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

(Mark One)

(X)  QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR 15 (d)  OF  THE  SECURITIES
      EXCHANGE ACT OF 1934 For the quarterly period ended January 31, 2004

                                       OR

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

                          Commission file number 0-8006


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

      NORTH CAROLINA                                             86-0220617
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

          69 McADENVILLE ROAD
        BELMONT, NORTH CAROLINA                                  28012-2434
(Address of principal executive offices)                         (Zip Code)
                                 (704) 825-8146
              (Registrant's telephone number, including area code)

                                      NONE
              (Former name, former address and former fiscal year,
                          if changed since last report)

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

Indicate by check mark whether the Registrant is an accelerated filer.
    Yes        No  X
       -----     -----

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

Number of shares of Common Stock, no par value, outstanding
at March 15, 2004.....................................................38,167,077
<PAGE>


                     COX TECHNOLOGIES, INC. AND SUBSIDIARIES
                                      INDEX

FACE SHEET ................................................................    1
TABLE OF CONTENTS .........................................................    2
PART I.  FINANCIAL INFORMATION
Item 1.     Financial Statements
       Consolidated Balance Sheets (Unaudited)
           January 31, 2004 and April 30, 2003 ............................    3
       Consolidated Statements of Income (Unaudited)
           Three Months and Nine Months Ended January 31, 2004 and 2003 ...  4-5
       Consolidated Statements of Changes in Stockholders' Deficit
           (Unaudited) Nine Months Ended January 31, 2004 and 2003 ........    6
       Consolidated Statements of Cash Flows (Unaudited)
            Three Months and Nine Months Ended January 31, 2004 and 2003 ..  7-8
       Notes to Consolidated Financial Statements                           9-13
Item 2.     Management's Discussion and Analysis
                 of Financial Condition and Results of Operations .........13-16
Item 3.     Quantitative and Qualitative Disclosure About Market Risks ....   16
Item 4.     Controls and Procedures .......................................   16

PART II.   OTHER INFORMATION AND SIGNATURES
Item 2.      Changes in Securities and Use of Proceeds ....................   17
Item 6.     Exhibits and Reports on Form 8-K ..............................   17
             1.    Exhibits
                  31.1 - Certification by Co-Chief Executive Officer ......   19
                  31.2 - Certification by Co-Chief Executive Officer ......   20
                  31.3 - Certification by Chief Financial Officer .........   21
                  32.1 - Certification by Co-Chief Executive Officers .....   22
                  32.2 - Certification by Chief Financial Officer .........   23

             2.    Reports on Form 8-K ....................................   17
Signatures ................................................................   18

                                        2


<PAGE>


                          PART I. FINANCIAL INFORMATION

Item 1.     Financial Statements

COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                     January 31, 2004   April 30, 2003
                                                     ----------------   --------------
<S>                                                     <C>             <C>
ASSETS                                                   (Unaudited)
------
CURRENT ASSETS:
      Cash and cash equivalents                         $    740,785    $    572,149
      Accounts receivable, less allowance
       for doubtful accounts                               1,270,668         964,078
      Inventory, net                                       1,673,871       1,182,270
      Note receivable                                        175,000          75,000
      Prepaid expenses                                        59,310          17,733
                                                        ------------    ------------
          TOTAL CURRENT ASSETS                             3,919,634       2,811,230
Property and equipment, net                                  196,938         505,688
Due from officer, net                                           --             8,928
Other assets                                                  77,983          71,510
Patents                                                         --           114,845
                                                        ------------    ------------
          TOTAL ASSETS                                  $  4,194,555    $  3,512,201
                                                        ============    ============

LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES:
       Accounts payable and accrued expenses            $    549,561    $    291,948
       Current portion of long-term debt                     304,575         530,778
                                                        ------------    ------------
           TOTAL CURRENT LIABILITIES                         854,136         822,726
OTHER LIABILITIES:
       Long-term debt                                        378,566         862,393
       Long-term debt - related parties                    3,624,338       3,327,500
                                                        ------------    ------------
            TOTAL OTHER LIABILITIES                        4,002,904       4,189,893
                                                        ------------    ------------
          TOTAL LIABILITIES                                4,857,040       5,012,619
                                                        ------------    ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT:
      Common stock, no par value; authorized
       100,000,000 shares; issued and outstanding;
       38,331,825 shares at January 31, 2004 and
       38,339,094 at April 30, 2003                       23,253,876      23,252,804
      Accumulated other comprehensive income (loss)          (48,316)        (32,591)
      Accumulated deficit                                (23,855,145)    (24,696,452)
      Less - Notes receivable for common stock               (12,900)        (24,179)
                                                        ------------    ------------
          TOTAL STOCKHOLDERS' DEFICIT                       (662,485)     (1,500,418)
                                                        ------------    ------------
          TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT   $  4,194,555    $  3,512,201
                                                        ============    ============
</TABLE>

                 See Notes to Consolidated Financial Statements.

                                       3
<PAGE>


COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
                                                        Three Months Ended January 31,
                                                        ------------------------------
                                                             2004            2003
                                                             ----            ----
<S>                                                     <C>             <C>
REVENUE:
   Sales                                                $  2,481,510    $  2,212,195
                                                        ------------    ------------
COSTS AND EXPENSES:
   Cost of sales                                           1,274,501       1,121,060
   General and administrative                                443,493         424,605
   Selling                                                   235,679         227,956
   Depreciation                                               24,867          24,517
                                                        ------------    ------------
     TOTAL COSTS AND EXPENSES                              1,978,540       1,798,138
                                                        ------------    ------------
INCOME FROM OPERATIONS                                       502,970         414,057
                                                        ------------    ------------
OTHER (INCOME) EXPENSE:
   Other income                                              (22,298)        (50,697)
   Interest expense                                           91,281         114,394
                                                        ------------    ------------
     TOTAL OTHER EXPENSE                                      68,983          63,697
                                                        ------------    ------------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES        433,987         350,360
PROVISION FOR INCOME TAXES                                       --              --
                                                        ------------    ------------
INCOME FROM CONTINUING OPERATIONS                            433,987         350,360
OPERATING LOSS FROM DISCONTINUED OPERATIONS                   39,989         191,775
LOSS ON SALE OF ASSETS OF DISCONTINUED OPERATIONS            248,690            --
PROVISION FOR INCOME TAXES ON DISCONTINUED OPERATIONS           --              --
                                                        ------------    ------------
LOSS FROM DISCONTINUED OPERATIONS                            288,679         191,775
                                                        ------------    ------------
NET INCOME                                              $    145,308    $    158,585
                                                        ============    ============
EARNING (LOSS) PER SHARE, BASIC AND DILUTED:
    Continuing Operations                                    $   .01          $  .01
    Discontinued Operations                                 ($   .01)        ($  .01)
    Net Income                                               $   .00          $  .00
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING      38,331,825      25,839,094
</TABLE>

                 See Notes to Consolidated Financial Statements.

