UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                    FORM 10-K

(Mark One)
[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES  EXCHANGE
     ACT OF 1934 - FOR THE FISCAL YEAR ENDED APRIL 30, 2000

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

                         Commission file number: 0-8006


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

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

         69 MCADENVILLE ROAD
       BELMONT, NORTH CAROLINA                                     28012
(Address of principal executive offices)                         (Zip Code)

       Registrant's telephone number, including area code: (704) 825-8146

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

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

                         COMMON STOCK, WITHOUT PAR VALUE
                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports)  and (2) has been  subject to such  filing
requirements for the past 90 days. 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. [X]

Estimated  aggregate market value of the voting stock held by  non-affiliates of
the registrant:

                         $17,504,036 as of July 6, 2000

Number of shares of Common  Stock,  no par value,  as of the latest  practicable
date:

                      24,414,725 shares as of July 6, 2000

                    Documents incorporated by reference: NONE
<PAGE>
                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

     (a) GENERAL DEVELOPMENT OF BUSINESS

     Cox  Technologies,  Inc. (the  Company),  was  incorporated  as Mericle Oil
Company  in July  1968,  under  the laws of the State of  Arizona.  The name was
changed to Energy Reserve, Inc. in August 1975. In November 1994, Energy Reserve
acquired Twin-Chart,  Inc. and altered its primary business focus from crude oil
operations to temperature recording and monitoring operations.  Subsequently, in
April 1998, to better  reflect this focus,  the Company  changed its name to Cox
Technologies, Inc.

     Executive  offices  are  located at 69  McAdenville  Road,  Belmont,  North
Carolina 28012; its telephone number is (704) 825-8146. Except where the context
otherwise  indicates,  all references to the "Company" are to Cox  Technologies,
Inc., its wholly owned subsidiaries,  Twin-Chart,  Inc., Transit Services, Inc.,
Vitsab Sweden, AB, Vitsab, Inc. and Cox Recorders  Australia,  Ltd., Pty., a 95%
owned Australian distribution company.

     The  Company is engaged  in the  business  of  producing  and  distributing
transit  temperature  recording  instruments,  both  domestically  in the United
States and internationally.  Transit temperature  recording  instruments work by
creating a strip  chart  record of  temperature  changes  over  time,  or record
temperatures  electronically  according to a present interval  ("logging").  The
Company has been involved in the sale and  manufacture  of both types of transit
monitoring  products,  and has established an international  market presence and
reputation for reliable temperature recording products.

     A major recent effort of the Company has been research and development into
new  technologies in electronic  data "logging." The result of this  investment,
the EDS logger and the EDM software  system (used to read the information in the
loggers), is projected as a new and technologically novel temperature monitoring
system.

     Concurrent with this electronic  hardware/software research and development
effort,   the  Company  has  expended  funds  to  further  the   development  of
enzyme-based  "smart  labels"  that  detect  temperature  abuse in  packages  of
perishable  goods.  The Company has  introduced  this new  technology,  known as
Vitsab(R),  to the food and  pharmaceutical  industries  as a  monitoring  label
applied to packages of temperature  sensitive products.  Initial indications for
demand of this product have been very positive.

     The core  expertise  of the  Company  has been  established  as a  reliable
provider of temperature  monitoring products,  and as an innovator and developer
of new and technologically advanced monitoring systems.

     Historically,   the  Company  has  held  oil  leases  in  California   (the
Chico-Martinez  field) for many years,  but has not produced in any  significant
volume.  The intent of this asset  holding has been a strategy to hold the asset
in anticipation of future  larger-scaled oil production,  as economic conditions
permit.

     Low  market  prices  for crude oil of the type  produced  by the field have
hampered production in recent years.  However, in tandem with the recent rise in
oil prices,  the market price for the Company's crude has more than tripled over
the last two years.

     Increasing  oil  prices  and the  Company's  desire  to  focus  on its core
business--temperature  monitoring  of  perishables--have  changed the  Company's
strategy  with  respect  to the oil field.  The  Company  now has a strategy  to
improve  production  in the field while  simultaneously  pursuing a buyer of the
subleases.

     The Company entered into an agreement with an independent oilfield operator
in April  1999.  The  primary  function  of the  operator  has been to  increase
production by  overhauling  the surface  equipment,  establishing  steam and hot
water injection  operations,  and improving field conditions at the property. In
July 2000 the  Company  entered  into a new  agreement  with the  operator  that
replaces  the  previous  agreement.  Under  the terms of the new  agreement  the
Company intends to increase production more rapidly. The new agreement will also
allow the Company to buyout the operator at any time,  thus making the subleases
immediately available for sale.

     It is the  Company's  strategy that  productive  activity at the field will
help to increase the revenues  while  establishing  a greater asset value,  thus
making the Company's sublease holdings more attractive to a potential buyer.

                                        2
<PAGE>
     Additionally,  the Company has entered into an exclusive  agreement  with a
group in Dallas,  Texas,  to sell the  subleases on behalf of the  Company.  The
group will contact and solicit  potential  buyers to make purchase offers to the
Company to buy the subleases.

     (b) FINANCIAL INFORMATION

     The  Company  has two  current  operating  segments  that  involve  the (1)
production and  distribution  of temperature  recording and monitoring  devices,
both  electronic  "loggers" and graphic  temperature  recorders  (referred to as
"Temperature  Recorder  Operations" as a group) and (2) oilfield  operations and
other, which include all economic activity related to the oil production and the
holding of the oil leases and the operation of its Phoenix office.

Financial information for these operating segments is summarized below:

<TABLE>
<CAPTION>
     FOR THE YEARS ENDED APRIL 30               2000           1999           1998
                                             ----------     ----------     -----------
<S>                                          <C>            <C>            <C>
     REVENUES:
     (1) Temperature Recorder Operations     $9,700,282     $8,943,883     $ 8,135,197
     (2) Oilfield Operations and Other           10,695          1,428           3,559


     OPERATING PROFIT (LOSS):
     (1) Temperature Recorder Operations     $  839,853     $  919,087     $ 1,094,285
     (2) Oilfield Operations and Other         (143,888)        46,946       1,972,283(1)


     IDENTIFIABLE ASSETS:
     (1) Temperature Recorder Operations     $4,906,328     $5,639,936     $ 2,958,066
     (2) Oilfield Operations and Other        3,576,309      4,596,239       6,808,470
</TABLE>
----------
(1)  This figure reflects a single event litigation  settlement.  See page 11 of
     this document under "Oilfield Operations".

     Research  and  development  (R & D) segments  are not  currently  operating
entities.  All of the  expenditures  in these  segments  have been  dedicated to
various aspects of business development,  including formal research, development
of production techniques,  and product research aimed at market readiness of the
product.  Some small revenues have been generated in the sale of  pre-production
materials.

     Research  and  development  segments  are the (1)  "Smart  Label"  project,
involving the research, technical and market development of the Vitsab(R) "smart
label"  tags (and  other  allied  tag  technologies)  and (2) EDS and  Ancillary
Software Development Project, involving "logger" hardware engineering,  software
development,  systems  integration  and  market  research.  The  following  data
summarize investment and income activity in these segments.

     FOR THE YEARS ENDED APRIL 30             2000         1999         1998
                                           ----------   ----------   -----------
     PROJECT REVENUES:
     (1) Smart Label Project                      -0-   $    9,233           -0-
     (2) EDS/Software Project                     -0-          -0-           -0-

     R & D EXPENSES:
     (1) Smart Label Project               $1,148,591   $  768,127           -0-
     (2) EDS/Software Project                 667,095          -0-           -0-

     IDENTIFIABLE ASSETS:
     (1) Smart Label Project               $  999,677   $  478,132           -0-
     (2) EDS/Software Project                 228,168           -0-          -0-

                                        3
<PAGE>
     (c) NARRATIVE DESCRIPTION OF BUSINESS

     TEMPERATURE RECORDER OPERATIONS

     The  Company's  temperature  recorder  activities  include  production  and
distribution  of  transit  temperature  recording  instruments  and the sale and
distribution of electronic  temperature  recorders (sold for non-transit quality
monitoring  purposes as well as for  transit  monitoring)  manufactured  for the
Company on contract. The Company also performs contract manufacturing.

     The  transit  temperature  recording  instruments,   known  as  temperature
recorders,  are  self-contained,   battery-powered  and  designed  to  create  a
graphical "time vs. temperature"  record. The electronic  temperature  recorders
are  battery-powered  devices that record temperature in a computer memory chip.
The data are later  visualized by transferring the information to a PC computer.
The  Company  also sells  digital  thermometers  as  adjuncts  to their  primary
temperature recorder activity.

     The transit  recorders are marketed  under the trade name Cox Recorders and
produce a record which is documentary proof of temperature conditions useful for
compliance  with  governmental   regulations,   the  monitoring  performance  of
refrigerated  carriers,  and for claims in the transport of valuable perishables
such as  produce,  meat,  pharmaceuticals,  chemicals,  live  plants  and animal
material.  The electronic  temperature  recording products are used for the same
purpose,  but also are used for internal  checking of temperature  conditions in
storage and processing.

     The  Company  produces  two  separate  graphic  recorders.  The  COX(1) and
COBRA(R) record the air temperature in the truck or container. The COBRA(R) is a
new low-cost  recorder  with a  transparent  case,  which allows  viewing of the
temperature  record without opening the case itself.  Both are used primarily in
transit  monitoring  of  temperature  variations.  COBRA(R)  design was recently
granted a U.S. patent.

     The Company also manufactures (through a contract manufacturing arrangement
with a producer  in New  Zealand)  and  distributes  an  electronic  temperature
recorder, or "data logger", named the TRACER(R). The TRACER(R) delivers its data
via a  cable  link to a  personal  computer  using  specialized  software.  This
software is used under contract issued by the New Zealand supplier. TRACER(R) is
used  primarily  in  quality  control  and  safety  applications  in  the  foods
industries.

     A  lower  cost  transit  or  "shipping"  version  of  the  TRACER(R),   the
DataSource(TM)  transit temperature logger, has been recently  introduced.  This
logger  product  is  encased  in a  postage-prepaid  mailer  sleeve  and is used
exclusively for transit temperature monitoring.

     COX(1),  COBRA(R) and  DataSource(TM)  are all  currently  selling into the
ongoing markets for the Company's recorder products.

     The  source  and   availability  of  raw  materials  are  not  critical  or
significant factors in the temperature  recorder operations of the Company.  The
temperature  recorder  operations of the Company are  non-seasonal.  The Company
does  and is  required  to  carry  significant  amounts  of  inventory  for  its
temperature  recorder  operations  and neither  Company nor  industry  practices
provide extended payment terms to customers.

     The temperature recorder operations of the Company are not dependent upon a
single  or a few  customers,  nor  would  the  loss of any one  customer  have a
materially  adverse  effect  upon  earnings  or the  financial  position  of the
Company.  Backlog of orders is not a major  factor in the  temperature  recorder
operations of the Company.

     The Company is a major competitor in the temperature  recording industry in
regards to its production and distribution activities.

     The  Company  generally  does  not  maintain  company  owned   distribution
entities.  However,  in 1999, the Company  established Cox Recorders  Australia,
Ltd.,  Pty.,  as a means to retain its market share and market  presence in this
geographic area.

     Except  for  this  subsidiary,  all  distributors  are on  contract.  Major
distributors are located in Copenhagen,  Denmark, Singapore and Santiago, Chile.
All other distribution and sales operations are through individual sales persons
operating on a sales commission basis or a salary plus incentive basis.

     Digital  thermometers with penetration  probes are purchased  wholesale and
retailed to customers for the Company's  manufactured products. The company also
sells data  collection  or  "listing"  temperature  recorders  that are used for
point-of-measurement recording. The Company does not manufacture these probe and
electronic recorder products.

     The COX(1) product accounts for 93% of the Company's revenues.  The balance
is accounted for through the sale of probes and of other temperature  monitoring
products.  The COBRA(R)  product is new and no  substantial  volume has yet been
achieved.

                                        4
<PAGE>
     OILFIELD OPERATIONS

     The  Company  owns  working  interests  in  certain  developed  oil and gas
properties  located in California.  Developed  acreage consists of properties on
which oil and gas wells have been drilled  which are capable of producing  crude
oil or natural gas. The  Company's  oil and gas  properties  are the Mitchel and
Bacon Hills subleases.

     For  further  information  reference  is  made  to  Note  E  -Property  and
Equipment,  Oil  and Gas  Properties  of the  notes  to  consolidated  financial
statements.

     MITCHEL AND BACON HILLS SUBLEASES

     The  Mitchel  subleases  and the Bacon  Hills  sublease  are located in the
Chico-Martinez field, Kern County, California. Together they comprise one entire
section of land. The Mitchel  subleases were acquired in 1969 and consist of 380
acres in which the Company has  interests  to a depth of 2,000 feet on 320 acres
and to a depth of 2,500 feet on 60 acres.  The Bacon Hills sublease was acquired
in December  1980 and consists of 260 acres,  in which the Company has interests
to the depth of 2,250 feet. The Company owns all of the working interest in both
these subleases that equates to a 78.33 percent revenue  interest.  There are 62
completed  oil wells that  produce  from the 500 to 1,600  foot  levels on these
subleases.  The oil produced is heavy crude of  approximately  12.7 API gravity.
The Company has no drilling  requirements under these subleases,  which are held
for an indefinite term by production.  The sublessor has a 21.67 percent royalty
revenue interest in these subleases.

     As previously disclosed in earlier reports, the sublessor had declared this
sublease  in default  due to the  failure by the  Company to meet  certain  well
drilling  requirements.  In May 2000, the Company paid the sub-lessor $50,000 to
cure the default.  By agreement  and  amendment to the  sublease,  the sublessor
acknowledged  that all drilling  requirements  had been fulfilled,  and that the
Company had no further  obligation to drill any additional  wells,  and that any
and all notices of default  were  cancelled,  and that the  sublease was in full
force and effect.

