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, 2000 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
--------------------------------------------
(State  of  Incorporation)     (IRS  E.I.N.)

615 Crescent Executive Court, Fifth Floor, Lake Mary, Florida          32746
-------------------------------------------------------------------------------
(Address  of  principal  executive  offices)                        (ZIP  Code)

(407)  333-5300
---------------
(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 in response 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 amendments to
this  Form  10-K.  [  ]

The  aggregate market value of the voting stock held by non-affiliates, based on
the  closing  price  as of March 7, 2001, was $8,211,479.  A total of 13,824,039
shares  of the Company's common stock were held by persons and entities believed
to  be  non-affiliated  on March 7, 2001, and the closing price of the Company's
common  stock  on  this  date  was  $.594.

As  of  March  7, 2001, there were 19,428,142 shares outstanding of the issuer's
only  class  of  common  stock.

This  report  consists  of  fifty-seven  (57)  pages.

The  index  to  exhibits  appears  on  page  twenty  (20).

DOCUMENTS  INCORPORATED  BY  REFERENCE

(1)     Portions  of  the  issuer's Annual Report to Shareholders for the fiscal
year  ended December 31, 2000 ("Annual Report to Shareholders") are incorporated
herein  by reference into Part II of this Form 10-K.  Portions of the definitive
Proxy  Statement  of  Dynamic  Healthcare Technologies, Inc. for the 2001 Annual
Meeting  of Shareholders to be filed with the Securities and Exchange Commission
no later than 120 days after the end of the issuer's fiscal year covered by this
report  are  incorporated  by  reference  into  Part  III  of  this  Form  10-K.

                                        1
<PAGE>
                                    FORM 10-K
                      DYNAMIC HEALTHCARE TECHNOLOGIES, INC.

THIS  ANNUAL  REPORT ON FROM 10-K CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE
MEANING  OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND ARE SUBJECT
TO  RISKS,  UNCERTAINTIES, AND OTHER FACTORS WHICH COULD CAUSE ACTUAL RESULTS TO
DIFFER  MATERIALLY  FROM  THOSE  EXPRESSED  OR  IMPLIED  BY SUCH FORWARD-LOOKING
STATEMENTS.  SEE  "ITEM  1.  BUSINESS  FACTORS  AFFECTING  FORWARD-LOOKING
STATEMENTS."

                                     PART I

ITEM  1.          BUSINESS

GENERAL

Dynamic  Healthcare Technologies, Inc. ("Dynamic" or the Company") is a provider
of  NT,  UNIX  and  AS/400  based  diagnostic  workflow solutions for pathology,
laboratory  and  radiology departments in approximately 640 customer sites, most
located  in the United States.  The Company has designed, developed and deployed
advanced  Internet  and image, voice and Web-enabled information systems for its
customers  that  address  a  broad range of requirements.  Dynamic's information
systems  contribute  to  higher quality and more cost-effective delivery of care
and  make  it possible to have access to information across the entire continuum
of  care.  The  Company  provides support for all of its systems and also offers
integration  and  other  consulting  services  to  its  customers.

The  Company's  customer base includes of many of the world's leading healthcare
organizations  such  as  Memorial  Sloan-Kettering  Cancer  Center,  The  Mayo
Foundation,  The  University of North Carolina Hospitals, LabCorp, Valley Health
System,  St.  Mary's  Health  System,  Parkland  Memorial  Hospital,  Columbia
Presbyterian  Medical Center, New York Hospital and Northwest Radiology Network.
The  Company's  systems  automate  ordering,  scheduling, specimen and procedure
tracking,  data / image acquisition from diagnostic equipment, store and archive
results.  For  years,  the  Company  has  provided  the  processing backbone for
clinical information within the key clinical departments of pathology, radiology
and  laboratory,  and has provided electronic integration with diagnostic images
and  voice  dictation

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 615 Crescent Executive Court, Fifth
Floor,  Lake Mary, Florida, 32746. In addition, the Company's clinical solutions
center  is  located  in  Waltham,  Massachusetts.  Its telephone number is (407)
333-5300  and  its  World  Wide  Web  address  is  http://www.dht.com.
                                                   ------------------

INDUSTRY

The healthcare industry continues to undergo rapid and significant change.  Cost
containment  pressures, industry consolidation, the increasing impact of managed
care,  rising  standards  of  healthcare  quality,  the  shift from inpatient to
outpatient  care settings, competition amongst healthcare providers,  increasing
involvement of patients in their healthcare delivery process, and the demand for
instant  access  to  information  on the part of physicians, patients and payers
represent  fundamental  trends  in  today's  healthcare  operating  environment.
Although healthcare has been slower than other industries to recognize the value
of  information  technology,  healthcare  providers  recognize  that  the key to
effective  cost  control  and  quality  management  lies  in  the  collection,
availability  and  analysis  of  medical  record information to assess treatment
patterns,  resource  utilization  and  outcomes.

The  Department  of  Health  and  Human  Services  (HHS)  has  issued   proposed
regulations  specifying  the  confidentiality  requirements  for  electronically
captured  personal   health  information  mandated   by  the   Health  Insurance
Portability and Accountability Act ("HIPAA"). These regulations, projected to be
finalized  by mid-year, are expected to go into effect in early 2002. The entire
healthcare  community - providers, payers,  software developers, consultants and
users  - will devote tremendous efforts over the next two (2) years implementing
the final HIPAA confidentiality regulations.  HHS has estimated that the cost of
meeting HIPAA compliance will exceed $3.8 billion.  The Company believes that it
is  well positioned to take advantage of the opportunities created by HIPAA.  In
this  regard,  we  employ a full time regulatory consultant whose duties include
monitoring and advising management of the applicable sections of HIPAA that will
apply  to  the  company's  business.

We believe that the emergence of the Internet as the medium of choice for global
information  access and communication offers significant potential to meet these
rapidly  increasing  demands for information by all participants in the delivery
of  healthcare.  The  growth  rate  of  Internet  users  seeking  health-related
information  is  expected to outpace the rapid growth of total Internet users as
far  out  as  consulting  analysts  are  currently  willing  to  project.


                                        2
<PAGE>
Given  its  expanded  market  reach and significantly lower operating costs, the
Internet  has  become a mission-critical competitive technology for all software
companies.  The  Internet  has  the  ability  to  transform  the  $1.2  trillion
healthcare  sector  from  a  cottage  industry  that  gets  by on incomplete and
inaccurate  data to one that is fueled by increased information flow.  This will
be  accomplished  by  connecting  all  participants  in  the  delivery of health
services  and  empowering  consumers and purchasers of healthcare to make better
decisions.  International  Data  Corporation  indicates that capital spending on
"Web-enablement"  will  grow from $305 billion in 1999 to $1.5 trillion by 2003.
Forrester  Research  anticipates that business-to-business (B2B) e-commerce will
reach  $1  trillion  by  2003.

PRODUCTS  AND  SERVICES

Dynamic  uses  the  power  of  technology  to  improve  diagnostic  workflow for
pathology,  laboratory and radiology services. Dynamic's solutions enable health
professionals  to have extensive access to the clinical information they need to
make  decisions  and more effectively manage patient care.  Although the company
has  various  products  and  services,  it  does not maintain discrete financial
information  by  product  line.  Management does not review operating results by
product  line  to  make  decisions  about  allocating  resources  and  assessing
operating  performance by product line.  In addition, the Company's product line
is  marketed through a common distribution network and to a common customer base
almost  exclusively  in  North  America.  Accordingly, management has determined
that  it  operates  in  a  single  reporting  segment.

PATHOLOGY

The  Company's  anatomic pathology systems are scalable, client/server solutions
which  are  enabled  with advanced voice, imaging and Web capabilities.  Dynamic
CoPathPlus  is a client/server anatomic pathology system that automates specimen
accessioning  and  case  dictation, produces patient and management reports, and
provides  SNOMED  and  natural language retrieval of diagnoses.  CoPathPlus also
provides  healthcare  facilities  with  a flexible tool set that allows users to
modify  specimen  data  entry  windows  and  report  formats.  CoPathPlus  is
image-enabled  by  capturing  high-resolution  digital  images  and  permanently
storing  those  images  electronically with related patient and diagnostic data.
CoPathPlus  is  also  voice-enabled  with  a  speech recognition solution, which
expedites the pathology dictation process and results in shorter turnaround time
in  delivering  patient  reports  to  clinicians.

The  Company's pathology product line has an installed base of approximately 456
customers.  Representative  Pathology  customers  include:

   Columbia  Presbyterian  Medical  Center        New  York  Hospital
   LabCorp                                        ProPath  Laboratory
   Memorial  Sloan-Kettering  Cancer  Center      The  Mayo  Foundation

Currently,  the pathology product line has a dedicated sales force consisting of
four  sales representatives.  Pricing for the Company's pathology systems ranges
from  approximately  $100,000  to  over  $1,000,000 for larger hospital systems.
These  prices  include licensed software, equipment and implementation services.
Annual  support  services  are  not  included in the systems price and typically
equal  approximately  18%  of  the  software  license  fee.

LABORATORY

The  Premier Series laboratory information system ("LIS") provides functionality
for  specimen  collection, testing and result reporting.  The Premier Series LIS
supports  bar  coding,  instrument  interfaces,  paperless  microbiology,
multi-facility  management  and optical storage.  Other features include quality
assurance  workload  recording and management reporting.  The Premier Series LIS
integrates  with  highly  specialized  blood bank information systems, providing
both transfusion and donor service software as well as regulatory products.  The
Premier  Series  LIS  also  complies  with  federal  regulations  and  assists
laboratories  in deciding upon the appropriate and medically necessary course of
action  in  diagnosing  and  treating  patients.

The Company's Web-enabled version of the Premier Series LIS, known as e-Premier,
enables  laboratory and clinical staff, both inside and outside the hospital, to
use  the  LIS over the Internet, extending the reach of the laboratory to remote
hospitals,  outreach  service  locations,  reference labs, physician offices and
homes.  Referring  physicians  and  clinicians  can  access  e-Premier using any
Internet-connected  device  to  enter  laboratory  orders  and  review patients'
laboratory  test  results.


                                        3
<PAGE>

The Company's laboratory product line has an installed base of approximately 104
customers.  Representative  Laboratory  customers  include:

  Clinical Labs of the Midwest  Ostego  Memorial  Hospital
  Deaconess  Hospital           Pharmacia  &  Upjohn
  El  Camino  Hospital          St.  Mary's  Duluth  Clinic  and  Health  System
  John  Umpstead  Hospital      Valley  Health  Systems

Currently, the laboratory product line has a dedicated sales force consisting of
two  sales representatives.  Pricing for the Company's laboratory systems ranges
from approximately $150,000 to over $250,000 for larger hospital systems.  These
prices include licensed software, equipment and implementation services.  Annual
support  services  are  not  included  in  the systems price and typically equal
approximately  18%  of  the  software  license  fee.

RADIOLOGY

The  Company's  radiology  solution combines advanced client/server architecture
with  Web  technology.  Dynamic's  competitive position is enhanced by the close
relationship  between  its Radiology Information System ("RIS"), and its Picture
Archiving  and  Communication  System  ("PACS").  Information  collected  by the
Company's  RIS  is  available  to  the PACS, and images captured by the PACS are
available  to  the  RIS.  The  result is an "image-enabled" RIS combined with an
"information-enabled"   PACS.  Primary  markets  for   the  Company's  radiology
solutions include hospitals, clinics and independent diagnostic imaging centers.

Dynamic  RadPlus is an image-enabled, client/server radiology information system
that includes scheduling, patient tracking, film tracking, remote transcription,
reporting  and management of all radiology functions.  Using RadPlus, facilities
can  easily  adapt  to  change  with  tools,  which  allow  users to make screen
modifications  without  the  expense  and delays of reprogramming by the vendor.
RadPlus  is  also voice-enabled with its continuous speech recognition solution.
In  addition,  remote  transcriptionists have the ability to access RadPlus over
the  Internet  to  transcribe,  approve  and  disseminate  radiology  reports to
referring physicians. This Web-based connectivity feature improves efficiency by
reducing  turnaround  time  in  the  patient  report  completion  process.

As  an  integral  part  of  RadPlus,  Dynamic  offers  a  PACS, which integrates
information  from  the  RIS with images and provides access to this information.
CoMed  for  Results,  a  vital  component  of  the  PACS  system, is a Web-based
teleradiology  system  that  provides radiologists and physicians with extensive
access  to  radiology  images  and  reports.

The  Company's  radiology product line has an installed base of approximately 66
customers.  Representative  Radiology  customers  include:

  Deaconess  Hospital             Next  Generation  Radiology
  Marquette  General  Hospital    Northwest  Radiology
  Medical  College  of  Virginia  University of California Irvine Medical Center
  Nassau  County  Medical Center  Winnipeg  Regional  Health  Authority

The  radiology product line has a dedicated sales force consisting of four sales
representatives.  Pricing  for  the  Company's  radiology  systems  ranges  from
approximately  $250,000  to  over  $1,000,000 for larger hospital systems. These
prices include licensed software, equipment and implementation services.  Annual
support  services  are  not  included  in  the systems price and typically equal
approximately  18%  of  the  software  license  fee.

COMED

In  July  2000,  the Company launched its CoMed Internet strategy.  CoMed is the
Company's   solution   for  the   industry's  challenges   in  the  capture  and
dissemination  of  pertinent  clinical  and  diagnostic information in any form.
CoMed,  short  for  Collaborative  Medicine, allows physicians, nurses and other
caregivers  throughout the care delivery system to access and share information.
Dynamic  believes  several  market  influences  position the industry to undergo
fundamental  change  in  accomplishing the capture and dissemination of clinical
information.  These  factors  include  the  availability   of  new   information
technology  and  the  increasingly  ubiquitous Internet communications platform,
along  with  the  sizable  financial  pressure  placed  on the healthcare system
through  the  Balanced  Budget  Act.


                                        4
<PAGE>

As a result of these market influences, Dynamic has developed its suite of CoMed
Internet  solutions  to:

     Enable  clients  to  deliver clinical transactions and information to their
physician  populations quickly and cost-effectively via a client branded, secure
Web  site;  and

     Allow  clients  with  limited  capital  and resources to purchase Dynamic's
workflow solutions via a subscription based Application Service Provider ("ASP")
model.

Dynamic  is  developing  and  commercializing  its  Internet  and software-based
medical  information system products using the names CoMed for Results and CoMed
for  Workflow  Management.  These  products  are  designed  to  provide, through
Dynamic's  ASP  facility,  the  ability  for  diagnostic clinical departments to
implement end-to-end clinical information systems and results distribution using
a  secure  Web  environment.  These  products  leverage  Dynamic's  expertise in
providing  traditional  clinical  information  system  solutions  for pathology,
laboratory  and  radiology  and  expand  their  reach through the use of current
Internet  technologies.

CoMed  for  Results  provides  physicians  and clinicians with rapid, convenient
access  to  laboratory,  radiology  and  pathology  results and reports over the
Internet.  The  application  runs under Netscape Communicator 4.0 (or higher) or
Microsoft  Internet Explorer 4.0 (or higher) and gives clinicians affordable and
mobile  computing  alternatives  ranging  from  standard desktop PCs to handheld
portable  computing devices.  CoMed for Results can be implemented very rapidly.
In  less than four weeks, a healthcare organization can provide secure access to
clinical  results  over the Internet through a client-branded Web site.  Dynamic
manages  the  entire  process,  reducing  implementation  risks  and  minimizing
disruption  of  customer  resources.

CoMed  for  Workflow Management is Dynamic's solution to the capital constrained
healthcare  environment  where  facilities and departments are rewarded for cost
containment,  risk  aversion  and  improved diagnostic and client care outcomes.
CoMed for Workflow Management consists of three distinct offerings for different
clinical  and  diagnostic  areas  of  hospitals,  clinics, laboratories, imaging
centers  and  other  ambulatory  care  settings:

     CoMed  for  Radiology  Management;

     CoMed  for  Laboratory  Management;  and

     CoMed  for  Pathology  Management

Dynamic  has  a significant opportunity to extend its reach to physicians and to
deliver its core clinical applications.  Unlike many e-health start-ups, Dynamic
enjoys  reduced  execution  risk  given  the foundation of its core business and
strong  operating  history.

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 include network design, implementation and support,
custom  software   development,   interfaces,  and   modifications  and  systems
integration.  The  Company 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  December  31,  2000,  20  employees were engaged in research and development
activities.  During  the  years  ended  December  31,  1998,  1999 and 2000, the
Company spent approximately, $8,064,000, $6,806,000 and $6,881,000 respectively,
on research and development.  The majority of Dynamic's research and development
expenditures  have  been  directed toward Dynamic RadPlus (TM), CoPathPlus (TM),
Premier  Series  LIS  and  CoMed  product  lines.  The  Company's  research  and
development  benefits  from  customer  input  and  user  group  forums.

MAJOR  CLIENTS

The Company does not have a dependence on any single customer, the loss of which
would have a material adverse effect on continuing operations.  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


                                        5
<PAGE>

similarly  affected by changes in economic, regulatory or other industry related
conditions.  The  Company   currently  has  approximately  640   customers.  The
majority  of  these  customers  are  located  within  the  United  States.

BACKLOG

As  of  December  31,  2000  the Company has a combined backlog of approximately
$21.4  million.  The  Company  had  contracts  for  the  delivery of systems and
services  totaling  approximately $7.8 million on December 31, 2000, compared to
$9.8  million  on  December  31, 1999.  In addition, as of December 31, 2000 the
Company  had contracts for the delivery of software support services billable at
an  annual  rate  of $13.6 million, compared to $14.7 million as of December 31,
1999.

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.

SYBASE  CORPORATION  (EMERYVILLE,  CA)  The  Company is an Option Solutions (TM)
Partner with Sybase Corporation.  This partnership enables Dynamic and Sybase to
deliver  enterprise  client/server  solutions.

TRIPATH  IMAGING,  INC. (FORMERLY AUTOCYTE, INC.) (BURLINGTON, NC) - The Company
has an Original Equipment Manufacturer (OEM) distribution agreement with TriPath
Imaging  allowing the integration of the AutoCyte Image Management System (AIMS)
into  CoPath Plus for Pathology. Marketed under the name PICSPlus, this solution
combines    sophisticated   image   management   features   with   telepathology
capabilities.  Through  this  agreement, the Company has the exclusive rights to
sell  AIMS  within  the  laboratory  and  anatomic pathology information systems
markets  in  the  U.S.  and  Canada.