                                       4
<PAGE>


COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
                                                         Nine Months Ended January 31,
                                                         -----------------------------
                                                              2004            2003
                                                             -----            ----
<S>                                                     <C>             <C>
REVENUE:
   Sales                                                $  7,446,371    $  6,387,739
                                                        ------------    ------------
COSTS AND EXPENSES:
   Cost of sales                                           3,609,674       3,478,813
   General and administrative                              1,334,283       1,348,486
   Selling                                                   689,592         682,973
   Depreciation                                               73,694          72,806
                                                        ------------    ------------
     TOTAL COSTS AND EXPENSES                              5,707,243       5,583,078
                                                        ------------    ------------

INCOME FROM OPERATIONS                                     1,739,128         804,661
                                                        ------------    ------------

OTHER (INCOME) EXPENSE:
   Other income                                              (48,289)       (145,564)
   Interest expense                                          332,717         357,467
                                                        ------------    ------------

     TOTAL OTHER EXPENSE                                     284,428         211,903
                                                        ------------    ------------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES      1,454,700         592,758
PROVISION FOR INCOME TAXES                                      --              --
                                                        ------------    ------------
INCOME FROM CONTINUING OPERATIONS                          1,454,700         592,758
OPERATING LOSS FROM DISCONTINUED OPERATIONS                  364,703         562,335
LOSS ON SALE OF ASSETS OF DISCONTINUED OPERATIONS            248,690            --
PROVISION FOR INCOME TAXES ON DISCONTINUED OPERATIONS           --              --
                                                        ------------    ------------
LOSS ON DISCONTINUED OPERATIONS                              613,393         562,335
                                                        ------------    ------------
NET INCOME                                              $    841,307    $     30,423
                                                        ============    ============
EARNING (LOSS) PER SHARE, BASIC AND DILUTED:
    Continuing Operations                                     $  .04          $  .02
    Discontinued Operations                                  ($  .02)        ($  .02)
    Net Income                                                $  .02          $  .00

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING      38,335,863      25,818,822
</TABLE>

                 See Notes to Consolidated Financial Statements.

                                       5
<PAGE>


COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (UNAUDITED)
<TABLE>
<CAPTION>

                                                  Accumulated                      Subscribed
                                                     Other                           Stock
                                     Common      Comprehensive    Accumulated      Less Note
                                      Stock      Income (Loss)      Deficit        Receivable        Total
                                  ------------   -------------   -------------   -------------   -------------
<S>                               <C>            <C>             <C>             <C>             <C>
Balance, April 30, 2002           $ 22,593,724   ($    68,168)   ($24,806,900)   ($    24,179)   ($ 2,305,523)
Comprehensive income (loss) -
     Net income (loss)                    --             --            30,423            --            30,423
     Foreign currency
       translation adjustment             --           52,347            --              --            52,347
                                                                                                       ------
Total comprehensive income                --             --              --              --            82,770
Common stock issued                     13,404           --              --              --            13,404
Change in subscribed stock, net           --             --              --              (883)           (883)
                                  ------------   ------------    ------------    ------------    ------------
Balance, January 31, 2003         $ 22,607,128   ($    15,821)   ($24,776,477)   ($    25,062)   ($ 2,210,232)
                                  ============   ============    ============    ============    ============

Balance, April 30, 2003           $ 23,252,804   ($    32,591)   ($24,696,452)   ($    24,179)   ($ 1,500,418)
Comprehensive income -
      Net income (loss)                   --             --           841,307            --           841,307
      Foreign currency
        translation adjustment            --          (15,725)           --              --           (15,725)
                                                                                                      -------
Total comprehensive  income               --             --              --              --           825,582
Common stock issued                      1,072           --              --              --             1,072
Change in subscribed stock, net           --             --              --            11,279          11,279
                                  ------------   ------------    ------------    ------------    ------------
Balance, January 31, 2004         $ 23,253,876   ($    48,316)   ($23,855,145)   ($    12,900)   ($   662,485)
                                  ============   ============    ============    ============    ============
</TABLE>

                 See Notes to Consolidated Financial Statements.

                                       6
<PAGE>


COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>

                                                                  Three Months Ended January 31,
                                                                  ------------------------------
                                                                        2004         2003
                                                                        ----         ----
<S>                                                                 <C>          <C>
CASH FLOW FROM OPERATING ACTIVITIES:
       Net income                                                   $ 145,308    $ 158,585
       Adjustments to reconcile net income
           to net cash provided by operating activities:
           Depreciation and amortization                               39,121       76,898
           Amortization of patents                                      9,570       10,994
           Increase (decrease) in allowance for doubtful accounts       5,135       (2,195)
           Other                                                       (6,857)      (7,212)
           Loss on sales of assets of discontinued operations         248,690         --
           Decrease in valuation adjustment                              --          1,785
                                                                    ---------    ---------
                                                                      440,967      238,855
       Changes in assets and liabilities:
          (Increase) decrease in current assets:
               Accounts receivable                                   (133,147)    (171,116)
               Inventory                                             (156,658)     126,770
               Prepaid expenses                                         1,777      (15,347)
          Increase (decrease) in current liabilities:
               Accounts payable and accrued expenses                   37,110       54,378
                                                                    ---------    ---------
CASH PROVIDED BY CONTINUING OPERATING ACTIVITIES                      190,049      233,540
                                                                    ---------    ---------

CASH FLOW FROM INVESTING ACTIVITIES:
        Purchase of property and equipment                            (30,000)     (25,568)
        Collection of note receivable from property held for sale        --        100,000
                                                                    ---------    ---------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                       (30,000)      74,432
                                                                    ---------    ---------
CASH FLOW FROM FINANCING ACTIVITIES:
       Increase (decrease) in debt                                    (45,818)    (155,151)
       Decrease in subscription receivable                             12,901         (434)
                                                                    ---------    ---------
CASH USED IN FINANCING ACTIVITIES                                     (32,917)    (155,585)
                                                                    ---------    ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH                                (6,535)      33,870
                                                                    ---------    ---------
NET INCREASE IN CASH                                                  120,597      186,257
CASH AND CASH EQUIVALENTS, beginning of period                        620,188      162,475
                                                                    ---------    ---------
CASH AND CASH EQUIVALENTS, end of period                            $ 740,785    $ 348,732
                                                                    =========    =========
Supplemental Cash Flow Information

   Interest paid                                                    $   9,174    $  38,656
   Income taxes paid                                                $    --      $    --
   Note received from sale of Vitsab operations                     $ 175,000    $    --
</TABLE>

           See Notes to Consolidated Financial Statements.

