SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K


[x]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934 For fiscal year ended MARCH 31, 2000 OR

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

                         Commission File Number 0-16594

                        MEDICAL TECHNOLOGY SYSTEMS, INC.
                        --------------------------------
             (Exact Name of Registrant as Specified in Its Charter)


      Delaware 59-2740462                                         59-2740462
      -------------------                                         ----------
(State or Other Jurisdiction of                               (I.R.S. Employer
 Incorporation or Organization)                              Identification No.)


12920 Automobile Boulevard, Clearwater, Florida                     33762
-----------------------------------------------                     -----
   (Address of Principal Executive Offices)                       (Zip Code)


                                 (727) 576-6311
                                 --------------
              (Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

   Title of Each Class                 Name of Each Exchange on Which Registered
   -------------------                 -----------------------------------------
          NONE                                           NONE

Securities registered pursuant to Section 12(g) of the Act:

                          COMMON STOCK, PAR VALUE $.01
                          ----------------------------
                                (Title of Class)

                         COMMON STOCK PURCHASE WARRANTS
                         ------------------------------
                                (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (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. [x] Yes [ ] No

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [x] Yes [ ] No

Aggregate  market  value of  voting  Common  Stock  held by  non-affiliates  was
$3,250,000 as of June 29, 2000.

Indicate  by check mark  whether  the  Registrant  has filed all  documents  and
reports  required  to be  filed by  Section  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court. [x] Yes [ ] No

The number of shares  outstanding  of the  Registrant's  Common Stock,  $.01 par
value, was 6,542,621 as of June 29, 2000.

Documents Incorporated by Reference
-----------------------------------

Parts of the Company's  definitive proxy  statement,  which will be filed by the
Company within 120 days after the end of the Company's 1999 fiscal year end, are
incorporated by reference into Part III of this Form.

Total number of pages, including cover page - 43 (excluding exhibits)



<PAGE>
                                       1



                        MEDICAL TECHNOLOGY SYSTEMS, INC.

                               CLEARWATER, FLORIDA

                                      INDEX

PART I                                                                      PAGE
                                                                            ----

Item   1.    Business....................................................    2-6

       2.    Properties..................................................      6

       3.    Legal Proceedings...........................................      6

       4.    Submission of Matters to a Vote of Security Holders.........      7

PART II

Item   5.    Market for Registrant's Common Equity and Related
               Stockholder Matters........................................     8

       6.    Selected Financial Data......................................     9

       7.    Management's Discussion and Analysis of Financial Condition
               and Results of Operations..................................    10

       7A.   Quantitative and Qualitative Disclosure about Market Risk....    13

       8.    Financial Statements and Supplementary Data..................    13

       9.    Changes In and Disagreements With Accountants On Accounting and
               Financial Disclosure.......................................    13

PART III

Item   10.   Directors and Executive Officers of the Registrant...........    14

       11.   Executive Compensation.......................................    14

       12.   Security Ownership of Certain Beneficial Owners and Management   14

       13.   Certain Relationships and Related Transactions...............    14

PART IV

Item   14.   Exhibits, Financial Statements, Schedules and Reports on
               Form 8-K...................................................    15

Index to Financial Statements.............................................    18

Signatures ...............................................................    42


<PAGE>
                                       2


                                     PART I

     This Annual Report on Form 10-K (the "10-K")  contains  certain  statements
concerning  the future that are subject to risks and  uncertainties.  Additional
written or oral forward-looking  statements may be made by the Company from time
to time, in filings with the  Securities  and Exchange  Commission or otherwise.
Such   statements   include,   among  other   things,   information   concerning
possible-future results of operations,  capital expenditures, the elimination of
losses under certain programs,  financing needs or plans relating to products or
services of the  Company,  assessments  of  materiality,  predictions  of future
events,  and  the  effects  of  pending  and  possible  litigation,  as  well as
assumptions  relating  to the  foregoing,  and  those  accompanied  by the words
"anticipates,"   "estimates,"   "expects,"   "intends,"   "plans,"   or  similar
expressions. For those statements we claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995.

     You should  specifically  consider the various  factors  identified in this
10-K,  including  the  matters set forth in "Item 1.  Business",  "Item 3. Legal
Proceedings",  "Item  7.  Management's  Discussion  and  Analysis  of  Financial
Condition and Results of  Operations"  and the Notes to  Consolidated  Financial
Statements  that could  cause  actual  results to differ  materially  from those
indicated in any forward-looking statements. Other factors that could contribute
to or cause such  differences  include,  but are not limited  to,  unanticipated
increases in operating costs, labor disputes, capital requirements, increases in
borrowing  costs,  product  demand,  pricing,  market  acceptance,  intellectual
property rights and litigation,  risks in product and technology development and
other risk factors detailed in the Company's  Securities and Exchange Commission
filings.

     Readers are  cautioned not to place undue  reliance on any  forward-looking
statements  contained in this 10-K, which speak only as of the date hereof.  The
Company  undertakes  no  obligation  to  publicly  release  the  results  of any
revisions to these forward-looking statements that may be made to reflect events
or  circumstances  after  the  date  hereof  or to  reflect  the  occurrence  of
unexpected events.

ITEM 1.  BUSINESS

Introduction
------------

     Medical  Technology  Systems,   Inc.(TM),   a  Delaware   corporation  (the
"Company"),  was  incorporated  in March 1984. The Company is a holding  company
that historically operated through a number of separate subsidiaries,  including
MTS   Packaging   Systems,   Inc.(TM)("MTS   Packaging"),   Medical   Technology
Laboratories, Inc. ("MTL") and LifeServ Technologies, Inc.(TM) ("LifeServ").

     MTS Packaging primarily  manufactures and sells disposable medication punch
cards,  packaging  equipment and allied ancillary products throughout the United
States. Its customers are predominantly pharmacies that supply nursing homes and
assisted living facilities with prescription medications for their patients. MTS
Packaging  manufactures  its  proprietary  disposable  punch cards and packaging
equipment in its own  facilities.  This  manufacturing  process uses  integrated
machinery  for  manufacturing   the  disposable   medication  punch  cards.  The
disposable  medication  punch  cards and  packaging  equipment  are  designed to
provide a cost  effective  method for  pharmacies to dispense  medications.  The
Company's medication  dispensing systems and products provide innovative methods
for dispensing medications in disposable packages.

     MTL was formed as a result of the acquisition and combination of Clearwater
Medical  Services and Clinical  Diagnostic  Centers during fiscal year 1992. MTL
conducted analytical services for testing of blood, tissue and other body fluids
for hospitals, physicians and other health care providers in Florida. In January
2000, MTL sold its principal assets to an unrelated third party and transitioned
the  operations of the business to the buyer until the buyer  received its state
license and Medicare provider number in April 2000. MTL received  $1,000,000 for
the assets that were  comprised  of  equipment,  goodwill  and certain  accounts
receivable. In addition, the buyer assumed approximately $400,000 in liabilities
of MTL. The proceeds of the sale were used  primarily to reduce bank debt of the
Company.  Since April 2000, MTL has continued to collect  amounts due from third
party payors,  patients and clients.  The Company has treated the  operations of
MTL in fiscal 1999 and 2000 as discontinued operations.


<PAGE>
                                       3


     On February  24,  1998,  the Company  formed  LifeServ  Technologies,  Inc.
("LifeServ")  for the purpose of holding and operating the Company's health care
information subsidiaries: Performance Pharmacy Systems, Inc. ("PPS"), Medication
Management  Systems,  Inc. ("MMS"),  Medication  Management  Technologies,  Inc.
("MMT"), Cart-Ware, Inc. ("Cart-Ware") and Systems Professionals,  Inc. ("SPI").
In April 1998,  the Company  entered into a stock  subscription  agreement  with
LifeServ  whereby  the  Company  made  a  capital  contribution  of  all  of the
outstanding  capital stock of those  subsidiaries to LifeServ.  On May 27, 1999,
the assets of LifeServ were sold to AIMCare, Inc.  ("AIMCare").  AIMCare assumed
the stated  liabilities of LifeServ of approximately  $5.0 million.  The Company
has treated the operations of LifeServ as discontinued operations.

Segments
--------

     The  continuing  operations  of the Company are  composed of one  operating
segment,  Medication Packaging and Dispensing Systems. MTS Packaging is the only
subsidiary in this segment and is supported by corporate personnel and services.

Continuing Operations
---------------------

     Products
     --------

     MTS Packaging  manufactures  proprietary  medication dispensing systems and
related products for use by medication  prescription  service  providers.  These
systems utilize disposable  medication punch cards and specialized machines that
automatically  or  semi-automatically   assemble,   fill  and  seal  drugs  into
medication  punch cards  representing  a weekly or monthly supply of a patient's
medication.

     MTS Packaging's  machinery for dispensing medication in disposable packages
automatically places tablets or capsules (the amount of medication required by a
patient  during one month) into a blistered  punch card.  The use of these cards
and machines provides a cost effective customized package at competitive prices.
The punch card medication dispensing system can provide tamper evident packaging
for products dispensed in the package.

     The  retail  price of MTS  Packaging's  machinery  ranges  from  $1,100  to
$120,000  depending  upon the degree of  automation  and options  requested by a
customer.  The punch cards typically retail from  approximately $155 to $225 per
1,000 cards and blisters,  depending  upon the size,  design and volume of cards
ordered by a customer.  To date,  MTS Packaging has placed  approximately  1,865
medication dispensing systems with pharmacy clientele.  MTS Packaging also sells
prescription  labels and  ancillary  supplies  designed to  complement  sales of
disposable  medication punch cards. MTS Packaging had approximately  $595,400 in
unshipped orders as of June 25, 2000.

     Research and Development
     ------------------------

     The Company  expended  approximately  $207,000 on research and  development
activities  during the fiscal year ended March 31, 2000. The Company's  focus in
the prior two fiscal  years was on the  development  of  products  that had been
determined to be technologically feasible,  therefore,  research and development
activities were minimal.

     Product Development
     -------------------

     The Company had several  projects  underway to develop new products  during
its most recent fiscal year.

     MTS Packaging is presently developing:

     o    Medication  dispensing systems that more fully automate its customers'
          operations and increase the productivity of the pharmacy.

     o    A  dispensing  system for the  packaging of unit dose  medication  for
          hospitals.

     o    Multi-Dose punch card for the assisted living market.

     o    Proprietary  automated  dispensing system that will allow customers to
          dispense medication in a variety of blister pack system formats.


<PAGE>
                                       4


     o    Special compliance  packages for the retail pharmacy,  nutritional and
          international home care market.

     Manufacturing Processes
     -----------------------

     MTS Packaging has developed  integrated punch card manufacturing  equipment
that will complete the various punch card manufacturing  steps in a single-line,
automated  process.  The Company believes that its advanced  automation gives it
certain speed,  cost and  flexibility  advantages over  conventional  punch card
manufacturers.  MTS Packaging's  equipment  produces  finished cards on a single
in-line  Flexographic  press. This process takes the place of approximately five
different presses using conventional offset printing methods.  MTS Packaging has
two machines capable of producing punch cards in this manner. In addition to the
manufacturing of punch cards, MTS Packaging  manufactures machines that are used
by its  customers  to fill punch cards with  medication.  The  majority of these
machines  are sold to  customers;  however,  from  time to time,  customers  are
provided or rented machines in conjunction with an agreement to purchase certain
quantities of punch cards over a specified period.

     MTS  Packaging  uses  automated   fabrication   equipment  to  produce  its
medication  packaging  machinery.  All essential  components of the machines are
designed and manufactured by the Company without reliance on outside vendors.

     MTS  Packaging is dependent on a number of suppliers  for the raw materials
essential in the production of its products. The Company believes that relations
are adequate with its existing vendors.  However, there can be no assurance that
such  relations will be adequate in the future or that shortages of any of these
raw materials will not arise,  causing production delays. MTS Packaging believes
it is necessary to maintain an inventory of materials and finished products that
allows for customer  orders to be shipped  within the  industry  standard of 2-3
days.  The inability to obtain raw materials on a timely basis and on acceptable
terms may have a material adverse effect on the future financial  performance of
the Company.  The Company's  ability to obtain raw materials and other goods and
services  is   substantially   dependent  upon  the  Company's  cash  flow  from
operations.

     Markets and Customers
     ---------------------

     MTS  Packaging's  products are sold primarily  throughout the United States
through  its sales  organization  and  independent  sales  representatives.  MTS
Packaging  also  participates  in trade shows and  training  seminars.  Sales to
countries  outside the U.S.  represent  less than ten percent (10%) of the total
revenue. Five customers comprise  approximately  thirty-two percent (32%) of MTS
Packaging's annual revenue.

     The primary customers for MTS Packaging's  proprietary  packaging machinery
and the related  disposable  punch  cards,  labels and  ancillary  supplies  are
pharmacies that supply prescription medication to nursing homes. Such pharmacies
serve  from 250 to 34,000  nursing  home beds per  location  and many  serve the
sub-acute, assisted living and the home health care markets as well.

     Competition
     -----------

     The pharmacy  customers of MTS Packaging supply  prescribed  medications to
nursing homes, which are the primary market for MTS Packaging's  products.  This
market is highly competitive.  There are several competitors that have developed
machines that automate the packaging and sealing of solid medications into punch
cards. The Company believes that products developed by the Company's competitors
are not as efficient as the Company's systems because they are not as automated.
The  Company's  method  of  dispensing   medication  replaces  more  traditional
dispensing  methods,  such as  prescription  vials.  The  principal  methods  of
competition in supplying  medication  dispensing systems to prescription service
providers are product innovation,  price, customization and product performance.
Many  of the  Company's  competitors  have  been in  business  longer  and  have
substantially greater resources than the Company. There is no assurance that the
Company  will  be  able to  compete  effectively  with  competitive  methods  of
dispensing medication or other punch card systems.

     The Company's  primary  competitors for punch card  dispensing  systems are
Drug  Package,  Inc.,  Artromic  International,  Inc.  and RX Systems,  Inc. The
Company   believes   that  its   automated   proprietary   packaging   machinery
distinguishes  MTS Packaging from its competitors' less automated  systems.  The
Company's  new  automated  packaging  machinery  can  fill  and  seal  over  900
disposable  medication  cards per hour. The Company believes that its production
rates will meet the needs of its  customers  who are  consolidating  and require
higher productivity to meet their growing market share.


<PAGE>
                                       5

     Proprietary Technology
     ----------------------

     The Siegel Family QTIP Trust (the "Trust") is the holder of certain patents
and other proprietary  rights for the equipment and processes that MTS Packaging
uses and sells.  The Trust is the  assignee of all such  proprietary  and patent
rights used in the Company's  business that were invented or developed by Harold
B. Siegel, the founder of the Company.  The Trust and the Company are parties to
a license  agreement  whereby the Company is granted an exclusive  and perpetual
license from the Trust to use the know-how and patent rights in the  manufacture
and sale of the  Company's  medication  dispensing  systems.  MTS  Packaging  is
heavily  dependent upon the continued use of the proprietary  rights  associated
with these patents.  The patents begin expiring in 2004 continuing through 2006.
The license agreements are co-extensive with the patents.

     There are numerous patent  applications  and patent license  agreements for
products  that  have been sold and that  have  been in  development  within  MTS
Packaging, however, its business is not materially dependent upon the issuing or
its ownership of any one patent applied for or patent license agreements.

