SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                    FORM 10K

                 ANNUAL REPORT PURSUANT TO SECTION 13 OF 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

       For the fiscal year ended April 30, 1999, Commission File #0-8006


                             COX TECHNOLOGIES, INC.
                           f.k.a. ENERGY RESERVE, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


            Arizona                                        86-0220617
-------------------------------                  -------------------------------
(State or other jurisdiction of                  (IRS Employer Identification #)
incorporation or organization)


               69 McAdenville Road, Belmont, North Carolina 28012
               --------------------------------------------------
                   (Address of Principal Executive Offices)


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:  (None)

                         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 [ ]

State the aggregate market value of the voting stock held by non-affiliates  for
the  registrant's  (the aggregate market value shall be computed by reference to
the price at which the stock was sold,  or the average  bid and asked  prices at
which the stock was sold, or the average bid and asked prices of such stock,  as
of a specified date within 60 days prior to the date of filing.)

                           $8,326,443 at July 31, 1999
--------------------------------------------------------------------------------

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest  practicable  date  (applicable only to corporate
registrants.)

                         23,618,261 as of July 31, 1999
--------------------------------------------------------------------------------

Documents   incorporated   by  reference:   List  the  following   documents  if
incorporated  by reference and the part of the Form 10-K into which the document
is  incorporated:  (1) any annual report to security  holders;  (2) any proxy or
information  statement;  and (3) any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933.  (The listed  documents  should be clearly
described for identification purposes.)
<PAGE>
                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

     (a) GENERAL DEVELOPMENT OF BUSINESS

     Cox Technologies,  Inc. f.k.a. Energy Reserve,  Inc. (the Company) has been
primarily  engaged  in  the  business  of  producing  and  distributing  transit
temperature  recording  instruments,  both domestically in the United States and
internationally.  The  Company  also  engages  in  the  business  of  acquiring,
developing and selling oil properties and of producing and selling crude oil for
its own account in the United States.  As such, the Company has not and does not
engage in petroleum refining or retail marketing.

     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 and changed for the second time in April 1998 to Cox Technologies,
Inc. Its executive offices, formerly located in Phoenix, Arizona are now located
at 69 McAdenville Road,  Belmont,  North Carolina 28012 and its telephone number
is (704) 825-8146.  Except where the context otherwise indicates, all references
to  the  "Company"  are  to  Cox   Technologies,   Inc.  and  its  wholly  owned
subsidiaries, Twin-Chart, Inc. and its wholly owned subsidiary Transit Services,
Inc., Visual Tag Indicator Systems, AB, Sweden,  Vitsab, USA and Digi-V, Inc., a
56% owned subsidiary.

     In June 1998,  the Company  acquired  Vitsab,  AB a Swedish  corporation in
exchange for 3,375,734 shares of the Company's  unregistered common stock valued
at $843,933 or $0.25 per share and 950,000 shares of the common stock of VITSAB,
USA,  Inc., a previously  wholly-owned  subsidiary of the Company with 4,750,000
issued shares of common stock  outstanding and the assumption of certain debt in
the amount of $2,300,000 owed by VITSAB, AB to an unrelated company. The Company
borrowed  $1,750,000  from a bank under two notes and  security  agreements  and
liquidated the referenced $2,300,000 for the discounted sum of $1,750,000.

     (b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

     The Company has three industry segments: (1) production and distribution of
temperature  recording and  monitoring  devices;  (2) crude oil  production  and
development and (3) visual tag indicators for food safety control. The following
table summarizes the assets,  revenues and operating results attributable to the
Company's operations by industry segments for the date and periods indicated.

For the years ended April 30                1999           1998          1997
                                            ----           ----          ----
Revenues:
(1) Temperature recorders               $ 8,943,883     $8,135,197    $7,444,170
(2) Oil production                            1,428          3,559         9,647
(3) Vitsab                                    9,233            -0-           -0-

Operating profit or loss:
(1) Temperature recorders               $   781,262     $1,094,285    $  840,992
(2) Oil production                           46,946      1,972,283        29,649
(3) Vitsab                                 (631,303)           -0-           -0-

Identifiable assets:
(1) Temperature recorders               $ 5,639,936     $2,958,066    $3,142,207
(2) Oil production                        4,596,239      6,808,470     3,811,149
(3) Vitsab                                2,530,394            -0-           -0-

     (c) NARRATIVE DESCRIPTION OF BUSINESS

     TEMPERATURE RECORDER OPERATIONS

     The  Company's  temperature  recorder  activities  include  production  and
distribution of transit temperature  recording  instruments.  These instruments,
known as temperature recorders, are self-contained, battery powered and designed
to create a graphical "time vs. temperature" record.

                                       2
<PAGE>
     The 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 Company produces two separate graphic recorders. The COX1 and COBRA are
single-channel  recorders  which  record  the air  temperature  in the  truck or
container.  The COBRA 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.

     In addition to these graphic temperature recorders, the Company distributes
an electronic  temperature  recorder,  or "data logger",  named the TRACER.  The
TRACER  delivers  its data via a cable link to a PC computer  using  specialized
software. TRACER is used in quality control and safety applications in the foods
industries and also in shipping. The shipping configuration is a new design with
an integral mailer pack that has patents pending.

     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 as
regards to its production and distribution activities.

     The Company does not maintain any company owned distribution  entities. All
distributors  are on contract and major  distributors are located in Copenhagen,
Singapore and Melbourne. All other distribution and sales operations are through
individual sales persons  operating on a sales commission basis or a salary plus
incentive basis.

     The product lines include a portable  penetration probe thermometer,  which
is retailed  but not  manufactured  by the Company.  The Company  also  performs
contract manufacturing.

     The COX(1) product accounts for 90% of the Company's business.  The balance
is due to probes  and retail  sales of other  temperature  monitoring  products,
which  are not  manufactured.  The  COBRA  and  TRACER  products  are new and no
substantial volume has yet been achieved.

     OIL PRODUCTION OPERATIONS

     The Company's oil activities  include the drilling of development wells and
the  development  and operation of such  properties for production of oil. Since
1980, the Company has principally financed these activities by borrowings, sales
of  non-operating  assets,  issuance  of its common  stock and from  operations.
During the three  years  covered by this  report the Company has only had modest
crude  oil  production  or sales  since  March  1997,  the date  when  crude oil
production was reactivated.

                                       3
<PAGE>
     In 1986, as a means to maximize production through steam enhancement of its
significant heavy crude reserves, the Company undertook a project to construct a
Cogeneration  (COGEN) and Thermal Enhanced Oil Recovery (TEOR) at its oil leases
in the Chico-Martinez field, Kern County,  California.  The COGEN/TEROR facility
as contracted with Pacific Gas & Electric  Company (PG&E),  a California  public
utility,  was a 45 MW project consisting of two phases;  Phase One being 20.5 MW
and Phase Two being 24.5 MW. Problems arose with PG&E,  principally dealing with
the power transmission routing and inter-connection, which prevented the Company
from meeting the contract deadline.

     As a result of these  problems,  a complaint was filed with the  California
Public  Utilities  Commission  against PG&E.  This matter along with current and
future  plans  of the  Company  pertaining  to it's  oil  production  and  lease
operations are discussed under the respective  properties  captions elsewhere in
this report under Item 2.,  Description  of Properties - Mitchel and Bacon Hills
leases.

     Actual  drilling  operations  are not  undertaken  by the Company,  but are
conducted by third-party drilling contractors.  The Company, however, may act as
operator  of such  projects,  thereby  supervising  exploration,  drilling,  and
production   activities.   Since  1980,  virtually  all  of  the  Company's  oil
development  activities  have been on its Kern County Leases,  which the Company
acquired  by cash and/or  issuance of shares of its common  stock to be held for
investment( investment shares).