                                        7
<PAGE>


COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>

                                                                     Nine Months Ended January 31,
                                                                     -----------------------------
                                                                         2004           2003
                                                                         ----           ----
<S>                                                                 <C>            <C>
CASH FLOW FROM OPERATING ACTIVITIES:
       Net income                                                   $   841,307    $    30,423
       Adjustments to reconcile net income
           to net cash used by operating activities:
           Depreciation                                                 181,849        232,763
           Amortization of patents                                       28,711         32,982
           Increase (decrease) in allowance for doubtful accounts         6,170         (7,513)
           Other                                                         (9,853)       (29,071)
           Loss on sale of assets                                       248,690
           Decrease in valuation adjustment                               8,928         32,139
                                                                    -----------    -----------
                                                                      1,305,802        291,723
       Changes in assets and liabilities:
          (Increase) decrease in current assets:
               Accounts receivable                                     (312,760)        81,524
               Inventory                                               (655,201)       113,481
               Prepaid expenses                                         (41,577)         8,309
          Increase (decrease) in current liabilities:
               Accounts payable and accrued expenses                    257,613         27,008
                                                                    -----------    -----------
CASH PROVIDED BY OPERATING ACTIVITIES                                   553,877        522,045
                                                                    -----------    -----------
CASH FLOW FROM INVESTING ACTIVITIES:
        Purchase of property and equipment                              (43,675)       (87,232)
        Proceeds from sale of property held for sale                       --           54,504
        Collection of note receivable from property held for sale        75,000        100,000
                                                                    -----------    -----------
CASH PROVIDED BY INVESTING ACTIVITIES                                    31,325         67,272
                                                                    -----------    -----------
CASH FLOW FROM FINANCING ACTIVITIES:
       Issuance of common stock, net                                      1,072         13,404
       Repayment of debt                                               (413,192)      (521,495)
       Decrease in subscription receivable                               11,279           (883)
                                                                    -----------    -----------
CASH USED IN FINANCING ACTIVITIES                                      (400,841)      (508,974)
                                                                    -----------    -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH                                 (15,725)        52,347
                                                                    -----------    -----------
NET INCREASE (DECREASE) IN CASH                                         168,636        132,690
CASH AND CASH EQUIVALENTS, beginning of period                          572,149        216,042
                                                                    -----------    -----------
CASH AND CASH EQUIVALENTS, end of period                            $   740,785    $   348,732
                                                                    ===========    ===========
   Supplemental Cash Flow Information
   Interest paid                                                    $    36,959    $   130,361
   Income taxes paid                                                $      --      $      --
   Note received resulting from sale of property held for sale      $      --      $   175,000
   Note received from sale of Vitsab operations                     $   175,000    $      --
</TABLE>

           See Notes to Consolidated Financial Statements.

                                        8
<PAGE>


COX TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.   SIGNIFICANT ACCOUNTING POLICIES

     Nature of Operations

     Cox  Technologies,  Inc.,  and Cox  Recorders  Australia,  Ltd.,  Pty.,  an
Australian   distribution   company   95%  owned  by  Cox   Technologies,   Inc.
(collectively   "the  Company"),   engage  in  the  business  of  producing  and
distributing  temperature recording  instruments,  both in the United States and
internationally.

     The  accompanying  unaudited  consolidated  financial  statements and notes
should be read in conjunction with the audited consolidated financial statements
and notes  included in the Cox  Technologies,  Inc.  2003 Annual  Report on Form
10-K. In the opinion of management, all adjustments (consisting solely of normal
recurring  adjustments)  necessary  for a  fair  statement  of  the  results  of
operations  for  the  interim  periods  have  been  recorded.   Certain  amounts
previously  reported have been reclassified to conform with the current period's
presentation.

     The accompanying unaudited condensed consolidated financial statements have
been  prepared  on a going  concern  basis,  which  contemplates  continuity  of
operations,   realization  of  assets,   and   liquidation  of  liabilities  and
commitments in the normal course of business.

     On December 12, 2003, the Company entered into an Asset Purchase  Agreement
with  Sensitech  Inc. and its wholly owned  subsidiary  Cox  Acquisition  Corp.,
pursuant  to which  Sensitech  will  acquire  substantially  all the  assets and
business of the Company and,  shortly  thereafter,  the Company will wind up its
operating  business,  effect  a  complete  liquidation  and  dissolution  of the
Company,  and distribute any remaining cash to its shareholders  (see details in
Note 6 of the Notes to Consolidated Financial Statements (Unaudited)).  Both the
sale of assets and the liquidation and dissolution of the Company are subject to
approval by the Company's  shareholders  and other  conditions.  There can be no
assurance  that  these  conditions  will  be met  and the  sale  of  assets  and
dissolution  consummated.  The  accompanying  unaudited  condensed  consolidated
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.  On January 29, 2004, the Asset Purchase  Agreement
was amended for the sole  purpose of  extending  the date on which  either party
could terminate the agreement if the transaction had not yet been consummated.

     On January 29,  2004,  the Company  sold its assets  relating to the Vitsab
product line (other than cash and accounts receivable) to Rask Holding ApS for a
purchase price of $175,000 plus assumed  liabilities.  In the transaction,  Rask
Holding acquired all of the assets  associated with the Vitsab division,  except
cash and accounts receivable, and assumed all liabilities relating to the Vitsab
division,  except  liabilities  associated  with a raw material  purchase from a
specific  vendor and for taxes  resulting from operations of the Vitsab division
prior to January 29, 2004. The  liabilities  related to the Vitsab division were
$74,100 in future  payments to be made to Mr. Peter  Ronnow under an  employment
agreement between him and the Company,  and $7,000 in trade accounts payable. In
payment of the purchase price,  Rask Holding  delivered a promissory note in the
amount of $175,000 which was paid in full on February 18, 2004. Also, as part of
this agreement,  the Company agreed to purchase  164,748 of the Company's common
shares  held by Peter  Ronnow for $.19 per share.  This  purchase  resulted in a
payment to Mr. Ronnow of approximately $31,000 and was completed on February 10,
2004.

     Stock-based Compensation

     The Company  has  elected to follow  Accounting  Principles  Board  Opinion
("APB") No. 25,  "Accounting  for Stock Issued to  Employees"  (APB No. 25), and
related  interpretations  in  accounting  for its employee  stock  options.  The
Company has adopted the disclosure-only  provisions of SFAS No. 123, "Accounting
for  Stock-Based  Compensation."  This statement  defines a fair value method of
accounting for stock options or similar equity instruments. SFAS No. 123 permits
companies to continue to account for stock-based  compensation  awards under APB
No. 25, but requires disclosure in a note to the financial statements of the pro
forma net income and  earnings  per share as if the  Company had adopted the new
method of  accounting.  SFAS No. 123 has been  amended by  Financial  Accounting
Standards  Board  pronouncement  number  148 ("FASB No.  148),  "Accounting  for
Stock-based  Compensation  - Transition and  Disclosure".  FASB No. 148 requires
prominent  disclosure in the annual and  quarterly  statements of the Company on
stock-based compensation.