     There is no  assurance  that any  additional  patents  will be granted with
respect to the  Company's  medication  dispensing  or  information  systems  and
products  or  that  any  patent  issued,  now or in  the  future,  will  provide
meaningful protection from competition.

     Government Regulation
     ---------------------

     Certain  subsidiaries of the Company are subject to various federal,  state
and local regulations with respect to their particular  businesses.  The Company
believes that it currently complies with these regulations.

     MTS  Packaging's  products are governed by federal  regulations  concerning
components of packaging materials that are in contact with food. The Company has
obtained  assurances  from its vendors that the packaging  materials used by MTS
Packaging  are  in  conformity  with  such  regulations.  However,  there  is no
assurance  that  significant  changes  in  the  regulations  applicable  to  MTS
Packaging's  products will not occur in the foreseeable future. Any such changes
could have a material adverse effect on the Company.

     The  Company  cannot  predict  the extent to which its  operations  will be
effected under the laws and  regulations  described above or any new regulations
that may be adopted by regulatory agencies.

Discontinued Operations
-----------------------

     The Company sold two business  segments in fiscal 2000,  both of which were
treated as discontinued operations for financial statement purposes.

     LifeServ was a health care  information  technology  company that  provided
solutions for medication management and point-of-care  electronic  documentation
for hospitals and other health care facilities. The assets of LifeServ were sold
in  May  1999  in  exchange  for  the  assumption  of  certain   liabilities  of
approximately $5.0 million.

     MTL provided  clinical  laboratory  testing services  including  analytical
tests of blood tissues and other bodily fluids. The principal assets of MTL were
sold in  January  2000 in  exchange  for $1.0  million  and the  assumptions  of
approximately $400,000 in liabilities.

Employees
---------

     As of June 24, 2000,  the Company  employed 100 persons full time.  None of
the Company's employees are covered by a collective  bargaining  agreement.  The
Company considers its relationship with employees to be good.

<PAGE>
                                       6


ITEM 2. PROPERTIES

     The Company  leases a 67,000  square foot plant  consisting of office space
and   air-conditioned   manufacturing   and  warehousing   space  near  the  St.
Petersburg/Clearwater  International Airport at 12920 Automobile Boulevard.  The
Company's corporate  administrative offices and the manufacturing facilities for
MTS Packaging  Systems,  Inc. ("MTS Packaging") are at this location.  The lease
expires on April 15, 2002.  The Company's  current  monthly  lease  payments are
approximately $22,000. The premises are generally suited for light manufacturing
and/or distribution.

     MTS  Packaging  leases  approximately  5,200  square feet at  approximately
$2,591 per month for office and warehouse space at 21530 Drake Road,  Cleveland,
Ohio. The lease expires on March 31, 2004.


ITEM 3.  LEGAL PROCEEDINGS

     The Company is involved in certain claims and legal actions  arising in the
ordinary course of business.  There can be no assurances that these matters will
be resolved on terms  acceptable to the Company.  In the opinion of  management,
based upon advice of counsel and  consideration  of all facts  available at this
time, the ultimate disposition of these matters will not have a material adverse
effect on the  financial  position,  results of  operations  or liquidity of the
Company.

     On  November  19,  1998,  Medical  Technology  Laboratories,  Inc.  ("MTL")
received a refund  request in the amount of $1.8 million from  Medicare  Program
Safeguards ("MPS") and $104,000 from the State of Florida Agency for Health Care
Administration  ("AHCA"). The requests followed an onsite review in May 1997, by
federal and state agencies,  of MTL's Medicare and Medicaid billing practices in
1996. MTL has conducted an internal  review of the billing  procedures,  records
and services in question  and disputes  MPS's  findings  and  determination.  On
December  17, 1998,  MTL  responded to the MPS  determination  and  subsequently
received a response  from MPS in which MPS informed MTL that  recoupment  of the
refund  amount would be stayed while MPS reviewed  MTL's  response.  On June 22,
1999, the Company was informed by MPS that the recoupment of the refund had been
suspended  pending  a  decision  from the  Central  Office  of the  Health  Care
Financing Administration (HCFA), regarding certain matters related to the refund
request.  Nevertheless, in order to preserve its rights, the Company requested a
hearing on the matter.  The hearing is not  expected to take place until a final
decision is reached by HCFA.  Although MTL believes that MPS's determination and
the request for refunds are without  merit,  there can be no assurance that this
matter will be resolved  over the near term or that the ultimate  outcome of the
matter will not result in a recoupment  effort by HCFA  directed at the proceeds
of the collection of accounts  receivable  that MTL retained as part of the sale
of the business.

     Certain  creditors of LifeServ and MTL have commenced  legal action against
the buyers of both LifeServ and MTL seeking  payment of  liabilities  assumed by
the  buyers  pursuant  to the  respective  asset  purchase  agreements.  Several
creditors have named LifeServ and MTL as  codefendants  in the legal action.  In
addition, several creditors have named the Company as a codefendant. The Company
intends to vigorously  defend these actions and seek  appropriate  remedies from
the buyers.

Reorganizations Under Chapter 11
--------------------------------

     On January 3, 1996,  three of the  Company's  subsidiaries,  MTS  Packaging
Systems, Inc. ("MTS Packaging"),  Medical Technology Laboratories,  Inc. ("MTL")
and MTS Sales and Marketing,  Inc. ("MTS Sales"),  filed voluntary petitions for
relief under Chapter 11 in the Bankruptcy  Court. On February 22, 1996,  Vangard
Labs, Inc. ("Vangard") filed a voluntary petition for relief under Chapter 11 in
the same jurisdiction.  On July 10, 1997,  Medication  Management  Technologies,
Inc. ("MMT") filed a voluntary  petition for relief under Chapter 11 in the same
jurisdiction.

     On September 4, 1996, the Plans of  Reorganization  for MTS Packaging,  MTL
and Vangard were  confirmed by the Bankruptcy  Court.  The case of MTS Sales was
dismissed. On June 12, 1998, the Plan of Reorganization for MMT was confirmed by
the bankruptcy court.


<PAGE>
                                       7


     Certain  liabilities were compromised by creditors as part of the Plans for
Reorganization as follows:

     Secured  Claims:  (Bank) - Each of the companies that filed petitions under
Chapter 11 were  co-borrowers on bank notes,  lines of credit,  accrued interest
and other charges and expenses,  in the amount of  approximately  $28.0 million,
that were combined and restructured into two separate promissory notes.

     Plan Note I, in the stated principal amount of approximately $27.0 million,
provided for a portion of the principal  amount,  $15.0  million,  to be due and
payable as follows:

     a.   Interest  at the  rate  of  7.5%  for a  period  of two  years  ending
          September 1, 1998.

     b.   Installments  of  principal  and  interest at the rate of 7.5% payable
          monthly for a period of ten years ending  September 1, 2006.  At which
          time,  the then  outstanding  principal  amount is due and  payable in
          full.  The  monthly   installments   of  principal  and  interest  are
          calculated  based on the principal  amount  amortized in equal monthly
          payments over twenty years.

     Plan Note II, in the stated  principal  amount of  $1,000,000  provided for
payment  of  $750,000  on or about  the  date of  confirmation  of the  Plans of
Reorganization.  The Company made the payment of $750,000 on or about  September
5, 1996 and in accordance  with the terms of Plan Note II, the stated  principal
amount was deemed fully satisfied.

     Plan Note I further provided that the net proceeds from the sale of Vangard
would be paid to the Bank. In addition,  certain other mandatory  prepayments of
the stated  principal  amount were  required  upon the  occurrence  of a capital
transaction in which any of the Company's subsidiaries are sold, as well as upon
the receipt of any proceeds resulting from certain causes of action commenced by
the Company.  Plan Note I also provided that the full stated principal amount of
approximately  $28.0  million  would be due and payable upon the  occurrence  of
specified major events of default.

     Effective  March 31, 1997, the stated  principal  amount of Plan Note I was
reduced to $15.0 million.  Thereby,  permanently  removing any contingent amount
due including the  additional  $12.0 million  principal  amount,  except for the
mandatory prepayments for any capital transactions.

     Plan Note I contains certain financial covenants including  prohibiting the
Company from exceeding a maximum  consolidated  intangible deficit,  maintaining
various  financial  ratios and limits  the  amount of capital  expenditures.  In
addition,  Plan Note I requires the bank's  approval of the payment of dividends
and the borrowing of any additional amounts from other parties.

     Unsecured Claims - The holders of trade and miscellaneous claims elected to
receive payment of their claims under several options  provided for in the Plans
of Reorganization.


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

     The  information  required by this item is incorporated by reference to the
Form 10-Q filed by the Company on November 12, 1999.


<PAGE>
                                       8

                                     PART II

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

Price Range of the Company's Securities
---------------------------------------

     The Company's Common Stock trades on the over-the-counter market. The table
below sets  forth the range of high and low bid  information  for the  Company's
common  stock for the periods  indicated,  as reported by the NASD OTC  Bulletin
Board.  Over-the-counter  market quotations reflect inter-dealer prices, without
retail markup,  markdown or commission and may not necessarily  represent actual
transactions.

<TABLE>
<CAPTION>
                                                                   High                          Low
                                                            ----------------             -----------------
                   <S>                                       <C>                          <C>
                       2000 Fiscal Year
                   -----------------------
                     First Quarter                           $     .25                    $      .19
                     Second Quarter                          $     .20                    $      .13
                     Third Quarter                           $     .16                    $      .07
                     Fourth Quarter                          $     .53                    $      .16

                      1999 Fiscal Year
                   -----------------------
                     First Quarter                           $     .44                    $      .31
                     Second Quarter                          $     .40                    $      .28
                     Third Quarter                           $     .36                    $      .17
                     Fourth Quarter                          $     .29                    $      .26
</TABLE>


     The Company's  warrants to purchase the  Company's  common stock are traded
through the National Quotation Bureau, LLC. The table below sets forth the range
of high and low bid  information  for the  Company's  warrants  for the  periods
indicated.  Over-the-counter  market  quotations  reflect  inter-dealer  prices,
without retail markup,  markdown or commission and may not necessarily represent
actual transactions.

<TABLE>
<CAPTION>
                                                                   High                          Low
                                                             ----------------             -----------------
                    <S>                                            <C>                            <C>

                       2000 Fiscal Year
                   -----------------------
                     First Quarter                                  *                             *
                     Second Quarter                                 *                             *
                     Third Quarter                                  *                             *
                     Fourth Quarter                                 *                             *

                       1999 Fiscal Year
                   -----------------------
                     First Quarter                                  *                             *
                     Second Quarter                                 *                             *
                     Third Quarter                                  *                             *
                     Fourth Quarter                                 *                             *

</TABLE>

                   *  Quotations  not  available.  The last reported bid for the
                      Company's  warrants  occurred on January 4, 1996.  At that
                      time the bid price was 1/32.

     As of June 25, 2000,  there were  approximately  4,000 holders of record of
the Company's common stock.

     Historically,  the Company has not paid  dividends  on its common stock and
has no present intention of paying dividends in the foreseeable future.  Payment
of dividends is subject to the prior approval by the Company's  secured  lender,
SouthTrust Bank.


<PAGE>
                                       9




     ITEM 6.  SELECTED FINANCIAL DATA


     The  following  tables set forth  selected  financial  and  operating  data
regarding  the Company.  This  information  should be read in  conjunction  with
"MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS"  and the  Company's  Financial  Statements  and Notes  thereto.  See
"FINANCIAL STATEMENTS."

<TABLE>
<CAPTION>
                                                                                 YEARS ENDED MARCH 31,
                                                         --------------------------------------------------------------------------
                                                                      (In Thousands, Except Earnings Per Share Amounts)
                                                             2000            1999            1998           1997           1996
                                                         ------------   -------------   ------------   ------------   -------------
<S>                                                      <C>            <C>             <C>            <C>            <C>
Income Statement Data:

Net Sales                                                $    16,981    $     15,073    $    12,337    $    11,169    $     10,651
Cost of Sales and Other Expenses                              15,767          14,740         12,707         10,818          24,691
                                                         ------------   -------------   ------------   ------------   -------------
Income (Loss) from Continuing Operations
  Before Income Taxes, Discontinued Operations and
       Extraordinary Gain                                      1,214             333           (370)           351         (14,040)
Income Tax (Benefit) Expense                                       0             125           (270)           131          (1,900)
Income (Loss) from Discontinued Operations                    (2,185)         (3,764)          (754)        (3,005)        (17,211)
Gain on Forgiveness of Debt of Discontinued
  Operations                                                   1,249             569              0          3,500               0
Gain (Loss) on Disposal of Discontinued Operations             2,221          (2,500)             0          2,200          (5,229)
Extraordinary Gain on Debt Forgiveness                             0               0              0         10,097               0
                                                         ------------   -------------   ------------   ------------   -------------
Net Income (Loss)                                        $     2,499    $     (5,487)   $      (854)   $    13,012    $    (34,580)
                                                         ============   =============   ============   ============   =============
Net Earnings (Loss) Per Basic and Diluted Share:
From Continuing Operations                               $      0.19    $       0.03    $     (0.02)   $      0.04    $      (2.99)
Income (Loss) from Discontinued Operations                      0.20           (0.91)         (0.12)          0.47           (5.33)
Extraordinary Gain on Debt Forgiveness                          0.00            0.00           0.00           1.76            0.00
                                                         ------------   -------------   ------------   ------------   -------------
Net Earnings (Loss) Per Basic and Diluted Share          $      0.39    $      (0.88)   $     (0.14)   $      2.27    $      (8.52)
                                                         ============   =============   ============   ============   =============
Average Common Shares Outstanding - Basic and Diluted          6,447           6,233          6,062          5,737           4,059
                                                         ============   =============   ============   ============   =============


                                                                                        AT MARCH 31,
                                                         --------------------------------------------------------------------------
                                                                                        (In Thousands)
Balance Sheet Data:                                          2000           1999            1998           1997             1996
                                                         ------------   -------------   ------------   ------------      ----------

Net Working Capital                                      $     1,702    $      1,458    $     1,592    $     2,916    $      5,139
Assets                                                         7,866           8,511         11,532         11,380          12,015
Short-Term Debt                                                1,052             874            294            205              99
Long-Term Debt                                                13,111          14,915         14,892         15,161             350
Stockholders' Equity (Deficit)                                (9,037)        (11,600)        (6,113)        (5,416)        (18,546)
Liabilities Subject To Compromise                                  0               0              0              0          29,586

</TABLE>


<PAGE>
                                       10


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


Overview
--------

     During  fiscal 2000,  the Company  continued  to implement  its strategy of
expansion of its core business,  MTS Packaging Systems,  Inc. ("MTS Packaging").
In May 1999,  the Company sold its Health Care  Information  business,  LifeServ
Technologies,  Inc. ("LifeServ"). A gain on disposal of approximately $1,800,000
was  recognized  on this  transaction  in the first  quarter of fiscal 2000.  In
addition,  the Company sold its Clinical Laboratory  Services business,  Medical
Technology  Laboratories,  Inc.  ("MTL").  A gain on disposal  of  approximately
$399,000 was recognized on this transaction  during the fourth quarter of fiscal
2000. As a result, the operations of both business segments have been treated as
discontinued for financial statement purposes.

