UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   FORM 10-KSB


(Mark one)

            X     Annual Report Pursuant to Section 13 or 15 (d) of the
          -----   Securities  Exchange  Act of 1934
                  FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999

                  Transition Report Pursuant to Section 13 or 15 (d) of the
          -----   of the Securities
                  Exchange Act of 1934

                         Commission File Number: 0-11914
                                  CAPRIUS, INC.
                 (Name of Small Business Issuer in its charter)

             DELAWARE                                  22-2457487
             --------                                  ----------
   (State or other jurisdiction of                  (I.R.S. Employer
   incorporation or organization)                   Identification No.)

                      ONE PARKER PLAZA, FORT LEE, NJ 07024
                      ------------------------------------
               (Address of principal executive offices) (Zip Code)

                    ISSUER'S TELEPHONE NUMBER: (201) 592-8838
                                               --------------

     Securities to be registered under Section 12 (b) of the Exchange Act:
                                      None

      Securities to be registered under Section 12(g) of the Exchange Act:
                    Common Stock, par value $ .01 per Share
                     Warrants for purchase of Common Stock
                     -------------------------------------
                                (Title of Class)

     Check  whether the issuer (1) filed all reports  required to be filed under
Section 13 or 15 (d) of the  Exchange Act during the past 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
                                                                       ---  ---

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the best of the  Registrant's  knowledge,  in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB [X].

     Revenues for the fiscal year ended September 30, 1999: $3,274,191

     The aggregate  market value of the voting stock held by  non-affiliates  of
the  Registrant  computed by reference to the price at which the stock was sold,
or the  average  bid and ask prices of such stock as of  December  15,  1999:  $
631,566

     The number of shares  outstanding of  Registrant's  Common Stock, $ .01 par
value, outstanding on December 15, 1999: 13,525,517 shares

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

                    Documents Incorporated by Reference: None
           TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT. YES     NO X
                                                              ---   ---

                                       1
<PAGE>


                                      INDEX

                                                                        Page No.

PART I
Item 1.   Business                                                         3
Item 2.   Properties                                                       6
Item 3.   Legal Proceedings                                                6
Item 4.   Submission of Matters to a Vote of Securities Holders            7


PART II
Item 5.   Market for Registrant's Common Equity and Related
          Stockholder Matters                                              7
Item 6.   Management's Discussion and Analysis of Financial
          Conditions and Results of Operations                             8
Item 7.   Financial Statements                                            11
Item 8.   Changes and Disagreements with Accountants on Accounting
          and Financial Disclosure                                        12

PART III
Item 9.   Directors, Executive Officers, Promoters and Control Persons;
          Compliance with Section 16 (a) of the Exchange Act.             12
Item 10.  Executive Compensation                                          15
Item 11.  Security Ownership of Certain Beneficial Owners and Management  18
Item 12.  Certain Relationships and Related Transactions                  19


PART IV
Item 13.  Exhibits and Reports on Form 8-K                                20



SIGNATURES


                                       2
<PAGE>


                                     PART I
                                     ------

ITEM I.  DESCRIPTION OF BUSINESS

GENERAL

     Caprius,  Inc. ("Caprius" or the "Company") was founded in 1983 and through
June 1999  essentially  operated in the business of medical  imaging  systems as
well as healthcare  imaging and rehabilitation  services.  On June 28, 1999, the
Company  acquired Opus  Diagnostics Inc.  ("Opus") and began  manufacturing  and
selling medical  diagnostic  assays.  The Company continues to own and operate a
comprehensive imaging center located in Lauderhill, Florida.

     Upon the merger (the "Opus Merger") between Opus and Caprius'  newly-formed
wholly-owned  subsidiary Caprius Merger Sub Inc., the Opus stockholders received
an aggregate of 6,178,977  shares of Caprius  Common  Stock,  par value $.01 per
share, which constituted approximately 45.6% of the outstanding shares after the
Merger.

     The Opus  Merger was  consummated  coincident  with the closing of an Asset
Purchase Agreement (the "Oxis Purchase  Agreement") between Opus and Oxis Health
Products Inc., a Delaware corporation ("Oxis").  The purchase price consisted of
$500,000 in cash, a secured  promissory  note (the "Oxis Note") in the principal
amount of $586,389 (as  adjusted)  payable on November  30, 1999,  and a warrant
granting  Oxis the right to  acquire  up to 10%  equity  interest  in Opus (on a
pre-Merger basis) (the "Warrant"),  exercisable after six months for a period of
five years.  Upon the Opus Merger,  the Warrant became  exercisable  for 617,898
shares of Caprius  Common Stock at an exercise price equal to 80% of the average
bid and asked prices for the Common Stock for the five trading days  immediately
preceding December 28, 1999. As of December 8, 1999, the principal sum due under
the Oxis Note was paid in full and under an  Amended  and  Restated  Warrant,  a
warrant for 617,898  shares of Caprius  Common Stock was issued,  exercisable at
$.0875 per share in replacement of the Warrant.

     George  Aaron and  Jonathan  Joels  formed  Opus in 1999 for the purpose of
effecting the Opus Merger and the Oxis Purchase Agreement.

     Opus  produces  and  sells 14  diagnostic  assays,  their  calibrators  and
controls for therapeutic drug monitoring which are used ON THE ABBOTT TDX(R) AND
TDXFLX(R)  instruments.  Pursuant to the Oxis Purchase Agreement,  Opus acquired
the assets  relating to the Oxis reagent  patent and trademark and  distribution
network for the therapeutic drug monitoring assay business (the "TDM Business").
Additionally,  pursuant  to a  Services  Agreement,  Oxis is  manufacturing  the
products of the TDM Business of Opus through September 30, 2000.

     On April 27, 1999,  pursuant to an Asset Purchase  Agreement among Caprius,
Caprius  Systems,  Inc., a wholly owned  subsidiary of Caprius  ("Systems"  and,
together  with  Caprius,  the  "Sellers")  and Pacific  Republic  Capital  Corp.
("Pacific"),  the Sellers  consummated  the sale of their Aurora breast  scanner
technology  ("Aurora  Technology") and related assets to Pacific for $854,490 in
cash and the assumption by Pacific of certain  obligations  associated  with the
transferred  assets.  The assets and  obligations  transferred  included all the
shares of Caprius'  wholly owned  subsidiary,  Caprius  Imaging  Corp.,  various
patents  relating  to the Aurora  technology  and assets of  Systems,  including
hospital  equipment  contracts and equipment leases.  Caprius was relieved of an
equipment debt that exceeded $1.1 million.


                                       3
<PAGE>


     In March 1999, the Company  transferred its interest in its  rehabilitation
center to an unrelated limited  liability  company in exchange for $900,000,  of
which  $850,000 was paid as of September  30, 1999.  In addition,  the acquiring
group assumed certain liabilities totaling approximately  $400,000. The transfer
price of $900,000 was used in part to pay a balance of approximately $372,000 to
the former  owner of the  center,  which was the  remaining  amount due from the
Company's acquisition of its interest in the center.

     In July  1998,  the  Company  acquired  The Strax  Institute  ("Strax"),  a
comprehensive breast imaging center, located in Lauderhill,  Florida. Strax is a
multi-modality  breast care center that treats approximately 15,000 patients per
year  offering  x-ray  mammography,  ultrasound,  stereotactic  biopsy  and bone
densitometry.

     In August 1997,  the Company and General  Electric  Company  ("GE") entered
into a Purchase Agreement (the "GE Purchase Agreement") whereby GE purchased all
inventory,  equipment and other assets, and assumed liabilities  relating to the
Company's  high field MRI  systems  and  InstaScan  business,  in  exchange  for
$2,432,580  in cash and the  purchase by GE of $2.7  million  stated  value of a
newly issued  class of Series B  Convertible  Redeemable  Preferred  Stock.  The
Company and GE entered into a Settlement and Release  Agreement  terminating and
releasing their prior obligations to each other.

     Effective  November  10,  1997,  the  Company  completed a merger (the "AMS
Merger") with Advanced  Mammography  Systems,  Inc. ("AMS"),  whereby AMS merged
into AMS Merger Corp., a wholly owned  subsidiary of the Company became a wholly
owned subsidiary.  Upon the AMS Merger, the Company changed its name to Caprius,
Inc. AMS was originally  formed on July 2, 1992 as a wholly owned  subsidiary of
Caprius  to  develop a  dedicated  breast  MRI system and at the time of the AMS
Merger, the Company owned approximately 14% of the outstanding AMS stock.

THERAPEUTIC DRUG MONITORING BUSINESS

     Opus sells a comprehensive  line of assays for therapeutic  drug monitoring
(TDM).  The line of  products  includes  two  tests  that are  exclusive  to the
Company;  one to monitor Topiramate,  a drug developed by Johnson & Johnson, and
the other Teicoplanin, developed by Hoechst Marion Dow.

     Opus competes with a variety of companies,  many of which are  considerably
larger  than  Opus  in the  area  of  therapeutic  drug  monitoring.  Among  its
competitors are Abbott  Laboratories,  Roche  Diagnostics,  Inc. and Sigma, Inc.
Opus  attempts to compete in its pricing of its kits.  Both the  Topirimate  and
Teicoplanin kits do not experience competition as the Company enjoys exclusivity
on each.

     ACCORDING  TO THE  MEDICAL &  HEALTHCARE  MARKETPLACE  (11TH  Edition)  the
therapeutic  drug monitoring  market is $417M.  Opus market  penetration is less
than 1%.

     The  Company  determined  that in order to  remain  cost  efficient  and to
optimize  the return on the use of its assets,  it will  contract its Research &
Development to third parties. This strategy of using outside contractors extends
also to manufacturing. Since there are numerous companies in the business of OEM
manufacturing,  it is the  Company's  intention to utilize this capacity for the
manufacture of its products.  This will eliminate the need to invest capital and
will also permit the Company to maintain a low head count. Currently, all of the
Company's  manufacturing  services have been  contracted  to Oxis  International
under a manufacturing  contract which expires on September 30, 2000. The Company
does not intend,  at this stage, to manufacture its goods in house unless volume
or other considerations would make it necessary to do so.


                                       4
<PAGE>


     In  anticipation  of new products that would  require 510 K FDA  regulatory
approval,  the  Company  consults  with a law firm  specializing  in health care
regulatory affairs.

     The Company intends to expand its product portfolio and, where appropriate,
to patent any  intellectual  properties,  as it has in the past. The products of
the Company are sold under the trademark  INNOFLUOR(R),  which was acquired from
Oxis.

     Opus markets the INNOFLUOR(R)  products  domestically  through distributors
and directly to accounts.  In the  international  market,  Opus  distributes its
products  through  distributors in 15 countries.  There is an ongoing program to
expand the  distribution  channels of the Company,  with special emphasis on the
international   market.   There  are  two  accounts   that   together   comprise
approximately  25% of the Company's total sales.  Approximately 65% of the sales
are  international.  All sales,  including  international,  are invoiced in U.S.
dollars.

THE STRAX INSTITUTE BUSINESS

     Strax  was  founded  in 1979  to  provide  comprehensive  breast  care  for
patients.  It specializes in comprehensive breast care utilizing several imaging
modalities and a high level of hands-on patient care. Strax performs all imaging
and diagnostic  services  in-house,  including  x-ray  mammography,  ultrasound,
stereotactic biopsies, and performs all patient screening,  scheduling,  billing
and  collections,  managed care  contracts,  transcription,  medical records and
accounting and bookkeeping.

     The healthcare  market in which The Strax Institute  operates is beneficial
for the services  offered.  It has a high percentage of elderly female patients,
many of whom are  repeat  patients,  and  provides  services  in an area  with a
growing population base.

     The  opportunities  available to increase volume and profitability at Strax
are  designed  around  programs and  initiatives  to expand  patient  volume and
particularly to increase the revenues obtained per patient.  The Strax Institute
performs  all  imaging  and  diagnostic   services  in-house,   including  x-ray
mammography,  ultrasound,  stereotactic  biopsies,  and  bone  densitometer.  In
November 1998, a new ultrasound  unit equipped with color doppler was purchased.
This unit allows the Strax  Institute to offer "stroke  prevention"  imaging and
bundle this procedure  together with the annual mammogram and bone  densitometry
tests directed to the same patient.

EMPLOYEES

     As of December 15, 1999, the Company's  breast imaging business had a staff
of 18 full-time employees,  including 1 physician and 1 senior manager, and also
4 part-time employees.

     As of December 15, 1999, the diagnostic business had 6 full-time employees,
including 3 senior managers.

     None of the Company's  employees are represented by labor organizations and
the  Company  is not aware of any  activities  seeking  such  organization.  The
Company considers its relations with employees to be good.