     The  source  and   availability  of  raw  materials  are  not  critical  or
significant factors in the oil production operations of the Company.

     The oil operations of the Company are non-seasonal.

     The Company  does not and is not required to carry  significant  amounts of
inventory  for its oil  operations  and neither  Company nor industry  practices
provide extended payment terms to customers.

     The oil  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 the earnings or financial position of the Company.

     Backlog  of  orders is not a factor  in the  crude  oil  operations  of the
Company.

     The oil and gas industry is extremely  competitive  and involves  risk. The
Company is a minor factor in the  petroleum  and natural gas industry as regards
to its  development  and  production  activities.  The ability of the Company to
market oil and gas  produced  from its  properties  or from  those  which may be
subsequently  acquired  depends on  numerous  factors  beyond the control of the
Company,  including the extent of production and imports of oil and gas into the
United  States,  the  proximity  and  capacity  of oil  and gas  pipelines,  the
availability of other  transportation  facilities,  the marketing of competitive
fuels,  the effect of governmental  regulations on the production of oil and gas
and  other  matters  affecting  the  availability  of a  ready  market,  such as
fluctuation, supply and demand.

     Governmental  agencies of the United  States  maintain a close watch on the
ecological  impact of development  activities and the  possibility of ecological
disturbances.  Such measures may  substantially  increase the cost of developing
and  producing  oil and gas  and  may  prevent  or  delay  the  commencement  or
continuance of a given  operation.  In the opinion of management of the Company,
its operations comply with applicable legislation and regulations. The existence
of such  regulation has had no material  effect on the Company's  operations and
the cost of such  compliance  has not been material to date. The cost and effect
on operations  of  compliance  with future  environmental  laws and  regulations
cannot  be  predicted  and such  measures  may  have an  effect  on the  capital
investment or the net revenues resulting from the Company's activities.

VISUAL TAG INDICATOR OPERATIONS

     The  Company's  visual tag  indicator  operations  include  production  and
distribution  of visual time  temperature  monitoring  tags/label  (TTI).  These
monitors,    known   as   smart   tags/labels   contain   certain   pre-selected
time/temperature limits that when exceeded will react with an irreversible color
change. The smart TTI are programmable devices which run as a "biological clock"
parallel to the biological clock of the product it is set to monitor.

                                       4
<PAGE>
     The smart TTI are  marketed  under the  trade  name of Vitsab  and  provide
visual  proof of the  progress  of the  biological  deterioration  process  of a
perishable food package.  The Company produces two separate Vitsab TTI, a "three
dot" indicator and a "one dot"  indicator.  Both work on a biological  principle
and  consist of an adhesive  plastic  tag/label  that  contains  small  internal
pouches of enzyme solution.  Applying  pressure to the TTI mixes these solutions
and when mixed, react to create a color change. The TTI is placed on the outside
of a package containing  refrigerated or frozen food and can indicate whether or
not the food product is still within the pre-set limits of freshness and safety.

     The source and availability of raw materials are a critical and significant
factor in the Vitsab TTI operations of the Company.

     The Vitsab TTI operations of the Company are non-seasonal.

     The Company does and is required to carry significant  amounts of inventory
for its Vitsab TTI operations and neither Company nor industry  practices extend
payment terms to customers.

     The Vitsab TTI 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.

     Backlog of orders is not a major factor in the Vitsab TTI operations of the
Company.

     The Company manufactures the Vitsab TTI at two locations, Malmo, Sweden and
Belmont, North Carolina.

     The Company maintains both company owned distribution  entities and certain
contract  distributors   associated  with  the  Company's  temperature  recorder
operations.

ITEM 2. DESCRIPTION OF PROPERTIES

     The  Company  owns  working  interests  in  certain  developed  oil and gas
properties in the United  States.  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  principal oil and gas  properties  are the Mitchel and Bacon
Hills leases previously  referred to in this report.  Following is a description
of each of these principal oil and gas properties:

     MITCHEL LEASES

     These  subleases,   located  in  the  Chico-Martinez  field,  Kern  County,
California,  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  Company  owns a 78.33  percent  working  interest  in  these
subleases,  with 52  completed  oil wells which were  unitized in 1976 and which
produce  from the 500 to 1,600 foot  levels.  Production  interest  of others in
these wells was 1.1 percent at April 30, 1998,  1997 and 1996.  The oil produced
is heavy crude of  approximately  12.7 API gravity.  The Company has no drilling
requirements under the subleases, which are held by production.

     BACON HILLS LEASE

     This  sublease,   located  in  the   Chico-Martinez   field,  Kern  County,
California,  was acquired in December,  1980 and consists of  approximately  260
acres,  1 which  the  Company  has  interests  to the depth of 5,000  feet.  The
landowners'  and  overriding  royalty  interest  holders are identical  with the
Mitchel  leases  which total 21.67  percent and the Company  owns the  remaining
78.33 percent working  interest in this lease. The acquisition of this sublease,
in  conjunction  with the  Mitchell  subleases,  provided  the Company  with the
leasehold interest in an entire section of land.

                                       5
<PAGE>
     Under the terms of this sub-lease, the Company committed to the drilling of
an initial six wells on or before  March 31, 1982,  and at least six  additional
wells each 12-month period thereafter, until at least 52 wells have been drilled
without  regard to whether  they are  producing  or  abandoned.  The Company has
drilled a total of 14 wells under its commitment.  No wells have been drilled on
this lease since 1984.

     In March  1990,  the  sub-lessor  declared  this  sublease  terminated  and
requested return of the underdeveloped portion of the sublease. The Company does
not  acknowledge  the  declaration of termination  and has not complied with the
sub-lessor's request. To date, no litigation, action or further request has been
undertaken by the sub-lessor in a connection with this matter. The Company holds
a five-acre  well tract and the oil and gas rights to each of fourteen  wells it
has drilled on this sublease.

COMBINED LEASES - MITCHELL AND BACON HILLS

     COGENERATION SYSTEM AND THERMALLY ENHANCED OIL RECOVERY OPERATION

     From 1986 until June 1997,  the  Company's  oil  activities  were  directed
toward the  implementation of the COGEN/TEOR Project on the Mitchel leases which
would be capable of serving the  combined  Mitchel and Bacon Hills leases with a
steam flood enhanced oil recovery operation and provide for the sale of power to
a  California  public  utility  company.  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
Pacific  Gas and  Electric  Company  for the  delivery  to the  utility  of 20.5
megawatts  of  electricity  by a date no earlier  than June 1, 1989 and no later
than December 24, 1991. The agreement further provided for delivery and purchase
of up to 45  megawatts  of  power in  later  years.  Contracts  were  signed  or
negotiated with responsible and experienced suppliers,  supervision, natural gas
delivery,  maintenance  and operation and the TEOR  installation,  including the
laying of steam lines for the steam flood operations.

     As stated earlier in 1(c) under Oil Production Operations, certain problems
arose with the public utility,  which rendered the Company unable to satisfy the
power purchase  contract  requirements  by the December 24, 1991  deadline.  The
public  utility  denied a request for deferral of the deadline date. The Company
filed  a  complaint  with  the  California  Public  Utility   Commission  (CPUC)
requesting continuation of the power purchase agreement. The matter was heard by
the CPUC in October 1993 and a settlement in this litigation was reached in June
1997,  which was approved by the CPUC in the amount of  $3,500,000.  The Company
received the settlement amount in February 1998.

     In April 1999, the Company  entered into an oil field  operating  agreement
with a California  firm.  For further  information  reference is made to Note E,
"Property and Equipment,  Oil and Gas  Properties" of the Notes to  Consolidated
Financial Statements, incorporated herein by reference.