Fiscal Year 2000 Compared to Fiscal Year 1999
---------------------------------------------

Results of Continuing Operations
--------------------------------

Net Sales
---------

     Net sales for the fiscal year ended March 31, 2000 increased 12.7% to $17.0
million from $15.1 million the prior fiscal year. Net Sales  increased in fiscal
2000  primarily  as a result of an  increase in the amount of  disposable  punch
cards sold to new and existing customers. In addition,  prices for machines sold
increased  approximately 10% and prices for disposables increased  approximately
2.5%.  The Company  anticipates  that pricing on  disposables  could  experience
downward  pressure as  reimbursement  amounts received by customers from the end
user of the products sold continue to be reduced. The volume of disposable cards
is anticipated to continue to grow as a result of reduced medication  dispensing
cycles.   The  reduced  cycles  implemented  by  pharmacies  has  resulted  from
reductions in reimbursements  introduced with the Medicare  prospective  payment
system in July  1999.  In  addition,  the  development  of new  markets  for the
Company's disposable products has contributed to the increase in net sales.

Cost of Sales
-------------

     Cost of sales for the year  ended  March 31,  2000  increased  9.4% to $9.2
million  from $8.4 million in the prior year.  Cost of sales as a percentage  of
sales decreased to 54.0% from 55.6%. The increase in cost of sales resulted from
the costs associated with the increased net sales. The decrease in cost of sales
as a percentage of sales  resulted  primarily  from increased net sales that did
not require  increases in certain  fixed costs of  operations.  The decrease was
partially  offset by  increases  in the direct  costs of raw material and labor.
Direct costs are expected to continue to increase.  The Company attempts to make
corresponding  adjustments to the prices of its products,  however, there can be
no assurance  that  competitive  factors will allow for  adjustments  in selling
prices in the future.

Selling, General and Administrative Expenses ("SG&A")
-----------------------------------------------------

     SG&A  expenses  for the year  ended  March 31,  2000  increased  1% to $4.4
million  compared  to $4.3  million  the  prior  year.  Although  reductions  in
corporate overhead costs resulting from the disposition of LifeServ and MTL were
realized in fiscal 2000,  sales and  marketing  costs  increased to  accommodate
increases in net sales generated by MTS Packaging.

Depreciation and Amortization
-----------------------------

     Depreciation and amortization  expense decreased 1.5% to $861,000 in fiscal
2000 from  $874,000  the prior year.  The  decrease  resulted  from older assets
becoming fully depreciated.

Interest Expense
----------------

     Interest expense increased nominally in fiscal 2000.


<PAGE>
                                       11

Income Tax
----------

     Income tax expense has not been  recognized  in fiscal 2000 due to the fact
that the Company has approximately $12.4 million of carryforward losses that are
available to offset taxable income.  See Note 14 of the  consolidated  financial
statements for further discussion regarding income taxes.

Results of Discontinued Operations
----------------------------------

Loss from Operations of Discontinued Operations
-----------------------------------------------

     The Company operated two businesses  during fiscal 2000 that were accounted
for as  discontinued  operations.  The  operations of LifeServ,  the Health Care
Information Systems segment,  resulted in a loss from discontinued operations of
$524,000 in fiscal 2000  compared to a loss of $3.7 million the prior year.  The
operations of MTL, the Clinical Laboratory Services segment,  resulted in a loss
from discontinued operations of $2,225,000 in fiscal 2000, $500,000 of which was
estimated and recorded in fiscal 1999,  compared to a loss of $164,000 the prior
year.  The  actual  loss  incurred  in fiscal  2000  exceeded  the loss that was
estimated  in fiscal 1999 due to the length of time that  elapsed  from the date
that a buyer  for the  business  was  identified  and the  date  the sale of the
business ultimately concluded.

Gain on Forgiveness of Debt of Discontinued Operations
------------------------------------------------------

     The Company  negotiated  several  settlements  with creditors of MTL during
fiscal  2000.  The  settlements  resulted  in a gain on  forgiveness  of debt of
discontinued operations of $1,249,000 in fiscal 2000.

     A plan of  reorganization  in the  Chapter 11  Bankruptcy  of a  subsidiary
included in the Company's Health Care  Information  Systems business segment was
approved in fiscal 1999. The plan of  reorganization  provided for reductions of
the amounts owed to both secured and unsecured  creditors.  The reduction,  less
certain expenses related to the reorganization,  of $569,000 has been recognized
as an extraordinary gain included within discontinued operations.

Gain on Disposal of Discontinued Operations
-------------------------------------------

     The Company  sold the assets of LifeServ and MTL during  fiscal  2000.  The
sale of the LifeServ  assets  resulted in a gain of $1.8 million and the sale of
the MTL assets  resulted  in a gain of  $399,000.  In fiscal  1999,  the Company
estimated  that the  disposal of MTL would  result in a loss of $2.5 million and
recorded a charge in that amount.  At that time,  the Company was uncertain if a
buyer  would  be  identified  for  the  business  or if the  business  would  be
abandoned.  During the second  quarter of fiscal  2000,  the  Company  commenced
negotiations with a buyer and ultimately sold the business in the fourth quarter
of  fiscal  2000.  The  terms of the  ultimate  sale of the  business  were more
favorable  than the Company had  estimated in fiscal 1999 and resulted in a gain
on the disposal rather than a loss.

Results of Continued Operations
-------------------------------

Fiscal Year 1999 Compared to Fiscal Year 1998
---------------------------------------------

Net Sales
---------

     Net sales for the fiscal year ended March 31, 1999 increased 22.2% to $15.0
million from $12.3 million the prior fiscal year. Net sales  increased in fiscal
1999  primarily  as a result of an  increase in the amount of  disposable  punch
cards and packaging machines sold to existing customers. In addition, prices for
machines sold increased  approximately  2% and prices for disposables  decreased
approximately  1%. The Company  anticipates  that pricing on  disposables  could
continue to experience  downward  pressure as reimbursement  amounts received by
customers  from the end user of the products  sold  continue to be reduced.  The
volume of disposable punch cards and machines is anticipated to continue to grow
as a result of  consolidation  of the  Company's  customer base and new business
development.

<PAGE>
                                       12


Cost of Sales
-------------

     Cost of sales for the year ended  March 31,  1999  increased  20.3% to $8.4
million  from $6.9 million in the prior year.  Cost of sales as a percentage  of
sales decreased to 55.6% from 56.4%. The increase in cost of sales resulted from
increased the costs associated with the net sales. The decrease in cost of sales
as a percentage of sales  resulted  primarily  from increased net sales that did
not require  increases in certain  fixed costs of  operations.  The decrease was
partially offset by increases in costs of raw material and labor.

Selling, General and Administrative Expenses ("SG&A")
-----------------------------------------------------

     SG&A  expenses  for the year ended March 31, 1999  increased  16.2% to $4.3
million compared to $3.7 million the prior year. The increase resulted primarily
from  increases in personnel and selling costs  associated  with the increase in
net sales.

Depreciation and Amortization
-----------------------------

     Depreciation and amortization  expense decreased 8.9% to $874,000 in fiscal
1999 from  $959,000  the prior year.  The decrease  resulted  from the fact that
certain assets became fully depreciated during fiscal 1999.

Interest Expense
----------------

     Interest  expense  increased  9.1% to $1.2 million in fiscal 1999 from $1.1
million in the prior year.  The  increase  resulted  primarily  from  additional
borrowing  in fiscal  1999 to  support  working  capital  needs of  discontinued
operations.

Income Taxes
------------

     The Company realized an income tax benefit in fiscal 1998 as a result of an
income tax refund  related to the  amendment of its 1992 income tax return.  The
Company  recorded income tax expense of $125,000,  which was offset by a benefit
of $125,000, included in discontinued operations.

Loss from Operations of Discontinued Operations
-----------------------------------------------

     The Company  discontinued  the operations of two business  segments  during
fiscal 1999. The operations of one  discontinued  business  segment,  the Health
Care  Information  Systems  segment,   resulted  in  a  loss  from  discontinued
operations of $3.7 million in fiscal 1999 compared to a loss of $1.2 million the
prior year.  The  operations of the other  discontinued  business  segment,  the
Clinical  Laboratory  Services  segment,  resulted  in a loss from  discontinued
operations of $164,000 in fiscal 1999 compared to a profit of $460,000 the prior
year.

Gain on Forgiveness of Debt of Discontinued Operations
------------------------------------------------------

     A plan of  reorganization  in the  Chapter 11  Bankruptcy  of a  subsidiary
included in the Company's Health Care  Information  Systems business segment was
approved in fiscal 1999. The plan of  reorganization  provided for reductions of
the amounts owed to both secured and unsecured  creditors.  The reduction,  less
certain expenses related to the reorganization,  of $569,000 has been recognized
as an extraordinary gain included within discontinued operations.

Year 2000 Compliance
--------------------

     The  Company  did  not  experience   any   significant   interruptions   or
difficulties  related to Y2K  readiness,  however,  internal  systems as well as
third party compliance continues to be monitored. Notwithstanding the foregoing,
there can be no  assurances  that  difficulties  will not arise  that may have a
material adverse effect on the operations of the Company.

<PAGE>
                                       13


Liquidity and Capital Resources
-------------------------------

     The Company had net income of $2.5 million in fiscal 2000 compared to a net
loss of $5.5 million the prior year.  Cash provided from  continuing  operations
was $1.8 million in fiscal 2000 compared to $1.1 million the prior year.

     Investing activities of continuing  operations used $623,000 in fiscal 2000
compared to $665,000 in fiscal 1999.  The  decrease  resulted  primarily  from a
decrease in amounts  expended for  acquisitions,  patents and other assets.  The
decrease was partially offset by an increase in expenditures for equipment.

     Financing  activities of continuing  operations  used  $1,215,000 in fiscal
2000 compared to $713,000 the prior year. The increase  resulted  primarily from
principal  payments made on the Company's  long-term  debt.  The Company's  loan
agreement  required  interest only payments  until  September 1998 and principal
payments commencing in October 1998. In addition, in fiscal 2000,  approximately
$900,000  of the  proceeds of the sale of the MTL assets were used to reduce the
Company's bank indebtedness.

     The Company had working  capital of  approximately  $1,702,000 at March 31,
2000 and has no source of  additional  working  capital other than that which is
generated from operations.

     The Company's  short-term and long-term liquidity is primarily dependent on
its  ability to generate  cash flow from  operations.  Inventory  levels are not
expected  to change  significantly  based upon the  Company's  current  level of
operation.  Increases  in net sales have  generally  resulted  in  corresponding
increases in accounts  receivable.  Cash flow from  operations is anticipated to
support an increase in accounts receivable.

     The Company has several new product development  projects underway that are
expected to be funded by cash flow from operations. These projects are monitored
on a regular basis to attempt to ensure that the  anticipated  costs  associated
with them do not exceed the  Company's  ability to fund them from cash flow from
operations.

     On July 6, 2000, the Company and its secured lenders agreed to modify their
loan agreement.  The modifications  included  increases in the monthly principal
payments,  an increase in the maximum amount payable pursuant to the excess cash
flow payment  provisions,  a change in the excess cash flow payment  formula and
changes to certain  financial  covenants  contained in the  agreement.  Upon the
execution of the modification  agreement,  the Company made a one-time principal
payment of $200,000 to the bank that  represented  the excess cash flow payments
that were due and payable as of March 31, 2000.

     The Company  believes that cash generated from  operations  during the next
fiscal  year  will be  sufficient  to meet  its  capital  expenditures,  product
development,  working capital needs and the principal  payments  required by its
modified loan agreement.

ITEM 7A  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     The Company  does not have any  material  market risk  sensitive  financial
instruments.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The financial  statements required by this item are contained at the end of
this report.

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

     NONE


<PAGE>
                                       14


                                    PART III

ITEM 10:  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information  required by this item is incorporated  herein by reference
to the information included in the Company's  definitive proxy statement,  which
will be filed by the Company within 120 days after the end of the Company's 2000
fiscal year.

ITEM 11:  EXECUTIVE COMPENSATION

     The information  required by this item is incorporated  herein by reference
to the information included in the Company's  definitive proxy statement,  which
will be filed by the Company within 120 days after the end of the Company's 2000
fiscal year.

ITEM 12:  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information  required by this item is incorporated  herein by reference
to the information included in the Company's  definitive proxy statement,  which
will be filed by the Company within 120 days after the end of the Company's 2000
fiscal year.

ITEM 13:  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information  required by this item is incorporated  herein by reference
to the information included in the Company's  definitive proxy statement,  which
will be filed by the Company within 120 days after the end of the Company's 2000
fiscal year.


<PAGE>
                                       15


                                     PART IV

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

<TABLE>
        <S>           <C>
              (a)     The following documents are filed as part of this report:
        1. and 2.     The Financial  Statements  and schedule  filed as part of this report are listed  separately in the
                      Index to Financial Statements beginning on page 24 of this report
               3.     For Exhibits,  see Item 14(c) below.  Each management  contract or compensatory plan or arrangement
                      required to be filed as an Exhibit hereto is listed in Exhibit Nos.  10.20,  10.21,  10.22,  10.23,
                      10.24 and 10.25 of Item 14(c) below.
              (b)     No  reports  on Form 8-K have  been  filed by the  Company during the last quarter of the
                      year ended March 31, 1998
              (c)     List of Exhibits
          2.1(10)     Agreement  and  Plan  of  Merger  between  Medication  Management  Technologies,  Inc.  and  Cygnet
                      Technologies, Inc. dated April 24, 1997
          2.2(11)     Sale Agreement Vangard Labs, Inc. and NCS Healthcare, Inc. dated April 17, 1997
          2.3(13)     Asset  Acquisition  Agreement  effective April 30, 1998 among the Company,  LifeServ  Technologies,
                      Peritronics Medical, Ltd. and 562577 B.C., Ltd.
          2.4(12)     Medication Management Technologies, Inc. Plan of Reorganization
           2.5(9)     MTS Packaging Systems, Inc. Plan of Reorganization
           2.6(9)     Medical Technology Laboratories, Inc. Plan of Reorganization
           2.7(9)     MTS Sales and Marketing, Inc. Plan of Reorganization
           2.8(9)     Vangard Labs, Inc. Plan of Reorganization
            **3.1     Articles of Incorporation and Amendments thereto
          *3.1(a)     Amendment  to Articles of  Incorporation  increasing  authorized  Common Stock to  25,000,000  from
                      15,000,000 shares
            **3.2     Bylaws of the Company
             *4.1     Form of Warrant from July 1992 Offering
         **4.1(a)     Form of Initial Offering Warrant from January 1988 Offering
            **4.2     Designation of Rights, Preferences and Limitations of Voting Preferred Stock
           **10.1     Business  Lease between Leslie A. Rubin,  Limited,  as Lessor and the Company as Lessee dated March
                      1987
           **10.2     Siegel Family Revocable Trust Agreement
      10.2(a) (8)     Amendment and Restated Siegel Family Revocable Trust Agreement
      10.2(b) (8)     Siegel Family Limited Partnership Agreement
        **10.3(a)     Agreements  and  Assignments  of Patent  Rights  between  Harold B.  Siegel and the  Siegel  Family
                      Revocable Trust
        **10.3(b)     License Agreement between the Company and the Siegel Family Revocable Trust
        **10.3(c)     Assignment of Trade Names,  Licenses,  and Accounts  Receivable from DRG  Consultants,  Inc. to the Company
           **10.4     Agreement for Sale of Stock between Lawrence E. Steinberg and the Company dated April 27, 1987
           **10.5     Warrant Agreement between Lawrence E. Steinberg and the Company dated April 27, 1987
           **10.6     Warrant Agreement between Overseas Group and the Company dated May 8, 1987
           **10.7     Option  Agreement  between  the Siegel  Family  Revocable  Trust and  Lawrence E.  Steinberg  dated
                      December 18, 1987
          ***10.8     Pilot Project and Option Agreement between Sandoz and the Company
         ****10.9     Documents  relating  to the  acquisition  of the  business  of Ohio Label &  Packaging  Inc.  dated
                      November 3, 1989
           *10.10     Agreement among Company,  Trust and Harold B. Siegel regarding modification to royalty arrangements
                      and issuance of Common Stock and retirement of preferred stock dated September 2, 1990
         10.11(1)     Acquisition and financing documents relating to Clearwater Medical Services, Inc.
         10.12(2)     Acquisition and financial documents relating to Clearwater Diagnostic Center, Inc.
         10.13(3)     Stock Purchase Agreement for Vangard Labs, Inc.
         10.14(4)     Warrant Agreement between Ladenburg Thalman & Co. and the Company
         10.15(5)     Loan and Security Agreement dated December 1, 1992 with Daiwa Bank, Limited

