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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                 ---------------
                                    FORM 10-K
                                 ---------------

                Annual Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934
                    For the fiscal year ended March 25, 2000
                         Commission File Number 1-12912


                          CENTENNIAL TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its Charter)
             ------------------------------------------------------


                  Delaware                                04-2978400
                  --------                                ----------
       (State or other jurisdiction                   (I.R.S. Employer
     of incorporation or organization)              Identification Number)


     7 Lopez Road, Wilmington, Massachusetts                    01887
     ----------------------------------------                   -----
     (Address of principal executive offices)                 (Zip Code)

                                 (978) 988-8848
                                 --------------
              (Registrant's telephone number, including area code)


    Securities registered pursuant to Section 12(b) of the Act:   None


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

       Title of each class             Name of each exchange on which registered
       -------------------             -----------------------------------------
  Common Stock, $0.01 par value                     Not Applicable
 Preferred Stock Purchase Rights                    Not Applicable


    Indicate by check mark whether the issuer (1) has filed all reports required
to be filed by Section 13 or 15(d) of the  Securities  and  Exchange Act of 1934
during  the  preceding  12  months  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
Yes [X]  No [ ]

    Indicate by check mark if disclosure of delinquent  filers  pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best  of  the  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [ ]

    The aggregate market value of the voting stock held by non-affiliates of the
registrant on May 8, 2000 was  $27,018,423.  The fair market value of the common
stock, $0.01 par value per share (the "Common Stock"),  of the registrant on May
8,  2000  was  $8.50  per  share,  based  on  information  reported  by  certain
internet-based bulletin board services purporting to monitor trading activities.
The  registrant  is  unable to  verify  the  accuracy  or  completeness  of such
information.  As of May 8, 2000,  there were 3,189,874 shares of Common Stock of
the registrant outstanding.

    Certain items in Part III of this Form 10-K incorporate by reference certain
portions of the  registrant's  definitive  proxy  statement to be filed with the
Securities  and Exchange  Commission in connection  with the  registrant's  2000
Annual Meeting of Stockholders.



<PAGE>



                          CENTENNIAL TECHNOLOGIES, INC.

                   Fiscal Year 2000 Annual Report on Form 10-K

                                TABLE OF CONTENTS
<TABLE>
     <S>                                                                                                 <C>

      PART I.                                                                                              PAGE NUMBER
      Item 1     Business                                                                                       3
      Item 2     Properties                                                                                     7
      Item 3     Legal Proceedings                                                                              7
      Item 4     Submission of Matters to a Vote of Security Holders                                            8
      Item 4A    Executive Officers of the Registrant                                                           9


      PART II.
      Item 5    Market for Registrant's Common Equity and Related Stockholder Matters                          11
      Item 6    Selected Financial Data                                                                        11
      Item 7    Management's Discussion and Analysis of Financial Condition and Results of Operations          13
      Item 7A   Quantitative and Qualitative Disclosures About Market Risk                                     24
      Item 8    Financial Statements and Supplementary Data                                                    24
      Item 9    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure           44

      Part III.
      Item 10   Directors and Executive Officers of the Registrant                                             45
      Item 11   Executive Compensation                                                                         45
      Item 12   Security Ownership of Certain Beneficial Owners and Management                                 45
      Item 13   Certain Relationships and Related Transactions                                                 45


      Part IV.
      Item 14  Exhibits, Financial Statement Schedules and Reports on Form 8-K                                 45

</TABLE>

<PAGE>

                                     PART I

ITEM 1.  BUSINESS

     This  report  contains  forward-looking  statements  regarding  anticipated
revenues and expenses,  possible price  competition and erosion,  expansion into
new markets,  future sales mix,  future supply of raw materials,  gross margins,
raw material inventory  procurement  practices,  customers,  future developments
involving certain investments and future  availability of financing.  Our actual
results may differ  materially from these  statements  because these  statements
involve numerous risks and  uncertainties  including those discussed  throughout
this  document  as  well as  under  "Management's  Discussion  and  Analysis  of
Financial  Condition  and Results of  Operations-Factors  That May Affect Future
Results" beginning on page 13. Readers are cautioned not to place undue reliance
on these  forward-looking  statements.  We assume no  obligation to update these
forward-looking  statements to reflect events or changes in circumstances  after
the date hereof.

   GENERAL

     Centennial Technologies,  Inc. and its subsidiaries  ("Centennial") design,
manufacture and market an extensive line of PC card-based  solutions to original
equipment  manufacturers  ("OEMs") and value added resellers  ("VARs").  We sell
into a broad  range of markets,  including:  Communications  (routers,  wireless
telephones,   local  area   networks);   Transportation   (navigation,   vehicle
diagnostics);  Mobile Computing and Office Automation (hand-held data collection
terminals, notebook computers, personal digital assistants);  Medical (blood gas
analysis systems,  defibrillators,  hand-held  glucometers,  holter devices) and
Consumer OEM (sewing  machines and digital  cameras).  Our products and services
have been  utilized by more than 250 OEMs,  including  Compaq  Computer,  Nortel
Networks,   Lucent  Technologies,   3Com,  Solectron,   Jabil  Circuit,   Symbol
Technologies, Intermec Technologies and United Parcel Service.

     We  commenced   operations  in  1987  to  develop  and  commercialize  font
cartridges for laser printers.  In 1992, we began designing,  manufacturing  and
marketing  cards  which  conformed  to the  specifications  agreed  upon  by the
Personal Computer Memory Card International Association ("PCMCIA").  These cards
became known as "PC cards."  Thereafter,  we gradually  de-emphasized and ceased
the marketing and sales of font  cartridges and began to focus on the growing PC
card  market.  We were  re-incorporated  in  Delaware  in  1994.  Our  principal
executive offices are located at 7 Lopez Road, Wilmington,  Massachusetts 01887,
and our telephone number is (978) 988-8848.

     On December 29, 1999 we acquired  the flash  memory card  business of Intel
Corporation for  approximately  $2.0 million in cash, a $4.0 million  promissory
note and 60,000 shares of Series B Convertible Preferred Stock. This acquisition
included  Intel's PCMCIA card families (Series 2, Value Series 100 and 200), its
miniature card families (Series 100 and 200) and inventory related thereto.

     For purposes of this Annual Report on Form 10-K,  all references to "fiscal
2000,"  "fiscal 1999" and "fiscal 1998" relate to the fiscal years of Centennial
ending March 25,  2000,  March 31, 1999 and March 31,  1998,  respectively.  Our
fiscal year was changed and now ends on the last Saturday of March.  For ease of
presentation,  March 31 has been utilized for all financial  statement  captions
for the fiscal year ended March 25, 2000. All references to "fiscal 1997" relate
to the  nine-month  period ended March 31, 1997  following  our change of fiscal
year from June 30 to March 31 and all  references to "fiscal 1996" relate to the
fiscal year ended June 30, 1996.

    On July 20, 1999, our  stockholders  approved a one-for-eight  reverse stock
split of our common  stock,  which was  effective as of the opening of the stock
markets  based in New York on July  23,  1999.  In this  report,  all per  share
amounts and numbers of shares have been  restated to reflect this reverse  stock
split.

   INDUSTRY OVERVIEW

     In recent years,  digital computing and processing have expanded beyond the
boundaries of desktop  computer systems to include a broader array of electronic
systems,  such  as  mobile  communication  systems,  network  switches,  medical
devices,  navigation systems, cellular telephones,  portable computers,  digital
cameras and portable data collection  terminals.  PC cards, with characteristics
such as high shock and vibration  tolerance,  low power consumption,  small size
and  high  access  speed,   better  meet  the  requirements  of  these  emerging
applications  than do traditional hard drive and floppy disk storage  solutions.

                                       3
<PAGE>

We believe  that demand for PC cards will  increase as a result of more  uniform
and expanded adoption of PCMCIA standards by electronic equipment manufacturers,
the inclusion of PC card slots on next generation  electronic  devices,  and the
development of PC cards offering new applications.  In addition, we believe that
widening acceptance of certain hand-held computers,  personal digital assistants
("PDAs"),  and Palm  Type  Devices  that  use PC cards  for  storage  and  other
applications may stimulate demand for our products.

   PRODUCTS

     Our PC cards may contain one or more of the  following  components:  memory
chips (such as flash (linear and ATA),  static random access memory  ("SRAM") or
one time programmable  ("OTP") memory) for storage capacity,  input/output chips
for transmitting  and receiving data, and memory chips with programmed  software
and other devices for specific applications.  Application-specific  PC cards are
generally  designed by us in cooperation with an OEM for a specific  industry or
commercial application.  The following are some of the applications in which our
PC cards are used:



     INDUSTRY                                                 APPLICATIONS
     --------                                                 ------------
Communications......................  Our  products  are  used  for  storage  in
                                      certain  wireless   telephones  and  other
                                      telecommunication  devices  such as screen
                                      phones.  Our  cards are also used in other
                                      communication   devices,   such   as   PBX
                                      switches and network routers.

Transportation......................  Our  products   are  used  in   navigation
                                      systems,   such  as   Global   Positioning
                                      Satellite ("GPS") equipment used in rental
                                      cars, fleet vehicles, emergency and rescue
                                      vehicles,  airplanes,  ships and  military
                                      vehicles.  GPS systems  interpret  signals
                                      from a  dedicated  network  of  satellites
                                      that circle the earth,  providing  data on
                                      the  position,   direction,  altitude  and
                                      speed of an  object.  We also  develop  PC
                                      cards  used  to  interact   with  on-board
                                      information   systems   embedded  in  air,
                                      marine and land based vehicles.

Mobile Computing and
     Office Automation..............  Our  products  are used  for  supplemental
                                      data   storage   in   portable   computing
                                      devices,   such   as   laptop   computers,
                                      handheld  computers,  PDAs,  and in office
                                      automation   products,   such   as   laser
                                      printers,   fax   machines   and   desktop
                                      computers.  Our memory  products  are also
                                      used  to  display  images  recorded  by  a
                                      digital camera on a personal computer.

Medical.............................  Our  products  are used to  store  patient
                                      data   from   medical    monitoring    and
                                      diagnostic equipment. Applications include
                                      blood gas analysis systems, defibrillators
                                      and hand-held glucometers.

Consumer OEM.......................   Our  products  are used by OEMs who design
                                      and sell various consumer  products,  such
                                      as sewing machines and digital cameras. In
                                      these  particular  applications,  PC cards
                                      are  used  to  store   digital  image  and
                                      embroidery pattern information.

     We also provide other non-PC card (PCMCIA)  products  based on flash memory
technology.  Flash memory  devices have grown in popularity  because they do not
require power to retain data,  are  reprogrammable  and are extremely  reliable.
Because of these  advantages,  flash memory solutions have become more prevalent
in equipment  requiring data storage. We believe that other flash based products
which we  manufacture  such as,  SIMMs,  DIMMs (which are each  defined  below),
miniature  cards,  compact flash cards and custom modules  provide our customers
with flexible alternatives to address data storage and processing requirements.

     SMALL FORM FACTOR FLASH CARDS are removable  flash memory  modules that fit
into small  electronic  devices,  such as compact  digital cameras through slots
that are smaller than those designed for PC cards. Small form factor flash cards
increase memory capacity and  functionality  and are similar to PC cards in that
they are made with existing  flash memory  technology  with modified  mechanical

                                       4
<PAGE>

packaging  and  electrical  connections.  In  addition  to custom  form  factors
tailored  to  particular   customer   requirements,   we  offer  four  types  of
standardized small form factor flash cards:

o        The  CompactFlash(TM) (a trademark of SanDisk  Corporation) is based on
         the  standard  endorsed by the  CompactFlash  Association,  an industry
         organization established to promote uniform standards for compact flash
         cards, of which we are a member.  The  CompactFlash  uses a design that
         relies on an on-board microcontroller and NAND flash technology.

o        The  Compact  Linear  Flash,  or CLF(TM)  card,  is based upon a design
         promoted by us. The CLF(TM) card is based on linear flash devices,  NOR
         flash  technology,  and  requires  no  on-board  micro-controller.  The
         CLF(TM) card uses a similar housing to the CompactFlash(TM).

o        The  MiniatureCard(TM) is based upon a design promoted by Intel that we
         acquired. The MiniatureCard is based on linear flash devices, NOR flash
         technology,  uses a linear  design,  as  opposed  to the  design of the
         CompactFlash,   and   requires   no   on-board   microcontroller.   The
         MiniatureCard(TM) uses a different housing design than the CLF(TM) card
         or CompactFlash(TM).

o        The Half  Card is  based  upon a  proprietary  design  developed  by us
         utilizing linear flash technology .

     FLASH  SINGLE  IN-LINE  MEMORY  MODULES  ("SIMMS")  AND DUAL IN LINE MEMORY
MODULES  ("DIMMs").  SIMMs and DIMMS are types of compact circuit board assembly
consisting of flash memory  devices and related  circuitry.  Electronic  systems
increasingly  employ SIMMs and DIMMs as building blocks in system design.  SIMMs
and DIMMs allow OEMs to configure a system with a variety of different levels of
memory,  thus enabling OEMs to address  cost-effective  multiple price points or
applications with a single module that is easily upgradable.

   BUSINESS STRATEGY

     Our  goal is to  become  a  leading  worldwide  provider  of PC  card-based
solutions  to  OEMs in the  communications,  transportation,  mobile  computing,
medical and consumer OEM industries. To reach our goal we intend to:

     OFFER COMPREHENSIVE PC CARD-BASED SOLUTIONS.  We offer an extensive PC card
product  line as well as  related  value-added  services,  such as (i)  in-house
design  expertise,  (ii) flexible  manufacturing,  including the ability to make
short  production  runs with minimum down time,  (iii)  private  labeling,  (iv)
programming  and  testing  capabilities,  (v) rapid order  turnaround,  and (vi)
just-in-time delivery programs. By offering  comprehensive  solutions for OEM PC
card  requirements,  from design to shipment,  we believe we have a  competitive
advantage in the PC card market.

     FOCUS ON OEM  CUSTOMERS.  We market  products and services to OEMs and VARs
that sell products for  applications  within our target  industries.  We believe
that we can achieve higher gross margins and customer loyalty by serving the OEM
market rather than  consumer  markets due to the OEM market's  requirements  for
value-added  services,  such as  design  expertise,  programming  and  prototype
development.  In addition, we believe that serving OEMs gives us exposure to new
technologies and emerging applications,  which helps us respond to technological
advances and anticipate changes in market conditions.

     PROVIDE   FLEXIBLE,   HIGH  QUALITY   MANUFACTURING   SOLUTIONS.   We  have
periodically  upgraded and automated our manufacturing  facilities to expand and
enhance in-house production capacity. By manufacturing our PC cards in-house, we
can offer more flexible  production  schedules to accommodate  OEMs that require
the delivery of a number of different products within a short time frame. Our PC
card manufacturing facility in Wilmington, Massachusetts is a certified ISO 9001
manufacturer.  ISO  certification  is based on numerous aspects of our business,
including manufacturing, purchasing, human resources, engineering and research.

   SALES AND MARKETING

     We target industrial and commercial  applications for PC cards primarily in
the communications,  transportation,  mobile computing, medical and consumer OEM
industries.  We market our products  through  direct sales  people,  independent
manufacturer  representatives  and  distributors.  Our  customer  service  staff
operates  from  our  main  office  in  Wilmington,  Massachusetts.  Field  sales
representatives  conduct  business  from our main  office,  and remote  offices,
including our sales office in Cheshire, England.

                                       5
<PAGE>

     We  generally  market our products  and  capabilities  directly to OEMs and
value-added  resellers  ("VARs").  Our sales staff and  engineers  work with OEM
engineers to design and engineer PC cards to OEM requirements, which often leads
to  providing  custom-designed  PC cards for specific  applications.  We believe
interaction  with OEM customers  provide  exposure to emerging  technologies and
applications,  facilitating a proactive approach to product design. The sales to
our OEM customers are made  pursuant to purchase  orders.  We have sold products
and services to more than 250 OEMs, including Compaq Computer,  Nortel Networks,
Lucent  Technologies,  3Com,  Solectron,  Jabil  Circuit,  Symbol  Technologies,
Intermec  Technologies  and United Parcel  Service.  We also pursue sales to the
military sector and to corporate end-users.

     We generally enter into  individual  purchase orders with our customers and
we do not presently have any fixed long-term volume  commitments from any of our
significant  customers.  Although Nortel Networks directly represented in excess
of 10% of our sales during fiscal 1999, no customer represented more than 10% of
our sales during  fiscal 2000.  However,  during  fiscal 1999,  Nortel  Networks
engaged  several  contract  manufacturers  to complete  the final  assembly of a
majority  of its  products  for which we have  historically  supplied  PC cards.
Nortel Networks combined with these contract manufacturers represented in excess
of 10% of our sales in fiscal 2000.

   ENGINEERING AND PRODUCT DEVELOPMENT

     We direct our engineering and design efforts towards  products for which we
believe there is a growing and profitable market. In particular, we seek to meet
the   requirements   of  our  OEM  customers  for  products  aimed  at  emerging
applications in the communications,  transportation,  mobile computing,  medical
and consumer OEM industries by applying the latest available  technology and the
PC card design and engineering  know-how gained from our focus on these markets.
We provide  engineering  and design support to many of our customers in order to
help integrate our products into OEM equipment.  OEMs often require PC cards for
new  applications  within our target  markets.  We have  developed  a library of
several  hundred designs through our work with OEMs. By working with these OEMs,
we  have  been  exposed  to new  market  opportunities  for  our  PC  card-based
solutions.

COMPETITION

    The market in which we compete is  intensely  competitive.  We compete  with
manufacturers of PC cards and related products,  including  M-Systems Flash Disk
Pioneers  Ltd.,  SanDisk  Corporation,   Simple   Technologies,   Smart  Modular
Technologies,  Inc.,  Viking  Components,  Inc.  and  White  Electronic  Designs
Corporation  as  well  as  with  electronic  component  manufacturers  who  also
manufacture  PC cards,  including  Hitachi  Semiconductor,  Inc. and  Mitsubishi
Electric Corporation. Certain of these competitors supply us with raw materials,
including  electronic  components,  which are occasionally,  and are at present,
subject to industry wide allocation.  These  competitors may have the ability to
manufacture  products  at lower  costs  than we do as a result  of their  higher
levels of  integration.  We believe  that our  ability  to compete  successfully
depends on a number of factors, including the following:

<TABLE>
   <S>                                                  <C>
    o  product quality and performance                   o  order turnaround
    o  provision of competitive design capabilities      o  timely response to advances in technology
    o  timing of new product introductions by            o  production efficiency
        Centennial, our customers and competitors        o  number and nature of  our competitors
    o  price                                                 in a given market
    o  ability to obtain raw materials                   o  general market and economic conditions

</TABLE>

   RAW MATERIALS AND PRODUCT COMPONENTS

     We are currently  experiencing supply shortages,  particularly with respect
to computer memory chips used to manufacture PC cards. Currently, certain memory
chips,  which are an integral  component of our products,  are on  industry-wide
allocation by suppliers.  These shortages are currently  having an impact on our
business and if they continue or expand,  will have a material adverse effect on
our business,  financial condition and results of operations. We believe we will
be able to meet most of our customers' orders for the first half of fiscal 2001.
At this time we are unable to determine what the impact will be  thereafter.  If
the current  shortages  become more severe,  such shortages will prevent us from
growing our business as we currently contemplate.

                                       6
<PAGE>

     We purchase  certain key  components  from single source  vendors for which
alternative  sources are not currently  available.  We do not maintain long-term
supply agreements with our vendors. The inability to develop alternative sources
for these  single  source  components  or to  obtain  sufficient  quantities  of
components could result in delays or reductions in product shipments,  or higher
prices  for  these  components,  or both,  any of  which  could  materially  and
adversely affect our business, financial condition and results of operations. No
assurance can be given that one or more of our vendors will not reduce  supplies
to us.

   EMPLOYEES

     As of  March  25,  2000,  we had 130  full-time  employees,  of whom 8 were
executive  officers,  23 were involved in sales and marketing,  16 were involved
with engineering and product  development,  13 were involved with administration
and 70 were involved in manufacturing.  None of our employees are represented by
a labor union.