     The  tables  below set forth the gross and net  developed  acreage  and the
gross,  net, and revenue net  productive  wells of all oil and gas properties of
the Company at April 30, 1999.

     (a) "Gross  Acreage"  represents  all acres in respect to which the Company
has a working  interest;  "Net Acreage"  represents the aggregate of the working
interest of the Company in the gross acreage.

                                                            Acreage (a)
                                                       ---------------------
                                                         Gross
       Location          Held By        Expires        Developed        Net
     ------------      ----------      ----------      ---------      ------
       California
        Mitchel        Production      Indefinite       380.00        297.65
     *Bacon Hills      Production          *             70.00         54.83
                                                        ------        ------
                                                        450.00        352.48

* Reference  is made to the  descriptions  of the Mitchel and Bacon Hills leases
previously  discussed  in this Item 2  concerning  the  status of the leases and
certain  drilling   commitments  required  of  the  Compnay  pertaining  to  the
California leases.

                                       6
<PAGE>
     (b) "Gross  Wells"  represents  the total number of wells which the Company
has a working  interest;  "Net  Wells"  represents  the  number  of gross  wells
multiplied  by the  percentages  of the working  interests  therein owned by the
Company.  "Revenue Net Wells" represents the number of gross wells multiplied by
the percentages of the  participating  production  interests therein retained by
the Company.

                                    OIL WELLS

                                                      Revenue
                  Location        Gross     Net         Net
                  --------        -----     ----      -------
                  California       62.0     48.6       48.6

     During the past five fiscal  years,  the Company has not drilled any oil or
gas wells.

     The Company is not obligated under any existing  contracts or agreements to
provide a fixed and determinable quantity of oil and gas in the future.

     The latest  independent  petroleum studies and reports for the Kern County,
California  leases  were by  Douglass  Petroleum  Management  Co.,  Bakersfield,
California  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 agency other than the Securities
and Exchange Commission.

     The net  production of oil and gas for each of the last five years is shown
below.  Net  production  represents  the gross  production  after  deduction for
royalties of other parties.

                                    OIL/BBDS

                               1999          862
                               1998          235
                               1997          500
                               1996          -0-
                               1995          -0-

     None of the net production during each of these years is applicable to
long-term supply or similar  agreements with foreign  governments or authorities
in which the Company acts as producer.

ITEM 3. LEGAL PROCEEDINGS

     Disclosure  of legal  proceedings  is  contained  in Note M,  "Commitments,
litigation and contingencies," of the Notes to Consolidated Financial Statements
incorporated herein by reference.

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

     On November 21, 1998 pursuant to Notice and  accompanying  Proxy  Statement
for the Annual Meeting of  Shareholders,  the annual meeting of  shareholders of
the Company was held in Belmont,  North  Carolina 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, 1999.

                                       7
<PAGE>
                                     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 in the  nationwide  over-the-counter
market and is listed 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 stock, was as follows:

                          1999           1998           1997          1996
                      ------------   -------------   ----------    -----------
                       HIGH   LOW    HIGH    LOW     HIGH   LOW    HIGH   LOW
                      -----  -----   ----  -------   ----   ---    ----   ----
     First Quarter     3/8    5/16   1/4      1/4    1/4    5/8    3/8    1/4
     Second Quarter    5/16   9/32   5/16  1  1/4    1/8    5/8    5/16   5/16
     Third Quarter    13/32   5/16   3/8     13/16   3/8    5/8    5/16   3/4
     Fourth Quarter    5/8   19/32   3/8      3/4    3/8    1/2    5/16   3/4


     (b) APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS

     As of April 30,  1999 the  approximate  number of holders of record of each
class of equity securities of the Company was as follows:

     Common Stock, no par value 3,000 (1)

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

     (c) DIVIDENDS

     The  Company has not  declared  any  dividends  during the past three years
ended April 30, 1997 through 1999.

ITEM 6. SELECTED FINANCIAL DATA

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

                                         1999          1998         1997
                                      -----------   ----------   ----------
     Operating Revenues               $ 8,943,883   $8,138,757   $7,453,817
     Profit (loss) from
     continuing operations                258,515    3,117,068    1,004,333

     Profit (loss) from continuing
     operations per common stock             0.01         0.15         0.05

     Total Assets                     $12,877,192   $9,766,536   $6,953,356

     Long-term Obligation             $   581,374   $  280,706   $  358,686

     Cash Dividends Declared
     Per Common Share                         -0-          -0-          -0-

                                       8
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     LIQUIDITY AND CAPITAL RESOURCES

     Based  upon its  temperature  recorder  operations  and the  developed  and
undeveloped  reserves  of the  Mitchel  and  Bacon  Hills  leases,  the  Company
anticipates  cash  from  operations,   equity  investment,  and  borrowing  from
long-term lending sources adequate to meet cash requirements.  At present,  cash
flow from  operations is adequate to meet cash  requirements  and commitments of
the Company.  However,  the Company intends to enter into equity,  debt of other
financing  arrangements  to meet its further  financial needs for expansion into
food safety control products and to provide for general working capital needs.

     COMPARISON OF OPERATIONS FOR 1999 AND 1998

     Consolidated operations for the year ended April 30, 1999 resulted in a net
earnings of $196,905. In the year ended April 30, 1998, the company had only two
business  segments.  In the year ended April 30, 1999 the Company acquired a new
segment,  visual tag indicators  (Vitsab),  as previously disclosed elsewhere in
this report under Item 1 (a) General Development of Business.

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

<TABLE>
<CAPTION>

                                        Year Ended 1999                  Year Ended 1998
                              ----------------------------------  ------------------------
                              Recorders      Oil       Vitsab      Recorders       Oil
                              ----------  ---------   ---------   -----------  -----------
<S>                           <C>         <C>         <C>         <C>          <C>
Revenues:
Sales                         $8,943,883  $   1,428   $   9,233   $ 8,135,197  $    3,559

Cost of sales                  4,193,586     13,130     610,536     3,676,082      28,775

General & Admin                2,307,732    160,467         -0-     1,925,715     153,492
Sales Expense                  1,388,232        -0-         -0-     1,223,921         -0-
Depreciation & Amortization       87,569        -0-      30,000        34,468         782
Interest                         150,414      2,716         -0-        34,938      37,250
                              ----------  ---------   ---------   -----------  ----------
Income (loss) from operations    816,350   (174,885)   (631,303)     (127,203)   (216,740)
Other income (expense)             7,031    241,322         -0-        18,515   2,221,008
Income taxes                      42,119     19,491         -0-       133,692      31,985
                              ----------  ---------   ---------   -----------  ----------
Net earnings (loss)           $  781,262  $  46,946   $(631,303)  $ 1,095,285  $ 1,972,28
                              ----------  ---------   ---------   -----------  ----------
</TABLE>

     TEMPERATURE RECORDERS

     Sales  increased  approximately  $800,000  or 10% for the  current  year as
compared to the prior year. Cost of sales as a percentage of sales was 46.9% for
1999 as compared to 45.1% in 1998.

     Sales expense for 1999 increased $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 percentage of sales  increased to
25.8% in 1999 as compared  to 23.7% in 1998.  The amount of increase is $382,017
and is  primarily  due to  research  and  development  expenses  related  to new
recorder monitoring technologies.

                                       9
<PAGE>
     Depreciation  and  amortization  increased  $53,101 in 1999 as  compared to
1998. This was due to equipment and machinery purchased.

     The  interest  expense  increase  of  $115,476  was the result of  increase
borrowings to finance the Vitsab acquisition.

