilities:
STOCKHOLDERS'         Line of credit                                       $       7,519           $         6,019
INVESTMENT            Accounts payable                                             5,376                     7,427
                      Accrued salaries and benefits                                1,327                     1,376
                      Accrued warranty costs                                         291                       348
                      Deferred revenue                                               827                       722
                      Customer deposits                                            3,354                     1,892
                      Accrued income taxes                                           503                       438
                      Other current liabilities                                      994                     2,291
                                                                           -------------           ---------------
                      Total current liabilities                                   20,191                    20,513
                                                                           -------------           ---------------

                      Non-current liabilities:
                      Deferred revenue                                               749                       781
                      Deferred compensation                                           97                        95
                      Deferred rent                                                  268                       287
                                                                           -------------           ---------------
                      Total non-current liabilities                                1,114                     1,163
                                                                           -------------           ---------------

                      Stockholders' investment:
                      Preferred stock, no par value
                        Authorized  - 100,000 shares
                        Issued - none
                      Common stock, $.66-2/3 par value
                        Authorized - 20,000,000 shares
                        Issued 5,027,496 shares at June 30, 2001
                         and 5,012,752 shares at March 31, 2001                    3,351                     3,342
                      Capital in excess of par value                              18,546                    18,472
                      Retained earnings                                            1,559                     1,460
                                                                           -------------           ---------------
                                                                                  23,456                    23,274
                      Note receivable - officer                                     (640)                     (640)
                                                                           -------------           ---------------
                      Total stockholders' investment                              22,816                    22,634
                                                                           -------------           ---------------
                                                                           $      44,121           $        44,310
                                                                           =============           ===============
</TABLE>


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


                                      -3-
<PAGE>


                     AMERICAN SCIENCE AND ENGINEERING, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)


<TABLE>
<CAPTION>

Dollars and shares in thousands, except per share amounts                For Three Months Ended
                                                                   ------------------------------------
                                                                   June 30, 2001          June 30, 2000
                                                                   -------------          -------------
<S>                                                             <C>                    <C>

 NET SALES AND CONTRACT REVENUE                                   $       19,027          $      15,063
                                                                  --------------          -------------

 COSTS AND EXPENSES:
   Cost of sales and contracts                                            14,413                 11,335
   Selling, general and administrative expenses                            2,668                  2,224
   Research and development                                                1,597                  1,306
                                                                  --------------          -------------
   Total costs and expenses                                               18,678                 14,865
                                                                  --------------          -------------

OPERATING INCOME                                                             349                    198
                                                                  --------------          -------------

OTHER EXPENSE:
   Interest, net                                                            (122)                  (126)
   Other, net                                                                (70)                   (25)
                                                                  --------------          -------------
   Total other expense                                                      (192)                  (151)
                                                                  --------------          -------------

INCOME BEFORE PROVISION
   FOR INCOME TAXES                                                          157                     47

PROVISION FOR INCOME TAXES                                                    58                     18
                                                                  --------------          -------------

NET INCOME                                                        $           99          $          29
                                                                  ==============          =============

INCOME PER SHARE - BASIC                                          $         0.02          $        0.01
                                                                  ==============          =============
                 - DILUTED                                        $         0.02          $        0.01
                                                                  ==============          =============

WEIGHTED AVERAGE SHARES - BASIC                                            5,022                  4,969
                                                                  ==============          =============
                        - DILUTED                                          5,056                  5,000
                                                                  ==============          =============
</TABLE>


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


                                      -4-
<PAGE>


                     AMERICAN SCIENCE AND ENGINEERING, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