                                       5
<PAGE>


ITEM 2.  PROPERTIES

     The  Company  leases  1,545  square feet of office  space in Fort Lee,  New
Jersey for sales and  administrative  personnel pursuant to a lease that expired
on November 30 1999, at a base monthly rental of approximately $3,733. The lease
is being extended on a month to month basis while the Company is negotiating for
a new lease at the same location for approximately 2,700 square feet.

     The Company leases 8,400 square feet for its  comprehensive  breast-imaging
center in  Lauderhill,  Florida,  pursuant to a lease with current  monthly base
rental payment of $ 9,527. The lease expires on January 31, 2004.

ITEM 3.  LEGAL PROCEEDINGS

     On January 7, 1998,  the  Company and Jack  Nelson,  the  Company's  former
Chairman and Chief Executive Officer, were served with a complaint in connection
with a purported  class action brought against them by Dorothy L. Lumsden in the
United States  District  Court of the District of  Massachusetts.  The complaint
claimed  alleged  violations  of Sections  10(b) and 20(a) under the  Securities
Exchange Act and common law fraud. Ms. Lumsden purported to bring her action "on
behalf of herself and all other persons who purchased or otherwise  acquired the
common  stock of the  Company  during the period  August 10,  1994  through  and
including  December 12, 1997".  On February 2, 1998,  the Company and Mr. Nelson
were  served  with a class  action  complaint  by Robert  Curry  naming  them as
defendants  in  connection  with a second  action  brought in the United  States
District  Court for the District of  Massachusetts.  The complaint in the second
class action alleged the same purported class and contained similar  allegations
and claims as the first class  action.  On April 24, 1998,  the  District  Court
consolidated  the two class actions claims into one for pre-trial  purposes.  On
January  7,  1999,  the  Company  announced  that it had  reached a  preliminary
settlement in the shareholder class actions.  Under the terms of the settlement,
Caprius made a cash payment of $150,000  and agreed to issue  325,000  shares of
common stock to Plaintiffs.  Caprius' insurance carrier contributed  $100,000 of
the cash payment. In addition,  the settlement also stipulated that in the event
Caprius sold all or part of its business within 12 months an additional  payment
of $75,000 and issuance of 100,000 additional shares would be made by Caprius to
plaintiffs. Consequently, on April 27, 1999, the additional payment was made and
the additional  shares will be issued.  For the year ended September 30, 1999,
the Company reported $207,323 as total settlement costs,  which included $82,323
for the market value of the shares to be issued.

     On October 19, 1998, the Company filed a complaint  against Eric T. Shebar,
M.D. ("Shebar"), the former Chief Operating Officer and Medical Director for the
Company's motor vehicle accident rehabilitation ("MVA") business, and MVA Center
for  Rehabilitation,  Inc.  ("MVA,  Inc.") whereby the Company alleged breach of
contract and certain  misrepresentations  and sought  damages in an amount to be
determined at trial.  The Company  filed a  preliminary  injunction to reach and
apply a secured  promissory note to MVA, Inc. against damages sought from Shebar
and to enjoin him against any remedies upon default of the Note.  The injunction
was denied.  Consequently,  the final Note payment of approximately $372,000 was
paid as part of the sale of the MVA. A Settlement  Agreement between the Company
and Eric T. Shebar,  M.D.  was entered  into on December  27, 1999,  wherein the
Company paid $60,000 immediately with a further $20,000 to be paid over the next
two years.  Upon the initial  payment,  the Company was released from all claims
and actions relating to this matter.


                                       6
<PAGE>


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

     None.


                                     PART II
                                     -------

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

     Since June 8, 1999,  upon the delisting of the Company's  Common Stock from
the NASDAQ  Small Cap Market,  the Common  Stock has traded on the OTC  Bulletin
Board under the symbol CAPR.  From November 10, 1997,  upon the Merger with AMS,
until the close of  business  on June 7, 1999,  the Common  Stock  traded on the
NASDAQ  Small Cap  Market  under the  symbol  "CAPR".  Trading  in the  Warrants
(NASDAQ:  CAPRW)  commenced on August 31, 1995,  after the closing of the merger
with Medical  Diagnostics,  Inc.  Prior to the AMS Merger,  the Warrants  traded
under the symbol "ANMRW".  The Warrants are now listed on the OTC Bulletin Board
under the symbol CAPRW.

     The following table sets forth, for the calendar  quarters  indicated,  the
reported high and low bid  quotations  per share of the Common Stock as reported
on the NASDAQ Small Cap Market and OTCBB. Such quotations  reflect  inter-dealer
prices, without retail mark-up, markdown or commission,  and may not necessarily
represent actual transactions.  There is no quoted public market for the trading
of the Company's Warrants.

           Common Stock                     High              Low

           1999

                    Fourth Quarter      $  0.3125          $0.1250
                    Third Quarter          2.0000           0.1250
                    Second Quarter         0.4375           0.0625
                    First Quarter          1.0625           0.2500

           1998

                    Fourth Quarter         1.729            1.063
                    Third Quarter          1.542            1.042
                    Second Quarter         1.709            0.896
                    First Quarter          2.380            1.272

     The Company has paid no  dividends  on its shares of Common Stock since its
inception in July 1983 nor does the Company  expect to declare any  dividends on
its Common Stock in the foreseeable future.

     On September 30, 1999,  there were  approximately  571 holders of record of
the Common Stock of the Company.  Since a large number of shares of Common Stock
are held in street or nominee  name, it is believed that there are a substantial
number  of  additional  beneficial  owners of the  Company's  Common  Stock.  On
September 30, 1999, there were 13,525,517 shares outstanding.


                                       7
<PAGE>


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITIONS AND RESULTS OF OPERATIONS

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF FINANCIAL  CONDITIONS  AND RESULTS OF
OPERATIONS

     The following  discussion  should be read in  conjunction  with the audited
consolidated  financial  statements  and  notes  thereto  for  the  years  ended
September 30, 1999 and 1998.

GENERAL

     Due to  significant  changes in the  nature of  operations  of the  Company
during the past two years,  comparisons  of results of operations  between years
may not be meaningful.

RESULTS OF OPERATIONS

FISCAL YEAR ENDED SEPTEMBER 30, 1999 COMPARED TO FISCAL YEAR ENDED SEPTEMBER 30,
1998

     Net patient service revenue totaled $2,883,000 for the year ended September
30,  1999 versus  $3,764,000  for the year ended  September  30,  1998.  Cost of
service  operations  totaled  $2,080,000  for the year ended  September 30, 1999
versus $ 3,616,000  for the year ended  September 30, 1998.  The decreases  from
1998 to 1999 are due to the sale of the Aurora Technology and the rehabilitation
business,  partially offset by the additional net patient revenues and operating
expenses for the Strax Institute.

     Included  in revenues for the year  ended  September  30,  1999 are
$391,000 of sales revenues for Opus'  therapeutic drug monitoring assays for the
period commencing July 1, 1999. The cost of goods for the Opus business for this
period was $107,000, and is included in cost of operation.

     Upon the Opus Merger,  Caprius also entered into Severance  Agreements with
Jack Nelson and Enrique Levy. Mr. Nelson's  employment as the Chairman and Chief
Executive  Officer to  Caprius  was  terminated,  and he  currently  serves as a
consultant to Caprius for a period of one year.  Pursuant to the Agreement,  Mr.
Nelson received $46,000 in cash and was to have received a $258,500 payment upon
the earlier of December 28, 1999 or the  consummation of a Business  Transaction
(as defined therein),  and he will get 125,000 shares of Caprius Common Stock in
2000. As of December 28, 1999, the severance payment was converted into a
Secured Promissory Note repayable on October 1, 2000, subject to prepayment (see
Item 10).

     Mr. Levy's  employment as President and Chief Operating  Officer of Caprius
was  terminated and he is serving as a consultant to Caprius for a period of one
year.  Pursuant to the agreement,  Mr. Levy received  $44,000 in cash and was to
have  received a $247,500  payment  upon the earlier of December 28, 1999 or the
consummation  of a Business  Transaction (as defined  therein),  and he will get
100,000  shares of Caprius  Common Stock in 2000. As of December 28, 1999, the
severance payment was converted into a Secured Promissory Note repayable on
October 1, 2000, subject to prepayment (see Item 10).


                                       8
<PAGE>

     Selling,  general and  administrative  expenses totaled  $4,482,000 for the
year ended September 30, 1999 versus $5,166,000 for the year ended September 30,
1998.   This  decrease   reflects  the  sale  of  Aurora   Technology   and  the
rehabilitation  business  as well as a  shift  in  business  focus  to the  Opus
Diagnostics product line of therapeutic drug monitoring assays (TDM).

     Loss on sale of the rehabilitation business of $1,461,000 reflects the
accounting for the disposition of  the rehabilitation center to Medical
Diagnostics and Rehabilitation, LLC.

     Loss on the sale of the Aurora Technology of $2,096,000 reflects the loss
on the sale to Pacific Republic Capital Corp.

     In fiscal 1998, research and development reflects the change in the
Company's accounting treatment of AMS from equity to consolidation accounting.
Purchased research and development reflects the portion of the AMS purchase
price allocated to research and development projects in process.

     Write down of intangibles  in 1998, in the amount of  $1,900,000,  reflects
the  reduction  in goodwill  related to the  Company's  Rehabilitation  Services
business based on a review of undiscounted future cash flows.

LIQUIDITY AND CAPITAL RESOURCES

     The  Company  had  available  cash  and cash  equivalents  of  $116,068  at
September 30, 1999. The Company intends to utilize the funds for working capital
purposes to continue  developing the business of Opus by adding new distributors
in  territories  currently  not  covered by  existing  distributors  and for the
development of new  diagnostic  kits. The Company also intends to pursue efforts
to identify  additional funds through various funding options,  including bridge
loans, banking facilities and equity offerings. The ability to secure commercial
or other borrowings could be more difficult due to the Company's  delisting from
NASDAQ.  There  can be no  assurance  that  such  funding  initiatives  will  be
successful  and any equity  placement  could result in  substantial  dilution to
current stockholders. Consequently, the Company's viability could be threatened.
Accordingly,  the auditors' report on the 1999 financial  statements contains an
explanatory  paragraph expressing  substantial doubt about the Company's ability
to continue as a going concern.

     The significant cash flows used in investing  activities for the year ended
September 30, 1999 consists  primarily of $523,000 for the Opus Merger offset by
the  proceeds  from  the  sale of the  rehabilitation  business  and the  Aurora
Technology.  Cash flows from financing activities include approximately $140,000
of proceeds  from  financing of long-term  debt offset by principal  payments on
long-term debt and equipment debt of $839,000.  Cash used in operations amounted
to approximately $3,257,000.

     During  the year ended  September  30,  1999,  the  Company  has funded its
operations  principally  through the cash  obtained  from the sale of the Aurora
technology  business.  Since  the  fiscal  year end,  the  Company  completed  a
short-term  bridge  loan of $600,000  through the  issuance of loan notes due on
February 29, 2000 and warrants which was used  principally to pay the Oxis Note,
retained an investment banker to assist the Company in raising further funds,
has concluded agreements with Messrs.  Nelson and Levy to extend the payment
date for their severance payments through the issuance of notes to them, and is
reviewing the possible disposition of The Strax Institute.

INFLATION

     To date, inflation has not had a material effect on the Company's business.
The Company  believes  that the effects of future  inflation may be minimized by
controlling costs and increasing  efficiency through product sales volume of the
diagnostic kit business.


                                       9
<PAGE>


YEAR 2000 SYSTEMS

     The Company had undertaken a review  concerning the ability of its internal
information  systems to handle date  information  and to function  appropriately
from and after January 1, 2000.  The total cost to address any changes  required
as a result of the  so-called  "Year  2000  Problem"  will not be  material.  In
addition,  the Company has  evaluated  the impact of possible Year 2000 problems
encountered  by its suppliers  and customers  upon the Company and to date there
have not been any problems.