     OIL PRODUCTION

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

     Cost of sales  declined  $15,645 in 1999 as compared  to 1998.  These costs
represent  the cost and  expense  of  maintaining  the oil field for both  these
years.

     General and  administrative  expenses increased $6,975 for 1999 as compared
to 1998. This increase is primarily due to legal costs.

     Interest  expense  decreased  due  to the  reduction  of  interest  bearing
indebtedness.

     Other  income  for 1999 of  $241,322  was  realized  from  satisfaction  of
indebtedness  at  less  than  the  recorded  amount.  Reference  is  made to the
following  Comparison of Operations  for 1998 and 1997 for an explanation of the
$2,221,008 other income for 1998.

     VISUAL TAG INDICATORS

     This new business  segment,  which was acquired in June 1998,  had sales of
$9,233 for the nine months  ended April 30, 1999.

     The cost of sales represents the costs and expenses of business development
and operations for the Vitsab product.

COMPARISON OF OPERATIONS FOR 1998 AND 1997

     Operations  for the year ended April 30, 1998  resulted in net  earnings of
$3,066,568  or 0.15 per  share.  Included  in these net  earnings  is a one-time
income  amount of $2,043,305  net of the provision for income taxes.  The income
from  operations  was $1,023,263 for the current year and $985,119 for the prior
year.

     The  following  schedule  reflects  the two company  segments for the years
ended April 30, 1998 and 1997.

                                    Y/E 1998                     Y/E 1997
                           ------------------------     ------------------------
                           Temperature       Oil        Temperature      Oil
                            Recorders    Production      Recorders    Production
                            ---------    ----------      ---------    ----------
Sales                      $ 8,135,197   $     3,559    $ 7,444,170   $   9,647

Cost of sales                3,676,082        28,775      3,472,256       3,649

General & Admin              1,925,715       153,492      1,745,691      88,915
Sales Expense                1,223,991           -0-      1,052,164         -0-
Interest                        34,938        37,250         40,851      24,249
Depreciation                    34,468           782         36,946       3,977

Income (loss) operations     1,240,003      (216,740)     1,096,262    (111,143)
Other income (expense)        (127,203)    2,221,008       (121,578)    140,792
Income taxes                    18,515        31,985       (133,692)        -0-

Net earnings (loss)        $ 1,094,285   $ 1,972,283    $   840,992   $  29,649

     TEMPERATURE RECORDERS

     Sales  increased  approximately  $700,000  or 9% for  the  current  year as
compared to the prior year ended April 30. There was an  improvement  in cost of
sales as a  percentage  of sales from 46.6% in the 1996-97  year to 45.1% in the
1997-98 year.

                                       10
<PAGE>
     Sales expense increased  $171,827 for the current year over the prior year.
Such expenses  expressed as a percent of sales,  increased from 14% last year to
15%  for  the  current  year.  This  increase  was due  primarily  to  marketing
activities in the  introduction  of the Company's new products  concerning  food
safety monitoring.

     General  and  administrative  expense  as a  percentage  of sales  remained
constant at 23% for the two years of comparative operations. The decrease of 15%
in interest  expense was due to  reduction  in long term debt.  The  category of
other expense increased by $5,625 or 5% due primarily to a reduction in interest
income from the prior year.

     Overall,   the  improvement  in  Income  from  Operations  of  $143,741  is
noteworthy  by the fact  that it  represents  21% of the  sales  increase.  This
compares favorably with the Company's  historically normal percentage of 15% for
this category of income.

     OIL PRODUCTION

     Crude oil sales were down in the  1997-98  year by $6,088 or 63%.  This was
the  result of  decreased  production  due to  depressed  oil  prices and a well
work-over program.

     Cost  of  sales  increased  $25,126  due to the  above-mentioned  work-over
program, which accounted for all of the increase.

     General and administrative  expenses increased $64,577 or 73% due primarily
to technological research and development costs of $32,000,  shareholder meeting
costs of $19,000  and  increases  aggregating  approximately  $13,500  for rent,
travel, insurance and office relocation costs.

     The  increase  in  interest  expense of  $13,000  was due  primarily  to an
adjustment of the note payable  balance  pertaining to the stipulated  judgement
referred to in Note H of Notes to Consolidated Financial Statements incorporated
herein by reference.

     Other income  increased  $2,080,216 over the prior year income of $140,792.
As disclosed elsewhere in this report under Enhanced Oil Recovery Operations and
by Note E of Notes to Consolidated  Financial Statements  incorporated herein by
reference,  the Company  received $3.5 million in February 1998 in settlement of
certain  litigation with a public utility  company.  The Company  realized a net
settlement amount of $2,274,764 after payment of legal fees, consultant fees and
litigation  costs of the six-year  litigation.  The Company absorbed a charge to
operations  of  $53,756  from a  write  off  of  certain  investment  securities
valuation  and other  expenses  which  resulted in the  $2,221,008  other income
amount

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     See Part IV

ITEM 9. DISAGREEMENT OF ACCOUNTING AND FINANCIAL DISCLOSURE

     None

                                       11
<PAGE>
                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

     (a) IDENTIFICATION OF DIRECTORS

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

Name, Positions and                       Director      Term      Certain Other
Offices With Registrant           Age       Since      Expires    Corporations
-----------------------           ---       -----      -------    ------------
James L. Cox, President,
Chief Executive Officer,
Chairman of the Board             54        1995         (1)           (2)

David K. Caskey
Secretary and Treasurer           37        1997         (1)           (3)

Alfred P. Sprenger,               72        1968         (1)           (4)

George M. Pigott                  71        1997         (1)

Michael  E. Fonzo                 59        1997         (1)

----------
(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-Charts, Inc.
(3)  Serves as Secretary-Treasurer of Company's  subsidiaries,  Twin Chart, Inc.
     and Transit Services, Inc.
(4)  Serves  as the sole  trustee  of the  Liquidating  Trusts  for  Progressive
     Investment Corporation (PIC) and PIC Research & Development Corporation.

     (b) IDENTIFICATION OF EXECUTIVE OFFICERS

                                                                    Executive
Name, Positions and                       Officer       Term      Certain Other
Offices With Registrant           Age      Since       Expires    Corporations
-----------------------           ---      -----       -------    -------------
James L. Cox,
President, Chief
Executive Officer,
Chief Operating Officer
Chairman of the Board               54     1995          (1)           (2)

David Caskey
Secretary-Treasurer                 37     1997          (1)           (3)

----------
(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-Treasurer of Company's subsidiaries,  Twin-Chart, Inc.,
     and Transit Services, Inc.

                                       12
<PAGE>
     (c) BUSINESS EXPERIENCE

     Dr.  James L. 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.

     Mr.  Alfred  P.  Sprenger  has been a  director  of the  Company  since its
incorporation.  He served  in the  capacity  of  President  and Chief  Operating
Officer from 1969 to August 1, 1995. He served as Chief Executive Officer of the
Company  from August 1, 1995 to November  1997,  on which date he resigned as an
executive  officer and  employee.  He served in identical  capacities in the two
affiliated  corporations,  Progressive  Investment  Corporation  (PIC)  and  PIC
Research and  Development  (PIC R&D) until  December  1983 and now serves as the
sole trustee of the Liquidating Trusts for PIC and PIC and R&D.

     In September 1996, Mr. David K. Caskey was elected  Secretary/Treasurer  of
the Company to replace  Roger  Sherer,  who died in August 1996.  Mr. Caskey has
served as  Secretary/Treasurer in the two subsidiary  corporations,  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.

     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,
coal-mines  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 is 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 has held these
positions since approximately 1985. 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.

     (d) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

     Disclosure  of  legal  proceedings  is  contained  in Note O  "Commitments,
Litigation and Contingencies," of the Notes to Consolidated Financial Statements
incorporated herein by reference.