</TABLE>

<PAGE>
                                       16

<TABLE>
        <S>           <C>

         10.16(6)     Amended and Restated Loan and Security  Agreement  dated September 28, 1993 with SouthTrust Bank of Alabama
         10.17(7)     First  Amendment to Amended and  Restated  Loan and  Security  Agreement  dated April 25, 1994 with
                      SouthTrust Bank of Alabama
         10.18(7)     Addendum to Lease dated  September  30, 1993 with Leslie A. Rubin for  facilities  located at 12920
                      and 12910 Automobile Boulevard, Clearwater, Florida
         10.19(7)     Lease effective August 2, 1993 by and between C & C Park Building and Medical  Technology  Systems,
                      Inc. for property located at 21540 Drake Road, Strongsville, Ohio
         10.20(7)     Form of 1994 Stock Option Plan
         10.21(7)     Form of Employment Agreement for Todd Siegel and Gerald Couture
         10.22(7)     Form of Executive Stock Appreciation Rights and Non-Qualified Stock Option Agreement
         10.23(7)     Form of Director's Stock Option Agreement
         10.24(7)     Form of Directors' Consulting Agreement
         10.25(7)     Form of Director/Officer Indemnification Agreement
         10.26(7)     Joint Venture Agreement between MedVantage, Inc. and the Company dated January 5, 1995
         10.27(7)     Third Amendment to Amended and Restated Loan and Security Agreement effective March 28, 1995
        10.28(10)     Form of Executive Director's Agreement for Gerald Couture
        10.29(10)     Stock Option Plan dated March 4, 1997
        10.30(10)     Stock Option Agreement with David Kazarian
        10.31(13)     Stock  Subscription  Agreement,   dated  April  28,  1998, between the Company and LifeServ Technologies, Inc.
        10.32(13)     Loan Agreement dated May 13, 1998, between Ella Kedan and LifeServ Technologies,  Inc., Performance
                      Pharmacy  Systems,   Inc.,  Cart-Ware  Inc.,   Medication  Management  Systems,  Inc.  and  Systems
                      Professional, Inc. and related Promissory Note and Security Agreement.
        10.33(13)     Form of Warrant dated May 13, 1998 between  LifeServ and Ella Kedan
        10.34(13)     Form of Warrant dated May 13, 1998 between the Company and Ella Kedan
        10.35(13)     Form of Warrant dated May 13,  1998  between LifeServ  and  Ella  Kedan
        10.36(13)     LINC  Capital,  Inc.  - Sale  and Leaseback Agreement dated February 23, 1998
        10.37(13)     Employment Agreement between LifeServ Technologies, Inc. and Michael T. Felix dated April 1, 1998
        10.38(13)     Employment Agreement between Medical Technology Systems,  Inc. and Michael P. Conroy dated March 1, 1998
        10.39(13)     Amendment  to Second  Amended and  Restated  Loan and  Security  Agreement  between the Company and
                      SouthTrust Bank dated April 16, 1998
        10.40(14)     Asset Acquisition Agreement dated August 4, 1998 between Medical Technology Laboratories,  Inc. and
                      Community Clinical Laboratories, Inc.
        10.41(14)     Loan Agreement dated May 13, 1998,  between Stanley D. Estrin Irrevocable Trust dtd March 16, 1993,
                      Judith C. Estrin, Trustee and Medical Technology Systems, Inc.
        10.42(14)     Form of Warrant  dated May 13,  1998,  between  Stanley D. Estrin  Irrevocable  Trust dtd March 16,
                      1993, Judith C. Estrin, Trustee and Medical Technology Systems, Inc.
        10.43(14)     Form of Warrant  dated May 13,  1998,  between  Stanley D. Estrin  Irrevocable  Trust dtd March 16,
                      1993, Judith C. Estrin, Trustee and Medical Technology Systems, Inc.
        10.44(14)     Loan Agreement dated August 7, 1998, between Sally Siegel and Medical Technology Systems, Inc.
        10.45(14)     Form of Warrant dated August 7, 1998, between Sally Siegel and Medical Technology Systems, Inc.
        10.46(14)     Form of Warrant dated August 7, 1998, between Sally Siegel and Medical Technology Systems, Inc.
        10.47(14)     Loan  Agreement  dated  August 18,  1998,  between  Todd and Shelia  Siegel and Medical  Technology
                      Systems, Inc.
        10.48(14)     Form of Warrant  dated  August 18,  1998,  between  Todd and Shelia  Siegel and Medical  Technology
                      Systems, Inc.
        10.49(14)     Form of Warrant  dated  August 18,  1998,  between  Todd and Shelia  Siegel and Medical  Technology
                      Systems, Inc.
        10.50(15)     Asset  Acquisition  Agreement  dated May 25, 1999  between  LifeServ  Technologies,  Inc.,  Medical
                      Technology Systems, Inc. and AIMCare, Inc.
        10.51(16)     Loan Agreement dated October 16, 1998, between Joan L. Fitterling,  as Trustee, or her successor in
                      Trust of the Joan L.  Fitterling  Revocable  Trust dated  August 15,  1995 and  Medical  Technology
                      Systems, Inc.
        10.52(16)     Form of Warrant dated October 16, 1998,  between Joan L. Fitterling,  as Trustee,  or her successor
                      in Trust of the Joan L.  Fitterling  Revocable  Trust dated August 15, 1995 and Medical  Technology
                      Systems, Inc.
</TABLE>
<PAGE>
                                       17

<TABLE>

<S>                   <C>
        10.53(16)     Form of Warrant dated October 16, 1998,  between Joan L. Fitterling,  as Trustee,  or her successor
                      in Trust of the Joan L.  Fitterling  Revocable  Trust dated August 15, 1995 and Medical  Technology
                      Systems, Inc.
        10.53(16)     Form of Warrant dated October 16, 1998,  between Joan L. Fitterling,  as Trustee,  or her successor
                      in Trust of the Joan L.  Fitterling  Revocable  Trust dated August 15, 1995 and Medical  Technology
                      Systems, Inc.
        10.54(17)     Fourth Amendment to Warrant Agreement dated July 16, 1999
        10.55(18)     Management  Agreement between Medical Technology  Systems,  Inc., Medical Technology  Laboratories,
                      Inc. and Brittany Leigh, Inc. dated September 8, 1999
        10.56(19)     Asset Purchase  Agreement dated January 1, 2000 between Medical Technology  Systems,  Inc., Medical
                      Technology Laboratories, Inc. and Brittany Leigh, Inc.
        10.57(20)     Second  Amendment to Second  Amended and Restated Loan and Security Agreement between the Company and
                      SouthTrust Bank dated July 6, 2000 and the Consent and  Re-Affirmation  of Guaranty and Loan Documents
                      dated July 6, 2000.
           27(20)     Financial Data Schedule
*                     Incorporated  herein by reference to same  Exhibit(s),  respectively,  Registration  Statement  No.
                      33-40678 filed with the Commission on May 17, 1991
**                    Incorporated  herein  by  reference  to  same  Exhibit(s), respectively,   Registration   Statement
                      (SEC  File  No. 33-17852)
***                   Incorporated herein by reference to Form 8-K filed on November 18, 1988
****                  Incorporated herein by reference to Form 8-K filed on November 16, 1989
(1)                   Incorporated herein by reference to Form 8-K for event dated November 8, 1991
(2)                   Incorporated herein by reference to Form 8-K for event dated November 14, 1991
(3)                   Incorporated herein by reference to Form 8-K for event dated May 27, 1991
(4)                   Incorporated herein by reference to Form S-3 filed April 16, 1993
(5)                   Incorporated herein by reference to Form 10-K for year ended March 31, 1993
(6)                   Incorporated  herein by reference to Post Effective Amendment No. 1 to Form S-1 (File No. 33-40678)
                      dated October 14, 1993
(7)                   Incorporated herein by reference to Form 10-K for year ended March 31, 1995
(8)                   Incorporated herein by reference to Form 10-K for year ended March 31, 1996
(9)                   Incorporated  herein by  reference  to Form 10-Q dated  November  11,  1996 for the  quarter  ended
                      September 30, 1996
(10)                  Incorporated herein by reference to Form 10-K for the year ended March 31, 1997
(11)                  Incorporated herein by reference to Form 8-K dated May 2, 1997
(12)                  Incorporated  herein by  reference  to Form 10-Q dated  February  13,  1998 for the  quarter  ended
                      December 31, 1997
(13)                  Incorporated herein by reference to Form 10-K for the year ended March 31, 1998
(14)                  Incorporated  herein by reference to Form 10Q filed November 12, 1998 for quarter ending  September
                      30, 1998
(15)                  Incorporated herein by reference to Form 8K filed on June 9, 1999 for event dated May 25, 1999
(16)                  Incorporated herein by reference to Form 10-K for year ended March 31, 1999
(17)                  Incorporated herein by reference to Form 8-K filed July 16, 1999
(18)                  Incorporated  herein by  reference  to Form 10-Q dated  November  12, 1999 for the  quarter  ending
                      September 30, 1999
(19)                  Incorporated herein by reference to Form 8-K filed January 18, 2999
(20)                  Filed herewith

</TABLE>

<PAGE>
                                       18


                        MEDICAL TECHNOLOGY SYSTEMS, INC.

                          INDEX TO FINANCIAL STATEMENTS

                                                                            Page

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS........................    19


CONSOLIDATED FINANCIAL STATEMENTS

      Consolidated Balance Sheets as of March 31, 2000 and 1999...........    20

      Consolidated Statements of Operations for the years ended
        March 31, 2000, 1999 and 1998.....................................    21

      Consolidated Statement of Changes in Stockholders' Equity (Deficit)
        for the years ended March 31, 2000, 1999 and 1998.................    22

      Consolidated Statements of Cash Flows for the years ended
         March 31, 2000, 1999 and 1998....................................    23

      Notes to Consolidated Financial Statements.......................... 24-41


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON FINANCIAL
         STATEMENT SCHEDULE...............................................    43


FINANCIAL STATEMENT SCHEDULE

      Schedule II - Valuation and Qualifying Accounts.....................   S-1


     All other  schedules  are omitted  since the  required  information  is not
present in amount  sufficient  to require  submission of the schedule or because
the  information  required  is included in the  financial  statements  and notes
thereto.


<PAGE>
                                       19



               Report of Independent Certified Public Accountants

Board of Directors

Medical Technology Systems, Inc. and Subsidiaries
Clearwater, Florida

     We have audited the  accompanying  consolidated  balance  sheets of Medical
Technology Systems,  Inc. and Subsidiaries as of March 31, 2000 and 1999 and the
related consolidated  statements of operations,  changes in stockholders' equity
(deficit)  and cash flows for each of the three years in the period  ended March
31, 2000.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

     We conducted our audits in accordance  with  auditing  standards  generally
accepted in the United States.  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  Medical
Technology Systems, Inc. and Subsidiaries as of March 31, 2000 and 1999, and the
consolidated results of operations and cash flows for each of the three years in
the  period  ended  March 31,  2000 in  conformity  with  accounting  principles
generally accepted in the United States.


GRANT THORNTON LLP
Tampa, Florida

June 29, 2000,  except for  paragraph 2 of Note 9 on Page 31 of the Notes to the
Consolidated Financial Statements, as to which the date is July 6, 2000.


<PAGE>
                                       20


               MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             MARCH 31, 2000 AND 1999
                                 (In Thousands)

                                     ASSETS

<TABLE>
<CAPTION>
                                                                                        2000                 1999
                                                                                  ---------------      ---------------
<S>                                                                               <C>                  <C>
Current Assets:
     Cash                                                                         $          172       $          205
     Accounts Receivable, Net                                                              2,601                2,473
     Inventories                                                                           2,030                1,990
     Prepaids and Other                                                                       86                   69
                                                                                    -------------        -------------
     Total Current Assets                                                                  4,889                4,737

Property and Equipment, Net                                                                1,904                2,013
Other Assets, Net                                                                          1,073                1,761
                                                                                  ---------------      ---------------

Total Assets                                                                      $        7,866       $        8,511
                                                                                  ===============      ===============


                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)


Current Liabilities:
     Current Maturities of Long-Term Debt                                         $        1,052       $          874
     Accounts Payable and Accrued Liabilities                                              2,135                2,405
                                                                                  ---------------      ---------------
     Total Current Liabilities                                                             3,187                3,279

Net Liabilities of Discontinued Operations                                                   605                1,917
Long-Term Debt, Less Current Maturities                                                   13,111               14,915
                                                                                  ---------------      ---------------
Total Liabilities                                                                         16,903               20,111
                                                                                  ---------------      ---------------
Stockholders' Equity (Deficit):
     Voting Preferred Stock                                                                    1                    1
     Common Stock                                                                             65                   64
     Capital In Excess of Par Value                                                        8,646                8,583
     Accumulated Deficit                                                                 (17,421)             (19,920)
     Less:  Treasury Stock                                                                  (328)                (328)
                                                                                  ---------------      ---------------
     Total Stockholders' Equity (Deficit)                                                 (9,037)             (11,600)
                                                                                  ---------------      ---------------
     Total Liabilities and Stockholders' Equity (Deficit)                         $        7,866       $        8,511
                                                                                  ===============      ===============
</TABLE>

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



<PAGE>
                                       21



            MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF OPERATIONS
              YEARS ENDED MARCH 31, 2000, 1999 AND 1998
          (In Thousands; except Earnings Per Share Amounts)


<TABLE>
<CAPTION>
                                                                               2000              1999             1998
                                                                          --------------    --------------   --------------
<S>                                                                       <C>               <C>              <C>
Net Sales                                                                 $      16,981     $      15,073    $      12,337

