FORM 10-K
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549



(Mark One)

[X] Annual report pursuant to Section 13 or 15(d) of the Securities 
    Exchange Act of 1934 (Fee Required)


For the fiscal year ended DECEMBER 31, 1996 or
                          -----------------

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities 
    Exchange Act of 1934 (No Fee Required)

For the transition period from ________________ to ________________

Commission File Number  0-12516
                        -------

  DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)

  FLORIDA                                               59-3389871
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(State of Incorporation)                               (IRS E.I.N.)

101 SOUTHHALL LANE, SUITE 210, MAITLAND, FLORIDA          32751
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(Address of principal executive offices)               (ZIP Code)

(407) 875-9991
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(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:        NONE
                                                            -------------------

Securities registered pursuant to Section 12(g) of the Act:  COMMON STOCK
                                                           ----------------
                                                           (Title of Class)

Indicate by checkmark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

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. [ ]

The aggregate market value of the voting stock held by non-affiliates, based on
the average bid and asked prices as of March 10, 1997, was $89,346,402. A total
of 11,528,568 shares of the Company's common stock were held by persons and
entities believed to be non-affiliated on March 10, 1997, and the closing bids
and ask prices of the Company's common stock on this date were $7.625 and
$7.875, respectively.

<PAGE>


As of March 10, 1997, there were 17,034,253 shares outstanding of the issuer's
only class of common stock.

This report consists of fifty-six (56) pages.

The index to exhibits appears on page nineteen (19).


DOCUMENTS INCORPORATED BY REFERENCE

(1) Portions of the definitive proxy statement for the Company's 1997 
    Annual Meeting of Shareholders, to be filed within 120 days of the
    end of the Company's fiscal year covered by this report, pursuant to
    General Instruction G(3) to Form 10-K.

                                        2

<PAGE>

                                    FORM 10-K
                      DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
                                     PART I


ITEM 1.  BUSINESS

GENERAL

Dynamic Healthcare Technologies, Inc. ("Dynamic" or the "Company") is a leading
provider of enterprise-wide, patient-centered healthcare information systems.
These systems enable hospitals, physician practice groups and integrated
delivery networks to capture, store, archive and retrieve clinical, financial
and administrative patient information. The Company's products enhance
productivity, reduce costs and improve the quality of patient care by providing
on-line access to patient information previously maintained on a variety of
media, including paper, X-ray film, magnetic disk, and video and audio
recordings. The Company's current product lines include clinical information
systems for use in laboratory, radiology, anatomic pathology and anesthesiology
applications and imaging and electronic health record solutions. The Company
provides support for all of its systems and provides integration and other
consulting services.

The Company currently serves over 550 customers the majority of which are
located in the United States. Key customers include the UCLA Medical Center,
Methodist Hospital of Memphis, Orlando Regional Health System, Ohio State
University Hospital, University of Pittsburgh, Temple University Hospital,
University of Illinois at Chicago Medical Center, Memorial Sloan-Kettering
Cancer Center, Advocate Health Care, Greater Dayton Area Hospital Association,
The Mayo Clinic and UniHealth.

Utilizing the Company's healthcare information experience, imaging technologies
and customer input, the Company is focusing on a product strategy for electronic
health records. The Company's electronic health record product, DYNAMICVISION,
provides connectivity and enabling technologies that integrate clinical and
imaging information systems to create an open architecture, multi-media clinical
workstation. DYNAMICVISION provides prompt and simultaneous on-line access to
information stored in various systems and data repositories located at multiple
sites. This information can include documents, medical images such as X-rays,
MRIs and CAT scans, and video and audio recordings.

The Company was originally incorporated in California in 1977, reincorporated in
Nebraska in 1982 and subsequently reincorporated in Florida in 1996. The
Company's executive offices are located at 101 Southhall Lane, Suite 210,
Maitland, Florida 32751, its telephone number is (407) 875-9991 and its World
Wide Web address is http://www.dht.com.

                                        3

<PAGE>

INDUSTRY

The healthcare information industry is undergoing rapid and significant change.
Cost containment pressures, industry consolidation, the movement toward managed
care and rising standards of healthcare quality represent fundamental trends in
today's healthcare operating environment. Increasingly, the key to effective
cost control and quality management lies in the collection, availability and
analysis of medical records in order to assess treatment patterns, resource
utilization and outcomes. As a result, the information demands in the healthcare
industry are rapidly increasing for caregivers, managers and third party payors.
Total healthcare information technology spending in the United States was
estimated to be $8.5 billion in 1994, and is projected to reach $13.0 billion by
1997 and $20.0 billion by 2000.

Cost containment and quality management efforts in the healthcare industry have
historically been hampered by a lack of integrated clinical and financial
information and the fact that a large amount of healthcare information exists on
paper and is not accessible by computer. The paper based storage of patient
information creates costly information management problems including: (i) delays
in accessing information; (ii) space and personnel costs to store paper-based
records; (iii) lost and misfiled documents; (iv) single user access to relevant
data; and (v) errors in entering and reading information. As reimbursement is
shifting more toward risk sharing and capitation, providers and payors need to
better manage risk by controlling costs, demonstrating quality, measuring
outcomes and influencing utilization.