     The latest independent petroleum studies and reports for the leases were by
a  respected  petroleum  engineer  as  follows:   (1)  Comprehensive   Reservoir
Engineering  Study,  dated February 1986,  which  estimated the  recoverable oil
reserves at 21,103,341  barrels,  and (2) a Steam Flood  Development Plan, dated
June 1987,  which sets forth a plan including  drilling and production costs for
recovery of the oil reserves.  The Company has not filed any reports  concerning
oil and gas reserve estimates with any regulatory  authorities or agencies other
than the Securities and Exchange  Commission.  The petroleum  engineer confirmed
the level of reserves in a recently issued letter.

     The Company has engaged the services of an independent operator to commence
production  at  its  Chico-Martinez  field.  Higher  oil  prices  have  made  it
economical  for  the  Company  to  invest  capital  in  an  effort  to  increase
production.  It is the Company's strategy to increase production at the field in
an effort in increase  revenues and establish a greater  value.  The Company has
recently  raised its  commitment to  increasing  production.  Additionally,  the
Company has  increased  its  commitment to sell the  subleases,  thus  providing
additional  capital  to focus  on the  growth  of the  Company's  core  business
operations.

     The Company has entered into a one-year exclusive agreement with a group in
Dallas,  Texas,  to act as an agent on behalf  of the  Company  and to  identify
potential  buyers of the subleases.  Once potential  buyers are identified,  the
group will solicit offers and present them to the Company.  The Company  intends
to weigh the increased  production against potential offers to purchase that may
be presented by the agent.

     SMART LABEL PROJECT

     Vitsab(R) is a new  technology  which employs  enzymatic  color  indicators
inside a label to show the amount of temperature exposure of a stored or shipped
temperature-sensitive  commodity.  The enzyme indicator reaction is activated at
the beginning of the monitoring  period by applying pressure on a plastic bubble
strip that is a structure part of the label.  This strip contains sealed packets
of the  non-toxic  liquids  are  broken by the  pressure,  which mix to form the
indicating solution.

     These  tags  are  programmable  devices  that run as a  "biological  clock"
parallel  to the  biological  clock of the  product it is set to  monitor.  They
integrate both time and temperature  and give a visual  indication when parallel
processes  with  the  monitored  food or drug  product  has  reached  a  certain
definable state. This device is known as a TTI (time-temperature integrator).

     The Company plans to produce two distinct Vitsab(R) TTI  configurations:  a
"three dot" indicator (for wholesale  distribution  of  perishables)  and a "one
dot" indicator  (primarily for food safety and consumer  packages).  Each can be
produced on high-speed automated machinery. The Company has engaged the services
of a respected automation  engineering and equipment development firm to develop
new machinery for accelerated Vitsab(R) production.

                                        5
<PAGE>
     The Company is in the final formative stages of the development, production
and marketing of these Vitsab(R)  temperature  history  indicating  tags.  Final
development  of this  technology  has  required  substantial  effort  to  refine
manufacturing  procedures to achieve a reliable and consistent product delivery.
In addition, the chemical formulation of the tag itself,  including the specific
chemical nature of the enclosure has required exhaustive testing and validation.

     The Company's visual indicator tag operations also include the development,
production  and   distribution   of  FreshTag(TM)   food  spoilage   indicators.
FreshTag(TM)  is based on a licensed  and patented  technology  developed by the
U.S. Food and Drug  Administration  (FDA),  and is a tag technology that enables
the detection or "sniffing" of specific chemical odors that signal the incipient
spoilage  of seafood and other food types.  The  Company is  currently  the sole
licensee for this patent from the FDA.  Research and development on this part of
the project is less complete than the  Vitsab(R).  The Company has not currently
set a date for product  announcement  for the  FreshTag(TM)  technology,  and is
pursuing a policy of seeking new external funding for the continued research and
development efforts for the FreshTag(TM) product.

     The source and  availability of certain raw materials may be a critical and
significant  factor for Vitsab(R) TTI when it begins  production in  significant
volumes.  The source and  availability of raw materials for FreshTag(TM) are not
likely to be a  critical  and  significant  factor in the future  production  of
FreshTag(TM) product forms.

     The Company plans to manufacture the Vitsab(R) TTI at two locations: Malmo,
Sweden and Belmont, North Carolina.  Preliminary production operations have been
periodically  started and stopped in Malmo,  Sweden as  development  progresses.
Machinery  testing and  preparation  of solutions  is currently  being set up in
Belmont, North Carolina.

     The Company maintains both company owned distribution  entities and certain
contract  distributors   associated  with  the  Company's  temperature  recorder
operations.  The Company plans to use these same distribution entities as future
Vitsab(R) outlets.

     EDS/SOFTWARE PROJECT

     The Company has initiated a major new design effort in the EDS  temperature
logger.  The EDS is a slim package about the size of a credit card and less than
a quarter of an inch thick. The large LCD screen displays  detailed  information
about the temperature  recording,  and the user can scroll to display additional
items  of  information.  This  "smart  card"  design  departs  from  the  normal
configuration for such products in that it is small in size, is engineered to be
very inexpensive, and displays much of the information that the users of graphic
transit  temperature  instruments now obtain from a visual inspection of a paper
chart. The Company has invested in design  consultants,  outside engineers,  new
high-level personnel and other expenditures to bring the EDS/Software Project to
a near-completed state.

     The price and performance  characteristics  of the EDS  temperature  logger
should create an additional market position for the Company.

     EDS  manufacturing  will be  based  on  subcomponent  fabrication  in China
combined with  assembly,  testing and  programming in Belmont,  North  Carolina.
Production  planning is in process,  but no product is currently being produced.
The Company expects to bring this product to market during fiscal 2001.

     All temperature  logger products need software to interpret and display the
data that have been  collected  and  stored in the  electronic  device.  A major
shortcoming  of existing  software used for this purpose is that each  recording
episode  creates a separate  file in the  computer  after  downloading.  Typical
practice  in  corporate  use  of   temperature   loggers  for   time-temperature
maintenance  regimes  requires that hundreds to thousands of recording  episodes
are  obtained  and stored.  This creates a  substantial  problem for  logistics,
analysis  and  sorting of the  information.  As a part of the EDS  Project,  the
Company has  engaged  the  services  of  programming  professionals  to create a
database  storage  software system for rational  treatment of recording  episode
data.  Initial  introduction  of this program,  EDM-2000,  has met with positive
responses from prospective corporate customers.

     As an adjunct to its  EDS/Software  development  program,  the  Company has
developed a UNIX-type software operating system (OS) designed for data gathering
and  reporting  of  temperature   recording  data.  During  development  it  was
recognized  that  the  OS  could  be  expanded  to  include  significantly  more
functionality  than its initial  design.  Accordingly,  the OS has a range of 14
separate  product   functionalities   that  are  completed  and  awaiting  final
documentation  to be ready for  marketing.  The OS functions from memory without
the use of a hard drive. This is the significant difference between it and other
operating systems in the market.  Independent  markets for the OS may exist, but
the Company is not examining these independent markets at this time.

     The source and  availability  of certain raw materials may be a critical or
significant  factor in the  planned EDS  operations  of the  Company.  A current
global shortage of EPROM memory chips may limit  production,  dependent upon the

                                        6
<PAGE>
scale of impending demand for the product.  There are no raw material source and
availability  factors  other than this single  component for any other aspect of
the EDS/Software development.

     The projected EDS operations of the Company are  non-seasonal.  The Company
will  be  required  to  carry  significant  amounts  of  inventory  for  its EDS
operations and neither Company nor industry  practices  provide extended payment
terms  to  customers.  The  projected  EDS  operations  of the  Company  are not
dependent  upon a  single  or a few  customers,  nor  would  the loss of any one
customer have a material adverse effect upon earnings or the financial  position
of the Company.

ITEM 2. PROPERTIES

     Disclosure of properties is contained in Note E - Property and Equipment of
the notes to consolidated financial statements.

ITEM 3. LEGAL PROCEEDINGS

     Disclosure  of legal  proceedings  is  contained  in Note N -  Commitments,
Litigation and Contingencies of the notes to consolidated financial statements.

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

     On  November  20,  1999  pursuant  to  Notice  for the  Annual  Meeting  of
Shareholders   and  accompanying   Proxy   Statement,   the  annual  meeting  of
shareholders  of the Company was held at the Shelter  Pointe Hotel and Marina in
San Diego, California at which meeting the following matters were submitted to a
vote of the securities holders:

     1.   To elect five  Directors to the Board of Directors for a one-year term
          in accordance with the Bylaws of the Company.

     2.   To  consider  and act upon a  proposal  to  ratify  the  selection  of
          Bedinger & Company as the Company's independent public accountants for
          the fiscal year ending April 30, 2000.

                                     PART II

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

     (a) MARKET INFORMATION FOR COMMON STOCK

     The  Company's  common stock is traded on the  nationwide  over-the-counter
market and is listed under the symbol "coxt.ob" in the electronic bulletin board
provided by the National  Quotation  Bureau,  Inc. The range of high and low bid
quotations for each quarterly  period during the past four years ended April 30,
based upon  information  provided to the Company by the National  Association of
Securities  Dealers  or market  makers in the  Company's  common  stock,  was as
follows:

<TABLE>
<CAPTION>
                              2000              1999              1998              1997
                          -------------     -------------     -------------     -------------
                          LOW      HIGH     LOW      HIGH     LOW      HIGH     LOW      HIGH
                          ----     ----     ----     ----     ----     ----     ----     ----
<S>                      <C>      <C>      <C>      <C>       <C>      <C>     <C>      <C>
     First Quarter        47/64    35/64     3/8     5/16      1/4      1/4      1/4     1/4

     Second Quarter       47/64    30/64    5/16     9/32     5/16     5/16    1 1/4     1/8

     Third Quarter       4 5/16    31/64   13/32     5/16      3/4      3/8    13/16     3/8

     Fourth Quarter       3 3/8    1 1/4     5/8    19/32      3/4      3/8      3/4     3/8
</TABLE>

     (b) APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS

     As of April 30,  2000 the  approximate  number of holders of record for the
single  existing  class of common stock (no par value) equity  securities of the
Company was approximately 3,500.(2)

----------
(2)  Included  in the  number of  stockholders  of  record  are  shares  held as
     "nominee" or "street name.

                                        7
<PAGE>
     (c) DIVIDENDS

     The  Company has not  declared  any  dividends  during the past three years
ended April 30, 2000.

ITEM 6. SELECTED FINANCIAL DATA

     Following  is a summary  of  selected  financial  data for each of the last
three fiscal years ended April 30:

<TABLE>
<CAPTION>
                                                   2000           1999           1998
                                                -----------    -----------    -----------
<S>                                             <C>            <C>            <C>
     Operating revenues

     Profit (loss) from continuing operations   $ 9,710,976    $ 8,943,883    $ 8,138,757
          (A)  Excluding R&D segments(1)            695,965        794,595      1,095,451
          (B)  Including R&D segments            (1,005,478)       163,292      1,095,451

     Profit (loss) from continuing operations
     per average share of common stock
          (A)  Excluding R&D segments           $       .02    $       .04    $       .05
          (B)  Including R&D segments           $      (.04)   $       .01    $       .05
     Total assets                               $14,719,242    $12,877,192    $ 9,766,536
     Long-term obligations                      $ 2,928,359    $   581,374    $   280,706
     Cash dividends declared                            -0-            -0-            -0-
     Cash dividends declared per common share           -0-            -0-            -0-
</TABLE>
----------
(1)  R&D  segments  refers  to the  Smart  Label  Project  and the  EDS/Software
     Project.

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

     LIQUIDITY AND CAPITAL RESOURCES

     The  Company  anticipates  cash from  operations,  equity  investment,  and
borrowing from long-term  lending  sources  adequate to meet cash  requirements.
Although at present the cash flow from  operations  is not adequate to meet cash
requirements  and commitments of the Company,  the Company intends to enter into
equity, debt or other financing arrangements to meet its further financial needs
for  expansion  into food  safety  control  products  and to provide for general
working  capital  needs.  In  this  connection,  reference  is  made to Note O -
Subsequent Event of notes to consolidated financial statements.

                                        8
<PAGE>
     COMPARISON OF OPERATIONS FOR 2000 AND 1999

     Presented here is a summary of the  operational  business  segments for the
years ended April 30, 2000 and 1999.

<TABLE>
<CAPTION>
                                        2000           1999           2000           1999
                                     -----------    -----------    -----------    -----------
                                     Temperature    Temperature     Oilfield       Oilfield
                                      Recorder       Recorder      Operations     Operations
                                     Operations     Operations      and Other      and Other
                                     -----------    -----------    -----------    -----------
<S>                                  <C>            <C>            <C>            <C>
     Sales                           $ 9,700,282    $ 8,943,883    $    10,694    $     1,428
                                     -----------    -----------    -----------    -----------
     Cost of sales                     5,134,172      4,193,586         21,248         13,130
     General & administrative          2,183,123      2,307,732        133,333        160,467
     Sales expense                     1,459,339      1,388,232            -0-            -0-
     Depreciation & amortization          83,795         87,569            -0-            -0-
                                     -----------    -----------    -----------    -----------
     Income (loss) from operations       839,853        966,764       (143,888)      (172,169)
     Interest expense                    (14,266)       (12,590)           -0-         (2,716)
     Other income (expense)               43,396          7,031        (78,424)       241,322
     Income taxes                        (41,754)       (42,119)           -0-         19,491
                                     -----------    -----------    -----------    -----------
     Net earnings (loss)             $   827,229    $   919,086    $  (222,312)   $    46,946
                                     ===========    ===========    ===========    ===========
</TABLE>

     TEMPERATURE RECORDER OPERATIONS

     Sales  increased  $756,399 or 8.5 % for the current year as compared to the
prior  year.  Cost of sales as a percent of sales was 52.9% for 2000 as compared
to 46.9% in 1999. This change was primarily due to increased  material and labor
costs.