SUNQUEST  INFORMATION  SYSTEMS  (TUCSON,  ARIZONA) The Company has a value-added
re-marketer  agreement  with Sunquest Information Systems (Sunquest).  Under the
terms  of  the  agreement,  Sunquest  exclusively  markets  and sub-licenses the
Company's  CoPathPlus  anatomic  pathology  solution  to  their existing base of
clients.  Sunquest  may also sell CoPathPlus, when bundled with their laboratory
information  system,  in the general U.S. healthcare market and on a stand-alone
product  basis  in  the  international  market.

KEANE  INC.  (FORMERLY  FIRST  COAST  SYSTEMS  OF  JACKSONVILLE, FL) Keane is an
authorized  reseller  of  the  Premier Series LIS. Through this agreement, Keane
markets  and  sells  the  Premier  Series  as  a  complement  to  their hospital
information  system  solution.

PENRAD  (PLYMOUTH,  MN)  Through  an  OEM  agreement, Dynamic markets the PenRad
mammography  management  application  as an integrated component of the complete
radiology  solution;  RadPlus.

PEGASUS  IMAGING  CORPORATION  (TAMPA,  FL)  The  Company  uses  Pegasus Imaging
Corporation's  wavelet  compression  technology  in  the web-based teleradiology
solution,  CoMed  for  results.

SALES  AND  MARKETING

As  of  December  31,  2000, the Company had 20 full time employees in sales and
marketing  related  functions.  The  Company  had  10  sales  employees  and  10
marketing  employees.  The  compensation of the sales employees is substantially
dependent  on  the achievement of individual sales targets.  Marketing personnel
perform telemarketing, proposal development, demonstration coordination, develop
business  plans  and  product  marketing  programs,  competitive analyses, sales
collateral,  audio  and  video  products,  coordinate  trade shows, advertising,
public  relations,  investor  relations  activities, and administrative support.

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, Sunquest Information
Systems,  TriPath Imaging, Keane, Inc (formerly First Coast Systems) and others.


                                        6
<PAGE>

CUSTOMERS

Dynamic  currently  serves  more  than 640 customers, most located in the United
States.  Key  customers include Memorial Sloan-Kettering Cancer Center, The Mayo
Foundation,  The  University of North Carolina Hospitals, LabCorp, Valley Health
System,  St.  Mary's  Health  System,   Parkland  Memorial  Hospital,   Columbia
Presbyterian  Medical Center, New York Hospital and Northwest Radiology Network.

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.  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.

GOVERNMENT  REGULATION

The  United  States Food and Drug Administration (the FDA) has issued a guidance
document  addressing  the  regulation  of  certain  computer products as medical
devices  under  the  Federal  Food,  Drug and Cosmetic Act  (the FFDCA).  To the
extent that computer software is classified as a medical device under applicable
regulations, the manufacturers of such products are required, depending upon the
product, to: register and list their products with the FDA (Class I), notify the
FDA  and  demonstrate  substantial  equivalence  to other products on the market
before  marketing such products (Class II) or, obtain  FDA clearance by filing a
Pre  Market  Application  (PMA) that establishes the safety and effectiveness of
the  product (Class III).  As a result of the characterization of certain of the
Company's  products  as  medical 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 Quality System Regulations
(QSR).  The  Company  currently  has one product classified as a Class I Medical
Device,  Premier  Series LIS, and one product currently classified as a Class II
Medical  Device, PACSPlus.  A second product that was also classified as a Class
II  Medical  Device,  Transfusion Service Manager ("TSM"), was retired effective
June  30,  2000.   Both  PACSPlus  and  TSM  products  were deemed substantially
equivalent  and had 510(k) clearance letters issued by the FDA.  The most recent
FDA on-site inspection of the Company's Corporate Headquarters in Lake Mary, FL,
occurred  August  25-31,  1999,  and concluded without incident. There can be no
assurance  that  the  Company  ultimately  will  be  able  to obtain or maintain
required  FDA  approvals  to  market  its  products.

The  Health Insurance Portability and Accountability Act of 1996 ("HIPAA"),  has
direct impact on the ASP portion of Dynamic's business and an indirect effect on
Dynamic  as  a  Business  Associate  of its customers, the healthcare providers.
Dynamic  has  monitored  HIPAA  progress  throughout  its implementation and has
proactively  taken steps to ensure the Company responded appropriately.  All the
Company's  existing  products  have  been  assessed  against  the  proposed  and
finalized  HIPAA  regulations and the ASP business unit was developed with HIPAA
security  in the forefront. We are confident we will be able to provide software
that  will  assist  our  customers  in  achieving  their  HIPAA  compliance.

INTELLECTUAL  PROPERTY

The  Company  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  licenses  object  codes  only  and  does  not license or otherwise
distribute  source  codes.

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

The  Company  has  obtained  federal trademark protection for DynamicVision (R),
CoPath  (R),  Maxifile (R), Optima (R), Dynamic CoPath Plus (R), Dynamic RadPlus
(R),  and  Dynamic  PACSPlus  (R).  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


                                        7
<PAGE>

not  prevent  independent  third-party development of functionally equivalent or
superior  technologies or services.  The Company does not believe 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  February  15, 2001, the Company had 171 full time employees, of which 20
were employed in research and development, 104 in client services, 27 in general
and  administrative  and  20  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.


FACTORS  AFFECTING  FORWARD-LOOKING  STATEMENTS

This  Annual  Report  on  Form  10-K  (including the exhibits hereto), 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  within the meaning of the safe harbor provisions of
the  Private  Securities Litigation Reform Act of 1995, 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,  capital  spending  plans,  financing  services, 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.  These  forward-looking  statements  are
typically  identified  by  words  or   phrases  such  as  "believe,"   "expect,"
"anticipate,"   "plan,"  "estimate,"  "intend,"  and  other  similar  words  and
expressions,  or  future or conditional verbs such as "will," "should," "would,"
and  "could."  These forward looking statements reflect the current views of the
Company  at  the  time  they  are  made  and  are based on information currently
available  to  the  management  of  the  Company  and upon current expectations,
estimates,  and projections regarding the Company and its industry, management's
beliefs with respect thereto, and certain assumptions made by management.  These
forward-looking  statements  are  not  guarantees  of future performance and are
subject  to  risks,  uncertainties, and other factors (many of which are outside
the  control  of  the  Company)  which  could  cause  actual  results  to differ
materially  from  those expressed or implied by such forward-looking statements.
The  Company  undertakes  no  obligation  to publicly release the results of any
revisions  to  these  forward-looking  statements  which  may be made to reflect
events  or  circumstances  after the date hereof or to reflect the occurrence of
unanticipated  events.  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.

RISK  FACTORS

THE LENGTH OF OUR SALES AND IMPLEMENTATION CYCLES AND CUSTOMERS DELAYS - We have
experienced  long  sales  and implementation cycles.  How and when to implement,
replace,  expand or substantially modify an information system, or modify or add
business   processes,   are  major  decisions  for  a  healthcare  organization.
Furthermore,  the  solutions  we  provide  typically require significant capital
expenditures by the customer.  The sales cycle for our systems has ranged from 6
to  18 months or more from initial contact to contract execution.  Historically,
our  implementation cycle has ranged from 3 to 36 months from contract execution
to  completion of implementation.  During the sales cycle and the implementation
cycle, we will expend substantial time, effort and financial resources preparing
contract  proposals, negotiating the contract and implementing the solution.  We
may  not  realize  any  revenue  to  offset  these  expenditures, and, if we do,
accounting  principles  may  not  allow  us  to  recognize  the  revenues during
corresponding  periods,  which   could   harm  our   future  operating  results.
Additionally,  any  decision  by  our  customers  to  delay  implementation  may
adversely  affect  our  revenues.

THE  UNITED STATES HEALTHCARE INDUSTRY FINANCIAL CONSTRAINTS - The United States
healthcare  industry  has  faced,  and will likely continue to face, significant
financial  constraints.  For  example,  the  shift  to managed healthcare in the
1990s put pressure on healthcare organizations to reduce costs, and the Balanced
Budget  Act  of  1997  dramatically reduced Medicare reimbursement to healthcare
organizations.  Our  customers  are  almost  exclusively  located  in the United
States  of  America.  Our  solutions  often  involve   a  significant  financial
commitment  by our customers, and, as a result, our ability to grow our business
is  largely  dependent on our customers' information technology budgets.  To the
extent  healthcare  information  technology  spending declines or increases more
slowly  than we anticipate, demand for our products could be adversely affected.


                                        8
<PAGE>

HEALTHCARE  INDUSTRY CONSOLIDATION - Many healthcare providers have consolidated
to  create larger healthcare delivery enterprises with greater market power.  If
this  consolidation continues, it could erode our customer base and could reduce
the  size  of  our  target market.  In addition, the resulting enterprises could
have  greater  bargaining  power,  which  may  lead  to  price  erosion.

FAILURE  TO  ATTRACT, MOTIVATE AND RETAIN HIGHLY QUALIFIED TECHNICAL, MARKETING,
SALES  AND MANAGEMENT PERSONNEL - Our success depends, in significant part, upon
the  continued  services  of  our key technical, marketing, sales and management
personnel  and on our ability to continue to attract, motivate and retain highly
qualified  employees.  Competition for these employees is intense.  In addition,
the  process  of  recruiting  personnel  with  the  combination  of  skills  and
attributes   required  to  execute  our  business  strategy  can  be  difficult,
time-consuming  and  expensive.  We  believe  that  our ability to implement our
strategic  goals depends to a considerable degree on our senior management team.
The  loss  of  any  member  of  that  team  could  hurt  our  business.


DEPENDENCY  ON LICENSES FROM THIRD PARTIES - We depend upon licenses for some of
the  technology  used  in  our  products  from  a number of third-party vendors,
including   Computer   Corporation  of  America,   Computer  Associates,  Oracle
Corporation  and  Microsoft.  We  also  have  licenses  from  Premier,  Inc. for
comparative  database  systems  and  other  software   components  and  clinical
benchmarking  data.  Most of these licenses expire within one to four years, can
be  renewed  only by mutual consent and may be terminated if we breach the terms
of  the  license  and fail to cure the breach within a specified period of time.
We  may  not be able to continue using the technology made available to us under
these  licenses on commercially reasonable terms or at all.  As a result, we may
have  to  discontinue,  delay  or  reduce  product  shipments  until  we  obtain
equivalent  technology,  which could hurt our business.  Most of our third-party
licenses  are non-exclusive.  Our competitors may obtain the right to use any of
the  technology  covered  by  these  licenses  and use the technology to compete
directly  with us.  In addition, if our vendors choose to discontinue support of
the licensed technology in the future, we may not be able to modify or adapt our
own  products.

DEPENDENCY ON EXPANSION THROUGH ACQUISITIONS AND INTEGRATION RISK - An important
element  of  the  Company's  business  strategy  has been and may 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.

POTENTIAL  NEW  REGULATIONS  -  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.

QUARTERLY VOLATILITY IN OPERATING PERFORMANCE - The Company's quarterly revenues
and  results  of operations have varied significantly as a result of a number of
factors, including (i) the volume and timing of systems sales and installations;
(ii)  the  timing  of client acceptances; (iii) the length and complexity of the
systems  sales  and installation cycles; (iv) seasonal buying trends as a result
of clients' annual purchasing and budgeting practices.  The Company expects that
these  variations  will  continue  for  the  foreseeable  future.   The  Company
recognizes  revenues  from  the  services  and custom software portion of system
sales as services are performed.  As a result, the timing of revenue recognition
varies  considerably  and  could  be  impeded  by a number of factors, including
availability  of  Company  personnel,  the  Company's  need  to  allocate system
installation  resources  to  other  installations or to research and development
activities, availability of client personnel and other resources, and complexity
of  the  clients'  needs  and delays imposed by clients.  Any trend of delays in
progress toward completing a material system installation or a number of smaller
installations could reduce the revenues recognized in any given period and could
have  a  material  adverse  effect  on  the  Company's  business  and results of
operations.  Because  a  significant  percentage  of  the   Company's  expenses,
particularly  employee  compensation,  is  relatively  fixed,  variations in the
timing  of  systems  sales and installations can cause significant variations in
operating  results  from  quarter  to  quarter.  If  total  revenues  are  below
expectations  in  any  period,  the  Company's  inability  to adjust spending to
compensate fully for the lower revenues may magnify the adverse effect of such a
shortfall  on  the  Company's  results  of operations.  Accordingly, the Company
believes  that period-to-period comparisons of revenue and results of operations
are  not  necessarily  meaningful and should not be relied upon as indicators of
future  performance.


                                        9
<PAGE>

NEW  FDA REQUIREMENTS - The Company expects that the United States Food and Drug
Administration  ("FDA")  is  likely  to become increasingly active in regulating
computer  software  that  is intended for use in health care settings.  In March
1994, the FDA issued a letter advising that the FDA considers medical devices to
include software products intended for use in the manufacture of blood and blood
components  or  for  the  maintenance of data used to assist personnel in making
decisions concerning the suitability of blood donors and the release of blood or
blood  components  for  transfusion  or  further  manufacture.  As such, the FDA
determined  that  manufactures  and  distributors of these products, such as the
Company,  are  subject  to  FDA   regulation.  The  FDA  can   impose  extensive
requirements  governing  pre-   and   post  market  conditions  such  as  device
investigation,  approval, labeling and manufacturing.  Compliance with these new
requirements  and any future requirements imposed by the FDA could be costly and
could  delay  or preclude the introduction of certain new products.  The Company
is  unable to determine at this time the effect, if any, that these requirements
may  have  on  its  business.

DEPENDENCY ON NEW PRODUCT DEVELOPMENT - 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.

POTENTIAL  CUSTOMER  CLAIMS,  PRODUCT  LIABILITY - The Company's systems include
applications  that  may  relate  to confidential medical histories and treatment
plans.  Improper  disclosure of this information or any failure by the Company's
systems  to  provide  accurate  and  timely  information  could result in claims
against  the  Company  by  its  clients  or  their patients.  A successful claim
brought  against  the  Company  in excess of its insurance coverage could have a
material  adverse effect on the Company's business or results of operations, and
even unsuccessful claims could result in the expenditure of substantial funds in
litigation  and the diversion of management time and resources.  There can be no
assurance  that  the  Company  will not be subject to such claims in the future,
that  such  claims  will  not  result  in  liability  in excess of any insurance
coverage  maintained  by the Company with respect to such claims, that insurance
will  cover  such  claims  or  that  appropriate  insurance  will continue to be
available  to  the  Company  at  commercially  reasonable  rates.

INADEQUACY  OF  INSURANCE  COVERAGE  -  While  the  Company  maintains insurance
protecting  against  certain asserted claims, there can be no assurance that its
insurance  coverage  would  adequately  cover  any  or  all such claims asserted
against  the  Company.

RAPIDLY  CHANGING  TECHNOLOGIES  -  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.

DEPENDENCY  ON  PROPRIETARY INFORMATION - 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.

STOCK  PRICE  FLUCTUATION - 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  to  be  settled  through  the issuances of its stock and to access
additional  capital.

In  addition,  the  Company  faces the possibility that its Common Stock will be
delisted  from  Nasdaq-NMS  for  failing   to  satisfy  the  minimum  bid  price
requirements  established  under  its  rules.  See  "Item  5 - Market for Common
Equity  and  Related Stockholders Matters."  If the Common Stock is delisted, it
may  make  it  difficult for the Company to raise additional capital through the
sale  of  its  equity securities, and it may have an adverse effect on the price
and  liquidity  of  our  Common  Stock.

ITEM  2.     PROPERTIES

The  Company's  corporate  headquarters  are  located  at 615 Crescent Executive
Court,  Suite 600, Lake Mary, Florida 32746.  The Lake Mary location consists of
approximately  53,800  square  feet  of  office space under a lease that expires
March  1,  2005.  In  addition,  the  Company  also  maintains  an office at Two
University  Office  Park,  51  Sawyer  Road, Waltham, Massachusetts 02154 as the
Company's   clinical   solutions  center.   The  Waltham  location  consists  of
approximately  30,000  square  feet  under lease that expires November 30, 2004.
The  Company  believes  that  its  current facilities are sufficient to meet its
near-term  requirements.


                                       10
<PAGE>

ITEM  3.     LEGAL  PROCEEDINGS

On  February  27,  2001  the  Company  signed  an  Amended Strategic Value Added
Reseller  Agreement  with  Sunquest Information Systems, Inc.  Sunquest paid the
Company  for  maintenance services through December 31, 2003 and advance license
fees,  and  Sunquest  will  continue  to  distribute,  implement and support the
Company's  CoPath Plus product.  This resolves all previous disputes between the
two  companies.

As of the date hereof, in the opinion of management, there are no other material
legal  proceedings pending against the Company which will have a material effect
on  the  Company's  consolidated  financial  statements.


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  2000.


                                       11
<PAGE>

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


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

The  Company's Common Stock is quoted on the Nasdaq Stock Market National Market
System  ("Nasdaq-NMS") under the symbol DHTI.  At the close of business on March
7,  2001,  there  were  outstanding 19,428,142 shares of Common Stock which were
held  by  approximately  3,688  shareholders  of  record  (and  approximately 22
beneficial  owners).

The  following  table  sets  forth  the high and low sales prices for the Common
Stock  as  quoted  by  Nasdaq-NMS  for  the  periods  indicated:

<TABLE>
<CAPTION>
                                        HIGH    LOW
                                       ------  ------
<S>                                    <C>     <C>
YEAR ENDED DECEMBER 31, 1999:
First Quarter                          $2.125  $0.625
Second Quarter                         $2.750  $1.813
Third Quarter                          $2.563  $1.188
Fourth Quarter                         $1.875  $1.125

YEAR ENDED DECEMBER 31, 2000:
First Quarter                          $3.906  $1.500
Second Quarter                         $2.063  $0.906
Third Quarter                          $1.500  $0.875
Fourth Quarter                         $1.750  $0.344

YEAR ENDED DECEMBER 31, 2001:
First Quarter (through March 7, 2001)  $0.875  $0.531
</TABLE>

On  March 7, 2001, the last reported sale price of the Common Stock as quoted by
Nasdaq-NMS  was  $.594  per  share.

Holders  of  the Company's Commons Shares are entitled to receive dividends when
and  if  declared  by  its  Board  of  Directors  out of funds legally available
thereof.  The  Company  however,  has  never  declared any cash dividends on its
Common  Shares  and  does  not  anticipate  the payment of cash dividends in the
foreseeable  future.