ITEM 2.  PROPERTIES

     We maintain our principal  executive offices,  research and development and
ISO 9001  certified  manufacturing  operations  in a 34,000  square  foot leased
facility in Wilmington,  Massachusetts.  We currently pay rent of  approximately
$23,000 per month  pursuant to a lease that expires on April 30, 2002. The lease
contains  an option  to renew  for an  additional  five-year  period.  The lease
provides  for  annual  rent  increases  of 4% and  provides  that  we pay to our
landlord,  as additional  rent,  our pro rata share of certain  operational  and
maintenance costs at the facility during the term of the lease.

     We conduct  business  through  sales  offices in the United  States and our
United  Kingdom  office  located  in  Cheshire,  England.  We  believe  that our
facilities  are adequate for our current needs and that adequate  facilities for
expansion, if required, are available at competitive rates.

ITEM 3.  LEGAL PROCEEDINGS

     We are party  from  time to time to legal  proceedings  arising  out of the
normal  course  of  our  business.  We  do  not  believe  that  any  such  legal
proceedings,  either  individually  or in the  aggregate,  will have a  material
adverse effect on our business, financial condition or results of operations. In
addition, we have been or are parties to other litigation as summarized below.

CLASS ACTION LITIGATION

    We have been party to various  class action  lawsuits  which were  commenced
principally   during  fiscal  1997  and  1998.  A  substantial   number  of  the
participants in these class action lawsuits  participated in settlements with us
that became effective during fiscal 1999. The following discusses the history of
these class action  lawsuits,  together with the  settlements  that were entered
into principally in fiscal 1999.

    Since our  announcement  on February  11, 1997 that we were  undertaking  an
inquiry  into the accuracy of our prior  reported  financial  results,  and that
preliminary  information  had raised  questions as to whether  reported  results
contained  material  misstatements,  approximately  40  purported  class  action
lawsuits were filed in or  transferred  to the United States  District Court for
the District of Massachusetts.  These complaints  asserted claims against us and
our Board of  Directors,  officers  and former  independent  accountants,  among
others,  under certain federal and state laws.  These class action lawsuits were
purportedly  brought  by and on behalf of  purchasers  of our  Common  Stock (i)
between our initial  public  offering on April 12, 1994 and February 10, 1997 or
(ii) on February 25, 1997.

    On February 9, 1998,  these class action  lawsuits  were  consolidated  (the
"Consolidated Litigation"),  and the lead counsel representing the plaintiffs in
the  Consolidated  Litigation filed a Stipulation of Settlement (the "Settlement
Agreement"),  whereby we and  certain of our  officers  and  directors  would be
released  from  liability   arising  from  the   allegations   included  in  the
Consolidated  Litigation.  In return, we paid the plaintiffs in the Consolidated
Litigation $1.475 million in cash and issued to these plaintiffs  854,300 shares
or 37% of our  Common  Stock.  We  also  adopted  certain  corporate  governance
policies and procedures.  The Settlement  Agreement became effective on July 20,
1998.  All shares  issued in connection  with the  Consolidated  Litigation  are
included in the weighted  average shares  outstanding  calculation from July 20,
1998 forward.

                                       7
<PAGE>

    A number of class  members  elected  not to  participate  in the  Settlement
Agreement  described  above.  In September  1999, we reached an agreement with a
number of these  parties  which  calls for us to pay  $500,000 in cash to settle
these claims (the "Additional Settlement Agreement").  For the remaining parties
who did not participate in the Settlement Agreement or the Additional Settlement
Agreement,  we believe that the applicable  Federal  statue of  limitations  has
likely  expired  and that we do not have  material  exposure  to these  parties.
During fiscal 2000, we revised our estimate of the  allocation  between cash and
common stock of the $20 million provision for settlement of all such shareholder
litigation  recorded during fiscal 1997 related to the Class Action  Litigation.
Accordingly,  we  reclassified  certain amounts in fiscal 2000 from the original
settlement   reserve  to  accrued   liabilities,   representing  the  Additional
Settlement  Agreement  described above and a remaining  estimate of the probable
costs to be incurred in connection with the remaining parties not a party to the
Settlement Agreement or the Additional Settlement Agreement.  In fiscal 2000, we
made a partial payment of $188,000 in settlement of certain of these claims.  We
expect the remaining amount to be paid in the first quarter of fiscal 2001.

    In fiscal 2000, the  plaintiffs in the  Consolidated  Litigation  reached an
agreement  with  our  former  Interim  Chief  Executive  Officer,   Lawrence  J.
Ramaekers,  and his employer, Jay Alix & Associates ("Jay Alix"),  regarding the
plaintiffs' alleged claims against them. In fiscal 2000 we paid Jay Alix and Mr.
Ramaekers  $1.0 million for legal fees  incurred and Jay Alix and Mr.  Ramaekers
released any and all claims against our affiliates our directors and us.

SECURITIES AND EXCHANGE COMMISSION INVESTIGATION

     In February 1997, we were notified that the Boston  District  Office of the
Securities and Exchange  Commission  ("SEC") was conducting an  investigation of
us. We cooperated fully with the SEC and believe,  based on discussions with the
SEC,  that we will be able to resolve  the issues  arising  from the  conduct of
former members of our senior management and the restatement of certain financial
statements  in an  acceptable  manner,  although we can not assure you that such
matters will be resolved in a manner acceptable to us.

WEBSECURE LITIGATION

    On  and  after  March  26,  1997,  several  complaints  were  filed  against
WebSecure,  certain officers, directors and underwriters of WebSecure, and us in
the United States District Court for the District of Massachusetts by plaintiffs
purporting  to  represent   classes  of  shareholders  who  purchased  stock  of
WebSecure,  Inc.  ("WebSecure")  between December 5, 1996 and February 27, 1997.
The claims against us included  alleged  violations of Sections 11 and 15 of the
Securities Act of 1933 (the "WebSecure Securities Litigation").  In fiscal 1997,
we  established  a reserve  of $1.2  million  in  connection  with the  expected
settlement of this litigation.

    In fiscal 2000, we settled the WebSecure Securities Litigation in return for
the issuance of 43,125  shares of our Common  Stock,  of which 14,375 shares had
been  issued as of March 31,  2000,  and the  payment of $50,000  for notice and
administrative  costs.  In fiscal 2000,  we revised our estimate of the expected
cost to  resolve  this  matter  based on the  final  settlement  amounts,  which
resulted in income of $940,000.  All shares to be issued in connection with this
settlement are included in the weighted average shares  outstanding  calculation
from September 17, 1999 forward.

OTHER

    On May 12, 2000, we received a complaint  from Dennis M.  O'Connor  alleging
that he is  owed  approximately  $485,000  in  connection  with  legal  services
provided by O'Connor,  Broude & Aronson  prior to May 12,  1997.  Because of the
early stage of this litigation,  we are not able to make an assessment as to its
likely outcome.

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

     None.
                                       8
<PAGE>

ITEM 4A.  EXECUTIVE OFFICERS OF REGISTRANT

     The  executive  officers  and  management  of  Centennial,  their  ages and
positions held in Centennial, are as follows:

<TABLE>
<CAPTION>
                Name                         Age                  Position
                ----                                              --------
      <S>                                   <C>    <C>
       L. Michael Hone................       50     President and Chief Executive Officer
       Richard N. Stathes.............       54     Executive Vice President, Worldwide Sales and  Marketing
       Jacques Assour, Ph.D...........       67     Senior Vice President, Operations
       Richard J. Pulsifer............       41     Vice President, Chief Financial Officer and Secretary
       Douglas S. Boehme..............       41     Vice President of North American Sales
       Mary A. Gallahan...............       52     Vice President of Administration and Human Resources
       Grady D. Lambert...............       37     Vice President of Engineering
       John C. Nugent.................       56     Managing Director of Centennial Technologies International Limited

</TABLE>

     Executive officers are elected by and serve at the pleasure of the Board of
Directors.  The following is a brief summary of the background of each executive
officer of Centennial.

     L. MICHAEL HONE,  President and Chief  Executive  Officer.  Mr. Hone joined
Centennial as its President and Chief  Executive  Officer and Director in August
1997. Prior to Centennial, Mr. Hone was the Chairman and Chief Executive Officer
of PSC Inc., a publicly-held  manufacturer of hand-held and fixed-position laser
based bar code scanners,  scan engines and other scanning products, from 1992 to
1997; director of Telxon Corporation,  a publicly-traded  company engaged in the
global  design  and  manufacture  of  wireless  networks  for  mobile  computing
solutions and information systems;  director of Rochester Healthcare Information
Group,  Inc.,  a  company  principally  engaged  in  providing  data  processing
management to the health care industry;  director of  Association  for the Blind
and Visually  Impaired,  Inc., a company  principally  engaged in assisting  the
blind and visually impaired to achieve vocational and social  independence.  Mr.
Hone is a named inventor on 6 United States patents.

     RICHARD  N.  STATHES,   Executive  Vice  President,   Worldwide  Sales  and
Marketing.  Mr. Stathes joined  Centennial as Senior Vice President of Sales and
Marketing in September 1997 and became Executive Vice President, Worldwide Sales
and Marketing in April 2000.  From 1992 until 1997,  Mr.  Stathes served as Vice
President of Sales and Marketing for PSC Inc., a  publicly-held  manufacturer of
hand-held and  fixed-position  laser based bar code  scanners,  scan engines and
other  scanning  products.  Mr.  Stathes  holds a Bachelor of Science  degree in
Business Administration from Syracuse University.

     JACQUES ASSOUR, PH.D., SENIOR VICE PRESIDENT, OPERATIONS. Dr. Assour joined
Centennial  in  September  1997.  From 1995  until  1997,  Dr.  Assour  provided
electronics design and financial planning  consulting services to various client
companies,  including  Robotic  Vision  Systems,  Inc. From 1990 until 1995, Dr.
Assour  served  as  Senior  Vice   President  of  Operations  for  PSC  Inc.,  a
publicly-held  manufacturer of hand-held and fixed-position laser-based bar code
scanners,  scan  engines  and other  scanning  products.  Dr.  Assour is a named
inventor on five United States  patents.  Dr. Assour holds a Bachelor of Science
degree and a Master of Science degree in Electrical Engineering,  and a Ph.D. in
Electrophysics from Polytechnic Institute of Brooklyn.

       RICHARD  J.  PULSIFER,  VICE  PRESIDENT,   CHIEF  FINANCIAL  OFFICER  AND
SECRETARY.  Mr. Pulsifer joined  Centennial in June 1999. From 1996 to 1998, Mr.
Pulsifer  served  as Chief  Financial  Officer  and Vice  President  for  Praxis
International, Inc., Waltham, Massachusetts, a manufacturer of software products
for data movement.  Previously, Mr. Pulsifer held financial management positions
with  Chrysalis  Symbolic  Design,  Summa  Four,  Trinzic,  Altron and Coopers &
Lybrand  L.L.P.  Mr.  Pulsifer  holds a Bachelor  of Science  degree in Business
Administration from Suffolk University.

     DOUGLAS S. BOEHME,  VICE  PRESIDENT OF NORTH  AMERICAN  SALES.  Mr.  Boehme
joined  Centennial in 1998 as a Regional Sales Manager and became Vice President
of North American Sales in January 2000. Prior to joining Centennial, Mr. Boehme
was a Sales Director for PSC Inc. a publicly-held  manufacturer of hand-held and
fixed-position  laser-based  bar code scanners,  scan engines and other scanning
products.

                                       9
<PAGE>

     MARY A. GALLAHAN, VICE PRESIDENT OF ADMINISTRATION AND HUMAN RESOURCES. Ms.
Gallahan joined  Centennial in October 1999. During 1999, Ms. Gallahan served as
Vice President of Human Resources for Schuff Steel, Phoenix,  Arizona. From 1997
to 1999,  Ms.  Gallahan  provided  consulting  services.  From 1992 to 1997, Ms.
Gallahan was Vice President of Human  Resources for PSC,  Inc., a  publicly-held
manufacturer of hand-held and fixed-position laser-based bar code scanners, scan
engines and other scanning products.

       GRADY D. LAMBERT,  VICE  PRESIDENT OF  ENGINEERING.  Mr.  Lambert  joined
Centennial in May 1997 as a senior design  engineer and was promoted to Director
of Advanced Technology in December 1998 and became Vice President of Engineering
in  February   2000.   From  1994  to  1997,   Mr.   Lambert  was  flash  memory
product/engineering  manager for AMP, Inc.'s PC Card Division  located in Largo,
Florida.  Mr. Lambert holds a Bachelor of Science degree and a Master of Science
degree  in  Electrical   Engineering   from  the   University  of  Alabama  with
concentrations in the areas of digital communications and digital design.

     JOHN C. NUGENT, MANAGING DIRECTOR OF CENTENNIAL TECHNOLOGIES  INTERNATIONAL
LIMITED.  Mr. Nugent  joined  Centennial  as Managing  Director of  Centennial's
subsidiary, Centennial Technologies International Limited, in January 1998. From
1997 until January 1998,  Mr. Nugent served as Sales Manager for Matco,  Inc., a
contract  manufacturer  of electronic  boards.  From 1992 until 1997, Mr. Nugent
served  as  Vice  President  of   International   Operations  for  PSC  Inc.,  a
publicly-held  manufacturer of hand-held and fixed-position laser-based bar code
scanners, scan engines and other scanning products.


                                       10
<PAGE>

                                     PART II

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

     Our Common Stock is not  currently  traded or quoted on an organized  stock
exchange or  automated  quotation  system.  From March 1997 until May 1998,  our
Common Stock was traded on the "pink  sheets," and since May 1998, has traded on
the Over-the-Counter  Electronic Bulletin Board under the symbol "CENL." For the
periods indicated, the following table sets forth the range of high and low sale
prices  for  the  Common  Stock  based  on   information   reported  by  certain
internet-based bulletin board services purporting to monitor trading activities.
We are unable to verify  the  accuracy  or  completeness  of the  internet-based
bulletin board information.

                                                            HIGH           LOW
FISCAL 1999                                                 ----           ---
April 1, 1998 through June 27, 1998..................     $  21.00      $  10.50
June 28, 1998 through September 26, 1998.............     $  13.50      $   3.50
September 27, 1998 through December 26, 1998.........     $  11.00      $   3.00
December 27, 1998 through March 31, 1999.............     $  12.00      $   4.50
FISCAL 2000
April 1, 1999 through June 26, 1999..................     $   9.36      $   5.36
June 27, 1999 through September 25, 1999.............     $   9.05      $   4.50
September 26, 1999 through December 25, 1999.........     $   5.06      $   3.50
December 26, 1999 through March 25, 2000.............     $  12.00      $   4.38

     In fiscal 2000, we filed an application  for listing on the Nasdaq National
Market. We believe that we presently meet all of the requirements for listing on
the Nasdaq National Market, except that we believe we need to fully resolve with
the SEC all of the  issues  arising  from  the  conduct  of  former  members  of
Centennial's   senior  management  and  the  restatement  of  certain  financial
statements.  We are  cooperating  fully  with  the SEC  and  believe,  based  on
discussions  with the SEC,  that we will be able to resolve  these  issues in an
acceptable  manner,  although  we can not  assure you that such  issues  will be
resolved with the SEC, or if the issues are resolved, that our Common Stock will
be approved for listing on the Nasdaq  National  Market on a timely basis, or at
all.


ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

     The selected consolidated  financial data set forth below should be read in
conjunction  with our  consolidated  financial  statements and related notes and
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations"  included elsewhere in this Annual Report on Form 10-K. The selected
consolidated  financial data as of March 31, 1998 and 1997 and June 30, 1996 and
for the nine  months  ended  March  31,  1997 and 1996 have  been  derived  from
financial statements not included herein.


                                       11
<PAGE>

CONSOLIDATED  STATEMENT  OF  OPERATIONS  DATA (IN  THOUSANDS,  EXCEPT  PER SHARE
AMOUNTS):

<TABLE>
<CAPTION>
                                                                                            Nine Months Ended      Fiscal Year Ended
                                               Fiscal Years Ended March 31,                       March 31,              June 30,
                                                                                                  ---------              --------
                                   ------------------------------------------------------
                                      2000           1999          1998          1997          1997           1996          1996
                                  ------------   ------------  ------------  ------------  ------------  -------------  --------
                                                                              (Unaudited)                 (Unaudited)
<S>                              <C>            <C>           <C>           <C>           <C>           <C>            <C>
Net sales......................   $   35,580     $   27,633    $   28,263    $   39,907    $   28,263    $   21,768     $   33,412
Cost of goods sold.............       25,040         18,968        23,683        33,213        24,453        21,018         29,778
                                  ----------     ----------    ----------    ----------    ----------    ----------     ----------
   Gross profit................       10,540          8,665         4,580         6,694         3,810           750          3,634
Operating expenses:
   Research and development....        1,887            750           838         1,369         1,061         1,126          1,434
   Selling, general and

administrative.................        6,673          6,132         9,957         8,416         7,318         2,705          3,803
                                  ----------          -----         -----         -----         -----         -----
   Operating income (loss).....        1,980          1,783        (6,215)       (3,091)       (4,569)       (3,081)        (1,603)
Other income (expense):
   Loss on investment activities          --           (733)      (14,065)      (16,689)      (14,096)          (69)        (2,662)
   Loss on disposal of equipment        (343)            --            --            --            --            --             --
     Special investigation costs          --             --          (597)       (3,673)       (3,673)           --             --
   Provision for settlement....
     of shareholder litigation.           --             --            --       (20,000)      (20,000)           --             --
   Provision for loss on
inventory
     subject to customer dispute          --             --        (1,841)           --            --            --             --
   Proceeds from resolution of
     customer dispute..........           --          1,600            --            --            --            --             --
   Other                                 940             --            --            --            --            --             --
   Other income (expense)......           46           (132)         (258)           --            --            --             --
   Net interest income (expense)         185            344           (56)         (234)         (391)         (174)           (17)
                                  ----------     ----------    -----------   -----------   -----------     ---------      ---------
   Income  (loss)  before income
taxes                                  2,808          2,862       (23,032)      (43,687)      (42,729)       (3,324)        (4,282)
    and  equity in  earnings  of
affiliate
Equity in earnings of affiliate           --             --           423           959           959            --             --
                                  ----------     ----------    ----------    ----------    ----------    ----------     ----------
   Income  (loss)  before income       2,808          2,862       (22,609)      (42,728)      (41,770)     (  3,324)        (4,282)
taxes
Provision for income taxes.....          155             56            --            --            --            --             --
                                  ----------     ----------    ----------    ----------    ----------    ----------     ----------
   Net income (loss)...........   $    2,653     $    2,806    $  (22,609)   $ (42,728)    $  (41,770)   $   (3,324)   $    (4,282)
                                  ==========     ==========    ==========    =========     ==========    ==========    ===========

Net  income  (loss)  per share -  $     0.83    $      0.97   $     (9.80)  $   (19.90)     $  (19.24)    $  (2.10)      $   (2.51)
basic
Net  income  (loss)  per share -  $     0.76    $      0.96   $     (9.80)  $   (19.90)     $  (19.24)    $  (2.10)      $   (2.51)
diluted .......................
Weighted average shares
   outstanding - basic.........        3,186          2,907         2,308         2,147         2,171         1,585          1,704
Weighted average shares
   outstanding - diluted.......        3,508          2,939         2,308         2,147         2,171         1,585          1,704

Consolidated Balance Sheet Data (in thousands):

                                                              MARCH 31,
                                          ---------------------------------------------------    JUNE 30,
                                             2000          1999          1998          1997         1996
                                         ----------    ----------    ----------     ----------  --------

Current assets......................      $ 24,912      $ 14,703      $ 11,497       $ 27,213    $ 37,017
Total assets........................        30,373        18,954        17,078         52,090      41,132
Current liabilities.................        13,651         7,258         8,140         22,644       8,856
Working capital.....................        11,261         7,445         3,357          4,569      28,161
Stockholders' equity................        15,895        11,696         8,902         29,446      31,909

</TABLE>

                                       12
<PAGE>



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

    Item  7  of  this  Annual  Report  on  Form  10-K  contains  forward-looking
statements   within  the  meaning  of  the  federal   securities   laws.   These
forward-looking statements include statements regarding anticipated revenues and
expenses,  price  competition  and erosion,  expansion into new markets,  future
sales  mix,  future  supply  of raw  materials,  gross  margins,  raw  materials
inventory procurement practices, Centennial's customer base, future developments
involving   certain   investments   and  future   availability   of   financing.
Forward-looking   statements  involve  a  number  of  risks  and  uncertainties,
including,  but not limited to, those (i) discussed below,  (ii) discussed under
the heading "Factors That May Affect Future Results",  and (iii) identified from
time to time in our periodic filings with the SEC. These risks and uncertainties
could cause actual results to differ  materially from those  projected.  Readers
are cautioned not to place undue reliance on these  forward-looking  statements.
We assume no  obligation to update these  forward-looking  statements to reflect
events or circumstances after the date hereof.