FORWARD LOOKING STATEMENTS

     The Company is including the following  cautionary statement in this Annual
Report of Form 10-KSB to make  applicable  and take advantage of the safe harbor
provisions  of the  Private  Securities  Litigation  Reform  Act of 1995 for any
forward-looking   statements   made  by,  or  on   behalf   of,   the   Company.
Forward-looking  statements  include  statements  concerning plans,  objectives,
goals,  strategies,  future events or performance and underlying assumptions and
other  statements which are other than statements of historical  facts.  Certain
statements  contained  herein are  forward-looking  statements  and  accordingly
involve risks and uncertainties  which could cause actual results or outcomes to
differ materially from those expressed in the  forward-looking  statements.  The
Company's expectations,  beliefs and projections are expressed in good faith and
are  believed  by the  Company to have a  reasonable  basis,  including  without
limitation,  management's  examination  of  historical  operating  trends,  data
contained in the Company's  records and other data available from third parties,
but  there  can  be no  assurance  that  management's  expectation,  beliefs  or
projections  will result or be achieved  or  accomplished.  In addition to other
factors and matters  discussed  elsewhere  herein,  the  following are important
factors that, in the view of the Company,  could cause actual  results to differ
materially from those discussed in the forward-looking statements: technological
advances by the Company's competitors,  changes in health care reform, including
reimbursement  programs, capital  needs to fund any  delays or  extensions  of
research programs, delays in new product development,  lack of market acceptance
of new technology based products,  changes in governmental regulations,  and the
availability  of capital  on terms  satisfactory  to the  Company.  The  Company
disclaims  any  obligation to update any  forward-looking  statements to reflect
events or circumstances after the date hereof.


                                       10
<PAGE>


ITEM 7.  FINANCIAL STATEMENTS

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

          Independent Auditor's Report

          Consolidated Balance Sheets at September 30, 1999 and 1998

          Consolidated  Statements of Operations  for the years ended  September
          30, 1999 and 1998

          Consolidated  Statements  of  Stockholders'  Equity  for  years  ended
          September 30, 1999 and 1998

          Consolidated  Statements  of Cash Flows for the years ended  September
          30, 1999 and 1998

          Notes to Consolidated Financial Statements


                                       11
<PAGE>


ITEM 8.  CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

     Effective  April 1, 1998 the Boston  office of Richard A. Eisner & Company,
LLP ("RAE") was merged into the Boston office of BDO Seidman, LLP ("BDO").  This
merger  resulted  in RAE no longer  having an office  in the  Boston  area.  The
Company  concluded that it would be appropriate to select a new accounting firm.
At a meeting of the Audit  Committee  of the  Company  on June 3,  1998,  it was
approved that the Company would retain BDO to serve as its independent auditors,
effective  immediately.  During the  Company's  two most recent fiscal years and
through June 3, 1998, there had not been any  disagreements  between the Company
and RAE on any matter of accounting principles or practices, financial statement
disclosure,  or auditing scope or procedure which disagreement,  if not resolved
to the  satisfaction  of RAE,  would  have  caused it to make  reference  to the
subject matter of the disagreements in connection with its report on the audited
financial statements for the two years prior to the termination of its services.

                                    PART III
                                    --------

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16 (A) OF THE EXCHANGE ACT

DIRECTORS AND EXECUTIVE OFFICERS
--------------------------------

     As of December  15,  1999,  the  directors  and  executive  officers of the
Company were:

NAME                           AGE          POSITION
----                           ---          --------

George Aaron                   47           Chairman of the Board,
                                            President & Chief Executive Officer


Jonathan Joels                 43           Chief Financial Officer, Treasurer,
                                            Secretary & Director

Elliott Koppel                 55           VP Sales & Marketing

Enrique Levy                   61           Director

Jack Nelson                    48           Director

Robert Spira, MD (1) (2)       50           Director

Sol Triebwasser, Ph.D. (1)(2)  77           Director

--------------------
(1)  Member of the Audit Committee
(2)  Member of the Compensation/Option Committee

     The  principal  occupations  and brief  summary of the  background  of each
Director  and  executive  officer  of  Caprius  during the past five years is as
follows:


                                       12
<PAGE>


     GEORGE AARON. Mr. Aaron has been Chairman of the Board,  President & CEO of
     ------------
Caprius  since  June  1999.  He also  served as a  Director  on the Board of the
Company from 1992 until 1996.  From 1992 to 1998, Mr. Aaron was a co-founder and
CEO of Portman  Pharmaceuticals,  Inc.  which was  engaged in  therapeutic  drug
development and in 1994 he co-founded CBD Technologies, Inc. of which he remains
a  Director.  From  1983  to  1988,  Mr.  Aaron  was  the  founder  and  CEO  of
Technogenetics Inc. (a diagnostic company). Prior to 1983, Mr. Aaron was founder
and  partner  in the  Portman  Group,  Inc.  and headed  International  Business
Development  at Schering  Plough.  Mr.  Aaron also serves on the Board of Peptor
Limited, the acquirer of Portman  Pharmaceuticals,  Inc. Mr. Aaron is a graduate
of the University of Maryland.

     JONATHAN JOELS. Mr. Joels has been CFO, Treasurer, Secretary and a director
     --------------
of Caprius since June 1999.  From 1992 to 1998,  Mr. Joels was a co-founder  and
CFO of Portman Pharmaceuticals, Inc. and in 1994 he co-founded CBD Technologies,
Inc. Mr. Joels'  previous  experience  included a Partnership  in Portman Group,
Inc., CFO of London & Leeds Corp. and Chartered  Accountant  positions with both
Ernst & Young and Hacker Young  between 1977 and 1981.  Mr. Joels  qualified and
was admitted as a Chartered Accountant to the Institute of Chartered Accountants
in England and Wales in 1981 and holds a BA Honors Degree in Accountancy  (1977)
from the City of London.

     ELLIOTT  KOPPEL.  Mr.  Koppel has been VP of Marketing and Sales since June
     ---------------
1999. From 1996 to 1999, he served as CEO of ELK  Enterprises,  a consulting and
advertising company for the Medical Device industry.  From1993 to1996, he was VP
Sales and Marketing for Clark  Laboratories Inc. From 1992 to1993 Mr. Koppel was
Director of the Immunology Business Unit at Schiapparelli  BioSystems.  From1990
to1992 he was VP of Sales and Marketing at Enzo BioChem.  From1986 to 1990,  Mr.
Koppel  was VP of  Clinical  Sciences  Inc.  Between  1974  and 1986 he held the
positions of Sales Representative, Regional Manager, and International Marketing
Manager  at  Warner  Lambert  Diagnostics.  Prior to 1974 Mr.  Koppel  was Sales
Representative and Product Manager with Ortho  Diagnostics.  Mr. Koppel has a BS
in Commerce from Rider University

     ENRIQUE  LEVY.  Mr. Levy has been a  consultant  to the Company  since June
     -------------
1999,  having  served as President and Chief  Operating  Officer of Caprius from
October  1995 to June 1999,  and he has been a  Director  of the  Company  since
August 31, 1995. From May 1994 to October 1995 he was  Manager/Manufacturing  at
Xerox Graphic Systems, Harrison, New York, a venture of Xerox Corporation.  From
April 1989 to May 1994, he was  Executive  Vice  President of Worldwide  Process
Technologies,  Allendale,  New Jersey,  a  manufacturer  of process  systems and
equipment for the web handling and film and paper coating  industries.  Prior to
1989, he was President and Chief Executive Officer of Polychrome Corporation, an
international  manufacturer  of  supplies  to  the  graphic  arts  and  printing
industry.  He  holds a BS in  Chemical  Engineering  from  the  Louisiana  State
University.

     JACK NELSON.  Mr.  Nelson has been a consultant  to the Company  since June
     -----------
1999,  having  served as Caprius'  Chairman of the Board and CEO since June 1991
and Treasurer  since  November 1990. He has been a Director of the Company since
September  1990.  From 1976  through  1993,  Mr.  Nelson had been engaged in the
private practice of law as senior partner with the law firm of Zaslowsky, Marx &
Nelson in New York,  New York.  Mr.  Nelson  serves on the Board of Directors of
Advanced  Machine Vision,  Inc., a publicly traded company  (NASDAQ:  AMVC). Mr.
Nelson  holds a BA degree from  Yeshiva  University  and JD degree from  Hofstra
University School of Law.


                                       13
<PAGE>


     ROBERT SPIRA, M.D.,  F.A.C.P.  Dr. Spira has been a director of the Company
     ----------------------------
since  September  1990 and Vice  Chairman  from  February 1994 to June 28, 1999.
Since   October   1992,   he  has  been  the  Director  of  the   Department  of
Gastroenterology  at St. Michael's Medical Center in Newark, New Jersey, and for
more than  five  years  prior  thereto,  he served as Chief of  Gastrointestinal
Endoscopy at St. Michael's  Medical Center.  Dr. Spira is a graduate of New York
University  Medical School,  a past president of both the New Jersey Society for
Gastrointestinal Endoscopy and the New Jersey Society of Gastroenterology.

     SOL TRIEBWASSER,  PH.D. Dr.  Triebwasser has been a director of the Company
     ----------------------
since July 1984. Until 1996, Dr.  Triebwasser was Director of Technical Journals
and Professional  Relations for IBM Corporation in Yorktown Heights New York and
currently a Research Staff member emeritus. Since receiving his Ph.D. in physics
from Columbia in 1952, he had managed  various  projects in device  research and
applications at IBM. Dr. Triebwasser is a fellow of the Institute for Electrical
and  Electronic  Engineers,  the  American  Physical  Society  and the  American
Association for the Advancement of Science.

     Mr. Aaron and Mr. Joels are brothers-in-law.

     The Board of Directors met, either in person or telephonically,  nine times
in fiscal 1999. Each of the directors attended or participated in 75% or more of
the meetings.

     The  Board  of  Directors  has  standing   Audit  and   Compensation/Option
Committees.

     The Audit Committee reviews with the Company's independent  accountants the
scope and timing of the accountants'  audit services and any other services they
are  asked to  perform,  their  report  on the  Company's  financial  statements
following  completion of their audit and the Company's  policies and  procedures
with respect to internal  accounting and financial  controls.  In addition,  the
Audit Committee reviews the independence of the independent  public  accountants
and makes annual  recommendations  to the Board of Directors for the appointment
of independent  public accountants for the ensuing year. The Audit Committee met
twice during fiscal 1999.

     The  Compensation/Option  Committee  reviews and recommends to the Board of
Directors the compensation and benefits of all officers of the Company,  reviews
general policy matters relating to compensation and benefits of employees of the
Company   and   administers    the   Company's    Stock   Option   Plans.    The
Compensation/Option Committee met twice during fiscal 1999.

COMPLIANCE WITH SECTION 16 (A)
------------------------------

     Based  solely in its  review of copies of Forms 3 and 4  received  by it or
representations  from certain  reporting  persons,  the Company  believes  that,
during the fiscal year ended  September  30,  1999,  there was  compliance  with
Section 16 (a) filing requirements applicable to its officers, directors and 10%
stockholders.


                                       14
<PAGE>


ITEM 10. EXECUTIVE COMPENSATION

     The following table sets forth the aggregate cash  compensation paid by the
Company to (i) its Chief Executive Officer and (ii) its most highly  compensated
officers whose cash compensation exceeded $100,000 for services performed during
the year ended September 30, 1999.

<TABLE>
<CAPTION>

                            ANNUAL COMPENSATION                      LONG TERM COMPENSATION
                            -------------------                      ----------------------

                                                  AWARDS                        PAYOUTS
                                                  ------                        -------

<S>            <C>              <C>         <C>          <C>           <C>           <C>        <C>           <C>
                                                                                Securities
Name and                                            Other         Restricted    Underlying
Prinicpal                                           Annual          Stock        Options       LTIP        All Other
POSITION       YEAR          Salary      Bonus    Compensation     Award(s)       SARs       Payouts     Compensation
                              ($)         ($)          ($)            ($)         ($)          (#)              ($)

George         1999(1)         -0-         -0-          -0-           -0-           -0-        -0-           -0-(3)
Aaron
President/CEO


Jack Nelson    1999(2)(5)    193,875       -0-    39,263(6)           -0-           -0-        -0-        16,200(3)
               1998          258,500   158,000          -0-           -0-       125,000        -0-        16,200(3)
               1997          247,201       -0-          -0-           -0-           -0-        -0-
                                                                                                          16,200(3)


Enrique Levy   1999(4)(5)    185,625       -0-    39,340(6)           -0-           -0-        -0-         8,400(3)
               1998          247,500   125,000          -0-           -0-       100,000        -0-
               1997          242,740       -0-          -0-           -0-           -0-        -0-         8,400(3)
                                                                                                           8,400(3)

</TABLE>

(1)  Mr. Aaron was appointed by the Board  effective  June 28, 1999 as President
     and CEO.  Mr. Aaron has agreed that the salary of $41,206 for the period be
     accrued and will be paid in 2000.
(2)  Mr.  Nelson was a full-time  employee  beginning  January 1, 1994,  and was
     Chairman and CEO until June 28, 1999 when he became a consultant.
(3)  Paid to Messrs.  Aaron, Nelson and Levy for the purpose of reimbursing each
     of them for transportation and other expenses. Expenses due to Mr. Aaron in
     the amount of $3,000  have been  accrued for the period and will be paid in
     2000.
(4)  Mr. Levy was  President  and COO  beginning  October 1, 1995 until June 28,
     1999.
(5)  The Company had  committed to issue Common Stock to Mr. Nelson and Mr. Levy
     in the amount of 125,000 and 100,000 shares  respectively,  and termination
     payments  of  $258,500   and  $247,500   respectively   pursuant  to  their
     Termination Agreement, see Part II/Item 6.
(6)  Paid to Messrs. Nelson and Levy for vacation (based on salary rate).