<TABLE>
<CAPTION>
Dollars in thousands                                                            For the Three Months Ended
                                                                           --------------------------------------
                                                                           June 30, 2001            June 30, 2000
                                                                           -------------            -------------
<S>                                                                     <C>                       <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                 $         99             $         29
Adjustments to reconcile net income to net cash provided by
   operating activities:
   Depreciation and amortization                                                    603                      501
   Provisions for contract, inventory, accounts receivable
     and warranty reserves                                                           57                       45
   Changes in assets and liabilities:
      Accounts receivable                                                            49                      648
      Unbilled costs and fees                                                     3,122                   (2,497)
      Inventories                                                                   794                      (23)
      Prepaid expenses, deposits and other assets                                   109                       85
      Accounts payable                                                           (2,051)                  (1,865)
      Accrued income taxes                                                           65                        -
      Customer deposits                                                           1,462                    4,521
      Deferred revenue                                                               73                        -
      Accrued expenses and other current liabilities                             (1,369)                    (146)
      Non-current liabilities                                                       (17)                    (155)
                                                                           ------------             ------------
   Total adjustments                                                              2,892                    1,114
                                                                           ------------             ------------
Net cash provided by operating activities                                         2,996                    1,143
                                                                           ------------             ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of property and equipment                                              (228)                    (852)
                                                                           ------------             ------------
Net cash used by investing activities                                              (228)                    (852)
                                                                           ------------             ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from line of credit                                                   1,500                    1,000
   Proceeds from exercise of stock options                                            -                       59
                                                                           ------------             ------------
 Net cash provided by financing activities                                        1,500                    1,059
                                                                           ------------             ------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                         4,268                    1,350
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                  1,206                    1,246
                                                                           ------------             ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                 $      5,474             $      2,596
                                                                           ============             ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
   Interest paid                                                           $        134             $        142
   Income taxes paid                                                       $         15             $          -
NON-CASH TRANSACTIONS:
   Issuance of stock in lieu of fees                                       $         92             $          -
</TABLE>


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


                                      -5-
<PAGE>


                     AMERICAN SCIENCE AND ENGINEERING, INC.
           PREPARATION OF CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


The condensed consolidated financial statements included herein have been
prepared by American Science and Engineering, Inc. (the Company) pursuant to the
rules and regulations of the Securities and Exchange Commission, and the annual
condensed consolidated financial statements are subject to year end audit by
independent public accountants. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. The Company believes, however, that the disclosures are
adequate to make the information presented not misleading. It is suggested that
these condensed consolidated financial statements be read in conjunction with
the consolidated financial statements and the notes thereto included in the
Company's latest annual report on Form 10-K.

The condensed consolidated financial statements, in the opinion of management,
include all adjustments necessary to present fairly the Company's financial
position and the results of operations. These results are not necessarily
indicative of the results to be expected for the entire year.


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.       NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES

         American Science and Engineering, Inc., is engaged in the development
         and manufacture of sophisticated X-ray inspection systems for critical
         detection and security screening solutions for sale primarily to U.S.
         and foreign government agencies. The Company has only one reporting
         segment, X-ray screening products.

         The significant accounting policies followed by the Company and its
         subsidiary in preparing its consolidated financial statements are set
         forth in Note 1 to the consolidated financial statements included in
         Form 10-K for the year ended March 31, 2001. The Company has made no
         changes to these policies during this quarter.


2.       INVENTORIES

         Inventories consisted of:

<TABLE>
<CAPTION>

             (Dollars in thousands)                              June 30, 2001             March 31, 2001
                                                                 --------------            ---------------
            <S>                                                <C>                         <C>

             Raw materials and completed
                sub-assemblies                                   $       8,158               $       7,839
             Work in process                                             5,047                       6,160
                                                                 -------------               -------------
             Total                                               $      13,205               $      13,999
                                                                 =============               =============
</TABLE>


                                      -6-
<PAGE>


3.       INCOME PER COMMON AND COMMON EQUIVALENT SHARE

         Basic earnings per common share is computed by dividing net income by
         the weighted average number of shares of common stock outstanding
         during the period. Diluted earnings per share includes the dilutive
         impact of options and warrants using the average share price of the
         Company's common stock for the period.

