UNITED STATES
                       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, 2002

                                       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
----------------------------------                         --------------------
(State or Other Jurisdiction                                  (I.R.S. Employer
of 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)

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|

Aggregate  market  value of  voting  Common  Stock  held by  non-affiliates  was
$12,500,000 as of June 26, 2002.

The number of shares  outstanding  of the  Registrant's  Common Stock,  $.01 par
value, was 4,361,690 as of June 26, 2002.

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 2002 fiscal year end, are
incorporated by reference into Part III of this Form.

Total number of pages, including cover page - 41 (excluding exhibits)


<PAGE>
                                       i.

                        MEDICAL TECHNOLOGY SYSTEMS, INC.

                               CLEARWATER, FLORIDA



                                      INDEX
PART I                                                                      PAGE
                                                                            ----

Item      1.    Business.......................................................1

          2.    Properties.....................................................4

          3.    Legal Proceedings..............................................4

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

PART II

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

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

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

          7A.   Quantitative and Qualitative Disclosure about Market Risk.....11

          8.    Financial Statements and Supplementary Data...................11

          9.    Changes In and Disagreements With Accountants On Accounting and
                 Financial Disclosure.........................................11

PART III

Item      10.   Directors and Executive Officers of the Registrant............12

          11.   Executive Compensation........................................12

          12.   Security Ownership of Certain Beneficial Owners,
                 Management and Related Stockholder Matters...................12

          13.   Certain Relationships and Related Transactions................12

PART IV

Item      14.   Exhibits, Financial Statements, Schedules and Reports
                 on Form 8-K..................................................13


Index to Financial Statements.................................................16

Signatures ...................................................................40



<PAGE>
                                       1


                                     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"). The
Company sold the assets of MTL and LifeServ in fiscal 2000.

     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,
assisted living and correctional  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.  MTS Packaging's medication dispensing systems and products provide
innovative methods for dispensing medications in disposable packages.

Segments
--------

     The  operation  of  the  Company  is  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.

<PAGE>
                                       2

     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 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
$580,000  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.  MTS Packaging has placed  approximately 1,865 medication
dispensing  systems with pharmacy  clientele since the inception of the Company.
MTS Packaging also sells prescription  labels and ancillary supplies designed to
complement  sales of  disposable  medication  punch  cards.  MTS  Packaging  had
approximately $915,000 in unshipped orders as of June 20, 2002.

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

     The Company  expended  approximately  $87,000 on research  and  development
activities  during the fiscal  year ended  March 31,  2002.  During the  current
fiscal year, the Company  devoted the majority of its  development  resources to
products that have been determined to be technologically feasible.

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

     The Company is presently  directing its product development efforts towards
the following projects:

          o    OnDemand(TM)packaging machines
          o    Various products for the assisted living,  home care
               and nutriceutical markets

     The Company expended  approximately  $853,000 on product development during
the fiscal year ended March 31, 2002.  The majority of these  expenditures  were
made for the OnDemand machine project.

     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  processes using conventional  offset printing methods.  MTS Packaging
has  several  machines  capable of  producing  punch  cards in this  manner.  In
addition to the  manufacturing  of punch cards,  MTS Packaging  manufactures the
machines that are sold to 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.

<PAGE>
                                       3

     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.  Ten  customers  comprise  approximately  sixty  percent  (60%)  of MTS
Packaging's  annual  revenue.  Sales to  PharMerica,  Inc.,  Tampa,  Florida and
Omnicare,  Inc., Covington,  Kentucky each represented  approximately 14% of MTS
Packaging's revenue in the fiscal year ended March 31, 2002.


     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.  These
pharmacies  serve from 250 to 34,000  nursing  home beds per  location  and many
serve the sub-acute,  assisted living, correctional and 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.,  Useful  Products  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.

     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  assignor 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 2008.

     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  that has been  submitted  to the  Patent and
Trademark Office.

     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.

<PAGE>
                                       4

     MTS  Packaging's  products are governed by federal  regulations  concerning
components of packaging  materials that are in contact with food and drugs.  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 the fiscal year ending March 31,
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  assumption  of
approximately $400,000 in liabilities.

Employees
---------

     As of June 26, 2002,  the Company  employed 145 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.


ITEM 2. PROPERTIES

     The Company  leases a 73,600  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  primary  manufacturing
facilities  for  MTS  Packaging  Systems,  Inc.  ("MTS  Packaging")  are at this
location.  The lease  expires on June 30, 2005.  The Company's  current  monthly
lease payments are approximately  $31,210. The premises are generally suited for
light manufacturing and/or distribution.

     MTS  Packaging  leases  approximately  5,200  square feet at  approximately
$3,034 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 are not  expected to have a
material  adverse  effect on the  financial  position,  results of operations or
liquidity of the Company.

     Certain  creditors of LifeServ,  a discontinued  operation,  have commenced
legal  action  against  the buyer of  LifeServ  seeking  payment of  liabilities
assumed by the buyer pursuant to the asset purchase agreement. Several creditors
have named LifeServ as a co-defendant  in the legal action.  The Company intends
to vigorously defend these actions and seek appropriate remedies from the buyer.

     In November 1998, MTL, a discontinued operation,  received a refund request
in the amount of $1.8 million from  Medicare  Program  Safeguards  ("MPS").  MTL
disputed the refund  request in its response to MPS in December  1998.  To date,
MTL has not received any further correspondence from MPS regarding this matter.


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

     None.


<PAGE>
                                       5


                                     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.  The first,  second and third  quarter of fiscal 2001  amounts  have been
retroactively  adjusted for the 1 for 2.5 reverse  stock split that  occurred in
December 2000.  Over-the-counter  market quotations reflect inter-dealer prices,
without retail markup,  markdown or commission and may not necessarily represent
actual transactions.

<TABLE>
<CAPTION>
                      2003 Fiscal Year                         High                          Low
                   -----------------------              -----------------             ----------------
                     <S>                                <C>                           <C>
                     First Quarter                      $     2.92                    $    2.45

                      2002 Fiscal Year                         High                          Low
                   -----------------------              -----------------             ----------------

                     First Quarter                      $     2.85                    $    1.25
                     Second Quarter                     $     2.55                    $    1.35
                     Third Quarter                      $     2.95                    $    1.55
                     Fourth Quarter                     $     3.00                    $    2.40

                       2001 Fiscal Year                        High                          Low
                   -----------------------              -----------------             ----------------

                     First Quarter                      $     1.58                    $     .78
                     Second Quarter                     $     1.73                    $    1.33
                     Third Quarter                      $     1.40                    $     .63
                     Fourth Quarter                     $     2.25                    $     .63

</TABLE>

     As of June 20, 2002,  there were  approximately  3,000 holders of record of
the  Company's  common  stock.

     The  Company has not  declared a dividend on its common  stock and does not
currently intend to declare a dividend.  Furthermore,  the Company is restricted
from paying dividends pursuant to the terms of its secured loan agreements.  The
Company intends to reinvest its future earnings,  if any, into the operations of
its business.

<PAGE>
                                       6





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)

                                                          2002            2001            2000           1999            1998
                                                      ------------    ------------    ------------   -------------   ------------
<S>                                                   <C>             <C>             <C>            <C>             <C>
Income Statement Data:

Net Sales                                             $    24,769     $    21,457     $    18,221    $     16,017    $    13,188
Cost of Sales and Other Expenses                           21,561          19,406          17,007          15,684         13,558
                                                      ------------    ------------    ------------   -------------   ------------
Income (Loss) from Continuing Operations
    Before Income Taxes, Discontinued Operations
      and Extraordinary Gain                                3,208           2,051           1,214             333           (370)
Income Tax Benefit (Expense)                               (1,234)          5,570               0            (125)           270
(Loss) from Discontinued Operations                             0            (227)         (2,185)         (3,764)          (754)
Gain on Forgiveness of Debt of Discontinued
    Operations                                                  0               0           1,249             569              0
Gain (Loss) on Disposal of Discontinued Operations              0               0           2,221          (2,500)             0
                                                      ------------    ------------    ------------   -------------   ------------
Net Income (Loss)                                     $     1,974     $     7,394     $     2,499    $     (5,487)   $      (854)
                                                      ============    ============    ============   =============   ============
Net Earnings (Loss) Per Basic and Diluted Common
    Share:  (Retroactively adjusted for the 1 for 2.5
      reverse stock split in December 2000)
Net Earnings (Loss) Per Basic Common Share:
From Continuing Operations                            $      0.46     $      2.45     $      0.47    $       0.08    $     (0.04)
Income (Loss) from Discontinued Operations                   0.00           (0.07)           0.50           (2.27)         (0.31)
                                                      ------------    ------------    ------------   -------------   ------------
Net Earnings (Loss) Per Basic Common Share            $      0.46     $      2.38     $      0.97    $      (2.19)   $     (0.35)
                                                      ============    ============    ============   =============   ============
Net Earnings (Loss) Per Diluted Common Share:
From Continuing Operations                            $      0.44     $      2.43     $      0.47    $       0.08    $     (0.04)
Income (Loss) from Discontinued Operations                   0.00           (0.07)           0.50           (2.27)         (0.31)
                                                      ------------    ------------    ------------   -------------   ------------
Net Earnings (Loss) Per Diluted Common Share          $      0.44     $      2.36     $      0.97    $      (2.19)   $     (0.35)
                                                      ============    ============    ============   =============   ============

</TABLE>

See Note 2 to the audited financial statements.

<TABLE>
<CAPTION>
                                                                                      AT MARCH 31,
                                                      ---------------------------------------------------------------------------
                                                                                     (In Thousands)
                                                          2002            2001            2000           1999            1998
                                                      ------------    ------------    ------------   -------------   ------------
<S>                                                   <C>             <C>             <C>            <C>             <C>
Balance Sheet Data:

Net Working Capital                                   $     3,274     $     1,682     $     1,702    $      1,458    $     1,592
Assets                                                     15,515          14,791           7,866           8,511         11,532
Short-Term Debt                                               968             963           1,052             874            294
Long-Term Debt                                             10,812          11,887          13,111          14,915         14,892
Stockholders' Equity (Deficit)                                468          (1,598)         (9,037)        (11,600)        (6,113)

</TABLE>

See Note 20 to the audited financial statements.


<PAGE>
                                       7


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

Overview
--------

     The Company's  core  business,  MTS Packaging  Systems,  Inc.,  experienced
profitable  growth in fiscal  2002.  Revenue  increased  by 15.3% and net income
before  income  taxes  increased  56.4%.  The  Company   continued  to  reinvest
significant portions of its earnings in new capital equipment to meet production
demands resulting from increased revenue and also made a substantial  investment
in the  development  of its  new  OnDemand(TM)  packaging  machine  as  well  as
additional disposable products for new markets.