Healthcare providers have recently begun to view information systems technology
as a viable avenue for increasing productivity and efficiency, measuring and
managing costs, and improving the quality of services delivered. The 1996 Annual
Healthcare Information Management and Systems Society ("HIMSS")/Hewlett Packard
Leadership Survey showed that 63% of its respondents indicated that their
healthcare information systems budgets will increase by 20% or more over the
next two years and 24% indicated budget growth of over 50% during the next two
years.

As the need for readily accessible information throughout the healthcare
enterprise continues to grow, hospitals, providers and payors of all sizes are
faced with the challenge of implementing healthcare information management
systems that are scaleable, capable of working with existing multiple legacy
information systems and flexible to adapt to changes in the healthcare
marketplace. Also, such systems must be patient-centered, integrating all
aspects of managing the healthcare process, such as clinical care, financial
management and administrative decision support.

Industry changes are resulting in fewer but larger healthcare entities and the
emerging organizational model is the integrated delivery network ("IDN"). An IDN
is a network of healthcare organizations that assumes and manages healthcare
risk, provides coordinated care and is held financially and clinically
accountable for the health of the population it serves. The 1996 HIMSS/Hewlett
Packard Leadership Survey indicated that 83% of the respondents are now or will
soon be part of an IDN.

IDN's require innovative information systems infrastructure to support their
multi-entity, multi-state environments. Their information systems must
contribute to making the delivery of healthcare services more efficient and
effective across the continuum of care. They must deliver tangible cost
reductions and measurable productivity and quality improvements, making the
availability of complete, timely and cost-effective patient-centered information
essential.

The Company believes that one of the most significant changes in healthcare
information needs will be the development and implementation of the electronic
health record. Electronically capturing, storing, indexing, archiving and
disseminating information enables physicians, health information managers,
clinicians, claims processors and others across an entire healthcare enterprise
to share centralized comprehensive patient information. The Company believes
that the electronic health record will be an essential part of information
systems that support IDN's.

                                        4

<PAGE>

PRODUCTS AND SERVICES

The Company has a broad offering of products and services that are based upon a
strategic mix of applications and technologies that support the restructuring of
healthcare delivery information systems backed by implementation and support
services. The Company's products are organized into two areas: electronic health
record and imaging solutions, and clinical information systems.
<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------------
PRODUCTS GENERALLY AVAILABLE               TYPE OF SOLUTION                               DESCRIPTION
-----------------------------------------------------------------------------------------------------------------------------------
                                   ELECTRONIC HEALTH RECORD AND IMAGING SOLUTIONS
                                   ----------------------------------------------  
<S>                                     <C>                            <C>
DYNAMICVISION...................        Electronic Health Record       An enterprise-wide multi-media electronic health records
                                                Systems                clinical workstation and system

MEDICAL RECORDSPLUS.............        Enterprise-wide Document       Based on IBM's ImagePlus/400 image processing system,
                                             Imaging System            enables authorized caregivers to access centralized
                                                                       repositories of document images

PROFESSIONAL ACCESS FACILITY(1).               (OS/2.based             Enables authorized caregivers to review and complete charts
                                               Workstation
MAXIVIEW........................        Diagnostic Image Graphics      An advanced imaging and graphic workstation that enables
                                               Workstation             two- and three-dimensional image processing

PACSPLUS+.......................             Diagnostic.Image          Enables physicians and caregivers to access and review
                                              Management and           images from local and remote locations
                                           Distribution System


                                            CLINICAL INFORMATION SYSTEMS
                                            ----------------------------

COPATH .........................        Anatomic Pathology System      Manages clerical and administrative functions of
                                                                       cytology/pathology department

MAXIFILE........................         Radiology Information         Manages clerical and administrative functions of radiology
                                                System                 department including patient scheduling and film tracking

OPTIMA (3)......................         Radiology Mammography         Manages clerical and administrative functions for
                                                Manager                mammography services

LABPRO 2000.....................              Laboratory               Manages clerical and administrative functions in the
                                          Information System           laboratory including monitoring and controlling specimens,
                                                                       ordering, tracking, and results reporting

TRANSFUSION SERVICE MANAGER(2)..          Blood Bank System            Manages specialized result entry, blood storage, patient
                                                                       history storage, and product inventory
ANSIRS..........................      Anatomic Pathology System        Manages clerical and administrative functions of
                                                                       cytology/pathology department

MEDSPEAK/RADIOLOGY..............          Continuous Speech            An IBM speech recognition solution that enables
                                             Recognition               radiologists to create their own diagnostic reports

PHYSICIAN'S WORKSTATION.........     Point of care patient record      A Wang product that facilitates real time capture of patient
                                                system                 information

HEALTHPOINT ACS.................     Point of care patient record      A Healthpoint product that is a clinical information system
                                                system                 for physicians in both office and hospital ambulatory 
                                                                       settings

NRIDENTITY......................       Fingerprint recognition         A National Registry product allowing physicians and other
                                                system                 authorized users to log-on to systems via fingerprint
                                                                       recognition

<FN>
--------------------------
(1) PROFESSIONAL ACCESS FACILITY is an add-on component which may be used only
    in conjunction with MEDICAL RECORDSPLUS. 
(2) TRANSFUSION SERVICE MANAGER is an add-on component which may be used only 
    in conjunction with LABPRO 2000. 
(3) OPTIMA is an add-on component which may be used only in conjunction with
    MAXIFILE.
-----------------------------------------------------------------------------------------------------------------------------------
</FN>
</TABLE>