                                       13
<PAGE>
ITEM 11. MANAGEMENT REMUNERATION AND TRANSACTIONS

     (a) Remuneration,  on an accrual basis, paid to the executive  officers and
directors of the Company during the year ended April 30, 1999, was as follows:

                            Cash and Cash Equivalents
                              Forms of Remuneration

                                                        Securities
                                                       or Property
                                                        Insurance
                                      Salaries, Fees   Benefits or  Aggregate of
Name of Individual                    Director's Fees Reimbursement  Contingent
   or Number of      Capacities in     Commissions,      Personal     Forms of
 Persons in Group     Which Served      and Bonuses      Benefits   Remuneration
 ----------------     ------------      -----------      --------   ------------
   James L. Cox    Director, President    $133,000          None         None
                   Chief Exec. Officer
                  Chairman of the Board


Alfred P. Sprenger       Director              -0-          None         None
                      Past President


                        Director &
 David K. Caskey        Sec/Treas.         $77,728          None         None

                      All Officers &
       Two              Directors         $210,728          None         None

     (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.

     (d)  Transactions  with  management are disclosed in Note L of the Notes to
Consolidated Financial Statements incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The  following  table  show as of April 30,  1999 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.

                                       14
<PAGE>
     a) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS (CONTINUED)

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

Title of         Name and Address           Amount and Nature of      Percent of
 Class           Beneficial Owner           Beneficial Ownership         Class
 -----           ----------------           --------------------         -----
 Common          James L. Cox                 4,587,000 shares           20.1%
 stock,          69 McAdenville Rd.                 Record
 no par          Belmont, NC

 Common          Vitsag, AG                   3,375,734 shares           14.8%
 stock,          Stenyxegatan 21
 no par          S-213 76 Malmo Sweden

 Common          Robert W. Dupree               704,000 shares            3.0%
 stock,          2432 W. Peoria Ave
 no par          Suite 1181
                 Phoenix, AZ

 Common          Other Related Parties*       2,284,773 shares           10.0%
 stock,          Record and Beneficial
 no par

----------
*    Comprised of  individuals  being certain  Company  employees and relatives,
     friends and business associates of Mr. Sprenger.

     For  further  information  concerning  ownership  interests,  see  Note  L,
"Related-party  Matters,  Ownership  Interests,"  of the  Notes to  Consolidated
Financial Statements, incorporated herein by reference.

     (b) SECURITY OWNERSHIP OF MANAGEMENT

     The following  table shows as of April 30, 1999,  all shares of the Company
stock,  beneficially  owned by the  officers  and  directors of the Company as a
group:

  Title of              Name of           Amount and Nature of        Percent of
   Class               Security           Beneficial Ownership           Class
  --------             --------           --------------------        ----------
Common stock,    Cox Technologies, Inc.         5,576,000                24.4%
   No par

                                       15
<PAGE>
                                     PART IV


ITEM 13. 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--April 30, 1999 and April 30, 1998

       Statement of operations  and  accumulated  deficit for the years ended
       April 30, 1999, 1998 and 1997

       Statement of shareholders' investment for the years ended April 30, 1999,
       1998 and 1997

       Statement of cash flows for the years ended April 30, 1999, 1998 and 1997

     (b) REPORTS ON FORM 8-K

     The Company has filed the following  Forms 8-K for the year covered by this
report ended April 30, 1999:

     None

YEAR 2000 DISCLOSURE

1. COMPANY'S STATE OF READINESS

     Management  began  addressing the Company's Year 2000 issues over two years
ago, at which time it was determined  the accounting  software was not Year 2000
compliant.  New software was purchased  and  installed.  The Company  obtained a
written  statement  from the  software  vendor  who  attested  to the Year  2000
readiness of this software. To accommodate this new software the Company updated
its network software with Novell 4.0 to interact with the accounting software in
a manner that will not interfere  with its Year 2000  readiness.  Management has
also reviewed all  electronically  based product software  programs sourced from
third party vendors and have  determined  that they are all Year 2000 compliant.
The  Company  has  mailed  questionnaire  forms  to  all  its  mission  critical
vendor/suppliers of parts for its assembly line. There has been virtually a 100%
return of these  informational  requests.  Concurrently,  the  Company  has been
qualifying  alternate   vendors/suppliers  for  potential  replacement  for  any
non-compliant vendors.

2. COSTS TO ADDRESS THE COMPANY'S YEAR 2000 ISSUES

     The Company has expended  approximately  $15,000 to date in addressing  its
Year 2000 readiness.  By management  analysis,  the future outlay for addressing
any perceived Year 2000 issues will not exceed $25,000  including  assembly line
parts and supplies under its contingency plan.

3. RISKS OF THE COMPANY'S YEAR 2000 ISSUES

     Management's analysis of its Year 2000 readiness indicate there are no Year
2000  issues  that  will have a  material  effect on its  business,  results  of
operations  or financial.  This opinion is based upon the  Company's  accounting
readiness is now complete and all of the vendors of parts and supplies  critical
to its operations have acknowledged Year 2000 readiness and compliance.

4. COMPANY'S CONTINGENCY PLANS

     If  management's  analysis  of its third  party  vendor  capability  is not
achieved by the June 1999 date,  a  contingency  plan has been  developed  which
provided  for  stockpiling  of  assembly  line parts and  continuing  new vendor
sourcing of Year 2000 compliance vendors.

                                       16
<PAGE>
                                   SIGNATURES


     Pursuant to the  requirements of Section 13 of the Securities  Exchange Act
of 1934,  the  Company  has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

Dated:
                                           COX TECHNOLOGIES, INC.
                                           an Arizona Corporation


09-01-99                                   By /s/ James L. Cox
                                              ----------------------------------
                                              James L. Cox, President and
                                              Chief Executive Officer


09-01-99                                   By /s/ R. W. Dupree
                                              ----------------------------------
                                              R.W. Dupree, Controller and
                                              Chief Financial Officer


09-01-99                                   By /s/ David K. Caskey
                                              ----------------------------------
                                              David K. Caskey
                                              Secretary-Treasurer

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

Dated:                                              Signatures
                                                    ----------

09-01-99                                   By /s/ James L. Cox
                                              ----------------------------------
                                              James L. Cox
                                              President and Director

09-01-99                                   By /s/ David K. Caskey
                                              ----------------------------------
                                              David K. Caskey
                                              Secretary-Treasurer and Director

09-01-99                                   By /s/ George M. Pigott
                                              ----------------------------------
                                              George M. Pigott
                                              Director

09-01-99                                   By /s/ Michael E. Fonzo
                                              ----------------------------------
                                              Michael E. Fonzo
                                              Director

09-01-99                                   By /s/ Alfred P. Sprenger
                                              ----------------------------------
                                              Alfred P. Sprenger
                                              Director

                                       17
<PAGE>
                     COX TECHNOLOGIES, INC. AND SUBSIDIARIES
              REPORT ON AUDIT OF CONSOLIDATED FINANCIAL STATEMENTS

                  YEARS ENDED APRIL 30, 1999 AND APRIL 30, 1998

                                    CONTENTS

                                                                            Page
                                                                            ----

Independent Auditors' Report..............................................     1

FINANCIAL STATEMENTS

      Consolidated Balance Sheets.........................................     2

      Consolidated Statements of Income and Accumulated Deficit...........     3

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

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

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

      Notes to Consolidated Financial Statements .........................  8-34
<PAGE>
                          INDEPENDENT AUDITORS' REPORT


                                  June 18, 1999

Board of Directors
Cox Technologies, Inc.
Phoenix, Arizona

We  have  audited  the   accompanying   consolidated   balance   sheets  of  Cox
Technologies,  Inc., as of April 30, 1999 and 1998, and the related consolidated
statements  of income and  accumulated  deficit  and of cash flows for the years
ended  April  30,  1999,  1998 and  1997.  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, 1999 and 1998,  and the results of its  operations  and cash
flows for the years ended April 30,  1999,  1998 and 1997,  in  conformity  with
generally accepted accounting principles.