Fiscal Year 2002 Compared to Fiscal Year 2001
---------------------------------------------

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

Net Sales
---------

     Net sales for the fiscal year ended March 31, 2002 increased 15.3% to $24.8
million from $21.5 million the prior fiscal year. Net sales  increased in fiscal
2002  primarily  as a result of an  increase in  disposable  punch cards sold to
existing  customers  and  increases  in the  sales of  packaging  machinery.  In
addition,  the  Company  added new  customers  during the year as a result of it
marketing  efforts that were directed  towards  smaller  independent  pharmacies
throughout  the  United  States  and the  United  Kingdom.  Selling  prices  for
disposable products increased slightly compared to the prior year.

     The Company  expects that selling  prices may increase  throughout the next
fiscal  year  depending  upon  competitive  factors.  The  volume of  disposable
products, as well as packaging machinery, is expected to increase as the Company
obtains new customers in the U.S.,  successfully  penetrates new markets such as
in the United Kingdom, and sells more products to its existing customer base. In
addition,  the Company expects that the completion of a beta site testing of its
new OnDemand machine will result in additional revenue from the sale of OnDemand
machines to existing customers.

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

     Cost of sales for the fiscal year ended March 31, 2002  increased  15.2% to
$14.4 million from $12.5  million the prior year.  Cost of sales as a percentage
of net sales  increased  slightly  to 58.2% from 58.1% for the prior  year.  The
increase in cost of sales resulted from the costs  associated with increased net
sales.  The slight increase in the cost of sales percentage  resulted  primarily
from  increases  in raw material  costs.  Increased  labor costs were  generally
offset by improvements in labor efficiencies.

     The Company  expects that its raw material  costs will increase  throughout
the  next  year.  However,   depending  on  competitive   factors,  the  Company
anticipates  that its selling  prices to customers will be increased in order to
offset the increase in raw material costs. During the last two fiscal years, the
Company made  significant  investments  in new  production  machinery,  which is
anticipated to result in manufacturing  efficiencies  that will generally offset
increases in labor costs.

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

     SG&A  expenses for the fiscal year ended March 31, 2002  increased  4.0% to
$5.2  million  compared to $5.0 million the prior year.  The  increase  resulted
primarily  from  increases  in sales  and  marketing  expenses  associated  with
increased net sales. In addition,  administration expenses increased compared to
the prior year primarily due to expenditures for investor relations, shareholder
communications  and investment  banking services.  The increase in SG&A expenses
were  partially  offset by an adjustment of $180,000 in the Company  reserve for
bad debts. The Company expects SG&A expenses to increase during the next year as
a result of  increased  sales and  marketing  efforts as well as the addition of
several administrative personnel to accommodate the increased business activity.

<PAGE>
                                       8

Research and Development ("R & D")
----------------------------------

     Research and development  expenses decreased 26.9% to $87,000 from $119,000
the prior year.  The decrease in R & D  expenditures  results from the Company's
emphasis in  developing  new  products  (including  the  OnDemand  product)  for
existing markets.

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

     Depreciation and amortization  expenses for the fiscal year ended March 31,
2002  increased  14.8% to  $926,000  compared to  $807,000  the prior year.  The
increase results primarily from the depreciation of manufacturing equipment that
was  placed in  service  during the  second  half of the prior  fiscal  year and
throughout the fiscal year ended March 31, 2002.

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

     Interest expense for the fiscal year ended March 31, 2002 decreased 6.3% to
$919,000 from $981,000 the prior year. The decrease in interest expense resulted
from the decrease in long-term  debt  outstanding  that resulted from  principal
payments made throughout the year.

Income Tax Expense
------------------

     Income tax expense for the fiscal year ended March 31, 2002 was  $1,234,000
compared  to an income tax  benefit of  $5,570,000  the prior  year.  Income tax
expense  for the  fiscal  year  ended  March 31,  2002  represents  taxes at the
statutory  federal and state rates.  During the prior  fiscal year,  the Company
recorded an income tax benefit of $5,719,000  resulting from the  recognition of
tax  benefits,  primarily  net  operating  loss  carryforwards,   that  had  not
previously been recognized.

Fiscal Year 2001 Compared to Fiscal Year 2000
---------------------------------------------

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

Net Sales
---------

     Net sales for the fiscal year ended March 31, 2001 increased 18.1% to $21.5
million from $18.2 million the prior fiscal year. Net Sales  increased in fiscal
2001  primarily  as a result of an  increase in the amount of  disposable  punch
cards sold to new and existing customers.  Selling prices remained stable during
the fiscal year ended March 31, 2001. Although the Company's customers continued
to experience downward pressure on reimbursement  amounts,  the Company believes
that the cost  savings  that are  realized by its  customers  by  utilizing  its
medication  dispensing  systems  will allow it to continue  to maintain  selling
prices at competitive levels.

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

     Cost of sales for the year ended  March 31, 2001  increased  20.2% to $12.5
million from $10.4  million in the prior year.  Cost of sales as a percentage of
sales increased to 58.1% from 57.1%. The increase in cost of sales resulted from
the costs associated with the increased net sales. The increase in cost of sales
as a percentage of sales  resulted  primarily from 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, 2001  increased  13.6% to $5.0
million  compared  to $4.4  million the prior year.  Sales and  marketing  costs
increased in Fiscal 2001 to accommodate  increases in net sales generated by MTS
Packaging. In addition, the Company incurred increased costs associated with its
investor relations, shareholder communication and investment banking activities.

<PAGE>
                                       9

Research and Development ("R & D")
----------------------------------

     Research and development  expenses  decreased 42.5% in the year ended March
31, 2001 to $119,000 from $207,000 the prior year. The Company  directed more of
its development  efforts to the completion of new products during the year ended
March 31, 2001  compared  to the prior year in which  development  efforts  were
directed towards the research of these new products.

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

     Depreciation and amortization  expense decreased 6.3% to $807,000 in fiscal
2001 from  $861,000  the prior year.  The  decrease  resulted  from older assets
becoming fully depreciated.

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

     Interest  expense  for the year ended  March 31,  2001  decreased  15.4% to
$981,000 from $1,159,000 the prior year. The decrease  resulted from a reduction
in long-term debt outstanding.

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

     During previous years, the Company had provided a 100% valuation  allowance
on its net  deferred  tax  asset  as it was not  more  likely  than not that the
related  income tax benefit would be realized in the future.  During the quarter
ended December 31, 2000, the Company  removed its valuation  allowance,  thereby
recording an income tax benefit of  $5,719,000  as the Company now believes that
it is more likely than not that these  income tax  benefits  will be realized in
the future based in part on (1) the historical profitable operations of its core
business;   (2)  expectations  that  its  core  business  will  continue  to  be
profitable;  (3) growth opportunities  available for its core business;  and (4)
the length of time that the net operating  loss  carryforwards  are available to
offset future taxable income.  The income tax benefit is comprised  primarily of
net operating  loss  carryforwards  that are available to offset future  taxable
income. The carryforward  losses expire beginning in fiscal year 2011 and ending
in fiscal year 2020.

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

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

     The operations of discontinued  operations  during the year ended March 31,
2001 were  confined  to the  liquidation  of  certain  assets of MTL,  primarily
accounts receivable.  Since the date of sale, approximately $431,000 of accounts
receivable were collected. The proceeds of the collection of accounts receivable
were used to pay the ongoing cost of  collection  and to fund  settlements  with
creditors of MTL.  During fiscal 2001, the Company  determined  that the cost of
collecting the remaining  accounts  receivable  could equal or exceed the amount
collected,  and therefore,  discontinued its collection  efforts and reduced the
carrying value of the accounts receivable to $0.

     Certain  liabilities of MTL were compromised during fiscal 2001 as a result
of settlements reached with creditors.  In addition, the Company determined that
certain liabilities were not payable, and therefore,  reduced the carrying value
of them to $0.

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

     The  operations  of the Company  provided  $3.1  million in the fiscal year
ended March 31,  2002  compared to $3.4  million  the prior year.  The  decrease
resulted   primarily   from  the  fact  that   accounts   receivable   increased
approximately  $900,000 and accounts payable and accrued  liabilities  decreased
approximately  $300,000 during the year. This increase in accounts receivable is
due to increased sales and an increase in days sales in accounts  receivable due
to slower  payments  from several  large  customers  and slow  payments from new
accounts in the United Kingdom.

     Investing  activities  used $1.7 million during the fiscal year ended March
31,  2002  compared  to $2.0  million  the prior  year.  The  decrease  resulted
primarily  from the fact that in the prior year the Company  made a  significant
expenditure  for new  manufacturing  equipment to  accommodate  the  anticipated
increase in net sales that was realized in the current year.

<PAGE>
                                       10

     Financing  activities  used $1.0 million during the fiscal year ended March
31, 2002 compared to $1.5 million the prior year. The decrease results primarily
from the fact that the Company made certain principal  payments to its lender in
the  prior  year  pursuant  to the  excess  cash  flow  provisions  of its  loan
agreement.

     The Company had working  capital of $3.3  million at March 31, 2002 and had
no source of additional  working capital at March 31, 2002 other than that which
is generated from operations.

     In June 2002,  the Company repaid the entire  amount,  $11,310,000,  of its
bank term loan with the proceeds of a new revolving line of credit,  term loans,
a  subordinated  note and  convertible  preferred  stock.  The revolving line of
credit allows for  borrowing of up to  $5,000,000  based upon advance rates that
are  applied  to the  Company's  eligible  accounts  receivable  and  inventory.
Interest is payable on the revolving line of credit monthly based on the average
unpaid balance at the prime rate plus 1.0%.

     One term loan in the  amount of  $700,000  is  repayable  in equal  monthly
installments  over a five (5) year term,  plus  interest  at the prime rate plus
1.25%.  Another  term loan in the amount of  $2,000,000  is  repayable  in equal
monthly  installments  over two (2) years plus  interest  at the prime rate plus
2.25% and is subject to an excess cash flow payment provision.

     The  revolving  line of  credit  and the  term  loans  are  secured  by the
Company's accounts receivable,  inventory, machinery and equipment and all other
assets of the Company.

     The subordinated  note in the amount of $4,000,000 is repayable in five (5)
years with  interest  only,  at 14%,  payable  monthly until the maturity of the
note. The subordinated  note is secured by a second lien on all of the assets of
the Company.  In addition,  the  subordinated  note holders were issued  566,517
warrants to purchase  common  stock  exercisable  for ten (10) years at $.01 per
share. (Subject to certain antidilution provisions.)

     The Company  issued 2,000 shares of convertible  preferred  stock at $1,000
per share.  The  holders of the  convertible  preferred  stock are  entitled  to
receive  quarterly  dividends at the rate of 11% per annum.  The  dividends  are
payable  in cash or shares of  convertible  preferred  stock,  at the  Company's
option,  and are  cumulative.  The preferred  stock is convertible  into 846,000
shares of the  Company's  common  stock at $2.36 per share.  (Subject to certain
antidilution provisions.)