     Sales expense remained relatively constant for both years. This category of
expense  increased  $71,107 or 1% in 2000 as compared  to 1999.  As a percent of
sales, these expenses were 15% for 2000 and 15.5% for 1999.

     General and administrative  expense decreased $124,609 or 1.4 % for 2000 as
compared  to  1999.   Expressed   as  a  percent  of  sales,   the  general  and
administrative  expenses for 2000 was 22.5% and 25.8% for 1999.  This  reduction
reflects a reassignment of certain staff to the Smart Label project.

     OILFIELD OPERATIONS AND OTHER

     There were no oil production  operations  conducted directly by the Company
during  the year ended  April 30,  2000.  However,  financial  results  from the
farm-out  arrangement  are  reflected  in the  figures  presented.  The  Company
maintained  certain  insurance and other  compliance  matters  pertaining to the
oilfield  operations during this period, and these expenses are reflected in the
schedule above.

     Subsequent  to the  end of the  April  30,  2000  fiscal  year,  by  mutual
agreement,  the aforementioned  farm-out arrangement was terminated and replaced
by a new agreement.  For further information regarding this matter, please refer
to Note O-Subsequent Events of notes to consolidated financial statements.

     The other  expenses  relate to the Phoenix  office of the Company which has
functioned  as a  management  office for certain of the  overall  affairs of the
Company,  the center for administration of oilfield activities and transactions,
and as a developmental location for aspects of software development.

                                        9
<PAGE>
COMPARISON OF SMART LABEL PROJECT AND EDS PROJECT FOR 2000 AND 1999

     Expenses  for the  research  and  development  (R&D)  business  development
projects are summarized in the following table:

<TABLE>
<CAPTION>
                                       2000           1999          2000          1999
                                    -----------    -----------    ----------    ----------
                                    Smart Label    Smart Label   EDS/Software  EDS/Software
                                      Project        Project        Project       Project
                                    -----------    -----------    ----------    ----------
<S>                                 <C>            <C>            <C>           <C>
     Revenue                        $       -0-    $     9,233    $      -0-    $      -0-
                                    -----------    -----------    ----------    ----------
     Expenses(1)                        836,974        610,536       667,095           -0-
     Depreciation & amortization        197,552         30,000           -0-           -0-
                                    -----------    -----------    ----------    ----------
     Income (loss) operations        (1,034,526)      (631,303)     (667,095)          -0-
     Interest expense                  (155,819)      (137,824)          -0-           -0-
                                    -----------    -----------    ----------    ----------
     Net Expenses Invested in R&D   $(1,190,523)   $  (769,127)   $ (667,095)          -0-
                                    ===========    ===========    ==========    ==========
</TABLE>
----------
(1)  Expenses  include   salaries,   rent,   materials,   equipment   purchases,
     consulting,  travel and office  costs.  Some of these are PRORATA  expenses
     based on US facilities and  activities,  but the majority of the line total
     is for the Malmo, Sweden, Vitsab(R) facility and related activities.

     The Vitsab(R) facility and associated activities was acquired in June 1998.
Income of $9,233 for prototype  materials delivered for testing is reflected for
the nine months  ended  April 30,  1999.  Other  related  expenditures  for this
project are included in this line.

     The  EDS/Software  project started during the year ended April 30, 2000, so
there are no expenditures reflected in 1999 for this project.

     COMPARISON OF OPERATIONS FOR 1999 AND 1998

     The following  schedule reflects the operational  business segments for the
years ended April 30, 1999 and 1998.

<TABLE>
<CAPTION>
                                        1999           1998           1999           1998
                                     -----------    -----------    -----------    -----------
                                     Temperature    Temperature     Oilfield       Oilfield
                                      Recorder       Recorder      Operations     Operations
                                     Operations     Operations      and Other      and Other
                                     -----------    -----------    -----------    -----------
<S>                                  <C>            <C>            <C>            <C>
     REVENUE:
     Sales                           $ 8,943,883    $ 8,135,197    $     1,428    $     3,559
                                     -----------    -----------    -----------    -----------
     Cost of sales                     4,193,586      3,676,082         13,130         28,775
     General & administrative          2,307,732      1,925,715        160,467        153,492
     Sales expense                     1,388,232      1,223,991            -0-            -0-
     Depreciation & amortization          87,569         34,468            -0-            782
                                     -----------    -----------    -----------    -----------
     Income (loss) from operations       966,764      1,274,941       (172,169)      (179,490)
     Other income (expense)                7,031       (127,203)       241,322      2,221,008
     Interest expense                    (12,590)       (34,938)        (2,716)       (37,250)
     Income taxes                        (42,119)       (50,500)       (19,491)           -0-
                                     -----------    -----------    -----------    -----------
     Net earnings (loss)             $   919,086    $ 1,062,300    $    46,946    $ 2,004,268
                                     ===========    ===========    ===========    ===========
</TABLE>

     TEMPERATURE RECORDER OPERATIONS

     Sales  increased  $808,686 or 10% for the  current  year as compared to the
prior year ended April 30.

     Cost of sales increased  $517,504 in 1999 as compared to 1998. As a percent
of sales, this costs were 46.9% in 1999 and 45.1% in 1998.

                                       10
<PAGE>
     Sales expense for 1999 increased by a total of $164,241 or 13.4% over 1998.
Expressed as a percent of sales, this expense remained constant at approximately
15% for both years.

     General and administrative expense as a percent of sales increased to 25.8%
in 1999 as compared to 23.7% in 1998.

     The increase in  depreciation  and  amortization  resulted  from  equipment
purchases and amortization of goodwill.

     Interest  expense  declined due to reduction of debt  attributable  to this
segment of operations.

     OILFIELD OPERATIONS

     There were no crude oil sales in 1999.  Income of $1,428 was  derived  from
other operating sources.

     Cost of  sales,  which  represent  expenditures  in  maintaining  the field
declined $15,645 in 1999 as compared to 1998

     The increase of $6,975 in general and administrative  expense was primarily
due to professional fees.

     Interest  decreased due to the reduction in interest  bearing  indebtedness
attributable to this business segment.

     COMPARISON OF SMART LABEL PROJECT AND EDS PROJECT FOR 1999 AND 1998

     Expenses for the R&D business  development  projects are  summarized in the
following table:

<TABLE>
<CAPTION>
                                        1999           1998           1999           1998
                                     -----------    -----------    -----------    -----------
                                     Smart Label    Smart Label   EDS/Software   EDS/Software
                                       Project        Project        Project        Project
                                     -----------    -----------    -----------    -----------
<S>                                  <C>            <C>            <C>            <C>
     Revenue                         $     9,233            -0-            -0-            -0-
                                     -----------    -----------    -----------    -----------
     Expenses(1)                         610,536            -0-            -0-            -0-
     Depreciation & amortization          30,000            -0-            -0-            -0-
                                     -----------    -----------    -----------    -----------
     Income (loss) operations           (631,303)           -0-            -0-            -0-
     Interest expense                   (137,824)           -0-            -0-            -0-
                                     -----------    -----------    -----------    -----------
     Net expenses invested in R&D    $  (769,127)           -0-            -0-            -0-
                                     ===========    ===========    ===========    ===========
</TABLE>
----------
(1)  Expenses  include   salaries,   rent,   materials,   equipment   purchases,
     consulting,  travel and office  costs.  Some of these are PRORATA  expenses
     based on US facilities and  activities,  but the majority of the line total
     is for the Malmo, Sweden, Vitsab(R) facility and related activities.

     Costs for fiscal 1999  related to the  Vitsab(R)  facility  and  associated
activities  which was  acquired  in June 1998.  Income of $9,233  for  prototype
materials delivered for testing is reflected for the nine months ended April 30,
1999. Other related expenditures for this project are included in this line.

     The  EDS/Software  project started during the year ended April 30, 2000, so
there are no expenditures reflected in fiscal 1999 for this project.

                                       11
<PAGE>
     MANAGEMENT COMMENTS ON RECENT DEVELOPMENTS

     The following  significant  events took place during the period from May 1,
1999 to the date of this report:

     1.   REPLACED  AUSTRALIAN  DISTRIBUTOR  WITH  SUBSIDIARY  OPERATION  Due to
          difficulties  experienced  the Company  moved to  preserve  its market
          position  and  aggressive  sales stance by buying out the contract and
          inventory of its existing distribution agency in Melbourne, Australia.
          A new company  was then  formed to perform the sales and  distribution
          function.  The  Company  hired the chief  sales  person  away from the
          previous  distribution  company and  appointed  him to the position of
          chief of sales and  administration of the new entity.  This new entity
          is Cox Recorders,  Australia,  Ltd., Pty., and is a corporation formed
          under Australian law. The Company owns 95% of this subsidiary.

     2.   HIRED SENIOR VICE  PRESIDENT  OF  ENGINEERING,  MR. URI M. DAHAN,  AND
          BEGAN THE  DEVELOPMENT OF THE EDS "SMART CARD"  TEMPERATURE  LOGGER As
          part of its ongoing efforts to achieve market  leadership in technical
          products in temperature monitoring, the Company started development of
          its EDS "Smart Card" electronic  temperature recorder.  The conceptual
          origins of this product began in 1996 when plans were laid to create a
          technologically novel device for temperature monitoring. Late in 1999,
          the  opportunity  arose to hire a design expert in the field of design
          for devices of this type. The Company took the  opportunity  and hired
          Mr. Dahan to provide design and product development leadership for the
          product.  The final phase of  realization of this product from concept
          to  prototype  has been his  primary  responsibility.  Mr.  Dahan  was
          elected a director  of the  Company in 1999.  His  qualifications  are
          summarized in Part II, Item 1(c).

     3.   HIRED  SENIOR VICE  PRESIDENT  OF  INFORMATION  SYSTEMS,  MR.  MOHAMED
          HASSIM, TO COMPLEMENT THE HARDWARE DEVELOPMENT OF THE EDS "SMART CARD"
          TEMPERATURE   LOGGER  WITH  COMPANION  SOFTWARE  With  the  advent  of
          accelerated development of the EDS "Smart Card" electronic temperature
          recorder, a parallel effort was required to develop custom software to
          read the information from the device.  Mr. Hassim, a software designer
          and  engineer  was hired to head up this  project.  Mr.  Hassim  has a
          distinguished  background in software  development,  and is a talented
          software designer.

     4.   INITIATED PURCHASE,  DESIGN AND DEVELOPMENT OF A NEW HIGH-SPEED "SMART
          LABEL" MACHINE The Company has performed an in depth market assessment
          of demand for its  Vitsab(R)"Smart  Label"  product.  This  assessment
          revealed that market  viability would be dependent upon the ability to
          produce  the  product at high  volumes  during the  initial  phases of
          commercial   introduction.   Existing  machinery  for  production  was
          essentially  "pilot plant" in scale;  creation of new  technology  and
          machinery would therefore be necessary to achieve commercial readiness
          for the  Vitsab(R)product.  The  Company  engaged  the  services  of a
          recognized  designer and producer of automated  production  machinery.
          The machinery, as of the preparation of this document, is 90% complete
          as of the date of this report, and has been successfully operated in a
          preliminary  trial.  The  value  of  the  machinery  is in  excess  of
          $1,100,000 (see item 10 below).

     5.   OBTAINED FINANCING OF $2,500,000 FROM TECHNOLOGY INVESTORS,  LLC Rapid
          expansion by the Company into new  technologies  has  necessitated the
          acquisition of financing for investment purposes.  The Company entered
          into an agreement with Technology  Investors,  LLC and its principals,
          Brian D. Fletcher and Kurt C. Reid,  which  yielded the  $2,500,000 in
          investment  capital to the  Company.  The  details  of this  financing
          transaction  appear in Note K - Related-Party  Matters of the notes to
          the consolidated financial statements.

     6.   HIRED CHIEF OPERATING OFFICERS, BRIAN D. FLETCHER AND KURT C. REID Mr.
          Fletcher and Mr. Reid agreed to join the Company as Co-Chief Operating
          Officers in 2000. Mr. Fletcher and Mr. Reid,  along with President and
          CEO,  Dr.  James  L.  Cox,  constitute  the new  executive  management
          committee of the Company.

     7.   HIRED  PRESIDENT  OF  VITSAB,  INC.,  JAMES R. MCCUE The  Company  has
          planned for the expansion of the Vitsab(R)  operations in anticipation
          of  commercial  readiness  and high volume  production.  Mr. McCue was
          hired to head up the expansion effort,  and now serves as President of
          Vitsab,  Inc.,  the core  subsidiary  for the  Company's  Smart  Label
          operations. Mr. McCue has extensive experience in management and sales
          administration.  He was formerly  involved in medical  equipment sales
          and sales administration for a large national firm.

                                       12
<PAGE>
     8.   BEGAN  PROCESS OF  REDUCING  EXPENSES  IN THE COX  RECORDERS  ASSEMBLY
          OPERATION  A review of  operations  within the Company  revealed  that
          reorganization   of   certain   of  its   procedures,   policies   and
          manufacturing protocols related to recorder operations could result in
          substantial  reductions  in expenses.  Management  has started to make
          significant  changes  aimed at greater  efficiency  in workflow,  more
          economic choices of outside services, and more competitive sourcing of
          materials  for  operations.  Some  manufacturing  processes  are being
          studied for automation, as well.