     The  Company had an  employment  agreement  with Jack  Nelson (the  "Nelson
Employment Agreement"),  employing him as Chairman of the Board, Chief Executive
Officer and Treasurer. The Agreement was originally entered into on December 20,
1995,  whereby Mr.  Nelson was  employed by both the Company and AMS.  Effective
with the AMS Merger,  Mr. Nelson became employed  full-time by the Company.  The
Nelson Employment Agreement included an aggregate base salary of $258,500,  with
any additional increases in base salary thereafter being instituted by the Board
of Directors.  Upon the Opus Merger,  effective June 28, 1999,  Caprius  entered
into a Severance  Agreement with Mr. Nelson  terminating  the Nelson  Employment
Agreement,  terminating  all options and he ceased  serving as the  Chairman and
Chief  Executive  Officer.  Pursuant to the Severance  Agreement,  Mr. Nelson is


                                       15
<PAGE>


serving as a consultant to Caprius for a period of one year. Mr. Nelson received
$45,734 in cash as payment of deferred  compensation,  will get 125,000 shares
of Caprius  Common Stock in 2000,  and was to have  received a $258,500  payment
upon  the  earlier  of  December  28,  1999 or the  consummation  of a  Business
Transaction (as defined therein). As of December 28, 1999, the severance
obligation was converted into a Note repayable on October 1, 2000 subject to
mandatory prepayment from the proceeds of the sale of The Strax Institute, and
if not prepared by March 1, 2000, becomes secured by the assets of The Strax
Institute. Any prepayments on the Note to Mr. Levy would be proposed with
prepayments on the Note to Mr. Nelson.

     The  Company  had an  employment  agreement  with  Enrique  Levy (the "Levy
Employment  Agreement")  employing him as President and Chief Operating Officer.
The Levy Employment Agreement included an aggregate base salary of $247,500 with
any additional increases in base salary thereafter being instituted by the Board
of  Directors.  Upon the Merger  with Opus,  effective  June 28,  1999,  Caprius
entered into a Severance Agreement with Mr. Levy terminating the Levy Employment
Agreement,  terminating  all options and he ceased  serving as the President and
Chief  Operating  Officer.  Pursuant  to the  Severance  Agreement,  Mr. Levy is
serving as a consultant  to Caprius for a period of one year.  Mr. Levy received
$43,789 in cash as payment of deferred  compensation,  will get 100,000 shares
of Caprius Common Stock in 2000 and was to have received a $247,500 payment upon
the earlier of December 28, 1999 or the  consummation of a Business  Transaction
(as  defined  therein). As of December 28, 1999, the severance obligation was
converted into a Note repayable on October 1, 2000 subject to mandatory
prepayment from the proceeds of the sale of The Strax Institute, and if not
prepared by March 1, 2000, becomes secured by the assets of The Strax
Institute. Any prepayments on the Note to Mr. Levy would be proposed with
prepayments on the Note to Mr. Nelson.

     The Company does not have Employment  Agreements for Messrs.  Aaron,  Joels
and Koppel.

     The  Company  does not have any  annuity,  retirement,  pension or deferred
compensation plan or other  arrangements  under which any executive officers are
entitled to participate without similar participation by other employees.


                                       16
<PAGE>


OPTION/SAR GRANTS IN LAST FISCAL YEAR


<TABLE>
<CAPTION>

                                                                                 Potential Realized
                                                                                  Value at Assumed       Alternative
                                                                                Annual Rates of Stock    to (f) and
                                      Individual                                Price Appreciation for   (g) Grant
                                        Grants                                      Option Term          Date Value

<S>                           <C>          <C>         <C>            <C>          <C>          <C>         <C>
          (a)                (b)         (c)          (d)            (e)           (f)        (g)          (h)
                                         % of
                          Number of     Total
                         Securities    Options/     Exercise                                              Grant
                         Underlying      SARS       on Base       Expiration                              Date
          Name            Options/    Granted to     Price           Date        5% ($)     10% ($)      Present
                            SARs      mployee(s)     ($/Sh)                                              Value $
                         Granted (#)  in Fiscal
                                         Year

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

         George Aaron        -0-          -0-         -0-            -0-          -0-          -0-         -0-

         Jack Nelson         -0-          -0-         -0-            -0-          -0-          -0-         -0-

         Enrique Levy        -0-          -0-         -0-            -0-          -0-          -0-         -0-

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

</TABLE>


                          FISCAL YEAR END OPTION VALUE

                    NUMBER OF SECURITIES                   VALUE OF UNEXERCISED
                   UNDERLYING UNEXERCISED                  IN-THE-MONEY OPTIONS
                  OPTIONS AT SEPT. 30, 1999                  AT SEPT. 30, 1999
NAME              EXERCISABLE/UNEXERCISABLE                   EXERCISABLE ($)
----              -------------------------                   ---------------

George Aaron              18,500/0                                 $-0-

Jack Nelson                  -0-                                   $-0-

Enrique Levy                 -0-                                   $-0-




                                       17
<PAGE>


COMPENSATION OF DIRECTORS

     Directors  who are  employees  of the  Company  are not  paid  any  fees or
additional  compensation  for  services  as  members of the  Company's  Board of
Directors  or any  committee  thereof.  Although  non-employee  Directors do not
receive  Board fees,  they are  entitled  to Options to  purchase  shares of the
Company's  Common  Stock.  Each  person  that  becomes  a member of the Board is
granted  Options to purchase  15,000 shares of the Common Stock.  Thereafter,  a
Director is granted  Options to purchase  10,000 shares  annually if that person
has been a Director of the  Company  for more than six  months.  Pursuant to the
1993 Directors Stock Option Plan for Non-Employee Directors (the "1993 Directors
Plan"), which was amended in December 1997, the number of shares available under
the 1993 Directors Plan has been increased to 200,000  shares.  At September 30,
1999,  options to  purchase an  aggregate  of 54,000  shares of Common  Stock at
exercise  prices  ranging from $2.925 to $5.00 were  outstanding  under the 1993
Directors Plan.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     The  members  of the  Company's  Compensation/Option  Committee  are Robert
Spira, M.D., F.A.C.P., and Sol Triebwasser,  Ph.D., none of whom is an executive
officer  or  employee  of the  company  or its  subsidiaries.  The  Compensation
Committee met during Fiscal 1999 to review  executive  compensation and obtained
approval from the Board of Directors for changes to executive compensation.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The  following  table  sets  forth,  as  of  December  15,  1999,   certain
information  regarding  the  beneficial  ownership  of Common  Stock by (i) each
person who is known by the Company to own beneficially more than five percent of
the outstanding  Common Stock,  (ii) each director and executive  officer of the
Company, and (iii) all directors and executive officers as a group:


<TABLE>
<CAPTION>

<S>                                <C>                          <C>                <C>
                                                           Amount and Nature    Percentage of
Name of                      Position with                 of Beneficial        Common
Beneficial Owner             Company                       Ownership (1)        Stock
----------------------------------------------------------------------------------------------

George Aaron                 Chairman of the               3,108,689 (2)        22.9%
                             Board; Chief Executive
                             Officer;
                             President

Jonathan Joels               Director; Chief               3,089,489            22.8%
                             Financial Officer;
                             Treasurer;
                             Secretary


                                       18
<PAGE>


Elliott Koppel               VP Sales & Marketing                -0-                *

Jack Nelson                  Director                        157,500 (3)         1.2%

Enrique Levy                 Director                        112,000 (4)            *

Robert Spira, M.D.           Director                         14,000 (5)            *

Sol Triebwasser, Ph.D.       Director                         17,000 (6)            *

All Directors and Executive

Officers as a group          %
(7 persons)                  (1)(2)(3)(4)(5)(6)            6,498,678             47.1


</TABLE>


---------------
*    Less than one percent (1%).

(1)  All shares of Caprius  Common Stock are  beneficially  owned,  and the sole
     voting and  investment  power is held by the persons  named,  except as set
     forth in the notes below. A person is deemed to be the beneficial  owner of
     shares that can be  acquired  within 60 days of the date of this table upon
     exercise of options or warrants.

(2)  Includes 18,500 shares  underlying  options presently  exercisable  granted
     under the 1993 Directors Plan and excludes 1,500 shares underlying  options
     granted under the 1993 Directors Plan, which are currently not exercisable.

(3)  Includes  125,000  shares  to be  issued  in  2000  pursuant  to  Severance
     Agreement.  Excludes 30,200 shares owned by Mr. Nelson's wife and children,
     as to which shares he disclaims beneficial ownership.

(4)  Includes  100,000  shares  to be  issued  in  2000  pursuant  to  Severance
     Agreement.

(5)  Includes 14,000 shares  underlying  options presently  exercisable  granted
     under the 1993 Directors Plan and excludes 1,500 shares underlying  options
     granted under the 1993 Directors Plan, which are currently not exercisable.

(6)  Includes 17,000 shares underlying options presently exercisable granted the
     1993 Directors Plan and excludes 1,500 shares  underlying  options  granted
     under the 1993 Directors Plan, which are currently not exercisable.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     See Item 10 regarding conversion of severance payment obligations of the
Company to Messrs.  Nelson and Levy into Securred Promissory Notes.


                                       19
<PAGE>


                                     PART IV
                                     -------

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits, including those incorporated by reference.

EXHIBIT NO.       DESCRIPTION
-----------       -----------

2.1               Agreement  and Plan of Merger,  dated January 20, 1997, by and
                  among  Registrant,   Medial  Diagnostics,  Inc.  ("MDI"),  MDI
                  Acquisition  Corporation and US Diagnostic Inc.  (incorporated
                  by  reference  to  Exhibit  1 to  Registrant's  Form 8-K filed
                  January 23, 1997).

2.2               Agreement and Plan of Merger, dated as of June 23, 1997, among
                  Registrant,  ANMR/AMS  Merger Corp.  and Advanced  Mammography
                  Systems, Inc. ("AMS") (incorporated by reference to Annex A to
                  the Joint  Proxy  Statement  Prospectus  that  formed  part of
                  Registrant's  Registration  Statement  of Form  S-4  filed  on
                  October 9, 1997 ("Registrant's Form S-4")).

2.3               Agreement  and Plan of Merger  dated as of June 28, 1999 among
                  Registrant,   Caprius  Merger  Sub,  Opus   Diagnostics   Inc.
                  ("Opus"),  George Aaron and Jonathan  Joels  (incorporated  by
                  reference to Exhibit 2.1 to Registrant's  Form 8-K, filed July
                  1, 1999 (the "July 1000 Form 8-K")).

3.1               Certificate of Incorporation  of Registrant.  (incorporated by
                  reference  to Exhibit 3 filed with  Registrant's  Registration
                  Statement  on  Form  S-2,  and  amendments  thereto,  declared
                  effective  August 18,  1993 (File No.  2084785  ("Registrant's
                  Form S-2")).

3.2               Amendment to Certificate of  Incorporation of Registrant filed
                  November 5, 1993  (incorporated by reference to Exhibit 3.2 to
                  Registrant's Form S-4).

3.3               Amendment to Certificate of Incorporation of Registrant, filed
                  August 31, 1995,  (incorporated by reference to Exhibit 3.1 to
                  Registrant's  Form 8-K for an event of  August  31,  1995 (the
                  "August 1995 Form 8-K")).

3.4               Amendment to Certificate of Incorporation of Registrant, filed
                  September 21, 1995  (incorporated  by reference to Exhibit 3.1
                  to Registrant's Annual Report on Form 10-K for the nine months
                  ended September 30, 1995 (the "ANMR 1995 Form10-K")).

3.5               Amended and Restated  By-laws of Registrant  (incorporated  by
                  reference to Exhibit 3.4 to Registrant's Form S-4).

4.1.1             Form of Warrant  Agreement  between  Registrant  and  American
                  Stock Transfer & Trust Company, as Warrant Agent (incorporated
                  by  reference  to Exhibit 4 to  Registrant's  August 1995 Form
                  8-K).

4.1.2             Form of Warrant  Certificate  (incorporated  by  reference  to
                  Annex  B to the  Registrant's  Joint  Proxy  Statement,  dated
                  August 31, 1995).