OVERVIEW

   GENERAL

    We  design,  manufacture  and  market  an  extensive  line of PC cards  used
primarily  by OEMs in  industrial  and  commercial  applications.  Our PC  cards
provide added  functionality to devices containing  microprocessors by supplying
increased storage capacity,  communications capabilities and programmed software
for specialized applications.

    ACQUISITION OF THE FLASH MEMORY CARD BUSINESS OF INTEL CORPORATION.

     On December 29, 1999,  we acquired the flash memory card  business of Intel
Corporation.  The acquired business included the PCMCIA card families (Series 2,
Value series 100 and 200) and the miniature  card families  (Series 100 and 200)
and inventory  related  thereto.  This  acquisition  has been accounted for as a
purchase  in the  fourth  quarter  of  fiscal  2000.  In  consideration  for the
acquisition,  we paid cash of $2.0 million, issued a secured promissory note for
$4.0 million and issued 60,000 shares of Series B  Convertible  Preferred  Stock
which  represented   approximately   16%  of  our  outstanding   shares,  on  an
as-converted  basis.  The  promissory  note bears interest at the rate of 9% per
annum, and is due and payable, together with interest thereon, in December 2000.
The Series B  Convertible  Preferred  Stock  converts at a ratio of 10 shares of
Common  Stock  per  share of  Series B  Convertible  Preferred  Stock  and has a
liquidation  preference  of $4.8 million.  Intel  Corporation  received  certain
registration  rights with  respect to the shares of Common Stock  issuable  upon
conversion of the Series B Convertible  Preferred  Stock.  The flash memory card
business  was  concentrated  with a few  customers.  While there is a contingent
payment of up to $4.5  million  due January  2001 based on units  shipped by the
acquired business to Cisco Systems,  Inc. ("Cisco Systems"),  we received notice
from Cisco Systems of its intent to discontinue purchasing from us. Accordingly,
we expect that we will not have to make any portion of the contingent payment.

    The following discussion and analysis should be read in conjunction with the
consolidated  financial  statements and notes thereto included elsewhere in this
Annual Report on Form 10-K.


                                       13
<PAGE>

RESULTS OF OPERATIONS

The following table sets forth certain consolidated statements of income data of
Centennial expressed as a percentage of net sales:

<TABLE>
<CAPTION>
                                                                           Years Ended                        Nine Months Ended
                                                                            March 31,                              March 31,
                                                            2000         1999          1998         1997       1997        1996
                                                        -----------  -----------   -----------  ----------  ----------  ---------
     <S>                                                    <C>         <C>           <C>         <C>         <C>         <C>
      Net sales.......................................       100.0%      100.0%        100.0%      100.0%      100.0%      100.0%
      Cost of goods sold..............................        70.4        68.6          83.8        83.2        86.5        96.6
                                                        ----------   ---------     ---------    --------    --------    --------
        Gross profit..................................        29.6        31.4          16.2        16.8        13.5         3.4
      Operating expenses:
        Research and development......................         5.3         2.7           3.0         3.5         3.7         5.2
        Selling, general and administrative...........        18.7        22.2          35.2        21.1        25.9        12.4
                                                        ----------   ---------     ---------    --------    --------    --------
          Operating income (loss).....................         5.6         6.5         (22.0)       (7.8)      (16.1)      (14.2)
      Other income expense:
        Loss on investment activities.................         --         (2.7)        (49.8)      (41.8)      (49.9)       (0.3)
        Loss on disposal of equipment.................       (1.0)          --            --          --          --          --
        Special investigation costs...................         --           --          (2.1)       (9.2)      (13.0)         --
        Provision for settlement of shareholder
           Litigation.................................         --           --            --       (50.1)      (70.8)         --
        Provision for loss on inventory subject to
           customer dispute...........................         --           --          (6.5)         --          --          --
        Proceeds from resolution of customer dispute..         --          5.8            --          --          --          --
        Other.........................................         2.7          --            --          --          --          --
        Other income (expenses).......................         0.1        (0.4)         (0.9)         --          --          --
        Net interest income (expense).................         0.5         1.2          (0.2)       (0.6)       (1.4)       (0.8)
                                                        ----------   ---------     ----------   ---------   ---------   ---------
        Income (loss) before income taxes and equity
           in earnings of affiliate...................         7.9        10.4       (  81.5)     (109.5)     (151.2)    (  15.3)
      Equity in earnings of affiliate.................         --           --           1.5         2.4         3.4          --
                                                        ----------   ---------     ---------    --------    --------    --------
        Income (loss) before income taxes.............         7.9        10.4       (  80.0)     (107.1)     (147.8)    (  15.3)
      Provision for income taxes......................         0.4         0.2            --          --          --          --
                                                        ----------   ---------     ---------    --------    --------    --------
        Net income (loss).............................         7.5%       10.2%      (  80.0)%    (107.1)%    (147.8)%   (  15.3)%
                                                        ==========   =========     =========    =========   ========    ========
</TABLE>

             TWELVE MONTHS ENDED MARCH 25, 2000 AND MARCH 31, 1999

    NET SALES.

    Net sales  increased  29% to $35.6 million for fiscal 2000 compared to $27.6
million for fiscal 1999. The increase in sales is attributable to an increase in
units shipped. In the fourth quarter of fiscal 2000, our sales to Cisco Systems,
the primary  customer  of the flash  memory card  business  acquired  from Intel
Corporation,  were approximately $2.0 million.  Following our acquisition of the
flash memory card business,  Cisco Systems notified us that they would no longer
purchase from us and cancelled all remaining orders.  Component costs (primarily
related to memory  chips)  increased  significantly  throughout  fiscal 2000. We
expect  component costs to continue to increase in fiscal 2001, which we believe
may cause an increase in our average  selling price.  We can not assure you that
if component  costs continue to rise we will be able to continue to increase our
average selling price or that competitive  pricing  pressures will not adversely
affect the average  selling price. We anticipate that there will be strong sales
growth in fiscal  2001  compared  to  fiscal  2000.  We  believe  there  will be
significant shortages of certain of our components, particularly with respect to
flash memory.  Any such  shortages  could have a material  adverse effect on our
business, financial condition and results of operations.

                                       14
<PAGE>

    We  continue to  experience  limited  backlog  and  advance  bookings as our
customers,   particularly  our  major   customers,   continue  to  expect  short
lead-times.  A majority of our anticipated quarterly revenues are expected to be
orders that will be received and fulfilled in the same quarter.  Due to a number
of factors described herein and in "Factors That May Affect Future Results," our
ability to adjust our  operating  expenses  is limited in the short  term.  As a
result,  if  product  revenues  are  lower  than  anticipated,  our  results  of
operations will be adversely affected.

    For fiscal 2000, no customer  represented more than 10% of our sales. Nortel
Networks  represented  5%  and  14%  of our  sales  in  fiscal  2000  and  1999,
respectively.  During fiscal 1999,  Nortel  Networks  engaged  several  contract
manufacturers  to complete the final  assembly of a majority of its products for
which we have  historically  supplied  PC  cards.  Our  sales to these  contract
manufacturers for both fiscal 2000 and 1999 represented 14% of our sales. One of
these contract manufacturers recently merged with one of our competitors,  which
could result in a decrease of sales to this contract manufacturer.  A relatively
small number of customers account for a significant  percentage of our sales. If
these customers were to reduce significantly the amount of business they conduct
with us, it could have a material adverse effect on the our business,  financial
condition and results of operations.

    For  fiscal  2000  and  1999,  sales  outside  of  the  United  States  were
approximately  20% and 12%,  respectively,  of our sales.  Sales  outside of the
United States are primarily to customers in several Western European  countries,
although sales to customers in any one country did not comprise more than 10% of
our sales for fiscal 2000 or 1999.

    GROSS PROFIT.

    Gross profit increased 22% to $10.5 million for fiscal 2000 compared to $8.7
million  for fiscal  1999.  Gross  margins  were 30% for fiscal 2000 and 31% for
fiscal  1999.  The fourth  quarter of fiscal 2000  included  approximately  $4.4
million of net sales of inventory  acquired  with the  acquisition  of the flash
memory card business of Intel Corporation. This acquired inventory is carried at
its  estimated  fair  market  value.  Accordingly,  the  sale of this  inventory
resulted,  and will likely  result in the future,  in a lower gross  margin than
sales of our other inventory.  We anticipate that most of the acquired inventory
on hand as of March 31,  2000  should be sold  during  the first  half of fiscal
2001.  Excluding the effect of sales of the acquired inventory and related costs
of this acquired inventory, the gross margin for fiscal 2000 would have been 34%
as compared to 30%.

    We anticipate  that gross margins will continue to be strong in fiscal 2001;
however,  the  gross  margins  will  likely be  somewhat  lower in the first two
quarters  of fiscal  2001 as we  anticipate  certain of the  remaining  acquired
inventory will be sold during those  periods.  We also believe the gross margins
on sales by the acquired business, in general, will be somewhat lower than those
achieved by us on our  existing  products.  We have been able to achieve  higher
margins on our products  primarily due to a significant amount of custom product
sales  through our direct sales force  combined  with a small amount of software
and service  revenue.  Our existing  products  and services  tend to have higher
margins than standard products, which comprise substantially all of the acquired
business' product line.

    We experienced an increase in our flash memory costs throughout fiscal 2000.
We increased the average  selling price of our products  during fiscal 2000 as a
result of our increased  component  costs.  This increase in our average selling
price  enabled us to  maintain  our gross  margin.  We believe  costs of certain
component  memory  devices will continue to increase  during fiscal 2001. We can
not assure you that we will be able to continue to increase our average  selling
prices to offset such component cost increases that might have an adverse affect
our gross margin.

    RESEARCH AND DEVELOPMENT.

    Our research and development  expenditures  increased  significantly to $1.9
million or 5% of sales in fiscal 2000  compared  to $0.8  million or 3% of sales
for fiscal 1999. The higher research and development  costs are due generally to
increased  spending  on  outside   consultants,   higher  engineering   material
expenditures  and  recruiting  and  relocation  costs combined with an increased
percentage of employees focused on research and development  projects. We expect
that we will continue to spend  significant  amounts on research and development
in the future.

    SELLING, GENERAL AND ADMINISTRATIVE.

    Selling,  general and  administrative  expenses  were $6.7 million or 19% of
sales in fiscal 2000  compared to $6.1  million or 22% of sales in fiscal  1999.
The $0.6 million increase in these expenses for fiscal 2000 is mainly attributed
to higher  staffing  costs  necessary  to generate  and support our  increase in
sales.  We  anticipate  our selling,  general and  administrative  expenses will
continue to increase as our sales grow.

                                       15
<PAGE>

    OTHER INCOME/EXPENSE.

    In fiscal  2000,  we incurred a loss of $343,000 on the  disposal of certain
equipment that was replaced.

    In fiscal 2000, we settled the WebSecure Securities Litigation in return for
the issuance of 43,125  shares of our Common  Stock,  of which 14,375 shares had
been  issued as of March 31,  2000,  and the  payment of $50,000  for notice and
administrative  costs.  In fiscal 2000,  we revised our estimate of the expected
cost to  resolve  this  matter  based on the  final  settlement  amounts,  which
resulted in income of $940,000.  All shares to be issued in connection with this
settlement are included in the weighted average shares  outstanding  calculation
from September 17, 1999 forward.

    NET INTEREST INCOME/EXPENSE.

    Net interest  income was  $185,000 for fiscal 2000  compared to net interest
income of $344,000 for fiscal 1999.  This decrease is primarily  attributable to
decreased funds invested or on deposit in interest bearing accounts,  as well as
increased  borrowing under  capitalized  leases during fiscal 2000 combined with
interest expense on the note payable.

    NET INCOME PER SHARE.

    On July 20, 1999, our  shareholders  approved a one-for-eight  reverse stock
split of the common  stock,  which was  effective as of the opening of the stock
markets on July 23, 1999.  In this report,  all per share amounts and numbers of
shares have been restated to reflect the reverse stock split.

    As a result of the Intel Corporation transaction described more fully below,
diluted  weighted average  outstanding  shares increased by 600,000 shares as of
December 29, 1999.

Twelve months ended March 31, 1999 and March 31, 1998

     NET SALES.

     Sales decreased 2% to approximately  $27.6 million for fiscal 1999 compared
to $28.3  million for fiscal 1998.  The average  selling  price for our products
fell  approximately  7% during  fiscal 1999,  which was  partially  offset by an
increase  in the  volume  of PC  cards  sold  of  approximately  5%.  Decreasing
component costs between periods and competitive pricing pressures contributed to
the decrease in the average selling price of our products.

     Sales outside of the United States  represented 12% of sales in fiscal 1999
compared to 14% of sales for fiscal 1998. At the end of fiscal 1998, we opened a
new sales office in Cheshire, England.

     Sales to Nortel  Networks  represented 14% of sales in fiscal 1999 compared
to 29% of sales in fiscal 1998.  During fiscal 1999,  Nortel Networks  engaged a
contract  manufacturer  to  complete  the final  assembly  of a majority  of its
products  for which we have  historically  supplied PC cards.  Our sales to this
contract manufacturer represented almost 10% of our sales during fiscal 1999. No
other customer accounted for more than 10% of our sales during fiscal 1999.

     GROSS PROFIT.

     Gross profit increased 89% to $8.7 million for fiscal 1999 compared to $4.6
million for fiscal 1998.  Gross margins were 31% for fiscal 1999 compared to 16%
for fiscal  1998.  During  fiscal  1999,  we sold  portions  of some  customized
inventory for approximately $1.2 million,  the cost of which had been previously
fully reserved due to a dispute with the customer for whom the customized  cards
were  originally  produced and who had attempted to cancel the order.  The gross
margin for fiscal 1999,  excluding  this sale of fully reserved  inventory,  was
28%. Costs of goods sold include provisions for inventory  obsolescence of $0 in
fiscal 1999 and  $886,000  in fiscal  1998,  representing  3% of sales in fiscal
1998,  which  reflects the strategy of prior  management  to build  inventory in
anticipation of customer  orders,  a portion of which did not  materialize.  Our
gross  margins were also  negatively  impacted  during  fiscal 1998 by declining
memory chip prices,  which reduced PC card selling prices in certain  situations
where we had already purchased memory chips at higher prices.


                                       16
<PAGE>
     RESEARCH AND DEVELOPMENT.

     Research and development  costs decreased by 11% to approximately  $750,000
in fiscal 1999 compared to $838,000 for fiscal 1998.

     SELLING, GENERAL AND ADMINISTRATIVE.

      Selling,  general and  administrative  expenses  decreased  by 39% to $6.1
million in fiscal 1999 compared to $10.0  million in fiscal 1998.  This decrease
primarily  resulted  from the  non-recurrence  in fiscal  1999 of the  following
expenses incurred in fiscal 1998: legal and consulting  expenses relating to the
negotiation and  finalization  of the settlement of the class action  litigation
against us, the settlement of several other legal claims,  the filing of revised
tax  returns,  and  the  conclusion  of  our  arrangements  for  interim  senior
management  consulting  services.  Bad debt  expenses were also higher in fiscal
1998 than in fiscal 1999 as we  provided  specific  reserves  for several of our
former customers in fiscal 1998. We also paid  non-recurring  retention  bonuses
during fiscal 1998 to several key employees  following the  announcement  of the
special  investigation  into  our  prior  reported  financial  results.  We also
incurred  non-recurring  costs in fiscal 1998 in hiring a new senior  management
team,  and paid  severance  benefits  to  certain  of the  former  officers  and
employees.  We also incurred  non-recurring  costs during fiscal 1998 in closing
its  Canadian  and UK offices and  establishing  a new sales office in Cheshire,
England. We incurred increased sales expenses related to its new UK sales office
during fiscal 1999.  Employee  benefits and  commissions  expenses  increased in
fiscal 1999 as we implement a profit-sharing plan and a new commissions program.

    LOSS ON INVESTMENT ACTIVITIES.

    Loss on investment activities consists of write-downs, valuation adjustments
and accruals for losses  recorded  associated with certain  investments.  During
fiscal  1999,  we  reduced  the  carrying  value of our  investment  in  Century
Electronics  Manufacturing,  Inc.  ("Century")  by  $733,000  to  $1.7  million,
reflecting our assessment of the deterioration in the value of this investment.

    PROCEEDS FROM RESOLUTION OF CUSTOMER DISPUTE.

    During  fiscal 1998,  we filed suit against a customer  regarding  inventory
specifically  purchased and  manufactured  pursuant to a purchase order from the
customer (the "Custom Inventory"). The customer attempted to cancel a portion of
the purchase  order.  We disputed the  customer's  claim that the purchase order
cancellation  was  effective.  During fiscal 1998, we fully reserved the cost of
the Custom  Inventory of  approximately  $1.8 million due to the legal costs and
inherent uncertainties involved in litigation.

     During  fiscal  1999,  we  settled  the  litigation.  As a  result  of this
settlement,  we received  $1.6 million in cash and the  customer  agreed that we
retain this Custom Inventory. During fiscal 1999, we recognized the cash payment
of $1.6  million  as income.  Also  during  fiscal  1999,  after the  settlement
agreement  was  reached,   we  sold   portions  of  the  Custom   Inventory  for
approximately $1.2 million, which was included in net sales.

    OTHER EXPENSES, NET.

    During fiscal 1999, we incurred a loss on the disposal of certain  equipment
that had a net  book  value  of  approximately  $132,000,  which  equipment  was
replaced. During fiscal 1998, we increased its accrual for Special Investigation
Costs by $597,000 due to incremental costs.  During fiscal 1998, we paid in full
our line of  credit  and  lease  financing  obligations  with the bank  that was
previously  providing us with credit  facilities.  That bank  required us to pay
lease  cancellation  charges of  approximately  $258,000 in order to release its
lien on the equipment being financed pursuant to those leases.

    NET INTEREST INCOME/EXPENSE.

    Net interest  income was  $344,000 for fiscal 1999 and net interest  expense
was $56,000 in fiscal 1998,  reflecting  cash available for investment in fiscal
1999 and outstanding borrowings during fiscal 1998.

                                       17
<PAGE>

    YEAR 2000 MATTERS

    Over  the  past  several  years  we  made  significant  investments  in  new
manufacturing,  financial and operating hardware and software. These investments
were made to support the growth of our operations;  however,  as a by-product of
this effort,  we had year 2000 compliant  hardware and software  operating as we
entered into the year 2000. We upgraded or replaced  systems which were not year
2000 compliant.

    Our computer  systems and equipment  successfully  transitioned  to the year
2000. However,  there may be latent problems that surface at key dates or events
in the future. We have not experienced,  and do not anticipate,  any significant
problems  related to the  transition  to the year 2000. We estimate that we have
spent in aggregate  approximately  $600,000 in  addressing  year 2000  readiness
issues, of which $502,000 was capitalized.  We do not anticipate any significant
future expenditures related to year 2000 compliance.

                        LIQUIDITY AND CAPITAL RESOURCES

    Since inception,  we have financed our operating  activities  primarily from
public  and  private  offerings  of  equity  securities,  loans  from  financial
institutions and positive cash flows from operations.  At March 25, 2000, we had
cash  and  cash  equivalents  of   approximately   $5.8  million  and  generated
approximately  $1.2 million of cash from  operating  activities  during the year
then ended. The $4.0 million  promissory note, and related  interest,  issued in
connection  with our  acquisition  of the flash memory card  business from Intel
Corporation  is due and payable on December  29,  2000.  We believe the existing
cash  and cash  equivalents,  short-term  investments  and  available  financing
arrangements will be sufficient to meet our current  anticipated working capital
and capital  expenditure  requirements  for the  foreseeable  future,  including
satisfaction of the $4.0 million note obligation.