<TABLE>
<CAPTION>

   Earnings Per Share                                             Three Months Ended
   ------------------                                            --------------------
   (in thousands except per share amounts)               June 30, 2001          June 30, 2000
                                                         -------------          -------------
<S>                                                  <C>                      <C>

   BASIC
   Net income                                           $             99         $            29
                                                        ----------------         ---------------
   Weighted average shares                                         5,022                   4,969
                                                        ----------------         ---------------
   Basic earnings per share                             $           0.02         $          0.01
                                                        ----------------         ---------------
   DILUTED
   Net income                                           $             99         $            29
                                                        ----------------         ---------------
   Weighted average shares                                         5,022                   4,969
   Effect of stock options                                            34                      31
                                                        ----------------         ---------------
   Weighted average shares, as adjusted                            5,056                   5,000
                                                        ----------------         ---------------
   Diluted earnings per share                           $           0.02         $          0.01
                                                        ================         ===============
</TABLE>


4.       INCOME TAXES

         At March 31, 2001, the Company had approximately $708,000 of unused
         investment tax and other credits, which expire through 2018.

5.       BORROWINGS

         On November 30, 2000, the Company signed two new credit agreements with
         HSBC Bank USA ("HSBC"). The first agreement is for a $10 million
         domestic revolving credit facility to support the Company's routine
         working capital and standby letter of credit needs. The second is a $30
         million export credit and security agreement, guaranteed by the
         Export-Import Bank of the United States ("Ex-Im"), to support the
         Company's overseas contract, trade finance and working capital needs.
         The credit facility bears an interest rate of the HSBC Bank USA prime
         rate or LIBOR plus 2.0% at the Company's option.

         At June 30, 2001, $7.5 million in borrowings were outstanding and $19.2
         million in letters of credit were in effect against this credit
         facility. The Company's credit facility restricts the payment of
         dividends, except in shares of the Company's stock, without consent of
         the bank. The credit facility requires the Company to meet certain
         financial covenants. As of June 30, 2001, the Company was in compliance
         with all of the financial covenants.


                                      -7-
<PAGE>


                     AMERICAN SCIENCE AND ENGINEERING, INC.
           ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS


         OVERVIEW

         In the first quarter of fiscal 2002 net sales and contract revenues
         were $19,027,000, a 26% increase from the comparable period a year ago
         and a 2% increase from the previous quarter. The Company earned a net
         profit of $99,000 in the current quarter, compared to a net profit of
         $29,000 in the corresponding period a year ago and a net profit of
         $267,000 in the previous quarter.

         RESULTS OF OPERATIONS

         Net sales and contract revenues in the first quarter increased by
         $3,964,000 (26%) in comparison to the corresponding period a year ago
         and increased by $463,000 (2%) compared to the fourth quarter of fiscal
         2001. This increase in revenues from the previous quarter is due to
         progress made on CargoSearch(TM) projects and increased field services
         revenues.

         For the first quarter, costs of sales and contracts increased to
         $14,413,000 from $11,335,000 in the corresponding period a year ago.
         Costs of sales and contracts represented 76% of revenues versus 75% for
         the corresponding period last year and 76% for the fourth quarter of
         fiscal year 2001. The costs of sales as a percentage of revenue in the
         current quarter increased slightly from the corresponding period last
         year due primarily to sales mix.

         Selling, general and administrative expenses of $2,668,000 for the
         first quarter were higher by 20% compared to the corresponding period
         last year and higher by 6% compared to the fourth quarter of fiscal
         2001. As a percent of sales, selling, general and administrative
         expenses were 14% of revenues in the current quarter compared to 15% of
         revenues for the corresponding period a year ago and 14% for the fourth
         quarter of fiscal year 2001.

         Company-funded research and development expenses of $1,597,000 for the
         first quarter increased by $291,000 (22%) compared to the corresponding
         period last year and increased by $302,000 (23%) compared to the fourth
         quarter of fiscal year 2001. The current quarter's results are a result
         of increased efforts on internal research and development projects and
         are consistent with plan.