Under  the  Nasdaq  rules,  one  prerequisite to continued listing of the Common
Stock  on  Nasdaq-NMS is the maintenance of a minimum closing bid price of $1.00
per  share.  If  a  quoted company's closing bid price falls below $1.00 for ten
consecutive  trading  days,  such  company  may  be subject to having its shares
delisted  from  Nasdaq  ("Minimum Closing Price Requirement").  Our Common Stock
has  been trading below the Minimum Closing Price Requirement since October 2000
and Nasdaq has notified the Company of its intention to delist the Common Stock.
The  Company  has  filed  an appeal with Nasdaq and will forward a submission to
Nasdaq  setting  forth  a  plan  of  action that we believe will demonstrate our
ability  to become compliant, and sustain long term compliance, with the Minimum
Closing  Price Requirement.  In this regard , we have engaged the services of SG
Cowen  Securities  Corporation,  a well respected investment banking firm with a
focus on healthcare and technology, to be our financial advisor to assist in the
execution  of  a new strategic plan, which plan will include those steps that we
believe will bring our Common Stock in compliance with the Minimum Closing Price
Requirement.  The  Common Stock will continue to trade on the Nasdaq-NMS until a
decision  is  rendered  by  Nasdaq on the Company's appeal.  Although we believe
that  we  can  become  compliant  with the Minimum Closing Price Requirement and
maintain  compliance thereafter on a long term basis, we can not assure you that
we  will  meet  those or any other Nasdaq listing requirement or that the Common
Stock  will  not  be  delisted  by  Nasdaq.

During  2001,  management  was notified of a dispute involving the effect on the
conversion  price  of the Series C Preferred Stock (see also Notes G and K) as a
result  of  the  issuance  of  certain stock options by the Company. The dispute
involved  whether  or  not  the  terms  of  the  Series  C  Preferred Stock were
originally  intended  to exclude from adjustments to the conversion price of the
Series C Preferred Stock, issuances or grants of dilutive securities pursuant to
its  employee benefit plans or employment contacts. The Company and its Series C
Preferred  Stockholders  agreed  to  resolve this dispute and stipulate that the
exclusion  language  should


                                       12
<PAGE>

have  been  included in the Amended Articles of Incorporation from inception and
therefore that no adjustment in conversion price was due to them in exchange for
certain  other  revisions to the terms of the Series C Preferred Stock. On March
30,  2001,  the  Company  and the holders of the Series C Preferred Stockholders
agreed  to  amend  the  Company's  Articles  of  Incorporation  relating  to the
adjustment  of  the  conversion  price  of  the  Series  C  Preferred  Stock  to
specifically  exempt  dilutive  securities  issued  in  connection with employee
benefit  plans  or  employment  contracts  after  the  issuance  of the Series C
Preferred  Stock,  in  exchange for creating a Contingent Dividend provision for
the  Series  C  Preferred  Stock  shareholders.  The Contingent Dividend will be
payable  only  upon  conversion or a change of control, as defined, in an amount
equal  to  the greater of $125,000 or an accumulated amount calculated beginning
January  1,  2001 at the rate of $0.08 per annum per share of Series C Preferred
Stock.

ITEM  6.  SELECTED  FINANCIAL  DATA

The  information  required by this item is incorporated herein by reference from
page  24  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 25 through page 32 of the Annual Report to Shareholders included on Exhibit
13  to  this  Form  10-K.


ITEM  7(A).  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

The  information  required by this item is incorporated herein by reference from
page 32 of the Annual Report to Shareholders included on 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 33 through page 57 of the Annual Report to Shareholders included on Exhibit
13  to  this  Form  10-K.


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

There  were  no  disagreements  with  accountants on accounting and/or financial
disclosures  during  1998,  1999  or  2000.

On  June  16,  1999  the  Registrant's  Audit  Committee  as  authorized  by the
Registrant's   Board   of  Directors  acting  upon  the  recommendation  of  the
Registrant's current officers, approved a resolution to dismiss the Registrant's
Independent  Accountant  KPMG  LLP.

On  June  23,  1999  the  Registrant  engaged  BDO Seidman, LLP as the principal
accountant  to  audit  and  report  on  the  Registrant's consolidated financial
statements  as  of  and  for  the  year  ended  December  31,  1999.

KPMG  LLP's  report on the Registrant's financial statements for the fiscal year
ended  December  31,  1998  was unqualified and there were no disagreements with
KPMG  LLP  on  any  matter  of  accounting  principles  or  practices, financial
statement  disclosure  or auditing scope or procedure, which, if not resolved to
the  satisfaction  of  the  former  accountant,  would  have  caused  it to make
reference  to  the  subject  matter  of  the disagreement in connection with its
report.  In  1999,  the  Registrant  authorized KPMG LLP to respond fully to the
inquiries  of  BDO  Seidman,  LLP  with  respect  to  their  engagement  as  the
Registrant's  Independent  Accountant  without  limitation.


                                       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  2001 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  2001 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  2001 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  2001 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


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

     1.     FINANCIAL  STATEMENTS

     -    Independent  Auditors'  Reports  on  the  financial  statements.
     -    Balance  Sheets  as  of  December  31,  1999  and  2000.
     -    Statements  of  Operations for the years ended December 31, 1998, 1999
          and  2000.
     -    Statements  of  Shareholders'  Equity for the years ended December 31,
          1998,  1999  and  2000.
     -    Statements  of  Cash Flows for the years ended December 31, 1998, 1999
          and  2000.
     -    Notes  to  Financial  Statements.

The Financial Statements listed above are all incorporated by reference to pages
33  through  57 of  Exhibit  3  to  this  Form  10-K.

     2.   FINANCIAL  STATEMENT  SCHEDULES

                         INDEX                         SCHEDULE NO.     PAGE NO.

     Independent  Auditors'  Report on Financial           ---             16
Statement Schedule as of and for the  years ended          ---             17
December 31, 1999 and 2000

     Independent Auditors' Report on Financial
Statement Schedule for the year ended December 31,
1998

     Valuation and Qualifying Accounts                      II             18


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

     3.   EXHIBITS  AND  REPORTS  ON  FORM  8-K

         (a)     Exhibits:

                 Exhibit  13:  2000 Annual Report to Security  Holders.

         (b)     Reports  on  Form  8-K:

                 A  Form  8-K,  dated  November  15,  2000,   was  filed by  the
Registrant during the quarter ended December 31, 2000 reporting the appointments
of Mr. Christopher Assif to the position of Chief Executive Officer and Mr. John
P.  Fingado  to  the  position  of  President  and  Chief  Operating  Officer.


                                       15
<PAGE>
                                     ------
                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------





Board  of  Directors
Dynamic  Healthcare  Technologies,  Inc.:

The  audits referred to in our report dated March 8, 2001, except for note F and
Note  M,  as  to  which  the  dates  are  March  15,  2001,  and March 30, 2001,
respectively,  relating  to  the  financial  statements  of  Dynamic  Healthcare
Technologies,  Inc.,  which  is  incorporated  in  Item  8  of this Form 10-K by
reference  to  the annual report to stockholders for the year ended December 31,
2000  included  the  audit  of  the  financial  statement schedule listed in the
accompanying  index.  This financial statement schedule is the responsibility of
the  Company's  management.  Our responsibility is to express an opinion on this
financial  statement  schedule  based  upon  our  audits.


In  our  opinion  such  financial  statement  schedule  presents  fairly, in all
material  respects,  the  information  set  forth  therein.


                                                  /S/BDO  SEIDMAN  LLP
                                                  --------------------
                                                  BDO  SEIDMAN  LLP




New  York,  New  York
March  8,  2001,


                                       16
<PAGE>

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





Board  of  Directors
Dynamic  Healthcare  Technologies,  Inc.:

Under  date  of February 19, 1999, we reported on the consolidated statements of
operations,  shareholders' equity and cash flows for the year ended December 31,
1998,  as  contained  in  the  annual report on Form 10-K for the year 2000.  In
connection   with  our  audit  of  the   aforementioned  consolidated  financial
statements,   we  have  also   audited  the  related  1998  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 1998
information  in  this  consolidated  financial  statement  schedule based on our
audit.

In  our  opinion,  such 1998 information in the consolidated financial statement
schedule,  when  considered in relation to the basic 1998 consolidated financial
statements  taken  as  a  whole,  presents fairly, in all material respects, the
information  set  forth  therein.


                                                  /S/KPMG  LLP
                                                  ------------
                                                  KPMG  LLP




Orlando,  Florida
February  19,  1999


                                       17
<PAGE>

                      DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
                        VALUATION AND QUALIFYING ACCOUNTS
                  YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000

                                   SCHEDULE II


<TABLE>
<CAPTION>
                                                 Balance At   Charged to  Write-Offs,
                                                Beginning of  Costs and  Retirements &  Balance At
              Description                            Year      Expenses   Collections   End of Year
              -----------                         ----------  ----------  ----------  -----------
<S>                                               <C>         <C>         <C>         <C>
YEAR ENDED DECEMBER 31, 1998:
Allowance for Doubtful Accounts                   $  307,056  $  206,805  $  153,861  $   360,000
     Receivable
Accumulated Amortization of Capitalized Software  $4,829,271  $1,756,798  $       --  $ 6,586,069
     Development Costs

YEAR ENDED DECEMBER 31, 1999:
Allowance for Doubtful Accounts                   $  360,000  $  242,993  $  143,232  $   459,761
     Receivable
Accumulated Amortization of Capitalized Software  $6,586,069  $2,077,643  $       --  $ 8,663,712
     Development Costs

YEAR ENDED DECEMBER 31, 2000:
Allowance for Doubtful Accounts                   $  459,761  $  378,131  $  388,414  $   449,478
     Receivable
Accumulated Amortization of Capitalized Software  $8,663,712  $6,877,994  $4,998,234  $10,543,472
     Development Costs
</TABLE>


                                       18
<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/CHRISTOPHER  ASSIF                    Date:  March  30,  2001
     ---------------------
Christopher  Assif
Chief  Executive  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/JERRY  L.  CARSON         Chairman of the Board                March 30, 2001
------------------------
Jerry  L.  Carson


/S/CHRISTOPHER  ASSIF        Chief Executive Officer & Director   March 30, 2001
------------------------
Christopher  Assif


/S/PAUL  S. GLOVER           Vice President of Finance, CFO       March 30, 2001
------------------------     & Secretary
Paul  S.  Glover             (Principal  Accounting  Officer)


/S/CHARLES  COOPER           Director                             March 30, 2001
------------------------
Charles  Cooper


/S/MITCHEL  J.  LASKEY       Director                             March 30, 2001
----------------------
Mitchel  J.  Laskey


/S/THOMAS  J.  MARTINSON     Director                             March 30, 2001
------------------------
Thomas  J.  Martinson


/S/BRET  R.  MAXWELL         Director                             March 30, 2001
------------------------
Bret  R.  Maxwell


/S/DANIEL  RAYNOR            Director                             March 30, 2001
------------------------
Daniel  Raynor


                                       19
<PAGE>

                                    FORM 10-K
                      DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
                                INDEX TO EXHIBITS



                                                                      PAGE
DESCRIPTION  OF  EXHIBITS                                            NUMBER

Exhibit  13     Annual  Report  to  Shareholders  of  Dynamic
                Healthcare Technologies,  Inc.  for  the  fiscal
                year  ended  December 31, 2000.                        22


                                       20
<PAGE>

                                    FORM 10-K
                      DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
                                   EXHIBIT 13



                          ANNUAL REPORT TO SHAREHOLDERS
                    OF DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000


                                       21
<PAGE>

                               OUTSIDE FRONT COVER



                      DYNAMIC HEALTHCARE TECHNOLOGIES, INC.

                               2000 ANNUAL REPORT

                                       22
<PAGE>

                               INSIDE FRONT COVER

Dynamic  Healthcare  Technologies,  Inc.  is  a  leader  in  providing  advanced
information  technologies  for  the  healthcare  industry.  Dynamic's enterprise
information  solutions  enable healthcare providers to capture, manage and share
electronic  health  information  across  the  continuum  of  care.



                                    CONTENTS



Company  Profile

Letter  to  Shareholders

Selected  Financial  Data

Management's  Discussion  and  Analysis

Financial  Statements  and  Notes

Independent  Auditors'  Reports

Board  of  Directors  and  Officers

Shareholders  Information



              23
<PAGE>
                            SELECTED FINANCIAL DATA
                       FIVE YEARS ENDED DECEMBER 31, 2000

             (IN THOUSANDS EXCEPT PER SHARE DATA AND CURRENT RATIO)

The  following  selected  financial  data  for the five years ended December 31,
2000,  was  derived  from  the  financial  statements  of  Dynamic  Healthcare
Technologies,  Inc.  This  data  should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations and the
financial  statements,  related  notes  and other financial information included
herein.

<TABLE>
<CAPTION>

                                       1996 (1)    1997      1998     1999      2000
                                       ---------  -------  --------  -------  --------
<S>                                    <C>        <C>      <C>       <C>      <C>
Operating Revenues                     $ 19,826   $36,545  $25,829   $35,143  $25,659
Net Earnings (Loss)                     (15,618)    1,043   (9,013)      854   (8,621)

Net Earnings (Loss) Per Common Share      (1.72)     0.06    (0.50)     0.04    (0.46)

Working Capital (Deficit)                 9,191     6,534     (255)    2,078     (314)
Current Ratio                              1.80      1.59      .98      1.17      .98
Total Assets                             31,825    32,977   30,604    29,660   22,505
Long-Term Liabilities                       591       454    1,871     1,545    1,242
Shareholders' Equity                     19,771    21,423   14,626    15,921    7,629
</TABLE>

The  Company has declared no cash dividends on common stock since its inception.

(1)  Includes  the operating results and related financial information since the
     acquisitions  of  Dimensional  Medicine,  Inc.  ("DMI"), on May 1, 1996 and
     Collaborative  Medical  Systems,  Inc.  ("CoMed"),  on  December  17, 1996,
     including  the  non-recurring  write  off  of  in-process  research  and
     development  of  $15,057,569  or $1.63 per common share, in connection with
     the  CoMed  acquisition.  Both  of these acquisitions were accounted for as
     purchase  business  combinations.



                                       24
<PAGE>

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

OVERVIEW
--------

Dynamic  Healthcare Technologies, Inc. ("Dynamic" or the Company") is a provider
of  NT,  UNIX  and  AS/400  based  diagnostic  workflow solutions for pathology,
laboratory  and  radiology departments in approximately 640 customer sites, most
located  in the United States.  The Company has designed, developed and deployed
advanced  Internet  and image, voice and Web-enabled information systems for its
customers  that  address  a  broad range of requirements.  Dynamic's information
systems  contribute  to  higher quality and more cost-effective delivery of care
and  make  it possible to have access to information across the entire continuum
of  care.  The  Company  provides support for all of its systems and also offers
integration  and  other  consulting  services  to  its  customers.

The  Company's  customer base consists of many of the world's leading healthcare
organizations  such  as   Memorial   Sloan-Kettering  Cancer  Center,  The  Mayo
Foundation,  The  University of North Carolina Hospitals, LabCorp, Valley Health
System,   St.  Mary's  Health  System,  Parkland  Memorial  Hospital,   Columbia
Presbyterian  Medical Center, New York Hospital and Northwest Radiology Network.
The  Company's  systems  automate  ordering,  scheduling, specimen and procedure
tracking,  data / image acquisition from diagnostic equipment, store and archive
results.  For  years,  the  Company  has  provided  the  processing backbone for
clinical information within the key clinical departments of pathology, radiology
and  laboratory,  and has provided electronic integration with diagnostic images
and  voice  dictation

The  Company  is  expanding its e-Health initiatives with a new service offering
entitled  "CoMed"  as  part  of  its  commitment to changing the way clinicians'
access  and  use  information for the benefit of their patients and communities.
CoMed  has  been designed to automate the daily workflow and communication needs
of  healthcare  participants  and  improve  the  delivery of patient care within
healthcare  communities.  CoMed  is  a  secure,  members only web site providing
physicians  and other clinicians access to the most current pathology, radiology
and  laboratory  results  -  the most important diagnostic components of today's
medical  record.  CoMed will also be a place where physicians can obtain current
relevant medical reference material, initiate e-commerce, participate in virtual
communities  and  with  other physicians in discussion forums, as well as obtain
the  wealth  of  lifestyle  and business information available on the World Wide
Web.

A  key  differentiator  of  CoMed  is  that  it is designed to support the local
healthcare  brands  of integrated delivery networks, thereby positioning them to
sponsor  the  implementation and subscription to the product.  CoMed is intended
to  help  healthcare delivery channels communicate effectively with their client
population,  to  improve  health  outcomes,  to  increase  revenues  through new
referrals,  and  decrease  administrative  costs by eliminating paper processing
and  faxes.  CoMed enhances connectivity to other lab, radiology and health plan
oriented  systems,  creates virtual private communities and delivers value added
Internet  content  and context to physicians located throughout these integrated
delivery  networks.  CoMed  intends to leverage the Company's existing installed
base  of  prestigious hospitals, laboratories, and diagnostic imaging centers as
well  as the related clinical transaction volume and aggregate patient database,
providing  a significant opportunity to extend its reach to physicians and other
clinicians  as  a result of these relationships and the existing knowledge base.

Today,  physicians  have  a  need  and are demanding Internet access to clinical
information  including test results, comparative studies, and treatment plans to
provide  more  efficient  and  effective  patient care. CoMed will enable timely
information  exchange  and collaboration among healthcare participants, minimize
administrative   costs   associated    with   healthcare    business-to-business
transactions,  reduce unauthorized and non-reimbursed patient care, decrease the
waiting  time  and delivery costs for diagnostic test results and provide access
to  online  medical and other content. Internet transactions are far less costly
than  manual chart pulls, pushed faxes, report distribution, couriered or mailed
charts.  In  addition  to  the  direct  cost  reductions  associated  with these
improved  efficiencies,  Internet-connected providers make more prudent clinical
decisions.  CoMed  will  allow  convenient   access  to  information  supporting
analysis  across  multiple cases, to relevant medical reference material, and to
historical  patient  data  anytime,  anywhere  and  on  a  securitized  basis.