     OPERATING ACTIVITIES.

     At March 31,  2000 and 1999,  working  capital  was $11.3  million and $7.4
million,  respectively.  The increase in working capital is primarily due to the
acquisition of the flash memory card business of Intel Corporation combined with
positive  operating  results  partially offset by higher inventory  levels.  The
inventory balance increased from $3.0 million at March 31, 1999 to $14.6 million
at March 31, 2000. This  significant  increase is attributable to  approximately
$7.5  million  in  inventory  at  March  31,  2000  that was  acquired  with the
acquisition of Intel's flash memory card business. In addition, we increased our
raw material levels of the flash memory component. The higher flash memory level
is due to  higher  planned  purchases  in the  fourth  quarter  due to  expected
shortages.  Additionally,  we have  had to  increase  our  inventory  levels  as
supplier lead times have increased.

    INVESTING TRANSACTIONS.

    Net capital expenditures amounted to $473,000 during fiscal 2000 compared to
$669,000 in fiscal 1999.

    In fiscal 2000, we invested $248,000 for approximately a 7% interest in Elan
Digital Systems Limited  ("Elan").  Elan was formed in the United Kingdom during
1976 and offers application  engineering and design services for microcontroller
based   solutions.   We  carry  this  investment  on  our  balance  sheet  under
"Investments"  and  report  its  operating  results  under  the cost  method  of
accounting.

    FINANCING TRANSACTIONS.

    In fiscal  2000,  we  entered  into two  five-year  capital  leases  for new
manufacturing equipment with monthly payments that aggregate to $22,535.


                                       18
<PAGE>

    INVESTMENT IN CENTURY ELECTRONICS MANUFACTURING, INC.

    Since October 1996, we have held an equity  interest in Century  Electronics
Manufacturing,  Inc. ("Century"), a contract manufacturer.  On February 4, 1998,
Century  redeemed  a portion  of our debt and  equity  holdings  in  Century  in
exchange for $9.7 million in cash,  $4.0 million of Century Series B Convertible
Preferred  Stock  and  the  forgiveness  of  certain  interest.   The  Series  B
Convertible  Preferred Stock is equivalent upon conversion to approximately  7%,
non-diluted,  of Century's  outstanding shares, is non-voting,  has no dividend,
and  has  a  liquidation  preference  of  $4.0  million  senior  to  the  common
shareholders  and  subordinate to the holders of Century's  Series A Convertible
Preferred Stock. We recorded a loss on investment  activities of $5.1 million in
the third  quarter of fiscal  1998 to reflect  the  difference  between the fair
value of the  consideration  received from Century and the carrying value of our
investment in Century.  During fiscal 1999, we reduced the carrying value of our
investment  in Century by  $733,000  to $1.7  million,  reflecting  management's
assessment of the deterioration in value of our investment.

     LEGAL PROCEEDINGS

     We are party  from  time to time to legal  proceedings  arising  out of the
normal  course  of  our  business.  We  do  not  believe  that  any  such  legal
proceedings,  either  individually  or in the  aggregate,  will have a  material
adverse effect on our business, financial condition or results of operations. In
addition, we have been or are parties to other litigation as summarized below.

     CLASS ACTION LITIGATION

    We have been party to various  class action  lawsuits  which were  commenced
principally   during  fiscal  1997  and  1998.  A  substantial   number  of  the
participants in these class action lawsuits  participated in settlements with us
that became effective during fiscal 1999. The following discusses the history of
these class action  lawsuits,  together with the  settlements  that were entered
into principally in fiscal 1999.

    Since our  announcement  on February  11, 1997 that we were  undertaking  an
inquiry  into the accuracy of our prior  reported  financial  results,  and that
preliminary  information  had raised  questions as to whether  reported  results
contained  material  misstatements,  approximately  40  purported  class  action
lawsuits were filed in or  transferred  to the United States  District Court for
the District of Massachusetts.  These complaints  asserted claims against us and
our Board of  Directors,  officers  and former  independent  accountants,  among
others,  under certain federal and state laws.  These class action lawsuits were
purportedly  brought  by and on behalf of  purchasers  of our  Common  Stock (i)
between our initial  public  offering on April 12, 1994 and February 10, 1997 or
(ii) on February 25, 1997.

    On February 9, 1998,  these class action  lawsuits  were  consolidated  (the
"Consolidated Litigation"),  and the lead counsel representing the plaintiffs in
the  Consolidated  Litigation filed a Stipulation of Settlement (the "Settlement
Agreement"),  whereby we and  certain of our  officers  and  directors  would be
released  from  liability   arising  from  the   allegations   included  in  the
Consolidated  Litigation.  In return, we paid the plaintiffs in the Consolidated
Litigation $1.475 million in cash and issued to these plaintiffs  854,300 shares
or 37% of our  Common  Stock.  We  also  adopted  certain  corporate  governance
policies and procedures.  The Settlement  Agreement became effective on July 20,
1998.  All shares  issued in connection  with the  Consolidated  Litigation  are
included in the weighted  average shares  outstanding  calculation from July 20,
1998 forward.

    A number of class  members  elected  not to  participate  in the  Settlement
Agreement  described  above.  In September  1999, we reached an agreement with a
number of these  parties  which  calls for us to pay  $500,000 in cash to settle
these claims (the "Additional Settlement Agreement").  For the remaining parties
who did not participate in the Settlement Agreement or the Additional Settlement
Agreement,  we believe that the applicable  Federal  statue of  limitations  has
likely  expired  and that we do not have  material  exposure  to these  parties.
During fiscal 2000, we revised our estimate of the  allocation  between cash and
common stock of the $20 million provision for settlement of all such shareholder
litigation  recorded during fiscal 1997 related to the Class Action  Litigation.
Accordingly,  we  reclassified  certain amounts in fiscal 2000 from the original
settlement   reserve  to  accrued   liabilities,   representing  the  Additional
Settlement  Agreement  described above and a remaining  estimate of the probable
costs to be incurred in connection with the remaining parties not a party to the
Settlement Agreement or the Additional Settlement Agreement.  In fiscal 2000, we
made a partial payment of $188,000 in settlement of certain of these claims.  We
expect the remaining amount to be paid in the first quarter of fiscal 2001.

    In fiscal 2000, the  plaintiffs in the  Consolidated  Litigation  reached an
agreement  with  our  former  Interim  Chief  Executive  Officer,   Lawrence  J.
Ramaekers,  and his employer, Jay Alix & Associates ("Jay Alix"),  regarding the
plaintiffs' alleged claims against them. In fiscal 2000 we paid Jay Alix and Mr.
Ramaekers  $1.0 million for legal fees  incurred and Jay Alix and Mr.  Ramaekers
released any and all claims against our affiliates our directors and us.

                                       19
<PAGE>

     SECURITIES AND EXCHANGE COMMISSION INVESTIGATION

     In February 1997, we were notified that the Boston  District  Office of the
Securities and Exchange  Commission  ("SEC") was conducting an  investigation of
us. We cooperated fully with the SEC and believe,  based on discussions with the
SEC,  that we will be able to resolve  the issues  arising  from the  conduct of
former members of our senior management and the restatement of certain financial
statements  in an  acceptable  manner,  although we can not assure you that such
matters will be resolved in a manner acceptable to us.

WEBSECURE LITIGATION

    On  and  after  March  26,  1997,  several  complaints  were  filed  against
WebSecure,  certain officers, directors and underwriters of WebSecure, and us in
the United States District Court for the District of Massachusetts by plaintiffs
purporting  to  represent   classes  of  shareholders  who  purchased  stock  of
WebSecure,  Inc.  ("WebSecure")  between December 5, 1996 and February 27, 1997.
The claims against us included  alleged  violations of Sections 11 and 15 of the
Securities Act of 1933 (the "WebSecure Securities Litigation").  In fiscal 1997,
we  established  a reserve  of $1.2  million  in  connection  with the  expected
settlement of this litigation.

    In fiscal 2000, we settled the WebSecure Securities Litigation in return for
the issuance of 43,125  shares of our Common  Stock,  of which 14,375 shares had
been  issued as of March 31,  2000,  and the  payment of $50,000  for notice and
administrative  costs.  In fiscal 2000,  we revised our estimate of the expected
cost to  resolve  this  matter  based on the  final  settlement  amounts,  which
resulted in income of $940,000.  All shares to be issued in connection with this
settlement are included in the weighted average shares  outstanding  calculation
from September 17, 1999 forward.

OTHER

On May 12, 2000, we received a complaint from Dennis  O'Connor  alleging that he
is owed  approximately  $485,000 in connection  with legal services  provided by
O'Connor,  Broude & Aronson prior to May 12, 1997. Because of the early stage of
this litigation, we are not able to make an assessment as to its likely outcome.

                     FACTORS THAT MAY AFFECT FUTURE RESULTS

    From  time to  time,  information  we  provided  or  statements  made by our
employees may contain forward-looking information. Our actual results may differ
materially from those  projections or suggestions  made in such  forward-looking
information as a result of various potential risks and uncertainties  including,
but not limited to, the factors  discussed  below.  We assume no  obligation  to
update  these  forward-looking   statements  to  reflect  event  or  changes  in
circumstances after the date hereof.

OUR INDUSTRY IS EXPERIENCING SHORTAGES IN THE SUPPLY OF CERTAIN COMPONENTS WHICH
MAY IMPACT OUR ABILITY TO FULFILL ORDERS AND MAINTAIN OUR MARGINS ON OUR SALES.

     We are currently  experiencing supply shortages,  particularly with respect
to computer memory chips used to manufacture PC cards. Currently, certain memory
chips,  which are integral  components  of our  products,  are on  industry-wide
allocation by suppliers.  These shortages are currently  having an impact on our
business and, if they continue or expand, will have a material adverse effect on
our business,  financial condition and results of operations. We believe we will
be able to meet most of our customers' orders for the first half of fiscal 2001.
At this time we are unable to determine what the impact will be  thereafter.  If
the current  shortages  become more severe,  such shortages will prevent us from
growing our business as we currently contemplate.

     We purchase  certain key  components  from single source  vendors for which
alternative  sources are not currently  available.  We do not maintain long-term
supply agreements with our vendors. The inability to develop alternative sources
for these  single  source  components  or to  obtain  sufficient  quantities  of
components could result in delays or reductions in product shipments,  or higher
prices  for  these  components,  or both,  any of  which  could  materially  and
adversely affect our business, financial condition and results of operations. No
assurance can be given that one or more of our vendors will not reduce  supplies
to us.

WE DEPEND ON A SMALL NUMBER OF LARGE  CUSTOMERS TO PURCHASE  OUR  PRODUCTS,  THE
LOSS OF ONE OR MORE OF WHICH COULD ADVERSELY IMPACT OUR RESULTS.

                                       20
<PAGE>

    A relatively  small number of customers  have  accounted  for a  significant
percentage of our sales.  If these  customers were to reduce  significantly  the
amount of business they conduct with us, it could have a material adverse effect
on our business, financial condition and results of operations.

    For fiscal 2000, no customer  represented more than 10% of our sales. Nortel
Networks  represented  5%  and  14%  of our  sales  in  fiscal  2000  and  1999,
respectively.  During fiscal 1999,  Nortel  Networks  engaged  several  contract
manufacturers  to complete the final  assembly of a majority of its products for
which we have  historically  supplied  PC  cards.  Our  sales to these  contract
manufacturers  for fiscal  2000 and 1999  represented  14% of our sales.  One of
these contract manufacturers recently merged with one of our competitors,  which
could  result in a decrease of sales to this  contract  manufacturer.  If any of
these customers were to reduce significantly the amount of business they conduct
with us, it could  have a material  adverse  effect on our  business,  financial
condition and results of operations.

    We generally  enter into  individual  purchase orders with our customers and
have no firm long-term volume  commitments  from any of our major customers.  We
have  experienced  fluctuations in order levels from period to period and expect
we will continue to experience such  fluctuations  in the future.  Our business,
financial  condition and results of operations  depend in a significant  part on
our ability to obtain  orders from new  customers,  as well as on the  financial
condition  and  success  of these  customers.  Therefore,  any  adverse  factors
affecting any of our customers or their customers could have a material  adverse
effect on our business, financial condition and results of operations.  Frequent
mergers, consolidations,  acquisitions,  corporate restructurings and changes in
management  characterize the industries  served by us, and we have, from time to
time,  experienced  reductions in purchase  orders from customers as a result of
such events. We can not assure you that such events involving our customers will
not  result  in a  significant  reduction  in the  level  of our  sales  to such
customers  or the  termination  of our  relationship  with  such  customers.  In
addition,  the  percentage  of our  sales  to  individual  customers  can and do
fluctuate  from period to period.  Customer  orders can be  canceled  and volume
levels can be changed or delayed.  The timely replacement of canceled,  delayed,
or reduced orders with other customer orders cannot be assured.  These risks are
exacerbated  because a majority of our sales are to customers in the electronics
industry,   which  is  subject  to  rapid   technological   change  and  product
obsolescence.  The  electronics  industry is also subject to economic cycles and
has  experienced,  and is likely  to  experience,  fluctuations  in  demand.  We
anticipate that a significant  portion of our sales for the  foreseeable  future
will  continue  to be  concentrated  in a  small  number  of  customers  in  the
electronics industry.

INTENSE  COMPETITION  COULD  REDUCE  OUR  MARKET  SHARE  AND HARM OUR  FINANCIAL
PERFORMANCE.

     The market in which we compete is  intensely  competitive.  We compete with
manufacturers of PC cards and related products,  including  M-Systems Flash Disk
Pioneers  Ltd.,  SanDisk  Corporation,   Simple   Technologies,   Smart  Modular
Technologies,  Inc.,  Viking  Components,  Inc.  and  White  Electronic  Designs
Corporation  as  well  as  with  electronic  component  manufacturers  who  also
manufacture  PC cards,  including  Hitachi  Semiconductor,  Inc. and  Mitsubishi
Electric Corporation. Certain of these competitors supply us with raw materials,
including  electronic  components,  which are occasionally,  and are at present,
subject to industry wide allocation.  These  competitors may have the ability to
manufacture  products  at lower  costs  than we can as a result of their  higher
levels  of  integration.  In  addition,  many of our  competitors  or  potential
competitors have greater name recognition,  larger installed bases of customers,
more extensive engineering,  manufacturing,  marketing, distribution and support
capabilities and greater financial,  technological and personnel  resources than
we do. We expect competition to increase in the future from existing competitors
and from other  companies  that may enter our  existing or future  markets  with
similar or  alternative  products that may be less costly or provide  additional
features.  We believe  that our  ability to  compete  successfully  depends on a
number of factors, including the following:

<TABLE>
<S>                                                 <C>
o  product quality and performance                   o  order turnaround
o  provision of competitive design capabilities      o  timely response to advances in technology
o  timing of new product introductions by            o  production efficiency
    us, our customers and competitors                o  number and nature of  our competitors
o  price                                                 in a given market
o  ability to obtain raw materials                   o  general market and economic conditions

</TABLE>

     In addition,  market  conditions may lead to intensified  price competition
for our products and services,  which could  materially and adversely affect our
business,  financial  condition  and  results  of  operations.  There  can be no
assurance that we will compete successfully in the future.


                                       21
<PAGE>

WE HAVE  HISTORICALLY  RELIED ON ONE PRODUCT  LINE AND  REDUCED  DEMAND FOR THIS
PRODUCT LINE WOULD HARM OUR FINANCIAL PERFORMANCE AND FINANCIAL CONDITION.

     PC cards and related services constituted 100% of our sales for fiscal 2000
and 1999. The market for PC cards is continually  evolving and we can not assure
you that computing and  electronic  equipment that utilizes PC cards will not be
modified  to  render  our PC cards  obsolete  or  otherwise  have the  effect of
reducing demand for our PC cards. In addition,  we face intense competition from
competitors that have greater financial,  marketing and technological  resources
than we have.  This  competition  may reduce demand for our PC cards.  Decreased
demand for the our PC cards as a result of technological change,  competition or
other factors would have a material  adverse  effect on our business,  financial
condition and results of operations.

REDUCTIONS  IN OUR  AVERAGE  SALES PRICE AS A RESULT OF PRICING  COMPETITION  OR
CHANGES IN OUR  PRODUCT  MIX MAY REDUCE  OUR GROSS  MARGIN AND HARM OUR  OVERALL
FINANCIAL PERFORMANCE.

    Although we have  recently  experienced  an  increase  in our average  sales
prices,  we have in the  past  experienced,  and may in the  future  experience,
declining average sales prices for our products. The markets in which we compete
are  characterized  by  intense  competition.  Therefore,  we  expect  to  incur
increasing  pricing  pressures from our customers in future  periods,  which may
result in declines in average sales prices for our products.  We believe that we
must continue to achieve  manufacturing  cost  reductions,  develop new products
that incorporate customized features and increase our volume of PC card sales in
order to offset the effect of possible declining average sales prices. If we are
not able to achieve such cost  reductions,  develop new  customized  products or
increase our unit sales volumes,  our business,  financial condition and results
of operations could be materially  adversely impacted.  In addition,  a relative
increase in the mix of our business towards lower margin, non-custom PC cards or
other products could have a material adverse effect on our business.

OUR QUARTERLY  RESULTS MAY FLUCTUATE  SIGNIFICANTLY  AS A RESULT OF A VARIETY OF
FACTORS WHICH MAY NEGATIVELY IMPACT THE MARKET PRICE OF OUR COMMON STOCK.

    Our quarterly and annual operating results have fluctuated  significantly in
the past and we expect that they will continue to fluctuate in the future.  This
fluctuation is a result of a variety of factors, including the following:

<TABLE>
<S>                                                 <C>
o  timing of receipt and delivery of                 o  competitive pricing pressures
    significant orders for our products              o  increases in raw material costs
o  changes in customer and product mix               o  production difficulties
o  quality of our  products                          o  write-downs of investments in other companies
o  exchange rate fluctuations                        o  market acceptance of new or enhanced versions
o  litigation settlements and revisions of               of products
    estimates in connection with legal matters       o  raw material shortages

</TABLE>

    Other  factors,  some of which  are  beyond  our  control,  may  also  cause
fluctuations  in our  results  of  operations.  We have  short  lead  times from
customers, and accordingly do not have a significant backlog.  Additionally,  as
is the case with many high technology  companies,  a significant  portion of our
orders and  shipments  often occurs  towards the end of a quarter.  As a result,
revenues for a quarter are not predictable,  and our revenues may shift from one
quarter to the next, having a significant effect on reported results.

OUR TRADING PRICE MAY FLUCTUATE  SIGNIFICANTLY  WHICH MAY NEGATIVELY  IMPACT OUR
STOCKHOLDERS' ABILITY TO OBTAIN LIQUIDITY AT ACCEPTABLE LEVELS, IF AT ALL.

    The trading price of our common stock may  fluctuate  widely in response to,
among other things, the following:

<TABLE>
<S>                                                   <C>
  o  quarter-to-quarter operating results              o  industry conditions
  o  awards of orders to us                            o  new product or product development
      or our competitors                                   announcements by us or our competitors
  o  changes in earnings estimates by analysts         o  resolution of pending SEC investigation

</TABLE>

                                       22
<PAGE>
    We can not assure you that our future performance will meet the expectations
of analysts or investors.  In addition,  the volatility of the stock markets may
cause wide  fluctuations  in trading  prices of  securities  of high  technology
companies. Our common stock is currently traded on the over-the-counter Bulletin
Board, which we believe has resulted in a minimal amount of analyst coverage and
liquidity.

THE LOSS OF OUR SENIOR  MANAGEMENT OR OTHER KEY PERSONNEL COULD ADVERSELY AFFECT
OUR BUSINESS.

    Our success  depends to a significant  degree upon the efforts and abilities
of members of our senior management and other key personnel, including technical
personnel.  The loss of any of these  individuals  could have a material adverse
effect on our  business,  financial  condition  and results of  operations.  Our
business  also depends upon our ability to continue to attract and retain senior
managers  and skilled  technical  employees.  Failure to attract and retain such
personnel  could  materially  and  adversely  affect  our  business,   financial
condition and results of operations.