     9.   DOWNSIZING  AND EXPENSE  REDUCTION  AT THE PHOENIX  OFFICE The Phoenix
          office of the  Company  has  functioned  as a  management  office  for
          certain  of  the  overall  affairs  of the  Company,  the  center  for
          administration  of  oilfield  activities  and  transactions,  and as a
          developmental location for aspects of software development. Changes in
          the focus of some of these  activities  have opened the possibility to
          downsize  the scope of these office  functions.  The Company has taken
          significant steps to reduce expenditure at the Phoenix office by staff
          reduction, reduction in leased space, and reduction of telecom service
          expense.

     10.  ESTABLISHED  BANKING  RELATIONSHIP WITH LONG-TERM LOAN, LINE OF CREDIT
          AND LEASE FOR SMART LABEL  MACHINE The  Company has  restructured  its
          entire banking  relationship.  The need for  restructuring  arose from
          prior  bank  debt  maturity  and  impending   requirements  for  lease
          financing arising from the acquisition of automated  machinery for the
          high-speed  production of the  Vitsab(R)product.  Expansion of the new
          technologies,  according to the  Company's  projections  and budgetary
          analyses,  also required a new credit line for working capital. All of
          these  requirements have been recently resolved with the establishment
          of a new banking  relationship  to supplant the prior banking  service
          provider. This refinancing/new  financing transaction is a significant
          event  in  the  overall  expansion  plan  for  the  Company's  future.
          Important  details of this  financing  transaction  appear in Note O -
          Subsequent   Events  of  the  notes  to  the  consolidated   financial
          statements.

     11.  SET UP FRESHTAG(TM)  RESEARCH AND MANUFACTURING,  INC., TO CONCENTRATE
          ON THE DEVELOPMENT OF FRESHTAG(TM)  PROJECT The Company was successful
          in the  acquisition  of patent rights to  technology  developed by the
          FDA, the  FreshTag(TM).  As sole patent rights holder,  the Company is
          positioned to offer FreshTag(TM)  product in the future to what appeAR
          to  be  a  substantial  market  for  this  "Smart  Label"  technology.
          Projections  of cash  needs  for the  commercial  realization  of this
          technology,  however,  have necessitated a strategy of seeking of some
          outside funding for the project.  A new subsidiary,  FreshTag Research
          and  Manufacturing,  Inc.,  was  formed  to  serve as the  entity  for
          performing  the  development,  and as a vehicle  for  possible  future
          equity financing of the project.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     See Part IV of this Annual Report.


ITEM 9. DISAGREEMENT OF ACCOUNTING AND FINANCIAL DISCLOSURE

     None

                                       13
<PAGE>
                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     (a) IDENTIFICATION OF DIRECTORS

     The following table lists certain  information  concerning the directors of
the Company:

        NAME, POSITIONS AND                 DIRECTOR     TERM      CERTAIN OTHER
              OFFICES               AGE      SINCE      EXPIRES    CORPORATIONS
              -------               ---      -----      -------    ------------
     James L. Cox, President,       55        1995        (1)           (2)
     Chief Executive Officer
     and Chairman of the Board

     David K. Caskey, Secretary     38        1997        (1)           (3)
     and Treasurer

     Uri M. Dahan                   40        1999        (1)           --

     George M. Pigott               72        1997        (1)           --

     Michael E. Fonzo               60        1997        (1)           --

     Brian D. Fletcher              38        2000        (4)           --

     Kurt C. Reid                   40        2000        (4)           --
----------
(1)  Serves until next meeting of the Company's stockholders.
(2)  Serves as President,  Chief Executive  Officer and Chairman of the Board of
     the Company's subsidiary, Twin-Chart, Inc.
(3)  Serves as Secretary-Treasurer of Company's subsidiaries,  Twin-Chart,  Inc.
     and Transit Services, Inc.
(4)  Elected to serve until next meeting of the Company's stockholders.

     (b) IDENTIFICATION OF EXECUTIVE OFFICERS

<TABLE>
<CAPTION>
                                                                                 EXECUTIVE
               NAME, POSITIONS AND                        OFFICER    TERM      CERTAIN OTHER
                     OFFICES                       AGE     SINCE    EXPIRES     CORPORATIONS
                     -------                       ---     -----    -------    ------------
<S>                                                <C>     <C>       <C>            <C>
     James L. Cox, President and                    55      1995      (1)            (2)
     Chief Executive Officer

     David K. Caskey, Secretary and Treasurer       38      1997      (1)            (3)

     Uri M. Dahan, Senior V.P. - Engineering        40      1999      (4)            --

     Robert W. Dupree, Chief Financial Officer      78      1980      (5)            --

     Brian D. Fletcher, Chief Operating Officer     38      2000      (4)            --

     Kurt C. Reid, Chief Operating Officer          40      2000      (4)            --
</TABLE>
----------
(1)  Serves until replaced by the Board of Directors.
(2)  Serves as President and Chief  Executive  Officer of Company's  subsidiary,
     Twin-Chart, Inc. and Transit Services, Inc.
(3)  Serves as Secretary and Treasurer of Company's  wholly owned  subsidiaries,
     Twin-Chart, Inc., and Transit Services, Inc.
(4)  Secured by employment contract and/or agreement.
(5)  Retires October 31, 2000

                                       14
<PAGE>
     (c) BUSINESS EXPERIENCE

DR. JAMES L. COX - PRESIDENT, CHIEF EXECUTIVE OFFICER - CHAIRMAN OF THE BOARD
Dr. Cox has been an officer and director of the Company since August 1, 1995. He
has served in the capacity of President  and Chief  Operating  Officer from that
date to the present.  From November 1997 to the present,  he has served as Chief
Executive Officer.  He has served in identical  capacities in the two subsidiary
corporations,  Twin-Chart, Inc., and Transit Services, Inc., since 1986 and from
1977 to 1986, he served as Sales Manager and Executive Vice-President of Transit
Services,  Inc. He holds a Ph.D.  from Stanford  University and has held various
teaching  and  research  positions  with  Duke  University,   Stanford  Research
Institute and University of California, Santa Barbara.

DAVID K. CASKEY - SECRETARY AND TREASURER - MEMBER, BOARD OF DIRECTORS
Mr.  Caskey has served as Secretary  and Treasurer of the Company since 1996. He
has  served  in the  identical  capacities  in two  wholly  owned  subsidiaries,
Twin-Chart, Inc., and Transit Services, Inc., since 1990. He holds a B.A. degree
from Long Beach State  University and has been with the subsidiary  corporations
since 1987.

URI M. DAHAN - SENIOR VICE PRESIDENT, ENGINEERING - MEMBER, BOARD OF DIRECTORS
Mr.  Dahan has served as a director  and officer of the Company  since  November
1999.  He  holds  two  engineering  degrees,  an  MS  in  Manufacturing,  Boston
University and a BS in Industrial Engineering,  Northwestern  University.  Since
1988,  he has  been  actively  engaged  in  both  manufacturing  and  industrial
engineering  as  a  technical   contributor   in  developing   and   introducing
mechanical/electrical  products and  supervision of R&D projects.  From 1993, he
has been a designer and engineer for  manufacturing  of  temperature  monitoring
systems.

BRIAN D. FLETCHER - CHIEF OPERATING OFFICER - MEMBER, BOARD OF DIRECTORS
Mr. Fletcher became an officer and director of the Company in March 2000. He has
been a private  investor for the past five years.  Prior to that,  he served for
ten  years as an  investment  representative  for  Edward  Jones  Co. He holds a
B.S.B.A degree in Finance and Economics from Rockhurst  College.  He is a member
of the Board of  Directors  of Piedmont  Bank,  Statesville,  NC. and a Managing
Director of Technology  Investors,  LLC, a group that has provided  financing to
the Company.

KURT C. REID - CHIEF OPERATING OFFICER - MEMBER, BOARD OF DIRECTORS
Mr.  Reid became an officer  and  director of the Company in March 2000.  He has
been a private investor for the past 5 years.  Previously,  he served for twelve
years as an  investment  representative  for  Edward  Jones  Co. He holds a B.S.
Degree in Business  Administration,  Southern Illinois University at Carbondale.
He is a  Managing  Director  of  Technology  Investors,  LLC,  a group  that has
provided financing to the Company.

MICHAEL E. FONZO - MEMBER, BOARD OF DIRECTORS
Mr. Michael E. Fonzo has been Vice-President of AMS Industrial, Inc. since 1986,
a firm engaged in engineering  solutions for coal-fired power plants,  coalmines
and in  conducting  seminars  to  engineering  companies.  He holds a Master  of
Science from Catholic  University,  Chile and has held a teaching  position with
the University of the North,  Chile.  He has been a Sales and Marketing  manager
and consultant to several  companies in the  petrochemical  field.  From 1991 to
1993 he represented Cox Recorders in selected countries.

DR. GEORGE M. PIGOTT - MEMBER, BOARD OF DIRECTORS
Dr.  Pigott was formerly  Professor of Food  Engineering  and is Director of the
Institute for Food Science and Technology, School of Fisheries, College of Ocean
and Fishery  Sciences at the University of Washington.  He held these  positions
from  approximately  1985 to 1999. He is the author of many papers  presented at
symposiums  around the world and is a lecturer  at several  universities  in the
United  States.  For  years,  Dr.  Pigott  has been  involved  in  research  and
development activities for the processing, preservation and packaging of aquatic
products presented to the customer.  He is a consultant in the field of shipment
and quality control for the transit of perishable foods.

     (d) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

     Disclosure  of legal  proceedings  is  contained  in Note N -  Commitments,
Litigation and Contingencies of the notes to consolidated financial statements.

                                       15
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION

     (a) Remuneration,  on an accrual basis, paid to the executive  officers and
directors of the Company during the year ended April 30, 2000 was as follows:

<TABLE>
<CAPTION>
               NAME OF INDIVIDUAL                   SALARIES, FEES      SECURITIES, PROPERTY,
                (WITH JOB CAPACITY)                 DIRECTOR'S FEES      INSURANCE, BENEFITS
                  OR NUMBER OF                        COMMISSIONS,         REIMBURSEMENT,
                PERSONS IN GROUP                      AND BONUSES        PERSONAL BENEFITS
                ----------------                      -----------        -----------------
<S>                                                     <C>            <C>
James L. Cox, President, Chief Executive Officer        $134,575                None

David K. Caskey, Secretary and Treasurer                $ 78,440                None
President, Transit Services, Inc. Subsidiary

Uri M. Dahan, Senior V.P. - Engineering                 $ 73,006       Contract Contingency(1)

Robert W. Dupree, Chief Financial Officer               $100,000                None

Brian D. Fletcher, Chief Operating Officer              $     1(2)              None

Kurt C. Reid, Chief Operating Officer                   $     1(2)              None

James R. McCue, President Vitsab, Inc. Subsidiary       $ 8,462(3)              None
</TABLE>
----------
(1)  Employment contracts of Uri M. Dahan and Mohamed Hassim have provisions for
     bonuses  based  on  sales  of the EDS  product  line  for the term of their
     contract  and have  certain  guarantees  of personal  legal  services to be
     provided.
(2)  Brian D. Fletcher and Kurt C. Reid have received  purchase  options for Cox
     Technologies, Inc., shares in lieu of compensation.
(3)  James R. McCue was hired March 21, 2000

     (b) The Company does not have future plans to pay remuneration, directly or
indirectly, to any of the above officers or directors other that direct salaries
and bonuses as authorized by the Board of Directors.

     (c) The directors of the Company do not receive compensation for serving in
their capacity other than  reimbursement of expenses incurred related to company
business.  Transactions  with management are disclosed in Note K - Related Party
Matters of the notes to consolidated financial statements.

                                       16
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The  following  table  show as of April 30,  2000 the  effective  number of
shares of common stock of the Company  owned by every person owning of record or
known  by  the  Company  as  owning  beneficially  more  than 5  percent  of the
outstanding common stock.

     a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

     The  number  of  shares  and  percentage   ownership  represents  effective
ownership in the Company.

                  NAME AND ADDRESS           AMOUNT AND NATURE OF     PERCENT OF
TITLE OF CLASS    BENEFICIAL OWNER           BENEFICIAL OWNERSHIP        CLASS
--------------    ----------------           --------------------        -----

Common Stock     James L. Cox                7,087,000 shares             23.7%
(no par value)   69 McAdenville Rd.          Record and Beneficial
                 Belmont, NC

Common Stock     Vitsab, AG                  3,125,734 shares             10.4%
(no par value)   Stenyxegatan 21 S-213 76    Record
                 Malmo, Sweden

Common Stock     Technology Investors, LLC   2,000,000 shares
(no par value)   191 Bridgeport Drive        Beneficial                    6.7%
                 Mooresville, NC

Common Stock     Brian D. Fletcher           2,503,000 shares(1)
(no par value)   191 Bridgeport Drive        Beneficial                    8.4%
                 Mooresville, NC

Common Stock     Kurt C. Reid                2,500,000 shares(1)           8.4%
(no par value)   102 La Bellevue Street      Beneficial
                 Morganton, NC

----------
(1)  Includes the 2,000,000 shares  beneficially owned by Technology  Investors,
     LLC of which Mr. Fletcher and Mr. Reid are principals.

     For  further  information  concerning  ownership  interests,  see  Note K -
Related-Party Matters of the notes to consolidated financial statements.

     (b) SECURITY OWNERSHIP OF MANAGEMENT

     The following  table shows as of April 30, 2000,  all shares of the Company
stock  beneficially  owned by the  officers  and  directors  of the Company as a
group:

                                             AMOUNT AND NATURE OF      PERCENT
TITLE OF CLASS      NAME OF SECURITY         BENEFICIAL OWNERSHIP      OF CLASS
--------------      ----------------         --------------------      --------

Common Stock      Cox Technologies, Inc.           8,937,811             29.9%
(no par value)

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     David K. Caskey,  Secretary and  Treasurer,  and Director of the Company is
the  brother-in-law of James L. Cox,  President,  Chief Executive  Officer,  and
Chairman of the Board of the Company.