                                        5

<PAGE>

                 ELECTRONIC HEALTH RECORD AND IMAGING SOLUTIONS

DYNAMICVISION is the Company's electronic health record solution, is a
universal, clinical workstation which provides enterprisewide connectivity
through a master patient index to systems and data repositories existing in the
healthcare environment, giving physicians, caregivers and other authorized
individuals prompt and simultaneous access to both current and historical health
information. DYNAMICVISION enables physicians, clinicians and other technical
professionals to: (i) view records, report results and worklist assignments;
(ii) display and manipulate document and diagnostic images; (iii) handle the
analysis and assignment of chart deficiencies and electronically sign records;
(iv) play video and audio recordings; and (v) participate in video
consultations. DYNAMICVISION provides business process and workflow automation
that streamlines the flow of tasks and information throughout an enterprise. In
addition, system administration capabilities include security profiling and
specific permissions for the enterprise. DYNAMICVISION provides the connectivity
and enabling technologies that integrate Dynamic's imaging and clinical
information systems, as well as those from other companies, into a virtual
healthcare information systems environment.

MEDICAL RECORDSPLUS is an industry leading, enterprise-wide document imaging
solution based on IBM's ImagePlus/400 image processing system. MEDICAL
RECORDSPLUS gathers information from scanned or faxed paper documents or
directly from existing provider systems which enables physicians, medical
records personnel and other authorized individuals to access centralized
electronic health record information operating on IBM AS/400.

PROFESSIONAL ACCESS FACILITY is an OS/2 based clinical workstation which is used
with MEDICAL RECORDSPLUS to enable physicians, clinicians and other technical
professionals to view records and worklist assignments, display and manipulate
document images, handle the analysis and assignment of record deficiencies and
electronically sign records.

MAXIVIEW is an advanced imaging and graphics workstation which accommodates two-
and three-dimensional image processing and is compatible with imaging equipment
from all major manufacturers. It enables a physician to observe
interrelationships of soft tissue and bone, precisely locate lesions and tumors
and perform a variety of measurements. See "Government Regulation."

PACSPLUS+ is an enterprise-wide, diagnostic image management and distribution
system. It provides physicians and caregivers local and remote access to review
quality or diagnostic quality images from cost effective, standard workstations.
PACSPLUS+ provides remote access to diagnostic images across a network already
functioning at the customer's location.

CLINICAL INFORMATION SYSTEMS

COPATH(/registered trademark/) Anatomic Pathology Information System provides
pathology departments with a complete clinical solution that incorporates text,
voice, images, and multi-media capabilities by integrating a Microsoft Windows
GUI with a Sybase relational database. Unique system tools enable users to
customize their report formats as well as specimen data entry windows. A library
of management reports tracks daily workflow requirements, monthly statistics,
CLIA compliance, and billing. Diagnosis coding follows either SNOMED
International or SNOMED II. Reports can be signed out electronically and
automatically faxed to multiple locations within the enterprise. CoPath
Client/Server configurations are available on IBM RS/6000, Intel NT, or DEC
Alpha NT servers, with Microsoft Windows 95 or Windows NT clients.

MAXIFILE is a radiology information system that computerizes the clerical and
administrative functions of the radiology department. Modular in design,
MAXIFILE applications include patient scheduling and tracking, film management,
statistical reporting, quality control and patient billing. MAXIFILE schedules
patient appointments and automatically generates documents which are available
when the patient arrives. The system monitors the patient throughout the
radiology process and offers time and status reports. Film management tracks
film movement among departments, film libraries, clinics and off-site locations.
Diagnostic reports can be approved electronically and then printed, communicated
via a network or automatically faxed through MAXIFILE'S AutoFAX capability.
Primary markets include hospitals, clinics and independent diagnostic imaging
centers.

OPTIMA is a radiology mammography manager which performs clerical and
administrative functions for mammography services, including American College of
Radiology ("ACR") compliance. OPTIMA may be used only in conjunction with
MAXIFILE. OPTIMA includes an on-line patient history, including breast diagrams,
and supports ACR standards of compliance.

LABPRO 2000 is a clerical and administrative laboratory information system that
allows the laboratory to monitor and control the flow of specimens through the
department. It computerizes the process of ordering, tracking and reporting
results of procedures performed by the clinical laboratory. Patient and
management reporting capabilities provide support for diagnostic and therapeutic
decision making. Multiple LABPRO 2000 laboratory systems may be linked,
providing economies of scale through specialized testing stations.

                                        6
<PAGE>

TRANSFUSION SERVICES MANAGER is a blood bank system which manages specialized
blood test result entries, blood product inventory, blood storage and patient
transfusion histories. TRANSFUSION SERVICE MANAGER may be used only in
conjunction with LABPRO 2000. In addition, management reports enable the
department to evaluate the effectiveness of transfusion services provided.
TRANSFUSION SERVICE MANAGER is an FDA regulated product for which approval is
pending. See "Government Regulation."

ANSIRS is an anatomic pathology system that functions independently, or
interfaced with LABPRO 2000, to manage clerical and administrative functions
within cytology/pathology departments. ANSIRS provides on-line workstation
access for cytologists/histologists, medical secretaries and pathologists. Major
functional areas include report transcription and word processing, quality
assurance, regulatory requirements and on-line access to patient history.