                                       25
<PAGE>

The  Company's  revenues  are  derived  from  the  licensing and sale of systems
comprised  of  internally  developed  software  and  third  party  software  and
hardware,  professional  services,  maintenance   and  support   services.   The
Company's  services  include implementation and training, product management and
customer   software   development.  Revenues  from  professional  services   and
maintenance  and  support services typically increase as the number of installed
systems  increases.  Computer  system  equipment  sales  revenues  are generally
recognized  when  hardware  is  shipped.  Computer  system  equipment  sales and
support  revenues  include hardware support contracts for a specific period from
which  revenue  is  recognized  ratably  over the corresponding contract period.
Application  software  license revenues are recognized when application software
is  delivered  to  the  customer.  Installation  and  training service revenues,
included  with application software licenses, are recognized as the services are
performed.  Software  support  revenues principally include contracts for remote
dial-up  problem diagnosis, maintenance and corrective support services, each of
which covers a specified period for which revenue is recognized ratably over the
corresponding  contract  period.  Services  and  other  revenues  include custom
programming  services,  post-contract  support  obligations  and other services,
which  are  provided  under separate contract and are recognized as services are
performed.

Cost  of  products sold includes the cost of hardware sold, costs of third party
software  licenses  and  hardware  support subcontracts.  Client service expense
includes  the  direct  and  indirect  costs  associated  with implementation and
support  personnel.  Software  development costs include the direct and indirect
salaries  and  wages  of  software  research  and  development personnel, direct
research  and  development expenses, reduced by capitalized software development
costs.  Software development costs are expensed until such time as technological
feasibility is established and then are capitalized in compliance with Statement
of  Financial  Accounting  Standards  No.  86  "Accounting for Costs of Computer
Software  to  be  Sold, Leased or Otherwise Marketed."  Software amortization is
separately  stated.  Sales  and  marketing  costs  include  direct  and indirect
salaries,  commissions,  joint  marketing  costs, advertising, trade show costs,
user  group  cost  and travel and entertainment expenses related to the sale and
marketing  of  the  Company's products and services.  General and administrative
expenses  include salaries and expenses for corporate administration, financial,
legal  and  human  resources.

The  sales  cycle  for the Company's systems is typically six to eighteen months
from  initial  contact  to  contract  signing.  The  product  delivery  cycle is
variable.  Based  on  the  customer's  implementation plan, product delivery may
take  two or more years, particularly with enterprise-wide electronic healthcare
record  solutions   involving   significant   and  continuing  customer  service
requirements.  Accordingly,  the   product   delivery  cycle  depends  upon  the
combination  of  products  purchased  and the implementation plan defined by the
customer  in  the  master sales agreement.  Each customer contract is separately
negotiated.  The  installation  schedules  for  clinical information systems, or
departmental electronic healthcare record implementations, typically require six
to  twelve  months.  Under  its  standard  master  sales  agreement, the Company
generally receives a partial payment upon execution of the agreement, a hardware
installment  payment  upon  delivery of hardware, installation progress payments
upon the completion of defined milestones and final payment, which may vary with
each  contract.

The  Company  has  determined  that  it  operates in a single reporting segment.


                                       26
<PAGE>

RESULTS  OF  OPERATIONS

The  following  table  sets  forth,  for  each of the periods indicated, certain
selected  statement  of  operations  data  expressed  as  a  percentage of total
operating  revenues:

<TABLE>
<CAPTION>

                                                   1998    1999      2000
                                                --------  ------  --------
<S>                                             <C>       <C>     <C>
Operating revenues:
  Computer system equipment sales and support     10.2 %  12.3 %    4.0  %
  Application software licenses                    20.9    27.7      27.7
  Software support                                 45.4    33.3      45.9
  Service and other                                23.5    26.7      22.4
                                                --------  ------  --------
           Total operating revenues               100.0   100.0     100.0
                                                --------  ------  --------
Costs and expenses:
  Cost of products sold                            12.6    17.8       9.0
  Software amortization                             6.8     5.9       7.3
  Client services expenses                         42.4    28.1      38.4
  Software development costs                       18.9    13.4      20.2
  Sales and marketing                              36.5    18.7      17.6
  General and administrative                       17.8    11.6      18.1
   Restructuring costs                               --     1.5      22.3
                                                --------  ------  --------
          Total costs and expenses                135.0    97.0     132.9
                                                --------  ------  --------
Operating income (loss)                           (35.0)    3.0     (32.9)
Other income (expense)                              0.1    (0.5)     (0.7)
Income taxes                                         --      --        --
                                                --------  ------  --------
Net earnings (loss)                             (34.9) %   2.5 %  (33.6) %
                                                ========  ======  ========
</TABLE>


                                       27
<PAGE>

YEAR  ENDED  DECEMBER  31,  2000  COMPARED  TO  YEAR  ENDED  DECEMBER  31,  1999

Revenues.  During the year ended December 31, 2000 the Company reported revenues
of  $25,659,000  a decrease of $9,484,000 from revenues of $35,143,000 for 1999.
Revenues  from new system implementations declined significantly principally due
to  general  market slowdown caused by reduced capital procurement by healthcare
providers.   Combined revenues from computer system equipment sales, application
software  licenses,  and  services  and  other  revenues declined by $9,535,000,
reflecting  this  decrease in new system implementations, while software support
revenues  increased  modestly  by  $51,000.  The  Company's  radiology  revenues
decreased  by  $3,947,000,  from $9,479,000 recognized during 1999 to $5,532,000
recognized  during 2000.  Pathology revenues for 2000 decreased by $2,724,000 to
$12,011,000  from  $14,735,000  during 1999.  Similarly, laboratory revenues for
2000 also decreased by $1,200,000 to $7,045,000 from $8,245,000 during 1999.  In
addition,  Records  Plus  product  line  revenues  decreased  by $1,455,000 from
$2,526,000  reported  for  1999  to  $1,071,000  for  2000.

Computer  system equipment sales and support revenues decreased by $3,274,000 to
4.0%  of  total  revenues  for  2000,  compared  to  12.3% for 1999.  Management
attributes  the  decrease  to  the  decreased  implementation  of new systems by
customers  focused  on  year  2000  remediation  and  system validation efforts.

Application  software  license  revenue  during  2000 decreased by $2,624,000 as
compared  to 1999, from $9,745,000 to $7,121,000, and service and other revenues
decreased  by  $3,637,000  to  $5,749,000 from $9,386,000, principally resulting
from  the  decreased  implementation  of  new  systems  during  2000.

Software support revenues increased by $51,000 to $11,767,000 for 2000, compared
to  $11,716,000  for  the  same  period  one year ago.  During 1999, the Company
discontinued  support  for a limited offering of legacy laboratory and financial
products  in  connection with Year 2000 remediation efforts.  Management expects
support revenues to grow with the implementation of new systems.  As of December
31,  2000, the recurring annualized billable support base was $12.3 million.  An
additional $1.3 million of annualized software support revenue is anticipated to
be  generated  from  delivery  of  the  Company's  existing new systems backlog.

Cost of Products Sold.  Cost of products sold as a percent of total revenues for
2000 decreased to 9.0% from 17.8% for 1999.  Computer system equipment sales and
support  revenues  during  2000  similarly decreased to 4.0% from 12.3% of total
revenues   for   1999,   due  to  the  significant  decrease   in   new   system
implementations.

Software   Amortization.   Software   amortization   for   2000   decreased   by
approximately  $198,000  from $2,078,000 during 1999 to $1,880,000.  During 2000
the  Company  abandoned  marketing  of  DynamicVision and PACSPlus for strategic
reasons,  which  lowered  the  recurring  amortization.

Client  Services Expense.  Client services expense for 2000 decreased $24,000 to
$9,856,000  from  $9,880,000  for 1999, increasing as a percentage of sales from
28.1%  to   38.4%.   The  Company  previously  reported  decreased  staffing  in
connection  with  the  re-engineering and cost reduction plan completed in 1998.
Product  installation, delivery and support services were standardized along all
product  lines as the Company centralized these functions.  However, during late
1999  and  continuing through the first quarter of 2000 the Company transitioned
various  development  personnel  to support and new system implementation roles,
consistent  with  the  maturing of the recent new product releases, which offset
these  decreases.

Software  Development  Costs.  Software  development costs for 2000 increased to
20.2% of total operating revenues from 13.4% incurred during 1999.  The $466,000
increase  in  software  development  expense  reported  for  2000 of $5,176,000,
compared  to  $4,710,000  reported  for 1999, results principally from resources
committed to the development of the Company's e-Business initiatives, which have
not  been capitalized.  In addition, development efforts continue as part of the
Company's  overall  growth  strategy, including enhancements to existing product
lines.

Sales  and  Marketing.  Sales  and  marketing  costs for 2000 as a percentage of
total revenues, decreased to 17.6% from 18.7% for the same period of 1999.  This
decrease  of  $2,081,000  from  $6,589,000  to $4,508,000 in sales and marketing
expenses  results  principally  from  cost  reductions  attributed  to the sales
realignment  programs completed in 1999 and a decrease in sales commissions as a
result  of  reduced  new  system  bookings  during  2000.


                                       28
<PAGE>

General  and  Administrative.  General  and  administrative  costs  increased by
$562,000  to  $4,631,000 for 2000 compared to $4,069,000 for 1999, and increased
as  a  percentage  of  total revenues to 18.1% from 11.6%.  Costs related to the
management  of  the Company's e-Business initiatives is being charged to general
and  administrative  costs, and the restructured organization allocates a higher
percentage  of  overhead  burdens  to  the  general administrative department as
result  of  the  department  constituting  a  higher  percentage of Company-wide
salaries  and  wages.  In  addition,  bad  debt  charges  for  2000 increased by
$135,000,  principally  as a result of the discontinued product offerings during
2000,  and  a  $300,000  severance  charge  was  taken  in  connection  with the
transition  of  the Company's former CEO to Senior Advisor in the fourth quarter
of  2000.

Restructuring  Costs.  During  the  third  quarter  2000,  the Company adopted a
formal  plan  to  stop  marketing and further development of  specific products,
and,  as  a result, recorded restructuring charges of $5,725,007.  In connection
with  the  Company's  strategic  decision  to  focus  marketing  efforts  on the
Company's clinical suite of products (CoPathPlus, RadPlus and e-Premier) and its
e-Business  initiatives (CoMed Internet),  SurgiPlus, DynamicVision and PACSPlus
will  no  longer  be actively marketed by the Company.  Historical revenues from
the  discontinued  products were approximately $1,071,000 and $2,526,000 for the
years  ended  December  31,  2000  and 1999, respectively.  The affected product
charges consist of the write-off of net capitalized software costs of $4,998,234
and  a  write-off  of  prepaid  licenses  of  $130,624.  In  addition,  employee
severance  and  termination  costs,  associated  with  positions eliminated as a
result  of  the  abandoned  product  offerings,  in the amount of $399,735 and a
reserve  for  contract  losses  of $196,414 were accrued and expensed during the
third  quarter  of  2000.  A total of 32 employees were terminated in connection
with  the  abandoned  product  offerings.

YEAR  ENDED  DECEMBER  31,  1999  COMPARED  TO  THE YEAR ENDED DECEMBER 31, 1998

Revenues.  During the year ended December 31, 1999 the Company reported revenues
of  $35,143,000,  an  increase of $9,314,000 or 36% from revenues of $25,829,000
for 1998.  The Company's radiology system revenues increased by $4,416,000, from
$5,063,000  recognized  during  the  1998  to $9,479,000 recognized during 1999.
Pathology   revenue  for  1999  increased  by  $3,909,000  to  $14,735,000  from
$10,826,000  during 1998.  Similarly, laboratory information system revenues for
1999  also  increased  by  $643,000  to  $8,245,000 from $7,603,000 during 1998.
Revenues  from  the  Records  Plus  product  line  increased  by  $592,000  from
$1,934,000  to $2,526,000 comparing 1998 to 1999, respectively.  During 1997 the
Company  introduced  new  technology  product releases in virtually every market
segment   in   which  the  Company   competes.   Lengthy  initial  sales  cycles
significantly  impacted 1998 performance, while record fourth quarter 1998 sales
bookings,  and  the resulting record high new systems backlog as of December 31,
1998,  resulted  in  increased  system  implementations  during  1999.

Computer  system equipment sales and support revenues increased by $1,659,000 to
12.3%  of  total  revenues  for  1999  compared  to  10.2% for 1998.  Management
attributed  the  increase  to  the increased implementation of new system sales.

Application  software  license  revenue during 1999 increased by $4,349,000 over
1998,  from  $5,396,000  to $9,745,000, and similarly, service and other revenue
increased   by   $3,313,000  to  $9,386,000  from  $6,073,000.  These  increases
principally  result  from  the  increased  implementation  of  new system sales.

Software  support revenues modestly decreased by $7,000 to $11,716,000 for 1999,
compared  to  $11,723,000  for  1998.  During  1998  the  Company  announced the
discontinuance  of  support  for  a  limited  offering  of legacy laboratory and
financial  products  in  connection  with  Year 2000 remediation efforts.  As of
December  31,  1999,  the  recurring  annualized billable support base was $12.3
million,  and  an additional $2.3 million of annualized software support revenue
was  anticipated  to  be  generated  from delivery of the Company's existing new
systems  backlog.

Cost of Products Sold.  Cost of products sold as a percent of total revenues for
1999  increased to 17.8% from 12.6% for 1998.  Hardware and application software
license  revenues  during  1999 similarly increased to 40.0% from 31.1% of total
revenues   for   1998,   due   to  the   significant  increase   in  new  system
implementations.

Client  Services Expense.  Client services expense for 1999 decreased $1,078,000
to  $9,880,000  from  $10,958,000  for 1998, decreasing as a percentage of sales
from  42.4%  to  28.1%.  The  Company  previously reported decreased staffing in
connection  with  the  re-engineering and cost reduction plan completed in 1998.
Product  installation, delivery and support services were standardized along all
product  lines  as  the  Company  centralized  these  functions.


                                       29
<PAGE>

Software  Development  Costs.  Software  development costs for 1999 decreased to
13.4%  of  total  operating  revenues  from  18.9%  incurred  during 1998.  This
$180,000  net  decrease  in  software  development  expense  resulted  despite a
$1,078,000  reduction  in capitalized software development costs from $3,174,000
capitalized  during  1998 to $2,096,000 capitalized during 1999, which increased
the  expense.  In  effect,  a  real  reduction  in  total  software  development
departmental  costs  of  $1,258,000  occurred  in  1999,  as  compared  to 1998.

Sales  and  Marketing.  Sales  and  marketing  costs for 1999 as a percentage of
total revenues, decreased to 18.7% from 36.5% for the same period of 1998.  This
decrease  of  $2,840,000  from  $9,430,000  to $6,590,000 in sales and marketing
expenses  was  despite  an  increase  in  sales commissions incurred for 1999 of
$462,000  from  $1,063,000  incurred  during  1998 to $1,525,000 incurred during
1999,  resulting from increased sales closings.  This translates to a base sales
and marketing cost reduction of approximately $3,302,000 attributed to the sales
realignment  program  undertaken  in 1998, in connection with the Company's cost
reduction  plan.

General  and  Administrative  Expenses.  General and administrative expenses for
1999  decreased  by $536,000 and decreased to 11.6% of total revenues from 17.8%
incurred  during  1998.  This  decrease  was  despite an increase of $382,000 in
amounts accrued under the Company's Management Incentive Compensation Plan ("MIC
Plan").  The  Company  did  not pay any MIC Plan compensation for 1998.  General
and  administrative  costs for 1999 compared to the same period in 1998, include
reductions  in  salaries  and  professional  services  of  $544,000, office rent
expense of $164,000 telephone expenses of $269,000, supplies of $72,000 and mail
delivery  costs  of  $49,000, principally attributed to the office consolidation
and  realignment  efforts.

Restructuring  Costs.  During  the third quarter of 1999 the Company announced a
restructuring  plan.  This  restructuring was designed to provide a single focus
to  the  development,  marketing, sales and support of the Company's information
systems.  It  also established specific cost reductions, revenue improvement and
customer  satisfaction  objectives and anticipated future cost efficiencies.  In
connection with the plan, a total of seventeen employees were terminated and the
Company  incurred  $524,000  of  termination  charges.

Other  Income (Expense).  The Company incurred $202,000 of net other expense for
1999  compared  to  $41,000 of net other income reported for 1998.  Net interest
income  was $180,000 during 1998 as compared to net interest expense during 1999
of  $176,000  due  to the cash used by operating and investing activities during
1998,  and increased borrowings on the line of credit during 1999.  In addition,
the Company incurred approximately $139,000 in losses on sale of fixed assets in
connection  with  the  office  consolidation  in  1998  and  $26,000  in  1999.

LIQUIDITY  AND  CAPITAL  RESOURCES
----------------------------------

As of December 31, 2000 the Company had cash and cash equivalents of $3,198,000,
draws  on the line of credit of $2,875,000, working capital deficit of $314,000,
and  a  working  capital  ratio  of  .98  to  1.  In  addition,  the Company has
experienced  positive  cash  flow from operations for nine consecutive quarters.

Accounts  receivable  as  of  December  31,  2000  decreased  by  $3,281,000  to
$5,309,000  as  compared  to  the  balance  of  $8,590,000 on December 31, 1999,
principally  as  a  result  of  decreased  system  implementations  in  process.
However,  unbilled receivables as of December 31, 2000, increased by $644,000 as
compared  to  the  unbilled  receivable  balance  as  of  December  31, 1999 due
principally  to  the timing of billing milestones relating to implementations in
process.

Contracts receivable as of December 31, 2000 increased by $146,000 to $1,042,000
as  compared to the balance of $896,000 on December 31, 1999, due principally to
two  large  system  installations  completed  during  2000 with deferred payment
terms,  less  scheduled  collections  on  existing  contracts.

During  fiscal  2000  the Company capitalized $1,705,000 of software development
costs,  and  purchased and leased $773,000 of additional property and equipment.
Development  efforts during 2000 included enhancements to the Company's existing
product  line,  while property purchases were made principally to build the data
center  to  support  the  Company's  e-Business  initiatives.  During  the third
quarter of 2000 approximately $244,000 of the e-Business property purchases were
financed  under  a  three  year  capital  lease,  and  portal development of the
e-Business  initiative has been effectively financed by subordinating payment to
the  subcontracted  development  partner  to  future  revenue  from the product.
Management  expects  capitalized  development  costs  to  continue  to  decrease
significantly  as  a  result  of  the  restructuring  and  the  transitioning of
personnel  to  new  system  implementation  roles.


                                       30
<PAGE>

Deferred  revenue  as  of  December 31, 2000 decreased by $648,000 to $5,929,000
from $6,577,000 reported as of December 31, 1999.  The previously announced plan
to  terminate support for the MUMPS based Maxifile radiology information systems
effective  June  30, 2001, limited the billable support period through this date
for  these  customers.  The Company is actively marketing a migration sales plan
for  these  customers to the RadPlus client server radiology information system.