Costs and Expenses:
      Cost of Sales                                                               9,170             8,381            6,964
      Selling, General and Administrative                                         4,370             4,327            3,723
      Research and Development                                                      207                 0                0
      Depreciation and Amortization                                                 861               874              959
      Interest                                                                    1,159             1,158            1,061
                                                                          --------------    --------------   --------------

Total Costs and Expenses                                                         15,767            14,740           12,707
                                                                          --------------    --------------   --------------

Income (Loss) from Continuing Operations Before
  Income Taxes, Discontinued Operations and
  Extraordinary Gain                                                              1,214               333             (370)

Income Tax Expense (Benefit)                                                          0               125             (270)
                                                                          --------------    --------------   --------------

Income (Loss) from Continuing Operations Before
  Discontinued Operations and Extraordinary Gain                                  1,214               208             (100)

Loss from Operations of Discontinued Operations                                  (2,185)           (3,764)            (754)

Gain on Forgiveness of Debt of Discontinued Operations                            1,249               569                0

Gain (Loss) on Disposal of Discontinued Operations                                2,221            (2,500)               0
                                                                          --------------    --------------   --------------

Net Income (Loss)                                                         $       2,499     $      (5,487)   $        (854)
                                                                          ==============    ==============   ==============

Net Income (Loss) per Basic and Diluted Common Share:
      Income (Loss) from Continuing Operations                            $        0.19     $        0.03    $       (0.02)
      Income (Loss) from Discontinued Operations                                   0.20             (0.91)           (0.12)
                                                                          --------------    --------------   --------------

Net Income (Loss) per Basic and Diluted Common Share                      $        0.39     $       (0.88)   $       (0.14)
                                                                          ==============    ==============   ==============

Weighted average Common Shares Outstanding - Basic and Diluted                    6,447             6,233            6,062
                                                                          ==============    ==============   ==============
</TABLE>


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

<PAGE>
                                       22



                MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                    YEARS ENDED MARCH 31, 2000, 1999 AND 1998
                        (In Thousands Except Share Data)

<TABLE>
<CAPTION>

                                                                            COMMON STOCK
                                      --------------------------------------------------------------------------------------
                                        Number          Par         Capital in     Retained        Treasury
                                          of           Value        Excess of      Earnings          Stock          Total
                                        Shares                      Par Value     (Deficit)
                                      -----------   -----------    -----------   ------------    ------------    -----------
<S>                                    <C>           <C>            <C>           <C>             <C>            <C>
Balance, March 31, 1997                5,957,173     $      60      $  8,433      $ (13,579)      $    (331)      $  (5,417)

Stock Issued                             172,500             2           155                                            157

Net Loss for Year Ended
   March 31, 1998                                                                      (854)                           (854)
                                      --------------------------------------------------------------------------------------

Balance, March 31, 1998                6,129,673     $      62      $  8,588      $ (14,433)      $    (331)      $  (6,114)

Stock Cancellation                       (10,800)                         (3)                             3

Stock Issued                             287,318             2            (2)

Net Loss for Year Ended
   March 31, 1999                                                                    (5,487)                         (5,487)
                                      --------------------------------------------------------------------------------------

Balance, March 31, 1999                6,406,191     $      64      $  8,583      $ (19,920)      $   (328)       $ (11,601)

Stock Issued                             136,430             1            38                                             39

Debt Conversion                                                           25                                             25

Net Income for Year Ended
   March 31, 2000                                                                     2,499                           2,499
                                      --------------------------------------------------------------------------------------

Balance, March 31, 2000                6,542,621     $      65      $  8,646      $ (17,421)      $   (328)       $  (9,038)
                                      ===========   ===========    ===========   ============    ============    ===========


                                                                        VOTING PREFERRED STOCK
                                      --------------------------------------------------------------------------------------
                                        Number        $0001.
                                          of            Par
                                        Shares         Value
                                      -----------   -----------

Balance, March 31, 1998                6,500,000     $       1                                                    $       1
                                      -----------   -----------                                                  -----------

Balance, March 31, 1999                6,500,000     $       1                                                    $       1
                                      -----------   -----------                                                  -----------

Balance, March 31, 2000                6,500,000     $       1                                                    $       1
                                      -----------   -----------                                                  -----------

Total Stockholders' (Deficit)
   March 31, 2000                                                                                                 $  (9,037)
                                                                                                                 ===========
</TABLE>


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


<PAGE>
                                       23



            MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                YEARS ENDED MARCH 31, 2000, 1999 AND 1998

                              (In Thousands)
<TABLE>
<CAPTION>
                                                                                        2000             1999             1998
                                                                                   -------------    -------------    -------------
<S>                                                                                <C>              <C>              <C>
Operating Activities
    Net Income (Loss) from Continuing Operations                                   $      1,214     $        208     $       (100)
                                                                                   -------------    -------------    --------------
    Adjustments to Reconcile Net Income (Loss) to Net Cash
         Provided by Operating Activities:
      Issuance of Stock for Services                                                         24                0                0
      Depreciation and Amortization                                                         861              874              959
      Legal Settlements                                                                       0              226                0
      Loss on Early Retirement of Fixed Assets                                                0               21                7
      Deferred Income Taxes                                                                   0              125                0
      (Increase) Decrease in:
         Accounts Receivable                                                               (128)            (541)            (584)
         Inventories                                                                        (40)            (110)            (114)
         Prepaids and Other                                                                 (17)              29               59
         Other Receivables                                                                    0                0              350
         Other Assets                                                                         0                0             (230)
      Increase (Decrease) in:
         Accounts Payable and Other Accrued Liabilities                                    (108)             285            1,244
                                                                                   -------------    -------------    --------------
    Total Adjustments                                                                       592              909            1,691
                                                                                   -------------    -------------    --------------
    Net Cash Provided by Continuing Operations                                            1,806            1,117            1,591
                                                                                   -------------    --------------   --------------
Investing Activities
    Expended for Property and Equipment                                                    (494)            (297)            (198)
    Expended for Product Development                                                       (112)            (159)            (196)
    Expended for Patents and Other Assets                                                   (18)            (114)             (48)
    Expended for Acquisition, Net of Cash Acquired                                            0              (95)               0
                                                                                   -------------    --------------   --------------
    Net Cash (Used) by Investing Activities of Continuing Operations                       (624)            (665)            (442)
                                                                                   -------------    --------------   --------------
Financing Activities
    Payments on Notes Payable and Long-Term Debt                                         (1,601)            (309)             (44)
    Advances from (to) Affiliates - Discontinued Operations                                 386             (754)          (1,406)
    Issuance of Common Stock                                                                  0                0                7
    Proceeds from Borrowing on Notes Payable and Long-Term Debt                               0              350                0
                                                                                   -------------    --------------   --------------
    Net Cash (Used) by Financing Activities of Continuing Operations                     (1,215)            (713)          (1,443)
                                                                                   -------------    --------------   --------------

Net Decrease in Cash - Continuing Operations                                                (33)            (261)            (294)
Cash at Beginning of Period - Continuing Operations                                         205              466              760
                                                                                   -------------    --------------   --------------
Cash at End of Period - Continuing Operations                                      $        172     $        205     $        466
                                                                                   =============    ==============   ==============
</TABLE>

See Note 19 for supplemental disclosures of other cash flow information.
The accompanying notes are an integral part of these financial statements.


<PAGE>
                                       24


                        MEDICAL TECHNOLOGY SYSTEMS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                          MARCH 31, 2000, 1999 AND 1998

NOTE 1 - BACKGROUND INFORMATION

     Medical Technology Systems, Inc. (the "Company") is a Delaware corporation,
incorporated   in  March  of  1984.  The  Company  is  a  holding  company  that
historically  operated  through a number of  separate  subsidiaries  providing a
diverse line of proprietary medication dispensing systems,  clinical information
systems  and  laboratory  services to the health care  industry.  The  Company's
principal businesses  previously consisted of the following reportable segments:
(i) the core  business  of  manufacturing  and  selling  proprietary  medication
dispensing  systems,  which  include  punch  cards  for  use  by  pharmacies  in
dispensing  prescription  medicines;  (ii) the Health Care  Information  Systems
business  consisting of the Performance(TM)  pharmacy software,  the MedServ and
E-mar computerized  medication management systems for hospitals and other health
care  facilities,  and Cygnet,  the fetal  monitoring and archiving  information
systems for obstetrical clinics of hospitals and doctors' offices; and (iii) the
Clinical Laboratory Services business of supplying anatomical diagnostic testing
services to the medical profession.

     During  fiscal year ended March 31, 2000,  the Company  sold the  principal
assets of LifeServ Technologies,  Inc. ("LifeServ"), its Health Care Information
Systems business and Medical Technology Laboratories, Inc. ("MTL"), its Clinical
Laboratory  Services  business.  The  operations  of both  businesses  have been
treated as discontinued in the accompanying  financial  statements.  The Company
realized a gain on the disposal of both businesses and a gain on the forgiveness
of certain indebtedness of MTL (See Note 3).

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation
-------------

     The consolidated  financial  statements include the accounts of the Company
and its subsidiaries,  MTS Packaging Systems,  Inc. ("MTS  Packaging"),  MTL and
LifeServ. MTL and LifeServ represent discontinued  operations,  and accordingly,
these  discontinued  segments'  net assets or net  liabilities  are shown as one
amount under the captions "Net  Liabilities  of  Discontinued  Operations".  The
results of operations  of these  discontinued  segments for 2000,  1999 and 1998
have been  excluded  from the  components  of  "Income  (Loss)  from  Continuing
Operations"  and shown under the caption "Loss from  Operations of  Discontinued
Operations"  in the  Statements of  Operations.  All  significant  inter-company
accounts and transactions have been eliminated in consolidation.

Discontinued Operations
-----------------------

     The Company`s Health Care Information  Systems business  (LifeServ) and its
Clinical  Laboratory  Services  business (MTL) were  classified as  discontinued
operations.  The assets of LifeServ  were sold in May 1999 and the assets of MTL
were sold in January 2000.  Certain accounts  receivable of MTL were retained by
MTL.  The  ongoing  operations  of MTL is  limited  to the  collection  of these
accounts receivable.

Use of Estimates
----------------

     The  preparation  of financial  statements  in  conformity  with  generally
accepted accounting  principles in the United States requires management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities,  disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during the
reporting  period.  The Company has  estimated the net  realizable  value of the
accounts  receivable  that  were  retained  by MTL.  Actual  collections  of the
accounts receivable could differ materially from the estimate.

Cash

     For purposes of the  statement  of cash flows,  the Company  considers  all
highly liquid debt instruments purchased with a maturity of three months or less
to be  cash  equivalents.  There  were  no  cash  equivalents  for  all  periods
presented.

<PAGE>
                                       25


 Inventories
 -----------

     Inventories  are stated at the lower of cost or market.  Cost is determined
by the first-in,  first-out  ("FIFO") method. As of March 31, 2000 and 1999, the
Company has established an inventory valuation allowance of $40,000 and $140,000
respectively,  to account for the  estimated  loss in value of inventory  due to
obsolescence. The Company will continue to evaluate the inventory and review the
valuation allowance if deemed necessary.

Revenue Recognition
-------------------

     The Company  recognizes revenue when products are shipped by MTS Packaging.
MTL (discontinued  operations)  recognizes revenue from the clinical  laboratory
services  net of estimated  contractual  adjustments  resulting  from the unpaid
portion of the  assigned  insurance  billings and other third party  payers,  as
services are performed.  LifeServ  (discontinued  operations) recognizes revenue
when systems are placed in service.

Property and Equipment
----------------------

     Property  and  equipment  are  recorded  at cost.  Additions  to and  major
improvements of property and equipment are  capitalized.  Maintenance and repair
expenditures  are charged to expense as incurred.  As property and  equipment is
sold or retired, the applicable cost and accumulated  depreciation is eliminated
from the accounts and any gain or loss recorded.  Depreciation  and amortization
are calculated using the  straight-line  method based upon the assets' estimated
useful lives as follows:

                                                                  Years

   Property and Equipment........................................  3-7
   Leasehold Improvements........................................    5

     The Company uses accelerated methods of depreciation for tax purposes.


Software and Product Development Cost
-------------------------------------

     Effective April 1, 1998, the Company  implemented the AICPA's SOP No. 98-1,
"Accounting  for the  Costs of  Computer  Software  Developed  or  Obtained  for
Internal Use". The SOP segments an internal use software project into stages and
the accounting is based on the stage in which a cost is incurred.  Costs related
to the  preliminary  project  stage are  expensed as incurred.  Specified  costs
related to the application  development stage are capitalized if the preliminary
project is complete,  management has  authorized the project,  and completion of
the project is  probable.  Costs  incurred in the  post-implementation/operation
stage for training and maintenance are expensed as incurred.  The implementation
of SOP  98-1  did  not  have  a  material  effect  on  the  Company's  financial
statements.

Goodwill
--------

     Goodwill  represents  amounts paid in excess of fair market value of assets
acquired by the Company in the purchase of other  companies.  These  amounts are
amortized over a ten-year  period.  See the Accounting for Impairment Note below
and Note 8.

Other Assets
------------

     Other assets are carried at cost less  accumulated  amortization,  which is
being provided on a straight-line basis over a five to seventeen year period.

<PAGE>
                                       26


Earnings (Loss) Per Share
-------------------------

     Earnings per share are computed using the basic and diluted calculations on
the face of the statement of operations.  Basic earnings per share is calculated
by dividing net income (loss) by the weighted average number of shares of common
stock  outstanding for the period.  Diluted  earnings per share is calculated by
dividing  net income by the  weighted  average  number of shares of common stock
outstanding  for the period,  adjusted for the  dilutive  effect of common stock
equivalents, using the treasury stock method (see Note 17).

Research and Development
------------------------

     The Company  expenses  research and development  costs as incurred.  During
fiscal  2000,  the Company  incurred  approximately  $207,000  in  research  and
development  costs.  During  fiscal  1999 and 1998,  the Company  dedicated  its
resources to the  completion of product  development  projects and therefore did
not incur any material research and development costs.

Income Taxes
------------

     Income taxes are provided for under the liability method in accordance with
FASB No. 109,  "Accounting  for Income Taxes",  whereby  deferred tax assets are
recognized  for  deductible  temporary  differences  and operating  loss and tax
credit  carryforwards  and deferred tax  liabilities  are recognized for taxable
temporary  differences.  Temporary  differences are the differences  between the
reported  amounts of assets and  liabilities  and their tax bases.  Deferred tax
assets are reduced by a valuation  allowance when, in the opinion of management,
it is more likely than not that some  portion or all of the  deferred tax assets
will not be realized.  Deferred tax assets and  liabilities are adjusted for the
effects of changes in tax laws and rates on the date of enactment.

Treasury Stock
--------------

     The Company records its treasury stock at cost.

Stock Based Employee Compensation
---------------------------------

     The  Company  accounts  for its  stock  options  granted  to  employees  in
accordance  with the provisions of Accounting  Principles  Board ("APB") Opinion
No. 25, Accounting for Stock Issued to Employees,  and related  interpretations.
As such,  compensation  expense  would be recorded  on the date of granting  the
stock options only if the current market price of the underlying  stock exceeded
the exercise  price.  As permitted by SFAS No. 123,  Accounting for  Stock-Based
Compensation,  the Company also provides certain pro forma disclosure provisions
of Statement 123 (See Note 15).

Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of
---------------------------------------------------------------------

     Long-lived assets and certain identifiable intangibles, including goodwill,
to be held and used by the Company are reviewed for impairment  whenever  events
or changes in  circumstances  indicate that the carrying  amount of these assets
may not be recoverable. In performing the review for recoverability, the Company
estimates  the future  cash flows  expected to result from the use of the assets
and their  eventual  disposition.  If the sum of the expected  future cash flows
(undiscounted  and without interest charges) is less than the carrying amount of
the assets,  an impairment  loss is  recognized.  Long-lived  assets and certain
identifiable  intangibles  to be  disposed of are to be reported at the lower of
the carrying amount or the fair value less cost to sell,  except for assets that
are  related to  discontinued  operations,  which are  reported  at the lower of
carrying  value  or net  realizable  value.  There  were  no  impairment  losses
recognized in 2000, 1999 and 1998. In conjunction with  discontinued  operations
(see Note 3), there were valuation adjustments made in 1999.

Fair Value of Financial Instruments
-----------------------------------

     The  carrying  amounts of cash  receivables,  accounts  payable and accrued
liabilities  approximate  fair  value  because of the  short-term  nature of the
items.

<PAGE>
                                       27


     The carrying  amount of current and  long-term  portions of long-term  debt
pproximates fair value since the interest rates approximate  current prevailing
market rates.

Segment Information
-------------------

     The Company  has  adopted  SFAS No. 131  "Disclosures  about  Segments of a
Business  Enterprise".  As  continuing  operations  of the Company are conducted
through  one  business  segment  as of March  31,  1999  (see  Note 3),  segment
disclosures,  as previously  reported,  are not provided for in these  financial
statements.


NOTE 3 - DISCONTINUED OPERATIONS

     During  fiscal  2000,  the Company  implemented  a strategy of focusing its
resources in its core business,  MTS  Packaging,  and divesting of the other two
business segments it historically operated.

     In May 1999, the Company sold LifeServ, its Health Care Information Systems
business segment. The Asset Acquisition Agreement provided,  among other things,
for  the  buyer  to  receive   substantially  all  the  assets  of  LifeServ  in
consideration  of the assumption of certain stated  liabilities of approximately
$5 million. Revenue from the operations of LifeServ during fiscal 2000, 1999 and
1998 were $454,000,  $5.2 million and $4.3 million respectively.  The operations
of LifeServ during fiscal 2000 resulted in a loss of approximately  $524,000 and
a gain on disposal of $1.8 million.

     In January 2000, the Company sold the principal assets of MTL. MTL received
$1,000,000 for the assets that were comprised of equipment, goodwill and certain
accounts receivable.  In addition,  the buyer assumed approximately  $400,000 in
liabilities of MTL.  Revenue from the operations of MTL during fiscal 2000, 1999
and 1998 were $7.9  million,  $14.0 million and $7.4 million  respectively.  The
operations  of MTL during  fiscal 2000 resulted in a loss of $2,225,000 of which
$500,000  was  estimated  and recorded in fiscal  1999.  In addition,  a gain on
disposal of $399,000 was realized in fiscal 2000 and a gain on debt  forgiveness
of  $1,249,000  was realized as a result of  settlements  that were reached with
several  creditors  of MTL.  In fiscal  1999,  the  Company  estimated  that the
disposal of MTL would  result in a loss of  $2,500,000  and recorded a charge in
that  amount.  During the second  quarter  of fiscal  2000,  a buyer for MTL was
identified  and the business was sold during the fourth  quarter of fiscal 2000.
The length of time that elapsed  between the date that the buyer was  identified
and the  date the sale  concluded  resulted  in a loss  from  operations  of the
business in fiscal 2000 that was greater than the loss from  operations that was
estimated in fiscal 1999.  However,  the terms of the sale of the business  were
more favorable than the Company estimated in fiscal 1999.

     The carrying  value of the net assets of  discontinued  operations at March
31, 2000 and 1999 are comprised of the following.

<TABLE>
<CAPTION>

                                           LifeServ                     MTL                  Total Discontinued
                                                                                                 Operations
                                   ------------------------   ------------------------    ------------------------
                                      2000          1999         2000          1999          2000          1999
                                   ----------    ----------   -----------   ----------    ----------    ---------
 <S>                               <C>           <C>          <C>           <C>           <C>           <C>

 Current Assets                    $     0       $ 1,047      $  1,078      $  3,945      $  1,078      $  4,992
 Other Assets                            0         2,088             0            71             0         2,159
                                   ---------     ---------    ----------    ---------     ---------     ---------
 Total Assets                      $     0       $ 3,135      $  1,078      $  4,016      $  1,078      $  7,151
                                   ---------     ---------    ----------    ---------     ---------     ---------

 Current Liabilities               $     0       $ 4,532      $  1,509      $  2,876      $  1,509      $  7,408
 Long-Term Liabilities                   0           346           174         1,314           174         1,660
                                   ---------     ---------   ----------     ---------     ---------     ---------
 Total Liabilities                 $     0       $ 4,878      $  1,683      $  4,190      $  1,683      $  9,068
                                   ---------     ---------   ----------     ---------     ---------     ---------
 Net   Assets    (Liabilities)
 of    Discontinued Operations     $     0       $ (1,743)    $   (605)     $   (174)     $   (605)     $ (1,917)
                                   =========     =========   ==========     =========     =========     =========
</TABLE>


<PAGE>
                                       28


     The  current  assets of MTL at March 31,  2000 are  comprised  of  accounts
receivable. The Company has estimated the net realizable value of these accounts
receivable based upon its historical experience with regard to collections.

     The current liabilities of MTL at March 31, 2000 are comprised primarily of
trade accounts payable and accrued state taxes.

     The long-term liabilities of MTL at March 31, 2000 are comprised of amounts
payable  over  eighteen  months  to  creditors  for  obligations  that have been
guaranteed by the Company.


NOTE 4 - ACCOUNTS RECEIVABLE

     The Company  maintains an allowance for potential  losses on individual and
commercial accounts receivable.  Management considers the allowances provided to
be reasonable.

     Accounts Receivable consist of the following:

<TABLE>
<CAPTION>
                                                                          March 31,        March 31,
                                                                            2000              1999
                                                                        -------------    -------------
                                                                                (In Thousands)
                 <S>                                                    <C>              <C>
                 Accounts Receivable                                    $     2,875      $     2,684
                 Less:  Allowance for Doubtful Accounts                        (274)            (211)
                                                                        -------------    -------------
                                                                        $     2,601      $     2,473
                                                                        =============    ==============
</TABLE>


     All of the Company's accounts  receivable are pledged as collateral on bank
notes.

     The  geographic  sales  of  the  Company  are  in  the  United  States  and
internationally.  There were 1, 2 and 1 customer(s)  whose sales exceeded 10% of
revenue for 2000, 1999 and 1998, respectively.


NOTE 5 - INVENTORIES

     Inventories consist of the following:

<TABLE>
<CAPTION>
                                                                           March 31,         March 31,
                                                                             2000               1999
                                                                        --------------    ---------------
                                                                                  (In Thousands)
                 <S>                                                    <C>               <C>
                 Raw Material                                           $       967       $        767
                 Finished Goods and Work in Process                           1,103              1,363
                 Less:  Inventory Valuation Allowance                          (40)               (140)
                                                                        -------------     --------------
                                                                        $     2,030       $      1,990
                                                                        =============     ==============
</TABLE>


         All of the  Company's  inventories  are pledged as  collateral  on bank
notes.


<PAGE>
                                       29



NOTE 6 - PROPERTY AND EQUIPMENT

     Property and equipment consists of the following:

<TABLE>
<CAPTION>
                                                                           March 31,         March 31,
                                                                             2000              1999
                                                                        -------------     --------------
                                                                                  (In Thousands)
                 <S>                                                    <C>               <C>

                 Property and Equipment                                 $     6,374       $      6,298
                 Leasehold Improvements                                         344                695
                                                                        -------------     --------------
                                                                              6,718              6,993
                 Less: Accumulated Depreciation and Amortization             (4,814)            (4,980)
                                                                        -------------     --------------
                                                                        $     1,904       $      2,013
                                                                        =============     ==============
</TABLE>


     Substantially  all of the  Company's  property and equipment are pledged as
collateral on bank notes.

     Depreciation  expense and  amortization  of  leasehold  improvements  total
approximately $684,000,  $723,000 and $880,000 for fiscal years ending March 31,
2000, 1999 and 1998 respectively.


NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

     Accounts payable and accrued liabilities are comprised of the following:


<TABLE>
<CAPTION>
                                                                          March 31,          March 31,
                                                                            2000               1999
                                                                       --------------    ---------------
                                                                                 (In Thousands)
                 <S>                                                   <C>               <C>
                 Accounts Payable/Trade                                $      1,178      $       1,198
                 Accrued Liabilities:
                     Salaries & Commissions                                     418                518
                      Medical Claims                                             71                100
                      Interest                                                   91                 27
                      State Taxes                                                70                 25
                      Royalties                                                 307                200
                      Deferred Revenue                                            0                 85
                      Other                                                       0                252
                                                                       --------------    --------------
                                                                       $      2,135      $       2,405
                                                                       ==============    ==============
</TABLE>


<PAGE>
                                       30


NOTE 8 - OTHER ASSETS

     Other assets consists of the following:

<TABLE>
<CAPTION>
                                                                          March 31,          March 31,
                                                                             2000               1999
                                                                       --------------    ---------------
                                                                                 (In Thousands)
                 <S>                                                   <C>               <C>
                 Goodwill                                              $          0      $        588
                     Less:  Accumulated Amortization                              0               (27)
                                                                       --------------    --------------
                                                                       $          0      $        561
                                                                       --------------    --------------

                 Product Development                                   $        551      $        530
                     Less:  Accumulated Amortization                           (152)              (89)
                                                                       --------------    --------------
                                                                       $        399      $        441
                                                                       --------------    --------------

                 Patents                                               $      1,109      $      1,109
                     Less:  Accumulated Amortization                           (561)             (473)
                                                                       --------------    --------------
                                                                       $        548      $        636
                                                                       --------------    --------------

                 Other                                                          143               125
                      Less:  Accumulated Amortization                           (17)               (2)
                                                                       --------------    --------------
                                                                       $        126      $        123
                                                                       --------------    --------------

                 Total Other Assets, Net                               $      1,073      $      1,761
                                                                       ==============    ==============
</TABLE>


     Substantially  all  of the  Company's  intangible  assets  are  pledged  as
collateral on bank notes.


NOTE 9 - LONG-TERM DEBT

     Long-term debt related to continuing operations consists of the following:


<TABLE>
<CAPTION>
                                                                                      March 31,         March 31,
                                                                                         2000             1999
                                                                                    -------------    --------------
                                                                                             (In Thousands)
  <S>                                                                              <C>               <C>
  Bank Term Loan;  payable in  installments  of interest  at 7.5% and  principal
    monthly for ten years ending  September 1, 2006,  with a lump sum payment of
    approximately $7.7 million on that date secured by all tangible and
    intangible assets of the Company.                                                $  13,376       $    14,806

  Unsecured Notes Payable plus interest at 18% through December 2000.                      150               150

  Unsecured Notes Payable due March 2001 plus interest at 13%.                             142               200

  Unsecured Note Payable plus interest at 3%, payable in monthly  installments
    of $2,394 through September 2006.                                                      169               193

  Unsecured  Note  Payable  under  settlement  agreement  with  State of Florida
    Department of Revenue, payable in monthly installments of $2,500-$3,500

    over a period of four to eight years.                                                  260               284

   Other Notes and  Agreements;  interest and  principal  payable  monthly and
    annually at various amounts through March 2001.                                         66               156
                                                                                    ------------     -------------
  Total Long -Term Debt                                                                 14,163            15,789
  Less Current Portion                                                                  (1,052)             (874)
                                                                                    ------------     -------------
  LONG-TERM DEBT DUE AFTER 1 YEAR                                                    $  13,111       $    14,915
                                                                                    ============     =============

</TABLE>

     The  bank  notes  payable  are  collateralized  by the  Company's  accounts
receivables, inventory, equipment and intangibles.

<PAGE>
                                       31


     At March 31, 1999, the Company was in violation of certain covenants of the
bank term loan agreement.  The Company  requested a waiver of certain  defaults,
which  may  have  occurred  under  the  loan  agreement  as a  result  of  these
violations. On July 16, 1999, the bank provided the Company with a waiver of the
defaults through June 30, 1999. In addition,  the bank and the Company agreed to
modify these financial covenants of the loan agreement for results of operations
subsequent  to July 1, 1999.  Throughout  fiscal 2000,  the bank and the Company
have been engaged in discussions regarding the financial covenant  modifications
along  with the  payment of  amounts  due  pursuant  to  provisions  of the loan
agreement  that provide for  principal  payments  based upon an excess cash flow
formula.  On July 6,  2000 the  bank and the  Company  agreed  to the  financial
covenant  modifications,  the excess cash flow payment and a modification to the
excess  cash  flow  payment  formula.  As a result  of the  agreement,  the bank
provided the Company with waivers of default through June 30, 2000. In addition,
upon the execution of the  modification  agreement,  the Company made a one-time
principal  payment of $200,000 to the bank that represented the excess cash flow
payments that were due and payable as of March 31, 2000. The financial covenants
prohibit the Company from exceeding a maximum  deficit net worth and provide for
limits on annual capital  expenditures and officers  compensation as well as the
maintenance of certain financial ratios.

     In August  1998,  the Company  borrowed  $150,000  from three  individuals,
including  $100,000  from the Chairman and C.E.O.  to support the  operations of
Medical Technology Laboratories, Inc. ("MTL"). The terms and conditions of these
obligations  provided for repayment  within six months from the  borrowing  date
including interest payable at 12% per annum. In addition,  the notes provide the
lenders with  warrants to purchase  88,500 shares of common stock of the Company
at $.75 per share for a period of ten (10) years. The fair value assigned to the
warrants is insignificant.  The obligations  matured without repayment,  and the
Company and its lenders agreed to a repayment schedule with monthly installments
commencing in March 2000 and ending in December 2000  including  interest at the
default rate of 18%.

     In October  1998,  the Company  borrowed  $200,000  from an  individual  to
support the  operations  of MTL.  The terms and  conditions  of this  obligation
included repayment on September 1, 1999 including interest at 12% per annum. The
notes  provide the lenders with  warrants to purchase  118,000  shares of common
stock of the Company at $.75 per share for a period of ten (10) years.  The fair
value assigned to the warrants is insignificant.  The obligation matured without
repayment,  and the Company and the lender  agreed to a repayment  schedule with
monthly  installments  commencing  in October 1999 and ending in September  2001
including  interest  at 13%.  In the  event  that the  Company  defaults  on its
obligations  under the  promissory  note,  the  lender is  entitled  to  receive
warrants to purchase up to 800,000 and 18,000 shares of common stock at $.05 and
$.75 per share,  respectively,  for a period of ten (10) years. In addition, the
note is secured by 290,313  shares of the  Company's  common  stock owned by the
Chairman and C.E.O.