4.2               Specimen  Certificate  for  Common  Stock,  par value $.01 per
                  share, of Registrant (incorporated by reference to Exhibit 4.2
                  to Registrant's Form S-4).

4.3.1             Form  of  Supplemental   Agreement  relating  to  Registrant's
                  assumption of MDI's  obligations  under the Warrant  Agreement
                  between MDI and First Albany Corporation and Janney Montgomery
                  Scott,  Inc.  (incorporated  by reference to Exhibit  4.3.1 to
                  Registrant's Form S-4).


                                       20
<PAGE>


4.3.2             Form  of  Supplemental   Agreement  relating  to  Registrant's
                  assumption of MDI's  Obligations  under the Warrant  Agreement
                  between  MDI and  Jacob  by  reference  to  Exhibit  4.3.2  to
                  Registrant's Form S-4).

4.4               Form of Warrant Certificate, dated as of March 6, 1994, issued
                  to Dominick & Dominick Incorporated (incorporated by reference
                  to Exhibit 4.4 to Registrant's Form S-4).

4.5               Certificate of Designation of Series A Preferred  Stock of the
                  Registrant (incorporated by reference to the Registrant's Form
                  8-K, filed on March 31, 1996.

4.6               Certificate of Designation of Series B Convertible  Redeemable
                  Preferred  Stock of Registrant  (incorporated  by reference to
                  Registrant's Form 8-K, filed September 2, 1997).

4.7               Warrant issued to Oxis Health Products,  Inc. (incorporated by
                  reference to Exhibit 10.2 to Registrant's July 1999 Form 8-K).

10.1              Registrant's  1983  Incentive and  Non-Qualified  Stock Option
                  Plan, Amended and Restated as

of                February  1,  1988,   and  form  of  incentive   stock  option
                  (incorporated  by reference  to Exhibit  10.4 to  Registrant's
                  Form S-2).

10.2              Registrant's 1993 Employee Stock Option Plan  (incorporated by
                  reference to Exhibit A of the Proxy Statement for Registrant's
                  1993 Annual Meeting of Stockholders).

10.3              Registrant's 1993 Directors Stock Option Plan for Non-Employee
                  Directors (incorporated by reference to Exhibit B of the Proxy
                  Statement   for   Registrant's    1993   Annual   Meeting   of
                  Stockholders).

10.4.1            Registration Rights Agreement,  dated August 18, 1997, between
                  the   Registrant   and   General   Electric   Company   ("GE")
                  (incorporated by reference to Exhibit 10.2 to the Registrant's
                  Form 8-K, filed September 2, 1997).

10.4.2            Stockholders  Agreement,  dated August 18,  1997,  between the
                  Registrant and GE  (incorporated  by reference to Exhibit 10.3
                  to the Registrant's Form 8-K, filed September 2, 1997).

10.4.3            Settlement  and  Release  Agreement,  dated  August 18,  1997,
                  between the  Registrant and GE  (incorporated  by reference to
                  Exhibit 10.4 to the Registrant's  Form 8-K, filed September 2,
                  1997).

10.4.4            License   Agreement,   dated  August  18,  1997,  between  the
                  Registrant and GE  (incorporated  by reference to Exhibit 10.4
                  to the Registrant's Form 8-K, filed September 2, 1997).

10.5.1            Employment  Agreement between Registrant and Jack Nelson dated
                  as of December 6, 1993  (incorporated  by reference to Exhibit
                  10.5 filed with the ANMR 1994 Form 10-K).

10.5.2            Severance and  Consulting  Agreement  between  Registrant  and
                  Nelson  (incorporated  by  reference  to  Exhibit  10.4 to the
                  Registrant's July 1999 Form 8-K).

10.6.1            Employment  Agreement among Registrant,  Advanced  Mammography
                  Systems,  Inc.  ("AMS") and Enrique Levy dated  September  17,
                  1995 (incorporated by reference to Exhibit 10.6 to Registrants
                  ANMR September 1995 Form 10K)

10.6.2            Severance and Consulting Agreement between Registrant and Levy
                  (incorporated by reference to Exhibit 10.5 to the Registrant's
                  July 1999 Form 8-K).

10.7              Lease Agreement between Registrant and John T. Spinelli, dated
                  May 5, 1991  (incorporated  by reference to Exhibit 10.9 filed
                  with  Registrant's  Annual  Report on Form 10-K for the fiscal
                  year ended December 31, 1995).

10.8              Key Employment Agreement between MVA Rehabilitation Associates
                  and  Eric  T.  Shebar,  M.D.  dated  as of  January  31,  1995
                  (incorporated  by reference to Exhibit 10(b) to MDI's Form 8-K
                  filed on February 15, 1995 (File No. 0-19736)).


                                       21
<PAGE>


10.9              Amended  and  Restated   Agreement  of   Partnership   of  MVA
                  Rehabilitation   Associates   (incorporated  by  reference  to
                  Exhibit 10(a) to MDI's Form 8-K filed on February 15, 1995).

10.10             Form  of  Regulation  S  Securities   Subscription   Agreement
                  relating   to  the   Company's   Series  A   Preferred   Stock
                  (incorporated by reference to the Registrant's Form 8-K, dated
                  March 31, 1996).

10.11             Interest Transfer  Agreement by and among Middlesex MRI Center
                  Inc.  ("Middlesex") and MDI Rehab Inc. and Medical Diagnostics
                  and  Rehabilitation,  LLC ("MDR") the sole general partners of
                  MVA  Rehabilitation  Associates  ("MVA")  for the  transfer of
                  Middlesex and MDR's partnership interests in MVA.(incorporated
                  by  Reference  to Exhibit 2.1 to  Registrant's  Form 8-K dated
                  March 11, 1999).

10.12             Asset  Purchase   Agreement  between  Registrant  and  Pacific
                  Republic  Capital Corp.  for the sale of Aurora breast scanner
                  technology  related  assets   (incorporated  by  reference  to
                  Exhibit  2.1 to the  Registrant's  Form 8-K  dated  April  27,
                  1999).

10.13.1           Asset  Purchase  Agreement  dated as of June 28,  1999,  among
                  Opus, Oxis Health Products, Inc. and Oxis International,  Inc.
                  (incorporated by reference to Exhibit 2.2 to Registrant's July
                  1999 Form 8-K).

10.13.2           Secured   Promissory  Note  of  Opus  issued  to  Oxis  Health
                  Products,  Inc.  in the initial  principal  amount of $565,000
                  (incorporated  by reference  to Exhibit  10.1 to  Registrant's
                  July 1999 Form 8-K).

10.13.3           Services  Agreement,  dated as of June 30, 1999,  between Opus
                  and Oxis Health Products,  Inc.  (incorporated by reference to
                  Exhibit 10.3 to Registrant's July 1999 Form 8-K).

10.14*            Settlement Agreement,  General Release and Covenant Not to Sue
                  ("Agreement") between MVA Rehabilitation Associates, MDI Rehab
                  Inc. Middlesex MRI Center and Eric T. Shebar,  M.D.,
                  dated December 27, 1999.

10.15*            Promissory  Notes  issued  for  bridge  loan in the  aggregate
                  amount of $600,000 (November 1999 and December 1999).

10.16.1*          Securred Promissory Note, dated as of December 28, 1999 from
                  Registrant to Jack Nelson.

10.16.2*          Securred Promissory Note, dated as of December 28, 1999 from
                  Registrant to Enrique Levy.

10.16.3*          Security Agreement, dated as of December 28, 1999 from
                  Registrant to Enrique Levy, as agent.

21*               List of Company's subsidiaries.
23.1*             Consent of BDO Seidman,  LLP,  independent  public accountants
                  for Company.
27*               Financial Data Schedule

----------
*  Filed herewith

(b)  Reports on Form 8-K:
            None


                                       22
<PAGE>

                                   SIGNATURES
                                   ----------

  Pursuant  to the  requirements  of the  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, thereunto duly authorized on the 14th day of
  January 2000.

  CAPRIUS, INC.

  BY:    /S/JONATHAN JOELS
         --------------------------------------------------
         Jonathan Joels, CFO, Treasurer & Secretary

  Pursuant  to the  requirements  of the  Securities  Exchange  Act of 1934 this
  report has been signed by the following  persons in the  capacities and on the
  dates indicated.

  SIGNATURE                           TITLE                         DATE
  ---------                           -----                         ----

  /s/George Aaron            Chairman of the Board,               Jan. 11, 2000
  -------------------        President & CEO
  George Aaron


  /s/Jonathan Joels          Director, CFO, Treasurer             Jan. 11, 2000
  -------------------        & Secretary
  Jonathan Joels


 /s/ Jack Nelson
  -------------------        Director                             Jan. 14, 2000
  Jack Nelson


 /s/ Enrique Levy                                                 Jan. 14, 2000
  -------------------        Director
  Enrique Levy


 /s/Robert Spira             Director                             Jan. 8, 2000
 --------------------
 Robert Spira, M.D.


 /s/ Sol Triebwasser         Director                             Jan. 11, 2000
  -------------------
  Sol Triebwasser, Ph.D.


                                       23

<PAGE>


                         CAPRIUS, INC. AND SUBSIDIARIES



                                    I N D E X






Independent Auditors' Report                                         F-2


Consolidated Balance Sheets                                          F-3


Consolidated Statements of Operations                                F-4


Consolidated Statements of Stockholders' Equity                      F-5


Consolidated Statements of Cash Flows                                F-6


Notes to Consolidated Financial Statements                           F-7


                                       F1
<PAGE>


                          INDEPENDENT AUDITORS' REPORT



The Board of Directors and Stockholders
Caprius, Inc.

         We have audited the accompanying consolidated balance sheets of
Caprius, Inc. (formerly Advanced NMR Systems, Inc.) and subsidiaries as of
September 30, 1999 and 1998, and the related consolidated statements of
operations, stockholders' equity, and cash flows for years ended September 30,
1999 and 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 audits.

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

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Caprius, Inc. and subsidiaries at September 30, 1999 and 1998, and the results
of their operations and their cash flows for the years then ended in conformity
with generally accepted accounting principles.

         The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. However, the Company has incurred
substantial losses in recent years which raises substantial doubt about its
ability to continue as a going concern. Management's plans in regard to this
matter are described in Note A. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.



BDO Seidman, LLP
----------------
BDO Seidman, LLP
Boston, Massachusetts

December 7, 1999


                                       F2
<PAGE>


                         CAPRIUS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                   September 30, 1999        September 30, 1998
                                                   --------------------      --------------------
<S>                                                    <C>                       <C>
ASSETS

CURRENT ASSETS:
     Cash and cash equivalents                         $       116,068           $     1,791,476
     Accounts receivable, net of reserve
          for bad debts of $25,669 at
          September 30, 1999 and $663,314 at
          September 30, 1998                                   537,510                 2,899,282
     Inventories                                               210,983                   720,858
     Other current assets                                       91,723                   584,875
                                                   --------------------      --------------------
         Total current assets                                  956,284                 5,996,491
                                                   --------------------      --------------------

PROPERTY AND EQUIPMENT:
     Medical equipment                                         314,320                 2,145,674
     Office furniture and equipment                            188,001                   251,199
     Other equipment                                               -                   1,518,874
     Leasehold improvements                                        950                 1,153,576
                                                   --------------------      --------------------
                                                               503,271                 5,069,323
     Less:  accumulated depreciation
          and amortization                                     151,348                 1,824,946
                                                   --------------------      --------------------
         Net property and equipment                            351,923                 3,244,377
                                                   --------------------      --------------------

OTHER ASSETS:
     Goodwill, net of accumulated
          amortization of $45,006 at
          September 30, 1999 and
          $2,357,703 at September 30, 1998                     675,176                 1,053,797
     Other intangibles, net of
          accumulated amortization of
          $29,880 at September 30, 1999
          and $371,698 at September 30, 1998                 2,360,493                 1,240,678
     Other                                                       9,314                    32,037
                                                   --------------------      --------------------
         Total other assets                                  3,044,983                 2,326,512
                                                   --------------------      --------------------
                                                       $     4,353,190          $     11,567,380
                                                   ====================      ====================
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Accounts payable                                  $       342,204           $       810,990
     Accrued expenses                                          465,941                   964,922
     Accrued compensation                                      652,153                   388,748
     Other current liabilities                                     -                      53,664
     Current maturities of long-term debt
          and capital lease obligations                        703,100                   915,608
                                                   --------------------      --------------------
         Total current liabilities                           2,163,398                 3,133,932

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS,
     NET OF CURRENT MATURITIES                                 180,623                 1,207,624
                                                   --------------------      --------------------

TOTAL LIABILITIES                                            2,344,021                 4,341,556
                                                   --------------------      --------------------