     The Company has two stock option plans, the Stock Option  Agreements By and
Between Cox Technologies, Inc. and Certain Executives ("Executive Plan") and the
2000 Stock Incentive Plan ("2000 Plan").  In accordance with the Executive Plan,
options to purchase an  aggregate  of up to  6,652,500  shares of the  Company's
Common  Stock  were  granted  to  certain  executives  of the  Company.  Options
generally were granted at the fair market value of the Company's Common Stock

                                        9
<PAGE>
determined on the date of the grant. Certain options were granted at an exercise
price below fair market value and $600,000 of  compensation  expense was charged
to operations in fiscal 2000. Options from the Executive Plan are exercisable on
various  dates and  expire on various  dates.  At January  31,  2004,  6,600,000
options under the Executive Plan are  outstanding.  In accordance  with the 2000
Plan, up to 8,000,000 shares of the Company's Common Stock can be issued through
the use of stock-based  incentives to employees,  consultants  and  non-employee
members of the Board of Directors. The exercise price of options granted through
the 2000 Plan cannot be less than 85% of the fair market value of the  Company's
Common Stock on the date of the grant. All outstanding options have been granted
at the fair market value;  therefore, no compensation expense has been recorded.
Options from the 2000 Plan are exercisable on various dates from the date of the
grant and expire on various  dates.  Exceptions  to the  exercise  date for both
plans are allowed upon the retirement,  disability or death of a participant. An
exception is also allowed upon a change in control as defined in both plans.

     The Company  applies APB No. 25 in accounting for both Plans.  Accordingly,
compensation  cost is determined  using the intrinsic value method under APB No.
25. For the periods  ended October 31, 2003 and 2002,  there was no  stock-based
compensation  expense  recorded.  Had  compensation  cost  for both  Plans  been
determined  consistent  with the fair  value  method  for  compensation  expense
encouraged  under SFAS No. 123, the  Company's net income and earnings per share
(EPS)  would  have been the pro forma  amounts  shown  below for the nine  month
fiscal periods ended January 31, 2004 and 2003.
<TABLE>
<CAPTION>
                                                               January 31, 2004      January 31,2003
                                                               ----------------      ---------------
<S>                                                                <C>                  <C>
Net income, as reported                                            $  791,307           $   30,423
Proforma stock-based compensation - net of tax                       (372,546)            (395,448)
                                                                   -----------          -----------
Net income (loss), proforma                                        $  481,761           $( 365,025)
                                                                   ==========           ===========
Basic and diluted EPS, as reported                                       $.02                $(.00)
Basic and diluted EPS, proforma                                          $.01                $(.01)
</TABLE>

     Restricted  stock  was  issued  out of the  2000  Plan to  consultants  and
employees in lieu of cash payments totaling zero and 30,000 shares, respectively
for the nine months ended January 31, 2004 and 2003. At January 31, 2004,  there
were 2,869,472 shares reserved for issuance under the 2000 Plan.

     Accounts Receivable

     The balance in the allowance  for doubtful  accounts is $51,803 and $45,750
at January 31, 2004 and April 30, 2003, respectively.

     Recent Accounting Pronouncements

     SFAS No. 143 addresses  financial  accounting and reporting for obligations
associated with the retirement of tangible  long-lived assets and the associated
asset  retirement  costs.  The  provisions  of SFAS No. 143 are  required  to be
applied  starting with fiscal years  beginning  after June 15, 2002. The Company
has  adopted  the  provisions  of SFAS No. 143  effective  May 1, 2003,  and the
adoption of the provisions of SFAS No. 143 did not have a significant  effect on
its financial position or results of operations.

     SFAS No. 150 addresses the  accounting  for certain  financial  instruments
with  characteristics  of both  liabilities  and equity,  and is  effective  for
interim  periods  beginning  after June 15,  2003.  The  Company has adopted the
provisions  of SFAS No. 150  effective  August 1, 2003,  and the adoption of the
provisions  of SFAS No. 150 did not have a  significant  effect on its financial
position or results of operations.

     FASB  Interpretation  No. 45  elaborates  on the  disclosures  to made by a
guarantor in its interim and annual  financial  statements about its obligations
under  certain   guarantees   that  is  has  issued.   The  provisions  of  this
interpretation  are required  prospectively  for  guarantees  issued or modified
after  December  31,  2002.  The  Company has  adopted  the  provisions  of FASB
Interpretation  No. 45  effective  January  31,  2004,  and the  adoption of the
provisions of FASB  Interpretation  No. 45 did not have a significant  effect on
its financial position or result of operations.

     FASB Interpretation No. 46 addresses  consolidation by business enterprises
of variable interest  entities.  The Company does not have any variable interest
entities as defined by FASB Interpretation No. 46 and therefore, the adoption of
the provisions of FASB  Interpretation  No. 46 did not have a material impact on
the financial position or results of operations.

                                       10
<PAGE>

2.   INVENTORY

     Inventory at January 31, 2004 and April 30, 2003 consists of the following:

                                   January 31, 2004        April 30, 2003
                               ------------------------ --------------------
Raw materials                         $   416,101              $   328,744
Work-in-process                           461,165                  103,059
Finished goods                            846,605                  800,467
                                     ------------             ------------
                                        1,723,871                1,232,270
Less reserve                               50,000                   50,000
                                    -------------             ------------
      Total                            $1,673,871               $1,182,270
                                    =============             ============

3.   DEBT

     On May 19,  2003,  the Company  executed a note  modification  agreement to
modify the note dated March 19, 2003. The effective date of the modification was
established when the Company made a principal  payment on the note for $355,000.
The payment was made to Centura on May 21, 2003. The results of the modification
is to reduce the monthly  principal  payment to $21,000  plus  accrued  interest
beginning on June 15, 2003 and continuing  until July 15, 2006 on which date the
balance of the note will mature.  Also,  beginning on the effective  date of the
modification, the interest rate on the outstanding principal shall be calculated
at the bank's  30-day  LIBOR base rate plus 2.5% per  annum.  As of October  31,
2003,  Centura has waived the  requirement of the Company to produce a borrowing
base  calculation  on  a  monthly  basis.  The  Company's   qualifying  accounts
receivable and inventory are adequate to support the outstanding loan at January
31, 2004.

4.   RELATED PARTY TRANSACTIONS

     On January 20, 2003, the Company  entered into a Stock  Purchase  Agreement
(the "TI Stock Purchase  Agreement") with Technology  Investors,  LLC ("TI"), an
affiliate of Brian Fletcher and Kurt Reid, who are officers and directors of the
Company,  pursuant to which TI agreed to purchase and the Company agreed to sell
12,500,000  shares of the Company's  Common Stock at a price of $0.06 per share,
for a total purchase price of $750,000.  This  transaction  was submitted to the
Company's   shareholders  for  their  approval  at  a  special  meeting  of  the
shareholders on March 12, 2003. With a quorum of shareholders  present, a motion
was made and seconded to approve the TI Stock Purchase Agreement, and the motion
was passed by a  unanimous  vote of those  present in person or  represented  by
proxy.  The transaction was consummated on March 19, 2003. TI, together with Mr.
Fletcher and Mr. Reid and their  affiliates,  now  collectively  own and control
beneficially an aggregate of 15,832,437 shares of the Company's Common Stock, or
approximately  38% of the Company's issued and outstanding  common stock.  These
figures include the 2,899,471  shares of the Company's  Common Stock that TI may
obtain by converting its existing  promissory note, but exclude the options that
Mr. Fletcher and Mr. Reid own to purchase, in the aggregate, 3,000,000 shares of
the Company's Common Stock,  which options are exercisable in varying increments
through September 9, 2009.