FAILURE TO CONTINUE TO DEVELOP  ENHANCEMENTS TO OUR PRODUCTS,  NEW  APPLICATIONS
AND  FEATURES  THAT  RESPOND  TO THE  CHANGING  NEEDS  OF OUR  CUSTOMERS,  RAPID
TECHNOLOGICAL  CHANGE AND ADVANCES INTRODUCED BY OUR COMPETITORS WILL IMPAIR OUR
ABILITY TO INCREASE OUR MARKET SHARE AND EXPAND OUR BUSINESS.

     Rapid technological  change,  evolving industry standards and rapid product
obsolescence  characterize  the markets for our  products.  Rapid  technological
development  substantially  shortens  product  life  cycles,  and our growth and
future success will depend upon our ability,  on a timely basis,  to develop and
introduce new products,  to enhance existing  products and to adapt products for
various industrial applications and equipment platforms. In addition, even after
customer  acceptance  of these  products,  we will  need to be able to  promptly
implement enhancements and adaptations in response to the same industry drivers.
We have limited resources  compared to our competitors and focus our development
efforts at any given time to a relatively narrow scope of development  projects.
We can not assure you that we will select the correct  projects for  development
or that our development  efforts will be successful.  In addition,  no assurance
can be given  that we will  not  experience  difficulties  that  could  delay or
prevent the successful  development,  introduction or marketing of new products,
that new products and product  enhancements  will meet the  requirements  of the
marketplace  and  achieve  market  acceptance,  or that our  current  or  future
products  will conform to  applicable  industry  standards.  If we are unable to
introduce  new  products  or  enhancements  on a  timely  basis,  our  business,
financial condition and results of operations could be adversely affected.

WE DERIVE  REVENUE  FROM OUR  INTERNATIONAL  OPERATIONS  AND ARE  SUBJECT TO THE
GENERAL RISKS OF DOING BUSINESS  ABROAD,  AS WELL AS FOREIGN  CURRENCY  EXCHANGE
FLUCTUATIONS,  EACH OF WHICH MAY ADVERSELY  IMPACT OUR  OPERATIONS AND FINANCIAL
PERFORMANCE.

     For  fiscal  2000  and  1999,  we  derived   approximately   20%  and  12%,
respectively,  of our sales from outside the United  States.  Our  international
operations are subject to the risks of doing business abroad, including currency
fluctuations, export duties, import controls and trade barriers, restrictions on
the transfer of funds,  greater  difficulty in accounts  receivable  collection,
burdens of complying  with a wide variety of foreign laws and, in certain  parts
of the world, political instability.

     Beginning in 1999, 11 member  countries of the European  union  established
fixed conversion rates between their existing  sovereign  currencies and adopted
the Euro as their common legal currency.  During the three-year transition,  the
Euro will be available  for non-cash  transactions  and legacy  currencies  will
remain  legal  tender.  We are  continuing  to assess the  Euro's  impact on our
business. We are reviewing the ability of our accounting and information systems
to handle the conversion,  the legal and contractual implications of agreements,
as well as pricing  strategies.  We expect that any additional  modifications to
our  operations  and  systems  will be  completed  on a timely  basis and do not
believe the conversion  will have a material  adverse impact on our  operations.
However,  there  can be no  assurance  that  the  we  will  be  able  to  modify
successfully all systems and contracts to comply with Euro requirements.

                                       23
<PAGE>

WE MAY BE UNABLE TO  ADEQUATELY  PROTECT  OUR  PROPRIETARY  RIGHTS,  WHICH COULD
SIGNIFICANTLY HARM OUR ABILITY TO GAIN MARKET SHARE AND INCREASE OUR REVENUES.

     Our products require technical know-how to engineer and manufacture. To the
extent proprietary technology is involved, we rely on trade secrets that we seek
to protect, in part, through confidentiality  agreements with certain employees,
consultants and other parties.  There can be no assurance that these  agreements
will not be breached,  that we will have  adequate  remedies for any breach,  or
that our trade  secrets will not  otherwise  become  known to, or  independently
developed by our existing or potential  competitors.  We  historically  have not
sought to protect our  proprietary  information  through  patents or  registered
trademarks.  There can be no assurance  that our  products  will not infringe on
patents held by others.  We may be involved  from time to time in  litigation to
determine the enforceability, scope and validity of our rights. Litigation could
result in substantial  cost to us and could divert the attention and time of our
management and technical personnel from our operations.

     We currently license certain proprietary and patented technology from third
parties.  There can be no assurance  that we will be able to continue to license
such  technology,  that such  licenses  will be or remain  exclusive or that any
patented  technology  licensed by us will  provide  meaningful  protection  from
competitors.  In the event that a  competitor's  products  were to  infringe  on
patents  licensed by us, it would be costly for us to enforce  our  infringement
action and such an action would divert funds and  management  resources from our
operations.

OUR  RECENTLY  ACQUIRED  BUSINESS  IS  CONCENTRATED  WITH A  LIMITED  NUMBER  OF
CUSTOMERS,  OF WHICH THE PRIMARY CUSTOMER HAS NOTIFIED US THAT IT WILL NO LONGER
PURCHASE  PRODUCTS FROM US, AND THE LOSS OF CUSTOMERS COULD IMPACT OUR FINANCIAL
PERFORMANCE  AND RESULTS IF WE ARE UNABLE TO SUBSTITUTE  NEW CUSTOMERS OR EXPAND
SALES TO EXISTING CUSTOMERS.

     On December 29, 1999,  we acquired the flash memory card  business of Intel
consisting of the PCMCIA card families  (Series 2, Value series 100 and 200) and
the miniature  card families  (Series 100 and 200), as well as inventory.  Cisco
Systems,  the principal  customer of this acquired  business,  has  discontinued
purchasing  products from the acquired  business.  In the event we are unable to
replace the business from Cisco Systems or any other customers who may terminate
or reduce the extent of their relationship with us with additional business from
existing  customers or business  from new  customers,  our  business,  financial
condition and results of operations could be materially and adversely impacted.

OUR  BUSINESS IS SUBJECT TO  ENVIRONMENTAL  REGULATIONS  WHICH,  IF NOT COMPLIED
WITH,  COULD IMPAIR OUR BUSINESS,  FINANCIAL  CONDITION OR RESULTS OF OPERATIONS
AND RESTRICT OUR ABILITY TO EXPAND OR ENHANCE OUR FACILITIES.

     We are subject to a variety of  environmental  regulations  relating to the
use, storage and disposal of hazardous  chemicals used during our  manufacturing
processes. Any failure by us to comply with present and future regulations could
subject us to  significant  liabilities.  In addition,  such  regulations  could
restrict  our ability to expand our  facilities  or could  require us to acquire
costly equipment or to incur other significant  expenses in order to comply with
such regulations.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Information  required by this Item is incorporated herein by reference from
the  discussion  under the heading  Fair Value of Financial  Instruments  in the
notes to the consolidated financial statements included in this Annual Report on
Form 10-K.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                                       24
<PAGE>

                         REPORTS OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of Centennial Technologies, Inc.

We have  audited the  accompanying  consolidated  balance  sheets of  Centennial
Technologies,  Inc. (the "Company") as of March 25, 2000 and March 31, 1999, and
the related  consolidated  statements of operations,  stockholders'  equity, and
cash flows for each of the two years in the period then  ended.  Our audits also
included the financial  statement schedule listed in the Index at Item 14(a)(2).
These financial  statements and schedule are the responsibility of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements and schedule based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Centennial  Technologies,  Inc.  at March 25, 2000 and March 31,  1999,  and the
consolidated  results of its  operations  and its cash flows for each of the two
years in the  period  ended  March  25,  2000,  in  conformity  with  accounting
principles  generally accepted in the United States.  Also, in our opinion,  the
related financial statement  schedule,  when considered in relation to the basic
financial statements taken as a whole,  presents fairly in all material respects
the information set forth therein.

                                                           /s/ Ernst & Young LLP


Boston, Massachusetts
May 1, 2000,  except for the last  paragraph of Note 15, as to which the date is
May 12, 2000


To the Board of Directors and Stockholders of Centennial Technologies, Inc.:

      In our  opinion,  the  consolidated  financial  statements  listed  in the
accompanying  index on page 44 present  fairly,  in all material  respects,  the
results  of  operations  and cash flows of  Centennial  Technologies,  Inc.  and
Subsidiaries  for the twelve  months  ended  March 31, 1998 in  conformity  with
generally  accepted  accounting  principles.  In addition,  in our opinion,  the
financial  statement schedule listed in the index on page 44 presents fairly, in
all  material  respects,   the  information  set  forth  therein  when  read  in
conjunction with the related consolidated financial statements.  These financial
statements  and  financial  statement  schedule  are the  responsibility  of the
Company's  management;  our  responsibility  is to  express  an opinion on these
financial  statements  based  on our  audit.  We  conducted  our  audit of these
statements  in accordance  with  generally  accepted  auditing  standards  which
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,  assessing the  accounting  principles
used and  significant  estimates made by management,  and evaluating the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for the opinions expressed above.


                                                  /s/ PricewaterhouseCoopers LLP

Boston, Massachusetts
May 15, 1998
                                       25
<PAGE>

                          CENTENNIAL TECHNOLOGIES, INC.
                           CONSOLIDATED BALANCE SHEETS
                    (in thousands, except per share amounts)
<TABLE>
<CAPTION>
                                                                                            March 31,
                                                                                      2000           1999
                                                                                ---------------   ----------
       <S>                                                                     <C>               <C>
                                       ASSETS
       Current assets:
         Cash and cash equivalents...........................................   $     5,780       $     4,922
         Short-term investments..............................................            --             2,500
         Trade accounts receivable, less allowances of $200 and $645,
           respectively......................................................         3,838             3,876
         Inventories.........................................................        14,574             3,049
         Other current assets................................................           720               356
                                                                                -----------       -----------
       Total current assets..................................................        24,912            14,703

       Equipment and leasehold improvements..................................         4,821             3,967
         Less accumulated depreciation and amortization......................        (2,131)           (1,508)
                                                                                ------------      ------------
                                                                                      2,690             2,459
       Investments...........................................................         1,948             1,700
       Intangibles, net......................................................           469                --
       Other assets..........................................................           354                92
                                                                                -----------       -----------

       Total assets..........................................................   $    30,373       $    18,954
                                                                                ===========       ===========

                        LIABILITIES AND STOCKHOLDERS' EQUITY

       Current liabilities:
         Accounts payable and accrued expenses...............................   $     9,436       $     7,222
         Note payable to related party.......................................         4,000                --
         Obligations under capital leases, current portion...................           215                36
                                                                                -----------       -----------
       Total current liabilities.............................................        13,651             7,258

       Long-term obligations under capital leases............................           827                --

       Commitments and contingencies (Notes 8 and 15)

       Stockholders' equity:
          Preferred Stock, $0.01 par value;  1,000 shares authorized,  60 shares
            issued and outstanding at March 31, 2000 and none at March 31, 1999
            (liquidation preference value $4,800)............................             1                --
          Common Stock, $0.01 par value; 6,250 shares authorized, 3,186 and 2,569
            issued and outstanding at March 31, 2000 and 1999, respectively..            32                26
          Additional paid-in capital.........................................        85,937            84,379
          Accumulated deficit................................................       (70,044)          (72,697)
          Accumulated other comprehensive loss...............................           (31)              (12)
                                                                                -----------       ------------
       Total stockholders' equity............................................        15,895            11,696
                                                                                -----------       -----------

       Total liabilities and stockholders' equity............................   $    30,373       $    18,954
                                                                                ===========       ===========
</TABLE>
                             See accompanying notes.

                                       26
<PAGE>

                          CENTENNIAL TECHNOLOGIES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                  Years ended March 31,
                                                          --------------------------------------
                                                              2000          1999         1998
                                                          ----------    ----------    ----------
   <S>                                                    <C>           <C>           <C>
   Net sales.........................................      $  35,580     $  27,633     $  28,263
   Cost of goods sold................................         25,040        18,968        23,683
                                                          ----------    ----------    ----------
      Gross profit...................................         10,540         8,665         4,580

   Operating expenses:
      Research and development.......................          1,887           750           838
      Selling, general and administrative............          6,673         6,132         9,957
                                                          ----------    ----------     ---------
      Operating income (loss) .......................          1,980         1,783      (  6,215)

   Other income (expense):...........................
      Loss on disposal of equipment..................           (343)           --            --
      Loss on investment activities..................             --          (733)      (14,065)
      Special investigation costs....................             --            --          (597)
      Provision for loss on inventory subject to
        customer dispute.............................             --            --        (1,841)
      Proceeds from resolution of customer dispute...             --         1,600            --
      Other..........................................            940            --            --
      Other income (expense).........................             46          (132)         (258)
      Net interest income (expense)..................            185           344           (56)
                                                            --------      --------       --------
      Income (loss) before income taxes and equity in
        earnings of affiliate........................          2,808         2,862       (23,032)
   Equity in earnings of affiliate...................             --            --           423
                                                           ---------     ---------     ---------
      Income (loss) before income taxes..............          2,808         2,862       (22,609)
   Provision for income taxes........................            155            56            --
                                                         -----------      --------      --------

        Net income (loss)............................      $   2,653     $   2,806     $ (22,609)
                                                           ==========    ==========    =========

   Net income (loss) per share - basic...............      $    0.83     $    0.97     $   (9.80)
   Net income (loss) per share - diluted.............      $    0.76     $    0.96     $   (9.80)
   Weighted average shares outstanding -basic........          3,186         2,907         2,308
   Weighted average shares outstanding - diluted.....          3,508         2,939         2,308

</TABLE>
                             See accompanying notes.

                                       27
<PAGE>

                          CENTENNIAL TECHNOLOGIES, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                        Three years ended March 31, 2000
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                                                         Accumulated
                                                                             Additional                     Other         Total
                                   Preferred Stock       Common Stock         Paid-in     Accumulated   Comprehensive  Stockholders'
                                 Shares     Amount     Shares     Amount      Capital       Deficit         Loss          Equity
                               --------- ---------- ----------- ---------- ------------- ------------- -------------- -------------
<S>                                 <C>   <C>           <C>     <C>         <C>           <C>         <C>            <C>
Balance at March 31, 1997......                          2,218   $    22     $ 82,395      $ (52,738)  $      (233)   $    29,446
Comprehensive income (loss):
  Net loss.....................                                                              (22,609)                     (22,609)
    Other comprehensive
    income-foreign
    currency adjustment........                                                                 (156)          233             77
                                                                                                                      -----------
Total comprehensive loss.......                                                                                           (22,532)
                                                                                                                      ------------
Exercise of options............                             15         1          206                                         207
Issuance of Common Stock in
  connection with
acquisition of
  affiliates...................                             99         1        2,180                                       2,181
Retirement of shares                                       (20)       (1)           1                                           0
repurchased....................
Settlement of claims related
to
  ViA investment...............                                                  (400)                                       (400)
                                   -------  -------  ----------  --------   -----------   -----------   -----------    -----------
Balance at March 31, 1998......                          2,312        23       84,382        (75,503)           --          8,902
                                   -------  -------  ----------  --------   -----------   -----------   -----------    -----------
Comprehensive income (loss):
  Net income...................                                                                2,806                        2,806
  Other comprehensive loss -
     foreign currency
  translation
    adjustment.................                                                                                (12)           (12)
                                                                                                                      -----------
Total comprehensive income.....                                                                                             2,794
                                                                                                                      -----------
Partial distribution of
shares in
   settlement of class action
   litigation..................                            257         3           (3)                                        --_
                                  -------  -------  ----------  --------   -----------   -----------   -----------    -----------
Balance at March 31, 1999......                          2,569        26       84,379        (72,697)          (12)        11,696
                                  -------  -------  ----------  --------   -----------   -----------   -----------    -----------
Comprehensive income (loss):
  Net income...................                                                                2,653                        2,653
  Other comprehensive loss -
    foreign currency
  translation
    adjustment.................                                                                                (19)           (19)
                                                                                                                      -----------
Total comprehensive income.....                                                                                              2,634
                                                                                                                      ------------
Purchase of fractional
  shares in connection with
  1 for 8 reverse stock split..                             (6)                   (35)                                        (35)
Exercise of options............                              8                     41                                          41
Issuance of Common Stock
  under employee stock
  option plan..................                              3                     23                                          23
Issuance of Preferred Stock
  in connection with
  business acquisition.........          60  $   1                              2,075                                       2,076
Adjustment related to
  settlement of litigation
  matters......................                                                  (540)                                       (540)
Final distribution of shares
in
  settlement of class action
   litigation..................                            612         6           (6)                                         --
                                   -------  -------  ----------  ---------    ----------   -----------   -----------    -----------
Balance at March 31, 2000......         60   $   1       3,186   $     32     $ 85,937      $ (70,044)   $       (31)     $  15,895
                                   =======  =======  ==========  =========    ==========   ===========   ===========    ===========
</TABLE>
                             See accompanying notes.

                                       28
<PAGE>

                          CENTENNIAL TECHNOLOGIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Amounts in thousands)
<TABLE>
<CAPTION>
                                                              Years ended March 31,
                                                    -----------------------------------------
                                                        2000           1999          1998
                                                    ------------   ------------  ------------
 <S>                                                 <C>            <C>           <C>
  Cash flows from operating activities:
    Net income (loss).............................    $  2,653       $  2,806      $(22,609)
    Adjustments to reconcile net income (loss) to
     net cash used in operating activities
    Depreciation and amortization.................       1,079          1,057         1,035
    Equity in earnings of affiliate...............          --             --          (423)
    Provision for loss on accounts receivable.....         (39)           170           177
    Provision for losses on sale of equipment.....         343             --          (480)
    Revision  of  an  estimate  of  a   litigation        (940)            --            --
  settlement......................................
    Provision for loss on investments.............          --             --         7,019
    Provision for loss on investment in affiliates          --            733         5,142
    Provision for loss on inventory...............          --         (2,114)           --
    Loss on disposal of capital equipment.........          --            128         1,315
    Other non-cash items..........................          --             41            --
    Change in operating assets and liabilities:
     Accounts receivable..........................          77         (1,237)        2,631
     Accounts receivable from affiliate...........          --             --           676
     Inventories..................................      (4,141)         1,374         5,485
     Notes receivable from affiliate..............          --             --         4,129
     Recoverable income taxes.....................                        171         7,019
     Other assets.................................        (238)           494           695
     Accounts payable and accrued expenses........       2,449           (904)       (3,884)
     Income taxes payable.........................                         56            27
                                                      --------       ---------     --------
       Net cash provided by operating activities..       1,243          2,775         7,954

  Cash flows from investing activities:
    Cash paid for acquired business...............      (2,000)            --            --
    Capital expenditures..........................        (473)          (669)       (1,265)
    Disposal of capital equipment.................                         40            --
    Purchase of held-to-maturity and
      available-for-sale Securities...............          --         (2,500)           --
    Maturities  from  sale  of  available-for-sale       2,500             --            --
  securities......................................
    Investment....................................        (248)            --            --
    Proceeds from sale of investment in affiliates          --             --         8,983
                                                      --------       --------      --------
       Net cash (used in)  provided  by  investing        (221)        (3,129)        7,718
  activities......................................