     The warrant  agreement  and the terms of the  convertible  preferred  stock
contain a make-whole provision that obligates the Company to pay certain amounts
to the holders of the warrants and  convertible  preferred  stock if they do not
ultimately receive an amount equal to the price per share of the common stock on
the date they  exercise  their right to purchase the common shares that underlie
the warrants and the convertible  preferred  stock.  The warrant  agreement also
contains a provision that may obligate the Company to pay certain amounts to the
holders  of the  warrants  in the event that there is a change in control of the
voting  common stock of the  Company,  or if there is a sale of the Company or a
public offering of the Company's common stock.

     In the event that the Company is  required to make  payments to the holders
of the  warrants  and/or  preferred  stock,  it may  elect to  issue  additional
warrants  and/or  preferred  stock  in  lieu  of a cash  payment.  Although  the
make-whole   provision  and  other  provisions  of  the  warrant  agreement  and
convertible preferred stock agreement provide for a maximum of 12,500,000 shares
that may be issued pursuant to those provisions,  based upon current conditions,
the Company  believes it is unlikely that the maximum  number of shares would be
issued.

     The Company also issued,  to its financial  advisors,  125,000  warrants to
purchase  common stock as part of a success fee related to the above  referenced
financing. The warrants are exercisable for five (5) years at $1.50 per share.



<PAGE>
                                       11

     The revolving  line of credit,  the term loans and the  subordinated  notes
each contain certain financial covenants that, among other things,  requires the
maintenance  of  certain  financial   ratios,   limits  the  amount  of  capital
expenditures and requires the Company to obtain the lenders approval for certain
matters.

     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 may  result in  corresponding  increases  in
accounts receivable. Cash flow from operations and borrowing availability on the
revolving  line of credit 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.

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


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>
                                       12


                                    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 2002
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 2002
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 2002
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 2002
fiscal year.

<PAGE>
                                       13

                                     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.
             (c)     List of Exhibits
           **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
           **4.2     Certificate of Designation of the Powers,  Designation Preferences of Rights of the Series A Preferred
                     Stock.
          **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
        10.18(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
        10.22(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
       10.29(10)     Stock Option Plan dated March 4, 1997
       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.
       10.45(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.
       10.48(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.
       10.52(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.
       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.
       10.59(22)     Form of Warrant dated September 24, 1999 between Andrew G. Burch and Medical Technology Systems, Inc.
       10.60(22)     Form of Warrant dated  September 24, 1999 between IFM Venture  Group and Medical  Technology  Systems,
                     Inc.
       10.62(23)     Employment  Agreement between Medical Technology  Systems,  Inc. and Todd E. Siegel dated September 1,
                     1999.
</TABLE>


<PAGE>
                                       14
<TABLE>
   <S>               <C>
       10.63(23)     Amendment One to Executive Stock  Appreciation  Rights and Non-Qualified  Stock Option Agreement dated
                     October 28, 2000 between Medical Technology Systems, Inc. and Todd E. Siegel.
       10.64(24)     Registration  Statement  regarding the Medical Technology  Systems,  Inc. 1997 Stock Option Plan dated
                     February 27, 2001.
       10.65(25)     Employment  Agreement between Medical  Technology  Systems,  Inc. and Michael P. Conroy dated March 2,
                     2001.
       10.66(26)     Subordination  Agreement between Eureka I, L.P.,  LaSalle Business Credit,  Inc.,  Medical  Technology
                     Systems, Inc., MTS Packaging Systems, Inc. dated June 26, 2002.
       10.67(26)     Securities Purchase Agreement between Eureka I, L.P. and Medical Technology  Systems,  Inc. dated June
                     26, 2002.
       10.66(26)     Senior  Subordinated Note between Eureka I, L.P. and Medical Technology  Systems,  Inc. dated June 26,
                     2002.
       10.68(26)     Registration Rights Agreement between Eureka I, L.P. and Medical Technology  Systems,  Inc. dated June
                     26, 2002.
       10.69(26)     Tag-Along Agreement between Eureka I, L.P., Medical Technology  Systems,  Inc. and JADE Partners dated
                     June 26, 2002.
       10.70(26)     Tag-Along Agreement between Eureka I, L.P., Medical Technology Systems,  Inc. and Todd E, Siegel dated
                     June 26, 2002.
       10.71(26)     Guarantor  Security  Agreement  between  Eureka I,  L.P.,  MTS  Packaging  Systems,  Inc.,  Medication
                     Management  Technology,  Inc.,  Clearwater Medical Services,  Inc.,  Medical Technology  Laboratories,
                     Inc.,  Medication Management Systems,  Inc., Systems  Professionals,  Inc.,  Cart-Ware,  Inc., Vangard
                     Pharmaceutical  Packaging,  Inc. LifeServ Technologies,  Inc., Performance Pharmacy Systems, Inc., and
                     MTS Sales & Marketing dated June 26, 2002.
       10.72(26)     Guaranty Agreement between Eureka I, L.P. Medical Technology Systems, Inc. dated June 26, 2002.
       10.73(26)     Securities  Pledge Agreement between Eureka I, L.P.,  Medical  Technology  Systems,  Inc. and LifeServ
                     Technologies, Inc. dated June 26, 2002
       10.74(26)     Security Agreement between Eureka I, L.P., Medical Technology Systems, Inc. date June 26, 2002.
       10.75(26)     Trademark Security Agreement between Eureka I, L.P. and Medical  Technology  Systems,  Inc. dated June
                     26, 2002.
       10.76(26)     Trademark  Security  Agreement between Eureka I, L.P. and MTS Packaging  Systems,  Inc. dated June 26,
                     2002.
       10.77(26)     Patent Security Agreement between Eureka I, L.P. and MTS Packaging Systems, Inc. dated June 26, 2002.
       10.78(26)     Patent Security  Agreement between Eureka I, L.P. and The Siegel Family Revocable Trust dated June 26,
                     2002.
       10.79(26)     Patent Security Agreement between Eureka I, L.P. and Medical Technology  Systems,  Inc. dated June 26,
                     2002.
       10.80(26)     Warrant Agreement between Eureka I, L.P. and Medical Technology Systems, Inc. dated June 26, 2002.
       10.81(26)     Warrant Agreement between  Westminster  Securities  Corporation and Medical Technology  Systems,  Inc.
                     dated June 26, 2002.
       10.82(26)     Loan and Security  Agreement  between LaSalle  Business Credit,  Inc. as Agent,  Standard Federal Bank
                     National  Association Inc. as Lender and Medical Technology  Systems,  Inc. and MTS Packaging Systems,
                     Inc. dated June 26, 2002.
       10.83(26)     Term  Note A  between  LaSalle  Business  Credit,  Inc.  as  Agent,  Standard  Federal  Bank  National
                     Association  Inc. as Lender and Medical  Technology  Systems,  Inc. and MTS  Packaging  Systems,  Inc.
                     dated June 26, 2002.
       10.84(26)     Term  Note B  between  LaSalle  Business  Credit,  Inc.  as  Agent,  Standard  Federal  Bank  National
                     Association Inc. as Lender and Medical Technology Systems,  Inc. and MTS Packaging Systems, Inc. dated
                     June 26, 2002
       10.85(26)     Revolving Credit Note between LaSalle Business Credit,  Inc. as Agent,  Standard Federal Bank National
                     Association Inc. as Lender and Medical Technology Systems,  Inc. and MTS Packaging Systems, Inc. dated
                     June 26, 2002
       10.86(26)     Capex Note between LaSalle Business Credit, Inc. as Agent,  Standard Federal Bank National Association
                     Inc. as Lender and Medical Technology  Systems,  Inc. and MTS Packaging  Systems,  Inc. dated June 26,
                     2002.
       10.87(26)     Continuing  Unconditional  Guaranty between LaSalle Business Credit,  Inc. as Agent,  Standard Federal
                     Bank  National  Association  Inc. as Lender and Medical  Technology  Systems,  Inc. and MTS  Packaging
                     Systems, Inc. dated June 26, 2002.
</TABLE>

<PAGE>
                                       15
<TABLE>
  <S>                <C>
       10.88(26)     Securities  Pledge Agreement  between LaSalle Business  Credit,  Inc. as Agent,  Standard Federal Bank
                     National  Association Inc. as Lender and Medical Technology  Systems,  Inc. and MTS Packaging Systems,
                     Inc. dated June 26, 2002.
         10.89(26)   Guarantor  Security  Agreement between LaSalle Business Credit,  Inc. as Agent,  Standard Federal Bank
                     National Association Inc. as Lender,  Medication  Management  Technologies,  Inc.,  Clearwater Medical
                     Services,  Inc., Medical Technology  Laboratories,  Inc., Medication Management Systems, Inc., Systems
                     Professionals,  Inc., Cart-Ware,  Inc., Vangard Pharmaceutical  Packaging, Inc. LifeServ Technologies,
                     Inc., Performance Pharmacy Systems, Inc., and MTS Sales & Marketing, Inc. dated June 26, 2002.
       10.90(26)     Trademark  Security  Agreement between LaSalle Business Credit,  Inc. as Agent,  Standard Federal Bank
                     National Association Inc. as Lender and MTS Packaging Systems, Inc. dated June 26, 2002.
       10.91(26)     Trademark  Security  Agreement between LaSalle Business Credit,  Inc. as Agent,  Standard Federal Bank
                     National   Association  Inc.  as  Lender  and  Medical  Technology   Systems,   Inc.  dated  June  26,
                     2002.
       10.92(26)     Patent Security  Agreement  between LaSalle  Business  Credit,  Inc. as Agent,  Standard  Federal Bank
                     National Association Inc. as Lender and Medical Technology Systems, Inc. dated June 26, 2002.
       10.93(26)     Patent Security  Agreement  between LaSalle  Business  Credit,  Inc. as Agent,  Standard  Federal Bank
                     National Association Inc. as Lender and The Siegel Family Revocable Trust dated June 26, 2002.
       10.94(26)     Patent Security  Agreement  between LaSalle  Business  Credit,  Inc. as Agent,  Standard  Federal Bank
                     National Association Inc. as Lender and MTS Packaging Systems, Inc. dated June 26, 2002.
*                    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)
(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, 1999
(20)                 Incorporated herein by reference to Form 10-K for year ending March 31, 2000
(21)                 Incorporated herein by reference to Form 8-K filed July 17, 2000
(22)                 Incorporated  herein by reference to Form 10-Q filed November 7, 2000 for quarter ending September 30,
                     2000
(23)                 Incorporated  herein by reference to Form 10-Q filed February 6, 2001 for quarter ending  December 31,
                     2000
(24)                 Incorporated herein by reference to Form S-8 filed February 27, 2001.
(25)                 Incorporated herein by reference to Form 10-K for year ending March 31, 2001
(26)                 Filed herein

</TABLE>


<PAGE>
                                       16


                        MEDICAL TECHNOLOGY SYSTEMS, INC.