Advanced  billings  as  of  December 31, 2000 declined by $190,000 to $1,197,000
from  the 1999 year end balance of $1,387,000.  The decline in new systems sales
bookings  and  implementations during 2000 resulted in a lower level of customer
contract  deposits  and  advance  payments  received.

On  March  15, 2001 the Company amended its existing Line of Credit with Silicon
Valley  Bank  (the  "Bank")  which  expires in March, 2002.  The amended Line of
Credit  is  intended  to  provide  for up to $3,000,000 of borrowings based on a
maximum  advance  ratio  equal  to  75%  of qualified receivables.  However, the
maximum  credit  limit is currently $1,500,000 until such time the company is in
compliance  with  the  operating  budget provided to the Bank, at which time the
maximum credit limit will increase in increments of $500,000 (up to a maximum of
$3,000,000)  but  will not exceed the Company's tangible net worth.  Interest is
to  accrue  at  the Bank's prime rate plus two and one half percent, which as of
March  15,  2001  was  eleven percent (11%), and is due monthly in arrears.  The
required  tangible  net worth covenant was reduced to $1,500,000.  The Company's
tangible  net  worth  as  of  December  31,  2000 was $2,687,518.  The agreement
contains  a  lock-box  requirement  and  a  subjective  acceleration clause, and
therefore,  the  entire  balance  is  classified  as  a  current  liability.

During  2000  the  Company  received  $155,000  in proceeds from the exercise of
director  and  employee  options, and paid $160,000 in dividends on the Series C
Preferred  Stock.

The Company intends to continue to enhance its product and service offerings and
to  seek market expansion opportunities beyond the recent product releases.  The
Company's  ability  to meet its future working capital requirements is dependent
on  the Company's ability to achieve profitable operations or to obtain suitable
additional  financing.

As  of  December  31,  2000 the Company had net operating loss carryforwards for
federal  income  tax  purpose of approximately $20,617,000, which can be used to
offset Federal taxable income in future years.  Future equity offerings combined
with  sales of the Company's equity during the preceding years may cause changes
in ownership under Section 382 of the Internal Revenue Code of 1986, as amended,
which  will  limit  the  use  of  the  Company's net operating loss carryforward
existing  as  of the date of the ownership change.  In the event the Company has
taxable income in the future, a change of ownership under Section 382 may result
in  the application of such limitations and could have a material adverse effect
on  the  Company.

Management  believes  that  existing  cash  and funds available from alternative
financing  options,  together  with funds expected to be generated by operations
will  be  sufficient to meet operating requirements for at least the next twelve
months.  In  this  regard,  the  Company's  Common  Stock  is  the  subject of a
delisting  hearing  with  Nasdaq  for failure to comply with the Minimum Closing
Price  Requirement.  If  the  company  cannot  successfully  demonstrate  to the
satisfaction  of  the  Nasdaq  that it will be able to come into compliance with
those  requirements  and maintain compliance for the long term, the Common Stock
could  be  delisted.  See  Item  5  -  "Market  for  Common  Equity  and Related
Stockholder Matters."  If the Company's Common Stock is delisted, it may make it
difficult  for the Company to raise capital through the sale of its Common Stock
or securities exercisable for, exchangeable for, or convertible into, the Common
Stock.

INFLATION  AND  CHANGING  PRICES

The  Company  believes  that  the  general state of the economy and inflationary
trends  have only a limited effect on its business.  Historically, inflation has
not  had a material effect on the Company.  Changing prices of computer hardware
could  have  a  material  effect  on  the cost of materials sold and the related
selling  price  of  software  and  hardware  sales.


                                       31
<PAGE>

MARKET  RISK

The  Company  is  exposed  to interest rate changes primarily as a result of its
variable  rate  line  of credit used to finance the Company's short-term working
capital  needs and general corporate purposes.  The Company's interest rate risk
management objectives is to limit the impact of interest rate changes on earning
and  cash  flows  and  to  lower  its  overall  borrowing  costs.

The  Company's  market  risks  associated  with  its  line  of credit borrowings
outstanding  is  that  the  interest  rate under the line of credit agreement is
based on the prime rate plus two and one half percent (11.5 % as of December 31,
2000).  The  line  of credit agreement expires on March 31, 2002.  Fair value of
the  line  of  credit as of December 31, 2000 was equal to its carrying value of
$2,875,000.

RECENT  ACCOUNTING  PRONOUNCEMENTS

In  June  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for Derivative
Instruments  and Hedging Activities" ("FAS 133").  FAS 133 requires companies to
recognize  all  derivative  contracts  as  either  assets  or liabilities in the
balance sheet and to measure them at fair value.  If certain conditions are met,
a  derivative  may specifically be designated as a hedge, the objective of which
is  to  match the timing of gain or loss recognition of:  (i) the changes in the
fair  value of the hedged asset or liability that are attributable to the hedged
risk;  or  (ii) the earnings effect of the hedged transaction.  For a derivative
not designated as a hedging instrument, the gain or loss is recognized as income
in  the  period of change.  FAS 133, as amended by FAS 137 and 138, is effective
for  all  fiscal  quarters  of  fiscal  years  beginning  after  June  15, 2000.
Historically,  the  Company has not entered into any derivative contracts either
to  hedge  existing risks or for speculative purposes.  Accordingly, the Company
does  not  expect  the  new  standard  to  affect  its  financial  statements.

In  March  2000,  the Financial Accounting Standards Board issued Interpretation
No.  44  ("FIN  44"),   Accounting  for  Certain  Transactions  Involving  Stock
Compensation,  and  Interpretation  of APB Opinion No. 25.  FIN 44 clarifies the
application of Opinion No. 25 for (a) the definition of employee for purposes of
applying  Opinion  No.  25,  (b)  the  criteria  for  determining whether a plan
qualifies  as a noncompensatory plan, (c) the accounting consequences of various
modifications  to  the  previously  fixed  stock  option  or  award, and (d) the
accounting   for  an  exchange  of  stock  compensation  awards  in  a  business
combination.  FIN  44  was effective July 2, 2000, but certain conclusions cover
specific  events  that occur after either December 15, 1998 or January 12, 2000.
The  adoption of FIN 44 has not had a material effect on the Company's financial
position  or  results  of  operations.

In  December  1999,  the Securities and Exchange Commission ("SEC") issued Staff
Accounting  Bulletin  No. 101 ("SAB No. 101"), "Revenue Recognition in Financial
Statements".  SAB  No.  101  summarizes  certain  of the SEC's views in applying
generally  accepted  accounting  principles  to revenue recognition in financial
statements.  In  October  2000,  the SEC issued additional written guidelines to
further  supplement  SAB  No.  101.  The adoption of this bulletin in the fourth
quarter  2000  did  not significantly impact the Company's financial statements.


                                       32
<PAGE>
<TABLE>
<CAPTION>
                              DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
                                          BALANCE SHEETS
                                     DECEMBER 31, 1999 AND 2000


                                                                                  1999           2000
                                                                              -------------  -------------
<S>                                                                           <C>            <C>
ASSETS
Current assets:
    Cash and cash equivalents                                                 $  1,818,209   $  3,197,743
    Accounts receivable, net                                                     8,590,441      5,309,700
    Unbilled receivables                                                         2,989,547      3,633,931
    Contracts receivable - current                                                 155,344        329,255
    Other current assets                                                           717,578        848,652
                                                                              -------------  -------------
        Total current assets                                                    14,271,119     13,319,281

Property and equipment, net                                                      4,107,481      3,507,870
Capitalized software development costs, net                                      9,266,284      4,093,560
Goodwill, net                                                                    1,255,483        847,934
Contracts receivable - non-current                                                 741,444        713,052
Other assets                                                                        18,114         22,872
                                                                              -------------  -------------
                                                                              $ 29,659,925   $ 22,504,569
                                                                              =============  =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
    Accounts payable and accrued expenses                                     $  3,041,799   $  3,061,461
    Deferred revenue                                                             6,577,199      5,929,122
    Advance billings                                                             1,387,119      1,197,266
    Line of credit                                                                 700,000      2,875,000
    Deferred lease incentives - current                                            190,231        190,230
    Other current liabilities                                                      297,143        380,335
                                                                              -------------  -------------
        Total current liabilities                                               12,193,491     13,633,414
Deferred lease incentives - non-current                                            792,632        602,403
Other non-current liabilities                                                      752,538        639,740
                                                                              -------------  -------------
        Total liabilities                                                       13,738,661     14,875,557
                                                                              -------------  -------------

Shareholders' equity:
    Series C redeemable convertible preferred stock ($.01 par value;
      issued and outstanding 1,000,000 shares with an aggregate liquidation
      preference of $2,000,000, as of December 31, 2000 and a $.16 per share
      annual dividend).                                                          1,811,327      1,811,327
   Common stock ($.01 par value; authorized 40,000,000 shares; issued and
      outstanding 18,814,887 and 19,348,166 shares in 1999 and 2000,
      respectively).                                                               188,149        193,482
   Warrants                                                                          3,000          3,000
   Additional paid-in capital                                                   45,135,109     45,701,122
   Deficit                                                                     (31,216,321)   (39,837,199)
                                                                              -------------  -------------
        Subtotal                                                                15,921,264      7,871,732
   Less:  note receivable from officer                                                  --       (242,720)
                                                                              -------------  -------------
        Total shareholders' equity                                              15,921,264      7,629,012
                                                                              -------------  -------------
                                                                              $ 29,659,925   $ 22,504,569
                                                                              =============  =============
</TABLE>

See  notes  to  financial  statements.


                                       33
<PAGE>
<TABLE>
<CAPTION>
                             DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
                                   STATEMENTS OF OPERATIONS
                          YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000


                                                              1998          1999          2000
                                                          ------------  ------------  ------------
<S>                                                       <C>           <C>           <C>
Operating revenues:
      Computer system equipment sales and support         $ 2,637,601   $ 4,296,500   $ 1,022,331
      Application software licenses                         5,396,122     9,745,107     7,121,050
      Software support                                     11,722,897    11,715,631    11,766,650
      Services and other                                    6,072,679     9,386,162     5,748,620
                                                          ------------  ------------  ------------
            Total operating revenues                       25,829,299    35,143,400    25,658,651
                                                          ------------  ------------  ------------
Costs and expenses:
      Cost of products sold                                 3,242,556     6,237,188     2,312,494
      Software amortization                                 1,756,798     2,077,643     1,879,760
      Client services expense                              10,958,132     9,880,115     9,856,409
      Software development costs                            4,889,673     4,709,784     5,175,867
      Sales and marketing                                   9,430,307     6,589,688     4,508,283
      General and administrative                            4,605,237     4,068,990     4,630,737
      Restructuring costs                                          --       523,569     5,725,007
                                                          ------------  ------------  ------------
            Total costs and expenses                       34,882,703    34,086,977    34,088,557
                                                          ------------  ------------  ------------
            Operating income (loss)                        (9,053,404)    1,056,423    (8,429,906)
                                                          ------------  ------------  ------------
Other income (expense):
      Interest expense and financing costs                    (94,049)     (277,075)     (273,837)
      Gain (loss) on disposal of property and equipment      (139,063)      (25,940)      (92,057)
      Interest income                                         273,826       100,960       174,922
                                                          ------------  ------------  ------------
            Total other income (expense)                       40,714      (202,055)     (190,972)
                                                          ------------  ------------  ------------
Earnings (loss) before income taxes                        (9,012,690)      854,368    (8,620,878)
Income taxes                                                       --            --            --
                                                          ------------  ------------  ------------
Net earnings (loss)                                       $(9,012,690)  $   854,368   $(8,620,878)
                                                          ============  ============  ============

Net earnings (loss) available for common shareholders     $(9,080,245)  $   694,368   $(8,780,878)
                                                          ============  ============  ============

Earnings (loss) per common share
      Basic and diluted                                   $     (0.50)  $      0.04   $     (0.46)
                                                          ============  ============  ============
</TABLE>


 See  notes  to  financial  statements.


                                       34
<PAGE>
<TABLE>
<CAPTION>
                                    DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
                                     STATEMENTS OF SHAREHOLDERS' EQUITY
                                YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000


                                                                               ADDITIONAL
                                                 SERIES C            COMMON     PAID-IN
                                                PREFERRED   WARRANTS  STOCK     CAPITAL    NOTE RECEIVABLE  DEFICIT
                                               ----------   --------  -------   -------    ---------------  ----------
<S>                                               <C>         <C>     <C>       <C>           <C>         <C>
Balance, December 31, 1997                        $        -  $    -  $180,082  $44,300,707   $       -   $(23,057,999)

     Issuance of Series C Preferred Stock and                                -            -                          -
       Warrants in Private Placement Transaction   1,811,327   3,000                                  -
     Exercise of Stock Options                             -       -       271       54,167           -              -
     Employee Stock Purchase Plan                          -       -       510       80,523           -              -
     Employee 401(k) Plan Match                            -       -     1,850      331,574           -              -
     Preferred Stock Dividends                             -       -         -      (67,555)          -              -
     Net loss                                              -       -         -            -           -     (9,012,690)
                                                  ----------  ------  --------  ------------  ----------  -------------
Balance, December 31, 1998                         1,811,327   3,000   182,713   44,699,416           -    (32,070,689)


     Exercise of Stock Options                             -       -     2,077      211,298           -              -
     Employee Stock Purchase Plan                          -       -     1,280       82,251           -              -
     Employee 401(k) Plan Match                            -       -     2,079      302,144           -              -
     Preferred Stock Dividends                             -       -         -     (160,000)          -              -
     Net income                                            -       -         -            -           -        854,368
                                                  ----------  ------  --------  ------------  ----------  -------------
Balance, December 31, 1999                         1,811,327   3,000   188,149   45,135,109           -    (31,216,321)


     Exercise of Stock Options and Warrants                -       -       669       67,494           -              -
     Employee Stock Purchase Plan                          -       -       714       85,897           -              -
     Employee 401(k) Plan Match                            -       -     2,470      331,382           -              -
     Preferred Stock Dividends                             -       -         -     (160,000)          -              -
     Exercise of Stock Option by an Officer                -       -     1,480      241,240    (242,720)             -
     Net loss                                              -       -         -            -           -     (8,620,878)
                                                  ----------  ------  --------  ------------  ----------  -------------
Balance, December 31, 2000                        $1,811,327  $3,000  $193,482  $45,701,122   $(242,720)  $(39,837,199)
                                                  ==========  ======  ========  ============  ==========  =============
</TABLE>

See  notes  to  consolidated  financial  statements.


                                       35
<PAGE>
<TABLE>
<CAPTION>
                                     DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
                                           STATEMENTS OF CASH FLOWS
                                  YEARS ENDED DECEMBER 31, 1998, 1999 AND 2000


                                                                                1998          1999          2000
                                                                            ------------  ------------  ------------
<S>                                                                         <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)                                                         $(9,012,690)  $   854,368   $(8,620,878)
Adjustments to reconcile net earnings (loss) to net cash
  Provided (used)  by operating activities:
      Depreciation and amortization                                           3,323,374     3,571,501     3,365,201
      Write off of software development costs                                        --            --     4,998,234
      Loss on disposed property and equipment                                   139,063        25,940        92,057
      Employer 401(k) contributions not requiring cash                          333,424       304,224       333,852
      Provision for doubtful accounts receivable                                206,805       242,993       378,131
Changes in assets and liabilities:
      Accounts receivable                                                      (987,998)   (1,985,936)    2,902,610
      Unbilled receivables                                                      322,624      (411,469)     (644,384)
      Contracts receivable                                                    1,325,952       869,611      (145,519)
      Other assets and liabilities                                             (194,955)      805,018      (137,836)
      Accounts payable and accrued expenses                                   1,208,181    (1,189,741)       19,662
      Deferred revenue                                                          273,316      (152,237)     (648,077)
      Advance billings                                                          568,475      (441,232)     (189,853)
                                                                            ------------  ------------  ------------
                  Net cash provided (used) by operating activities           (2,494,429)    2,493,040     1,703,200
                                                                            ------------  ------------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Capitalized software development costs                                 (3,174,028)   (2,096,349)   (1,704,572)
      Purchases of property and equipment                                    (1,142,941)     (280,828)     (529,332)
      Proceeds from disposal of property and equipment                           42,765        40,309         1,000
                                                                            ------------  ------------  ------------
                  Net cash used by investing activities                      (4,274,204)   (2,336,868)   (2,232,904)
                                                                            ------------  ------------  ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
      Borrowings (repayments) under line of credit, net                         856,000      (156,000)    2,175,000
      Borrowings (repayments) under notes payable                                    --            --       (78,095)
      Proceeds from issuance of common stock                                    135,471       296,905       154,773
      Proceeds from issuance of Series C Preferred Stock and Warrants         1,814,327            --            --
      Payment of preferred stock dividends                                      (67,555)     (160,000)     (160,000)
      Borrowings (repayments) capital lease obligations and other debt         (472,869)     (281,294)     (182,440)
                                                                            ------------  ------------  ------------
                  Net cash provided (used) by financing activities            2,265,374      (300,389)    1,909,238
                                                                            ------------  ------------  ------------

Net increase (decrease) in cash and cash equivalents                         (4,503,259)     (144,217)    1,379,534
Cash and cash equivalents, beginning of year                                  6,465,685     1,962,426     1,818,209
                                                                            ------------  ------------  ------------
Cash and cash equivalents, end of year                                      $ 1,962,426   $ 1,818,209     3,197,743
                                                                            ============  ============  ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
      Interest paid                                                         $    94,049   $   271,951   $   173,051
                                                                            ============  ============  ============

SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITY:
      Computer and communications equipment acquired under capital
          lease obligations                                                 $   492,495   $        --   $   243,687
                                                                            ============  ============  ============
      Common stock issued in exchange for note receivable from an officer   $        --   $        --   $   242,720
                                                                            ============  ============  ============
      Leasehold incentives received                                         $1 ,236,503   $        --   $        --
                                                                            ============  ============  ============
</TABLE>

See  notes  to  financial  statements.


                                       36
<PAGE>

                      DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 1998, 1999, AND 2000


A.          SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

BUSINESS - Dynamic Healthcare Technologies, Inc. ("Dynamic" or the "Company") is
a  provider  of  mission-critical  healthcare  information  systems for clinical
services  departments  and  facilities.  The  Company's product line, includes a
suite  of  image-,  voice-,  and  web-enabled  systems  for  anatomic pathology,
radiology,   and   laboratory   information  management   systems.   Dynamic  is
headquartered  in  the  greater  Orlando  area  and  has  a  key  operations and
development  center  near  Boston.  The  Company provides support for all of its
systems  and  offers  integration  and  other  consulting  services.