  Cash flows from financing activities:
    Net repayments under line of credit...........          --             --       (10,090)
    Borrowings from term loans....................          --             --           938
    Repayments on term loans and leases...........        (174)           (70)         (938)
    Payments for fractional  shares resulting from         (35)            --            --
  split...........................................
    Proceeds from employee stock purchase plan....          23             --            --
    Payments on equipment lease financing.........          --             --          (566)
    Proceeds from exercise of stock options.......          41             --           208
    Proceeds from exercise of warrants............          --             --            --
    Foreign   currency   translation   of   equity          --             --            77
                                                      --------       --------      --------
  investment......................................
       Net cash used in financing activities......        (145)           (70)      (10,371)
                                                      --------       --------      --------
  Effect of exchange rate changes on cash.........         (19)           (12)           --
                                                      --------       --------      --------
  Net  increase   (decrease)   in  cash  and  cash         858           (436)        5,301
  equivalents.....................................
  Cash and cash equivalents at beginning of period       4,922          5,358            57
                                                      --------       --------      --------
  Cash and cash equivalents at end of period......    $  5,780       $  4,922      $  5,358
                                                      ========       ========      ========

  Supplemental disclosures of cash flow information:
    Cash paid during the period for:
     Interest.....................................    $     35       $      4      $    452
                                                      ========       ========      ========
     Income taxes.................................    $    138       $     --      $     18
                                                      ========       ========      ========

  Non-cash transactions:
     Preferred Stock issued in connection with
      the acquired business.......................    $  2,076       $     --      $     --
                                                      ========       ========      ========
     Note payable issued in connection with the
      acquired business...........................    $  4,000       $     --      $     --
                                                      ========       ========      ========
     Other assets received in connection with the
      acquired business, net of transaction costs
      of $165.....................................    $    223       $     --      $     --
                                                      ========       ========      ========
     Equipment acquired under capital leases......    $  1,180       $     --      $     --
                                                      ========       ========      ========
     Issuance of Common Stock in connection with
      purchase of investments.....................    $     --       $     --      $  2,181
                                                      ========       ========      ========
     Settlement of claim related to ViA investment    $     --       $     --      $    400
                                                      ========       ========      ========
</TABLE>
                             See accompanying notes.

                                       29
<PAGE>

                          CENTENNIAL TECHNOLOGIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

BASIS OF PRESENTATION

     The  consolidated  financial  statements of Centennial  Technologies,  Inc.
("Centennial;"  also at times  referred to as "we",  "our" or "us")  include the
accounts  of  Centennial  and all  wholly  owned  subsidiaries.  Investments  in
companies  in  which  ownership  interests  range  from  20  to 50  percent  and
Centennial exercises significant influence over operating and financial policies
are accounted for using the equity  method.  Centennial's  investment in Century
Electronics  Manufacturing,  Inc.  ("Century"),  of  which  we had a 67%  equity
ownership  position at March 31, 1997,  has been  accounted for using the equity
method for fiscal 1997 because Centennial had a plan of disposition of a portion
of the investment in place prior to March 31, 1997 and the transaction closed on
July 1,  1997.  During  fiscal  1998,  Centennial  further  reduced  its  equity
ownership  position in Century,  and  thereafter has accounted for its remaining
investment  using the cost method.  See Note 6. Other  investments are accounted
for using the cost method. See Note 7. All significant intercompany balances and
transactions have been eliminated.

FISCAL YEAR

     In the year ended  March 25,  2000,  we changed  our fiscal year to a 52/53
week ending on the last  Saturday of March.  All  references  to "fiscal  2000",
"fiscal  1999" and "fiscal 1998" in the financial  statements  and  accompanying
notes  relate to the years  ended March 25,  2000,  March 31, 1999 and March 31,
1998, respectively. For ease of presentation, March 31 has been utilized for all
financial statement captions for the fiscal year ended March 25, 2000.

2. SUMMARY OF OTHER SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION

     Revenue from product sales is recognized at time of shipment and when title
passes.

WARRANTY COSTS

     We offer a limited  warranty,  normally  for one  year,  on  materials  and
workmanship for our products.  Costs relating to product  warranty are generally
accrued at time of shipment.  We have not experienced  material costs associated
with our warranty policy.

RESEARCH AND DEVELOPMENT COSTS

     Expenditures  relating to the  development  of new products and  processes,
including significant improvements and refinements to existing products that are
expensed as incurred.

CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

     Cash equivalents  include highly liquid  temporary cash investments  having
maturities  of  three  months  or  less  at  date  of  acquisition.   Short-term
investments  include commercial paper having a maturity longer than three months
but less than one year at date of acquisition.

CONCENTRATION OF CREDIT RISK

     Financial  instruments,  which  potentially  subject us to concentration of
credit  risk,  consist  principally  of cash  and cash  equivalents,  short-term
investments and trade receivables.  At March 31, 2000,  substantially all of our
cash,  cash  equivalents and short-term  investments  were held by one financial
institution. We primarily sell and grant credit to domestic and foreign original
equipment  manufacturers  and  distributors.   We  extend  credit  based  on  an
evaluation of the  customer's  financial  condition and generally do not require
collateral.  We monitor our exposure for credit  losses and maintain  allowances
for anticipated  losses.  At March 31, 2000 and 1999, the allowance for doubtful
accounts was $200,000 and $645,000, respectively.

                                       30
<PAGE>
                          CENTENNIAL TECHNOLOGIES, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


2. SUMMARY OF OTHER SIGNIFICANT ACCOUNTING POLICIES (Continued)

    For fiscal 2000 no customer  represented more than 10% of our sales.  Nortel
Networks represented 5%, 14% and 29% of our sales in fiscal 2000, 1999 and 1998,
respectively.  During fiscal 1999,  Nortel  Networks  engaged  several  contract
manufacturers  to complete the final  assembly of a majority of its products for
which we have  historically  supplied  PC  cards.  Our  sales to these  contract
manufacturers for both fiscal 2000 and 1999 represented 14% of our sales. One of
these contract manufacturers recently merged with one of our competitors,  which
could result in a decrease of sales to this contract manufacturer.  A relatively
small number of customers account for a significant  percentage of our sales. If
any of these customers were to reduce  significantly the amount of business they
conduct  with us, it could  have a  material  adverse  effect  on our  business,
financial  condition  and  results of  operations.  At March 31,  1999 and 1998,
Nortel Networks  accounted for  approximately $.1 million or 2% and $1.1 million
or 40%, respectively, of our accounts receivable balance.

     Approximately  20%, 12% and 14% of our sales in fiscal 2000, 1999 and 1998,
respectively,  were  outside the United  States,  primarily  in several  Western
European countries, Israel and Canada. No one country comprised more than 10% of
our sales.

FAIR VALUE OF FINANCIAL INSTRUMENTS

     Our financial instruments consist principally of cash and cash equivalents,
short-term investments,  accounts receivable, accounts payable, accrued expenses
and a note  payable.  We believe all of the carrying  amounts  approximate  fair
value.

INVENTORIES

     Inventories are stated at the lower of cost (first-in, first-out) or market
(estimated net realizable value).

EQUIPMENT AND LEASEHOLD IMPROVEMENTS

     Equipment  is  stated  at  cost.   Major  renewals  and   improvements  are
capitalized  while repair and  maintenance  charges are expensed when  incurred.
Depreciation  is  provided  over the  estimated  useful  life of the  respective
assets,  ranging from three to seven years, on a straight-line basis.  Leasehold
improvements  are  amortized  over the  lesser  of the term of the  lease or the
estimated  useful life of the related  assets.  When assets are sold or retired,
their cost and related  accumulated  depreciation are removed from the accounts.
Any gain or loss is included in the determination of net income. Amortization of
equipment under capital leases is included with depreciation and amortization in
the accompanying financial statements.

INCOME TAXES

     We  account  for  income  taxes by the  liability  method  as set  forth in
Statement of Financial Accounting Standards (SFAS) Statement No. 109, Accounting
for Income Taxes.  Under the liability  method,  deferred  taxes are  determined
based on the difference between the financial  statement and tax basis of assets
and  liabilities  using  enacted  tax  rates in effect in the years in which the
differences are expected to reverse.

STOCK-BASED COMPENSATION

     We  account  for  stock-based   awards  to  employees  in  accordance  with
Accounting  Principles  Board  Opinion No. 25,  Accounting  for Stock  Issued to
Employees  (APB 25) and have  adopted the  disclosure-only  alternative  to FASB
Statement No. 123, Accounting for Stock-Based Compensation.

INCOME (LOSS) PER SHARE

     We compute net income  (loss) per share in  accordance  with  Statement  of
Financial  Accounting  Standards  ("SFAS") 128,  "Earnings Per Share." Basic net
income  per  share  excludes  any  dilutive  effect  of  options,  warrants  and
convertible  securities  (which in our case are primarily  stock options and the
Series B Convertible Preferred Stock). Diluted net income per share includes all
potentially  dilutive  securities  using the treasury  stock  method  unless the
effect of such potentially dilutive securities is anti-dilutive.

                                       31
<PAGE>
                          CENTENNIAL TECHNOLOGIES, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


2. SUMMARY OF OTHER SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     On July 20, 1999, our shareholders  approved a one-for-eight  reverse stock
split of our common  stock,  which was  effective as of the opening of the stock
markets  based in New  York on July  23,  1999.  In the  accompanying  financial
statements,  all per share  amounts and numbers of shares have been  restated to
reflect  this  reverse  stock  split of  Centennial's  common  stock,  which was
effective on July 23, 1999.

     All shares issuable in connection  with the settlement of the  Consolidated
Litigation  described  in Note 15 are included in the  weighted  average  shares
outstanding calculation as of July 20, 1998, the date on which our settlement of
the Consolidated Litigation became effective.  All shares issuable in connection
with  the  settlement  of the  WebSecure  litigation  described  in  Note 15 are
included in the weighted average share  outstanding  calculation as of September
17, 1999, the date the settlement was effective.

     The  following  table sets forth the  computation  of net income (loss) per
share for the years ended March 31, 2000,  1999 and 1998 (in  thousands,  except
per share amounts).


                                           2000           1999          1998
                                       ----------     ----------    ------------
Basic Income (Loss) Per Share
Numerator
  Net income (loss)                    $    2,653     $    2,806     $  (22,609)
Denominator
  Common shares outstanding                 3,186          2,907          2,308
                                       ----------     ----------     ----------
Basic income (loss) per share          $     0.83     $     0.97     $    (9.80)
                                       ==========     ==========     ==========

Diluted Income (Loss) Per Share
Numerator
  Net income (loss)                    $    2,653     $    2,806     $  (22,609)
Denominator
  Common shares outstanding                 3,186          2,907          2,308
    Stock options and convertible
       securities                             322             32             --
                                       ----------     ----------     ----------
Shares used in computing
  diluted income (loss) per share           3,508          2,939          2,308
                                       ----------     ----------     ----------
Diluted income (loss) per share        $     0.76     $     0.96     $    (9.80)
                                       ==========     ==========     ==========

     Options to purchase  39,875,  107,912 and 366,500 shares of common stock on
March 31, 2000, 1999 and 1998, respectively, were excluded from the calculations
of diluted net income  (loss) per share  above as the effect of their  inclusion
would have been anti-dilutive.

USE OF ESTIMATES

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

COMPREHENSIVE INCOME (LOSS)

     Accumulated  other  comprehensive  income (loss) is comprised of cumulative
translation adjustments.
                                       32
<PAGE>
                          CENTENNIAL TECHNOLOGIES, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


2. SUMMARY OF OTHER SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SEGMENTS OF BUSINESS ENTERPRISE

     We operate in a single industry segment, the design and manufacture of high
technology  memory  chip  based  products  used  in  industrial  and  commercial
applications.

ACCOUNTING PRONOUNCEMENTS

     In December 1999, the  Securities  and Exchange  Commission  ("SEC") issued
Staff Accounting  Bulletin 101,  "Revenue  Recognition in Financial  Statements"
("SAB 101") which  provides  guidance  related to revenue  recognition  based on
interpretations  and  practices  followed by the SEC. SAB 101 is  effective  the
second  quarter of fiscal 2001 and  requires  companies to report any changes in
revenue  recognition as a cumulative change in accounting  principle at the time
of implementation in accordance with APB Opinion No. 20,  "Accounting  Changes."
We do not  expect  the  adoption  of SAB 101 to have a  material  impact  on our
financial position or results of operations.

RECLASSIFICATIONS

     Certain  amounts  in  the  fiscal  1999  and  1998  consolidated  financial
statements have been reclassified to conform to the current year presentation.

3. INVENTORIES

     Inventories  consisted  of the  following  at March  31,  2000 and 1999 (in
thousands):

                                                            2000           1999
                                                          -------        -------

Raw materials, primarily electronic components.......     $ 7,989        $ 1,709
Work in process......................................         454            399
Finished goods.......................................       6,131            941
                                                          -------        -------
                                                          $14,574        $ 3,049
                                                          =======        =======

     We maintain levels of inventories  that we believe are necessary based upon
assumptions  concerning  our  growth,  mix  of  sales  and  availability  of raw
materials. Changes in those underlying assumptions could affect our estimates of
inventory valuation.

     In fiscal  1998,  we  reserved  fully  $1.8  million  of costs  related  to
inventory  specifically  purchased  and  manufactured  pursuant  to  a  customer
purchase order (the "Custom Inventory").  The customer later attempted to cancel
the purchase  order.  We disputed the  customer's  claim that the purchase order
cancellation was effective,  and sought legal remedies  related thereto.  During
fiscal 1999, we agreed to settle our claim against the customer, in return for a
$1.6  million cash  payment,  which was included in other income in fiscal 1999,
and the right to retain and sell the Custom Inventory at issue. We sold portions
of the Custom  Inventory  during  fiscal 2000 and fiscal 1999 for  approximately
$1.0 million and $1.2  million,  respectively,  which have been  included in net
sales for each respective fiscal year.

                                       33
<PAGE>
                          CENTENNIAL TECHNOLOGIES, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


4. EQUIPMENT AND LEASEHOLD IMPROVEMENTS

     Equipment  and leasehold  improvements  consisted of the following at March
31, 2000 and 1999 (in thousands):

                                                         2000           1999
                                                    -------------- ---------

Equipment......................................       $  3,442       $  3,702
Equipment under capital leases.................          1,180            106
Leasehold improvements.........................            199            159
                                                      --------       --------
                                                         4,821          3,967
Accumulated depreciation and amortization......         (2,131)        (1,508)
                                                      --------       --------
                                                      $  2,690       $  2,459
                                                      ========       ========

     During  fiscal 2000, we incurred a $343,000 loss on the disposal of certain
equipment that was replaced.  During fiscal 1999, we wrote off equipment with an
original cost of $885,000 and accumulated depreciation of $757,000 in connection
with the  upgrading of our  manufacturing  processes  and the  remodeling of our
office space. We also disposed of equipment with an original cost of $73,000 and
accumulated depreciation of $33,000 in connection with these activities.  During
fiscal  1998,  we paid in full our lease  obligations  to the bank that had been
providing  us with our line of credit (See Note 8), and  disposed  of  equipment
having an original cost and accumulated depreciation of approximately $691,000.

     Depreciation  expense  (including  amortization  of equipment under capital
leases) for fiscal 2000, 1999 and 1998 was approximately $1,079,000,  $1,057,000
and $1,035,000, respectively.

5. ACQUISITION OF THE FLASH MEMORY CARD BUSINESS OF INTEL CORPORATION

     On December 29, 1999,  we acquired the flash memory card  business of Intel
Corporation  ("Flash  Card  Business")  for a cash  payment of $2.0  million,  a
secured promissory note for $4.0 million, and 60,000 shares of Centennial Series
B Convertible  Preferred  Stock. The transaction has been recorded as a purchase
for accounting  purposes and the consolidated  financial  statements include the
operating results of this business from the date of the acquisition.

     The  promissory  note,  secured by all of the assets of  Centennial,  bears
interest at the rate of 9% and the principal and interest are due and payable on
December 29, 2000. The convertible  preferred  stock is convertible  into shares
our  common  stock at a ratio of ten  shares  of  common  stock for one share of
preferred  stock.  The  preferred  stock has certain  registration  rights and a
liquidation preference value of $4.8 million.

     A summary of the assets acquired is shown below (in thousands).

                    Inventory                                      $ 7,384
                    Intangible assets                                  469
                    Other                                              388
                                                                   -------
                                                                     8,241
                    Less:
                    Preferred stock issued                          (2,076)
                    Note payable                                    (4,000)
                    Acquisition costs                                 (165)
                                                                   -------

                    Cash used to acquire the business
                    assets                                         $ 2,000
                                                                   =======

                                       34
<PAGE>
                          CENTENNIAL TECHNOLOGIES, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


5. ACQUISITION OF THE FLASH MEMORY CARD BUSINESS OF INTEL CORPORATION(CONTINUED)

     Intangible  assets  are being  amortized  on a  straight-line  basis over a
period of three  years.  There were no material  liabilities  assumed by us as a
result of this  transaction.  We review the value of intangible  assets whenever
events or changes in  circumstances  indicate that the carrying value may not be
recoverable.

     There  is a  contingent  payment  of  up  to  $4.5  million  due  to  Intel
Corporation ("Intel") in January 2001 based upon units shipped to Cisco Systems.
Following the acquisition,  Cisco Systems discontinued  purchasing from us. As a
result,  we  expect  that we will not be  required  to make any  portion  of the
contingent  payment.  Cisco Systems  represented  approximately  $2.0 of our net
sales in the fourth fiscal quarter of 2000.

     The following  unaudited pro forma consolidated  results of operations have
been prepared as if the acquisition of the acquired business had occurred at the
beginning of the respective fiscal period.

 Years Ended March 31,                              2000                 1999
                                                    ----                 ----
(in thousands, except per share amounts)

Revenues...................................      $   58,635           $   57,002
Net income.................................      $      830           $    1,776
Net income per share - diluted.............      $     0.21           $     0.50


     The  unaudited pro forma  financial  statements do not purport to represent
what our results of operations  would actually have been if the  acquisition had
in fact occurred on such dates or to project our results of operations as of any
future  date or for any  future  period.  The  unaudited  pro forma  data is not
indicative  of the  operating  results  that  would have been  achieved  had the
acquisition  been  consummated at the dates  indicated,  nor is it indicative of
future  operating  results.  The flash memory  component  used in the Flash Card
Business is reflected in the historical  financial  statements of the Flash Card
Business at Intel's actual manufacturing cost.

6. INVESTMENT IN CENTURY ELECTRONICS MANUFACTURING, INC.

     Since  October  1996,  we have  held an  interest  in  Century  Electronics
Manufacturing,  Inc. ("Century"), a contract manufacturer.  On February 4, 1998,
Century  redeemed a portion of our debt and equity holdings in exchange for $9.7
million in cash,  $4.0 million of Century Series B Convertible  Preferred  Stock
and the  forgiveness of interest.  The Series B Convertible  Preferred  Stock is
equivalent  upon  conversion  to  approximately  7%,  non-diluted,  of Century's
outstanding  shares,  is  non-voting,  has no  dividend,  and has a  liquidation
preference of $4.0 million senior to the common  shareholders and subordinate to
the holders of Century Series A Convertible  Preferred Stock. We recorded a loss
on  investment  activities  of $5.1  million  during  fiscal 1998 to reflect the
difference between the fair value of the consideration received from Century and
the carrying value of our investment in Century.  During fiscal 1999, Centennial
reduced  the  carrying  value of its  investment  in Century by $733,000 to $1.7
million,  reflecting  our  assessment  of the  decline  in  the  value  of  this
investment.

7.   OTHER INVESTMENTS

VIA, INC.

     In December 1996, we issued 156,000 unregistered shares of our Common Stock
in exchange for a 12% interest in ViA, Inc., a development  stage privately held
technology company that designs,  develops, and markets miniature  communication
and  computing  products.  We accounted for this  investment  during fiscal 1997
using the equity  method,  and  amortized  the  purchase  price in excess of its
interest in the investee's  underlying net assets, which excess amounted to $5.0
million,  over 60 months.  During fiscal 1998, we reserved the carrying value of
this investment, and recorded a loss on investment activities during fiscal 1998
related thereto of approximately $4.4 million.

                                       35
<PAGE>
                          CENTENNIAL TECHNOLOGIES, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


7.   OTHER INVESTMENTS (CONTINUED)

INTELLIGENT TRUCK PROJECT, INC., FLEET.NET, INC. AND SMART TRAVELER PLAZAS, INC.

     On December 13, 1996, we entered into merger  agreements  with  Intelligent
Truck  Project,   Inc.,   Fleet.Net,   Inc.  and  Smart  Traveler  Plazas,  Inc.
(collectively,  "ITP/Fleet.Net")  agreeing to exchange an  aggregate  of 792,960
shares  of our  Common  Stock  for all of the  outstanding  common  stock of the
acquired  businesses.  On May 15,  1997,  we and the  principal  shareholder  of
ITP/Fleet.Net  agreed to complete a merger.  The merger has been recorded  using
purchase accounting, and the excess (approximately $3.0 million) of the purchase
price over the fair value of assets  acquired  was  written  off in fiscal  1998
because of the uncertainties related to the future operations of ITP/Fleet.Net.