                          INDEX TO FINANCIAL STATEMENTS


                                                                            Page

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS............................17

CONSOLIDATED FINANCIAL STATEMENTS

      Consolidated Balance Sheets as of March 31, 2002 and 2001...............18

      Consolidated Statements of Operations for the years ended March 31, 2002,
        2001 and 2000.........................................................19

      Consolidated Statement of Changes in Stockholders' Equity (Deficit) for
        the years ended March 31, 2002, 2001 and 2000.........................20

      Consolidated Statements of Cash Flows for the years ended
         March 31, 2002, 2001 and 2000........................................21

      Notes to Consolidated Financial Statements...........................22-39


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON FINANCIAL
         STATEMENT SCHEDULE...................................................41


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>
                                       17


               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, 2002 and 2001 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, 2002.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

     In our opinion,  the financial statements referred to above present fairly,
in all  material  respects,  the  consolidated  financial  position  of  Medical
Technology Systems, Inc. and Subsidiaries as of March 31, 2002 and 2001, and the
consolidated results of operations and cash flows for each of the three years in
the  period  ended  March 31,  2002 in  conformity  with  accounting  principles
generally accepted in the United States of America.



GRANT THORNTON LLP
Tampa, Florida

June 11, 2002, except for Note 19
as to which the date is June 26, 2002




<PAGE>
                                       18



                MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             MARCH 31, 2002 AND 2001
                                 (In Thousands)

                                     ASSETS

<TABLE>
<CAPTION>
                                                                                        2002                 2001
                                                                                  ---------------      ---------------
<S>                                                                               <C>                  <C>
Current Assets:
     Cash                                                                         $          410       $           92
     Accounts Receivable, Net                                                              3,456                2,567
     Inventories, Net                                                                      2,212                2,311
     Prepaids and Other                                                                      199                  129
     Deferred Tax Benefits                                                                 1,232                1,085
                                                                                  ---------------      ---------------
     Total Current Assets                                                                  7,509                6,184

Property and Equipment, Net                                                                2,425                2,350
Other Assets, Net                                                                          2,477                1,772
Deferred Tax Benefits                                                                      3,104                4,485
                                                                                  ---------------      ---------------
Total Assets                                                                      $       15,515       $       14,791
                                                                                 ===============      ===============

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)


Current Liabilities:
     Current Maturities of Long-Term Debt                                         $          968       $          963
     Accounts Payable and Accrued Liabilities                                              3,267                3,539
                                                                                  ---------------      ---------------
     Total Current Liabilities                                                             4,235                4,502

Long-Term Debt, Less Current Maturities                                                   10,812               11,887
                                                                                  ---------------      ---------------
Total Liabilities                                                                         15,047               16,389
                                                                                  ---------------      ---------------
Stockholders' Equity (Deficit):
     Common Stock                                                                             43                   42
     Capital In Excess of Par Value                                                        8,806                8,715
     Accumulated Deficit                                                                  (8,053)             (10,027)
     Treasury Stock                                                                         (328)                (328)
                                                                                  ---------------      ---------------
     Total Stockholders' Equity (Deficit)                                                    468               (1,598)
                                                                                  ---------------      ---------------
     Total Liabilities and Stockholders' Equity (Deficit)                         $       15,515       $       14,791
                                                                                  ===============      ===============
</TABLE>

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


<PAGE>
                                       19


                MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    YEARS ENDED MARCH 31, 2002, 2001 AND 2000
                (In Thousands; Except Earnings Per Share Amounts)

<TABLE>
<CAPTION>
                                                                             2002             2001              2000
                                                                        --------------   --------------    --------------
<S>                                                                     <C>              <C>               <C>
Net Sales                                                               $      24,769    $      21,457     $      18,221

Costs and Expenses:
      Cost of Sales                                                            14,418           12,490            10,410
      Selling, General and Administrative                                       5,211            5,009             4,370
      Research and Development                                                     87              119               207
      Depreciation and Amortization                                               926              807               861
      Interest                                                                    919              981             1,159
                                                                        --------------   --------------    --------------

Total Costs and Expenses                                                       21,561           19,406            17,007
                                                                        --------------   --------------    --------------

Income from Continuing Operations Before
  Income Taxes, Discontinued Operations and
  Extraordinary Gain                                                            3,208            2,051             1,214

Income Tax Benefit (Expense)                                                   (1,234)           5,570                 0
                                                                        --------------   --------------    --------------

Income from Continuing Operations Before
  Discontinued Operations and Extraordinary Gain                                1,974            7,621             1,214

Loss from Operations of Discontinued Operations, Net of Tax                         0             (227)           (2,185)

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

Gain on Disposal of Discontinued Operations                                         0                0             2,221
                                                                        --------------   --------------    --------------

Net Income                                                              $       1,974    $       7,394     $       2,499
                                                                        ==============   ==============    ==============

Net Income per Basic Common Share:
      Income from Continuing Operations                                 $        0.46    $        2.45     $        0.47
      Income (Loss) from Discontinued Operations                                 0.00            (0.07)             0.50
                                                                        --------------   --------------    --------------

Net Income per Basic Common Share                                       $        0.46    $        2.38     $        0.97
                                                                        ==============   ==============    ==============

Net Income per Diluted Common Share:
      Income from Continuing Operations                                 $        0.44    $        2.43     $        0.47
      Income (Loss) from Discontinued Operations                                 0.00            (0.07)             0.50
                                                                        --------------   --------------    --------------

Net Income per Diluted Common Share                                     $        0.44    $        2.36     $        0.97
                                                                        ==============   ==============    ==============
</TABLE>

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



<PAGE>
                                       20


                MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                    YEARS ENDED MARCH 31, 2002, 2001 AND 2000
                        (In Thousands; Except Share Data)

<TABLE>
<CAPTION>
                                                                      COMMON STOCK
                                      --------------------------------------------------------------------------------------
                                        Number          0.01        Capital in     Retained        Treasury
                                          of            Par         Excess of      Earnings          Stock          Total
                                        Shares         Value        Par Value     (Deficit)
                                      -----------   -----------    -----------   ------------    ------------    -----------
<S>                                    <C>           <C>             <C>           <C>             <C>             <C>
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)

Issuance of Stock Options                                                  45                                            45

Exchange of Preferred Stock
    for Common Stock                   4,000,000           40             (39)                                            1

Reverse Stock Split                   (6,325,593)         (63)             63

Net Income for Year Ended
    March 31, 2001                                                                     7,394                          7,394
                                      --------------------------------------------------------------------------------------

Balance March 31, 2001                 4,217,028      $    42       $   8,715      $ (10,027)      $   (328)       $ (1,598)

Issuance of Stock Options                                                  49                                            49

Warrants and Options Exercised            64,133            1              23                                            24

Stock Issued                              50,000                           19                                            19

Net Income for Year Ended
    March 31, 2002                                                                     1,974                          1,974
                                      --------------------------------------------------------------------------------------

Balance March 31, 2002                 4,331,161      $    43       $   8,806      $  (8,053)      $   (328)       $    468
                                      ===========   ===========    ===========   ============    ============    ===========


                                                                        VOTING PREFERRED STOCK
                                      --------------------------------------------------------------------------------------
                                        Number        $0001.
                                          of           Par
                                        Shares        Value
                                      -----------   -----------
Balance, March 31, 2000                6,500,000      $     1                                                      $      1
                                      -----------   -----------                                                  -----------

Exchange of Preferred Stock
    for Common Stock                  (6,500,000)     $    (1)                                                     $     (1)
                                      -----------   -----------                                                  -----------

Balance, March 31, 2001                        0      $     0                                                      $      0
                                      -----------   -----------                                                  -----------

Balance, March 31, 2002                        0      $     0                                                      $      0
                                      -----------   -----------                                                  -----------

Total Stockholders' (Deficit)
   March 31, 2002                                                                                                  $    468
                                                                                                                 ===========
</TABLE>

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


<PAGE>
                                       21


                MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    YEARS ENDED MARCH 31, 2002, 2001 AND 2000
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                                                    2002              2001              2000
                                                                              --------------    --------------    --------------
<S>                                                                           <C>               <C>               <C>
Operating Activities
    Income from Continuing Operations                                         $       1,974     $       7,621     $       1,214
                                                                              --------------    --------------    --------------
    Adjustments to Reconcile to Net Cash
          Provided by Continuing Operations
       Issuance of Stock for Services                                                    19                 0                24
       Deferred Compensation                                                             49                45                 0
       Depreciation and Amortization                                                    926               807               861
       Deferred Income Tax Expense (Benefit)                                          1,234            (5,570)                0
       (Increase) Decrease in:
         Accounts Receivable                                                           (889)               34              (128)
         Inventories                                                                     99              (281)              (40)
         Prepaids and Other                                                             (70)              (43)              (17)
       Increase (Decrease) in:
         Accounts Payable and Other Accrued Liabilities                                (275)              763              (108)
                                                                              --------------    --------------    --------------
    Total Adjustments                                                                 1,093            (4,245)              592
                                                                              --------------    --------------    --------------
    Net Cash Provided by Operating Activities of Continuing Operations                3,067             3,376             1,806
                                                                              --------------    --------------    --------------

Investing Activities
    Expended for Property and Equipment                                                (809)           (1,063)             (494)
    Expended for Product Development                                                   (853)             (798)             (112)
    Expended for Patents and Other Assets                                               (42)              (91)              (18)
                                                                              --------------    --------------    --------------
    Net Cash Used by Investing Activities of Continuing Operations                   (1,704)           (1,952)             (624)
                                                                              --------------    --------------    --------------

Financing Activities
    Payments on Notes Payable and Long-Term Debt                                     (1,096)           (1,313)           (1,601)
    Advances from (to) Affiliates - Discontinued Operations                               0              (191)              386
    Exercise of Stock Options                                                            24                 0                 0
    Proceeds from Borrowing on Notes Payable and Long-Term Debt                          27                 0                 0
                                                                              --------------    --------------    --------------
    Net Cash Used by Financing Activities of Continuing Operations                   (1,045)           (1,504)           (1,215)
                                                                              --------------    --------------    --------------

Net Increase (Decrease) in Cash - Continuing Operations                                 318               (80)              (33)
Cash at Beginning of Period - Continuing Operations                                      92               172               205
                                                                              --------------    --------------    --------------
Cash at End of Period - Continuing Operations                                 $         410     $          92     $         172
                                                                              ==============    ==============    ==============
</TABLE>


See Note 17 for supplemental disclosures of other cash flow information.