Commitments and contingencies                                      -                         -

STOCKHOLDERS' EQUITY:
     Preferred stock, $.01 par value
          Authorized - 1,000,000 shares
          Issued and outstanding - Series A,
          none; Series B, convertible, 27,000
          shares at September 30, 1999 and
          September 30, 1998.
          Liquidation preference $2,700,000                  2,700,000                 2,700,000
     Common stock, $.01 par value
          Authorized - 50,000,000 shares
          Issued -  13,548,017 shares at
          September 30, 1999 and 7,369,040
          shares at September 30, 1998                         135,480                    73,690
     Additional paid-in capital                             64,778,855                63,561,672
     Accumulated deficit                                   (65,602,916)              (59,107,288)
     Treasury stock (22,500 common shares,
      at cost)                                                  (2,250)                   (2,250)
                                                   --------------------      --------------------
         Total stockholders' equity                          2,009,169                 7,225,824
                                                   --------------------      --------------------
                                                       $     4,353,190          $     11,567,380
                                                   ====================      ====================
</TABLE>


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


                                       F3
<PAGE>



                         CAPRIUS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                          Year Ended September 30,
                                                    1999                           1998
                                          -------------------------       ------------------------
<S>                                             <C>                           <C>
REVENUES:
     Net patient service revenues               $       2,882,818             $       3,764,189
     Net product sales                                    391,373                           -
                                          -------------------------       ------------------------
          Total revenues                                3,274,191                     3,764,189
                                          -------------------------       ------------------------

OPERATING EXPENSES:
     Cost of operations                                 2,079,613                     3,616,331
     Selling, general and administrative                4,482,038                     5,166,042
     Research and development                             496,480                     2,950,578
     Purchased research and development                       -                       7,097,566
     Provision for bad debt and
          collection costs                                149,297                       340,426
     Loss on sale of imaging business                      12,670                       265,791
     Loss on sale of rehabilitation business            1,461,121                           -
     Loss on sale of Aurora Technology                  2,096,057                           -
     Write down of intangibles                                -                       1,900,000
                                          -------------------------       ------------------------
          Total operating expenses                     10,777,276                    21,336,734
                                          -------------------------       ------------------------
          Operating loss from continuing
          operations                                   (7,503,085)                  (17,572,545)

Interest income                                            33,939                       328,235
Interest expense                                         (135,482)                     (219,338)
Other income                                                9,000                         3,050
                                          -------------------------       ------------------------

     Loss from continuing operations
     before equity in net loss of
     unconsolidated subsidiary                         (7,595,628)                  (17,460,598)


Equity in net loss of unconsolidated
subsidiary                                                    -                         (67,358)
                                          -------------------------       ------------------------

     Loss from continuing operations
     before provision for income taxes                 (7,595,628)                  (17,527,956)


Provision for income taxes                                    -                         (98,177)
                                          -------------------------       ------------------------

     Loss from continuing operations                   (7,595,628)                  (17,626,133)


Income on disposal of discontinued
operation                                               1,100,000                       107,430
                                          -------------------------       ------------------------

Net Loss                                        $      (6,495,628)            $     (17,518,703)
                                          =========================       ========================

Income (loss) per basic and diluted
common share:
     Loss from continuing operations                       $(0.85)                       $(2.51)
     Income on disposal of discontinued
          operation                                          0.12                          0.02
                                         --------------------------       ------------------------
     Net loss per share                                    $(0.73)                       $(2.49)
                                          =========================       ========================

Weighted average number of common shares
     outstanding, basic and diluted                     8,971,411                     7,025,802
                                          =========================       ========================
</TABLE>


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


                                       F4
<PAGE>




                         CAPRIUS, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY




<TABLE>
<CAPTION>

                                    Preferred Stock                 Common Stock
                             ----------------------------------------------------------
                              Number                        Number                  Additional
                                of                           of         $0.01         Paid-in      Accumulated
                              Shares        Amount          Shares    Par Value       Capital       Deficit
                             ---------------------------------------------------------------------------------------
<S>                            <C>       <C>              <C>         <C>          <C>          <C>
BALANCE,
 SEPTEMBER 30, 1997            27,000    $ 2,700,000      4,374,763   $   43,748   $56,170,271  $(41,588,585)


Issuance of common stock
   related to AMS merger            -              -      2,956,741       29,567     7,362,287             -
Conversion of note payable          -              -         27,429          274        20,725             -
Exercise of stock options           -              -         10,107          101         8,389             -
Net loss                            -              -              -            -             -   (17,518,703)
                             -----------------------------------------------------------------------------------

BALANCE, SEPTEMBER 30, 1998    27,000      2,700,000      7,369,040       73,690    63,561,672   (59,107,288)

Issuance of common stock
   related to Opus merger           -              -      6,178,977       61,790     1,217,183             -
Net loss                            -              -              -            -             -    (6,495,628)
                             -----------------------------------------------------------------------------------

BALANCE, SEPTEMBER 30, 1999    27,000    $ 2,700,000     13,548,017   $  135,480   $64,778,855  $(65,602,916)
                             ===================================================================================
</TABLE>



                              Treasury Stock
                            --------------------
                             Number                     Total
                              of        $0.01       Stockholders'
                            Shares    Par Value        Equity
                            ----------------------------------------

BALANCE,
 SEPTEMBER 30, 1997           22,500    $ (2,250)   $ 17,323,184


Issuance of common stock
   related to AMS merger           -           -       7,391,854
Conversion of note payable         -           -          20,999
Exercise of stock options          -           -           8,490
Net loss                           -           -     (17,518,703)
                            -------------------------------------

BALANCE, SEPTEMBER 30, 1998   22,500      (2,250)      7,225,824

Issuance of common stock
   related to Opus merger          -           -       1,278,973
Net loss                           -           -      (6,495,628)
                            -------------------------------------

BALANCE, SEPTEMBER 30, 1999   22,500    $ (2,250)   $  2,009,169
                            =====================================


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


                                       F5
<PAGE>


<TABLE>
<CAPTION>
                         CAPRIUS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                           Year Ended September 30,
                                                                            1999                     1998
                                                                     -------------------   ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                   <C>                    <C>
     Net Loss                                                         $   (6,495,628)        $  (17,518,703)
     Adjustments to reconcile net loss to net cash used in
          operating activities:
          Depreciation and amortization                                      787,389              2,352,068
          Equity in net loss of unconsolidated subsidiary                        -                   67,358
          Gain on disposal of discontinued business                       (1,100,000)                   -
          Loss (gain) on sale of Aurora Technology                         2,096,057                    -
          Loss (gain) on sale of rehabilitation business                   1,461,121                    -
          Loss (gain) on sale of imaging business                             12,670                    -
          Purchased research and development                                     -                7,097,566
          Changes in operating assets and liabilities:
               Accounts receivable, net                                     (204,907)              (207,425)
               Inventories                                                  (213,763)                87,976
               Other current assets                                          147,617               (293,435)
               Accounts payable and accrued expenses                         252,856                 36,156
                                                                     -------------------   ------------------
                    Net cash used in operating activities                 (3,256,588)            (8,378,439)
                                                                     -------------------   ------------------

CASH FLOWS FROM INVESTING ACTIVITIES:

     Proceeds from sale of rehabilitation business                           762,804                    -
     Proceeds from sale of equipment                                          13,693                    -
     Proceeds from sale of imaging business                                  (12,670)                   -
     Proceeds from disposal of discontinued operations                     1,100,000                    -
     Proceeds from sale of Aurora Technology                                 952,367                    -
     Cash used in Opus merger                                               (522,940)
     Cash used in AMS merger                                                     -                 (128,406)
     Advances to unconsolidated subsidiaries                                     -                 (479,673)
     Purchase of equipment, furniture and leasehold improvements             (12,803)            (1,981,001)
                                                                     -------------------   ------------------
                    Net cash provided by (used in) investing
                    activities                                             2,280,451             (2,589,080)
                                                                     -------------------   ------------------

CASH FLOWS FROM FINANCING ACTIVITIES:

     Exercise of stock options                                                   -                    8,490
     Proceeds from issuance of long-term debt                                140,216              2,105,921
     Repayment of long-term debt and capital lease obligations              (839,487)              (853,151)
                                                                     -------------------    -----------------
                    Net cash provided by (used in) financing
                    activities                                              (699,271)             1,261,260
                                                                     -------------------   ------------------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                 (1,675,408)            (9,706,259)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                               1,791,476             11,497,735
                                                                     -------------------   ------------------

CASH AND CASH EQUIVALENTS, END OF YEAR                                $      116,068         $    1,791,476
                                                                     ===================   ==================


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

     Cash paid for interest during the period                         $       38,112         $      203,876
                                                                     ===================   ==================

     Common stock issued in AMS merger                                $          -           $    7,391,854
                                                                     ===================   ==================

     Common stock issued in Opus merger                               $    1,278,973         $          -
                                                                     ===================   ==================

     Additions to capital leases                                      $      215,676         $          -
                                                                      ===================  ==================

</TABLE>

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


                                       F6
<PAGE>


                         CAPRIUS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999



(NOTE A) - Business and Basis of Presentation
---------------------------------------------

     Caprius,  Inc. ("Caprius" or the "Company") was founded in 1983 and through
June 1999  essentially  operated in the business of medical  imaging  systems as
well as healthcare  imaging and rehabilitation  services.  On June 28, 1999, the
Company  acquired Opus  Diagnostics Inc.  ("Opus") and began  manufacturing  and
selling medical  diagnostic  assays.  The Company continues to own and operate a
comprehensive imaging center located in Lauderhill, Florida.

         Upon the merger (the "Opus Merger") between Opus and Caprius'
newly-formed wholly-owned subsidiary Caprius Merger Sub Inc., the Opus
stockholders received an aggregate of 6,178,977 shares of Caprius Common Stock,
par value $.01 per share, which constituted approximately 45.6% of the
outstanding shares after the Merger.

         The Opus Merger was consummated coincident with the closing of an Asset
Purchase Agreement (the "Oxis Purchase Agreement") between Opus and Oxis Health
Products Inc., a Delaware corporation ("Oxis"). The purchase price consisted of
$500,000 in cash, a secured promissory note (the "Oxis Note") in the principal
amount of $586,389 (as adjusted) payable on November 30, 1999, and a warrant
granting Oxis the right to acquire up to 10% equity interest in Opus (on a
pre-Merger basis) (the "Warrant"), exercisable after six months for a period of
five years. This note is secured by substantially all assets of Opus. Upon the
Opus Merger, the Warrant became exercisable for 617,898 shares of Caprius Common
Stock at an exercise price equal to 80% of the average bid and asked prices for
the Common Stock for the five trading days immediately preceding December 28,
1999. As of December 8, 1999, the principal sum due under the Oxis Note was paid
in full and under an Amended and Restated Warrant, a warrant for 617,898 shares
of Caprius Common Stock was issued, exercisable at $.0875 per share in
replacement of the Warrant.

     George  Aaron and  Jonathan  Joels  formed  Opus in 1999 for the purpose of
effecting the Opus Merger and the Oxis Purchase Agreement.

         Opus produces and sells 14 diagnostic assays, calibrators and controls
for therapeutic drug monitoring which are used on the Abbott TDx(R) and
TDxFLx(R) instruments. Pursuant to the Oxis Purchase Agreement, Opus acquired
the assets relating to the Oxis reagent patent and trademark and distribution
network for the therapeutic drug monitoring assay business (the "TDM Business").
Additionally, pursuant to a Services Agreement, Oxis is manufacturing the
products of the TDM Business of Opus through September 30, 2000.

         On April 27, 1999, pursuant to an Asset Purchase Agreement among
Caprius, Caprius Systems, Inc., a wholly owned subsidiary of Caprius ("Systems"
and, together with Caprius, the "Sellers") and Pacific Republic Capital Corp.
("Pacific" the Buyer), the Sellers consummated the sale of their Aurora breast
scanner technology ("Aurora Technology") and related assets to Pacific for
$854,490 in cash and the assumption by Pacific of certain obligations associated
with the transferred assets. The assets and obligations transferred included all
the shares of Caprius' wholly owned subsidiary, Caprius Imaging Corp., various
patents relating to the Aurora technology and assets of Systems, including
hospital equipment contracts and equipment leases. Caprius was relieved of an
equipment debt that exceeded $1.1 million.


                                       F7
<PAGE>


                         CAPRIUS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999



         In March 1999, the Company transferred its interest in its
rehabilitation center to an unrelated limited liability company in exchange for
$900,000, of which $850,000 was paid as of September 30, 1999. In addition, the
acquiring group assumed certain liabilities totaling approximately $400,000. The
cash received of $900,000 was used in part to pay a balance of approximately
$372,000 to the former owner of the center, which was the remaining amount due
from the Company's acquisition of its interest in the center.