MEDSPEAK/RADIOLOGY, IBM's MedSpeak/Radiology Continuous Voice Recognition
Solution in conjunction with our suite of radiology products lets the
radiologist speak continuously and at a natural pace, with the text appearing
instantaneously on the screen. With little or no special training on the system,
radiologists can dramatically reduce the time and cost of radiology report
generation.

PHYSICIAN'S WORKSTATION, a Wang product, is a scaleable, point-of-care patient
record application designed by physicians and intended to be incorporated into
the Company's systems solutions. It communicates with existing information
systems to provide for the real-time capture of clinical and administrative
information and build a comprehensive patient health record. Information can be
scanned, received by fax or updated by the physician during the delivery of
care.

HEALTHPOINT ACS is a Windows-based clinical information systems for physicians
in both office and hospital ambulatory settings. HealthPoint ACS is designed to
help caregivers enhance the quality of patient care and reduce healthcare costs.
The software is used at the point of care to document the patient visit, improve
workflow, and provide physicians with an effective tool to analyze their medical
practice, enabling them to improve the quality and cost of care by better
understanding their patient population and measuring the impact of interventions
on diseases.

NRIDENTITY, NRI's finger imaging technology enables an authorized individual to
log on to DYNAMICVISION with the touch of a finger. This action compares the
finger image to a previously recorded and stored "finger print", bringing
systems security to a new level.

CONSULTING, SYSTEMS INTEGRATION AND OTHER SERVICES

The Company provides a full range of professional consulting services including
project management, implementation planning, training and education. The
Company's technical services includes network design, implementation and
support, custom software development, interfaces and modifications and systems
integration. The Company also provides support services including 24 hour
telephone support, and software maintenance and enhancements.

RESEARCH AND DEVELOPMENT

The Company's research and development program is designed to extend the
capabilities of existing products and develop new healthcare application
solutions. The Company believes that a substantial and sustained commitment to
product development is important to the long term success of its business. As of
March 15, 1997, 61 professional employees were engaged in research and
development activities. During the years ended December 31, 1994, 1995 and 1996,
the Company spent $2,068,000, $1,862,000 and $2,860,000 respectively, on
research and development. The Company's research and development is influenced
by customer input and user group forums. Currently, the Company's research and
development efforts are primarily focused on the DYNAMICVISION, OPEN IMAGE
SERVER, MAXIFILE C/S, COPATH C/S, PACSPLUS+ and MONITRAX product lines.

                                        7

<PAGE>

MAJOR CLIENTS

The Company does not have a dependence on any single customer the loss of which
would have a material adverse effect. The Company does generate revenue almost
exclusively through sales to the healthcare industry located in the United
States. Due to this concentration, substantially all receivables of the Company
are from healthcare institutions which may be similarly affected by changes in
economic, regulatory or other industry related conditions. The Company currently
has approximately 550 customers. The majority of these customers are located
within the United States.

BACKLOG

The Company had contracts which it believed to be firm for the delivery of
systems and services ("backlog"), totaling approximately $8.7 million on March
20, 1997, compared to $2.6 million on March 22, 1996. In addition, the Company
as of March 10, 1997 has contracts for the delivery of software support services
billable at an annual rate of $11 million, compared to $4 million as of March
22, 1996.

STRATEGIC RELATIONSHIPS

The Company has entered into strategic relationships with several leading
technology developers, to gain access to certain technologies that are
integrated into the Company's systems. In addition, through these strategic
relationships the Company is able to cross-market its internally developed or
acquired technologies to customers of its business partners.

IBM - The Company has a non-exclusive agreement with IBM to market, support and
enhance MEDICAL RECORDSPLUS. The Company is responsible for providing
maintenance, support, product shipment and product enhancements and offers
customers a wide range of additional services including telephone and remote
diagnostic assistance, problem resolution, implementation, training and
consulting services. A fee based on IBM's then current list price, less certain
allowances, is paid by the Company for licenses sold by the Company. IBM has
retained the right to market the product and, pursuant to the terms of the
agreement, pays a license fee to the Company for sales of the product by IBM.
The Company is also a IBM re-marketer.

WANG - The Company has non-exclusive agreements with Wang. This relationship
provides open systems, core imaging technology and business process automation
capabilities to the Company through Wang's suite of OPEN/software products which
includes OPEN/image, OPEN/workflow, and OPEN/COLDPLUS. In addition, PHYSICIAN'S
WORKSTATION provides the Company with a scaleable, point-of-care patient record
application which facilitates the real-time capture of clinical and
administrative information and the construction of a comprehensive patient
health record.

DICTAPHONE - The Company has a multi-media technology sharing and marketing
alliance with Dictaphone Corporation of Stratford, CT, enabling it to
incorporate Dictaphone's Integrated Voice and Data Management ("IVDM")
technologies into the Company's suite of healthcare information systems. The
integration of IVDM capabilities into DynamicVision creates a comprehensive
voice, text, data and imaging workstation.

THE NATIONAL REGISTRY - The Company has a marketing agreement with The National
Registry, Inc. ("NRI") of St. Petersburg, FL, which brings "The Power of
Positive Identification(/trademark/)" to DynamicVision. NRI's finger imaging
technology enables an authorized individual to log on to DYNAMICVISION with the
touch of a finger. This action compares the finger image to a previously
recorded and stored "finger print", bringing systems security to a new level.