     In March 2000,  the Company  entered into an agreement  with TI whereby the
Company  issued  to TI a 10%  subordinated  convertible  promissory  note in the
amount of $2,500,000 (the "TI Note"), the entire principal and interest of which
are due on March 10, 2005.  Alternatively,  the principal  amount of the TI Note
and interest  accrued  thereon may be converted,  at the option of holder,  into
shares of the Company's  Common Stock at a conversion  price of $1.25 per share.
As of January 31, 2004, the principal and accrued  interest of $3,624,338  could
be converted into  2,899,471shares  of the Company's  Common Stock. Mr. Fletcher
and Mr. Reid serve as the sole managers of TI and share voting and  dispositions
power with respect to the Common Stock issuable upon  conversion of the TI Note.
See Note 5 below for further discussion of this transaction and the consequences
to  the  Company  if it  fails  to  meet  its  principal  and  accrued  interest
obligations under the TI Note when they become due on March 10, 2005.

     In addition, Mr. Fletcher and Mr. Reid were named directors of the Company.
The  Company  has  agreed  to  nominate  Mr.  Fletcher  and Mr.  Reid for  three
consecutive terms on the Board of Directors. Mr. Fletcher and Mr. Reid were also
both retained as consultants to the Company.  In connection  with their services
they each would  receive  compensation  of $1 annually  and a one-time  grant of
immediately  exercisable  options to purchase  300,000  shares of the  Company's
Common  Stock at an exercise  price of $1.25 per share for a period of up to ten
years.

                                       11
<PAGE>


     In fiscal 2001,  Mr.  Fletcher and Mr. Reid each received  stock options to
purchase  2,000,000 shares of the Company's Common Stock at an exercise price of
$.59 per share for a period of up to ten years.

     In fiscal 2002,  Mr.  Fletcher and Mr. Reid each received  stock options to
purchase  800,000  shares of the Company's  Common Stock at an exercise price of
$.11 per share for a period of up to seven years.  Also,  the Board of Directors
approved an increase in compensation  for Mr. Fletcher and Mr. Reid  retroactive
to January 1, 2001,  whereby  they each would  receive  annual  compensation  of
$100,000, payable quarterly in unrestricted shares of the Company's Common Stock
valued at the average  daily  closing  price during the quarter.  During  fiscal
2002,  Mr.  Fletcher  and Mr. Reid were paid  $75,000 of salary in  unrestricted
shares of the  Company's  Common  Stock at an average  market  price of $.35 per
share  under this  structure.  On December 7, 2001,  Mr.  Fletcher  and Mr. Reid
agreed to a decrease in their annual  compensation  to $1  effective  October 1,
2001. On March 15, 2002,  the  Compensation  Committee of the Board of Directors
approved a compensation structure, effective March 1, 2002, whereby Mr. Fletcher
and Mr.  Reid would be  compensated  based on the actual  monthly  cash flow and
quarterly net income generated by the Company.  The maximum annual  compensation
would be capped at $210,000 each.  During fiscal 2002, Mr. Fletcher and Mr. Reid
were compensated $7,500 each under this structure.

     During fiscal 2003, Mr.  Fletcher and Mr. Reid were each granted options to
purchase  200,000  shares of the Company's  Common Stock at an exercise price of
$.11 per share for a period of up to seven  years.  Effective  November 1, 2002,
the Board of Directors ratified the recommendation of the Compensation Committee
to change the compensation  structure for both Mr. Fletcher and Mr. Reid and set
the annual salary rate at $100,000 per year.

     On April 1, 2003, the Board of Directors modified the compensation plan for
Mr.  Fletcher and Mr. Reid  increasing  their annual salary rate to $120,000 per
year,  effective  April 15,  2003,  and  establishing  a  quarterly  bonus  plan
beginning  with the first quarter of fiscal 2004 based on the  profitability  of
the Company.  The quarterly  bonus is limited to 50% of the Company's net income
for the quarter and Mr. Fletcher and Mr. Reid can earn a non-cumulative bonus up
to $10,000 per quarter.  During fiscal 2003, Mr. Fletcher and Mr. Reid were each
compensated  approximately $99,000 as a payout from the fiscal 2002 compensation
arrangement  and  approximately   $50,000  from  the  fiscal  2003  compensation
arrangement.  At  January  31,  2004,  the  Company  has paid or  accrued  bonus
compensation to Mr. Fletcher and Mr. Reid totaling $30,000 each.

5.    LIQUIDITY AND CAPITAL RESOURCES

     The Company's cash flow from operations is currently not adequate to retire
the TI Note,  and it is  unlikely  that  cash flow  will  increase  in an amount
sufficient  for the Company to meet its  obligations  under the TI Note when the
principal  and accrued  interest  become due on March 10, 2005. TI has indicated
that, in the event the Company becomes unable to meet its obligations  under the
TI Note,  TI may be  willing  to  explore  alternative  financing  arrangements,
including a restructuring  of the TI Note prior to its due date.  Alternatively,
the  Company  may seek a cash  infusion  elsewhere,  through a separate  debt or
equity offering, a strategic  partnership or some form of business  combination.
The  Company  may  consider  any or all of these  alternatives  in the  event it
becomes unable to meet its debt  obligation to TI, but there can be no assurance
that any deal will be consummated on terms acceptable to both the Company and TI
or another third party.  Without such an  arrangement,  it is highly likely that
the Company would default on its obligations under the TI Note, at which time TI
would be entitled to exercise any and all remedies  available to it under the TI
Note and  applicable  law,  including  bringing suit against the Company and its
assets.  Should TI seek to enforce its right to timely repayment of the TI Note,
there  is a risk  that  the  Company  will  not be able to  continue  as a going
concern.  Please  refer  to  Note  6 of  the  Notes  to  Consolidated  Financial
Statements   (Unaudited)   concerning  the  proposed  asset  sale  and  plan  of
liquidation and dissolution of the Company.

6.    PROPOSED ASSET SALE AND PLAN OF LIQUIDATION AND DISSOLUTION OF THE COMPANY

     On December 12, 2003, the Company entered into an Asset Purchase  Agreement
with  Sensitech  Inc. and its wholly owned  subsidiary  Cox  Acquisition  Corp.,
pursuant  to which  Sensitech  will  acquire  substantially  all the  assets and
business of the Company.  On January 29, 2004, the Asset Purchase  Agreement was
amended for the sole purpose of  extending  the date on which either party could
terminate the agreement if the transaction had not yet been consummated. Subject
to the terms and conditions of the Asset Purchase Agreement,  Sensitech will pay
approximately  $10,532,000 to the Company in exchange for  substantially  all of
the assets of the Company exclusive of the Vitsab product line, cash and certain
furniture and equipment.  Of the purchase price,  $10,240,000 is payable in cash
with the remainder being paid through the assumption of an estimated $292,000 in
accounts  payable.  The purchase  price may be adjusted  based on changes in the
amount of receivables, inventory, payables, product claims, customer commitments
and claims for indemnification.