                                   Certified Public Accountants

                                       1
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 30, 1999 AND 1998
--------------------------------------------------------------------------------

                                                             April 30
                                                    ---------------------------
                                                        1999           1998
                                                    ------------   ------------
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                         $  1,250,810   $  2,575,945
  Accounts receivable, less allowance for doubtful
    accounts of $28,664 and $29,527 at April 30,
    1999 and 1998, respectively                        1,599,079      1,627,074
  Inventory (Note B)                                   1,542,663      1,043,531
  Investment in securities (Note C)                       51,211         39,500
  Notes receivable - current (Note D)                     30,477         33,503
  Prepaid expenses                                        65,860        352,143
  Deferred income taxes (Note F)                               0         30,000
                                                    ------------   ------------
      TOTAL CURRENT ASSETS                             4,540,100      5,701,696

  Property and equipment (Net) (Note E)                7,109,762      3,704,243
  Investment in securities (Note I)                      300,000        300,000
  Deposits                                                23,692          5,290
  Goodwill (Notes A, I and J)                            886,783         48,479
  Notes receivable-non-current portion (Note D)           16,855          6,828
                                                    ------------   ------------
      TOTAL ASSETS                                  $ 12,877,192   $  9,766,536
                                                    ============   ============

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable and accrued expenses (Note G)    $    582,542   $    356,811
  Income taxes payable (Note F)                           34,720         52,270
  Current portion of long-term debt (Note H)           1,651,949        510,369
                                                    ------------   ------------
      TOTAL CURRENT LIABILITIES                        2,269,211        919,450

  Long-term debt (Note H)                                581,374        280,706
  Minority interest (Notes A and J)                          669            669
                                                    ------------   ------------
                                                       2,851,254      1,200,825
                                                    ------------   ------------
COMMITMENTS AND CONTINGENCIES (Note O)

STOCKHOLDERS' EQUITY
  Common stock, no par value; authorized-
    100,000,000 shares; issued and outstanding;
    19,905,438 shares at April 30, 1998 and
    23,618,261 shares at April 30, 1999               20,306,098     20,041,562
  Common stock subscribed                                 58,100         58,100
  Contributed capital                                    420,982        220,872
  Treasury stock                                         (45,920)       (45,920)
  Accumulated deficit                                (10,667,609)   (10,598,719)
  Unrealized loss on available-for-sale
    securities (Note C)                                        0       (180,500)
  Less - Notes receivable for common
    stock:
      Issued (Notes K and L)                            (875,650)
      Subscribed (Notes K and L)                         (45,713)       (54,034)
                                                    ------------   ------------
      TOTAL STOCKHOLDERS' EQUITY                      10,025,938      8,565,711
                                                    ------------   ------------
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY    $ 12,877,192   $  9,766,536
                                                    ============   ============

                        See Notes to Financial Statements

                                        2
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
YEARS  ENDED APRIL 30, 1999 AND 1998 AND 1997
--------------------------------------------------------------------------------

                                                  Year Ended April 30
                                        ---------------------------------------
                                           1999          1998          1997
                                        -----------   -----------   -----------
REVENUE:
  Sales                                 $ 8,954,544   $ 8,138,756   $ 7,453,817
                                        -----------   -----------   -----------
        TOTAL REVENUE                     8,954,544     8,138,756     7,453,817
                                        -----------   -----------   -----------
COSTS AND EXPENSES
  Cost of sales                           4,817,252     3,704,857     3,475,905
  General and administrative expenses     2,468,199     2,079,207     1,834,606
  Sales expense                           1,388,232     1,223,991     1,052,164
  Depreciation and amortization             117,569        35,250        40,923
                                        -----------   -----------   -----------
        TOTAL EXPENSES                    8,791,252     7,043,305     6,403,598
                                        -----------   -----------   -----------
        INCOME FROM OPERATIONS              163,292     1,095,451     1,050,219
                                        -----------   -----------   -----------
OTHER INCOME (EXPENSE):
    Other income (expense) (Note E)         248,353     2,093,805        19,214

    Interest expense                       (153,130)      (72,188)      (65,100)
                                        -----------   -----------   -----------
        TOTAL OTHER INCOME (EXPENSE)         95,223     2,021,617       (45,886)
                                        -----------   -----------   -----------
Earnings before income taxes                258,515     3,117,068     1,004,333

Provisions for income taxes (Note F)         61,610        50,500       133,692
                                        -----------   -----------   -----------
NET EARNINGS                            $   196,905   $ 3,066,568   $   870,641
                                        ===========   ===========   ===========
EARNINGS PER SHARE (Note A):
  Net Income                            $       .01   $       .15   $       .04
                                        ===========   ===========   ===========

                        See Notes to Financial Statements

                                        3
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS  ENDED APRIL 30, 1999 AND 1998 AND 1997
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                           Year Ended April 30
                                               --------------------------------------------
                                                   1999            1998           1997
                                               ------------    ------------    ------------
<S>                                            <C>             <C>             <C>
ACCUMULATED DEFICIT, beginning of year         $(10,598,719)   $(13,665,287)   $(14,535,928)
  as previously reported
  prior period adjustment (Note N)                  265,795
                                               ------------
  Accumulated deficit beginning
    of year, as restated                       $(10,964,514)

NET EARNINGS                                        196,905       3,066,568         870,641
                                               ------------    ------------    ------------

ACCUMULATED DEFICIT, end of year               $(10,667,609)   $(10,598,719)   $(13,665,287)
                                               ============    ============    ============

                                                               Common Stock
                                               --------------------------------------------
                                                Number of                      Contributed
                                                  Shares          Amount          Capital
                                               ------------    ------------    ------------
BALANCES:
  April 30, 1996                                 19,555,188    $ 20,006,562    $    220,872
  Shares issued:
    Acquisition of subsidiary                       350,000          35,000
                                               ------------    ------------    ------------
BALANCES:
  April 30, 1997                                 19,905,188      20,041,562         220,872
  Shares issued                                         250
                                               ------------    ------------    ------------
BALANCES:
  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)
                                               ------------    ------------    ------------
BALANCES:
  April 30, 1999                                 23,618,261    $ 20,306,098    $    420,982
                                               ============    ============    ============
</TABLE>

                        See Notes to Financial Statements

                                       4
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED APRIL 30, 1999 AND 1998 AND 1997
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                     Year Ended April 30
                                                           -----------------------------------------
                                                              1999           1998           1997
                                                           -----------    -----------    -----------
<S>                                                        <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net earnings                                             $   196,905    $ 3,066,568    $   870,641
  Adjustments to reconcile net earnings
    to net cash used by operating activities:
      Depreciation and depletion                                50,873         31,273         36,946
      Minority interest                                              0         (2,005)         2,674
      Allowance for doubtful accounts                             (863)          (473)         5,000
      Amortization of goodwill                                  36,696          3,977          3,977
      Deferred taxes                                            30,000        (30,000)       167,411
      (Acquisition) disposition of Goodwill                   (875,000)        26,231        (26,979)
      Revaluation of shares                                   (334,035)
      Prior period adjustment                                 (265,795)

CHANGES IN CURRENT ASSETS AND CURRENT
  LIABILITIES:  (Net of effect from purchase
  of Twin-Chart, Inc.: for the year ended April 30, 1997