IBM MED/SPEAK RADIOLOGY - The Company has integrated IBM(/registered trademark/)
Med/Speak Radiology(/trademark/) solution into its Maxifile(/registered
trademark/) radiology information system. This expands the Maxifile(/registered
trademark/) RIS products functionality to provide continuous speech recognition
for direct dictation of radiology results into a database, bypassing the need
for transcription of diagnostic reports. Continuous speech recognition allows
radiologists to dictate at normal rates of speech for instantaneous report
production, with little or no time lapse between the spoken and typed word.

HEALTHPOINT - The Company is authorized to sell, implement, train and support
HealthPoint ACS(/trademark/), an advanced clinical system for the office-based
physician in the ambulatory setting. HealthPoint ACS(/trademark/) is used in the
physicians' offices at the point of care to document the patient visit, improve
workflow and facilitate practice analysis.

                                        8

<PAGE>

DIGITAL EQUIPMENT CORPORATION - The Company is an Association of Software and
Application Partner ("ASAP") with Digital Equipment Corporation.

MICROSOFT - The Company is a Microsoft Solution Provider ("MSP"). Through this
program Microsoft works with the Company to provide information, tools, and
business development assistance in implementing the successful use of Microsoft
Solutions Platform products such as Windows 95 and NT.

POWERSOFT - The Company is a Commerical Application Partner ("CAP") with
Powersoft Corporation. CAPs are in the business of developing, marketing and
licensing computer application programs to end-user customers.

SYBASE - The Company is an Open Solutions(TM) Partner with Sybase Corporation.
This partnership enables Dynamic and Sybase to deliver enterprise client/server
solutions.

SALES AND MARKETING

As of March 15, 1997, the Company had twenty four sales representatives
reporting to four regional sales managers whom report to the Vice President of
Sales. The compensation of the Company's sales employees is substantially
dependent on the achievement of individual sales targets. In addition, a ten
person sales support group provides telemarketing, proposal development,
demonstration coordination and administrative support. The Company's marketing
department consists of thirteen individuals who develop product competitive
analyses, sales collateral, audio and video products and coordinate trade shows,
advertising and public relations activities.

The Company's sales cycle is typically six to eighteen months and includes
several steps: (i) initial contact and qualification; (ii) development of
proposal in response to request for a proposal or direct sales lead; (iii)
business problem requirements definition; (iv) product demonstrations; (v) site
visits; and (vi) contract preparation and negotiations. Members of the Company's
professional services, product management and sales support departments, and
members of executive management assist the sales force in completing the
proposal, conducting demonstrations and analyzing the requirements. In support
of the sales efforts, the Company advertises in trade journals, participates in
trade shows, publishes articles and provides speakers for industry shows and
conferences. In addition, the Company receives qualified leads as well as
support in proposal development, demonstrations and site visits from its
strategic business partners, which include IBM, Wang, Dictaphone, HealthPoint,
NRI and other.

CUSTOMERS

The Company currently supports over 550 customers the majority of which are
located in the United States. The Company generates revenues almost exclusively
through sales to the healthcare industry located in the United States. Due to
this concentration, substantially all receivables of the Company are from
healthcare institutions which may be similarly affected by changes in economic,
regulatory or other industry related conditions. Key customers include the UCLA
Medical Center, Methodist Hospital of Memphis, Orlando Regional Health System,
Ohio State University Hospital, University of Pittsburgh, Temple University
Hospital, University of Illinois at Chicago Medical Center, Memorial
Sloan-Kettering Cancer Center, Advocate Health Care, Greater Dayton Area
Hospital Association, The Mayo Clinic and UniHealth.

COMPETITION

The market for information technology in the healthcare industry is intensely
competitive. Many of the Company's competitors have significantly greater
financial, research and development, technical and marketing resources than the
Company. Competitors vary in size and in the scope and breadth of the products
and services they offer. The Company's systems compete both with other
technologies and with similar systems developed by other companies. Other major
information management companies, including the companies with whom the Company
has strategic relationships, may enter the markets in which the Company
competes. Competitive pressures and other factors, such as new system
introductions by the Company's competitors, may result in significant pricing
pressures that could have a material adverse effect on the Company. In addition,
in the professional and technical consulting segment, the Company competes with
the consulting divisions of national accounting firms as well as national and
regional healthcare specialty consulting firms. The Company does not have a
dependence on any single customer the loss of which would have a material
adverse effect.

                                        9

<PAGE>

GOVERNMENT REGULATION

The United States Food and Drug Administration ("FDA") has issued a draft
guidance document addressing the regulation of certain computer products as
devices under the Federal Food, Drug and Cosmetic Act ("FFDCA"). To the extent
that computer software is classified as a device under applicable regulations,
the manufacturers of such products could be required, depending upon the
product, to: (i) register and list their products with the FDA, (ii) notify the
FDA and demonstrate substantial equivalence to other products on the market
before marketing such products or (iii) obtain FDA clearance by filing a
pre-market application that establishes the safety and effectiveness of the
product. The Company has two products considered devices under the FFDCA:
MAXIVIEW and TRANSFUSION SERVICE MANAGER. As a result of the characterization of
certain of the Company's products as devices, the Company's manufacturing
facilities are registered with the FDA and its manufacturing operations
regarding devices are required to be in compliance with the FDA's rules and
regulations. The FDA conducted on-site inspections at the Maitland facility in
May 1996 and at the Minnetonka facility in June 1996. Both inspections were
concluded without incident. There can be no assurance that the Company will
ultimately be able to obtain or maintain required FDA approvals to market its
products. Of the Company's two regulated products, MAXIVIEW cleared as
substantially equivalent to a predicate device by the FDA in December 1995 and
the submission pursuant to Code of Federal Regulations Section 510(k) to
demonstrate substantial equivalence for the Transfusion Service Manager was
submitted to the FDA in March 1996 and is pending.