     The following is a schedule by year of the principal  payments  required on
these notes payable and long-term debts as of March 31, 2000:

                                  (In Thousands)
 2001. . . . . . . . . . . . . . . . $   1,052
 2002. . . . . . . . . . . . . . . . $     900
 2003. . . . . . . . . . . . . . . . $     907
 2004. . . . . . . . . . . . . . . . $     952
 2005. . . . . . . . . . . . . . . . $   1,023
 Thereafter. . . . . . . . . . . .   $   9,329


<PAGE>
                                       32


     Interest  expense from  continuing  operations for the years 2000, 1999 and
1998 amounted to $1,158,000, $1,145,000 and $652,000 respectively.

     Long-term debt included in net assets of discontinued  operations  consists
of the following:

<TABLE>
<CAPTION>
  LifeServ                                                                            March 31,         March 31,
  --------
                                                                                         2000             1999
                                                                                    -------------    --------------
                                                                                             (In Thousands)
  <S>                                                                                <C>             <C>
  Demand note past due at March 31, 1999 plus interest at default rate of 18%.       $       0       $       395

  Note payable;  interest at 12% payable  $20,026 per month  including  interest
    maturing September 1, 2002. Secured by equipment at a customer site and
    the payments from a lease contract receivable.                                           0               536

  Capital lease  obligations  payable monthly at various amounts through March
    2000.                                                                                    0                72
                                                                                    ------------     -------------
  Long-Term Debt related to discontinued operations                                          0             1,003
  Less Current Portion                                                                       0              (657)
                                                                                    ------------     -------------
  LONG-TERM DEBT RELATED TO DISCONTINUED OPERATIONS DUE AFTER 1 YEAR
                                                                                    $        0       $       346
                                                                                    ============     =============
</TABLE>

<TABLE>
<CAPTION>
  MTL                                                                                 March 31,         March 31,
  ----
                                                                                         2000             1999
                                                                                    -------------    --------------
                                                                                             (In Thousands)
  <S>                                                                               <C>              <C>
  Seller financing  under Tampa  Pathology  Acquisition  Agreement face value of
    $487,628 discounted at 10% with variable monthly payments until satisfied,

    subject to compromise at March 31, 1996.                                         $       0       $       234

  Seller Financing under Community Clinical Laboratories, Inc. (CCL) Acquisition
    Agreement,  maximum  face  amount  of $2.5  million  discounted  at 10% with
    variable  quarterly  payments based upon 9% of cash  collections  from tests
    performed for customers acquired pursuant to the acquisition

    agreement until satisfied or for 5 years, whichever comes first.                         0             1,058

  Capital  Lease  obligation  for equipment  acquired  from CCL;  interest and
    principal payable monthly at various amounts through May 2001.                           0               130

  Other Notes and  Agreements;  interest  and  principal  payable  monthly and
    annually at various amounts through March 2000.                                        290                79
                                                                                    ------------     -------------
  Long-term debt related to discontinued operations.                                       290             1,501
  Less Current Portion                                                                    (174)             (187)
                                                                                    ------------     -------------
  LONG-TERM DEBT RELATED TO DISCONTINUED OPERATIONS DUE AFTER 1 YEAR
                                                                                    $      116       $     1,314
                                                                                    ============     =============
</TABLE>



<PAGE>
                                       33


NOTE 10 - LEASE COMMITMENTS

     The  following  is a schedule  by year of future  minimum  rental  payments
required under operating leases that have an initial or remaining non-cancelable
lease term in excess of one year as of March 31, 2000.

                                (In Thousands)
  2001............................$ 365,000
  2002............................$ 347,000
  2003............................$  63,000
  2004............................$  59,000
  Thereafter......................$       0

     Rent expense  amounted to $312,000,  $311,000 and  $266,000,  for the years
ended March 31, 2000, 1999 and 1998, respectively.


NOTE 11 - 401(K) PROFIT SHARING PLAN

     The Company has a 401(K) Profit Sharing Plan. The Plan covers substantially
all of its employees.  Contributions are at the employees' discretion and may be
matched by the Company up to certain limits. For the years ended March 31, 2000,
1999 and 1998, the Company contributed $18,740, $22,000 and $0, respectively, to
the plan.


NOTE 12 - SELF INSURANCE PLAN

     The Company has a Medical Health Benefit  Self-insurance Plan, which covers
substantially  all of its  employees.  The Company is reinsured  for claims that
exceed  $30,000 per  participant  and has an annual maximum  aggregate  limit of
approximately $650,000.


NOTE 13 - RELATED PARTY TRANSACTIONS

     Todd E. Siegel  ("Siegel")  is the Trustee of the Siegel  Family QTIP Trust
(the  "Trust"),  which is the general  partner in JADE  Partners,  a significant
shareholder of the Company.  The Trust has entered into an exclusive  Technology
and Patent  Licensing  Agreement with the Company for certain  technologies  and
patents on machine and product designs.

     Under the terms of the amended agreement, the Company is required to pay to
the Trust royalties of one percent of sales on licensed  products.  In addition,
the  agreement  states that there are no minimum  royalty  payments  due and the
agreement   would  expire  if  the  Company   abandons  or  ceases  to  use  the
technologies.  Royalty  payments were $50,000,  $51,000 and $50,000 in the years
ended March 31, 2000, 1999 and 1998, respectively.  Accrued royalty payments due
as of March 31, 2000, 1999 and 1998 total approximately  $266,000,  $175,000 and
$104,000, respectively.

     Siegel, through his beneficial interest in the Trust, owns approximately 10
percent of the  outstanding  Common  Stock of the Company.  In addition,  Siegel
beneficially  owns 6,500,000 shares of voting  preferred  stock,  which have two
votes per share for all matters  submitted to the holders of the Common Stock of
the Company.

     Siegel had  outstanding  indebtedness  to the Company at March 31, 2000 and
March 31, 1999 of approximately $1,100 and $0.



<PAGE>
                                       34


NOTE 14 - TAXES

     The components of related  income taxes  provided on continuing  operations
were as follows:

<TABLE>
<CAPTION>
                                                                    Years Ended March 31,
                                                     ---------------------------------------------------
                                                          2000               1999              1998
                                                     -------------      -------------     --------------
                                                                        (In Thousands)
         <S>                                         <C>                <C>               <C>
         Current Tax (Benefit):
             Federal                                 $        0         $        0        $      (270)
             State                                            0                  0                  0
                                                     ------------       ------------      -------------
                                                              0                  0               (270)
                                                     ------------       ------------      -------------
         Deferred Tax:
             Federal                                 $        0         $      117        $         0
             State                                            0                  8                  0
                                                     ------------       ------------      ------------
                                                     $        0         $      125        $      (270)
                                                     ============       ============      =============
</TABLE>

     In 1999, income tax expense and benefit of equal and offsetting  amounts of
$125,000 were allocated to continuing and discontinued operations, respectively.

     Total income tax (benefit)  expense for 2000, 1999 and 1998 from continuing
operations resulted in effective tax rates of 0%, 37.5% and 73.0%, respectively.
The reasons for the  differences  between these effective tax rates and the U.S.
statutory rate of 34.0%-35.0% on the continuing operations are as follows:


<TABLE>
<CAPTION>
                                                                               Years Ended March 31,
                                                                 ------------------------------------------------
                                                                      2000              1999             1998
                                                                 -------------     -------------    -------------
                                                                                  (In Thousands)
   <S>                                                           <C>               <C>              <C>

   Tax (Benefit) Expense at U.S. statutory rate                  $      413        $      117       $     (382)
   State Income Tax, Net                                                 42                 8              (41)
   Net operating loss carryforward                                     (455)                0                0
   Current tax benefit not recognized                                     0                 0              423
   Effect of prior year carryback, not previously recognized              0                 0             (270)
                                                                 ------------      ------------     ------------
                                                                 $        0        $      125       $     (270)
                                                                 ============      ============     ============
</TABLE>


     Deferred taxes for continuing operations consist of the following:

<TABLE>
<CAPTION>
                                                                           March 31, 2000         March 31, 1999
                                                                         -----------------      -----------------
                                                                                      (In Thousands)
    <S>                                                                  <C>                    <C>
    Deferred Tax Assets:
        Depreciation/Amortization Temporary Difference                   $         (140)        $          222
        Allowance for Doubtful Accounts                                             103                     79
        Inventory Valuation Allowance                                                15                     52
        Tax Loss Carry Forward                                                    4,638                  5,240
        Reserves and Provisions                                                     218                    212
                                                                         ----------------       ----------------
        Gross Deferred Tax Asset                                                  4,834                  5,805
                                                                         ----------------       ----------------
        Less Valuation Allowance                                                 (4,834)                (5,805)
                                                                         ----------------       ----------------
        Deferred Income Taxes                                            $            0         $            0
                                                                         ================       ================
</TABLE>

<PAGE>
                                       35


     At March 31,  2000,  the Company had  deferred  tax assets  available  from
continuing  operations of  approximately  $4.8 million as shown above.  Deferred
taxes for discontinued  operations as of March 31, 2000 total approximately $1.4
million consisting principally of allowance for doubtful accounts. A tax benefit
has not been  recorded for these  assets,  as it is not yet more likely than not
that these benefits will be realized by reducing future taxable income. At March
31, 2000, the Company had  approximately  $12.4 million of  carryforward  losses
that will expire by 2020 that are available to offset future taxable income.


NOTE 15 - STOCKHOLDERS' EQUITY (DEFICIT)

     Stockholders' Equity (Deficit) consists of the following:

<TABLE>
<CAPTION>
                                                       March 31,             March 31,            March 31,
                                                         2000                  1999                  1998
                                                   ----------------      ----------------     -----------------
      <S>                                              <C>                   <C>                    <C>
      Voting Preferred Stock:
          Par Value $.0001 Per Share
          Authorized Shares                            7,500,000             7,500,000             7,500,000
          Issued Shares                                6,500,000             6,500,000             6,500,000
          Outstanding Shares                           6,500,000             6,500,000             6,500,000

                                                       March 31,             March 31,            March 31,
                                                         2000                  1999                  1998
                                                   ----------------      ----------------     -----------------
      Common Stock:
          Par Value $.01 Per Share
          Authorized Shares                           25,000,000            25,000,000            25,000,000
          Outstanding Shares                           6,495,421             6,358,991             6,071,673
          Issued Shares                                6,542,621             6,406,191             6,129,673

</TABLE>


Common Stock

     During fiscal 2000,  the Company issued 50,000 shares of common stock to an
officer and director in lieu of cash compensation of $4,750 and 46,430 shares of
common stock to outside directors in lieu of cash compensation of $18,500 earned
for attendance at meetings of the Board of Directors.  In addition,  the Company
issued 40,000 shares of common stock to two individuals pursuant to an agreement
to redeem the minority  interest  held by these  individuals  in a subsidiary of
LifeServ.

     During fiscal 1998,  the Company  issued  150,000 shares of common stock in
lieu of a debt payment to a former  employee of the  Company.  These shares were
valued based upon the value of the debt  payment  reduction,  and the  agreement
required additional shares to be issued one year later such that the total value
of all shares  issued be equal to  $150,000.  During  fiscal  1999,  the Company
issued 287,318 shares of common stock to complete this  agreement.  In addition,
during fiscal 1998, 22,500 shares were issued to employees for services and were
valued at $0.32 per share,  which was the  approximate  market value at the time
they were issued

<PAGE>
                                       36



Preferred Stock

     The JADE Family  Partnership  ("Partnership")  is  currently  the holder of
6,500,000  shares of Voting  Preferred  Stock.  The Siegel  Family  QTIP  Trust,
established  pursuant  to the terms of the Siegel  Family  Revocable  Trust (the
"Trust"), which originally acquired the shares of Voting Preferred Stock in 1986
for the aggregate par value of the shares  ($650.00),  transferred the shares to
the  Siegel  Family  Limited  Partnership  in 1993.  The Siegel  Family  Limited
Partnership transferred the shares to the Partnership in 1994. The Company's CEO
is the  trustee  of the  Trust,  which is the  managing  general  partner of the
Partnership, and accordingly, controls the shares held by the Partnership.

     The Voting Preferred Stock has two votes per share on all matters submitted
to a vote of other holders of Common Stock. In addition to  preferential  voting
rights,  the Voting  Preferred Stock is entitled to receive upon  dissolution or
liquidation  of the  Company,  the first  $10,000  of  proceeds  distributed  to
stockholders of the Company upon such events.  Thereafter,  the Voting Preferred
Stock is entitled to no additional  amounts upon  dissolution  or liquidation of
the  Company.  The Voting  Preferred  Stock has no dividend  rights,  redemption
provisions,  sinking fund  provisions or  conversion,  or preemptive or exchange
rights.  The  Voting  Preferred  Stock  is  not  subject  to  further  calls  or
assessments by the Company.

Stock Options

     The  Company  has  adopted  only the  disclosure  provisions  of  Financial
Accounting  Standard No. 123,  "Accounting for Stock-Based  Compensation," as it
relates to employment  awards.  It applies APB Opinion No. 25,  "Accounting  for
Stock Issued to Employees,"  and related  interpretations  in accounting for its
plans and does not recognize  compensation  expense based upon the fair value at
the grant date for awards  under these  plans  consistent  with the  methodology
prescribed by SFAS 123, the Company's net income (loss) and earnings  (loss) per
share would be reduced to the proforma amounts indicated below:

<TABLE>
<CAPTION>
                                                                       2000              1999             1998
                                                                  -------------     -------------    --------------
<S>                                                               <C>               <C>              <C>
Net Income (Loss)                        As Reported              $    2,499        $  (5,487)       $     (854)
                                         ProForma                 $    2,470        $  (5,589)       $   (1,066)

Earnings (Loss) Per Common Share         As Reported              $     0.39        $   (0.88)       $    (0.14)
                                         ProForma                 $     0.38        $   (0.90)       $    (0.18)
</TABLE>


     The fair value of each option grant is estimated on the date of grant using
the  Binominal   options-pricing  model  with  the  following   weighted-average
assumptions  used for grants in 2000, 1999, and 1998  respectively,  no dividend
yield for all years, expected volatility of 130, 148, and 131 percent; risk-free
interest rates of 6.3, 5.10 and 5.81 percent, and expected lives of 3.0, 4.0 and
3.7 years.


<PAGE>
                                       37


     Activity related to options is as follows:

<TABLE>
<CAPTION>
                                                                                            Weighted Average
                                                               Number of Shares                 Exercise
                                                                                             Price per Share
                                                             --------------------         --------------------
         <S>                                                      <C>                            <C>
         Outstanding at March 31, 1997                            1,016,289                      $1.51
               Granted in Fiscal 1997:
               Officers & Directors                                 152,000                      $1.00
               Employees                                            412,000                      $1.00
               Options Expired                                      (22,170)                     $2.62
                                                            --------------------         --------------------

         Outstanding at March 31, 1998                            1,558,119                      $1.31
               Granted in Fiscal 1998:
               Officers and Directors                                22,000                      $0.75
               Employees                                            115,000                      $1.00
               Options Expired                                     (117,688)                     $1.77
                                                             --------------------         --------------------

         Outstanding at March 31, 1999                            1,577,431                      $1.25
               Granted in Fiscal 2000:
               Officers and Directors                                12,000                      $1.00
               Employees                                                  0                         $0
               Options Expired                                     (498,166)                     $1.05
                                                             --------------------         --------------------

         Outstanding at March 31, 2000                             1,091,265                     $1.34
                                                             ====================         ====================

</TABLE>



<TABLE>
<CAPTION>
Outstanding Shares
------------------
                                                               Weighted Average
                Range of                   Number            Remaining Contractual       Weighted Average
            Exercise Prices              Outstanding                  Life                Exercise Price
                                                                    (Years)
        -----------------------      ------------------      ---------------------     -------------------
<S>        <C>                          <C>                          <C>                     <C>
           $0.75 - $1.63                1,051,395                    5.9                     $1.15
           $4.00 - $6.00                   27,250                    2.8                     $5.03
           $6.38 - $10.00                  12,620                    4.0                     $9.32

Exercisable Shares
------------------
           $0.75 - $1.63                 879,544                     5.7                     $1.18
           $4.00 - $6.00                  27,250                     2.8                     $5.03
           $6.38 - $10.00                 12,620                     4.0                     $9.32

</TABLE>


     The  options  outstanding  at  March  31,  2000  expire  on  various  dates
commencing in March 2001 and ending in March 2010.