                                       17
<PAGE>
                                     PART IV

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

     (a) DOCUMENTS FILED AS PART OF THIS REPORT

     LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

     Consolidated Financial Statements:

          *    Balance sheets as of April 30, 2000 and April 30, 1999
          *    Statement of  operations  and  accumulated  deficit for the years
               ended April 30, 2000, 1999 and 1998
          *    Statement of  shareholders'  investment for the years ended April
               30, 2000, 1999 and 1998
          *    Statement of cash flows for the years ended April 30, 2000,  1999
               and 1998

     (b) REPORTS ON FORM 8-K

     There were no reports on Form 8-K filed during the three months ended April
30, 2000.

                                       18
<PAGE>
                                   SIGNATURES


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


                                        COX TECHNOLOGIES, INC.
                                            (Registrant)


July 28, 2000                           By /s/ James L. Cox
                                           -------------------------------------
                                           James L. Cox
                                           President and Chief Executive Officer

July 28, 2000                           By /s/ Robert W. Dupree
                                           -------------------------------------
                                           Robert W. Dupree
                                           Chief Financial Officer
                                           (Principal financial and accounting
                                           officer)

     Pursuant to the  requirements  of the  Securities and Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities indicated on July 28, 2000.

                                        By /s/ James L. Cox
                                           -------------------------------------
                                           James L. Cox
                                           President and Chief Executive Officer
                                           and Chairman of the Board
                                           (Principal executive officer)

                                        By /s/ David K. Caskey
                                           -------------------------------------
                                           David K. Caskey
                                           Secretary and Treasurer and Director

                                        By /s/ George M. Pigott
                                           -------------------------------------
                                           George M. Pigott
                                           Director

                                        By /s/ Michael E. Fonzo
                                           -------------------------------------
                                           Michael E. Fonzo
                                           Director

                                        By /s/ Brian D. Fletcher
                                           -------------------------------------
                                           Brian D. Fletcher
                                           Chief Operating Officer and Director

                                        By /s/ Kurt C. Reid
                                           -------------------------------------
                                           Kurt C. Reid
                                           Chief Operating Officer and Director

                                        By /s/ Uri M. Dahan
                                           -------------------------------------
                                           Uri M. Dahan
                                           Executive Vice President and Director

                                       19
<PAGE>
                                    CONTENTS

                                                                      PAGE
                                                                      ----
Independent Auditors' Report........................................  F-1

FINANCIAL STATEMENTS

     Consolidated Balance Sheets....................................  F-2

     Consolidated Statements of Income..............................  F-3

     Consolidated Statements of Changes in Stockholders' Equity.....  F-4

     Consolidated Statements of Cash Flows..........................  F-5 - F-6

     Supplemental Schedule of Non-Cash Investing and
     Financing Activities...........................................  F-7

     Notes to Consolidated Financial Statements ....................  F-8 - F-32

                                       20
<PAGE>
                          INDEPENDENT AUDITORS' REPORT


Board of Directors
Cox Technologies, Inc.
Phoenix, Arizona

We  have  audited  the   accompanying   consolidated   balance   sheets  of  Cox
Technologies,  Inc., as of April 30, 2000 and 1999, and the related consolidated
statements  of  income,  stockholders'  equity,  and of cash flows for the years
ended  April  30,  2000,  1999 and  1998.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards. These standards require that we plan and perform the audits 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 financial  position of Cox Technologies,
Inc.,  at April 30, 2000 and 1999,  and the results of its  operations  and cash
flows for the years ended April 30,  2000,  1999 and 1998,  in  conformity  with
generally accepted accounting principles.


                                        Certified Public Accountants
                                        Bedinger & Company

June 14, 2000
(Except Note O, which is
July 13, 2000 and Note E
which is July 19, 2000)

                                       F-1
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 30, 2000 AND 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                         April 30,
                                                               -------------------------------
                                                                  2000                1999
                                                               ------------       ------------
<S>                                                            <C>                <C>
ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                                    $  2,225,192       $  1,250,810
  Accounts receivable, less allowance for doubtful
   accounts of $28,524 and $28,664 at April 30, 2000
   and 1999, respectively                                         1,627,601          1,599,079
  Inventory (Note B)                                              1,625,615          1,542,663
  Investment in securities (Notes C and I)                          300,000            351,211
  Notes receivable - current (Note D)                                24,948             30,477
  Prepaid expenses                                                    3,113             65,860
                                                               ------------       ------------
       TOTAL CURRENT ASSETS                                       5,806,469          4,840,100

  Property and equipment (Net) (Note E)                           5,406,760          5,109,762
  Deposits                                                          124,129             23,692
  Goodwill (Notes A and I)                                        3,158,706          2,886,783
  Notes receivable-non-current portion (Note D)                      19,970             16,855
  Patents                                                           203,208                  0
                                                               ------------       ------------

       TOTAL ASSETS                                            $ 14,719,242       $ 12,877,192
                                                               ============       ============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable and accrued expenses (Note G)               $    912,451       $    582,542
  Income taxes payable (Note F)                                           0             34,720
  Current portion of long-term debt (Notes H and K)               1,486,914          1,651,949
                                                               ------------       ------------
       TOTAL CURRENT LIABILITIES                                  2,399,365          2,269,211

  Long-term debt (Notes H and K)                                  2,928,359            581,374
  Minority interest (Note A )                                             0                669
                                                               ------------       ------------

                                                                  5,327,724          2,851,254
                                                               ------------       ------------
COMMITMENTS AND CONTINGENCIES (Note N)

STOCKHOLDERS' EQUITY
  Common stock, no par value; authorized - 100,000,000
   shares; issued and outstanding; 24,414,725 shares at
   April 30, 2000 and 23,618,261 shares at April 30, 1999        20,868,467         20,306,098
  Common stock subscribed                                            58,100             58,100
  Contributed capital                                               420,982            420,982
  Treasury stock                                                          0            (45,920)
  Accumulated deficit                                           (11,920,132)       (10,667,609)
  Less - Notes receivable for common stock:
    Subscribed (Notes J and K)                                      (35,899)           (45,713)
                                                               ------------       ------------
       TOTAL STOCKHOLDERS' EQUITY                                 9,391,518         10,025,938
                                                               ------------       ------------

       TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY              $ 14,719,242       $ 12,877,192
                                                               ============       ============
</TABLE>
                       See Notes to Financial Statements

                                      F-2
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS  ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                          Years Ended April 30,
                                                           ------------------------------------------------
                                                               2000              1999              1998
                                                           ------------      ------------      ------------
<S>                                                        <C>               <C>               <C>
REVENUE:
  Sales                                                    $  9,710,976      $  8,954,544      $  8,138,756
                                                           ------------      ------------      ------------

      TOTAL REVENUE                                           9,710,976         8,954,544         8,138,756
                                                           ------------      ------------      ------------
COSTS AND EXPENSES:
  Cost of sales                                               5,277,651         4,410,208         3,704,857
  General and administrative expenses                         2,711,934         2,468,199         2,079,207
  Sales expense                                               1,649,247         1,388,232         1,223,991
  Depreciation and amortization                                 281,347           117,569            35,250
  Research and development                                      796,275           407,044                 0
                                                           ------------      ------------      ------------
      TOTAL EXPENSES                                         10,716,454         8,791,252         7,043,305
                                                           ------------      ------------      ------------

      INCOME (LOSS) FROM OPERATIONS                          (1,005,478)          163,292         1,095,451
                                                           ------------      ------------      ------------
OTHER INCOME (EXPENSE):
  Other income (expense) (Notes C and E)                        (35,028)          248,353         2,093,805

  Interest expense                                             (170,263)         (153,130)          (72,188)
                                                           ------------      ------------      ------------

      TOTAL OTHER INCOME (EXPENSE)                             (205,291)           95,223         2,021,617
                                                           ------------      ------------      ------------

Earnings (loss) before income taxes                          (1,210,769)          258,515         3,117,068

Provisions for income taxes (Note F)                             41,754            61,610            50,500
                                                           ------------      ------------      ------------

NET EARNINGS (LOSS)                                        $ (1,252,523)     $    196,905      $  3,066,568
                                                           ============      ============      ============
BASIC:
  NET EARNINGS (LOSS) PER SHARE (NOTE A)                   $       (.05)     $        .01      $        .15
                                                           ============      ============      ============
  WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING       24,222,547        21,368,188        19,905,313
                                                           ============      ============      ============
</TABLE>
                       See Notes to Financial Statements

                                      F-3
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS  ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                      Years Ended April 30,
                                                         ------------------------------------------------
                                                            2000               1999              1998
                                                         ------------      ------------      ------------
<S>                                                      <C>               <C>               <C>
ACCUMULATED DEFICIT, beginning of year                   $(10,667,609)     $(10,598,719)     $(13,665,287)
  as previously reported

  Prior period adjustment (Note M)                                              265,795
                                                         ------------      ------------      ------------
  Accumulated deficit beginning of year, as restated      (10,667,609)      (10,964,514)      (13,665,287)

NET EARNINGS (LOSS)                                        (1,252,523)          196,905         3,066,568
                                                         ------------      ------------      ------------

ACCUMULATED DEFICIT, end of year                         $(11,920,132)     $(10,667,609)     $(10,598,719)
                                                         ============      ============      ============


                                                                            Common Stock
                                                         ------------------------------------------------
                                                           Number of                          Contributed
                                                            Shares            Amount            Capital
                                                         ------------      ------------      ------------
BALANCE at April 30, 1997                                  19,905,188      $ 20,041,562      $    220,872
  Shares issued                                                   250


BALANCE at April 30, 1998                                  19,905,438        20,041,562           220,872
  Shares issued:
   Acquisition of subsidiary                                3,375,734           843,933
   Reimbursement of  former officer (Note N)                  525,483            65,685           200,110
  Shares reacquired                                          (188,394)         (311,047)
  Share value reduced                                                          (334,035)


BALANCE at April 30, 1999                                  23,618,261        20,306,098           420,982
  Shares issued:
   Acquisition of subsidiary                                  571,462           235,728
   Issued                                                     215,002           326,641
  Share adjustment                                             10,000
                                                         ------------      ------------      ------------
BALANCE at April 30, 2000                                  24,414,725      $ 20,868,467      $    420,982
                                                         ============      ============      ============
</TABLE>

                       See Notes to Financial Statements

                                      F-4
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS  ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                    Years Ended April 30,
                                                       ---------------------------------------------
                                                          2000             1999             1998
                                                       -----------      -----------      -----------
<S>                                                    <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net earnings (loss)                                  $(1,252,523)     $   196,905      $ 3,066,568
  Adjustments to reconcile net earnings (loss)
  to net cash used by operating activities:
    Depreciation and depletion                              83,795           80,873           31,273
    Minority interest                                         (669)               0           (2,005)
    Allowance for doubtful accounts                           (140)            (863)            (473)
    Amortization of goodwill                               197,552           36,696            3,977
    Deferred taxes                                               0                0          (30,000)
    (Acquisition) disposition of goodwill                 (469,475)      (2,875,000)          26,231
    Revaluation of shares                                        0         (334,035)               0
    Prior period adjustment                                      0         (265,795)               0

CHANGES IN  ASSETS AND LIABILITIES:
  (Net of effect from purchase of Twin-Chart, Inc.
   for the year ended April 30, 1997)
  (Increase) decrease in current assets:
    Accounts receivable                                    (28,382)         139,481         (494,728)
    Inventory                                              (82,952)        (499,132)        (286,039)
    Prepaid expenses                                        62,747          286,283         (341,635)

  (Increase) decrease in non-current assets:
    Deposits                                              (100,437)         (18,402)          (1,400)

  Increase (decrease) in current liabilities:
    Accounts payable and accrued expenses                  329,909          225,731         (132,929)
    Income taxes payable                                   (34,720)         (17,550)          51,870
                                                       -----------      -----------      -----------

NET CASH  PROVIDED (USED) BY OPERATING ACTIVITIES       (1,295,295)      (3,044,808)       1,890,710
                                                       -----------      -----------      -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Patents                                                 (203,208)               0                0
  Investment in securities                                       0          (11,711)        (300,000)
  Purchase of property and equipment                      (380,793)      (1,456,392)         (37,090)
  Disposition of equipment                                       0                0           50,382
  Loss realized on disposition of securities                51,211          180,500           50,000
  Amounts repaid  on notes receivable                            0                0           58,100
                                                       -----------      -----------      -----------

NET CASH (USED) BY INVESTING ACTIVITIES                   (532,790)      (1,275,892)        (178,608)
                                                       -----------      -----------      -----------
</TABLE>
                       See Notes to Financial Statements

                                      F-5
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
YEARS  ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                     Years Ended April 30,
                                                        ---------------------------------------------
                                                           2000             1999             1998
                                                        -----------      -----------      -----------
<S>                                                    <C>               <C>             <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
  (Purchase) sale of treasury stock                          45,920                0          (45,920)
  Issuance of securities                                    562,369        1,109,728                0
  Amounts loaned on notes receivable                        (40,111)         (12,772)          (9,006)
  Amounts repaid on notes receivable                         42,525            5,771            8,254
  Amounts borrowed under notes payable                    3,487,513        2,275,869           78,069
  Amounts repaid on notes payable                        (1,305,563)        (756,350)        (231,539)
  Repayment (additions) to subscriptions receivable           9,814          696,077          (54,034)
  Reacquisition of common stock (net)                             0         (311,047)               0
                                                        -----------      -----------      -----------

NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES          2,802,467        3,007,276         (254,176)
                                                        -----------      -----------      -----------

NET INCREASE (DECREASE) IN CASH                             974,382       (1,313,424)       1,457,926

CASH AND CASH EQUIVALENTS, beginning of year              1,250,810        2,575,945        1,118,019
                                                        -----------      -----------      -----------

CASH AND CASH EQUIVALENTS, end of year                  $ 2,225,192      $ 1,262,521      $ 2,575,945
                                                        ===========      ===========      ===========


SUPPLEMENTAL DISCLOSURE:
  Interest paid                                         $   170,263      $   153,130      $    36,345

  Income taxes paid                                     $         0      $    19,039      $    26,326
</TABLE>
                       See Notes to Financial Statements

                                      F-6
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
YEARS  ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

OTHER NON-CASH INVESTING AND FINANCING ACTIVITIES

<TABLE>
<CAPTION>
                                                                     Years Ended April 30,
                                                        ---------------------------------------------
                                                           2000             1999             1998
                                                        -----------      -----------      -----------
<S>                                                    <C>               <C>             <C>
Write-down for unrealized loss on
  available for sale securities                           $   0            $180,500          $   0
</TABLE>

                       See Notes to Financial Statements

                                      F-7
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

NOTE A - ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

Cox Technologies,  Inc. (the Company) was incorporated as Mericle Oil Company in
1968,  an Arizona  corporation.  In August  1975 its name was  changed to Energy
Reserve,  Inc.  In November  1994,  Energy  Reserve  acquired  Twin-Chart,  Inc.
(Twin-Chart   conducts  its  operations   exclusively  through  a  wholly  owned
subsidiary  Transit Services,  Inc., under the name and style of Cox Recorders).
Following this  acquisition,  Dr. James L. Cox became an officer and director of
the Company and its primary  business focus changed from crude oil operations to
temperature recording and monitoring operations.