INTELLECTUAL PROPERTY

The Company primarily relies upon trade secrets, copyright laws and
confidentiality agreements with employees and customers to protect its rights in
its software technology. The Company does not hold any patents nor has it filed
copyrights with respect to any of its software technology. Due to the rapid pace
of innovation within the software industry, the Company believes that patent,
trade secret and copyright protection are less significant than the Company's
ability to further develop, enhance and modify its current products and other
clinical information systems through the technology and creative skills of its
personnel. To minimize the possibility of third parties imitating the Company's
systems, the Company only licenses object code and does not license or otherwise
distribute source code.

The Company's employees are required to enter into confidentiality agreements
which prohibit the disclosure of confidential information and require employees
to report and assign to the Company all concepts, developments, discoveries and
inventions conceived during their employment.

The Company has federal trademark registration for MAXIFILE(registered
trademark/) and COPATH(/registered trademark/), and has applied for federal
trademark registration for DYNAMICVISION, MONITRAX, PACSPLUS+, ASAP, OPTIMA and
MAXIVIEW.

There can be no assurance that the legal protections and precautions taken by
the Company will be adequate to prevent misappropriation of the Company's
technology. In addition, these protections do not prevent independent
third-party development of functionally equivalent or superior technologies or
services. The Company does not believe that its operations or products infringe
on the intellectual property rights of others. There can be no assurance that
others will not assert infringement or trade secret claims against the Company
with respect to its current or future products or that the Company will be
successful in defending any such claim.

EMPLOYEES

As of March 15, 1997, the Company had 251 full time employees, of which 61 were
employed in research and development, 119 in client services, 31 in general and
administrative and 40 in sales and marketing. None of the Company's employees is
represented by a labor union or subject to a collective bargaining agreement.
The Company has never experienced a work stoppage and believes that its employee
relations are good.

                                       10

<PAGE>

FACTORS AFFECTING FORWARD-LOOKING STATEMENTS

This report, and other reports, proxy statements and other communications to
stockholders, as well as oral statements made by representatives of the Company,
may contain forward-looking statements and other risks detailed from time to
time in the Company's filings with the Securities and Exchange Commission, that
are subject to risks and uncertainties, including, but not limited to, the
impact of competitive products and pricing product demand and market acceptance,
new product development, reliance on key strategic alliances, availability of
products procured from third party vendors, the healthcare regulatory
environment, fluctuations in operating results and with respect to, among other
things the Company's future revenues, operating income and earnings per share,
as well as plans and objectives of management. The following are some, but not
necessarily all, of the factors that may cause the Company's actual results to
vary materially from those which are the subject of any such forward-looking
statements.

An important element of the Company's business strategy has been and will
continue to be expansion through acquisitions, both to extend its customer base
and to acquire strategic technology. The Company's ability to expand
successfully through acquisitions depends on many factors including the
identification of appropriate acquisition opportunities, negotiation of suitable
terms and management's ability to effectively integrate and operate the acquired
businesses. The Company competes for acquisitions with other companies, certain
of which have significantly greater financial and management resources. The
Company's financial performance will be subject to the risks of the performance
of the acquired businesses as well as the financial effects associated with
integration of such businesses.

The healthcare industry is subject to changing political, economic and
regulatory influences, many of which relate to control of healthcare costs. Such
changes may affect operational aspects of the healthcare industry, including
procurement practices and the availability and/or allocation of capital funds,
which could result in greater selectivity, thus adversely impacting the
Company's ability to sell its products. The Company cannot predict with any
certainty what impact, if any, future regulation or healthcare reform might have
on its results of operations, financial condition or business.

While the Company maintains insurance protecting against certain asserted
claims, there can be no assurance that its insurance coverage would adequately
cover any such claims asserted against the Company.

Competition in the Company's industry is subject to continual change in not only
the products and services offered but also in the manner in which vendors are
selected by customers. Accordingly, the Company's continued success will be
dependent on its ability to develop new products and services on a timely basis
and at competitive prices.

The Company must anticipate and adapt to evolving industry standards and new
technological developments. The market for the Company's products is
characterized by continued and rapid technological advances. The Company's
future success will depend in part on its ability to be responsive to these
technological developments and challenges, which could also lower the cost of
products and services or otherwise result in competitive pricing pressures.

The Company relies on a combination of trade secret, copyright and trademark
laws, together with nondisclosure, other contractual provisions and technical
measures to protect its proprietary rights in its products. There can be no
assurance that these protections will be adequate or that the Company
competitors will not independently develop technologies that are equivalent or
superior to the Company's technology. Although the Company believes that its
products and other proprietary rights do not infringe upon the proprietary
rights of third parties, there can be no assurance that third parties will not
assert infringement claims against the Company in the future.

The stock market has, from time to time, experienced extreme price and volume
fluctuations, particularly in the high technology sector, which have often been
unrelated to the operating performance of particular companies. The Company
experiences fluctuations in its stock price related to these general market
swings as well as announcements of technological innovations, new product
introductions by the Company or its competitors, market conditions in the
computer software or hardware industries and healthcare reform measures. These
fluctuations may adversely effect the Company's ability to make acquisitions
utilizing its stock.