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


<PAGE>
                                       22


                        MEDICAL TECHNOLOGY SYSTEMS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          MARCH 31, 2002 2001 AND 2000

NOTE 1 - BACKGROUND INFORMATION

     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,
assisted living and correctional  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.

     The Company  sold the assets of MTL and LifeServ in fiscal 2000 and treated
the operations of these  subsidiaries as discontinued  operations in fiscal 2000
and 2001. The Company's  continuing  operations have been conducted  through one
business segment since fiscal 1999 (see Note 20).


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

     The consolidated  financial  statements include the accounts of the Company
and its subsidiaries, MTS Packaging, MTL and LifeServ. The results of operations
of these  discontinued  segments for 2001 and 2000 have been  excluded  from the
components of "Income 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.

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

     The  preparation  of financial  statements  in conformity  with  accounting
principles   generally  accepted  in  the  United  States  of  America  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.

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.

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, 2002 and 2001, the
Company has established an inventory  valuation  allowance of $40,000 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.

<PAGE>
                                       23


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

     The  Company  recognizes  revenue  when  products  are  shipped  and  title
transfers.  Revenue  includes  certain amounts invoiced to customers for freight
and handling  charges.  Effective with the fiscal year ended March 31, 2002, the
Company  excludes  the actual cost of freight  and  handling  incurred  from net
sales.  As a result of this change,  the Company has increased its net sales and
its  cost of  sales  for the  fiscal  year  ended  March  31,  2001  and 2000 by
$1,304,000 and $1,240,000 respectively.

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.

Research and Development and Product Development Costs
------------------------------------------------------

     The Company  expenses  research  and  development  costs as  incurred.  The
Company incurred  approximately  $87,000,  $119,000 and $207,000 in research and
development costs during fiscal 2002, 2001 and 2000 respectively.

     All  costs   associated  with  product   development   from  the  point  of
technological   feasibility  to  its  general   distribution  to  customers  are
capitalized and subsequently  amortized.  Annually,  the Company re-examines its
amortization  policy relating to its product  development costs. The Company has
determined  that  a  five-year  period  is  appropriate.   Capitalized   product
development costs totaled approximately $853,000,  $798,000 and $112,000 for the
years ended March 31, 2002, 2001 and 2000 respectively.

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

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

     Long-lived  assets and certain  identifiable  intangibles that are held and
used by the Company are reviewed for  impairment  whenever  events or changes in
circumstance  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 in 2002, 2001 or 2000.

Earnings 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 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 15). All earnings per share  amounts
have been retroactively adjusted for the 1 for 2.5 reverse stock split in fiscal
2001.

<PAGE>
                                       24


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 14)

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.

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

Reclassifications
-----------------

     Certain  reclassifications  were  made  to  the  2001  and  2000  financial
statement amounts to conform to 2002 presentation.

Recent Accounting Pronouncements
--------------------------------

     On July 20, 2001, the Financial  Accounting  Standards  Board (FASB) issued
Statement of Financial Accounting  Standards (SFAS) 141, Business  Combinations,
and SFAS 142,  Goodwill and  Intangible  Assets.  SFAS 141 is effective  for all
business  combinations  completed after June 30, 2001. SFAS 142 is effective for
the fiscal year beginning  April 1, 2002;  however,  certain  provisions of that
Statement apply to goodwill and other intangible assets acquired between July 1,
2001 and the  effective  date of SFAS 142.  The Company has not yet analyzed the
effect,  if any, of these new standards;  accordingly,  the Company is unable at
present to state what effect,  if any, the adoption of these standards will have
on the Company's financial statements.

     In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. This statement addresses financial  accounting
and reporting for the impairment or disposal of long-lived assets and supersedes
FASB Statement No. 121,  Accounting for the Impairment of Long-Lived  Assets and
for  Long-Lived  Assets to be Disposed Of. The  provisions  of the statement are
effective for financial  statements for the fiscal year beginning April 1, 2002.
The Company is  evaluating  the impact of the adoption of this  standard and has
not yet determined the effect of adoption on its financial  position and results
of operations. NOTE 3 - ACCOUNTS RECEIVABLE


<PAGE>
                                       25


     The Company  maintains an allowance for potential  losses on individual and
commercial  accounts  receivable,  which  are  unsecured.   Management  performs
periodic  collectibility reviews of its accounts receivable that considers aging
and other  factors.  As a result of these reviews,  the Company  reduced the bad
debt reserve by  approximately  $180,000  during the fiscal year ended March 31,
2002.

     Accounts Receivable consist of the following:

<TABLE>
<CAPTION>
                                                                           March 31,         March 31,
                                                                             2002              2001
                                                                        -------------     --------------
                                                                                (In Thousands)
                 <S>                                                    <C>               <C>
                 Accounts Receivable                                    $     3,557       $      2,857
                 Less:  Allowance for Doubtful Accounts                        (101)              (290)
                                                                        -------------     --------------
                                                                        $     3,456       $      2,567
                                                                        =============     ==============
</TABLE>

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

     The  geographic  sales of the Company are  primarily in the United  States.
There were 2, 2 and 1 customer(s)  whose sales exceeded 10% of revenue for 2002,
2001 and 2000 respectively.


NOTE 4 - INVENTORIES

     Inventories consist of the following:
<TABLE>
<CAPTION>
                                                                           March 31,        March 31,
                                                                             2002             2001
                                                                        -------------    --------------
                                                                                (In Thousands)
                 <S>                                                    <C>               <C>
                 Raw Material                                           $       964       $      1,053
                 Finished Goods and Work in Process                           1,288              1,298
                 Less:  Inventory Valuation Allowance                          (40)               (40)
                                                                        -------------    --------------
                                                                        $     2,212       $      2,311
                                                                        =============    ==============
</TABLE>

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


NOTE 5 - PROPERTY AND EQUIPMENT

     Property and equipment consists of the following:

<TABLE>
<CAPTION>
                                                                           March 31,         March 31,
                                                                             2002               2001
                                                                        -------------     --------------
                                                                                (In Thousands)
                 <S>                                                    <C>                <C>
                 Property and Equipment                                 $     7,953       $      7,328
                 Leasehold Improvements                                         638                453
                                                                        -------------     --------------
                                                                              8,591              7,781
                 Less: Accumulated Depreciation and Amortization             (6,166)            (5,431)
                                                                        -------------     --------------
                                                                        $     2,425       $      2,350
                                                                        =============     ==============
</TABLE>

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

<PAGE>
                                       26


     Depreciation  of property  and  equipment  and  amortization  of  leasehold
improvements  total  approximately  $732,000,  $617,000  and $684,000 for fiscal
years ending March 31, 2002, 2001 and 2000 respectively.


NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

     Accounts payable and accrued liabilities are comprised of the following:


<TABLE>
<CAPTION>
                                                                          March 31,          March 31,
                                                                             2002              2001
                                                                       --------------     --------------
                                                                                 (In Thousands)
              <S>                                                      <C>                <C>
              Accounts Payable/Trade                                   $      1,833       $      2,221
              Accrued Liabilities:
                  Salaries, Commissions and Employee Benefits                   804                696
                   Medical Claims                                               102                107
                   Interest                                                       0                 83
                   State Taxes                                                   34                 50
                   Royalties                                                    494                382
                                                                       --------------     --------------
                                                                       $      3,267       $      3,539
                                                                       ==============     ==============
</TABLE>


NOTE 7 - OTHER ASSETS

     Other assets consists of the following:

<TABLE>
<CAPTION>
                                                                          March 31,          March 31,
                                                                             2002              2001
                                                                       --------------     --------------
                                                                                 (In Thousands)
                 <S>                                                   <C>                <C>
                 Product Development                                   $      2,202       $      1,349
                     Less:  Accumulated Amortization                           (315)              (237)
                                                                       --------------     --------------
                                                                       $      1,887       $      1,112
                                                                       --------------     --------------

                 Patents                                               $      1,196       $      1,160
                     Less:  Accumulated Amortization                           (725)              (643)
                                                                       --------------     --------------
                                                                       $        471       $        517
                                                                       --------------     --------------

                 Other                                                          190                183
                      Less:  Accumulated Amortization                           (71)               (40)
                                                                       --------------     --------------
                                                                       $        119       $        143
                                                                       --------------     --------------

                 Total Other Assets, Net                               $      2,477       $      1,772
                                                                       ==============     ==============
</TABLE>


     Expenditures  for  product  development  in the fiscal year ended March 31,
2002  were  primarily   dedicated  to  the  development  of  the  Company's  new
OnDemand(TM)  machine. The Company has capitalized  approximately  $1,314,000 to
date on the  development  of the  OnDemand  machine and  estimates  that it will
capitalize an additional $500,000 to complete the project.

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

<PAGE>
                                       27


NOTE 8 - LONG-TERM DEBT

     Long-term debt consists of the following:
<TABLE>
<CAPTION>
                                                                                      March 31,         March 31,
                                                                                         2002             2001
                                                                                    ------------     -------------
                                                                                            (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 $7.1 million on that date secured by all tangible and
    intangible assets of the Company.                                                $  11,449       $    12,406

  Unsecured Notes Payable due September 2001 plus interest at 13%.                           0                45

  Unsecured Note Payable plus interest at 3%, payable in monthly  installments
    of $2,394 through September 2006.                                                      122               146

  Unsecured Note Payable under settlement agreement with State of Florida
    Department of Revenue, payable in monthly installments of $3,500 over a
    period of four years.                                                                  171               219

   Other Notes and Agreements                                                               38                34
                                                                                    ------------     -------------
  Total Long -Term Debt                                                                 11,780            12,850
  Less Current Portion                                                                    (968)             (963)
                                                                                    ------------     -------------
  LONG-TERM DEBT DUE AFTER 1 YEAR                                                    $  10,812       $    11,887
                                                                                    ============     =============
</TABLE>


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

     The Company made principal payments of approximately $102,000 during fiscal
year ended 2002 pursuant to the excess cash flow payment  provisions of its loan
agreement.

     During fiscal year ended 2002,  the Company  exceeded the amount of capital
expenditures  allowed in certain  covenants of its loan  agreement and requested
the lender's  consent to an increase in the annual  limit on these  expenditures
and waive any defaults that may have occurred.  In addition,  the lender advised
the Company that they believed that certain excess cash flow principal  payments
were not made in accordance with the loan agreement.  The Company  believed that
it consistently calculated the excess cash flow principal payments in accordance
with its  interpretation  of  certain  provisions  of the loan  agreement.  As a
result,  the  Company  entered  into  discussions  with  the  lender  to reach a
compromise on the excess cash flow principal  payments.  Subsequent to March 31,
2002,  the Company repaid the entire amount of the bank term loan (see Note 19 -
Subsequent Event).