         In July 1998, the Company acquired The Strax Institute ("Strax"), a
comprehensive breast imaging center, located in Lauderhill, Florida. Strax is a
multi-modality breast care center that treats approximately 15,000 patients per
year offering x-ray mammography, ultrasound, stereotactic biopsy and bone
densitometry.

         In August 1997, the Company and General Electric Company ("GE") entered
into a Purchase Agreement (the "GE Purchase Agreement") whereby GE purchased all
inventory, equipment and other assets, and assumed liabilities relating to the
Company's high field MRI systems and InstaScan business, in exchange for
$2,432,580 in cash and the purchase by GE of $2.7 million stated value of a
newly issued class of Series B Convertible Redeemable Preferred Stock. The
Company and GE entered into a Settlement and Release Agreement terminating and
releasing their prior obligations to each other.

         Effective November 10, 1997, the Company completed a merger (the "AMS
Merger") with Advanced Mammography Systems, Inc. ("AMS"), whereby AMS merged
into AMS Merger Corp., a wholly owned subsidiary of the Company, and became a
wholly owned subsidiary. Upon the AMS Merger, the Company changed its name to
Caprius, Inc. AMS was originally formed on July 2, 1992 as a wholly owned
subsidiary of Caprius to develop a dedicated breast MRI system and at the time
of the AMS Merger, the Company owned approximately 14% of the outstanding AMS
stock.

         The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. However, the Company has incurred
substantial losses in recent years which raises substantial doubt about its
ability to continue as a going concern. The financial statements do not include
one adjustment that might result from the outcome of this uncertainty. The
Company had available cash and cash equivalents of $116,068 at September 30,
1999. The Company intends to utilize the funds for working capital purposes to
continue developing the business of Opus by adding new distributors in
territories currently not covered by existing distributors and for the
development of new diagnostic kits. The Company also intends to pursue efforts
to identify additional funds through various funding options, including bridge
loans, banking facilities and equity offerings. The ability to secure commercial
or other borrowings could be more difficult due to the Company's delisting from
NASDAQ. There can be no assurance that such funding initiatives will be
successful and any equity placement could result in substantial dilution to
current stockholders.


(NOTE B) - Summary of Significant Accounting Policies
-----------------------------------------------------

         [1] Principles of consolidation
             ---------------------------

         The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All significant intercompany balances
and transactions have been eliminated in consolidation.

         [2] Revenue recognition
             -------------------

         The breast imaging and rehabilitation services businesses recognize
revenue as services are provided to patients. Reimbursements for services
provided to patients covered by Blue Cross/Blue Shield, Medicare, Medicaid,
HMO's and other contracted insurance programs are generally less than rates
charged by the Company. Differences between gross charges and estimated
third-party payments are recorded as contractual allowances in determining net
patient service revenue during the period that the services are provided.

         Revenue from the sale of a comprehensive line of assays for therapeutic
drug monitoring is recognized when the products are shipped to the customer.


                                       F8
<PAGE>


                         CAPRIUS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999



          [3]  Cash equivalents
               ----------------

         The Company considers all highly liquid debt instruments purchased with
a maturity of three months or less to be cash equivalents.

          [4]  Inventories
               -----------

         Inventories are accounted for at the lower of cost or market using the
first-in, first-out ("FIFO") method.

          [5]  Equipment, furniture and leasehold improvements
               -----------------------------------------------

         Equipment, furniture and leasehold improvements are recorded at cost.
Depreciation and amortization are computed by the straight-line method over the
estimated lives of the applicable assets, or term of the lease, if applicable.
Assets are written off when they become fully depreciated.

         Equipment under capital lease is stated at the lower of the fair market
value or the net present value of the minimum lease payments at the inception of
the lease. Capitalized lease equipment is amortized over the shorter of the term
of the lease or the estimated useful life.

         Asset Classification                        Useful Lives
         --------------------                        ------------

         Medical and other equipment                 5-8 years
         Office furniture and equipment              3-5 years
         Other equipment                             5 years
         Leasehold improvements                      Term of lease

          [6]  Goodwill and other intangibles
               ------------------------------

         At September 30, 1999, goodwill is related to the Opus Diagnostics
business and to The Strax Institute. At September 30, 1998, goodwill is related
to the company's rehabilitation services business and its breast care center.
Goodwill and other intangibles are amortized over their estimated useful lives.
The Company periodically reviews the carrying amount of goodwill and other
intangibles to determine whether an impairment has been incurred based on
undiscounted future cash flows. Other intangibles include trademarks, technical
know how and distributor agreements. Goodwill and other intangibles are being
amortized over twenty years.

         [7]  Net loss per share
              ------------------

         Net loss per share is computed in  accordance  with  Statement of
Financial Standards No. 128,  "Earning Per Share" ("SFAS No. 128").  SFAS No.
128 requires the presentation of both basic and diluted earnings per share.


                                       F9
<PAGE>



                         CAPRIUS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999



         Basic net loss per common share was computed using the weighted average
common shares outstanding during the period. Outstanding warrants and options
had an anti-dilutive effect and were therefore excluded from the computation of
diluted net loss per common share.

         [8]  Income taxes
              ------------

         The Company utilizes the liability method of accounting for income
taxes, as set forth in Statement of Financial Accounting Standards No. 109.
"Accounting for Income Taxes". Under this method, deferred tax liabilities and
assets are recognized for the expected tax consequences of temporary differences
between the carrying amount and the tax basis of assets and liabilities.

         [9]   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. Actual results could differ from those estimates.

         [10]  Recent pronouncements
               ---------------------

         Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income." ("SFAS No. 130") established standards for reporting and
display of comprehensive income, its components, and accumulated balances.
Comprehensive income is defined to include all changes in equity except those
resulting from investments by owners and distributions to owners. Among other
disclosures, SFAS No. 130 requires that all items that are required to be
recognized under current accounting standards as components of comprehensive
income be reported in a financial statement that is displayed with the same
prominence as other financial statements.

         SFAS No. 131, "Disclosure about Segments of an Enterprise and Related
Information", which supersedes SFAS No. 14, "Financial Reporting for Segments of
a Business Enterprise", establishes standards for the way that public
enterprises report information about operating segments in annual financial
statements and requires reporting of selected information about operating
segments in interim financial statements issued to the public. It also
establishes standards for disclosures regarding products and services,
geographic areas, and major customers. SFAS No. 131 defines operating segments
as components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief decision maker in deciding
how to allocate resources and in assessing performance.

         Both of these new standards are effective for financial statements for
periods beginning after December 15, 1997 and require comparative information
for earlier years to be restated. The adoption of these standards has no effect
on the Company's financial condition or results of operations.

         In June 1998, the Financial Accounting Standards Board issued SFAS No.
133 and 137. (SFAS No. 133), "Accounting for Derivative Instruments and Hedging
Activities" and (SFAS No. 137) "Accounting for Derivative Instruments and


                                      F10
<PAGE>


                         CAPRIUS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999



Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133".
SFAS No. 133 and SFAS No. 137 require 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 be
specifically designated as a hedge, the objective of which is to match the
timing of gain or loss recognition on the hedging derivative with the
recognition of ( i ) the changes in the fair value of the hedged asset or
liability that are attributable to the hedge risk or (ii) the earnings effect of
the hedged forecasted transaction. For a derivative not designated as a hedging
instrument, the gain or loss is recognized in income in the period of change.
These statements are effective for all fiscal quarters of fiscal years beginning
after June 15, 2000. The Company has no derivatives and does not expect the
pronouncement to materially effect future financial statements and disclosures.

(NOTE C) - Acquisitions
-----------------------

         On July 1, 1998, the Company acquired substantially all of the assets
and business of the Gertrude and Philip Strax Breast Diagnostic Institute in
Lauderhill, Florida, a comprehensive breast imaging center. As consideration for
the acquisition, the Company paid $600,000 in cash. The acquisition was
accounted for under the purchase method of accounting and the cost in excess of
net assets of approximately $450,000 is being amortized over 20 years.

     Effective June 28, 1999, the Company merged with Opus Diagnostics Inc.
coincident with the closing of the asset purchase agreement between Opus and
Oxis Health Products, Inc. As consideration related to the purchase, the Company
paid $500,000 in cash, issued a secured promissory note in the amount of
$586,389 and a warrant for up to 10% equity interest in Opus. The Company issued
6,178,977 shares of the Company's common stock to the shareholders of Opus
Diagnostics Inc., related to the merger of the companies. The asset purchase
agreement was accounted for under the purchase method of accounting. Costs in
excess of net assets of approximately $930,000 are being amortized over 20
years. Other intangibles in the sum of $2,360,493 are included in the Balance
Sheet as of September 30, 1999.


(NOTE D) - Inventory
--------------------

         At September 30, 1999, inventory represents completed medical
diagnostic assays. At September 30, 1998 inventory represented materials used to
manufacture the Aurora system.


                                      F11
<PAGE>


                         CAPRIUS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999



(NOTE E) - Long-term Debt and Capital Lease Obligations
-------------------------------------------------------

          Long-term debt and capital lease obligations at September 30, 1999 and
1998 consisted of the following:


                                                         1999          1998
                                                         ----          ----
Notes payable to major
 supplier of medical diagnostic assays.                $588,460     $        -
Principal repayment due November 30, 1999.
Notes payable to various leasing companies,             295,263      1,542,046
 secured by the respective medical equipment,
 interest rates ranging from 10.0% - 12.7%,
 Monthly payments of principal and interest
 ranging from $1,107 to $3,621, maturities
 ranging from November 2000 to July 2004.

Note payable to former minority owner of                      -        337,500
 rehabilitation  business,  interest at 12%,
 quarterly principal  payments of $137,500
 plus interest  through  October 1998 with a
 balloon payment of $200,000, collateralized
 by certain assets of the rehabilitation
 business.
Note payable to a hospital for leasehold                      -
 improvements,  interest at 11%,  Monthly
 payments of principal and interest of $4,685
 payable through August 2005
                                                              -        243,686
                                                        -------        -------
Total long-term debt and capital lease obligations      883,723      2,123,232


Less:  current maturities                               703,100        915,608
                                                        -------        -------
                                                       $180,623     $1,207,624
                                                       ========       ========




Future minimum debt payments for the next five years are as follows:

         Fiscal Year
         2000                                                 $703,100
         2001                                                  106,844
         2002                                                   51,893
         2003                                                   11,944
         2004                                                    9,942
                                                          ------------
                                                              $883,723
                                                            ==========


                                      F12
<PAGE>


                         CAPRIUS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999



(NOTE F) - Income Taxes
------------------------

         At September 30, 1999, the Company had a deferred tax asset totaling
approximately $17,680,000 due to net operating loss carryovers. A valuation
allowance has been established for the full amount of this asset due to
uncertainty as to the realization of the benefit.

         At September 30, 1999 and September 30, 1998, the Company had available
net operating loss carryforwards for tax purposes, expiring through 2015 of
approximately $52,000,000 and $30,000,000 respectively. The Internal Revenue
Code contains provisions which may limit the net operating loss carry forward
available for use in any given year if significant changes in ownership interest
of the Company occur.

         The following table reconciles the tax provision per the accompanying
statements of operations with the expected provision obtained by applying
statutory tax rates to the loss from continuing operations:


                                                Year Ended September 30,
                                                   1999              1998

         Loss from continuing operations:    $(6,495,628)      $(17,420,526)
         Loss attributable to AMS
           prior to merger                          -                67,358
         Loss attributable to Aurora
           Systems prior to sale                   9,918            -
                                            -------------     --------------
                                             $(6,485,710)      $(17,353,168)
                                            =============     ==============

         Expected tax (benefit) at 34%       $(2,205,000)       $(5,900,077)

         Adjustment due to
           increase in valuation reserve       2,205,000          3,600,000

         Non-deductible purchased
           R&D Costs                               -              2,300,077

         Other                                     -                (98,177)
                                            ------------     --------------

         Tax benefit (expense) per
           financial statements             $      -               $(98,177)
                                            ============     ==============


                                      F13
<PAGE>


                         CAPRIUS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999



(NOTE G) - Commitments and Contingencies
----------------------------------------


         [1]  Operating leases
              ----------------

         The Company leases facilities and equipment under non-cancelable
operating leases expiring at various dates through fiscal 2003. Facility leases
require the Company to pay certain insurance, maintenance and real estate taxes.
Rental expenses totaled approximately $197,412 and $528,000 for the years ended
September 30, 1999 and 1998.

         Future basic rental commitments under operating leases are as follows.