In 1997 Dr. Cox become  President,  Chief Executive  Officer and Chief Operating
Officer, and Mr. Alfred P. Sprenger, the former President became the Chairman of
the Board of Directors which was expanded to five members.

In April 1998,  the Company  changed its name to Cox  Technologies,  Inc. and in
June  1998  acquired  Visual  Indicator  Tag  Systems,  AB  (Vitsab)  a  Swedish
corporation.  In 1999, the business and operations  formerly conducted by Vitsab
were transferred to a wholly owned subsidiary corporation, Vitsab, Inc.

In March 2000, the Company formed Freshtag Research and Manufacturing, Inc. as a
wholly owned subsidiary.

In April 2000 the Company established a management executive committee comprised
of Dr. Cox, Mr.  Fletcher  and Mr. Reid to recommend  strategy of the Company to
the Board of Directors and manage the overall Company.

For further information on organization matters, reference is made to Note K, in
the notes to the consolidated financial statements.

                                       F-8
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

NOTE A - ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

a. PRINCIPLES OF CONSOLIDATION

The consolidated  financial  statements  include the accounts of the Company and
its wholly owned subsidiaries, Twin-Chart, Inc., Vitsab, Inc., Freshtag Research
and Mfg., Inc. (a development stage company) and Cox Temperature Recorders Ltd.,
Pty.  All  significant   intercompany   accounts  and  transactions   have  been
eliminated.

b. ACCOUNTING 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.

c. CAPITALIZATION OF OIL AND GAS PROPERTIES

The following  types of costs  relating to the Company's oil and gas  properties
are capitalized under the successful efforts method of accounting:

     (i)  Costs of purchase to acquire properties.

     (ii) Costs to obtain  access to proved  reserves and to provide  facilities
          for extracting, treating, gathering and storing oil and gas whether or
          not a specific well is successful.

d. DEPRECIATION, DEPLETION AND AMORTIZATION OF CAPITALIZED COST OF OIL AND GAS
PROPERTIES

Depreciation,  depletion and amortization of the capitalized cost of oil and gas
properties are provided (on each property) on the unit-of-production method,  at

                                       F-9
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

NOTE A - ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)

d. DEPRECIATION, DEPLETION AND AMORTIZATION OF CAPITALIZED COST OF OIL AND GAS
PROPERTIES (CONTINUED)

rates  which  are  based on the  ratio of oil and gas  produced  for the year to
independent  estimates of the total proved developed recoverable reserves and to
total proved recoverable reserves from the property.  These rates are applied to
the  unamortized  costs for each  property.  Adjustments  to the rates  applied,
required as the result of  revisions  of  independent  engineers'  estimates  of
proved reserves, affect the year of such change and future years.

Depreciation   of  all  other   property  and   equipment  is  provided  on  the
straight-line  method over the respective  estimated  lives ranging from five to
twenty years.

e. OPERATING COSTS

Costs of oil production  (lifting costs),  geological and geophysical  costs and
the costs of  carrying  and  retaining  undeveloped  properties  are  charged to
operations as incurred.

f. RESEARCH AND DEVELOPMENT COSTS

Costs of  research  and  development  activities  are charged to  operations  as
incurred.

g. CASH AND CASH EQUIVALENTS

Cash and cash equivalents represent highly liquid investments,  generally with a
remaining maturity of three months or less.

                                      F-10
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

NOTE A - ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)

h. INVENTORY

Inventory  at April  30,  2000  and 1999  consists  primarily  of raw  material,
work-in-progress  and finished  goods related to transit  temperature  recording
instruments;  manufactured  by Transit  Services.  Inventories are stated at the
lower of cost (first-in, first-out method) or market.

i. INCOME TAXES

The Company  accounts for income taxes under  Statement of Financial  Accounting
Standards  No. 109,  "Accounting  for Income  Taxes."  Income taxes are provided
based on earnings reported for financial statements purposes. Deferred taxes are
provided on the temporary differences between income for financial statement and
tax purposes.

The Company deducts certain  exploration and development costs in its income tax
returns,  which are capitalized and amortized for financial  reporting purposes.
Accordingly,  the tax basis of  certain of the  Company's  oil and gas assets is
less than its basis for financial reporting  purposes.  Deferred taxes for these
differences  have not been provided in the accompanying  consolidated  financial
statements due to the existence of net operating loss carryforwards.

j. CONCENTRATION OF CREDIT RISK

Financial  instruments,  which potentially subject the Company to concentrations
of credit risk,  consist  principally  of temporary cash  investments  and trade
receivables.  The Company  places its temporary  cash  investments  in two money
market  accounts  (totaling  $584,820  and  $202,483  at April 30, 2000 and 1999
respectively) with a high quality financial  institution.  At April 30, 2000 and
1999, substantially all cash and cash equivalents were on deposit with one

                                      F-11
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

NOTE A - ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)

j. CONCENTRATION OF CREDIT RISK (CONTINUED)

financial  institution.  Concentrations  of credit  risk with  respect  to trade
receivables  are limited due to the large  number of  customers  comprising  the
Company's  customer base and their dispersion  across many different  geographic
areas.   Accounts   receivable  from  the  ten  largest  customers  amounted  to
approximately 37% of the total accounts receivable at April 30, 2000. Generally,
the Company does not require  collateral or other  security to support  customer
receivables.  At April 30, 2000 and 1999 the allowance for doubtful accounts was
$28,524 and $28,664, respectively.

k. FAIR VALUE OF FINANCIAL INSTRUMENTS

Based on borrowing rates currently  available to the Company for bank loans with
similar terms and  maturities,  the fair value of the Company's  long-term  debt
approximates  the carrying value.  Furthermore,  the carrying value of all other
financial  instruments   potentially  subject  to  valuation  risk  (principally
consisting of cash and cash equivalents,  accounts receivable,  bank borrowings,
and accounts payable) also approximates fair value.

l. ISSUANCE OF COMMON STOCK

The  issuance of common  stock for other than cash is recorded by the Company at
management's  estimate  of the fair value of the  assets  acquired  or  services
rendered.  The shares of common stock used (investment  shares) can be sold only
in  accordance  with issued rules  promulgated  by the  Securities  and Exchange
Commission (SEC).

                                      F-12
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

NOTE A - ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES (CONTINUED)

m. GOODWILL

Goodwill  created in the acquisition of the  consolidated  subsidiaries is being
amortized over 15 to 22 years. Accumulated amortization amounted to $248,248 and
$50,696 at April 30, 2000 and 1999, respectively.

n. BASIC AND DILUTED EARNINGS PER SHARE

Earnings per share have been calculated in conformity with Financial  Accounting
Standards  Board  Statement  No.  128,  "Earnings  Per Share." The Company has a
complex capital  structure with significant  potential  common shares.  However,
basic  earnings  per common  share is based on the  weighted  average  number of
common  shares  outstanding  during  each  year  (2000  -  24,222,547;   1999  -
21,368,188;  1998  -  19,905,313).  Potential  common  shares  from  the  Senior
Subordinated Convertible Promissory Note are anti-dilutive for the period ending
April 30, 2000 and have been excluded from the earnings per share calculations.

o. LONG-LIVED ASSETS

The  Company  has  implemented  the   requirements  of  Statement  of  Financial
Accounting  Standards  No. 121,  "Accounting  for the  Impairment  of Long-lived
Assets."  In  evaluating  the  recoverability  of  the  Company's  oil  and  gas
properties,  management  evaluated  the current  fair market  value and expected
future cash flows of its assets and concluded  that the fair market value of its
oil and gas  properties  is in excess of their  cost as of April 30,  2000.  The
Company had recently  obtained a report from an independent  petroleum  engineer
which  reconfirmed  that the  quantity  of oil  reserves  in the oil  properties
continues to be  approximately  55,000,000  barrels and further  stated that the
value thereof is equal to or greater than the recorded cost.

p. RECLASSIFICATIONS

Certain   reclassifications   have  been  made  to  the  consolidated  financial
statements  as of April 30,  1999 to conform to the  classifications  used as of
April 30, 2000.

                                      F-13
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

NOTE B - INVENTORY

Inventory at April 30, 2000 and 1999 consists of the following:

                                        2000             1999
                                     ----------       ----------
               Raw materials         $  654,238       $  367,752
               Work-in-process          290,103          315,690
               Finished goods           681,274          859,221
                                     ----------       ----------

                                     $1,625,615       $1,542,663
                                     ==========       ==========

NOTE C - INVESTMENT IN SECURITIES

In March 1992, as part of a February 1992 agreement to acquire securities of Pan
American Energy,  Inc., (PAEC) a public corporation,  the Company traded certain
California  real estate lots in exchange for  4,000,000  Series "A" common stock
warrants and the right to purchase  2,000,000  additional  such  warrants at ten
cents ($.10) per warrant.  The Company did not  recognize a gain on the exchange
and has recorded the cost of the  warrants at the $30,000  recorded  cost of the
lots. The loss on these securities of $30,000 was realized during the year ended
April 30, 2000.

INVESTMENTS IN SECURITIES AVAILABLE FOR SALE

     O.T.S. HOLDINGS, INC.

In February  1992, the Company  entered into an agreement with O.T.S.  Holdings,
Inc. (O.T.S.) a public corporation to sell certain mining equipment. The Company
issued  50,000  shares of its common  stock in  exchange  for  $10,000  cash and
190,000 shares of 10% Cumulative  Convertible  Income  Preferred stock of O.T.S.
The  transaction  was valued at  $200,000  comprised  of $50,000 for the Company
common stock at $1.00 per share and $150,000 for the mining equipment.

Because of certain litigation in 1998, the value of the O.T.S shares was written
down to $9,500.

                                      F-14
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

NOTE C - INVESTMENT IN SECURITIES (CONTINUED)

O.T.S. HOLDINGS, INC. (CONTINUED)

A valuation  allowance was established  reducing the carrying amount to $.05 per
share because the core business of O.T.S. was still considered sound. However in
1999  discussions  with market  makers  indicated  that the value of O.T.S.  had
further declined and accordingly,  the unrealized loss was written off. The loss
on these  available for sale  securities of $9,500 was realized  during the year
ended April 30, 2000.

Securities held at April 30, 2000 and 1999 were comprised as follows:

                                                        2000
                                     ------------------------------------------
                                                      Current         Unrealized
                                       Cost            Value             Loss
                                     --------         --------         --------
Vitsab AG                            $300,000         $300,000         $      0
                                     --------         --------         --------

                                     $300,000         $300,000         $      0
                                     ========         ========         ========

                                                        1999
                                     ------------------------------------------
                                                      Current         Unrealized
                                       Cost            Value             Loss
                                     --------         --------         --------
Vitsab AG                            $300,000         $300,000         $      0
Pan American Energy, Inc. Warrants     30,000           30,000                0
O.T.S. Holdings, Inc. Stock           190,000            9,500                0
Other                                  11,711           11,711                0
                                     --------         --------         --------

                                     $531,711         $351,211         $      0
                                     ========         ========         ========

NOTE D - NOTES RECEIVABLE

Notes receivable at April 30, 2000 and 1999 consists of:

                                                                  April 30
                                                             -------------------
                                                              2000        1999
                                                             -------     -------
Unsecured note receivable, due October 6, 2000
plus accrued interest at 13%                                 $ 6,395     $16,989
Other                                                         38,523      30,343
                                                             -------     -------
                                                              44,918      47,332
Less: current portion                                         24,948      30,477
                                                             -------     -------

                                                             $19,970     $16,855
                                                             =======     =======

                                      F-15
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

NOTE E - PROPERTY AND EQUIPMENT

At April 30, 2000 and 1999,  property  and  equipment  are  summarized  by major
classification as follows:

OIL AND GAS PROPERTIES AND EQUIPMENT                      2000           1999
                                                       ----------     ----------
Intangible drilling costs                              $  883,023     $  883,023
Lease and well equipment                                1,828,881      1,828,881
Leasehold improvements                                    722,630        715,891
Undeveloped leases                                         72,167         72,167
Repurchased participating interests                     2,608,640      2,608,640
Other                                                     173,196        170,696
                                                       ----------     ----------
                                                        6,288,537      6,279,298

Less: accumulated depreciation and depletion            2,768,747      2,767,860
                                                       ----------     ----------
                                                        3,519,790      3,511,438
                                                       ----------     ----------
MANUFACTURING PROPERTY AND EQUIPMENT

Tooling                                                   473,139        230,665
Machinery and equipment                                 1,680,498      1,306,132
Office furniture and equipment                             84,510          8,106
Leasehold improvements                                    248,345        235,333
                                                       ----------     ----------
                                                        2,486,492      1,780,236

Less: accumulated depreciation and depletion              599,522        181,912
                                                       ----------     ----------

                                                        1,886,970      1,598,324
                                                       ----------     ----------

                                                       $5,406,760     $5,109,762
                                                       ==========     ==========

                                      F-16
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

NOTE E - PROPERTY AND EQUIPMENT (CONTINUED)

OIL AND GAS PROPERTIES (CONTINUED)

MITCHEL SUBLEASES

The  Mitchel  subleases  located  in the  Chico-Martinez  field of Kern  County,
California  consists of 380 acres,  on which 52 oil wells have been  drilled and
completed.