     The following is a schedule by year of the principal  payments  required on
these notes payable and long-term debts as of March 31, 2002:

                                                   (In Thousands)
            2003....................................  $    968
            2004 ...................................  $  1,016
            2005....................................  $  1,079
            2006....................................  $  1,158
            2007....................................  $  7,559
            Thereafter..............................  $      0

     Interest  expense for the years 2002,  2001 and 2000  amounted to $919,000,
$981,000 and $1,159,000 respectively.

<PAGE>
                                       28

NOTE 9 - LEASE COMMITMENTS

     The  following  is a schedule  by year of future  minimum  rental  payments
required under operating leases, primarily facility leases, that have an initial
or  remaining  non-cancelable  lease  term in excess of one year as of March 31,
2002.

                                                    (In Thousands)
            2003....................................  $    460
            2004....................................  $    445
            2005....................................  $    402
            2006....................................  $    103
            2007....................................  $      3
            Thereafter..............................  $      0

     Rent  expense  amounted to  $393,000,  $350,000  and $312,000 for the years
ended March 31, 2002, 2001 and 2000 respectively.


NOTE 10 - 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, 2002,
2001  and  2000,   the  Company   contributed   $30,000,   $16,000  and  $19,000
respectively, to the plan.


NOTE 11 - SELF INSURANCE PLAN

     The Company has a Medical Health Benefit  Self-insurance Plan, which covers
substantially  all of its  employees.  During the year ended March 31, 2002, the
Company was  reinsured  for claims that exceed  $25,000 per  participant  and an
annual maximum aggregate limit of approximately $342,000. Specific and aggregate
reinsurance  limits for fiscal year 2003 were  increased to $50,000 and $500,000
respectively.  Reinsurance limits for subsequent fiscal years may change. Future
claims  experience may effect the  reinsurance  limits that may available to the
Company in subsequent fiscal years.  Although claims incurred during the current
fiscal year for certain  individuals  relate to serious  illnesses,  the Company
believes that reinsurance  limits currently in effect provide adequate insurance
coverage for these  individuals  should the serious illness continue or reoccur.
The  Company  has  established  a reserve of  $102,000 at March 31, 2002 for all
unpaid  claims  incurred  during  fiscal  year  2002 and an  estimate  of claims
incurred  during  fiscal  year 2002 that have not been  reported as of March 31,
2002.


NOTE 12 - 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 $62,400,  $50,000 and $50,000 in the years
ended March 31, 2002, 2001 and 2000  respectively.  Accrued royalty payments due
as of March 31, 2002, 2001 and 2000 total approximately  $494,000,  $382,000 and
$266,000 respectively.

<PAGE>
                                       29


     Siegel,  through his beneficial  interest in the Trust, owns  approximately
42% of the outstanding Common Stock of the Company.


NOTE 13 - TAXES

     The components of income tax expense  (benefit) from continuing  operations
is as follows:

<TABLE>
<CAPTION>
                                                                             Years Ended March 31,
                                                              --------------------------------------------------
                                                                  2002              2001              2000
                                                              ------------     -------------     -------------
                                                                              (In Thousands)
         <S>                                                  <C>              <C>               <C>
         Current Income Taxes                                 $         0      $         0       $        0

         Deferred Income Taxes                                      1,234              632                0

         Change in Deferred Tax Valuation Allowance                     0           (6,202)               0
                                                              ------------     -------------     ------------

         Income Tax Expense (Benefit)                         $     1,234      $    (5,570)      $        0
                                                              ============     =============     ============
</TABLE>


     Total income tax (benefit)  expense for 2002, 2001 and 2000 from continuing
operations   resulted  in  effective  tax  rates  of  38.5%,   (271.6%)  and  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,
                                                            ---------------------------------------------------
                                                                 2002               2001              2000
                                                            -------------     --------------     --------------
                                                                               (In Thousands)
   <S>                                                      <C>               <C>                <C>
   Tax Expense at U.S. statutory rate                       $      1,118      $        697       $       413
   State Income Tax, Net                                             116                72                42
   Net Operating Loss Carryforward                                     0              (769)             (455)
   Net Deferred Tax Asset Recognized                                   0            (5,570)                0
                                                            -------------     --------------     -------------
                                                            $      1,234      $     (5,570)      $         0
                                                            =============     ==============     =============
</TABLE>

     Deferred taxes for continuing operations consist of the following:


<TABLE>
<CAPTION>
                                                                          March 31, 2002         March 31, 2001
                                                                         ----------------      ----------------
                                                                                      (In Thousands)
    <S>                                                                  <C>                   <C>
    Deferred Tax Assets:
        Depreciation/Amortization Temporary Difference                   $         (163)       $         (188)
        Allowance for Doubtful Accounts                                              38                   108
        Inventory Valuation Allowance                                                15                    15
        Tax Loss Carry Forward                                                    4,043                 5,225
        Reserves and Provisions                                                     403                   410
                                                                         ----------------      ----------------
        Deferred Income Taxes                                            $        4,336        $        5,570
                                                                         ================      ================
</TABLE>


<PAGE>
                                       30



     The  Company's  deferred  tax asset at March 31, 2002 is broken down to its
current and long-term portions as follows:

                  Current                $     1,232,000
                  Long-Term                    3,104,000
                                         ----------------
                                         $     4,336,000
                                         ================

     Prior to fiscal year ended 2001,  the Company had provided a 100% valuation
allowance  on its net deferred tax asset as it was not more likely than not that
the related  income tax benefit  would be realized in the future.  During fiscal
year ended 2001, the Company removed its valuation allowance,  thereby recording
an income tax benefit of $5,719,000 because the Company believed that it is more
likely than not that these  income tax  benefits  will be realized in the future
based in part on (1) the historical  profitable operations of its core business;
(2)  expectations  that its core business will  continue to be  profitable;  (3)
growth opportunities available for its core business; and (4) the length of time
that the net operating loss carryforwards are available to offset future taxable
income.  The income tax benefit is  comprised  primarily of net  operating  loss
carryforwards   that  are  available  to  offset  future  taxable  income.   The
carryforward  losses  expire  beginning in fiscal year 2011 and ending in fiscal
year 2020.

     In order for the Company to fully utilize the benefits of its net operating
loss  carryforwards  in the future,  its average  future annual  taxable  income
beginning  with  fiscal year 2003 and ending with fiscal year 2020 would have to
be  approximately  $600,000.  During  fiscal year 2002,  the  Company's  taxable
income,  exclusive of utilization  of net operating  losses,  was  approximately
$2,800,000.


NOTE 14 - STOCKHOLDERS' EQUITY (DEFICIT)

     Stockholders' Equity (Deficit) consists of the following:

<TABLE>
<CAPTION>
                                                       March 31,             March 31,            March 31,
                                                         2002                  2001                  2000
                                                   ----------------      ----------------     -----------------
      <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                                        0                     0             6,500,000
          Outstanding Shares                                   0                     0             6,500,000


     Common Stock  (Retroactively  adjusted for 1 for 2.5 reverse stock split in
     fiscal 2001):

          Par Value $.01 Per Share
          Authorized Shares                           25,000,000            25,000,000            25,000,000
          Outstanding Shares                           4,312,281             4,198,148             2,598,168
          Issued Shares                                4,331,161             4,217,028             2,617,048
</TABLE>



Common Stock

     During  fiscal year end 2002,  the Company  issued  50,000 shares of common
stock to an officer and director in lieu of $18,750 of cash compensation that is
payable pursuant to an employment agreement.


<PAGE>
                                       31


     During fiscal 2001, the Company exchanged  4,000,000 shares of common stock
for 6,500,000 shares of voting preferred stock and also effected a reverse stock
split of 1 share of common  stock  for 2.5  shares  of  common  stock  after the
exchange of common for preferred stock.

     During fiscal 2000,  the Company issued 20,000 shares of common stock to an
officer and director in lieu of cash compensation of $4,750 and 18,536 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 16,000 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.

Preferred Stock

     JADE Partners  ("Partnership") was 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 had 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 was 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 was entitled to no additional  amounts upon  dissolution or liquidation of
the  Company.  The Voting  Preferred  Stock had no dividend  rights,  redemption
provisions,  sinking  fund  provisions  or  conversion,  preemptive  or exchange
rights.  The  Voting  Preferred  Stock  was not  subject  to  further  calls  or
assessments by the Company.

     In December 2000, the Siegel Family Limited Partnership exchanged 6,500,000
shares of voting  preferred  stock for  4,000,000  shares of common stock of the
Company.  The exchange of preferred for common shares was approved by the common
shareholders of 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 and earnings per share would be
reduced to the proforma amounts indicated below (retroactively adjusted for the
1 for 2.5 reverse stock split in fiscal 2001):

<TABLE>
<CAPTION>
                                                                       2002             2001            2000
                                                                   ------------     ------------    ------------
<S>                                                                <C>              <C>             <C>
Net Income                               As Reported               $   1,974        $   7,394       $    2,499
                                         ProForma                  $   1,579        $   7,376       $    2,470

Earnings Per Common Share                Basic As Reported         $     .46        $    2.38       $     0.97
                                         Basic ProForma            $     .37        $    2.37       $     0.96

Earnings Per Common Share                Diluted As Reported       $     .44        $    2.36       $     0.97
                                         Diluted ProForma          $     .35        $    2.36       $     0.96
</TABLE>


<PAGE>
                                       32


     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 2002,  2001 and 2000  respectively,  no dividend
yield for all years, expected volatility of 148, 133 and 130 percent;  risk-free
interest rates of 3.7, 6.1 and 6.3 percent,  and 3.0 year expected lives for all
years.

     Activity related to options is as follows (Retroactively adjusted for 1 for
2.5 reverse stock split in fiscal 2001):

<TABLE>
<CAPTION>
                                                        Number of Shares           Weighted Average Exercise
                                                                                        Price per Share
                                                     ----------------------        -------------------------
         <S>                                                  <C>                           <C>
         Outstanding at March 31, 1999                        630,973                       $3.13
               Granted in Fiscal 2000
               Officers and Directors                           4,800                       $2.50
               Employees                                            0                          $0
               Options Expired                               (199,266)                      $2.63
                                                     ----------------------        -------------------------

         Outstanding at March 31, 2000                        436,507                       $3.35
               Granted in Fiscal 2001:
               Officers and Directors                         120,000                       $1.88
               Employees                                            0                           0
               Options Expired                                (53,301)                      $2.84
                                                     ----------------------        -------------------------

         Outstanding at March 31, 2001                        503,206                       $3.05
               Granted in Fiscal 2002
               Officers and Directors                         591,000                       $1.51
               Employees                                      376,500                       $1.59
               Options Exercised                               (9,000)                      $1.50
               Options Expired                                (11,900)                      $4.20
                                                     ----------------------        -------------------------

         Outstanding at March 31, 2002                      1,449,806                       $2.04
                                                     ======================        =========================
</TABLE>


Outstanding Shares

<TABLE>
<CAPTION>
                Range of                     Number               Weighted Average          Weighted Average
                                                                Remaining Contractual
             Exercise Prices                                            Life
                                          Outstanding                  (Years)               Exercise Price
        ------------------------      -------------------      ----------------------     --------------------
              <C>                         <C>                          <C>                       <C>

                $0.48 - $2.35             1,018,500                     8.9                       $1.56
                $2.50 - $5.00               420,658                     3.4                       $2.65
              $15.00 - $25.00                10,648                     2.0                      $18.93
</TABLE>

Exercisable Shares
<TABLE>
<CAPTION>
                                                                  Weighted Average
                Range of                                        Remaining Contractual
             Exercise Prices                 Number                     Life                Weighted Average
                                          Outstanding                  (Years)               Exercise Price
        ------------------------      -------------------      ----------------------     --------------------
              <C>                           <C>                         <C>                      <C>

                $0.48 - $2.35               522,664                     8.9                       $1.54
                $2.50 - $5.00               406,158                     3.3                       $2.65
              $15.00 - $25.00                10,648                     2.0                      $18.93
</TABLE>


<PAGE>
                                       33

     The  options  outstanding  at  March  31,  2002  expire  on  various  dates
commencing in June 2002 and ending in March 2012.