                                       11

<PAGE>

ITEM 2.  PROPERTIES

The Company's corporate headquarters are located at 101 Southhall Lane, Suite
210, in Maitland, Florida 32751. The Maitland location consists of approximately
23,600 square feet of office space under a lease which expires March 31, 1999.
The Company also maintains an office at 10901 Bren Road East, Minnetonka,
Minnesota 55343 (the former Dimensional Medicine, Inc. facility) as the
Company's radiology technology center. The Minnetonka location consist of
approximately 13,000 square feet under lease which expires on July 31, 1999. In
addition, the Company also maintains an office at Two University Office Park, 51
Sawyer Road, Waltham, Massachusetts, 02154 (the former Collaborative Medical
Systems, Inc. facility) as the Company's clinical solutions center. The Waltham
location consist of approximately 30,000 square feet under lease which expires
on November 30, 1999. The Company considers its existing facilities to be
adequate for its foreseeable needs.


ITEM 3.  LEGAL PROCEEDINGS

In February 1996, the Company instituted an action against James A. Terrano
("Terrano"), the Company's former President and Chief Executive Officer, in the
District Court of Lancaster County, Nebraska, alleging that Terrano (i) made
fraudulent and negligent representations to the Company's Board of Directors,
which resulted in the Company's acceptance of a handwritten memorandum modifying
Terrano's employment agreement, (ii) breached his fiduciary duty to the Company
and (iii) breached his obligations under his employment agreement with the
Company. The Company is seeking to recover damages in the amount of at least
$50,000 in addition to the declaratory judgment determining that no severance
pay is due Mr. Terrano and that the handwritten memorandum is invalid and
unenforceable and does not modify the employment agreement. Mr. Terrano has
counter-claimed that he has been defamed by the Company. The Company is a
defendant in an action in which Mr. Terrano has a demand for $280,000 in
severance pay together with two years worth of benefits unquantified to include
the use of an automobile, club dues and insurance policies. The Company is
vigorously contesting this case.

The Company is a defendant in an action filed by a former Vice-President in
March, 1995 in the District Court of Lancaster County, Nebraska, alleging that
the Company did not lawfully terminate her for cause, and, therefore, breached
her employment agreement. The former employee is seeking severance payment. The
Company is vigorously contesting this case.

The above cases are in the early stages of discovery and it is not possible to
evaluate the likelihood of a favorable or unfavorable outcome of either case at
this time. As of the date hereof, there are no other material legal proceedings
pending against the Company.


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

No matter was submitted to a vote of the Company's security holders during the
fourth quarter of 1996.

                                       12

<PAGE>

                                    FORM 10-K
                      DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
                                     PART II


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

   (a) The information called for by this item is incorporated herein by 
       reference from page fifty-five (55) of Exhibit 13 to this Form 10-K.

   (b) As of March 10, 1997, there were approximately 4,950 shareholders of the
       Company's Common Stock.

   (c) The Company has declared no cash dividends on its common stock since its
       inception and plans to continue to invest all earnings back into the 
       Company in the foreseeable future.


ITEM 6. SELECTED FINANCIAL DATA

The information required by this item is incorporated herein by reference from
page 25 of Exhibit 13 to this Form 10-K.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

The information required by this item is incorporated herein by reference from
page 26 through page 33 of Exhibit 13 to this Form 10-K.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this item is incorporated herein by reference from
page 34 through page 56 of Exhibit 13 to this Form 10-K.


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

The information required by this item is incorporated by reference to the
February 14, 1995 Form 8-KA filed by the Company. There have been no changes in
and/or disagreements with accountants on accounting and/or financial disclosures
since February 14, 1995.

                                       13

<PAGE>

                                    FORM 10-K
                      DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
                                    PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this item is incorporated herein by reference from
the Company's Proxy Statement for its 1997 Annual Meeting of Shareholders.


ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is incorporated herein by reference from
the Company's Proxy Statement for its 1997 Annual Meeting of Shareholders.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item is incorporated herein by reference from
the Company's Proxy Statement for its 1997 Annual Meeting of Shareholders.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is incorporated herein by reference from
the Company's Proxy Statement for its 1997 Annual Meeting of Shareholders.

                                       14

<PAGE>

                                    FORM 10-K
                      DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
                                     PART IV


ITEM 14.     EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K


(a) The following documents are filed as a part of this report:

      1.  FINANCIAL STATEMENTS
          -Independent Auditors' Report on the financial statements.
          -Balance Sheets as of December 31, 1995 and 1996.
          -Statements of Operations for the years ended December 31, 1994, 199
           and 1996.
          -Statements of Shareholders' Equity for the years ended December 31, 
           1994, 1995 and 1996.
          -Statements of Cash Flows for the years ended December 31, 1994, 1995
           and 1996.
          -Notes to Financial Statements.

The Financial Statements listed above are all incorporated by reference to pages
34 through 56 of Exhibit 13 to this Form 10-K.

      2. FINANCIAL STATEMENT SCHEDULES


                        INDEX                         SCHEDULE NO.   PAGE NO.

Independent Auditors' Report on Financial 
Statement Schedule                                        ---           16
Valuation and Qualifying Accounts                          II           17

All other schedules are omitted as the required information is inapplicable or
the information is presented in the financial statements or related notes
thereto.