ACCOUNTS  RECEIVABLE  -  Accounts receivable is stated at net book value less an
allowance  for  doubtful  accounts  of  $360,000, $460,000, and $449,000 for the
years  ended  December 31, 1998, 1999, and 2000, respectively.  Bad debt expense
for  each  of  the  years  ended December 31, 1998, 1999, and 2000 was $206,805,
$242,993,  and  $378,131  respectively.

UNBILLED  RECEIVABLES / ADVANCE BILLINGS - The timing of revenue recognition and
contractual  billing  terms  under certain multiple element arrangements may not
precisely coincide resulting in the recording of unbilled receivables or advance
billings.  Customer payments are due under these arrangements in varying amounts
upon  the  achievement  of   certain  contractual   milestones   throughout  the
implementation  period.  Implementation  periods  generally  range from three to
twelve  months.

PROPERTY  AND  EQUIPMENT  -  Property  and  equipment  is  stated  at  cost less
accumulated  depreciation  and amortization.  The cost of property and equipment
is  depreciated  and  amortized  over  the estimated useful lives of the related
assets,  ranging  from  five  to  ten  years,  using  the  straight-line method.

SOFTWARE  DEVELOPMENT  COSTS  -  Costs  incurred  to establish the technological
feasibility of computer software products are research and development costs and
are  charged  to  expense  as  incurred.  Costs  of  producing  product  masters
subsequent  to  establishing  technological  feasibility,  including  coding and
testing, are capitalized.  Capitalization of computer software costs ceases when
the  product  is  available  for  general  release to customers. Amortization of
capitalized  software  development  costs for the years ended December 31, 1998,
1999  and 2000 were $1,756,798, $2,077,643, and $1,879,760 respectively.  During
2000, the Company wrote off $4,998,234 of capitalized software costs as a result
of  a  restructuring  (See  Note  I).  Accumulated  amortization  of capitalized
software  development  costs  was  $6,586,069,  $8,663,712,  and  $10,543,472 at
December  31,   1998,  1999,  and   2000,  respectively.   Capitalized  software
development  costs  are amortized using either the straight-line method over the
estimated  economic  life of the products (initially five years) or the ratio of
current  revenues to current and anticipated revenues for the product, whichever
results in the greater amount of amortization.  Unamortized capitalized costs of
a  computer software product in excess of its estimated net realizable value are
expensed.

GOODWILL  -  Goodwill is stated at cost less accumulated amortization.  Goodwill
is  amortized  using  the  straight-line  method  over  a period of seven years.
Amortization  of  goodwill  for each of the years ended December 31, 1998, 1999,
and  2000  was  $407,549.  Accumulated  goodwill amortization as of December 31,
1998,  1999,  and 2000 was  $1,189,805, $1,597,354, and $2,004,903 respectively.
The  Company  assesses  the  recoverability  of  goodwill  based  upon projected
operations  over  a  period  which  represents the approximate remaining life of
goodwill.  The  Company  evaluates  the recoverability of goodwill based on this
forecast  of  future  cash from operations and income, and using an undiscounted
rate  that reflects the Company's average cost of funds.  No impairment has been
recorded  for  the  years  ended  December  31,  1998,  1999  and  2000.


                                       37
<PAGE>

REVENUES  -  Revenues  are derived from the sale of computer hardware, licensing
and  sub-licensing  of software, professional and technical consulting services,
and  maintenance  and  support  services.  Each  customer contract is negotiated
separately.  Application  software licenses, other than software customizations,
and  computer  system  equipment  revenues are recorded when they are delivered.
Installation  and  training revenues, which are included with services and other
revenues  in  the statements of operations, and customized software revenues are
recognized  when  the  services   are  performed.   Software   support  revenues
principally  include  contracts  for  continuing  support services which cover a
specific period, and from which revenue is recognized ratably over the period of
the  contract.  Other  service revenues include custom service revenues and post
contract  support  obligations,  which  are  typically  rendered  under separate
contract  and  are  recognized  as  the  services  are  performed.

DEFERRED  REVENUE  -  Principally  results from payments received in advance for
software  support  contracts.

EMPLOYEE  BENEFIT  PLAN  - The Company has a 401(k) defined contribution savings
plan covering all full-time employees.  Eligible employees may elect to defer up
to 20% of their compensation, but limited to the maximum allowed by the Internal
Revenue  Code.  Company contributions are made at the discretion of the Board of
Directors  and  amounted  to  $349,454, $304,998, and $335,898 in 1998, 1999 and
2000,  respectively.  The  employer  match contribution for 1998, 1999, and 2000
were  made  through  the issuance of 208,823, 194,713, and 269,114 shares of the
Company's  common  stock,  respectively.

STOCK-BASED  EMPLOYEE  COMPENSATION  PLANS  - The Company accounts for its stock
option  plans  in  accordance with the provisions of Accounting Principles Board
("APB")  Opinion No. 25, "Accounting for Stock Issued to Employees", and related
interpretations.  As such, compensation expense would be recorded on the date of
grant  only  if  the  current  market price of the underlying stock exceeded the
exercise  price.  Statement  of  Financial  Accounting Standards (SFAS) No. 123,
"Accounting  for  Stock-Based  Compensation",  permits  entities to recognize as
expense  over the vesting period the fair value of all stock-based awards on the
date of grant.  Alternatively, SFAS No. 123 allows entities to continue to apply
the  provisions  of  APB Opinion No. 25 and provide pro forma net income and pro
forma  earnings  per share disclosures for employee stock compensation as if the
fair-value-based  method  defined in SFAS No. 123 had been applied.  The Company
elected  to  continue  to apply the provisions of APB Opinion No. 25 and provide
the  pro  forma  disclosures  of  SFAS  No. 123 for options issued to employees.

INCOME  TAXES  - Deferred income taxes are provided for temporary differences in
the  recognition  of  income  and expense for financial reporting and income tax
purposes.  Deferred   income  tax  assets   and  liabilities  are  computed  for
differences between the financial statement and tax bases of assets, liabilities
and  tax  carry  forwards  that  will result in taxable or deductible amounts in
future  periods  based upon enacted tax laws and rates applicable to the periods
in  which  the  differences are expected to affect taxable income.  Deferred tax
liabilities  are  recognized when incurred; deferred tax assets, when necessary,
are  reduced  by  a valuation allowance when it is more likely than not that the
asset  will  not  be  realized.

EARNINGS  PER  SHARE  - Basic earnings per share is computed on the basis of the
weighted  average  number  of shares outstanding.  Diluted earnings per share is
computed  on the basis of the weighted average number of shares outstanding plus
potential  common stock which would arise from the exercise of stock options and
warrants  and  conversion  of  the  Series  C  Preferred  Stock,  if  dilutive.

The  following  is a reconciliation of basic and diluted net earnings (loss) per
share  for  the  years  ended  December  31,  1998,  1999  and  2000:

<TABLE>
<CAPTION>
                                                        1998          1999          2000
                                                    ------------  ------------  ------------
<S>                                                 <C>           <C>           <C>
Net earnings (loss)                                 $(9,012,690)  $   854,368   $(8,620,878)
Preferred stock dividends                               (67,555)     (160,000)     (160,000)
                                                    ------------  ------------  ------------
Earnings (loss) available for common shareholders   $(9,080,245)  $   694,368   $(8,780,878)
                                                    ============  ============  ============

Weighted average shares outstanding - basic          18,127,641    18,578,573    19,061,028
Dilutive effect of options and warrants                       -       295,128             -
                                                    ------------  ------------  ------------
Weighted average shares outstanding - diluted        18,127,641    18,873,701    19,061,028
                                                    ============  ============  ============
Earnings (loss) per share - basic and diluted       $     (0.50)  $      0.04   $     (0.46)
                                                    ============  ============  ============
</TABLE>


                                       38
<PAGE>

Loss per common share is based upon the weighted average number of common shares
outstanding  during each period.  Potential common shares for 1998 and 2000 have
not  been  included since their effect would be anti-dilutive.  Potential common
shares  not  included  in  diluted earnings (loss) per share for the years ended
December  31,  1998,  1999,  and  2000  are  summarized  as  follows:

<TABLE>
<CAPTION>
                                    1998       1999       2000
                                  ---------  ---------  ---------
<S>                               <C>        <C>        <C>
Incentive Stock Options           1,038,328    511,999  1,322,376
Director and Management Options     305,333    216,500    275,000
Warrants                            634,088    446,500    535,000
Employment Options                  696,500    325,000    546,500
Reserved for Series C Conversion  1,000,000  1,000,000  1,000,000
                                  3,674,249  2,499,999  3,678,876
                                  ---------  ---------  ---------
                                  =========  =========  =========
</TABLE>


CASH  EQUIVALENTS  -  For  purposes  of the statement of cash flows, the Company
considers  all  highly liquid investments purchased with an original maturity of
three  months  or  less  to  be  cash  equivalents.

USE  OF  ESTIMATES  - The preparation of financial statements in conformity with
generally  accepted  accounting principles requires management to make estimates
and  assumptions  that affect the reported amounts of assets and liabilities and
disclosure  of  contingent  assets  and liabilities at the date of the financial
statements  and  the  reported  amounts  of  revenues  and  expenses  during the
reporting  period.  Significant  estimates  relate to the allowance for doubtful
accounts, the recoverability of software development costs and goodwill.  Actual
results  could  differ  from  those  estimates.

CONCENTRATION  OF  CREDIT RISK - The Company generates revenue primarily through
sales  to  entities  operating within the healthcare industry located throughout
the  United States.  Due to this concentration, substantially all receivables at
December  31,  1999  and  2000,  are  from  healthcare institutions which may be
similarly  affected by changes in economic, regulatory or other conditions.  The
Company  performs ongoing credit evaluations of its customers and generally does
not  require  collateral.  The  Company  maintains reserves for potential credit
losses  and  such  losses  have  been  within  management's  expectations.

The  Company   invests  its  excess   cash  in  deposits  with  major  financial
institutions,  in  U.S.  government agency securities and in commercial paper of
companies  with strong credit ratings.  Generally, the investments mature within
90  days  and,  therefore,  are  subject  to  little  risk.  The Company has not
experienced  losses  related  to  these  investments.

FAIR VALUE OF FINANCIAL INSTRUMENTS - The following methods and assumptions were
used to estimate the fair value of the Company's financial instruments: The fair
value of cash and cash equivalents, trade receivables and trade accounts payable
approximate  their  carrying  amounts  because  of  the  short maturity of those
instruments.  The  fair  value of contract receivables approximates its carrying
value,  and  is  estimated  by  discounting  the guaranteed minimum payments and
unguaranteed  contract  residuals  at the imputed incremental borrowing rates of
the related customers (see also Note C herein).  The fair value of the bank note
payable and line of credit are estimated based on the current rates available to
the  Company  for  debt  of  the  same remaining maturities and approximates its
carrying  amount.

SEGMENT  INFORMATION  -  The Company has determined that it operates in a single
reporting  segment.

RECLASSIFICATIONS  -  Certain  prior  year  balances  have  been reclassified to
conform  to  the  2000  presentation.

RECENT  ACCOUNTING  PRONOUNCEMENTS - In June 1998, the FASB issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("FAS 133").  FAS
133 requires companies to recognize all derivative contracts as either assets or
liabilities  in the balance sheet and to measure them at fair value.  If certain
conditions  are met, a derivative may specifically be designated as a hedge, the
objective  of  which is to match the timing of gain or loss recognition of:  (i)
the  changes  in  the  fair  value  of  the  hedged  asset or liability that are
attributable  to  the  hedged  risk;  or  (ii) the earnings effect of the hedged
transaction.  For  a derivative not designated as a hedging instrument, the gain
or loss is recognized as income in the period of change.  FAS 133, as amended by
FAS  137 and 138, is effective for all fiscal quarters of fiscal years beginning
after  June  15,  2000.  Historically,  the  Company  has  not  entered into any
derivative contracts either to hedge existing risks or for speculative purposes.
Accordingly,  the  Company  does  not  expect  the  new  standard  to affect its
financial  statements.


                                       39
<PAGE>

In  March  2000,  the Financial Accounting Standards Board issued Interpretation
No.  44  ("FIN  44"),  Accounting  for   Certain  Transactions  Involving  Stock
Compensation,  and  Interpretation  of APB Opinion No. 25.  FIN 44 clarifies the
application of Opinion No. 25 for (a) the definition of employee for purposes of
applying  Opinion  No.  25,  (b)  the  criteria  for  determining whether a plan
qualifies  as a noncompensatory plan, (c) the accounting consequences of various
modifications  to  the  previously  fixed  stock  option  or  award, and (d) the
accounting  for  an  exchange  of  stock   compensation  awards  in  a  business
combination.  FIN  44  was effective July 2, 2000, but certain conclusions cover
specific  events  that occur after either December 15, 1998 or January 12, 2000.
The  adoption of FIN 44 has not had a material effect on the Company's financial
position  or  results  of  operations.

In  December  1999,  the Securities and Exchange Commission ("SEC") issued Staff
Accounting  Bulletin  No. 101 ("SAB No. 101"), "Revenue Recognition in Financial
Statements".  SAB  No.  101  summarizes  certain  of the SEC's views in applying
generally  accepted  accounting  principles  to revenue recognition in financial
statements.  In  October  2000,  the SEC issued additional written guidelines to
further  supplement  SAB  No.  101.  The adoption of this bulletin in the fourth
quarter  2000  did  not significantly impact the Company's financial statements.


B.     PROPERTY  AND  EQUIPMENT

<TABLE>
<CAPTION>
Property  and  equipment consists of the following:   DECEMBER 31,

                                                   1999        2000
                                                ----------  -----------
<S>                                             <C>         <C>
Furniture and fixtures                          $1,224,039  $ 1,133,734
Equipment                                        6,954,570    7,552,913
Leasehold improvements                           1,558,386    1,558,386
                                                ----------  -----------
                                                 9,736,995   10,245,033
Less accumulated depreciation and amortization   5,629,514    6,737,163
                                                ----------  -----------
                                                $4,107,481  $ 3,507,870
                                                ==========  ===========
</TABLE>

C.               CONTRACTS  RECEIVABLE:

Contracts  receivable  amounts  represent  receivables from customers in monthly
installments  of  principal  and interest with initial terms ranging from one to
five years.  The future minimum principal payments to be received under contract
receivables  as  of  December  31,  2000  are  summarized  as  follows:


    YEAR  ENDED  DECEMBER  31,
    --------------------------

                2001                  329,255
                2002                  282,513
                2003                  180,623
                2004                  142,799
                2005                  107,117
                                   ----------
                Total              $1,042,307
                                   ==========

D.     LEASE  OBLIGATIONS

CAPITAL  LEASES
---------------

The Company leases furniture and fixtures under a capital lease obligation.  The
capital  lease  obligation  requires  36  non-cancelable monthly installments of
$15,837 which began in October 1998, bears an interest rate of 9.8% and provides
for  a  $100 purchase option to the Company at lease expiration in October 2001.


                                       40
<PAGE>

During  the  third  quarter 2000, the Company entered into a lease agreement for
the  purchase of $243,687 of computer and communications equipment.  The capital
lease  requires 36 monthly installments of $7,753 which began September 2000 and
provides  for  a  $1.00  purchase  option  to the Company at lease expiration in
September  2003.  Future  minimum lease payments under capital lease obligations
as  of  December  31,  2000  are  summarized  as  follows:


 YEAR ENDED DECEMBER 31:
 -----------------------

          2001                                     $ 235,575
          2002                                        93,042
          2003                                        54,275
                                                   ----------
          Total future minimum lease payments        382,892
          Less:  Amount representing interest        (35,435)
                                                   ----------
          Present value of minimum lease payments    347,457
          Less:  Current portion                    (211,934)
                                                   ----------
          Long term capital lease obligation       $ 135,523
                                                   ==========


Included  in  property  and  equipment  are  the  following:

                                    1999        2000
                                 ----------  ----------
Property under capital leases    $ 523,049   $ 766,736
Less:  Accumulated amortization   (102,388)   (268,190)
                                 ---------   ----------
                                 $ 420,661   $ 498,546
                                 ==========  ==========

The  capital  lease  obligation  balances  are  included  with other current and
non-current  liabilities  on  the  balance  sheet.

OPERATING  LEASES
-----------------

The  Company  leases  office  space  under non-cancelable operating leases.  The
leases  call  for  monthly  payments  over  terms of 60 to 78 months and include
renewal  options.  Total  rent  expense  on all operating leases was $1,609,000,
$1,445,000, and $1,812,000 for the years ended December 31, 1998, 1999 and 2000,
respectively.

The  future  minimum  rental  payments under operating leases as of December 31,
2000  are  as  follows:

     YEAR  ENDED  DECEMBER  31,
     --------------------------

             2001             2,022,726
             2002             2,040,914
             2003             2,059,640
             2004             1,994,816
             2005               183,684
                             ----------
             Total           $8,301,780
                             ==========


DEFERRED  LEASE  INCENTIVES
---------------------------

In  connection  with  the  lease  of  the Lake Mary office space the Company was
provided $1,236,494 of lease incentives, which are being amortized on a straight
line  basis  over  the  78  month  lease  term beginning September 1, 1998, as a
reduction  in  office  rent  expense.  During  1998, 1999, and 2000, the Company
recognized  $63,401,  $190,230, and $190,230 of deferred lease incentive against
office  rent  expense.

E.     NOTE  PAYABLE

Included  in  other  current  and non-current liabilities is a note payable (the
"Note").  The  Note  is  payable  in fixed monthly installments of $7,228, bears
fixed interest at a rate of 8.74%, and matures on February 1, 2003.  On December
31,  2000  current  and long-term portions of the Note were $74,772 and $95,876,
respectively.


                                       41
<PAGE>

The  Note  was issued subject to the terms of the sale of the Company's right to
receive  minimum  payments  under  a radiology system contract (the "Contract").
The  Note  plus  any  accrued interest becomes immediately due should any of the
following  occur:  1) The Company fails to make a scheduled installment payment.
2)  Any  default  in  the  agreement  governing the sale of the minimum payments
occurs.  3)  The  customer  defaults  on the terms of the Contract.  The Note is
secured  by  all  the  hardware  and  software included in the Contract plus any
payments  due  to the Company under the Contract other than the minimum payments
sold.