                       Fiscal Year                        Amount
           --------------------------------------------------------------------
             2000                                         121,798
             2001                                         120,115
             2002                                         123,719
             2003                                         127,430
                                                        ---------
                                                        $ 493,062
                                                        =========

          [2]  Legal proceedings
               -----------------

         On January 7, 1998, the Company and Jack Nelson, the Company's former
Chairman and Chief Executive Officer were served with a complaint in connection
with a purported class action brought against them by Dorothy L. Lumsden in the
United States District Court of the District of Massachusetts. The complaint
contains claims for alleged violations of Sections 10(b) and 20(a) under the
Securities Exchange Act and for common law fraud. Ms. Lumsden purported to bring
her action "on behalf of herself and all other persons who purchased or
otherwise acquired the common stock of the Company during the period August 10,
1994 through and including December 12, 1997". On February 2, 1998, the Company
and Mr. Nelson were served with a second class action complaint naming them as
defendants in connection with another action brought in the United States
District Court for the District of Massachusetts. This action was brought by
Robert Curry and the complaint alleged the same purported class and contained
similar allegations and claims as the class action complaint discussed above. On
April 24, 1998, the District Court consolidated the two class actions claims
into one for pre-trial purposes. On January 7, 1999, the Company announced that
it had reached a preliminary settlement in the shareholder class action in
Federal Court in Boston. Under the terms of the settlement, Caprius made a cash
payment of $150,000 and agreed to issue 325,000 shares of common stock to
Plaintiffs. Caprius' insurance carrier contributed $100,000 of the cash payment.
In addition, the settlement also stipulated that in the event Caprius sold all
or part of its business within 12 months an additional payment of $75,000 and
issuance of 100,000 additional shares would be made by Caprius to plaintiffs.
Consequently, on April 27, 1999, the additional payment was made and the
additional shares will be issued. For the year ended September 30, 1999, the
Company reported $207,323 as total settlement costs, which included $82,323 for
the market value of the shares to be issued.

                                      F14
<PAGE>


                         CAPRIUS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999


         On October 19, 1998, the Company filed a complaint against Eric T.
Shebar, M.D. ("Shebar"), the former Chief Operating Officer and Medical Director
for the Company's motor vehicle accident rehabilitation ("MVA") business, and
MVA Center for Rehabilitation, Inc. ("MVA, Inc.") whereby the Company alleges
breach of contract and certain misrepresentations and sought damages in an
amount to be determined at trial. The Company filed a preliminary injunction to
reach and apply a secured promissory note to MVA, Inc. against damages sought
from Shebar and to enjoin against any remedies upon default of the Note. The
ruling on the injunction was denied. Consequently, the final Note payment of
$347,000 was paid as part of the sale of the MVA. The new Caprius management
negotiated a settlement agreement between the Company and Eric T. Shebar, M.D.
that was entered into on December 27, 1999, wherein the Company agreed to pay
$60,000 immediately and a further $20,000 over the next two years. Upon the
initial payment, the Company was released from all claims and actions relating
to this matter.


(NOTE H) - Capital Transactions
--------------------------------

          [1]  Preferred Stock - Class B
               -------------------------

        On August 18, 1997, the Company entered into various agreements with
General Electric Company ("GE") including an agreement whereby GE purchased
27,000 shares of newly issued Series B Convertible Redeemable Preferred Stock
(the "Series B Preferred Stock") for $2,700,000.

         The Series B Preferred Stock consists of 27,000 shares, ranks senior to
any other shares of preferred stock which may be created and the Common Stock.
It has a liquidation value of $100.00 per share, plus accrued and unpaid
dividends, is non-voting except if the Company proposes an amendment to its
Certificate of Incorporation which would adversely affect the rights of the
holders of the Series B Preferred Stock, and is initially convertible into
1,597,930 shares of Common Stock, subject to customary anti-dilution provisions,
commencing on August 18, 1998, or earlier upon a change of control as defined.
No fixed dividends are payable on the Series B Preferred Stock, except that if a
dividend is paid on the Common Stock, dividends are paid on the shares of Series
B Preferred Stock as if they were converted into shares of Common Stock.


         [2]  Warrants
              --------

          At September 30, 1998, in connection with various transactions
  including the acquisition of MDI and the AMS Merger, the Company had
  outstanding warrants to purchase 996,987 shares of the Company's common stock
  at exercise prices ranging from $4.20 to $106.30 per share and have a weighted
  average exercise price of $16.83.
  The warrants expire at various dates from January 31, 2000 to May 31, 2001.

         At September 30, 1999, in connection with the Opus Diagnostics Inc.
merger, the Company issued a warrant to purchase 617,898 shares of the company's
common stock at an exercise price of $.0875. The warrant expires on June 28,
2004.


                                      F15
<PAGE>


                         CAPRIUS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999



          [3]   Stock options
                -------------

         The Company has an Incentive and Nonqualified Stock Option Plan which
provides for the granting of options to purchase not more than 100,000 shares of
common stock. Exercise prices for any incentive options are at prices not less
than the fair market value at the date of grant, while exercise prices for
nonqualified options may be at any price in excess of $.01. When fair market
value at the date of issuance is in excess of the option exercise price, the
excess is recorded as compensation expense. The total number of shares
authorized for grant under this plan were reached during 1993 and no additional
options can be granted. During fiscal 1997 and 1998 certain options were
canceled and replaced with options exercisable at the then fair market value.

         Stock option transactions under the above plan for the past two fiscal
periods are as follows:
                                       Number of           Option Price
                                        Shares              Per Share
                                        ------              ---------

Balance, September 30, 1997              4,500              $5.00 - $31.30
Repriced Options:
    Original                            (2,000)             $3.13
    Repriced                             2,000              $0.84
Cancelled in 1998                       (2,500)             $5.00
                                       -------

Balance, September 30, 1998              2,000              $0.84
Cancelled in 1999                       (2,000)             $0.84
                                        -------

Balance, September 30, 1999                0
                                           =

         During 1993, the Company adopted a new employee stock option plan and a
stock option plan for non-employee directors. The employee stock option plan
provides for the granting of options to purchase not more than 1,000,000 shares
of common stock. The options issued under the plan may be incentive or
nonqualified options. The exercise price for any incentive options cannot be
less than the fair market value of the stock on the date of the grant, while the
exercise price for nonqualified options will be determined by the option
committee. The Directors' stock option plan provides for the granting of options
to purchase not more than 200,000 shares of common stock. The exercise price for
shares granted under the Directors' plan cannot be less than the fair market
value of the stock on the date of the grant. Both plans expire May 25, 2003.


         During 1998 certain options were cancelled and replaced with options
exercisable at the then fair market value. Stock option transactions under the
1993 plans are as follows:


                                      F16
<PAGE>


                         CAPRIUS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999



                                         Number of            Option Price
                                           Shares              Per Share
                                           ------              ---------

Balance, September 30, 1997               181,767             $2.80 - $52.50
Granted in 1998                           576,510             $0.84 - $1.46
Granted pursuant to AMS Merger            454,000             $0.84 - $20.00
Exercised in 1998                        ( 10,107)            $0.84
Repriced Options:
   Original                              (182,141)            $5.00 - $8.00
   Repriced                               182,141             $0.84
Cancelled in 1998                        (292,849)            $0.84 - $42.50
                                        ---------

Balance, September 30, 1998               909,321             $0.84 - $33.80
                                          -------
Cancelled in 1999                        (762,685)            $0.84 - $25.60
                                        ---------

Balance, September 30, 1999               146,636             $0.84 - $25.60
                                          =======




Stock option transactions not covered under the option plans in 1998, 1997 and
1996 are as follows:

                                         Number of            Option Price
                                           Shares              Per Share
                                           ------              ---------

Balance, September 30, 1997                81,032             $7.90 - $33.80
Repriced Options:
   Original                               (6,000)             $5.00
   Repriced                                6,000              $0.84
Cancelled in 1998                         (4,000)             $14.10
                                          -------

Balance, September 30, 1998                77,032             $0.84 - $20.10
                                           ------
Balance, September 30, 1999                77,032             $0.84 - $20.10
                                           ======



Under all plan and non-plan stock options, as of September 30, 1999, options to
purchase 1,055,364 shares were available for grant and options to purchase
226,827 shares at a weighted average price of $5.35 per share were exercisable.
The outstanding options expire at various dates within ten years from the date
of grant.


                                      F17
<PAGE>


                         CAPRIUS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999



         The Company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting or Stock-Based Compensation", but applies Accounting Principles
Board Opinion No. 25 and related interpretations in accounting for its plans.
There was no compensation expense recognized in 1999 or 1998. If the Company had
elected to recognize compensation cost for the plans based on the fair value at
the grant date for awards under the plans, consistent with the method prescribed
by SFAS No. 123, net loss per share would have been changed to the pro forma
amounts indicated below:

                                              Year Ended September 30,
                                               1999              1998
                                               ----              ----

         Net loss:

            As reported                     $(6,495,628)     $(17,518,703)
            Pro forma                       $(6,495,945)     $(17,600,935)

         Net loss per share:

            As reported                           $(.73)           $(2.49)
            Pro forma                             $(.73)           $(2.51)


         The fair value of the Company's stock options used to compute pro forma
net loss and net loss per share disclosures is the estimated present value at
grant date using the Black-Scholes option-pricing model with the following
weighted average assumptions for 1999 and 1998: dividend yield of 0%; expected
volatility of 0.50; risk free interest rates of 5.59%-7.78%; and an expected
holding period of 10 years.

         The Company did not grant options during fiscal year 1999. The
weighted-average grant-date fair value of options granted was $0.44 per share
for the year ended September 30, 1998.

         During fiscal 1998, the stockholders of the Company approved a reverse
1 for 10 stock split and an increase of shares authorized under the 1993 plans
to 1,200,000 shares on a post-reverse stock split basis. All share and option
amounts have been restated to reflect the stock split. On January 1, 1998, all
190,141 of the then outstanding employee stock options were repriced to the
current market price, using the existing exercise durations.


                                      F18
<PAGE>


                         CAPRIUS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999



(NOTE I) - Unconsolidated Subsidiary (AMS):
-------------------------------------------


         On November 10, 1997, the shareholders of Caprius and AMS agreed to
merge, and AMS became a wholly-owned subsidiary of the Company (see Note A).

         The following unaudited pro forma financial information sets for the
results of the Company as if the AMS merger had occurred October 1, 1997. The
pro forma financial information does not purport to be indicative of what would
have occurred had the acquisition been made as of October 1, 1997 or results
that may occur in the future. The pro forma information does not include the
expense for the purchased research and development costs.


                                                                Year ended
                                                            September 30, 1998
                                                                 (000's)
         Net revenues                                            $  3,764
         Operating expenses                                       (15,005)
                                                                   ------
         Operating loss from continuing operations               $(11,241)
         Net loss                                                $(11,395)
         Net loss per common share                               $  (1.55)


(NOTE J) - Discontinued Operations
----------------------------------

         In August 1996, the Company's Board of Directors adopted a formal plan
to discontinue its Imaging Systems business segment. The segment was accounted
for as discontinued operations in accordance with APB 30, which among other
provisions, requires the plan of disposal to be carried out within one year. The
Company's estimated loss on disposal was less than anticipated resulting in
income in fiscal 1998 amounting to approximately $107,000.

         In December 1998, the Company received $1,100,000 from a major MRI
manufacturer to resolve outstanding patent issues unrelated to the patents
protecting its Aurora technology.


                                      F19
<PAGE>


                         CAPRIUS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999



(NOTE K) -Pro Forma Information
-------------------------------


         The following unaudited pro forma financial information sets forth the
results of the Company as if the merger with Opus has occurred as of October 1,
1997. The pro forma financial information does not purport to be indicative of
what would have occurred had the acquisition been made as of October 1, 1997 or
results that may occur in the future.

                                                  Year ended September 30,
                                                    1999               1998
Net Revenues                                 $ 4,352,991        $ 5,202,589
Operating expenses                            11,505,901         22,367,334
Operating loss from                          (6,643,398)       (17,164,745)
 continuing operations
Loss from continuing operations              (6,735,941)       (17,218,333)
Loss per common share                              (.77)             (2.45)


(NOTE L) - Segment Information
------------------------------

         In June 1997, the Financial Accounting Standards Board issued SFAS No.
131, 'Disclosure about Segments of an Enterprise and Related Information'. SFAS
No. 131 established standards for the way that public enterprises report
information about operating segments. Due to the significant restructuring of
the Company during the years ended September 30, 1999 and September 30, 1998, it
is impracticable and would not be meaningful to financial statement users to
provide such information at this time.


                                      F20