                                       12

<PAGE>
     In  connection  with the  negotiation  of the asset  sale,  the Company has
agreed to continue  manufacturing  products  for  Sensitech  during a transition
period to end no later  than June 1,  2004,  unless  extended.  In order to keep
qualified  employees during the transition  period,  the Company has offered its
employees  bonuses  payments  for  remaining  until  their  jobs or  duties  are
completed and their  positions are terminated.  The current  estimated range for
these  costs is $96,000 - $120,000  and none of these cost have been  accrued at
January 31, 2004.  After the closing of the asset sale and following  expiration
of those  manufacturing  obligations,  the Company's intention is to wind up its
operating  business,  effect  a  complete  liquidation  and  dissolution  of the
Company, and distribute any remaining cash to its shareholders.

     Both the sale of assets and the  liquidation and dissolution of the Company
are subject to approval by the  Company's  shareholders.  The Board of Directors
has called for a special  meeting of  shareholders  to consider  the approval of
this sale of asset and also to consider  approval of a plan  whereby the Company
will convert its remaining  assets to cash,  pay all of its debts and distribute
the  remaining  net  proceeds to the  shareholders.  Subject to the  approval of
shareholders,  it is anticipated that the sale will be consummated in the second
calendar  quarter of 2004 and that a final  distribution of cash to shareholders
will occur in the third or fourth calendar quarter of 2004.

ITEM 2.  Management's Discussion And Analysis of Financial Condition
         And Results of Operations

     Recent Major Development - Proposed Sale of Assets and Plan of Liquidation

     On December 12, 2003, the Company entered into an Asset Purchase  Agreement
with  Sensitech  Inc. and its wholly owned  subsidiary  Cox  Acquisition  Corp.,
pursuant  to which  Sensitech  will  acquire  substantially  all the  assets and
business  of the  Company.  Subject  to the  terms and  conditions  of the Asset
Purchase Agreement,  Sensitech will pay approximately $10,532,000 to the Company
in exchange for  substantially all of the assets of the Company exclusive of the
Vitsab product line, cash and certain  furniture and equipment.  Of the purchase
price,  $10,240,000 is payable in cash with the remainder being paid through the
assumption of an estimated $292,000 in accounts payable.  The purchase price may
be adjusted based on changes in the amount of receivables,  inventory, payables,
product claims, customer commitments and claims for indemnification.

     In  connection  with the  negotiation  of the asset  sale,  the Company has
agreed to continue  manufacturing  products  for  Sensitech  during a transition
period to end no later  than June 1,  2004,  unless  extended.  In order to keep
qualified  employees during the transition  period,  the Company has offered its
employees  bonuses  payments  for  remaining  until  their  jobs or  duties  are
completed and their  positions are terminated.  The current  estimated range for
these  costs is $96,000 - $120,000  and none of these cost have been  accrued at
January 31, 2004.  After the closing of the asset sale and following  expiration
of those  manufacturing  obligations,  the Company's intention is to wind up its
operating  business,  effect  a  complete  liquidation  and  dissolution  of the
Company, and distribute any remaining cash to its shareholders.

     Both the sale of assets and the  liquidation and dissolution of the Company
are subject to approval by the  Company's  shareholders.  The Board of Directors
has called for a special  meeting of  shareholders  to consider  the approval of
this sale of asset and also to consider  approval of a plan  whereby the Company
will convert its remaining  assets to cash,  pay all of its debts and distribute
the  remaining  net  proceeds to the  shareholders.  Subject to the  approval of
shareholders,  it is anticipated that the sale will be consummated in the second
calendar  quarter of 2004 and that a final  distribution of cash to shareholders
will occur in the third or fourth calendar quarter of 2004.

     On March 10, 2004 the Company filed a definitive  proxy  statement with the
Securities and Exchange Commission relating to a special meeting of shareholders
of Cox  Technologies at which the  shareholders  will vote on proposals  seeking
approval of the asset sale and  dissolution  of Cox  Technologies.  On March 15,
2004 the Company mailed a notice of the special  meeting to be held on April 15,
2004 along with a definitive  proxy statement and proxy ballot to all holders of
record as of March 8, 2004.

     Recent Major Development - Sale of Vitsab Business Line

     On January 29,  2004,  the Company  sold its assets  relating to the Vitsab
product line (other than cash and accounts receivable) to Rask Holding ApS for a
purchase price of $175,000 plus assumed  liabilities.  In the transaction,  Rask
Holding acquired all of the assets  associated with the Vitsab division,  except
cash and accounts receivable, and assumed all liabilities relating to the Vitsab
division,  except  liabilities  associated  with a raw material  purchase from a
specific vendor and for taxes resulting from

                                       13
<PAGE>


operations of the Vitsab  division  prior to January 29, 2004.  The  liabilities
related to the Vitsab division were $74,100 in future payments to be made to Mr.
Peter  Ronnow under an  employment  agreement  between him and the Company,  and
$7,000 in trade accounts payable. In payment of the purchase price, Rask Holding
delivered a promissory note in the amount of $175,000, which was paid in full on
February  18,  2004.  Also,  as part of this  agreement,  the Company  agreed to
purchase  164,748 of the  Company's  common shares held by Peter Ronnow for $.19
per share.  This purchase  resulted in a payment to Mr. Ronnow of  approximately
$31,000 and was completed on February 10, 2004.

     Comparison of Operations for 2004 and 2003

     The Company operates in one reporting  segment that involves the production
and distribution of temperature recording and monitoring devices,  including the
Cox1 graphic temperature  recorder,  DataSource(R) and Tracer(R) electronic data
loggers, and temperature probes and related products.

     Revenues from sales increased $269,315,  or 12% and $1,058,632,  or 17% for
the three and nine months ended January 31, 2004 as compared to the same periods
as  last  year.  The  revenues  from  sales  of  graphic  recorders  represented
$1,554,882  and  $4,621,312  or 63% and 62%, for the three and nine months ended
January 31, 2004 of total revenues as compared to $1,600,623 and $4,702,819,  or
72% and 74%, in the same periods last year. The revenue from sales of electronic
data loggers represented $858,440 and $2,643,286,  or 35% and 36%, for the three
and nine months  periods ended January 31, 2004 of total revenues as compared to
$578,089 and  $1,558,559,  or 26% and 24%, in the same  periods  last year.  The
revenues from sales of temperature probes and other products represented $68,188
and $181,773, or 2% and 2%, for the three and nine months ended January 31, 2004
of total revenues as compared to $33,483 and $126,361, or 1% and 2%, in the same
periods last year. Sales of Cox1 units decreased 2% in the third quarter of 2004
and  increased 3% for the nine months ended  January 31, 2004 as compared to the
same periods last year and the average  sales price  decreased 4% and 5% for the
same periods.  Sales of DataSource(R)  units increased 64% and 85% for the three
and nine months ended January 31, 2004 as compared to the same periods last year
and the average sales price  decreased 7% and 3% for the same periods.  Sales of
Tracer(R)  units  increased  35% and 37% for the  three  and nine  months  ended
January 31, 2004 as compared to the same periods last year and the average sales
price decreased 13% and less than 1% for the same periods.  Management  believes
that the Company will  continue to  experience a decrease in average sales price
for all products due to competitive price pressure,  but expects units sales for
its  primary  products to remain  constant,  or in the case of  electronic  data
loggers,  to increase  in future  periods.  Historically,  the Company has had a
broad base of customers in a highly  competitive  market;  however,  the Company
finds  that it's  growth  in  revenues  is  developing  from a  smaller  base of
customers.