     The weighted  average  grant date fair value of options  during fiscal year
2002, 2001 and 2000 was $1.25, $.52 and $.33 respectively.

         At March 31, 2001 and 2000, exercisable options totaled 423,206 and
367,766 at weighted average exercise prices of $3.29 and $3.51 respectively.

Warrants
--------

     Activity  related to warrants  is as follows  (Retroactively  adjusted  for
fiscal 2001 1 for 2.5 reverse stock split in fiscal 2001):

<TABLE>
<CAPTION>
                                                                      Number of Shares         Weighted Average
                                                                                                Price Per Share
                                                                    --------------------      ------------------
            <S>                                                           <C>                      <C>
            Outstanding at March 31, 1999 and 2000                         628,600                 $15.38
            Granted in Fiscal 2001                                         105,000                  $1.05
            Warrants Expired                                              (528,000)                $17.52
                                                                    --------------------      ------------------
            Outstanding at March 31, 2001                                  205,600                  $1.37

            Granted in Fiscal 2002                                               0                   $  0
            Warrants Expired                                                     0                   $  0
            Warrants Exercised                                             (76,000)                 $ .97
                                                                    --------------------      ------------------
            Outstanding at March 31, 2002                                  129,600                  $1.60
                                                                    ====================      ==================
</TABLE>


     The  warrants  expire on various  dates  commencing  September  2002 ending
August 2009. All warrants are 100% vested at March 31, 2002.

     The weighted  average grant date fair value of warrants  during fiscal year
2001 and 2000 was $.90 and $.10 respectively.

     During  fiscal year 2001,  the Company  entered  into a financial  advisory
agreement  with  National  Securities  Corporation  ("NSC").  The  terms  of the
agreement  provided for the  issuance of 105,000  warrants to NSC as part of the
compensation  for their  services.  The warrants were  exercisable at an average
price  of $1.00  and  expire  in 2006.  Compensation  expense  related  to these
warrants totaled $49,000 and $45,000 for the years ended March 31, 2002 and 2001
respectively.  In  addition,  NSC may  receive an  additional  125,000  warrants
exercisable at $1.50 based upon the successful  completion of certain  financing
transactions.  During fiscal year 2002,  NSC  exercised  their rights to acquire
45,133 shares of common stock pursuant to the cashless exercise rights provision
contained in the warrant agreement representing 66,000 shares. The warrants were
exercisable at prices ranging from $.85 to $1.50.  In addition,  certain holders
of warrants  elected to exercise their rights to acquire 10,000 shares of common
stock. The warrants were exercisable at prices ranging from $1.13 to $1.50.

     The Company  entered into a stock  appreciation  rights  agreement with its
Chief Executive Officer in 1995. 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  expense for the years ended March 31,  2002,  2001 and
2000 totaled $143,000, $131,000 and $27,000 respectively.

<PAGE>
                                       34


NOTE 15 - EARNINGS PER SHARE

     Income from continuing  operations per common share is computed by dividing
income from  continuing  operations  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.  The number of
shares  outstanding  have been  retroactively  adjusted  for the 1 share for 2.5
shares reverse stock split that occurred in December 2000.

     The following  table sets forth the  computation of income from  continuing
operations per basic and diluted common share:

<TABLE>
<CAPTION>
                                                          Year Ended March     Year Ended March     Year Ended March
                                                              31, 2002             31, 2001             31, 2000
                                                         -----------------     ----------------     ----------------
<S>                                                       <C>                  <C>                  <C>
Numerator:
   Income from Continuing Operations                      $   1,974,000        $   7,621,000        $   1,214,000
                                                          ===============      ===============      ===============

Denominator:
    Weighted average shares outstanding - Basic               4,299,000            3,112,000            2,579,000
    Add: Effect of dilutive warrants                            218,000               18,000                    0
                                                          ---------------      ----------------     ---------------
    Weighted average shares outstanding - Diluted             4,517,000            3,130,000            2,579,000
                                                          ===============      ===============      ===============

Income from Continuing Operations Per Common Share
    - Basic                                               $         .46        $        2.45        $         .47
                                                          ===============      ===============      ===============

Income from Continuing Operations per Common Share
    - Diluted                                             $         .44        $        2.43        $         .47
                                                          ===============      ===============      ===============
</TABLE>


     The effect of 440,806 and 239,806 options and warrants were not included in
the  calculation  of net  income  per  diluted  common  share  for 2002 and 2001
respectively,  as the effect  would have been  anti-dilutive.  The effect of all
options and warrants (see Note 14) for 2000 were not included in the calculation
of income from  continuing  operations  per diluted  common  share as the effect
would have been anti-dilutive.


NOTE 16 - CONTINGENCIES

     The Company sold the assets of subsidiaries  LifeServ and MTL during fiscal
2000. The buyers assumed certain  liabilities of these subsidiaries  including a
certain long-term obligation totaling  approximately  $120,000,  as of March 31,
2002, 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, MTL, a discontinued operation,  received a refund request
in the amount of $1.8 million from  Medicare  Program  Safeguards  ("MPS").  MTL
disputed the refund  request in its response to MPS in December  1998.  To date,
MTL has not received any further correspondence from MPS regarding this matter.

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


<PAGE>
                                       35


     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  are  not  expected  to have a  material  adverse  effect  on the
financial position, results of operations or liquidity of the Company.


NOTE 17 - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

<TABLE>
<CAPTION>
                                                                                  2002          2001         2000
                                                                               ----------    ----------   ----------
<S>                                                                              <C>          <C>         <C>
Supplemental Disclosure of Cash flow Information:

   Cash Paid for Interest                                                      $  1,001       $   989     $  1,159

   Cash Paid for Income Taxes                                                         0             0            0

Supplemental Cash Flow Information for Discontinued Operations:

   Operating Activities:
     Net Cash Provided by Discontinued Operations                                     0           230          400

   Investing Activities:
   Net Cash Provided by Investing Activities of Discontinued Operations               0             0           90

   Financing Activities:
   Net Cash Used by Financing Activities of Discontinued Operations
                                                                                      0          (305)        (475)
                                                                               ----------    ----------   ----------

   Net Increase (Decrease) in Cash - Discontinued Operations                          0           (75)          15
   Cash at Beginning of Period - Discontinued Operations                              0            76           61
                                                                               ----------    ----------   ----------
   Cash at End of Period - Discontinued Operations                             $      0      $      1     $     76
                                                                               ==========    ===========  ==========
</TABLE>


     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>
                                       36



NOTE 18 - SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

     The information set forth below  represents  unaudited  selected  quarterly
financial data for the fiscal years ended March 31, 2002 and 2001.

<TABLE>
<CAPTION>
                                                                      Fiscal Year Ended March 31, 2002
                                                      ------------------------------------------------------------------
                                                                         For The Three Months Ended
                                                      ------------------------------------------------------------------
                                                              (In Thousands, Except Earnings Per Share Amounts)

                                                         June 30,        September 30,     December 31,      March 31,
                                                           2001              2001              2001             2002
                                                      -------------     -------------    -------------     -------------
<S>                                                   <C>               <C>              <C>               <C>
Income Statement Data:
Net Sales                                             $    5,876        $    5,991       $    6,192        $     6,710
Gross Profit                                               2,396             2,496            2,506              2,953
Income Before Income Taxes                                   662               676              854              1,016
Income Tax Expense                                           239               237              320                438
                                                      -------------     -------------    -------------     -------------
Net Income                                            $      383        $      439       $      534        $       618
                                                      =============     =============    =============     =============

Net Earnings Per Basic Common Share                   $     0.09        $     0.10       $     0.12        $      0.15
                                                      =============     =============    =============     =============

Net Earnings Per Diluted Common Share                 $     0.09        $     0.10       $     0.12        $      0.13
                                                      =============     =============    =============     =============
</TABLE>


<TABLE>
<CAPTION>
                                                                        Fiscal Year Ended March 31, 2001
                                                        -------------------------------------------------------------------------
                                                                           For The Three Months Ended
                                                        -------------------------------------------------------------------------
                                                                (In Thousands, Except Earnings Per Share Amounts)

                                                           June 30,       September 30,     December 31,       March 31,
                                                             2000             2000              2000             2001
                                                        -------------    --------------   --------------    -------------
<S>                                                     <C>              <C>              <C>               <C>
Income Statement Data:
Net Sales                                               $     4,983      $      5,189     $      5,395      $     5,890
Gross Profit                                                  1,986             2,131            2,488            2,362
Income from Continuing Operations Before Income
    Taxes and Discontinued Operations                           374               467              652              558
Income Tax Benefit (Expense)                                      0                 0            5,719            (149)
Income (Loss) from Discontinued Operations                       29               (7)            (212)             (37)
                                                        -------------    --------------   --------------    -------------
Net Income                                              $       403      $        460     $      6,159      $       372
                                                        =============    ==============   ==============    =============

Net Earnings (Loss) Per Basic and Diluted Common
    Share: (Retroactively adjusted for the 1 for 2.5
      reverse stock split in December 2000)
From Continuing Operations                              $      0.14      $       0.18     $       2.11      $      0.10
Income (Loss) from Discontinued Operations                     0.01              0.00           (0.07)           (0.01)
                                                        -------------    --------------   --------------    -------------

Net Earnings Per Basic and Diluted Common Share         $      0.15      $       0.18     $       2.04      $      0.09
                                                        =============    ==============   ==============    =============
</TABLE>


<PAGE>
                                       37


NOTE 19 - SUBSEQUENT EVENT (Unaudited)

     In June 2002,  the Company repaid the entire  amount,  $11,310,000,  of its
bank term loan with the proceeds of a new revolving line of credit,  term loans,
a  subordinated  note and  convertible  preferred  stock.  The revolving line of
credit allows for  borrowing of up to  $5,000,000  based upon advance rates that
are  applied  to the  Company's  eligible  accounts  receivable  and  inventory.
Interest is payable on the revolving line of credit monthly based on the average
unpaid balance at the prime rate plus 1.0%.