BACON HILLS SUBLEASE

This sublease,  located in the  Chico-Martinez  field, Kern County,  California,
consists of  approximately  260 acres,  on which ten oil wells have been drilled
and  completed.  The  acquisition  of this  sublease,  in  conjunction  with the
Mitchell subleases,  provided the Company with an entire leasehold interest in a
full section of land.

As  previously  disclosed in earlier  reports,  the  sublessor had declared this
sublease  in default  due to the  failure by the  Company to meet  certain  well
drilling  requirements.  In May 2000, the company paid the sublessor  $50,000 to
cure the default.  By agreement  and  amendment to the  sublease,  the sublessor
acknowledged  that all drilling  requirements  had been fulfilled,  and that the
Company had no further  obligation to drill any additional  wells,  and that any
and all notices of default  were  cancelled,  and that the  sublease was in full
force and effect.

COMBINED MITCHEL AND BACON SUBLEASES

During 2000,  1999 and 1998 the Company did not drill any wells on the subleases
as to which all drilling requirements have been satisfied.

Landowner and overriding royalty interests in both subleases are 21.66 percent.

During  2000,  1999 and 1998,  the Company  produced  approximately  2,000 gross
barrels of oil, on the combined Mitchel and Bacon Hills subleases.  During 2000,
1999 and 1998, the Company had no steaming operations.

In July 2000, the Company entered into an agreement with the existing  Operator.
The new  agreement  voids and  replaces all  previous  agreements  made with the
Operator.

                                      F-17
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

NOTE E - PROPERTY AND EQUIPMENT (CONTINUED)

COMBINED MITCHEL AND BACON SUBLEASES (CONTINUED)

The terms and conditions of the new agreement are as follows:

1)   The Operator will be reimbursed 120% his capital  investment,  or $106,800.
     This  reimbursement  will be paid to the  Operator in the net profit of the
     field,  not to  exceed  50% of the net  profit,  up to the  point  that the
     Operator is paid in full.
2)   Afterwards,  the Operator will receive the greater of $2,000 per month,  or
     7% of the net profit of the field.
3)   The  Operator  agrees to allow the Company to cancel the  agreement  at any
     time, with the full payment of the Operator's capital investment, including
     the 20% markup.
4)   The  Operator  will make  phase-in  proposals  to the  Company  for logical
     improvements  of the field.  The Company  will  approve and then fund these
     improvements at its discretion.

Under the agreement,  the Company retains all supervision over the Operator, and
will directly receive all revenue produced by the field.

Under this  Agreement,  the Company will not require any  significant  amount of
additional capital to continue  operations of its oil properties in 2000 and the
next few years.

OIL AND GAS PROPERTIES

COGENERATION SYSTEM AND THERMALLY ENHANCED OIL RECOVERY OPERATION (COGEN/TEOR)

The major activity of the Company  concerning  the properties  during the period
from  1984  to  1991  was  directed  toward  the  implementation  of a  proposed
COGEN/TEOR Project to be located on the Mitchel sublease, with the capability of
serving  the  combined  Mitchel  and Bacon  Hills  subleases  with a steam flood
enhanced  oil  recovery  operation  and  provide  for  the  sale of  power  to a
California public utility. ERES Cogenics,  Inc., a wholly owned subsidiary,  was
formed  in  August  1987  to be the  builder/owner/operator  of  the  COGEN/TEOR
facilities.  The Company signed a power purchase  agreement with the Pacific Gas
and Electric Company (PG&E) for the delivery by the Company of 20.5 megawatts of
electricity  no earlier than June 1, 1989 and no later than December  1991.  The
agreement  further  provided for delivery and the purchase of up to 45 megawatts
of power in later years.  Contracts were signed or negotiated  with  responsible

                                      F-18
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

NOTE E - PROPERTY AND EQUIPMENT (CONTINUED)

OIL AND GAS PROPERTIES

COGENERATION SYSTEM AND THERMALLY ENHANCED OIL RECOVERY OPERATION (COGEN/TEOR)

and  experienced   suppliers  and   contractors  for  the  COGEN   construction,
engineering,  supervision,  natural gas delivery,  maintenance and operation and
the TEOR  installation  including  the laying of steam lines for the steam flood
operations.  The  estimated  cost of the 20.5 megawatt  COGEN/TEOR  facility was
between $45,000,000 and $50,000,000 by independent engineers. The power purchase
agreement  with PG&E  terminated  on  December  24, 1991 after a decision by the
utility not to defer the deadline  date. In 1992,  the Company filed a complaint
with the California Public Utility  Commission (CPUC) alleging bad faith conduct
by PG&E and  requesting a  reinstatement  of a new power purchase  contract.  In
October 1993, the CPUC hearing on the complaint was concluded. In June 1997, the
Company and PG&E reached a  settlement  agreement  of the  complaint,  which was
approved  by the CPUC in the  amount of  $3,500,000  which was  received  by the
Company in February 1998.

OTHER MATTERS

Geological  and  geophysical  costs for the years  ended April 30, 2000 and 1999
were not significant.

                                      F-19
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

NOTE F - INCOME TAXES

The provisions for income taxes consists of:

                                                  Years Ended April 30
                                       -----------------------------------------
                                        2000             1999             1998
                                       -------          -------          -------
Current:
  Federal                              $     0          $46,500          $10,500
  State                                 14,754           25,000           70,000
                                       -------          -------          -------

                                        14,754           71,500           80,500
                                       -------          -------          -------
Deferred:
  Federal                               27,000            9,890           30,000
                                       -------          -------          -------
  State                                      0                0                0
                                       -------          -------          -------

                                        27,000            9,890           30,000
                                       -------          -------          -------

                                       $41,754          $61,610          $50,500
                                       =======          =======          =======

The Company and its subsidiaries file  consolidated  federal income tax returns.
There is an aggregate  federal net  operating  loss  carryover of  approximately
$8,500,000  available  to reduce  future  federal  taxable  income of the parent
company.  These net operating  loss  carryovers  will expire in various  amounts
between 2001 and 2020.

The Company also has available  unused  investment tax credits of $154,000 which
will expire in 2001

                                      F-20
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

NOTE F - INCOME TAXES (CONTINUED)

The  reconciliation  of income tax computed at federal and state statutory rates
to the income tax  provision  for the years ended April 30, 2000 and 1999 are as
follows:

                                                              2000
                                                  -----------------------------
                                                         Currently Payable
                                                  -----------------------------
                                                  Consolidated       Deferred
                                                  -----------       -----------

Pre-tax accounting income (loss)                  $(1,210,769)
                                                  ===========
Tax at statutory rates
  Federal                                         $         0       $    27,000
                                                  ===========       ===========
  State                                           $    14,000       $         0
                                                  ===========       ===========

                                                              1999
                                                  -----------------------------
                                                        Currently Payable
                                                  -----------------------------
                                                  Consolidated       Deferred
                                                  -----------       -----------

Pre-tax accounting income                         $   258,515
                                                  ===========
Tax at statutory rates:
  Federal                                             105,500       $    (9,890)
  State                                                25,000

     Utilization of net operating
     loss carryforward                                (59,000)
                                                  -----------       -----------
                                                  $    71,500       $    (9,890)
                                                  ===========       ===========

                                      F-21
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

NOTE G - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts  payable and accrued expenses at April 30, 2000 and 1999 consist of the
following:

                                                                April 30
                                                         ----------------------
                                                           2000          1999
                                                         --------      --------

Trade accounts payable                                   $767,063      $508,097
Accrued vacation payable                                   73,121        68,179

Other accounts payable and accrued expenses                72,267         6,266
                                                         --------      --------

                                                         $912,451      $582,542
                                                         ========      ========

NOTE H - NOTES AND CONTRACTS PAYABLE

The following is a summary of notes and contracts  payable at April 30, 2000 and
1999:

                                                              April 30
                                                      -------------------------
                                                         2000           1999
                                                      ----------     ----------
Unsecured notes payable to individuals due in
monthly installments of $2,955, including
interest at 8%, through  December 2001 (see
Note I).                                              $   19,485     $   46,837

Note payable secured by treasury stock, due in
monthly installments of $2,000 plus accrued
interest at 6.67% through March 2000.                          0          8,591

10% Senior Subordinated Convertible Promissory
Note due March, 2005 (principal amount of the
note and accrued interest are convertible into
the Company's no par common stock at a conversion
price of $1.25 per share.)                             2,500,000              0

                                      F-22
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

NOTE H - NOTES AND CONTRACTS PAYABLE (CONTINUED)

                                                              April 30
                                                      -------------------------
                                                         2000           1999
                                                      ----------     ----------
Advance against full lease/purchase finance
which was not completed at April 30, 1999.                     0        217,731

Other unsecured current notes payable                          0         31,376

Note payable to bank, secured under general
security agreement, due in monthly installments
of interest only at prime plus 1% until July 2000.       100,000         99,270

Note payable to bank, secured under general
security agreement, due in monthly installments
of $18,352, including interest at 11.5%, through
March 2002.                                              476,033        616,301

Unsecured note payable to an individual, due
in June 2000 including interest at 12%.                  100,000              0

Note payable to bank, secured by Certificate of
Deposit in the amount of $1,000,000. Interest
only due in monthly installments at 7.6% until
demand is made for principle.                                  0      1,000,000


Unsecured note payable to an individual, due
upon demand plus interest at 10%.                         20,000              0

Capital lease payable, secured by equipment for
60 months. Monthly payments are $560 through
January 2005                                              21,681              0

                                      F-23
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

NOTE H - NOTES AND CONTRACTS PAYABLE (CONTINUED)

                                                              April 30
                                                      -------------------------
                                                         2000           1999
                                                      ----------     ----------
Capital lease payable, secured by equipment for
36 months. Monthly payments are $483 through
August 2002.                                              10,963              0


Capital leases payable, secured by equipment for
60 months. Monthly payments are $5,804 through
June 2004                                                226,239              0

Capital leases payable, secured by equipment for
60 months. Monthly payments are $8,156 through
June 2004                                                296,351              0

Unsecured Note payable to bank, due July 2000
plus accrued interest at prime plus 1%.                  500,000              0

Note payable to bank, secured under general
security agreement, due in monthly installments
of $7,560, including interest at 8.5%, through
January 2002.                                            144,521        213,217
                                                      ----------     ----------

TOTAL                                                  4,415,273      2,233,323

Less: current portion                                  1,486,914      1,651,949
                                                      ----------     ----------

                                                      $2,928,359     $  581,374
                                                      ==========     ==========

                                      F-24
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

NOTE H - NOTES AND CONTRACTS PAYABLE (CONTINUED)

Aggregate maturities of long-term borrowings over the next five fiscal years are
as follows:  (See also information disclosed Note O to the notes to consolidated
financial statements)

     YEARS ENDED APRIL 30                                         AMOUNT
     --------------------                                         ------
            2001                                                $1,486,914
            2002                                                   126,875
            2003                                                   123,154
            2004                                                   122,154
            2005                                                 2,555,655

NOTE I - ACQUISITION OF VITSAB AB

In  November  1997,  the  Company  acquired a nominal  interest  in  Vitsab,  AG
(Vitsag), a corporation formed under the laws of the Country of Switzerland, for
$300,000.  In June 1998 the Company  acquired all of the  outstanding  shares of
Visual Indicator Tag Systems,  AB (Vitsab),  a corporation formed under the laws
of the  Country  of  Sweden,  and a  wholly  owned  subsidiary  of  Vitsag.  The
acquisition  was  accomplished  by  the  issuance  of  3,375,734  shares  of the
Company's  unregistered  common  stock,  950,000  shares of the common  stock of
Vitsab,  Inc., a wholly owned subsidiary of the Company, in the formation stage,
with 4,750,000 issued shares of common stock outstanding,  and the assumption of
certain debt owed by Vitsab to an unrelated  company.  The shares  issued by the
Company represented approximately 14% of the outstanding shares after the shares
had been issued.  The  transaction  has been accounted for as a purchase and the
results  of  Vitsab's   operations  have  been  included  in  the   accompanying
consolidated financial statements since the date of acquisition,  which was June
30,  1998.  The  total  cost of the  acquisition  was  approximately  $2,594,000
including  debt assumed of  approximately  $1,750,000,  which  exceeded the fair
value of the net assets of Vitsab at that date by  approximately  $864,000.  The
excess of  purchase  price  over net  assets  acquired,  or  goodwill,  is being
amortized on a straight-line basis over 22 years.