         The Company produced net income of $99,000 during the first quarter.
         This is an increase of $70,000 (241%) over net income in the prior year
         quarter and a decrease of $69,000 (41%) from the fourth quarter of
         fiscal 2001. The increase in net income from the prior year can be
         attributed primarily to the higher revenues realized in the current
         quarter.


         LIQUIDITY AND CAPITAL RESOURCES

         Cash and cash equivalents increased by $4,268,000 to $5,474,000 at June
         30, 2001 compared to $1,206,000 at March 31, 2001. This increase in
         cash and cash equivalents was primarily due to increased customer
         deposits, decreases in unbilled costs and fees and additional
         borrowings against the line of credit partially offset by the decrease
         in accounts payable and accrued expenses. Working capital increased by
         $524,000 (3%) since March 31, 2001, increasing from $16,751,000 to
         $17,275,000 at the end of the first quarter.


                                      -8-
<PAGE>

         On November 30, 2000, the Company signed two new credit agreements with
         HSBC Bank USA ("HSBC"). The first agreement is for a $10 million
         domestic revolving credit facility to support the Company's routine
         working capital and standby letter of credit needs. The second is a $30
         million export credit and security agreement, guaranteed by the
         Export-Import Bank of the United States ("Ex-Im"), to support the
         Company's overseas contract, trade finance and working capital needs.
         The credit facility bears an interest rate of the HSBC Bank USA prime
         rate or LIBOR plus 2.0% at the Company's option.

         At June 30, 2001, $7.5 million in borrowings were outstanding and $19.2
         million in letters of credit were in effect against this credit
         facility. The Company's credit facility restricts the payment of
         dividends, except in shares of the Company's stock, without consent of
         the bank. The credit facility requires the Company to meet certain
         financial covenants. As of June 30, 2001, the Company was in compliance
         with all of the financial covenants.


                                      -9-
<PAGE>


                        PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

The United States Court of Appeals for the Federal Circuit in Washington,
D.C., in a decision issued December 29, 1999, ruled that American Science &
Engineering, may pursue a patent infringement claim against Vivid
Technologies which produces X-ray detection devices used in baggage scanning
equipment.

The Appeals Court overturned a 1998 decision in Vivid's favor by the
Massachusetts Federal District. The lawsuit filed in May 1996, concerns
whether Vivid's X-ray detection devices infringed on AS&E's patent. The
District Court had ruled that AS&E could not assert a claim that Vivid's
devices infringed on AS&E's patent. The Appeals Court also reversed the
district court's finding on summary judgment that Vivid did not infringe on
AS&E's patent, as well as the district court's denial of AS&E's request for
discovery to oppose Vivid's summary judgment motion. Discovery is now
proceeding.

In September 1998, the Company filed suit against EG&G Astrophysics Research
Corp. ("EG&G") in U.S. District Court in Boston, Massachusetts alleging that
EG&G is infringing on at least two patents owned by the Company and that EG&G
has misappropriated certain trade secrets of the Company. In February 1999,
the Company filed a related action in the same court against the U.S. Customs
Service ("Customs") alleging that Customs had either misappropriated the
Company's trade secrets or facilitated their misappropriation by EG&G and
that Customs had improperly entered into a contract with EG&G for the
acquisition of a product functionally equivalent to MobileSearch(TM) X-ray
inspection system. In May 1999, the Court held a hearing on the Company's
motion for a preliminary injunction against both Customs and EG&G prohibiting
further performance of the contested contract and preventing EG&G from
utilizing the Company's trade secrets. In August 1999, the Court issued a
ruling denying the request for the preliminary injunction. In December 1999,
EG&G filed a Motion for Summary Judgment that EG&G did not misappropriate the
Company's trade secrets and in March 2000 EG&G filed a Motion for Summary
Judgment that EG&G did not infringe the Company's patents. In February 2001,
the Court denied EG&G's motion for Summary Judgment. The Company is
continuing to pursue its claims against EG&G, but has filed a motion to
dismiss the suit against U.S. Customs Service.