     One term loan in the  amount of  $700,000  is  repayable  in equal  monthly
installments  over a five (5) year term,  plus  interest  at the prime rate plus
1.25%.  Another  term loan in the amount of  $2,000,000  is  repayable  in equal
monthly  installments  over two (2) years plus  interest  at the prime rate plus
2.25% and is subject to an excess cash flow payment provision.

     The  revolving  line of  credit  and the  term  loans  are  secured  by the
Company's accounts receivable,  inventory, machinery and equipment and all other
assets of the Company.

     The subordinated  note in the amount of $4,000,000 is repayable in five (5)
years with  interest  only,  at 14%,  payable  monthly until the maturity of the
note. The subordinated  note is secured by a second lien on all of the assets of
the Company.  In addition,  the  subordinated  note holders were issued  566,517
warrants to purchase  common  stock  exercisable  for ten (10) years at $.01 per
share. (Subject to certain antidilution provisions.)

     The Company  issued 2,000 shares of convertible  preferred  stock at $1,000
per share.  The  holders of the  convertible  preferred  stock are  entitled  to
receive  quarterly  dividends at the rate of 11% per annum.  The  dividends  are
payable  in cash or shares of  convertible  preferred  stock,  at the  Company's
option,  and are  cumulative.  The preferred  stock is convertible  into 846,000
shares of the  Company's  common  stock at $2.36 per share.  (Subject to certain
antidilution provisions.)

     The warrant  agreement  and the terms of the  convertible  preferred  stock
contain a make-whole provision that obligates the Company to pay certain amounts
to the holders of the warrants and  convertible  preferred  stock if they do not
ultimately receive an amount equal to the price per share of the common stock on
the date they  exercise  their right to purchase the common shares that underlie
the warrants and the convertible  preferred  stock.  The warrant  agreement also
contains a provision that may obligate the Company to pay certain amounts to the
holders  of the  warrants  in the event that there is a change in control of the
voting  common stock of the  Company,  or if there is a sale of the Company or a
public offering of the Company's common stock.

     In the event that the Company is  required to make  payments to the holders
of the  warrants  and/or  preferred  stock,  it may  elect to  issue  additional
warrants  and/or  preferred  stock  in  lieu  of a cash  payment.  Although  the
make-whole   provision  and  other  provisions  of  the  warrant  agreement  and
convertible preferred stock agreement provide for a maximum of 12,500,000 shares
that may be issued pursuant to those provisions,  based upon current conditions,
the Company  believes it is unlikely that the maximum  number of shares would be
issued.

     The Company also issued,  to its financial  advisors,  125,000  warrants to
purchase  common stock as part of a success fee related to the above  referenced
financing. The warrants are exercisable for five (5) years at $1.50 per share.

     The revolving  line of credit,  the term loans and the  subordinated  notes
each contain certain financial covenants that, among other things,  requires the
maintenance  of  certain  financial   ratios,   limits  the  amount  of  capital
expenditures and requires the Company to obtain the lenders approval for certain
matters.


<PAGE>
                                       38


     If the Company had repaid the entire  amount of its bank term loan at March
31, 2002, the balance sheet as of that date would have been as follows:

                                                    (Unaudited)
                                              Proforma Balance Sheet
                                                  March 31, 2002
                                                  (In Thousands)
                                                      Assets
<TABLE>
        <S>                                                                             <C>
        Current Assets
                Cash                                                                    $            0
                Accounts Receivable, Net                                                         3,456
                Inventories                                                                      2,212
                Prepaids and Other                                                                 199
                Deferred Tax Benefits                                                            1,232
                                                                                        ----------------
                Total Current Assets                                                             7,099

        Property and Equipment, Net                                                              2,425
        Other Assets, Net                                                                        2,477
        Deferred Tax Benefits                                                                    3,104
                                                                                        ----------------
        Total Assets                                                                    $       15,105
                                                                                        ================

                                       Liabilities And Stockholders' Equity

        Current Liabilities:
                Current Maturities of Long-Term Debt                                    $        1,235
                Accounts Payable and Accrued Liabilities                                         3,307
                                                                                        ----------------
                Total Current Liabilities                                                        4,542

        Revolving Line of Credit                                                                 3,374
        Long-Term Debt, Less Current Maturities                                                  3,176
                                                                                        ----------------
        Total Liabilities                                                                       11,092
                                                                                        ----------------

        Stockholders' Equity:
                Convertible Preferred Stock                                                      2,000
                Common Stock                                                                        43
                Warrants*                                                                        1,545
                Capital In Excess of Par Value                                                   8,806
                Accumulated Deficit                                                             (8,053)
                Treasury Stock                                                                    (328)
                                                                                        ----------------
                Total Stockholders' Equity                                                       4,013
                                                                                        ----------------
                Total Liabilities and Stockholders' Equity                              $       15,105
                                                                                        =================
</TABLE>


*The Company has estimated the value of the warrants issued to the holder of the
subordinated  notes.  The ultimate  valuation  of these  warrants may change the
respective values of the subordinated notes and the warrants.


NOTE 20 - DISCONTINUED OPERATIONS

     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 2001, 2000 and
1999 were $0, $454,000 and $5.2 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.

<PAGE>
                                       39


     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 2001, 2000
and 1999 were $0, $7.9 million and $14.0 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.

     Certain  accounts  receivable  of MTL were not sold in  January  2000.  The
operations of MTL during  fiscal 2001 were  confined to the  collection of these
accounts receivable.  The Company estimated the realizable value of the accounts
receivable at the end of fiscal 2000 to be  $1,000,000.  Since the date of sale,
approximately  $431,000 of accounts  receivable were collected.  The proceeds of
the  collection  of accounts  receivable  were used to pay the  ongoing  cost of
collection and to fund  settlements  with creditors of MTL.  During fiscal 2001,
the  Company  determined  that the cost of  collecting  the  remaining  accounts
receivable  could  equal  or  exceed  the  amount   collected,   and  therefore,
discontinued  its  collection  efforts  and reduced  the  carrying  value of the
accounts receivable to $0.

     The carrying  value of the net assets of  discontinued  operations at March
31, 2001 was comprised of the following.

<TABLE>
<CAPTION>
                                                              LifeServ               MTL                Total
                                                                                                    Discontinued
                                                                                                     Operations
                                                            -------------       -------------       -------------
                                                                 2001                2001                2001
                                                            -------------       -------------       -------------
   <S>                                                      <C>                 <C>                 <C>
   Current Assets                                           $         0         $         1         $         1
   Other Assets                                                       0                   0                   0
                                                            -------------       -------------       -------------
   Total Assets                                             $         0         $         1         $         1
                                                            -------------       -------------       -------------

   Current Liabilities                                      $         0         $       642         $       642
   Long-Term Liabilities                                              0                   0                   0
                                                            -------------       -------------       -------------
   Total Liabilities                                        $         0         $       642         $       642
                                                            -------------       -------------       -------------

   Net Assets (Liabilities) of Discontinued Operations      $         0         $      (641)        $      (641)
                                                            =============       =============       =============
</TABLE>


     The  liabilities  of MTL at March 31, 2001 were comprised of trade accounts
payable,  accrued state taxes and  approximately  $140,000 of other  liabilities
that have been guaranteed by the Company.

     Certain  liabilities of MTL were compromised during fiscal 2001 as a result
of settlements reached with creditors.  In addition, the Company determined that
certain liabilities were not payable, and therefore,  reduced the carrying value
of them to 0.

     As a result of payments made in fiscal year 2002, the remaining liabilities
of discontinued  operations were reduced to approximately  $475,000 at March 31,
2002.  For  balance  sheet  presentation   purposes,   the  net  liabilities  of
discontinued  operations  at March  31,  2002 and 2001  have  been  included  in
accounts payable and accrued liabilities since these liabilities,  if satisfied,
will be paid by the continuing operation of the Company.


<PAGE>
                                       40




                                   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.


       Dated: July 1, 2002            MEDICAL TECHNOLOGY SYSTEMS, INC.

                                      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 1, 2002
 -----------------------    President and Chief Executive Officer
  Todd E. Siegel


 /s/ David W. Kazarian       Director                               July 1, 2002
 -----------------------
 David W. Kazarian


 /s/ Michael P. Conroy       Director, Chief Financial Officer      July 1, 2002
 -----------------------    and Vice President
 Michael P. Conroy


 /s/ John Stanton           Director and Vice Chairman of the       July 1, 2002
------------------------   Board of Directors
 John Stanton


 /s/ Michael Stevenson     Chief Operating Officer                  July 1, 2002
------------------------
 Michael Stevenson


 /s/ Mark J. Connolly       Principal Accounting Officer            July 1, 2002
-----------------------    and Controller
 Mark J. Connolly



<PAGE>
                                       41


              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 11, 2002,  which is included in the  Company's  Annual  Report on SEC
Form 10-K as of and for the year  ended  March 31,  2002,  we have also  audited
Schedule II for the years ended March 31, 2002,  2001 and 2000.  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 11, 2002




<PAGE>

                                       S-1
                                                                    SCHEDULE II



                MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES

                        VALUATION AND QUALIFYING ACCOUNTS
                For the Years Ended March 31, 2000, 2001 AND 2002


<TABLE>
<CAPTION>

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

Year Ended March 31, 2000                        $     5,805          $      (397)         $         0          $     6,202
Year Ended March 31, 2001                        $     6,202          $     6,202          $         0          $         0
Year Ended March 31, 2002                        $         0          $         0          $         0          $         0


(1) Inventory Valuation Allowance:

Year Ended March 31, 2000                        $       140          $       100          $         0          $        40
Year Ended March 31, 2001                        $        40          $         0          $         0          $        40
Year Ended March 31, 2002                        $        40          $         0          $         0          $        40


(1) Self Insured Medical Claims
        Valuation Allowance:

Year Ended March 31, 2000                        $       100          $       297          $       325          $        72
Year Ended March 31, 2001                        $        72          $       210          $       175          $       107
Year Ended March 31, 2002                        $       107          $       324          $       329          $       102


(1) Allowance for Doubtful Accounts

Year Ended March 31, 2000                        $       211          $        67          $         4          $       274
Year Ended March 31, 2001                        $       274          $       120          $       104          $       290
Year Ended March 31, 2002                        $       290          $      (180)         $         9          $       101


(1) Amounts reflect continuing operations only.

</TABLE>