                                      F-25
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

NOTE I - ACQUISITION OF VITSAB AB (CONTINUED)

The summarized  assets and liabilities of the purchased company at June 30, 1998
in U. S. dollars are as follows:

     Cash                               $  198,000
     Other current assets                  242,000
     Property & equipment (Net)          2,242,000
                                        ----------

                                        $2,682,000
                                        ==========

     Current liabilities                $  752,000
     Net worth                           1,730,000
                                        ----------

                                        $2,682,000
                                        ==========

The  following   summarized   proforma   (unaudited)   information  assumes  the
acquisition had occurred on May 1, 1998 and 1997:

                                           1999                1998
                                        -----------         -----------

     Net assets                         $ 7,934,711         $ 4,435,997
                                        ===========         ===========

     Income (loss) before taxes         $    76,515         $   (75,667)
                                        ===========         ===========

     Net income (loss)                  $    14,572         $  (209,359)
                                        ===========         ===========


In  2000,  Vitsab  filed  for  bankruptcy  in  Sweden  and its  activities  were
transferred  to a  Swedish  corporation  and  Vitsab,  Inc.  which is  currently
operating as a wholly owned  subsidiary  of Cox  Technologies,  Inc.  Neither of
these new entities had any revenues in the year ended April 30, 2000.

NOTE J - COMMON STOCK

SHARES ISSUED IN EXCHANGE FOR INTEREST-BEARING NOTES

The  Company  has  issued  shares  of its  common  stock in  exchange  for notes
receivable. The financial statements show the outstanding shares and the related
notes receivable as an offset against stockholders' equity.

                                      F-26
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

NOTE K - RELATED-PARTY MATTERS

As discussed  below,  certain  transactions  have been  consummated with parties
related to the Company and its management.

The  ownership  of the  Company's  common  stock  by Dr.  Cox,  Vitsag,  Company
directors,  employees,  and other related  parties is summarized as of April 30,
2000 as follows:

                                                              Percentage
                                                              ----------

     Dr. Cox (of record & beneficial)                            23.7
     Vitsag (of record)                                          10.4
     Technology Investors, LLC (Beneficial)                       6.7
     Brian D. Fletcher (Beneficial)                               8.4
     Kurt C. Reid  (Beneficial)                                   8.4

In  October  1998,  the Board of  Directors  (Board)  reviewed  the  status  and
longevity of certain  agreements  with  shareholders.  As of the Board's  review
date,  there was an  aggregate of $875,650  due on all of the  promissory  notes
secured by  1,325,800  of the issued  shares.  The ten (10) day running  average
market  price of the  Company's  common  stock was $0.30 per share on the review
date.  Mr.  Sprenger  and the  certain  related  parties  were each  offered the
following options regarding their stock purchases:

     1.   Based  upon  $0.0625  per share  price,  the  release of the shares or
          refund  of  the  monies  paid  therefore   under  the  stock  purchase
          agreement.  Further, if refund of the monies is requested, then Option
          number two (2) is unavailable  and the agreement is terminated and all
          shares under the agreement are cancelled;

     2.   Provided  the Option  number one (1) relating to the release of shares
          is accepted,  the  purchaser(s)  are granted the right to purchase the
          remaining  unreleased  restricted shares at seventy-five percent (75%)
          of the ten (10) day running  average  market share price of $0.30,  or
          $0.225 per share.

Final  disposition of the share  purchase  agreements was reached prior to April
30, 1999 with the  cancellation of 188,394 common stock shares and the refund of
$25,300 to certain other parties and the  realization of money or debt reduction
for the balance of the 1,137,406 common stock shares  aggregating  $255,916.  By
resolution  of the common  stock  purchase  agreement  the Company  reduced it's
Common Stock Capital amount by $645,035.

                                      F-27
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000, 1999 AND 1998
--------------------------------------------------------------------------------

NOTE K - RELATED-PARTY MATTERS (CONTINUED)

In March, 2000, the Company entered into an agreement with Technology Investors,
LLC  (TI)  whereby  the  Company  issued  to TI a 10%  subordinated  convertible
promissory  note due March,  2005 in the  amount of $2,  500,000  for cash.  The
principal amount of the note and interest  accrued thereon are  convertible,  at
the option of holder into shares of the  Company's  common stock at a conversion
price of $1.25 per share.  Two individuals Mr. Kurt C. Reid (Reid) and Mr. Brian
D.  Fletcher  (Fletcher)  are the  sole  managers  of TI and  share  voting  and
dispositions  power with respect to the common stock issuable upon conversion of
the note.  In  connection  with TI's  purchase  of the  note,  Mr.  Reid and Mr.
Fletcher  each  received  an option to purchase  notes with terms  substantially
similar to those of the note referred to above in the aggregate principal amount
of up to $500,000.  Also in connection with this  transaction,  Mr. Reid and Mr.
Fletcher  were  both  retained  as  consultants  to  the  Company  and  received
immediately exercisable options to purchase 300,000 shares of common stock at an
exercisable price of $1.25 per share for a period of up to 10 years. In addition
Mr. Reid and Mr.  Fletcher were named  directors of the Company for a three-year
term.

It is  management's  belief  that  this  transaction  was  consummated  on terms
equivalent to those in an arm's-length transaction.

NOTE L - SEGMENT INFORMATION

The Company has adopted FASB Statements No. 131, "Disclosure about Segments of a
Business Enterprise and Related Information."

The Company operates in three principal business segments:  Temperature recorder
operations, Visual Indicator Tag operations and Oil Production operations.

Temperature  Recorder segment  manufactures and distributes  transit temperature
recording  instruments  both  domestically and  internationally.  These products
provide a  permanent  record of the  temperature  of  perishable  products  in a
container during transit from loading until they reach their destination.

The Visual Indicator Tag segment is in the process of beginning to manufacture a
three layer, three-dot tag that will indicate deterioration in the consumability
of perishable food products.  The Company owns the worldwide distribution rights
to this product.

                                      F-28
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000 AND 1999 AND 1998
--------------------------------------------------------------------------------

NOTE L - SEGMENT INFORMATION (CONTINUED)

The Oil Production  segment is located in Kern County,  California.  The Company
produced a minimal amount of oil on this property in 2000,  1999 and 1998.  More
information  on the  property  can be  found  in  Note  E in  the  notes  to the
consolidated financial statements.

The accounting  policies of the segments are the same as those  described in the
Summary of Significant Accounting Policies.

<TABLE>
<CAPTION>

Years Ended       North                                   South       Australia/              Segment
 April 30        America        Canada       Europe      America     New Zealand   Mexico      Total
 --------        -------        ------       ------      -------     -----------   ------      -----
Net Sales:
<S>            <C>            <C>          <C>          <C>         <C>          <C>        <C>
2000            $7,497,224     $297,313     $927,785     $572,095    $ 318,663    $87,202    $9,700,282
1999             7,513,707      314,294      681,939      125,424      253,697     54,822     8,943,883
1998             6,832,095      325,477      511,510      278,424      137,753     49,938     8,135,197

Operating Profit (Loss)
2000            $  119,132     $  3,414     $ 10,884     $  6,711    ($ 27,372)   $ 1,023    $  113,792
1999                21,001       34,260       68,521        8,565       25,695      5,250       163,292
1998               887,536       50,061      100,122       12,515       37,546      7,671     1,095,451

Identifiable Assets:
2000            $6,089,416            0            0            0            0          0    $6,089,416
1999             5,639,936            0            0            0            0          0     5,639,936
1998             3,987,904            0            0            0            0          0     3,987,904
</TABLE>

                                      F-29
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000 AND 1999 AND 1998
--------------------------------------------------------------------------------

NOTE L - SEGMENT INFORMATION (CONTINUED)

<TABLE>
<CAPTION>
For the years ended April 30                          2000              1999               1998
----------------------------                      ------------      ------------      ------------
<S>                                               <C>               <C>               <C>
Net Sales to Unaffiliated Customers:
   Temperature Recorder                           $  9,700,282      $  8,943,883      $  8,135,197
   Visual Indicator Tag                                      0             9,233                 0
   Oil Production                                       10,694             1,428             3,559
   Intersegment sales or transfers                     945,601         1,341,119         1,220,346
                                                  ------------      ------------      ------------
                                                    10,656,577        10,295,663         9,359,102
   Less: Intersegment sales or transfers              (945,601)       (1,341,119)       (1,220,346)
                                                  ------------      ------------      ------------
   Consolidated sales                             $  9,710,976      $  8,954,544      $  8,138,756
                                                  ============      ============      ============
Net Earnings (loss):
   Temperature Recorder                           $    130,472      $    781,262      $  1,094,285
   Visual Indicator Tag                               (649,588)         (631,303)                0
   Oil Production                                     (733,407)           46,946         1,972,283
                                                  ------------      ------------      ------------
   Consolidated net earnings (loss)               ($ 1,252,523)     $    196,905      $  3,066,568
                                                  ============      ============      ============
Intersegment Sales or Transfers:
   Temperature Recorder                           ($   945,601)     ($ 1,341,119)     ($ 1,220,346)
   Visual Indicator Tag                                      0                 0
   Oil Production                                      945,601         1,341,119         1,220,346
                                                  ------------      ------------      ------------
   Consolidated intersegment sales or
   transfers                                      $          0      $          0      $          0
                                                  ============      ============      ============
Identifiable Assets:
   Temperature Recorder                           $  6,089,416      $  5,750,559      $  3,987,904
   Visual Indicator Tag                              4,858,092         2,530,394                 0
   Oil Production                                    3,771,734         4,596,239         5,778,632
                                                  ------------      ------------      ------------
   Consolidated identifiable assets               $ 14,719,242      $ 12,877,192      $  9,766,536
                                                  ============      ============      ============
Capital Expenditures:
   Temperature Recorder                           $    371,554      $  1,356,392      $     37,090
   Visual Indicator Tag                                      0                 0                 0
   Oil Production                                        9,239           100,000                 0
                                                  ------------      ------------      ------------
   Consolidated capital expenditures              $    380,793      $  1,456,392      $     37,090
                                                  ============      ============      ============
Depreciation and Amortization:
   Temperature Recorder                           $     87,013      $     87,569      $     35,250
   Visual Indicator Tag                                193,552            30,000                 0
   Oil Production                                          782                 0                 0
                                                  ------------      ------------      ------------
   Consolidated depreciation and amortization     $    281,347      $    117,569      $     35,250
                                                  ============      ============      ============
Interest Expense:
   Temperature Recorder                           $     14,444      $    150,414      $     72,188
   Visual Indicator Tag                                155,819                 0                 0
   Oil Production                                            0             2,716                 0
                                                  ------------      ------------      ------------
   Consolidated interest expense                  $    170,263      $    153,130      $     72,188
                                                  ============      ============      ============
</TABLE>

The only business  segment with sales outside the  continental  United States is
the Temperature  Recorder  segment.  Information on that segment by geographical
region is as follows:

                                      F-30
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000 AND 1999 AND 1998
--------------------------------------------------------------------------------

NOTE M - PRIOR PERIOD ADJUSTMENT

During the period from 1993 through 1995,  the former  President of the Company,
Mr. Sprenger, used his own shares of Company common stock, from time to time, to
help meet the obligations of the Company.  Most of these  transactions  occurred
when the  Company's  common stock was trading  around $.125 per share.  In 1998,
upon his resignation as Chairman of the Board, Mr. Sprenger requested that he be
reimbursed for the shares that he had issued.  Accordingly,  525,483 shares were
issued to Mr.  Sprenger  for  obligations  he had met  totaling  $265,795.  This
transaction  has  been  treated  as the  correction  of an  error  and  recorded
prospectively.

NOTE N - COMMITMENTS AND CONTINGENCIES

GENERAL

The Company's  operations  are subject to various  governmental  and  regulatory
controls  (particularly  those of the Department of Energy and the Environmental
Protection  Agency),  the effect of which on the nature of the Company's  future
operations, if any, is not known.

COMMITMENTS

The  Company  leases  its  offices  and  manufacturing  plant  facilities  under
noncancellable  operating  leases,  which  expire  in 2005.  The  total  minimum
commitments under these lease's are as follows:

     YEARS ENDING APRIL 30
     ---------------------
             2001                             $67,642
             2002                              67,642
             2003                              67,642
             2004                              67,642
             2005 &
           thereafter                          45,117

Rent  expense  for the years  ended  April 30,  2000,  1999 and 1998 is $158,306
$137,136, and $134,852, respectively.

                                      F-31
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 2000 AND 1999 AND 1998
--------------------------------------------------------------------------------

NOTE O - SUBSEQUENT EVENT

On July 13, 2000 the Company  refinanced all of the short-term debt due to their
previous primary lender, including accrued interest,  amounting to approximately
$1,177,000,  through a secured  long-term  loan from  their new  primary  lender
(Bank) in the amount of $1,190,000.  The Bank has also provided a revolving line
of credit for  working  capital in the amount of up to  $1,000,000  subject to a
maximum percentage of eligible accounts receivable and inventories.

Principal on the revolving line of credit is due on September 2, 2001.  Interest
on the revolving line accrues at the rate of the Bank's prime rate plus .25% per
annum and is due monthly beginning in August of 2000.

Principal  payments on the  long-term  loan in the amount of $9,920 plus accrued
interest, which initially is the Bank's prime rate plus .625% per annum, are due
monthly  from  September  2,  2000 to  August  2,  2001,  inclusive.  Commencing
September 2, 2001 long-term  loan payments of $22,312 plus accrued  interest are
due monthly until July 13, 2005.

The Company has agreed to certain  covenants  with respect to both the revolving
line and the long- term loan.

In addition, the Bank has agreed to finance the lease of a major piece of Vitsab
production  equipment to the Company. The cost of the equipment is approximately
$1,000,000 and the lease requires  monthly lease payments of $17,040,  including
interest at approximately 9.35% for a period of 84 months commencing December 1,
2000.

If the  refinancing  had occurred as of April 30, 2000,  the current  portion of
long-term debt would have been reduced by approximately $885,000.

                                      F-32