In a related matter, EG&G had filed a request with the U.S. Patent and
Trademark Office for re-examination of the two patents that currently are at
issue in the patent infringement action described above. The Company filed
oppositions to the re-examination requests and was advised by the U.S. Patent
and Trademark Office that the Company's MobileSearch X-ray inspection patent
was upheld in all material respects. The Company has now also been advised by
the U.S. Patent and Trademark Office that the Company's patent on its Z(R)
Backscatter X-ray inspection technology has been upheld in all material
respects.

In February 2000, Heimann Systems GmBH filed a civil action in U.S. District
Court in Boston, Massachusetts against the Company alleging that the Company
infringed a Heimann patent relating to a mobile vehicle and X-ray examining
device. The Company denies Heimann's assertions and believes that Heimann's
claims are without merit. The Company does not expect the outcome of this
litigation to have a material impact to its financial position or results of
operations.

                                      -10-
<PAGE>


ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits
                  10(c)(x) Employment Agreement between the Company and
                  Andrew R. Morrison dated May 30, 2001.

         (b)      REPORTS ON FORM 8-K
                  No reports on Form 8-K were filed during the quarter.

The information required by Exhibit Item 11 (Statement re: Computation of
Income per Common and Common Equivalent Share) may be found in Footnote No. 3
on Page 7.


SIGNATURES

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 hereunto duly authorized.


                          AMERICAN SCIENCE AND ENGINEERING, INC.
                          (Registrant)



Date: August 12, 2001

                          ________________________________________
                          Andrew R. Morrison
                          Vice President, Chief Financial Officer and Treasurer


SAFE HARBOR STATEMENT

THE FOREGOING 10-Q CONTAINS STATEMENTS CONCERNING THE COMPANY'S FINANCIAL
PERFORMANCE AND BUSINESS OPERATIONS WHICH MAY BE CONSIDERED "FORWARD-LOOKING"
UNDER APPLICABLE SECURITIES LAWS.

THE COMPANY WISHES TO CAUTION READERS OF THIS FORM 10-Q THAT ACTUAL RESULTS
MIGHT DIFFER MATERIALLY FROM THOSE PROJECTED IN ANY FORWARD-LOOKING STATEMENTS.

FACTORS WHICH MIGHT CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
PROJECTED IN THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN INCLUDE THE
FOLLOWING: SIGNIFICANT REDUCTIONS OR DELAYS IN PROCUREMENTS OF THE COMPANY'S
SYSTEMS BY THE UNITED STATES GOVERNMENT; DISRUPTION IN THE SUPPLY OF ANY
SOLE-SOURCE COMPONENT INCORPORATED INTO THE COMPANY'S PRODUCTS (OF WHICH THERE
ARE SEVERAL); LITIGATION SEEKING TO RESTRICT THE USE OF INTELLECTUAL PROPERTY
USED BY THE COMPANY; POTENTIAL PRODUCT LIABILITY CLAIMS AGAINST THE COMPANY;
GLOBAL POLITICAL TRENDS AND EVENTS WHICH AFFECT PUBLIC PERCEPTION OF THE THREAT
PRESENTED BY DRUGS, EXPLOSIVES AND OTHER CONTRABAND; THE ABILITY OF GOVERNMENTS
AND PRIVATE ORGANIZATIONS TO FUND PURCHASES OF THE COMPANY'S PRODUCTS TO ADDRESS
SUCH THREATS; AND THE POTENTIAL INSUFFICIENCY OF COMPANY RESOURCES, INCLUDING
HUMAN RESOURCES, CAPITAL, PLANT AND EQUIPMENT AND MANAGEMENT SYSTEMS, TO
ACCOMMODATE ANY FUTURE GROWTH. THESE AND CERTAIN OTHER FACTORS WHICH MIGHT CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED ARE MORE FULLY SET
FORTH UNDER THE CAPTION "FORWARD-LOOKING INFORMATION AND FACTORS AFFECTING
FUTURE PERFORMANCE" IN THE COMPANY'S REGISTRATION STATEMENT ON FORM 10-K.

                                       11