INFOS INTERNATIONAL, INC.

     During  fiscal 1997, we acquired an interest in Infos  International,  Inc.
("Infos"),  a supplier of intelligent  hand held data  collection  equipment for
route and shop floor  accounting.  The purchase price amounted to  approximately
$3.0 million in cash and 230,000 shares of our Common Stock having a fair market
value of $3.9 million at date of acquisition. On February 6, 1998, we, Infos and
shareholders of Infos entered into a transaction whereby we agreed to return our
shares  of Infos  capital  stock in  exchange  for an  agreement  to sell  Infos
inventory and  equipment  arising from the contract  manufacturing  relationship
between Infos and Century, which relationship was terminated.  Accordingly,  the
full amount of the investment cost ($7.0 million) has been written off.

INDUSTRIAL IMAGING, INC.

     We  purchased  for $730,000 in cash and  conversion  of $200,000 of notes a
minority interest in Industrial  Imaging,  Inc. which designs,  manufactures and
markets automated  optical vision and individual  imaging systems for inspection
and identification of defects in printed circuit boards. In addition,  effective
April 1, 1996 and  expiring  June 30,  1997,  we agreed to  provide  procurement
services and buy  material  using our credit  arrangements  for a service fee of
$200,000. Purchases aggregating $1.4 million were made during the aforementioned
period on behalf of the investee.  During  fiscal 1997,  we determined  that the
investee was unable to repay us for the material purchased,  and also determined
that the value of the equity investment was permanently  impaired.  We agreed to
convert our  accounts  receivable  into  common  stock of the  investee  and has
recorded a valuation  reserve  equal to the  carrying  value of the  investment.
During fiscal 1998,  we sold our  investment  in  Industrial  Imaging,  Inc. for
$550,000.

WEBSECURE, INC.

     During  fiscal  1996 we  purchased  for  $569,000  a minority  interest  in
WebSecure,  Inc.  ("WebSecure"),  a corporation that provided Internet services.
The former president,  a shareholder of WebSecure,  was a Director of Centennial
from February 1994 through November 1995. In connection with WebSecure's initial
public  offering,  we realized a gain of $1.2 million from the sale of a portion
of our investment;  however, based upon the WebSecure shareholder complaints and
related  litigation  described  in Note 15, we  provided  a reserve in an amount
equal to this gain.  As  described  in Note 15,  the  WebSecure  litigation  was
settled  during  fiscal  2000 and the  amount  of the  reserve  in excess of the
settlement  was  recognized  in income,  as a revision of an  estimate.  This is
included as other income in the accompanying financial statements. The remaining
investment  cost ($560,000) was fully reserved as of March 31, 1997 on the basis
that its value appeared to have been permanently  impaired.  During fiscal 1998,
we sold this remaining investment for $125,000.

ELAN DIGITAL SYSTEMS LIMITED

    On November 11, 1999 we invested $248,000 for approximately a 7% interest in
Elan Digital Systems Limited ("Elan") which is included in Investments. Elan was
formed in the UK during  1976 and  offers  application  engineering  and  design
services for  microcontroller  based solutions.  Elan is accounted for under the
cost method.

                                       36
<PAGE>
                          CENTENNIAL TECHNOLOGIES, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


8.  DEBT

     On August  14,  1997,  we entered  into a credit  agreement  with  Congress
Financial Corporation ("Congress Financial") for a revolving credit facility and
term loan facility of up to $4.1 million and $0.9 million,  respectively,  and a
$2.0  million  capital  equipment  acquisition  facility.  On August  15,  1997,
Centennial paid in full its line of credit and lease financing  obligations with
the bank that was previously providing Centennial with its credit facilities.

    On November  24,  1998,  Centennial  terminated  its credit  agreement  with
Congress  Financial and entered into a new credit  agreement with Fleet National
Bank ("Fleet") for a revolving credit facility, equipment term loan facility and
foreign  exchange  facility of $3.5  million,  $1.5  million  and $2.0  million,
respectively.  At March 31, 2000,  1999 and 1998,  Centennial had no outstanding
borrowings under any of the above credit arrangements.

LEASES

     In fiscal  2000,  we  entered  into two  five-year  capital  leases for new
manufacturing equipment.  Monthly payments under these leases total $22,535. The
subject equipment is recorded as an asset for financial statement purposes,  and
is being amortized accordingly.

     We lease our facilities under operating leases with renewal options,  which
expire at various dates through fiscal 2003. The lease on our  headquarters  and
manufacturing  facility contains an option to renew for an additional  five-year
period,  provides for annual rent  increases of 4% and provides that we will pay
to our landlord as additional rent our pro-rata share of certain operational and
maintenance costs at the facility during the term of the lease.

     At  March  31,  2000,   the  minimum   annual  rental   commitments   under
non-cancelable operating lease and capital lease obligations were as follows (in
thousands):

                                                         Operating      Capital
Years ending March 31,                                     Leases       Leases
                                                         ---------      -------

2001.................................................     $ 261          $ 270
2002.................................................       254            270
2003.................................................        20            270
2004 and thereafter..................................        --            384
                                                          -----          -----
   Total minimum lease payments......................     $ 535          1,194
                                                          =====
Lease amounts representing inputed interest..........                      152
                                                                       -------
   Present value of minimum lease payments...........                    1,042
Less current portion.................................                      215
                                                                       -------
   Capital lease obligations, less current portion...                  $   827
                                                                       =======

     Rental  expense  under  operating  leases  totaled  $267,000,  $250,000 and
$427,000 in fiscal 2000, 1999 and 1998,  respectively.  Interest expense totaled
$124,000, $4,000 and $452,000 in fiscal 2000, 1999 and 1998, respectively.

9. INCOME TAXES

     The income (loss)  before  income taxes  consisted of the following for the
years ended March 31, 2000, 1999 and 1998 (in thousands):

                                     2000               1999             1998
                                ------------        -----------      -----------
U.S........................     $      2,791        $    2,842       $  (22,609)
Foreign....................               17                20               --
                                ------------        ----------       ----------
                                $      2,808        $    2,862       $  (22,609)
                                ============        ==========       ==========

                                       37
<PAGE>
                          CENTENNIAL TECHNOLOGIES, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


9. INCOME TAXES (CONTINUED)

     The  provision  for income taxes  consisted of the  following for the years
ended March 31, 2000, 1999 and 1998 (in thousands):

                                        2000             1999             1998
                                   -------------    -------------     ----------
Current:
   Federal....................     $         85       $       40      $       --
   State......................               64                9              --
   Foreign....................                6                7              --
                                   ------------       ----------      ----------
      Total current...........     $        155       $       56      $       --
                                   ============       ==========      ==========

Provision for income taxes....     $        155       $       56      $       --
                                   ============       ==========      ==========

    The provision for income taxes differs from the amount  computed by applying
the  statutory  federal  income tax rate to income (loss) before income taxes as
follows for the years ended March 31, 2000, 1999 and 1998:

<TABLE>
<CAPTION>
                                                            2000            1999             1998
                                                       --------------  --------------   ---------
<S>                                                        <C>              <C>            <C>
Tax provision (benefit) at U.S. statutory rates..            34.0%           34.0%          (34.0)%
State taxes, net of federal benefit..............             7.0             6.4            (3.4)
Utilization  of net  operating  losses  and change in                       (40.0)           37.5
valuation allowance..............................           (38.1)
Alternative minimum tax..........................             2.0             1.6              --
Other............................................             0.6              --            (0.1)
                                                       ----------         -------          -------
                                                              5.5%            2.0%             -- %
                                                       ==========         =======          =======
</TABLE>

    The  components of deferred  income taxes were as follows at March 31, 2000,
1999 and 1998 (in thousands):

                                             2000          1999        1998
                                        ------------  ------------  -----------
Allowance for doubtful accounts.......  $        140   $       406  $       230
Notes receivable reserve..............            --           349          349
Inventory reserve and capitalization..           609           581        1,557
Investment reserve....................         5,517         5,648        5,355
Accrued expenses......................         1,556         1,410        1,378
Equipment, net........................           339           371          211
Net operating losses..................        13,610        19,970       20,633
Capital loss carryforward.............         1,473         1,473        1,473
                                         -----------   -----------  -----------
                                              23,244        30,208       31,186
Less valuation allowance..............       (23,244)      (30,208)     (31,186)
                                         -----------   -----------  -----------
Net deferred taxes....................   $        --   $        --  $        --
                                        ============   ===========  ===========

     We have  evaluated  the  positive and  negative  evidence  bearing upon the
realizability of our deferred tax assets, which are comprised principally of net
operating  losses and  reserves.  We have  considered  our history of losses and
concluded  that there is  insufficient  evidence that it is more likely than not
that we will generate future taxable income prior to the expiration of these net
operating losses in 2013.  Accordingly,  the deferred tax assets have been fully
reserved.

     At March 31,  2000,  we had federal net  operating  loss  carryforwards  of
approximately  $34.0 million  available to offset future taxable income expiring
in 2009 through 2013, and federal capital loss  carryforwards  of  approximately
$4.3  million,  which  expire in 2013.  Approximately  $2.1  million  of our net
operating  loss is  attributable  to the exercise of stock options  which,  when
utilized, will be credited as additional paid-in capital.

                                       38
<PAGE>
                         CENTENNIAL TECHNOLOGIES, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


10. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

     Accounts payable and accrued  expenses  consisted of the following at March
31, 2000 and 1999 (in thousands):

                                                               2000        1999
                                                          ----------   ---------
  Trade accounts payable................................   $   4,823   $   1,720
  Accrued compensation..................................       1,356       1,144
  Accrual related to WebSecure litigation...............          --       1,200
  Accrued special investigation costs...................         727       1,197
  Other accrued expenses, principally accrued legal.....       2,530       1,961
                                                           ---------   ---------
            Total accounts payable and accrued expenses.   $   9,436   $   7,222
                                                           =========   =========

     Accrued special  investigation costs represent  professional and legal fees
and settlement costs in connection with Centennial's  special  investigation and
shareholder litigation. See Note 15.

11.  STOCKHOLDERS' EQUITY

We are  authorized to issue up to 890,000  additional  shares of $0.01 par value
preferred  stock  without  further  stockholder  approval  with such  additional
designations,  powers,  preferences,  rights,  qualifications,  limitations  and
restrictions as may be designated by  Centennial's  Board of Directors from time
to time.

     In  connection  with the  acquisition  of the flash memory card business of
Intel  Corporation,  we issued 60,000  shares of Series B Convertible  Preferred
Stock,  par value  $0.01 per share.  The Series B  Convertible  Preferred  Stock
converts at a ratio of 10 for 1 and has a liquidation preference value of $80.00
per preferred  share.  The Series B  Convertible  Stock is not  redeemable.  The
Series B Convertible Preferred Stock ranks senior to the common stock and to all
other classes and series of equity securities of Centennial which by their terms
do not  rank  senior  to the  Series  A Junior  Participating  Preferred  Stock.
Preferred  shares are  entitled to a number of votes on any matter  submitted to
the  stockholders  of  Centennial  equal to the number of shares of common stock
into which they are then convertible.

     The holders of  convertible  preferred  stock shall be entitled to receive,
when and if declared by the Board of Directors of  Centennial,  dividends in the
same  amount  per share as would be  payable  on the  number of shares of common
stock into which the preferred stock is then convertible,  payable in preference
and  priority to any payment of any cash  dividend on common  stock or any other
class of stock or series thereof.

     In March 1999, the Board of Directors adopted a stockholder rights plan and
declared  a  dividend  of one right to  purchase  Series A Junior  Participating
Preferred Stock for each  outstanding  share of Common Stock.  The rights become
exercisable  based upon the  occurrence  of  certain  events  including  certain
acquisitions  of  Centennial's  capital  stock,  tender or  exchange  offers and
certain business combination transactions involving Centennial. In the event one
of the events occurs,  each right  entitles the registered  holder to purchase a
number  of  shares  of  preferred   stock  of   Centennial   or,  under  limited
circumstances,  of the acquirer.  The rights are  redeemable at our option under
certain conditions, for $0.01 per right and expire on March 16, 2009.

12. STOCK OPTION PLANS

     Under our 1999 Stock  Incentive Plan and 1994 Stock Option Plan,  incentive
and non-qualified stock options may be granted to employees, officers, directors
and consultants of Centennial. The amount reserved for issuances under these two
plans at March 31, 2000 are 1,000,000 and 750,000  shares,  respectively.  Under
the plans, the Compensation  Committee of the Board of Directors establishes the
terms and conditions of grants.

                                       39
<PAGE>
                         CENTENNIAL TECHNOLOGIES, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


12. STOCK OPTION PLANS (CONTINUED)

     On  November  11,  1999,  our Board of  Directors  adopted  the 1999  Stock
Incentive  Plan under which  incentive  and  non-qualified  stock options may be
granted to our  employees,  officers,  directors  and  consultants.  We reserved
1,000,000  shares of common  stock for issuance  under the 1999 Stock  Incentive
Plan.  The  Compensation  Committee  of the Board of Directors  establishes  the
vesting periods and the expiration date of options  granted.  In fiscal 2000, we
granted  options to acquire  585,500 shares of our common stock,  exercisable at
$3.50 per share  under  this plan.  These  options  vest  ratably on each of the
first, second and third anniversaries of the date of grant,  although vesting is
accelerated in the event certain stock price targets are achieved. These options
became fully vested in fiscal 2000.

     Under our Formula  Stock Option Plan (the  "Formula  Plan"),  non-qualified
options  may be granted  to  non-employee  directors.  Under the  Formula  Plan,
options  will be granted  pursuant  to a formula  that  determines  the  timing,
pricing  and amount of the  option  awards  using  objective  criteria.  We have
reserved  37,500 shares of Common Stock for issuance under the Formula Plan. The
exercise prices of the options granted to a non-employee director are granted at
fair market value.  These options vest and are  exercisable on the date of grant
and expire after 5 years.  All other options granted under the Formula Plan vest
and are exercisable  one year from the date of the grant.  During fiscal 1998, a
non-employee director was granted options to purchase 1,875 shares at $28.00 per
share. During fiscal 2000 and 1999,  non-employee directors were granted options
to purchase 2,250 shares at $7.28 per share and 6,375 shares at $6.00 per share,
respectively.

     In addition,  during  fiscal 1998,  Centennial  granted  options to acquire
130,625 shares outside of Centennial's stock option plans, exercisable at prices
ranging from $13.00 to $28.00 per share, of which 25,000 options were granted to
four non-employee directors and the balance to employees; the vesting period for
these options range from  immediately upon grant to three years, and the options
expire in ten years.

     FASB Statement No. 123, Accounting for Stock-Based  Compensation,  requires
that companies either recognize  compensation expense for grants of stock, stock
options,  and other equity instruments based on fair value, or provide pro forma
disclosure  of net income and earnings  per share in the notes to the  financial
statements.  There was no compensation  costs recognized in fiscal 2000 and 1999
and in fiscal  1998 there was  $34,000 of  compensation  costs  recognized.  Had
compensation cost for our stock-based  compensation  plans been determined based
on the fair value at the grant dates as calculated in accordance  with Statement
No.  123,  our net income  (loss) and net income  (loss) per share for the years
ended March 31,  2000,  1999 and 1998,  would have been as  indicated in the pro
forma amounts shown below:

<TABLE>
<CAPTION>
                                 2000                             1999                              1998
                   ----------------------------------- -----------------------------   -------------------
                   Net Income (Loss)     Net Income       Net Income      Net Income
                     (in thousands)        (Loss)           (Loss)          (Loss)         Net Loss         Net Loss
                   -----------------     Per Share      (in thousands)    Per Share     (in thousands)      Per Share
                                         ---------      --------------    ---------     --------------      ---------
<S>                  <C>                <C>              <C>              <C>            <C>               <C>
As Reported.......    $  2,653           $   0.76         $  2,806         $   0.96       $(22,609)         $   (9.80)
Pro forma.........    $ (3,163)          $  (0.99)        $ (1,966)        $  (0.68)      $(29,869)         $  (12.94)

</TABLE>

     The fair value of each stock option is estimated on the date of grant using
the  Black-Scholes  option-pricing  model  with the  following  weighted-average
assumptions:  an expected life of 5 years for grants prior to April 1, 1998, and
3 years for fiscal 2000 and 1999,  expected  volatility of 100% for fiscal 1998,
141% for fiscal  1999 and 321% for fiscal  2000,  no  dividends  and a risk-free
interest  rate of 7.0%,  6.0% and 6.0% for the years ended March 31, 2000,  1999
and 1998, respectively.


                                       40
<PAGE>
                         CENTENNIAL TECHNOLOGIES, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


12. STOCK OPTION PLANS (CONTINUED)

     The effects on fiscal 2000,  1999, and 1998 pro forma net income (loss) and
net  income  (loss) per share of  expensing  the  estimated  fair value of stock
options are not necessarily representative of the effects on reported net income
(loss) for future  years due to such things as the  vesting  period of the stock
options and the potential for issuance of additional  stock options and stock in
future years.

     A summary of the status of Centennial's  stock option plans as of March 31,
2000,  1999 and 1998 changes during the years ending on those dates is presented
below:

<TABLE>
<CAPTION>
                                                   2000                        1999                         1998
                                        --------------------------     -----------------------     ---------------------
                                                       Weighted                    Weighted                    Weighted
                                                       Average                     Average                     Average
                                                       Exercise                 Exercise Price                 Exercise
                                                        Price                     Per Share                     Price
                                           Number      Per Share      Number                       Number     Per Share
                                           ------      ---------      ------    --------------    --------    ---------
   <S>                                     <C>        <C>             <C>          <C>             <C>          <C>
    Options outstanding at beginning
      of period.......................      503,238                    366,500                      222,450
    Granted...........................      840,875    $   4.26        534,194      $  6.40         322,625      $ 16.64
    Exercised.........................       (7,847)       5.17              0          --          (14,050)       14.00
    Cancelled.........................      (61,845)      33.97       (397,456)       14.56        (164,525)      131.36
                                        -----------    --------    -----------      -------     -----------      -------
    Outstanding at period end.........    1,274,421    $   6.32        503,238      $ 13.12         366,500      $ 24.32
    Options exercisable at period end.      924,433                    105,440                       44,002
    Weighted average fair value of
      options granted during the year.                 $   4.18                     $  4.72                      $ 12.88

</TABLE>

    The following table summarizes  information about stock options  outstanding
at March 31, 2000:

<TABLE>
<CAPTION>
                                           Options Outstanding                               Options Exercisable
                                            Weighted-Average
                                               Remaining
          Range of            Number          Contractual        Weighted-Average        Number       Weighted-Average
      Exercise Prices       Outstanding           Life            Exercise Price       Exercisable     Exercise Price
    ------------------      -----------    ------------------    ----------------      -----------    ----------------
   <S>                        <C>                 <C>                 <C>              <C>               <C>
    $3.44 - $3.50              586,125             9.7                 $ 3.50           585,709           $   3.50
    $3.94 - $4.88               53,459             8.9                   4.62            11,461               4.69
    $5.20 - $5.20              341,401             7.5                   5.20           253,910               5.20
    $5.68 - $5.84              198,500             9.2                   5.84             9,125               5.83
    $5.88 - $9.88               55,061             6.8                   8.13            24,353               8.08
    $28.00 - $235.04            39,875             2.8                  59.63            39,875              59.63
    ----------------        ----------            -----                 -----        --  ------           --------
    $3.44 - $235.04          1,274,421             8.7                 $ 6.32           924,433           $   6.55

</TABLE>

     During fiscal 1999, we established a 1999 Employee Stock Purchase Plan (the
"ESPP") that provides for the grant of rights to eligible  employees to purchase
up to 25,000 shares of Centennial's Common Stock at 85% of the fair market value
of the Common Stock at the end of the established  offering  period.  There were
2,864 shares issued under the ESPP in fiscal 2000 and no shares issued under the
ESPP in fiscal 1999.