  (Increase) decrease in current assets:
     Accounts receivable                                       139,481       (494,728)      (240,192)
     Inventory                                                (499,132)      (286,039)       (12,768)
     Prepaid expenses                                          286,283       (341,635)        (1,697)

  (Increase) decrease in non-current assets:
     Deposits                                                  (18,402)        (1,400)             0

  Increase (decrease) in current liabilities:
     Accounts payable and accrued expenses                     225,731       (132,929)      (206,545)
     Income taxes payable                                      (17,550)        51,870              0
                                                           -----------    -----------    -----------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES            (1,044,808)     1,890,710        598,468
                                                           -----------    -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of treasury stock                                         0        (45,920)             0
  Issuance of securities                                     1,109,728                        35,000
  Investment in securities                                     (11,711)      (300,000)
  Purchase of property and equipment                        (3,456,392)       (37,090)       (56,816)
  Disposition of equipment                                           0         50,382
  Loss realized on disposition of securities                   180,500         50,000
  Common stock subscribed                                            0         58,100
                                                           -----------    -----------    -----------
NET CASH (USED) BY INVESTING ACTIVITIES                     (2,177,875)      (224,528)       (21,816)
                                                           -----------    -----------    -----------
</TABLE>

                        See Notes to Financial Statements

                                        5
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
YEARS  ENDED APRIL 30, 1999 AND 1998 AND 1997
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                 Year Ended April 30
                                                      -----------------------------------------
                                                         1999           1998           1997
                                                      -----------    -----------    -----------
<S>                                                   <C>            <C>            <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
  Amounts loaned on notes receivable                      (12,772)        (9,006)
  Amounts repaid on note receivable                         5,771          8,254         25,595
  Amounts borrowed under notes payable                  2,275,869         78,069
  Amounts repaid on notes payable                        (756,350)      (231,539)       (98,584)
  Repayment (additions) to subscriptions receivable       696,077        (54,034)
  Reacquisition of common stock (net)                    (311,047)
                                                      -----------    -----------    -----------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES        1,897,548       (208,256)       (72,989)
                                                      -----------    -----------    -----------
NET INCREASE (DECREASE) IN CASH                        (1,325,135)     1,457,926        503,663

CASH AND CASH EQUIVALENTS, beginning of year            2,575,945      1,118,019        614,356
                                                      -----------    -----------    -----------

CASH AND CASH EQUIVALENTS, end of year                $ 1,250,810    $ 2,575,945    $ 1,118,019
                                                      ===========    ===========    ===========

SUPPLEMENTAL DISCLOSURE:
  Interest paid                                       $   153,130    $    36,345    $    40,851
  Income taxes paid                                   $    19,039    $    26,326
</TABLE>

                        See Notes to Financial Statements

                                        6
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
YEARS ENDED APRIL 30, 1999 AND 1998 AND 1997
--------------------------------------------------------------------------------

OTHER NON-CASH INVESTING AND FINANCING ACTIVITIES

                                                     Year Ended April 30
                                              ----------------------------------
                                                1999         1998         1997
                                              --------     --------     --------
Payment of accounts payable and
  accrued expenses in exchange
  for common stock                            $      0     $      0     $      0

Write-down for unrealized loss on
  available for sale securities               $180,500     $      0     $205,500

                        See Notes to Financial Statements

                                        7
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1999 AND 1998 AND 1997
--------------------------------------------------------------------------------

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

ORGANIZATION

The Company was  organized in July 1968 for the purpose of acquiring oil and gas
leases and for the exploration and development of oil and gas properties.

On October 30, 1994, the Company acquired Twin-Chart, Inc. a Nevada Corporation,
and it's subsidiary  (collectively  Twin). Twin was privately owned and operated
and is a producer and distributor of transit temperature recording instruments.

Twin was acquired by the issuance of 4,587,000 restricted shares of common stock
and 5,000,000  warrants to purchase  restricted common stock of the Company with
an agreed aggregate value of approximately $1,050,000.

Twin conducts its operations  primarily  through a 100 percent owned  subsidiary
Transit Services, Inc., under the trade name and style of Cox Recorders.

Effective   August  1,  1995,  by  agreement,   the  Company   organization  was
restructured with Mr. James Cox becoming an officer and director of the Company.
In 1997 Mr. Cox became  President,  Chief Executive  Officer and Chief Operating
Officer,  Mr.  Sprenger,  formerly  President of the Company and Chief Operating
Officer became the Chairman of the Board of Directors and the Board was expanded
to a total of five  members.  One of the new members is an officer and employee.
In 1998  Mr.Sprenger  resigned as Chairman of the Board of Directors and Mr. Cox
was then elected Chairman of the Board. Mr. Sprenger remains a Board member.

SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

     a. PRINCIPLES OF CONSOLIDATION

     The consolidated  financial  statements include the accounts of the Company
     and its wholly owned  subsidiaries,  Energy Reserve Financial Corp., Energy
     Reserve  Holdings,  Inc.,  ERES Cogenics,  Inc. and  Twin-Chart,  Inc., and
     VITSAB AB, a Swedish  corporation.  It also  includes the 56%  ownership of
     Digi-V,   Inc.,  which  is  in  the  development   stage.  All  significant
     intercompany accounts and transactions have been eliminated.

                                        8
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1999 AND 1998 AND 1997
--------------------------------------------------------------------------------

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

     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 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.

                                       9
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1999 AND 1998 AND 1997
--------------------------------------------------------------------------------

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

     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.

     h. INVENTORY

     Inventory at April 30, 1999 and 1998  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.

                                       10
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1999 AND 1998 AND 1997
--------------------------------------------------------------------------------

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

     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 $202,483 and $817,368 at
     April  30,  1999  and  1998  respectively)  with a high  quality  financial
     institution.  At April 30, 1999 and 1998,  substantially  all cash and cash
     equivalents were on deposit with one 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
     ten  customers   amounted  to  approximately  37%  of  the  total  accounts
     receivable  at April 30,  1998.  Generally,  the  Company  does not require
     collateral or other security to support customer receivables.  At April 30,
     1999 and 1998 the allowance  for doubtful  accounts was $28,664 and $29,529
     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).

                                       11
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1999 AND 1998 AND 1997
--------------------------------------------------------------------------------

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

     m. GOODWILL

     Goodwill  created in the  acquisition of the  consolidated  subsidiaries is
     being amortized over 15 TO 22 years.  Accumulated  amortization amounted to
     $50,696 and $11,931 at April 30, 1999 and 1998, respectively.

     n. BASIC 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 simple capital structure with no significant potential common
     shares.  Basic  earnings per common share is based on the weighted  average
     number of common  shares  outstanding  during each year (1999 - 21,368,188;
     1998 -  19,905,313;  1997 -  19,584,355).  Common  stock  equivalents  were
     immaterial for earnings per share purposes.

     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 and for  Long-Lived  asset for the Disposal of". In  evaluating  the
     recoverability of the Company's Long-lived assets, management evaluated the
     current fair market value and expected  future cash flows of its assets and
     concluded that no impairment of value has occurred as of April 30, 1999.

NOTE B - INVENTORY

Inventory at April 30, 1999 and 1998 consists of the following:

                                                1999                1998
                                             ----------          ----------
     Raw Materials                           $  367,752          $  364,540
     Work-in-process                            315,690             352,096
     Finished goods                             859,221             326,895
                                             ----------          ----------
                                             $1,542,663          $1,043,531
                                             ==========          ==========

                                       12
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1999 AND 1998 AND 1997
--------------------------------------------------------------------------------

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 gain on the exchange and
has recorded the cost of the warrants at the $30,000 recorded cost of the lots.