As  of December 31, 2000, future maturities pursuant to the Note are as follows:


    YEAR  ENDED  DECEMBER  31,
    --------------------------

              2001           $ 74,772
              2002             81,575
              2003             14,301
                             --------
              Total          $170,648
                             ========


F.          LINE  OF  CREDIT

On  March  15, 2001 the Company amended its existing Line of Credit with Silicon
Valley  Bank  (the  "Bank")  which  expires in March, 2002.  The amended Line of
Credit  is  intended  to  provide  for up to $3,000,000 of borrowings based on a
maximum  advance  ratio  equal  to  75%  of qualified receivables.  However, the
maximum  credit  limit is currently $1,500,000 until such time the company is in
compliance  with  the  operating  budget provided to the Bank, at which time the
maximum credit limit will increase in increments of $500,000 (up to a maximum of
$3,000,000)  but  will not exceed the Company's tangible net worth.  Interest is
to  accrue  at  the Bank's prime rate plus two and one half percent, which as of
March  15,  2001  was  eleven percent (11%), and is due monthly in arrears.  The
required  tangible  net worth covenant was reduced to $1,500,000.  The Company's
tangible  net  worth  as  of  December  31,  2000 was $2,687,518.  The agreement
contains  a  lock-box  requirement  and  a  subjective acceleration clause, and,
therefore,  the  entire  balance  is  classified  as  a  current  liability.

G.     SERIES  C  REDEEMABLE  CONVERTIBLE  PREFERRED  STOCK

On  July  29,  1998  the  Company issued 1,000,000 shares of Series C Redeemable
Convertible   Preferred   Stock  ("Series  C  Preferred  Stock")  together  with
detachable  Warrants  to  purchase  an aggregate of 300,000 Common Shares of the
Company  in  a  private placement transaction, which resulted in net proceeds to
the  Company  of  $1,814,000.  The  Series C Preferred Stock is convertible on a
share  for  share basis to Common Stock, is non-voting, carries a $.16 per share
cumulative  annual  dividend  payable  calendar  quarterly  in  arrears,  has  a
liquidation  preference  of $2.00 per share, may be automatically converted upon
the  Company's Common Stock sustaining sufficient trading at or above $4.00, and
is  redeemable  by the Company on or after July 29, 2000 at a price of $2.00 per
share.  The Warrants are exercisable at $2.25 per Common Share at any time on or
before  July 29, 2003.  On September 29, 1998 common stock underlying the Series
C  Preferred  Stock  and  Warrants   ("Securities")  was  registered  under  the
Securities  Act  of 1933, as amended.  During the years ended December 31, 1998,
1999  and  2000  all  of  the  then  accrued  Series C Preferred Stock dividends
aggregating  $67,555,  $160,000,  and  $160,000  respectively, were declared and
paid.

H.     CAPITAL  STOCK,  WARRANTS  AND  OPTIONS

The  Articles  of  Incorporation  authorize the issuance of 40,000,000 shares of
$.01  par  value  common stock and 10,000,000 shares of $.01 par value preferred
stock,  in  such  series  and variations in the relative rights and preferences,
including  voting rights, if any, between series as the Board of Directors shall
determine.

During  1993,  the shareholders approved and the Company adopted a stock warrant
and option plan for directors and management employees (the "D&M Plan"), whereby
250,000  shares  of  common  stock were reserved for issuance.  During 1997, the
shareholders  approved  increasing  shares reserved for issuance pursuant to the
D&M  Plan  to  650,000.  Under  the  D&M Plan directors' and management employee
warrants are five year warrants which vest under varying terms and are issued at
an exercise price equal to the market price of the Company's common stock on the
date  of  grant.  During 1995, the shareholders approved an amendment to the D&M


                                       42
<PAGE>

Plan  to  conform  the  terms of vesting to 40% upon grant plus 20% per year for
each  of  three years thereafter, and to provide for early vesting upon death or
employment  termination  without  cause for all future options granted under the
D&M  Plan.  Outside  directors  receive a five-year warrant for 25,500 shares of
the  Company's common stock issued the date of their first election to the Board
of  Directors.  Additionally,  annual  warrants  are  issued  to certain outside
directors at the beginning of that director's fourth consecutive term in office.
Other  grants  under  the D&M Plan are made under the direction of the Company's
Compensation  Committee.  Each  annual  warrant  is  for  5,000  shares  of  the
Company's Common Stock, has a five year term, has an exercise price equal to the
average  of  the closing bid and ask prices of the Company's Common Stock on the
date  of  issuance, and is fully vested upon issuance.  At December 31, 2000 the
Company  had  stock  warrants  and options outstanding to purchase shares of its
common  stock  under  the  D&M  Plan  as  follows:

<TABLE>
<CAPTION>
                             Number    Presently      Price       Year      Expiration
                           of Shares   Exercisable    Per Share   Granted   Date
                          ----------  ------------   ----------   --------  ----------
<S>                       <C>         <C>            <C>         <C>       <C>
Directors'
Warrants:                      5,000       5,000     $ 1.97        1996     Mar. 2001
                              76,500      76,500     $ 6.06        1996     May  2001
                              10,000      10,000     $ 5.88        1997     June 2002
                               8,000       6,400     $ 1.44        1998     June 2003
                              20,000      12,000     $ 2.13        1999     June 2004
                              25,000      10,000     $ 1.17        2000     June 2005
                              25,500      10,200     $  .91        2000     Nov. 2005
Management Employees'
Options:                       7,500       7,500     $ 4.75        1996     Dec. 2001
                              97,500      78,000     $ 3.28        1998     Jan. 2003
                          ----------     -------
                             275,000     215,600
                           =========    ========
</TABLE>
<TABLE>
<CAPTION>

D&M  Plan  options  activity  is  summarized  as  follows:

                                                                           Shares
                                                                           -------
<S><C>                                                                    <C>
Options outstanding at December 31, 1997                                   293,999
   Exercised                                                               (25,500)
   Granted                                                                 133,000
   Canceled                                                                (96,166)
                                                                           --------
Options outstanding at December 31, 1998   305,333
   Exercised                                                               (17,000)
   Granted                                                                  20,000
   Canceled                                                                (78,833)
                                                                           --------
Options Outstanding at December 31, 1999                                   229,500
   Exercised                                                                (5,000)
   Granted                                                                  50,500
   Canceled                                                                      -
                                                                           --------
Options Outstanding at December 31, 2000                                    275,000
                                                                           ========
</TABLE>

The  Company  adopted  an  incentive stock option plan in 1983 for key employees
whereby  400,000  shares  of  common  stock were reserved for issuance under the
Plan.  Options  granted  vest  40%,  30%  and 30% on the first, second and third
anniversaries  of  their  issuance,  respectively and expire ten years after the
date of grant.  At December 31, 2000, the Company had granted options of 355,040
shares,  of  which  options  for  119,740 shares had been exercised, and 235,300
expired  unexercised.  The  1983  Plan  terminated  in  2000.

During  1993,  the  shareholders approved and the Company adopted a new ten year
incentive stock option plan for employees whereby 100,000 shares of common stock
were  reserved for issuance under the Plan.  The terms of this 1993 ISO Plan are
similar  to  the  1983  Plan.  During  1995  and 1997, the shareholders approved
increasing shares reserved for issuance pursuant to the 1993 ISO Plan to 600,000
then  1,500,000,  respectively.  During 2000, the shareholders approved amending
the  terms  of  the  1993  ISO  Plan,  merging  it  into and creating a new 2000
Incentive


                                       43
<PAGE>

Stock  Option  Plan,  increasing the shares issuable pursuant to the new Plan to
2,500,000  shares.  At  December  31,  2000, the Company had granted options for
2,978,407 shares, of which 146,050 options had been exercised, 1,509,981 options
were  terminated and options to purchase 485,262 shares were exercisable.  Under
both  the  1993  and 2000 Plans, the exercise price for stock options may not be
less  than  the market price of the Company's common stock at date of grant.  As
of  December  31,  2000  options  under the 2000 plan are summarized as follows:

<TABLE>
<CAPTION>
                                              WEIGHTED AVERAGE     WEIGHTED AVERAGE
RANGE OF EXERCISE PRICE        OUTSTANDING     EXERCISE PRICE  REMAINING CONTRACTUAL LIFE
------------------------       -----------     --------------  --------------------------
<S>                            <C>            <C>                  <C>
      .90 - $1.20                 311,855      $      1.02             5.9 Years
     1.36 - $2.00                 804,770             1.75             3.9 Years
     2.06 - $3.06                  23,000             2.39             1.8 Years
     3.28 - $4.38                  50,500             3.96             6.7 Years
     4.75 - $5.25                 132,251             5.04             5.9 Years
                              -----------       ----------             ---------
                                1,322,376       $     2.00             4.6 Years
                               ==========       ==========             =========
</TABLE>
<TABLE>
<CAPTION>
                                              WEIGHTED AVERAGE     WEIGHTED AVERAGE
RANGE OF EXERCISE PRICE        OUTSTANDING     EXERCISE PRICE  REMAINING CONTRACTUAL LIFE
------------------------       -----------     --------------  --------------------------
<S>                            <C>            <C>                  <C>
      .90 - $1.20                  62,792      $      1.00             7.0 Years
     1.36 - $2.00                 239,769             1.81             7.2 Years
     2.06 - $3.06                   5,650             2.67             5.4 Years
     3.28 - $4.38                  44,800             4.05             6.7 Years
     4.75 - $5.25                 132,251             5.04             5.9 Years
                              -----------       ----------             ---------
                                  485,262       $     2.80             6.8 Years
                                  =======       ==========             =========
</TABLE>

As  of  January  1,  2000  and  December 31, 2000, the weighted average exercise
prices  of  options  outstanding  under  the  ISO  Plans  were  $2.39 and $2.00,
respectively.  Additionally, during 2000 the weighted average exercise prices of
options  exercised,  granted  and canceled under the ISO Plans were $1.11, $1.53
and  $2.27,  respectively.

Incentive  stock  option activity under the 1983, 1993, and 2000 Plans and price
information  follows:

<TABLE>
<CAPTION>
                                                       Stock  Option
                                             Shares     Price  Range
                                             ------     ------------
<S>                                       <C>         <C>
Options outstanding at December 31, 1997    861,247   $1.00 - $5.38
   Exercised                                 (1,650)  $1.00 - $1.97
   Granted                                  757,750   $ .97 - $3.28
   Canceled                                (579,019)  $1.00 - $5.38
                                          ----------

Options outstanding at December 31, 1998  1,038,328   $ .97 - $5.25
   Exercised                                (60,650)  $1.00 - $1.00
   Granted                                  522,200   $1.00 - $2.20
   Canceled                                (484,254)  $1.00 - $5.25
                                          ----------

Options outstanding at December 31, 1999  1,015,624   $ .97 - $5.25
   Exercised                                (11,900)  $1.00 - $1.72
   Granted                                  665,500   $ .90 - $2.34
   Canceled                                (346,848)  $ .97 - $5.00
                                          ----------

Options outstanding at December 31, 2000  1,322,376   $ .90 - $5.25
                                          ==========
</TABLE>

During  1993 the shareholders approved and the Company adopted an Employee Stock
Purchase  Plan  effective for a five year period beginning January 1, 1994.  The
Company  reserved  200,000  shares  of common stock for issuance under the Plan.
During  1997,  the shareholders approved increasing shares reserved for issuance
to  600,000  shares,  and  during  1998 shareholders approved extending the Plan
through  December  31,  2003.  The  Plan  operates  in one or more phases of six
months  each  and  is open for enrollment by employees working at least 20 hours
per  week  and who have completed at least five months of service.  A summary of
plan  activity  is  as  follows:


                                       44
<PAGE>
<TABLE>
<CAPTION>

Phase  #              Phase  Ending  Date  Shares  Issued   Price
--------              -------------------  --------------   -----
<C>  <S>               <C>                 <C>             <C>
  1                    June 30, 1994        5,274          $1.650
  2                    December 31, 1994    2,535          $ .980
  3                    June 30, 1995        6,256          $ .930
  4                    December 31, 1995   22,575          $ .930
  5                    June 30, 1996       14,026          $2.045
  6                    December 31, 1996   17,321          $4.202
  7                    June 30, 1997       23,826          $4.200
  8                    December 31, 1997   40,116          $3.010
  9                    June 30, 1998       50,964          $1.590
 10                    December 31, 1998   57,973          $ .680
 11                    June 30, 1999       70,014          $ .630
 12                    December 31, 1999   24,543          $1.430
 13                    June 30, 2000       46,831          $1.100
 14                    December 31, 2000   47,327          $ .450
</TABLE>

Phase  ten  (10),  twelve  (12), and fourteen (14) shares were issued in January
1999,  2000,  and  2001  respectively.


The  Company's Board of Directors, in connection with employment agreements, has
granted  employment  options.  Employment options are exercisable for five years
from  the  date of grant in accordance with a vesting schedule of 40% upon grant
plus  20% per year for each of three years thereafter at an exercise price equal
to  the  fair  market  value  on the date of the grant.  On August 23, 1994, the
Company's  Board  of  Directors,  in  connection  with  an employment agreement,
granted options to Mitchel J. Laskey, the Company's President and then COO, (now
Senior  Advisor),  for  250,000 shares of common stock under similar terms at an
exercise  price  equal  to  the  fair  market  value on the date of the grant of
$1.6875.  On  September  13,  1995, the Company's Board of Directors reduced the
exercise  price  on  Mr.  Laskey's  employment  options  to $1.00 per share.  On
December  17,  1996 the Company's Board of Directors, in connection with various
other  employment  agreements,  granted options covering 96,000 shares of common
stock under similar terms at an exercise price equal to fair market value on the
date of the grant of $5.00.  On January 1, 1997 the Company's Board of Directors
granted  additional employment options to Mitchel J. Laskey for 50,000 shares of
common  stock under similar terms at an exercise price of $4.63 which represents
the  fair  market value on the date of grant.  During 1998, 47,500 of Mitchel J.
Laskey's  January  1,  1997  options  expired.  On January 1, 1998 the Company's
Board  of Directors approved additional options to Mitchel J. Laskey for 400,000
shares  of  common  stock,  100,000 shares at an exercise price of $6.00, $7.50,
$9.00  and  $10.50  each.  All of these employment option agreements provide for
early vesting upon death or employment termination without cause and were issued
at  exercise prices no less than the fair market value of the shares on the date
of  grant.  As  such,  in  accordance  with APB 25 no corresponding compensation
expense  was  recognized.

On  July  31,  1995  the  Company completed a Private Placement Offering issuing
$775,000  of  Subordinated  Convertible Notes, bearing simple interest at 9% per
annum,  together  with  detachable  warrants  to  purchase 155,000 shares of the
Company's  common  stock,  ("debt  warrants").  The warrants were exercisable at
$1.00  per  common  share,  and  are exercisable for five years from the date of
issuance  (70,000 in June 1995 and 85,000 in July 1995).  During the years ended
December  31,  1999  and  2000,  30,000  and  50,000  of  the debt warrants were
exercised,  respectively,  and  75,000  expired  in  2000.

In  connection  with  the  Private Placement of the shares of Series B Preferred
Stock, the Board of Directors of the Company authorized the issuance on December
8,1995  of warrants to purchase 210,000 shares of the Company's common stock for
$1.00  per  share  to  a financial consultant ("Series B warrants") for $25,000.
These warrants are exercisable for seven years from the date of issuance.  As of
December  31,  2000,  none  of  the  Series  B  warrants  were  exercised.


                                       45
<PAGE>

During  1998 the employer match contribution of $349,454 to the Company's 401(k)
defined  contribution  savings  plan  was  made  through the issuance of 208,823
shares  of  the  Company's  common stock at an average price of $1.67 per share.
During  1999 the employer match contribution of $304,998 to the Company's 401(k)
defined  contribution  savings  plan  was  made  through the issuance of 194,713
shares  of  the  Company's  common stock at an average price of $1.57 per share.
During  2000 the employer match contribution of $335,898 to the Company's 401(k)
defined  contribution  savings  plan  was  made  through the issuance of 269,114
shares  of  the  Company's  common stock at an average price of $1.25 per share.

On  August 8, 2000 the Company issued 148,000 shares of common stock pursuant to
an employment agreement with Mr. Christopher Assif, the Company's CEO, for $1.64
per  share  through the issuance of a promissory note in the amount of $242,720,
payable  to  the  Company on or before August 8, 2003.  Interest on the recourse
note is payable annually in arrears and accrues at the rate of nine percent (9%)
per  annum.  This  note  may  be  prepaid  in  whole or part at any time without
penalty.  Accrued  interest  receivable of $8,617 is included in other assets as
of  December  31,  2000.