13. RELATED PARTY TRANSACTIONS

     Included in other  current  assets is $493,000  due from Intel  Corporation
("Intel")  concerning the acquired business.  Beginning in the fourth quarter of
fiscal 2000,  we began  regularly  purchasing a  significant  portion of our raw
materials,  mostly memory chips,  from Intel.  Excluding  activity  related to a
transition  period with Intel and its contract  manufacturer,  we had  purchases
from Intel of $443,000 for fiscal 2000, which is included in accounts payable as
of March 31, 2000.

     Included  in Other  Assets is a $144,845  loan to our  President  and Chief
Executive  Officer.  The  loan is due and  payable  on July 25,  2001 and  bears
interest  at the rate of 5.8%.  In April  2000,  we loaned  this  individual  an
additional  $204,500,  which is also due and  payable on July 25, 2001 and bears
interest at the rate of 6.45%.

                                       41
<PAGE>
                         CENTENNIAL TECHNOLOGIES, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


14. SAVINGS PLAN

     We have a 401(k) Savings Plan under which  substantially all U.S. employees
may voluntarily defer a portion of their  compensation and we may elect to match
a portion of the  employee  deferral.  We made  contributions  of  $57,000  and,
$29,000  respectively,  to the plan related to contributions by employees during
fiscal 2000 and 1999. For fiscal 1998 there were no contributions to this plan.

15. CONTINGENCIES

LEGAL PROCEEDINGS

     We are party  from  time to time to legal  proceedings  arising  out of the
normal  course  of  our  business.  We  do  not  believe  that  any  such  legal
proceedings,  either  individually  or in the  aggregate,  will have a  material
adverse effect on our business, financial condition or results of operations. In
addition, we have been or are parties to other litigation as summarized below.

CLASS ACTION LITIGATION

    We have been party to various  class action  lawsuits  which were  commenced
principally   during  fiscal  1997  and  1998.  A  substantial   number  of  the
participants in these class action lawsuits  participated in settlements with us
that became effective during fiscal 1999. The following discusses the history of
these class action  lawsuits,  together with the  settlements  that were entered
into principally in fiscal 1999.

    Since our  announcement  on February  11, 1997 that we were  undertaking  an
inquiry  into the accuracy of our prior  reported  financial  results,  and that
preliminary  information  had raised  questions as to whether  reported  results
contained  material  misstatements,  approximately  40  purported  class  action
lawsuits were filed in or  transferred  to the United States  District Court for
the District of Massachusetts.  These complaints  asserted claims against us and
our Board of  Directors,  officers  and former  independent  accountants,  among
others,  under certain federal and state laws.  These class action lawsuits were
purportedly  brought  by and on behalf of  purchasers  of our  Common  Stock (i)
between our initial  public  offering on April 12, 1994 and February 10, 1997 or
(ii) on February 25, 1997.

    On February 9, 1998,  these class action  lawsuits  were  consolidated  (the
"Consolidated Litigation"),  and the lead counsel representing the plaintiffs in
the  Consolidated  Litigation filed a Stipulation of Settlement (the "Settlement
Agreement"),  whereby we and  certain of our  officers  and  directors  would be
released  from  liability   arising  from  the   allegations   included  in  the
Consolidated  Litigation.  In return, we paid the plaintiffs in the Consolidated
Litigation $1.475 million in cash and issued to these plaintiffs  854,300 shares
or 37% of our  Common  Stock.  We  also  adopted  certain  corporate  governance
policies and procedures.  The Settlement  Agreement became effective on July 20,
1998.  All shares  issued in connection  with the  Consolidated  Litigation  are
included in the weighted  average shares  outstanding  calculation from July 20,
1998 forward.

    A number of class  members  elected  not to  participate  in the  Settlement
Agreement  described  above.  In September  1999, we reached an agreement with a
number of these  parties  which  calls for us to pay  $500,000 in cash to settle
these claims (the "Additional Settlement Agreement").  For the remaining parties
who did not participate in the Settlement Agreement or the Additional Settlement
Agreement,  we believe that the applicable  Federal  statue of  limitations  has
likely  expired  and that we do not have  material  exposure  to these  parties.
During fiscal 2000, we revised our estimate of the  allocation  between cash and
common stock of the $20 million provision for settlement of all such shareholder
litigation  recorded during fiscal 1997 related to the Class Action  Litigation.
Accordingly,  we  reclassified  certain amounts in fiscal 2000 from the original
settlement   reserve  to  accrued   liabilities,   representing  the  Additional
Settlement  Agreement  described above and a remaining  estimate of the probable
costs to be incurred in connection with the remaining parties not a party to the
Settlement Agreement or the Additional Settlement Agreement.  In fiscal 2000, we
made a partial payment of $188,000 in settlement of certain of these claims.  We
expect the remaining amount to be paid in the first quarter of fiscal 2001.

    In fiscal 2000, the  plaintiffs in the  Consolidated  Litigation  reached an
agreement  with  our  former  Interim  Chief  Executive  Officer,   Lawrence  J.
Ramaekers,  and his employer, Jay Alix & Associates ("Jay Alix"),  regarding the
plaintiffs'  alleged  claims  against them. In fiscal 2000, we paid Jay Alix and
Mr.  Ramaekers  $1.0  million  for  legal  fees  incurred  and Jay  Alix and Mr.
Ramaekers  released any and all claims  against our affiliates our directors and
us.

                                       42
<PAGE>
                         CENTENNIAL TECHNOLOGIES, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)


15. CONTINGENCIES (CONTINUED)

SECURITIES AND EXCHANGE COMMISSION INVESTIGATION

     In February 1997, we were notified that the Boston  District  Office of the
Securities and Exchange  Commission  ("SEC") was conducting an  investigation of
us. We cooperated fully with the SEC and believe,  based on discussions with the
SEC,  that we will be able to resolve  the issues  arising  from the  conduct of
former members of our senior management and the restatement of certain financial
statements  in an  acceptable  manner,  although we can not assure you that such
matters will be resolved in a manner acceptable to us.

WEBSECURE LITIGATION

    On  and  after  March  26,  1997,  several  complaints  were  filed  against
WebSecure,  certain officers, directors and underwriters of WebSecure, and us in
the United States District Court for the District of Massachusetts by plaintiffs
purporting  to  represent   classes  of  shareholders  who  purchased  stock  of
WebSecure,  Inc.  ("WebSecure")  between December 5, 1996 and February 27, 1997.
The claims against us included  alleged  violations of Sections 11 and 15 of the
Securities Act of 1933 (the "WebSecure Securities Litigation").  In fiscal 1997,
we  established  a reserve  of $1.2  million  in  connection  with the  expected
settlement of this litigation.

    In fiscal 2000, we settled the WebSecure Securities Litigation in return for
the issuance of 43,125  shares of our Common  Stock,  of which 14,375 shares had
been  issued as of March 31,  2000,  and the  payment of $50,000  for notice and
administrative  costs.  In fiscal 2000,  we revised our estimate of the expected
cost to  resolve  this  matter  based on the  final  settlement  amounts,  which
resulted in income of $940,000.  All shares to be issued in connection with this
settlement are included in the weighted average shares  outstanding  calculation
from September 17, 1999 forward.

OTHER

    On May 12, 2000, we received a complaint  from Dennis M.  O'Connor  alleging
that he is  owed  approximately  $485,000  in  connection  with  legal  services
provided by O'Connor,  Broude & Aronson  prior to May 12,  1997.  Because of the
early stage of this litigation,  we are not able to make an assessment as to its
likely outcome.

16.  FINANCIAL INFORMATION BY QUARTER (unaudited)

(in thousands, except per share amounts)

Fiscal 2000 quarters ended,     June 26,  September 25,  December 25,  March 25,
                                  1999        1999           1999         2000
                                  ----        ----           ----         ----
Net sales                      $  6,681     $  7,633     $  8,567     $  12,699
Gross profit                      2,125        2,496        3,358         2,561
Operating income                    136          169        1,279           396
Net income                          231          838        1,336           248
Net income per share - basic       0.07         0.26         0.42          0.08
Net income per share - diluted     0.07         0.26         0.42          0.06

Fiscal 1999 quarters ended,     June 26,  September 25,  December 25,  March 25,
                                  1999        1999           1999         2000
                                  ----        ----           ----         ----
Net sales                      $  6,235     $  6,151     $  7,568      $  7,679
Gross profit                      1,645        1,910        2,590         2,520
Operating income                     35          253          577           918
Net income                           99        1,201          573           933
Net income per share - basic       0.04         0.41         0.18          0.36
Net income per share - diluted     0.04         0.41         0.18          0.35

                                       43
<PAGE>

                          Centennial Technologies, Inc.
                        Valuation and Qualifying Accounts
                For the years ended March 31, 2000, 1999 and 1998
<TABLE>
<CAPTION>
                                                                                         Schedule II

                                                Balance at     Charged to     Charged to
                                               beginning of     costs and       other                     Balance at end
                 Description                       period       expenses       accounts     Deductions       of period
                 -----------                   -------------- -----------    -----------    ----------   -------------
<S>                                              <C>           <C>             <C>           <C>             <C>
Accounts receivable allowance
    Fiscal 2000.............................      $   645        $  (39)                      $  406          $    200
    Fiscal 1999.............................          868           170         $(150)           243               645
    Fiscal 1998.............................          692           588                          412               868

Notes receivable reserve
    Fiscal 2000.............................      $   971                                     $  971          $      -
    Fiscal 1999.............................          971                                                          971
    Fiscal 1998.............................          971                                                          971

Investment reserve
    Fiscal 2000.............................      $13,095                                     $8,085          $  5,010
    Fiscal 1999.............................       13,095                                                       13,095
    Fiscal 1998.............................        8,669        $4,426                                         13,095

Inventory reserve
    Fiscal 2000.............................      $ 1,371                                     $  145          $  1,226
    Fiscal 1999.............................        3,485                                      2,114             1,371
    Fiscal 1998.............................        2,083        $2,676                        1,274             3,485

</TABLE>

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

     None.

                                       44
<PAGE>

                                    PART III

     Items  10 to 13  are  incorporated  herein  by  reference  to  Centennial's
definitive  proxy  statement  to be  filed  with  the  Securities  and  Exchange
Commission within one hundred twenty days following  Centennial's March 25, 2000
fiscal year end.

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

  (a)(1) Financial Statements.  The financial statements required to be filed by
Item 8 are as follows:

<TABLE>
<CAPTION>
                                                                                                      Page
<S>                                                                                                   <C>
Report of Independent Auditors.........................................................................25

Consolidated Balance Sheets as of March 25, 2000 and March 31, 1999....................................26

Consolidated  Statements of Operations for the years ended March 25, 2000, March
31, 1999 and March 31, 1998............................................................................27

Consolidated  Statements of  Stockholders'  Equity for the years ended March 25,
2000, March 31, 1999 and March 31, 1998................................................................28

Consolidated  Statements of Cash Flows for the years ended March 25, 2000, March
31, 1999 and March 31, 1998............................................................................29

Notes to Consolidated Financial Statements.............................................................30

(a)(2)  Financial Statement Schedules. The financial statement schedule required
        to be filed herewith is included in Item 8 of this report: Schedule II -
        Valuation and Qualifying Accounts, page 44.

     All other  schedules have been omitted either because they are not required
or the information is included in the financial statements.

  (a)(3) Exhibits.

ITEM                                                                                                      LOCATION
NO.                                                  DESCRIPTION                                          SEE NOTE:
---                                                                                                       ---------

3.1   --   Certificate of Incorporation (originally filed as Exhibit 3a)........................................(3)
3.2   --   Certificate of Amendment to the Certificate of Incorporation.........................................(1)
3.3   --   Amended and Restated By-Laws ........................................................................(2)
3.4   --   Shareholder   Voting   Agreement   between   Centennial   Technologies,   Inc.  and  the
           Shareholders who are a party thereto, dated November 27, 1996 .......................................(1)
3.5   --   Certificate of Designations of Series A Junior Participating Preferred Stock ........................(8)
3.6   --   Certificate  of  Designation  of the  Rights,  Preferences  and  Terms  of the  Series B
           Convertible Stock....................................................................................(9)
4.1   --   Specimen Stock Certificate ..........................................................................(2)
4.2   --   Rights Agreement, dated as of March 16, 1999....................................................... (8)
4.3   --   Amendment No. 1 to Rights Agreement, dated as of December 29, 1999................................. (10)
10.1  --   Form  of  Centennial's   Domestic  Distributor  Agreement  between  Centennial  and  its
           domestic distributors (originally filed as Exhibit 10.10)............................................(3)
10.2  --   Form of  Centennial's  Agreement  with its  Manufacturer's  Representatives  (originally
           filed as Exhibit 10.11) .............................................................................(3)
10.3  --   Investment and Stockholders Agreement by and between Centennial  Technologies,  Inc. and
           ViA, Inc., dated November 27, 1996 (originally filed as Exhibit 10.13)...............................(1)
</TABLE>

                                       45
<PAGE>

<TABLE>

<S>                                                                                                            <C>
10.4  --   1994 Stock Option Plan, as amended (originally filed as Exhibit 10.1)................................(4)
10.5  --   1994 Formula Stock Option Plan, as amended (originally filed as Exhibit 10.2)........................(4)
10.6  --   1999 Employee Stock Purchase Plan....................................................................(8)
10.7  --   1999 Stock Option Plan....................................................................Filed Herewith

10.8  --   Lease  Agreement by and between  Centennial  Technologies,  Inc. and Michael A. Howland,
           as  Trustee of the Hownat  Trust,  dated  April 17,  1997  (originally  filed as Exhibit
           10.27)...............................................................................................(5)
10.9  --   Employment  Agreement  between  Centennial  Technologies,   Inc.  and  L.  Michael  Hone
           effective August 19, 1997 (originally filed as Exhibit 10.31)........................................(7)
10.11 --   Letter Agreement between  Centennial  Technologies,  Inc. and John C. Nugent dated as of
           January 12, 1998 (originally filed as Exhibit 10.2).................................................(12)
10.12 --   Executive  Retention  Agreement  between  Centennial  Technologies,  Inc. and L. Michael
           Hone dated as of February 26, 1999...................................................................(8)
10.13 --   Executive  Retention  Agreement  between  Centennial  Technologies,  Inc. and Richard N.
           Stathes dated as of February 26, 1999................................................................(8)
10.14 --   Executive Retention Agreement between Centennial  Technologies,  Inc. and Jacques Assour
           dated as of February 26, 1999........................................................................(8)
10.15 --   Executive Retention Agreement between Centennial  Technologies,  Inc. and John C. Nugent
           dated as of February 26, 1999........................................................................(8)
10.16 --   Executive  Retention  Agreement  between  Centennial  Technologies,  Inc. and Richard J.
           Pulsifer dated as of September 13, 1999..............................................................(9)
10.17 --   Executive  Retention  Agreement  between  Centennial  Technologies,  Inc.  and  Mary  A.
           Gallahan dated as of December 16, 1999..............................................................(10)
10.18 --   Executive Severance Agreement between Centennial Technologies, Inc. and Jacques Assour
           dated as of April 11, 2000................................................................Filed Herewith
10.19 --   Executive  Severance  Agreement  between  Centennial  Technologies,  Inc. and Richard N.
           Stathes
           dated as of April 11, 2000................................................................Filed Herewith
10.20 --   Executive  Severance  Agreement  between  Centennial  Technologies,  Inc. and Richard J.
           Pulsifer
           dated as of April 11, 2000................................................................Filed Herewith
10.21 --   Executive  Severance  Agreement  between  Centennial  Technologies,  Inc.  and  Mary  A.
           Gallahan
           dated as of April 11, 2000................................................................Filed Herewith
21    --   Schedule of Subsidiaries .................................................................Filed Herewith
23.1  --   Consent of Ernst & Young LLP, Independent Auditors........................................Filed Herewith
23.2  --   Consent of PricewaterhouseCoopers LLP, Independent Auditors...............................Filed Herewith
27    --   Financial Data Schedule ..................................................................Filed Herewith

</TABLE>

       (1) Incorporated  by  reference to the  Exhibits to  Centennial's  Annual
           Report  on  Form  10-K/A  filed  with  the  Securities  and  Exchange
           Commission (the "Commission") April 28, 1998.

       (2) Incorporated   by   reference   to  the   Exhibits  to   Centennial's
           Registration  Statement  on Form 8-A  filed  with the  Commission  on
           November 19, 1998.

       (3) Incorporated by reference to the Exhibits to  Centennial's  Form SB-2
           Registration  Statement (No.  33-74862-NY)  declared effective by the
           Commission on April 12, 1994.

       (4) Incorporated by reference to the Exhibits to  Centennial's  Quarterly
           Report on Form 10-Q filed with the Commission on November 6, 1998.

       (5) Incorporated by reference to the Exhibits to  Centennial's  Quarterly
           Report on Form 10-Q filed with the Commission on August 14, 1997.

       (6) Incorporated by reference to the Exhibits to  Centennial's  Quarterly
           Report on Form 10-Q filed with the Commission on February 10, 1997.

       (7) Incorporated by reference to the Exhibits to  Centennial's  Quarterly
           Report on Form 10-Q filed with the Commission on February 8, 1998.

                                       46
<PAGE>

       (8) Incorporated  by  reference to the  Exhibits to  Centennial's  Annual
           Report on Form 10-K for the fiscal  year ended  March 31,  1999 filed
           with the Commission on June 4, 1999.

       (9) Incorporated by reference to the Exhibits to  Centennial's  Quarterly
           Report on Form 10-Q filed with the Commission on November 9, 1999.

       (10)Incorporated by reference to the Exhibits to  Centennial's  Quarterly
           Report on Form 10-Q filed with the Commission on February 8, 2000.

       (11)Incorporated   by   reference   to  the   Exhibits  to   Centennial's
           Registration  Statement  on Form  8-A/A  filed  with  the  Commission
           February 1, 2000.

       (12)Incorporated by reference to the Exhibits to  Centennial's  Quarterly
           Report on Form 10-Q filed with the Commission on February 8, 1999.



       (b) Reports on Form 8-K. During the last quarter of the period covered by
this report,  Centennial filed a Form 8-K on January 12, 2000 (amended March 13,
2000  and  February  1,  2000)  regarding  Centennial's   acquisition  of  Intel
Corporation's  flash  memory card  business  and  Centennial's  amendment of its
Shareholder  Rights Plan in connection  with Intel's  acquisition of convertible
preferred stock of Centennial, respectively.


                                       47
<PAGE>

                                   SIGNATURES

       In accordance with Section 13 or 15(d) of the Securities  Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                 CENTENNIAL TECHNOLOGIES, INC.

Dated: May 15, 2000                  By: /s/ L. MICHAEL HONE
                                        ----------------------------------------
                                        L. Michael Hone
                                        President and Chief Executive Officer


Dated: May 15, 2000                  By: /s/ RICHARD J. PULSIFER
                                        ----------------------------------------
                                        Richard J. Pulsifer
                                        Vice  President, Chief Financial Officer
                                        and Secretary


       In accordance with the Securities Exchange Act of 1934, as amended,  this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the date indicated.

<TABLE>
<CAPTION>

Name                                 Capacity                                           Date
----                                 --------                                           ----
<S>                                 <C>                                                <C>
  /s/ L. MICHAEL HONE                President, Chief Executive Officer and Director    May 15, 2000
--------------------------           (Principal executive officer)
     L. Michael Hone

 /s/RICHARD J. PULSIFER              Vice President, Chief Financial Officer and        May 15, 2000
--------------------------           Secretary (Principal accounting and financial
    Richard J. Pulsifer              officer)

 /s/ WILLIAM J. SHEA                 Chairman of the Board                              May 15, 2000
--------------------------
     William J. Shea

 /s/ EUGENE M. BULLIS                Director                                           May 15, 2000
--------------------------
     Eugene M. Bullis

 /s/ STEVEN M. DEPERRIOR             Director                                           May 15, 2000
--------------------------
     Steven M. DePerrior

 /s/ JAY M. EASTMAN                  Director                                           May 15, 2000
--------------------------
     Jay M. Eastman

 /s/ DAVID A. LOVENHEIM              Director                                           May 15, 2000
--------------------------
     David A. Lovenheim

 /s/ JOHN J. SHIELDS                 Director                                           May 15, 2000
--------------------------
     John J. Shields

</TABLE>

                                       48