     Cost of sales increased $153,441 and $130,861, or 14% and 3%, respectively,
for the three and nine  months  ended  January  31, 2004 as compared to the same
periods last year.  The increases for both the third quarter and the nine months
of fiscal 2004 were driven by  increases  in revenue  over the same periods last
year.  Cost of sales also  increased  in both  periods  due a greater  volume of
products  returned for retriever fees and rebates and increase  shipping  costs.
For the third quarter of 2004, cost of sales as a percentage of revenues was 51%
and equal to the same  quarter  last year and for the nine  month  period  ended
January 31, 2004 cost of sales as a percentage  of revenues  decreased to 48% as
compared  to  55%  for  the  same  period  last  year.  These  improvements  are
attributable to the Company's efforts to hold down labor and supply costs and to
a reduction in the price that the company pays for raw material components.

     The  Company  contracts  with a third  party to  manufacture  and  assemble
certain  base  versions  of the Cox1 units at an offshore  location.  During the
first nine months of fiscal 2004, this location  supplied  approximately  56% of
the  total  number of units  being  utilized  by the  Company.  Because  of this
manufacturing arrangement,  the Company has realized significant cost savings on
units manufactured in both the offshore and Belmont,  North Carolina facilities.
If the sale to Sensitech is not completed,  the Company will continue assembling
special use Cox1 units in the Belmont  facility.  The Belmont facility will also
continue  to  manufacture  and  assemble a certain  percentage  of the base Cox1
units. If necessary,  the production capabilities of the Belmont facility can be
expanded to meet the total demand for all Cox1 units. The Company has identified
certain risks and  uncertainties  that are associated  with offshore  production
that include, but are not limited to, political issues, transportation risks and
the  availability  of raw  materials.  The Company will not  experience  foreign
currency exchange risks as all transactions are denominated in U.S. dollars.

     General and  administrative  expenses  for the three and nine months  ended
January  31,  2004  increased  $18,888  and  decreased  $14,203  or 4%  and  1%,
respectively,  as compared to the same periods last year.  The increase in third
quarter of fiscal 2004 was due to increases in bad debt expense, temporary labor
costs, general liability and workers compensation insurance costs,  professional
services expense and salary costs partially offset by decreases in miscellaneous
expenses,  outside  services  costs and  payroll  taxes as  compared to the same
period a year ago. The  reduction for the nine month period was due to decreased
outside  accountant  costs,  computer  expenses,   equipment  leasing  expenses,
miscellaneous  expenses,  outside services costs, salary costs, partially offset
by increases in bad debt expense,  temporary labor costs, insurance expenses and
professional expenses.

                                       14
<PAGE>
     Selling expense increased $7,723 and $6,618, or 3% and 1% respectively, for
the three and nine months ended January 31, 2004 as compared to the same periods
last year. The increase in the both periods was  principally due to increases in
sales salaries and telephone expenses and was substantially  offset by decreases
in travel expenses, trade show expenses and outside sales services.

     Depreciation expense increased slightly for the three and nine months ended
January 31, 2004 as compared to the same periods last year.  There has been only
a nominal amount of asset additions in fiscal 2004.

     Other income decreased $28,399 and $97,275,  or 56% and 67%,  respectively,
for the three and nine  months  ended  January  31, 2004 as compared to the same
period last year.  This  change in both  periods  was  primarily  related to the
decrease in the amount of the  payments  received as a result of the revision in
the agreement  between the Company and its Copenhagen  distributor for an option
to  purchase  all  of the  shares  and  assets  of the  company's  wholly  owned
subsidiary, Vitsab Sweden, AB.

     Interest   expense   decreased   $23,113  and  $24,750,   or  20%  and  7%,
respectively,  for the three and nine months ended  January 31, 2004 as compared
to the same  period  last year.  Interest  expense is lower for both  periods of
fiscal 2004 because of the  decreases  in the interest  rate applied to the debt
and decreases in the principal balance.

     The increase in accounts receivable as of January 31, 2004 was $306,590, or
32%, as compared to the balance at April 30, 2003, is primarily due to increased
sales in fiscal 2004 over fiscal 2003.

     The increase in inventory as of January 31, 2004 was  $491,601,  or 42%, as
compared to the balance at April 30, 2003. This increase  reflects the Company's
plan  to be able  to  meet  future  demand  for  our  products,  especially  for
electronic data loggers, on a timely basis.

     The decrease in property and  equipment of $308,750 at January 31, 2004 was
due to the sale of Vitsab assets,  net of depreciation to Rask Holding,  AsP and
to depreciation expense taken year to date.

     The  Company  sold it patents  with a  carrying  value of  $86,134,  net of
amortization, to Rask Holding, AsP as part of the Vitsab transaction.

     Liquidity and Capital Resources

     The Company derives cash from operations,  equity sales, and borrowing from
long- and short-term lending sources to meet its cash requirements.  At present,
the cash flow from operations  appears  adequate to meet cash  requirements  and
commitments of the Company during the 2004 fiscal year.  Please refer to "Recent
Major Development - Proposed Asset Sale and Plan of Liquidation"  concerning the
proposed asset sale and plan of liquidation and  dissolution of the Company.  If
the  proposed  asset sale and  liquidation  and  dissolution  of the Company are
approved and effected as currently planned,  it is anticipated the Company would
have  sufficient  resources  to  satisfy  existing  obligations  and  distribute
approximately $0.16 to $0.20 per share to shareholders upon liquidation.

     In March 2000,  the Company  entered into an agreement  with TI whereby the
Company  issued  to TI a 10%  subordinated  convertible  promissory  note in the
amount of $2,500,000 (the "TI Note"), the entire principal and interest of which
are due on March 10, 2005.  Alternatively,  the principal  amount of the TI Note
and interest  accrued  thereon may be converted,  at the option of holder,  into
shares of the Company's  Common Stock at a conversion  price of $1.25 per share.
As of January 31, 2004, the principal and accrued  interest of $3,624,338  could
be converted into 2,899,471  shares of the Company's  Common Stock. Mr. Fletcher
and Mr. Reid serve as the sole managers of TI and share voting and  dispositions
power with respect to the Common Stock issuable upon conversion of the TI Note.