      3. EXHIBITS

            Exhibit 11:  Statement regarding computation of per share earnings.
            Exhibit 13:  1996 Annual Report to Security Holders.
            Exhibit 27:  Financial Data Schedule

(b) The following report on Form 8-K was filed by the Registrant during the
    quarter ended December 31, 1996:

              ITEM REPORTED                                 DATE OF REPORT
              -------------                                 --------------

              Acquisition of Collaborative Medical 
              Systems, Inc.                                 December 17, 1996


                                       15

<PAGE>

                              INDEPENDENT AUDITORS' REPORT
                              ----------------------------






Board of Directors 
Dynamic Healthcare Technologies, Inc.:


Under date of March 17, 1997, we reported on the consolidated balance sheets of
Dynamic Healthcare Technologies, Inc. as of December 31, 1995 and 1996 and the
related statements of operations, shareholders' equity and cash flows for the
years ended December 31, 1994, 1995 and 1996, as contained in the annual report
on Form 10-K for the year 1996. In connection with our audits of the
aforementioned consolidated financial statements, we have also audited the
related 1994, 1995 and 1996 information in the consolidated financial statement
schedule as listed in the accompanying index. This consolidated financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on the 1994, 1995 and 1996 information
in this consolidated financial statement schedule based on our audits.

In our opinion, such 1994, 1995 and 1996 information in the consolidated
financial statement schedule, when considered in relation to the basic 1994,
1995 and 1996 consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.




                                         /s/KPMG PEAT MARWICK LLP
                                         ------------------------
                                         KPMG PEAT MARWICK LLP







Orlando, Florida 
March 17, 1997

                                       16
<PAGE>
<TABLE>
<CAPTION>
                      DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
                        VALUATION AND QUALIFYING ACCOUNTS
                  YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
                                   SCHEDULE II


                                               BALANCE AT   CHARGED TO   WRITE-OFFS,   BALANCE AT
                                               BEGINNING    COSTS AND    RETIREMENTS     END OF
                 DESCRIPTION                    OF YEAR      EXPENSES   & COLLECTIONS     YEAR
                 -----------                   ----------   ----------  -------------  ----------
<S>                                            <C>          <C>          <C>           <C> 

YEAR ENDED DECEMBER 31, 1994:

Allowance for Doubtful Accounts
  Receivable                                   $  189,672   $ 179,409     $119,081     $  250,000

Accumulated Amortization of Capitalized 
  Software Development Costs                   $  843,537   $ 505,613     $ 76,055     $1,273,095



YEAR ENDED DECEMBER 31, 1995:

Allowance for Doubtful Accounts
  Receivable                                   $  250,000   $(12,498)     $ 96,665     $  140,837

Accumulated Amortization of Capitalized 
  Software Development Costs                   $1,273,095   $ 562,606     $   --       $1,835,701



YEAR ENDED DECEMBER 31, 1996:

Allowance for Doubtful Accounts
  Receivable                                   $  140,837   $ 222,902     $ 37,637     $  326,102

Accumulated Amortization of Capitalized        $1,835,701   $ 883,675     $   --       $2,719,376
  Software Development Costs
</TABLE>

                                       17

<PAGE>

                                    FORM 10-K
                      DYNAMIC HEALTHCARE TECHNOLOGIES, INC.

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

DYNAMIC HEALTHCARE TECHNOLOGIES, INC. 
Commission File No. 0-12516 
IRS E.I.N. 59-3389871

By /s/PAUL S. GLOVER                Date  MARCH 25, 1997
   -----------------                      --------------
Paul S. Glover, Vice President of Finance and Chief Financial Officer

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 and
in the capacities and on the dates indicated.

SIGNATURE                                         TITLE             DATE

/s/DAVID M. POMERANCE      Chairman of the Board                 MARCH 25, 1997
----------------------- 
David M. Pomerance

/s/MITCHEL J. LASKEY       President, CEO, Treasurer &           MARCH 25, 1997
-----------------------    Director
Mitchel J. Laskey

/s/PAUL S. GLOVER          Vice President of Finance, CFO        MARCH 25, 1997
------------------------                                  
Paul S. Glover

/s/JERRY L. CARSON         Director                              MARCH 25, 1997
------------------------
Jerry L. Carson

/s/THOMAS J. MARTINSON     Director                              MARCH 25, 1997
------------------------
Thomas J. Martinson

/s/BRET R. MAXWELL         Director                              MARCH 25, 1997
------------------------
Bret R. Maxwell

/s/DANIEL RAYNOR           Director                              MARCH 25, 1997
------------------------
Daniel Raynor

/s/RICHARD W. TRUELICK     Director                              MARCH 25, 1997
------------------------
Richard W. Truelick

                                       18

<PAGE>

                                    FORM 10-K
                      DYNAMIC HEALTHCARE TECHNOLOGIES, INC.

                                INDEX TO EXHIBITS



                                                                         PAGE
             DESCRIPTION OF EXHIBITS                                    NUMBER

Exhibit 11   Statement regarding computation of per share 
             earnings.                                                    20


Exhibit 13   Annual Report to Shareholders of Dynamic Healthcare
             Technologies, Inc. for the fiscal year ended 
             December 31, 1996.                                           22

Exhibit 27   Financial Data Schedule

                                       19