I.               RESTRUCTURING  COSTS

During  the third quarter of 1999 the Company announced a realignment plan. This
realignment  was  designed  to  provide  a  single  focus  to  the  development,
marketing,  sales  and  support  of  the Company's information systems.  It also
established    specific  cost   reductions,  revenue  improvement  and  customer
satisfaction objectives and anticipated future cost efficiencies.  In connection
with  the  plan,  a  total  of seventeen employees were terminated.  Termination
benefits  for  the  year  ended  December  31,  1999  are summarized as follows:

<TABLE>
<CAPTION>
                           NO. OF      TOTAL SEVERANCE
                         TERMINATED    AND TERMINATION
DEPARTMENT               EMPLOYEES      BENEFITS PAID
----------               ---------      -------------

<S>                         <C>            <C>
Client Services               6            $ 28,368
Software Development          6              55,114
Sales and Marketing           4             192,043
General and Administrative    1             248,044
                             --            --------
                             17            $523,569
                             ==            ========
</TABLE>

During  the  third  quarter  of  2000, the Company adopted a formal plan to stop
marketing specific products, and, as a result, recorded restructuring charges of
$5,725,007.  In  connection  with  the  Company's  strategic  decision  to focus
marketing  efforts  on  the  Company's  clinical  suite of products (CoPathPlus,
RadPlus  and  e-Premier)  and  its  e-Business  initiatives  (CoMed  Internet).
SurgiPlus  and  DynamicVision for Imaging will no longer be actively marketed by
the  Company.  Historical  revenues  from  the  discontinued  products  were
approximately  $1,070,857,  $2,525,682,  and  $1,913,858  for  the  years  ended
December  31,  2000, 1999, and 1998 respectively.  The abandoned product charges
consist  of  the write-off of net capitalized software costs of $4,998,234 and a
write-off  of prepaid licenses of $130,624.  In addition, employee severance and
termination  costs,  associated  with  positions  eliminated  as a result of the
abandoned  product  offerings,  in  the  amount  of  $399,735  and a reserve for
contract  losses  of $196,414 were accrued and expensed during the third quarter
of  2000.  A  total  of  32  employees  were  terminated  in connection with the
abandoned  product  offerings.  Termination  benefits  paid  for  the year ended
December  31,  2000  are  summarized  as  follows:

<TABLE>
<CAPTION>
                  NO. OF          TOTAL SEVERANCE
                TERMINATED        AND TERMINATION
  DEPARTMENT     EMPLOYEES         BENEFITS PAID
  ----------     ---------         -------------


<S>                   <C>            <C>
Client Services        13            $ 90,271
Software Development   16             209,643
Sales and Marketing     3              99,821
                       --            --------
                       32            $399,735
                       ==            ========
</TABLE>


                                       46
<PAGE>

J.                    INCOME  TAXES

     The components of income tax expense (benefit) are as follows:

<TABLE>
<CAPTION>
               YEAR  ENDED  DECEMBER  31,
               --------------------------
               1998        1999      2000
               ----        ----      ----
<S>             <C>       <C>         <C>
Current:
Federal         $--       $ 299.000   $--
State             -          43,000     -
                ---       ----------  ---
                  -         342,000     -
                ---       ----------  ---
Deferred:
Federal                    (299,000)
State             -         (43,000)    -
                ---       ----------  ---
                  -        (342,000)    -
                ---       ----------  ---
                  -                     -
Total           $--       $      --   $--
                ===       ==========  ===
</TABLE>


Deferred  income  taxes  reflect  the  net tax effects of operating loss and tax
credit  carryforwards  and temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for
income  tax  purposes.  The  tax  effects  of  significant  items comprising the
Company's  net  deferred  tax  as of December 31, 1999 and 2000, are as follows:

<TABLE>
<CAPTION>
                                                1999         2000
                                           ------------  ------------
<S>                                        <C>           <C>
 Deferred tax asset:
   Net operating loss carryforwards        $ 7,753,000   $ 8,247,000
   Tax credit carryforwards                    551,000       551,000
   Other                                       528,000       528,000
                                           ------------  ------------
                                             8,832,000     9,326,000
 Deferred tax liabilities:
   Capitalized software development costs   (3,128,000)   (1,058,000)
   Other                                      (235,000)      (99,000)
                                           ------------  ------------
 Net deferred tax asset                      5,469,000     8,169,000
 Valuation allowance                        (5,469,000)   (8,169,000)
                                           ------------  ------------
 Net deferred tax                          $        --   $        --
                                           ============  ============
</TABLE>

The  net  deferred  tax  asset  is  reduced  by a valuation allowance due to the
uncertainty  associated with the realization of the net deferred tax asset.  The
valuation  allowance  increased  $2,700,000  from the allowance of $5,469,000 at
December  31,  1999.

The  provisions  for  Federal  income  taxes differs from the amount computed by
applying  the statutory rate to net earnings (loss) before income taxes for each
of  the  three  years  in  the  period  ended  December  31,  2000  as  follows:

<TABLE>
<CAPTION>
                                                                      AMOUNT OF TAX
                                                         --------------------------------------
                                                                1998        1999           2000
                                                         ------------  ----------  ------------
<S>                                                      <C>           <C>         <C>
Computed expected tax expense (benefit)                  $(3,154,000)  $ 299,000   $(3,017,000)
State taxes expenses (benefit), net of federal benefit      (450,000)     43,000      (431,000)
Permanent differences                                              -           -       119,000
Other                                                              -           -        15,000
Expiration of net operating loss                                   -           -       614,000
     carry forward
Non-recognition (recognition) of the benefits of
    operating loss carryforward and the related
    valuation allowance change                             3,604,000    (342,000)    2,700,000
                                                         ------------  ----------  ------------
                                                         $        --   $      --   $        --
                                                         ============  ==========  ============
</TABLE>


                                       47
<PAGE>

At  December  31,  2000, the Company had unused net operating loss carryforwards
for  tax  and  alternative minimum tax purposes of approximately $20,617,000 and
$19,983,000,  respectively,  and  unused  tax credits of approximately $551,000.
These  operating  loss  carryforwards  and tax credits expire in varying amounts
during  2007  through  2020.

K.                    RELATED  PARTY  TRANSACTIONS

The Company expensed $63,000 and $46,500 during 1998 and 1999, respectively, for
consulting  and  advisory fees paid to MMRI, Inc. which is majority owned by the
Company's  former  Chairman  of  the  Board,  David  Pomerance.

The private placement transaction closing on July 29, 1998, more fully discussed
in  Note  G, was solely subscribed to by executive officers and directors of the
Company  on  terms  negotiated  by  non-participating  directors  and  executive
officers  with  the  Company's  investment  banker.

L.                    LITIGATION

On  February  27,  2001  the  Company  signed  an  Amended Strategic Value Added
Reseller  Agreement  with  Sunquest Information Systems, Inc.  Sunquest paid the
Company  for  maintenance services through December 31, 2003 and advance license
fees,  and  Sunquest  will  continue  to  distribute,  implement and support the
Company's  CoPath Plus product.  This resolves all previous disputes between the
two  companies.

As of the date hereof, in the opinion of management, there are no material legal
proceedings pending against the Company which will have a material effect on the
Company's  consolidated  financial  statements.


                                       48
<PAGE>

M.                  SUBSEQUENT EVENT

During  2001,  management  was notified of a dispute involving the effect on the
conversion  price of the Series C Preferred Stock (see also Notes G and K), as a
result  of  the  issuance  of  certain stock options by the Company. The dispute
involved  whether  or  not  the  terms  of  the  Series  C  Preferred Stock were
originally  intended  to exclude from adjustments to the conversion price of the
Series C Preferred Stock, issuances or grants of dilutive securities pursuant to
its  employee benefit plans or employment contacts. The Company and its Series C
Preferred  Stockholders  agreed  to  resolve this dispute and stipulate that the
exclusion  language  should  have  been  included  in  the  Amended  Articles of
Incorporation  from  inception  and  therefore  that no adjustment in conversion
price  was  due  to them in exchange for certain other revisions to the terms of
the  Series  C  Preferred  Stock.  On  March  30,  2001,  the


                                       49
<PAGE>

Company  and  the holders of the Series C Preferred Stockholders agreed to amend
the  Company's  Articles  of  Incorporation  relating  to  the adjustment of the
conversion price of the Series C Preferred Stock to specifically exempt dilutive
securities  issued  in  connection  with  employee  benefit  plans or employment
contracts  after  the  issuance of the Series C Preferred Stock, in exchange for
creating  a  Contingent  Dividend  provision  for  the  Series C Preferred Stock
shareholders.  The Contingent Dividend will be payable only upon conversion or a
change  of control, as defined, in an amount equal to the greater of $125,000 or
an  accumulated amount calculated beginning January 1, 2001 at the rate of $0.08
per  annum  per  shareof  Series  C  Preferred  Stock.

N.               STOCK  BASED  COMPENSATION  PRO  FORMA  INFORMATION
--------------------------------------------------------------------

Options  granted  to  the Company's directors and employees under the 1983, 1993
and  2000  Incentive  Stock Option Plans, various employment agreements, and the
D&M  Stock  Option  Plan  (hereafter,  the "Plans"), are accounted for under APB
Opinion   25,   Accounting   for   Stock   Issued   to  Employees,  and  related
interpretations.  The exercise price of each option granted under these Plans is
at  least equal to the market price of the Company's stock on the date of grant.
Accordingly,  no  compensation  has  been recognized for directors and employees
under these Plans.  Had compensation cost for the Plans been determined based on
the  fair  value  of  the  options  at  the  grant  dates  consistent
with  the  method of Statement of Financial Accounting Standards 123, Accounting
for  Stock-Based  Compensation (SFAS 123), the Company's net earnings (loss) and
net  earnings  (loss)  per  share  would  have  reflected  the pro forma amounts
indicated  below.

<TABLE>
<CAPTION>
                                                 1998        1999        2000
                                             ------------  --------  ------------
<S>                             <C>          <C>           <C>       <C>
Net earnings (loss)             As reported  $(9,012,690)  $854,368  $(8,620,878)
                                Pro forma    $(9,448,792)  $442,200  $(9,039,489)

Net earnings (loss) available   As reported  $(9,080,245)  $694,368  $(8,780,878)
   to common shareholders       Pro forma    $(9,516,348)  $282,200  $(9,199,489

Basic and diluted earnings      As reported  $     (0.50)  $    .04  $     (0.46)
   (loss) per share             Pro forma    $     (0.52)  $    .01  $     (0.48)
</TABLE>

The  fair  value of each option grant under SFAS 123 is estimated on the date of
grant  using  the  Black-Scholes  option-pricing model assuming no future common
stock  dividend declarations.  Volatility was computed based on the daily common
stock  high,  low  and  close information provided by NASDAQ for the twenty days
prior  to  the close of trading on the date of each option grant, and range from
59%  -  234%  for  options granted during 1998,  116% - 331% for options granted
during 1999, and 87% - 262% for options granted during 2000.  Risk free rates of
5.0% for options granted with a ten year exercise period and for options granted
with  a  three  to  five  year exercise period were used for all options granted
during  1998  and 1999.  For all options granted during 2000, the risk free rate
used  was 4%.  The initial forfeiture rate under the 1993 and 2000 ISO Plans for
1998  was  70%, for 1999 was 44%, and for 2000 was 70%.  Under the D&M Plan, the
initial  forfeiture  rate  for  1998  was 70%, and ranged between 0% and 70% for
options  granted  in  connection  with  continuing  employment  agreements.  The
initial  forfeiture  rate  under  the D&M Plan for 1999 and 2000 was 35% and for
options  granted in connection with employment agreements was 100%. The weighted
average  grant  date  fair  value of options granted during 1998, 1999, and 2000
were  $0.41,  $.71,  and  $1.53,  respectively.


                                       50
<PAGE>

O.               UNAUDITED  QUARTERLY  INFORMATION

Quarterly  operating results are summarized as follows (in thousands, except per
share  data):

<TABLE>
<CAPTION>
                                                           Three Months Ended (Unaudited)

1999                                           March 31    June 30    September 30    December 31
-------------------------------------------  ----------  ---------  --------------  -------------
<S>                                          <C>         <C>        <C>             <C>
Total Operating Revenues                      $   9,843   $  9,925   $       7,502   $      7,873
Operating Income (Loss)                             479        609            (201)           169
Net Earnings (Loss)                                 438        549            (266)           134
Net Earnings (Loss) Per Share                       .02        .03            (.02)           .01
Shareholders' Equity                             15,150     15,765          15,763         15,921

                                                          Three Months Ended (Unaudited)

2000                                           March 31    June 30    September 30    December 31
-------------------------------------------  ----------  ---------  --------------  -------------

Total Operating Revenues                      $   6,582   $  6,466   $       6,180   $      6,431
Operating Income (Loss)                            (335)      (432)         (6,480)        (1,183)
Net Earnings (Loss)                                (350)      (479)         (6,503)        (1,289)
Net Earnings (Loss) Per Share                     (0.02)     (0.03)          (0.34)         (0.07)
Shareholders' Equity                             15,652     15,239           8,882          7,629
</TABLE>


                                          51
<PAGE>

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




To  the  Board  of  Directors
Dynamic  Healthcare  Technologies,  Inc.

We  have  audited   the  accompanying  balance   sheets  of  Dynamic  Healthcare
Technologies,  Inc.  as of December 31, 2000 and 1999 and the related statements
of  operations,  shareholders'  equity  and cash flows for the years then ended.
These  financial  statements are the responsibility of the company's management.
Our  responsibility is to express an opinion on these financial statements based
on  our  audits.

We conducted our audits in accordance with auditing standards generally accepted
in  the  United  States  of  America.  Those  standards require that we plan and
perform  the  audit  to  obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.  We  believe   that  our  audits  provide  a
reasonable  basis  for  our  opinion.

In  our  opinion,  the financial statements referred to above present fairly, in
all  material   respects,  the   financial   position   of  Dynamic   Healthcare
Technologies,  Inc.  at  December  31,  2000  and  1999,  and the results of its
operations  and  its  cash  flows  for  the  years then ended in conformity with
accounting  principles  generally  accepted  in  the  United  States of America.


                                                           /S/BDO  SEIDMAN,  LLP
                                                           ---------------------
                                                              BDO  SEIDMAN,  LLP

New  York,  New  York
March  8,  2001, except
for  Note  F and Note M,
as  to  which  the  dates  are
March  15,  2001. and
March 30, 2001, respectively


                                       52
<PAGE>

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



Board  of  Directors
Dynamic  Healthcare  Technologies,  Inc.:



We  have  audited  the  accompanying  consolidated   statements  of  operations,
shareholders' equity and cash flows of Dynamic Healthcare Technologies, Inc. for
the  year  ended December 31, 1998.  These consolidated financial statements are
the  responsibility  of  the  Company's  management.  Our  responsibility  is to
express  an  opinion  on  these  consolidated  financial statements based on our
audit.

We  conducted our audit in accordance with auditing standards generally accepted
in  the  United  States  of  America.  Those  standards require that we plan and
perform  the  audit  to obtain reasonable assurance about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.  We  believe  that   our  audit  provides  a
reasonable  basis  for  our  opinion.

In  our opinion, the consolidated financial statements referred to above present
fairly,  in  all  material respects, the results of operations and cash flows of
Dynamic  Healthcare  Technologies, Inc. for the year ended December 31, 1998, in
conformity with accounting principles generally accepted in the United States of
America.


                                                                     /S/KPMG LLP
                                                                     -----------
                                                                        KPMG LLP


Orlando,  Florida
February  19,  1999


                                       53
<PAGE>

                              CORPORATE INFORMATION
                               BOARD OF DIRECTORS


               JERRY L. CARSON                 CHRISTOPHER ASSIF
           Executive Vice President         Chief Executive Officer
         and Chief Financial Officer    Dynamic Healthcare Technologies, Inc.
           Evans Enterprises


               CHARLES COOPER                 MITCHEL J. LASKEY, C.P.A.
                  President                        Senior Advisor
         Plangent Systems Corporation   Dynamic Healthcare Technologies, Inc.


            THOMAS J. MARTINSON                 BRET R. MAXWELL
                   President                      Co-Chairman
           Martinson & Company, Ltd.             First Analysis


                                  DANIEL RAYNOR
                                Managing Partner
                               The Argentum Group

                               EXECUTIVE OFFICERS
           CHRISTOPHER ASSIF                     JOHN P. FINGADO
        Chief Executive Officer     President and Chief Operating Officer

                                 PAUL S. GLOVER
                             Vice President, Finance
                      Chief Financial Officer and Secretary

                               CORPORATE OFFICERS
               JOSEPH M. JOHNSON                     MICHAEL A. POMERANCE
        Vice President, Pathology Sales          Vice President, Client Sales

               JOHN MCGIBBON                               LISA LABAU
Vice President, Internet Product Development     Vice President, Client Services


                                  LEGAL COUNSEL
                              Carlton Fields, P.A.
                            4000 International Place
                             100 S.E. Second Street
                           Miami, Florida  33131-9101
                                  (305)530-0050

                TRANSFER AGENT                    INDEPENDENT AUDITORS
                  Wells Fargo                       BDO Seidman, LLP
             161 North Concord Exchange            330 Madison Avenue
         St. Paul, Minnesota 55075-0738         New York, New York 10017
                (651) 450-4100                       (212) 885-8000


                                       54
<PAGE>
                            STOCK TRADING INFORMATION


The  Common  Stock  of  Dynamic  Healthcare  Technologies, Inc. is traded on the
NASDAQ  National  Market  System  under  the  NASDAQ  symbol  DHTI.

                            COMMON STOCK INFORMATION

The  number  of  stockholders  of  record  of  the  Company's  Common  Stock was
approximately  3,688 on March 7, 2001.  High and low sales prices for the Common
Stock  for  the  last  eight  quarters  are  presented  below:


                            1999                       2000
QUARTER ENDED           HIGH    LOW                 HIGH    LOW

March 31      $        2.125  $ .625             $3.906  $1.500
June 30                2.750   1.813              2.063    .906
September 30           2.563   1.188              1.500    .875
December 31            1.875   1.125              1.750    .344


                  ANNUAL REPORT ON FORM 10-K, WITHOUT EXHIBITS

Dynamic  Healthcare  Technologies,  Inc.'s annual filing with the Securities and
Exchange  Commission  (Form  10-K)  is  available upon request without charge to
shareholders  by  writing  to:

                          Investor Services Department
                      Dynamic Healthcare Technologies, Inc.
                     615 Crescent Executive Court, Suite 500
                            Lake Mary, Florida 32746
                                 (407) 333-5300



                                 ANNUAL MEETING

The Annual Meeting of Shareholders of Dynamic Healthcare Technologies, Inc. will
be  held  on  June  7,  2001,  in  Lake  Mary,  Florida.


                                       55
<PAGE>



                          INDEPENDENT AUDITORS' CONSENT
                          -----------------------------



The  Board  of  Directors
Dynamic  Healthcare  Technologies,  Inc.:


We  hereby  consent  to  the  incorporation  by  reference  in  the registration
statements  (No.  33  -72684,  33-72764 and 333-57713) on Form S-8 of our report
dated  March  8,  2001,  except for Note F and Note M, as to which the dates are
March  15,  2001  and  March  30,  2001, respectively, relating to the financial
statements  and  schedule  of Dynamic Healthcare Technologies, Inc. appearing in
the  Company's  Annual Report on Form 10-K for the year ended December 31, 2000.




                                                             /S/BDO SEIDMAN, LLP
                                                             -------------------
                                                                BDO SEIDMAN, LLP




New  York,  New  York
March  30,  2001


                                       56
<PAGE>

                          INDEPENDENT AUDITORS' CONSENT
                          -----------------------------



The  Board  of  Directors
Dynamic  Healthcare  Technologies,  Inc.:



We  consent  to  incorporation  by reference in the registration statements (No.
33-72684,   33-72764   and   333-57713)  on   Form  S-8  of  Dynamic  Healthcare
Technologies,  Inc.  of  our  reports  dated  February 19, 1999, relating to the
consolidated  statements  of operations, shareholders' equity and cash flows for
the  year ended December 31, 1998, and related schedule, which reports appear in
the  December  31,  2000 report on Form 10-K of Dynamic Healthcare Technologies,
Inc.





                                                                     /S/KPMG LLP
                                                                     -----------
                                                                        KPMG LLP




Orlando,  Florida
March  30,  2001


                                       57
<PAGE>