     The weighted  average  grant date fair value of options  during fiscal year
2000, 1999 and 1998 was $.33, $.28, and $.29 respectively.


<PAGE>
                                       38


     At March 31,  1999 and 1998,  exercisable  options  totaled  1,167,098  and
673,984 at weighted average exercise prices of $1.33 and $1.68, respectively.

Warrants
--------

        Activity related to warrants is as follows:

<TABLE>
<CAPTION>
                                                                      Number of Shares         Weighted Average
                                                                                                Price Per Share
                                                                    --------------------      ------------------
        <S>                                                             <C>                         <C>
        Outstanding at March 31, 1997 through March 31, 1999             1,529,000                  $6.15
        Granted in Fiscal 2000                                              42,500                  $0.46
                                                                    --------------------      ------------------
        Outstanding at March 31, 2000                                    1,571,500                  $6.00
                                                                    ====================      ==================
</TABLE>


     Of the warrants  outstanding  at March 31, 2000,  1,320,000  expire in July
2000 with the remaining warrants expiring in March 2010.

     The weighted  average grant date fair value of warrants  during fiscal year
2000 and 1999 was $.10 and $.25 respectively.

     During  fiscal year 1995,  the Company  entered  into a stock  appreciation
rights agreement with its Chief Executive Officer. The agreement, which is for a
term of 10 years,  calls for additional  compensation  payable annually equal to
3.25% of the total of the  incremental  increase  in the value of the  Company's
outstanding stock. Additional compensation payable for the years ended March 31,
2000, 1999 and 1998 totaled $27,000, $0 and $0 respectively.


NOTE 16 - BUSINESS ACQUISITION

     During the second  quarter of fiscal year 1999,  the  Company,  through its
subsidiary  MTL,  entered  into an  agreement  to  purchase  certain  assets  of
Community  Clinical  Laboratories,   Inc.  ("CCL"),  principally  equipment  and
goodwill/customer base, in exchange for a $2,500,000 contingent note payable for
a period of five years. The primary operations of CCL were previously  suspended
in July 1998 when certain  agencies of both the State of Florida and the Federal
Government  revoked  CCL's  ability  to seek  reimbursement  for its  laboratory
testing  services from both the Medicare and Medicaid  programs and seized CCL's
accounting records.

     During the third  quarter of fiscal  year 1999,  the Company  recorded  the
acquisition  of the  assets  of  CCL as a  purchase.  Accordingly,  the  Company
estimated the amount ultimately  payable pursuant to the contingent note payable
and allocated the total  estimated cost of the  acquisition  to equipment  based
upon an  independent  appraisal,  and the remainder to  goodwill/customer  base.
During  the  fourth  quarter  of fiscal  year  1999,  the  Company  changed  its
preliminary  estimate of the present  value of the amount that may be ultimately
payable  on  the  contingent  note  payable  from  approximately  $2,000,000  to
approximately  $1,058,000  based on a more thorough  analysis of historical  and
expected   cash   collections   and   correspondingly   reduced  the  amount  of
goodwill/customer base recorded to approximately $250,000. The goodwill/customer
base has a ten-year amortization period.

     As a result of the  uncertainty  related to the  operations of CCL prior to
the  acquisition  of certain  assets by MTL and the lack of  reliable  financial
information  related  to the  historical  operation  of  CCL,  as well as due to
management's  decision in fiscal 1999 to sell or abandon MTL,  pro-forma results
as if the business  combination  occurred  April 1, 1997 and 1998 are not deemed
meaningful and have not been presented. The principal assets of MTL were sold in
January 2000 (see Note 3).

<PAGE>
                                       39



NOTE 17 - EARNINGS PER SHARE

     Net income  (loss) per common  share is  computed  by  dividing  net income
(loss) by the  basic and  diluted  weighted  average  number of shares of common
stock outstanding.  For diluted weighted average shares outstanding, the Company
used the treasury  stock method to calculate the Common Stock  equivalents  that
the stock options would represent.

<TABLE>
<CAPTION>
                                                                Year Ended          Year Ended          Year Ended
                                                              March 31, 2000      March 31, 1999      March 31, 1998
                                                             --------------      --------------     ---------------
<S>                                                             <C>                 <C>                 <C>
Basic and Diluted

    Actual   weighted   average   shares   outstanding;
    weighted   average   shares   used  in  income  per
    calculation - basic and diluted                             6,447,000           6,223,000           6,062,000
                                                              ==============      ==============     ===============
</TABLE>



     The  following  table set forth the  computation  of  historical  basic and
diluted earnings (loss) per share:

<TABLE>
<CAPTION>
                                                                   2000                1999                1998
                                                             ---------------      --------------     ---------------
<S>                                                           <C>                 <C>                 <C>
Numerator:
   Net Income (Loss)                                          $ 2,499,000         $ (5,487,000)       $  (854,000)
                                                             ===============      ==============     ===============
Denominator:
    Denominator  for basic  and  diluted  earnings  per
    share- weighted average shares outstanding                  6,447,000            6,233,000          6,062,000
                                                             ===============      ==============     ===============

Net Income (Loss) Per Common Share - Basic                    $      0.39               $(0.88)       $     (0.14)
                                                             ===============      ==============     ===============
Net Income (Loss) per Common Share - Diluted                  $      0.39         $      (0.88)       $     (0.14)
                                                             ===============      ==============     ===============

</TABLE>

     The effect of all options and warrants (see Note 15) for all years were not
included in the calculation of net income (loss) per diluted common share as the
effect would have been anti-dilutive.

<PAGE>
                                       40



NOTE 18 - CONTINGENCIES

     The Company sold the assets of subsidiaries  LifeServ and MTL during fiscal
2000 (See Note 3). The buyers assumed certain  liabilities of these subsidiaries
including a certain long-term obligation of approximately  $536,000 payable to a
financial institution and secured by equipment at a customer site and a contract
receivable.  The  Company  was a  guarantor  of the  obligation  at the time the
obligation originated and continues as a guarantor.

     In November 1998, the Company's subsidiary,  MTL, received a refund request
in the amount of $1.8  million  from  Medicare  Program  Safeguards  ("MPS") and
$104,000  from the  State of  Florida  Agency  for  Health  Care  Administration
("AHCA").  The requests followed an onsite review of MTL's billing procedures by
agencies of both the State of Florida and the  federal  government.  The Company
has  requested  a hearing in the  matter,  and MPS and AHCA have  suspended  the
recoupment  of the refund until the hearing  takes place.  Although MTL believes
that MPS's  determination  and the request for refunds are without merit,  there
can be no assurance that this matter will be resolved over the near term or that
the  ultimate  outcome of the matter will not result in a  recoupment  effort by
HCFA directed at the proceeds of the collection of accounts  receivable that MTL
retained as part of the sale of the business.

     Certain  creditors of LifeServ and MTL have commenced legal actions against
the Company seeking payment of liabilities assumed by the buyers of LifeServ and
MTL. The Company intends to vigorously defend these actions and seek appropriate
remedies from the buyers.

     The Company is involved in certain claims and legal actions  arising in the
ordinary course of business  including the matters referred to above.  There can
be no assurances that these matters will be resolved on terms  acceptable to the
Company.  In the  opinion  of  management,  based  upon  advice of  counsel  and
consideration  of all facts available at this time, the ultimate  disposition of
these matters will not have a material adverse effect on the financial position,
results of operations or liquidity of the Company.

     The  Company  did  not  experience   any   significant   interruptions   or
difficulties  related to Y2K  readiness,  however,  internal  systems as well as
third party compliance continues to be monitored. Notwithstanding the foregoing,
there can be no  assurances  that  difficulties  will not arise  that may have a
material adverse effect on the operations of the Company.


NOTE 19 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

<TABLE>
<CAPTION>
                                                                                  2000          1999         1998
                                                                               ----------    ---------   ----------
<S>                                                                               <C>           <C>          <C>
Supplemental Disclosure of Cash flow Information

   Cash Paid for Interest                                                      $  1,159      $ 1,153     $ 1,048

   Cash Received from Income Tax Refund                                        $      0      $     0     $   270

Supplemental Cash Flow Information for Discontinued Operations

   Operating Activities:
     Net Cash Provided (Used) by Discontinued Operations                       $    400      $  (477)    $(1,286)

   Investing Activities

   Net Cash Provided (Used) by Investing Activities of Discontinued

     Operations                                                                      90       (1,527)       (679)

   Financing Activities:
   Net Cash Provided (Used) by Financing Activities of Discontinued
     Operations                                                                    (475)       2,207       1,967

   Net Increase (Decrease) in Cash - Discontinued Operations                         15          203           2
   Cash at Beginning of Period - Discontinued Operations                             61         (142)       (144)
                                                                               ---------    ---------   ---------
   Cash at End of Period - Discontinued Operations                             $     76     $     61        (142)
                                                                               =========    =========   =========
</TABLE>

     Other non-cash investing and financing activities are as follows:

Continuing Operations
---------------------

     During  fiscal  year  2000,  the  Company  recorded  a  prior  year  equity
transaction  that was deemed  insignificant  pertaining  to the  forgiveness  of
$25,000 of debt to a former  officer of the Company in exchange  for a reduction
in the exercise price of options  previously granted to him from $4.00 and $1.63
per option to $1.00 per option.  The new  exercise  price was  greater  than the
market  price of the  Company's  common  stock at that time.  In  addition,  the
Company  issued common stock in exchange for an accrued  liability  reduction of
$15,000 and transferred approximately $90,000 of other assets to fixed assets.


<PAGE>
                                       41


     During fiscal 1998, the Company reduced a debt obligation  $150,000 through
the issuance of common stock.

     During  fiscal 1998,  the Company  acquired a patent as  satisfaction  of a
receivable in the amount of $201,000.

    Discontinued Operations

     During fiscal year 1999,  the Company  acquired  certain assets of CCL (See
Note 16) in exchange for a contingent  note valued at $1,058,000  and assumption
of a capital lease  obligations  valued at $151,000.  The assets  acquired had a
fair value of $1,209,000.

     During  fiscal  1998,  the Company  purchased  Cygnet for a cash payment of
$357,000 (net of cash acquired) and assumption of liabilities of $1,247,000. The
assets acquired had a fair value of $517,000 (net of cash acquired).

     During fiscal 1998,  the Company  redeemed a minority  interest  share of a
subsidiary's  common  stock  resulting  in a $160,000  addition to goodwill  and
accrued expenses.

     See  Notes  1  and  3  for  fiscal  2000  and  1999   forgiveness  of  debt
(extraordinary gain) and gain on disposal of discontinued operations.


<PAGE>
                                       42



                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this Form 10-K to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                        MEDICAL TECHNOLOGY SYSTEMS, INC.


Dated: July 6,  2000                    By: /s Todd E. Siegel
                                        ---------------------------------------
                                        Todd E. Siegel, Chief Executive Officer

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


         Signature                  Title                               Date
------------------------    ----------------------                --------------


 /s Todd E. Siegel          Chairman of the Board of Directors,    July 6, 2000
 -----------------------    President and Chief Executive Officer
  Todd E. Siegel


 /s David W. Kazarian       Director                               July 6, 2000
 -----------------------
 David W. Kazarian


 /s Michael P.Conroy        Director, Chief Financial Officer      July 6, 2000
 -----------------------    and Vice President
 Michael P. Conroy


 /s John Stanton           Director and Vice Chairman of the       July 6, 2000
------------------------   Board of Directors
 John Stanton


 /s Mark J. Connolly       Principal Accounting Officer            July 6, 2000
-----------------------    and Controller
 Mark J. Connolly

<PAGE>
                                       43



              REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON
                          FINANCIAL STATEMENT SCHEDULE



Board of Directors
Medical Technology Systems, Inc.


         In connection with our audit of the consolidated  financial  statements
of Medical Technology Systems,  Inc. and Subsidiaries  referred to in our report
dated June 29, 2000,  which is included in the  Company's  Annual  Report on SEC
Form 10-K as of and for the year  ended  March 31,  2000,  we have also  audited
Schedule II for the years ended March 31, 2000,  1999 and 1998.  In our opinion,
this schedule presents fairly in all material respects, the information required
to be set forth herein.

GRANT THORNTON LLP
Tampa, Florida

June 29, 2000



<PAGE>


                                                                     SCHEDULE II


                MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES

                        VALUATION AND QUALIFYING ACCOUNTS
                For the Years Ended March 31, 1998, 1999 AND 2000



<TABLE>
<CAPTION>
                Column A                           Column B             Column C             Column D             Column E
-----------------------------------------       --------------       --------------       --------------       --------------
                                                  Balance at           Charged to            Accounts            Balance at
                                                 Begining of           Costs and           Writtren Off,           End of
                                                     Year               Expenses                Net                 Year
                                                --------------       --------------       --------------       --------------
<S>                                             <C>                  <C>                  <C>                  <C>
(1) Deferred Tax Valuation Allowance:

Year Ended March 31, 1998                       $       4,909        $         980        $           0        $       5,889
Year Ended March 31, 1999                       $       5,889        $          84        $           0        $       5,805
Year Ended March 31, 2000                       $       5,805        $       1,167        $           0        $       4,638


(1) Inventory Valuation Allowance:

Year Ended March 31, 1998                       $          80        $         189        $           0        $         269
Year Ended March 31, 1999                       $           0        $         140        $           0        $         140
Year Ended March 31, 2000                       $         140        $         100        $           0        $          40


(1) Self Insured Medical Claims
        Valuation Allowance:

Year Ended March 31, 1998                       $         212        $         583        $         611        $         184
Year Ended March 31, 1999                       $         122        $         566        $         588        $         100
Year Ended March 31, 2000                       $         100        $         297        $         325        $          72


(1) Allowance for Doubtful Accounts
        and Contractual Allowances:

Year Ended March 31, 1998                       $       1,040        $       1,463        $         499        $       2,004
Year Ended March 31, 1999                       $         178        $          58        $          25        $         211
Year Ended March 31, 2000                       $         211        $          67        $           4        $         274


</TABLE>

     (1) For years  ended March 31, 2000 and 1999,  amounts  reflect  continuing
operations only. The year ended March 31, 1998 amounts have not been restated to
reflect continuing operations only as to do so is not practical.