     The Company's cash flow from operations is currently not adequate to retire
the TI Note,  and it is  unlikely  that  cash flow  will  increase  in an amount
sufficient  for the Company to meet its  obligations  under the TI Note when the
principal  and accrued  interest  become due on March 10, 2005. TI has indicated
that, in the event the Company becomes unable to meet its obligations  under the
TI Note,  TI may be  willing  to  explore  alternative  financing  arrangements,
including a restructuring  of the TI Note prior to its due date.  Alternatively,
the  Company  may seek a cash  infusion  elsewhere,  through a separate  debt or
equity offering, a strategic  partnership or some form of business  combination.
The  Company  may  consider  any or all of these  alternatives  in the  event it
becomes unable to meet its debt  obligation to TI, but there can be no assurance
that any deal will be consummated on terms acceptable to both the Company and TI
or another third party. Without such an arrangement, it is

                                       15
<PAGE>
highly  likely that the Company would  default on its  obligations  under the TI
Note,  at which  time TI would be  entitled  to  exercise  any and all  remedies
available to it under the TI Note and applicable  law,  including  bringing suit
against  the  Company  and its  assets.  Should TI seek to enforce  its right to
timely  repayment  of the TI Note,  there is a risk that the Company will not be
able to continue as a going concern.

     On May 19, 2003, the Company  executed a note  modification  agreement with
Centura Bank to modify the note dated March 19, 2003.  The effective date of the
modification  was established  when the Company made a principal  payment on the
note for $355,000.  The payment was made to Centura on May 21, 2003. The results
of the modification is to reduce the monthly  principal  payment to $21,000 plus
accrued  interest  beginning on June 15, 2003 and continuing until July 15, 2006
on which  date the  balance  of the note will  mature.  Also,  beginning  on the
effective  date  of the  modification,  the  interest  rate  on the  outstanding
principal shall be calculated at the bank's 30-day LIBOR base rate plus 2.5% per
annum. As of October 31, 2003, Centura has waived the requirement of the Company
to produce a  borrowing  base  calculation  on a monthly  basis.  The  Company's
qualifying  accounts  receivable  and  inventory  are  adequate  to support  the
outstanding loan at January 31, 2004.

     Forward-Looking Statements

         Statements  contained in this  document,  which are not  historical  in
nature,  are  forward-looking  within  the  meaning  of the  Private  Securities
Litigation  Reform  Act of 1995.  Forward-looking  statements  give our  current
expectations of forecasts of future events. You can identify these statements by
the fact that they do not relate  strictly to historical or current facts.  They
use words such as  "estimate,"  "intend,"  "plan,"  and other words and terms of
similar  meaning in  connection  with any  discussion  of future  operating  and
financial  performance.  Forward-looking  statements  are  subject  to risks and
uncertainties  that may cause future results to differ materially from those set
forth  in  such  forward-looking  statements.  Cox  Technologies  undertakes  no
obligation  to  update   forward-looking   statements   to  reflect   events  or
circumstances  after the date hereof.  Such risks and uncertainties with respect
to Cox Technologies include, but are not limited to, its ability to successfully
implement  internal  performance  goals,   performance  issues  with  suppliers,
regulatory issues, competition, the effect of weather on customers,  exposure to
environmental  issues and liabilities,  variations in material costs and general
and specific economic conditions,  the risk that the sale of assets to Sensitech
and/or the dissolution  may not be consummated in a timely manner,  on the terms
described above, or at all; the discretion of the Cox Technologies' shareholders
in approving the sale and/or the dissolution; changes in the value of the assets
and  liabilities  transferred  to Sensitech  and  retained by Cox  Technologies;
performance  of the  business  of Cox  Technologies  prior to the closing of the
sale;  delays in  distributions  to Cox  Technologies  shareholders  and reduced
distributions  due  to  unexpected  liabilities  and  the  inability  to  settle
obligations to creditors;  delays in distributions due to the timing of sales of
non-cash assets, claim settlements with creditors and the amounts paid out under
warranty claims. From time to time, Cox Technologies may include forward-looking
statements in oral statements or other written documents.

Item 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS

     There was no  material  change in the  Company's  market  risk  during  the
quarter ended January 31, 2004. For additional information on market risk, refer
to the  "Quantitative  and Qualitative  Disclosure About Market Risk" section of
the Company's Annual Report on Form 10-K for the year ended April 30, 2003.

Item 4.    DISCLOSURE CONTROLS AND PROCEDURES

     The  Co-Chief  Executive  Officers and the Chief  Financial  Officer of the
Company have  concluded,  based on their  evaluation as of a date within 90 days
prior to the date of the filing of this Report,  that the  Company's  disclosure
controls and procedures are effective to ensure that information  required to be
disclosed  by the  Company in the  reports  filed or  submitted  by it under the
Securities  Act of 1934, as amended,  are recorded,  processed,  summarized  and
reported  within the time  periods  specified  in the  Securities  and  Exchange
Commissions  rules and forms and include  controls  and  procedures  designed to
ensure that information  required to be disclosed by the Company in such reports
is  accumulated  and  communicated  to the Company's  management,  including the
Co-Chief Executive  Officers and the Chief Financial Officer of the Company,  as
appropriate to allow timely decisions regarding required disclosures.

     There were no significant  changes in the Company's internal controls or in
other factors that could  significantly  affect these controls subsequent to the
date of such evaluation.

                                       16
<PAGE>


                    PART II. OTHER INFORMATION AND SIGNATURE

Item 2.     Changes in Securities and Use of Proceeds

          (a)  There were no changes in the Company's equity  securities  during
               the quarter ended January 31, 2004.



Item 6.     Exhibits and Reports on Form 8-K

          (a)  Exhibits:

               31.1 - Certification by Co-Chief Executive Officer
               31.2 - Certification by Co-Chief Executive Officer
               31.3 - Certification by Chief Financial Officer
               32.1 - Certificate of Co-Chief Executive Officers
               32.2 - Certificate of Chief Financial Officer

          (b)  Reports on Form 8-K:

               i.   The Company  filed on December 12, 2003 a Current  Report on
                    Form 8-K  disclosing  that the Company  had entered  into an
                    Asset   Purchase   Agreement   with  Sensitech  Inc  whereby
                    Sensitech would acquire  substantially all the assets of Cox
                    Technologies, Inc.

               ii.  The Company  filed on January  29, 2004 a Current  Report on
                    Form 8-K  disclosing  that the Company  had entered  into an
                    Asset Purchase  Agreement with Rask Holding AsP whereby Rask
                    purchased the Company's Vitsab line of business.


                                       17

<PAGE>


                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                             COX TECHNOLOGIES, INC.
                                  (Registrant)


Date:    03-16-04                            /s/  Brian D Fletcher
         --------                           ------------------------
                                            Brian D. Fletcher
                                            Co-Chief Executive Officer


Date:    03-16-04                            /s/  Kurt C. Reid
         --------                           ------------------------
                                            Kurt C. Reid
                                            Co-Chief Executive Officer


Date:    03-16-04                            /s/  John R. Stewart
         --------                           -------------------------
                                            John R. Stewart
                                            Chief Financial Officer


                                       18