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. (OTS) a public  company to sell certain mining  equipment and 50,000 shares
of  Company  stock in  exchange  for  $10,000  cash and  190,000  shares  of 10%
Cumulative Convertible Income Preferred stock of OTS. The transaction was valued
at $200,000  comprised  of $50,000 for the Company  stock at $1.00 per share and
$150,000 for the mining equipment.

Because of certain litigation in 1998, the shares were written down.

A valuation  allowance was established  reducing the carrying amount to $.05 per
share,  because the core  business of the  company was still  considered  sound.
However in 1999  discussions  with market makers indicated that the value of the
company had further  declined and  accordingly,  the unrealized loss was written
off.

     PERFECTION FOODS INTERNATIONAL

In December  1992,  the Company  agreed in principal to use 50,000 shares of its
common stock to acquire 1,500,000 common stock shares and 5,000,000  warrants of
Perfection Foods,  International (PFI) a company formed in 1992 to engage in the
fish  processing  business.  In March 1993,  subsequent to the fiscal year ended
December 31, 1992,  the  transaction  was completed  and the Company  issued the
agreed shares and received the PFI shares.  Mr. Sprenger,  a Director and former
chairman of the Board of Directors of the Company, is an officer and director of
PFI.  At  the  date  of the  transaction,  March  1993,  the  Company's  holding
represented 33% of the outstanding  shares of PFI, and the Company  recorded the
transaction of $1.00 per share issued on 50,000  shares.  Because the short-term
growth of PFI has been slower than anticipated, the Company reduced the carrying
amount of PFI's  shares  by 50% in 1997.  The loss on these  available  for sale
securities was realized in 1998.

                                       13
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1999 AND 1998 AND 1997
--------------------------------------------------------------------------------

NOTE C - INVESTMENT IN SECURITIES (Continued)

Shares held at April 30, 1999 and 1998 were comprised as follows:

                                                           1999
                                              ----------------------------------
                                                           Current    Unrealized
                                                Cost        Value        Loss
                                              --------     -------    ----------
Pan American Energy Corporation Warrants      $ 30,000     $30,000
O.T.S. Holdings, Inc. Stock                    190,000       9,500
Other                                           11,711      11,711
                                              --------     -------
                                              $231,711     $51,211        $0
                                              ========     =======        ==

                                                           1998
                                              ----------------------------------
                                                           Current    Unrealized
                                                Cost        Value        Loss
                                              --------     -------    ----------
Pan American Energy Corporation Warrants       $30,000     $30,000     $
O.T.S. Holdings, Inc. Stock                    190,000       9,500      180,500
                                              --------     -------     --------
                                              $220,000     $39,500     $180,500
                                              ========     =======     ========

NOTE D - NOTES RECEIVABLE

Notes receivable at April 30, 1999 and 1998 consists of:

                                                              1999        1998
                                                             -------     -------
     Unsecured note receivable, due October 6,
       1999 plus accrued interest at 13%                     $16,989     $14,929
     Other                                                    30,343      25,402
                                                             -------     -------
                                                              47,332      40,331
     Less: current portion                                    30,477      33,503
                                                             -------     -------
                                                             $16,855     $ 6,828
                                                             =======     =======

                                       14
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1999 AND 1998 AND 1997
--------------------------------------------------------------------------------

NOTE E - PROPERTY AND EQUIPMENT

At April 30, 1999 and 1998,  property  and  equipment  are  summarized  by major
classification as follows:

     OIL AND GAS PROPERTIES AND EQUIPMENT               1999          1998
                                                     ----------    ----------
     Intangible drilling costs                       $  883,023    $  883,023
     Lease and well equipment                         1,828,881     1,828,881
     Leasehold improvements                             715,891       715,891
     Undeveloped leases                                  72,167        72,167
     Repurchased participating interests              2,608,640     2,608,640
     Other                                              170,696        71,036
                                                     ----------    ----------
                                                      6,279,298     6,179,638
     Less: accumulated depreciation and depletion     2,767,860     2,767,860
                                                     ----------    ----------
                                                      3,511,438     3,411,778
                                                     ----------    ----------
     MANUFACTURING PROPERTY AND EQUIPMENT

     Tooling                                            230,665       146,225
     Machinery and equipment                          3,306,132        34,640
     Office furniture and equipment                       8,106         8,106
     Leasehold improvements                             235,333       234,533
                                                     ----------    ----------
                                                      3,780,236       423,504
     Less: accumulated depreciation and depletion       181,912       131,039
                                                     ----------    ----------
                                                      3,598,324       292,465
                                                     ----------    ----------
                                                     $7,109,762    $3,704,243
                                                     ==========    ==========

                                       15
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1999 AND 1998 AND 1997
--------------------------------------------------------------------------------

NOTE E - PROPERTY AND EQUIPMENT (Continued)

OIL AND GAS PROPERTIES

     MITCHEL LEASES

The Mitchel leases located in Kern County,  California  consist of 380 acres, on
which 52 oil wells have been drilled and completed.

During 1999,  1998 and 1997 the Company did not drill any wells on this lease as
to which all drilling requirements have been satisfied.

Landowner and overriding royalty interests in the property total 21.66 percent.

The Company has obtained a report from an independent  petroleum  engineer which
combines  the  estimated  proved  reserves  and  revenues as of June 1996 of the
Mitchel leases and the  contiguous  Bacon Hills leases.  These  combined  leases
comprise an entire section of the Chico-Martinez  field (see below, "Bacon Hills
lease").  Reference is also made to the supplemental information on Standardized
measure of Discounted Future Net Cash Flows elsewhere in this Form 10-K.

During 1999 and 1998, the Company produced  approximately 1,100 gross barrels of
oil, on the  combined  Mitchel and Bacon Hills  leases.  No oil was  produced on
these leases in 1997.  During 1999,  1998 and 1997,  the Company had no steaming
operations.

     BACON HILLS LEASE

This sublease, located in the Chico-Martinez field, Kern County, California, was
acquired in December 1980, and consists of approximately 260 acres, in which the
Company has interests to the depth of 5,000 feet.  The landowners and overriding
royalty  interest  holders are identical  with the Mitchel  leases,  which total
21.67 percent, and the Company owns the remaining 78.33 percent working interest
in this  lease.  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. Under the terms of this sublease, the Company committed to
the drilling of an initial six wells on or before  March 31, 1982,  and at least
six additional  wells each 12-month period  thereafter,  until at least 52 wells
have been drilled without regard to whether they are producing or abandoned. The
Company  has drilled a total of 14 wells - under its  Commitment.  No wells have
been drilled on this lease since 1984.

In March 1990,  the  sublessor  declared the sublease  terminated  and requested
return  of  the  undrilled  portion  of  the  sublease.  The  Company  does  not
acknowledge  the  declaration  of  termination,  and has not  complied  with the

                                       16
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1999 AND 1998 AND 1997
--------------------------------------------------------------------------------

NOTE E - PROPERTY AND EQUIPMENT (Continued)

OIL AND GAS PROPERTIES (Continued)

    BACON HILLS LEASE (Continued)

sublessor's request. To date, no litigation,  action or further request has been
undertaken by the sublessor in connection with this matter. The Company believes
that this breach can be cured, but irrespective of the breach, the Company holds
a five-acre well tract and the oil and gas rights to each of the  aforementioned
fourteen wells on this sublease.

     COGENERATION SYSTEM AND THERMALLY ENHANCED OIL RECOVERY OPERATION

The major activity of the Company  concerning the properties during the past ten
years was directed toward the implementation of a proposed COGEN/TEOR Project to
be located on the Mitchel  leases,  with the  capability of serving the combined
Mitchel  and  Bacon  Hills  leases  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 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.

In  November  1998,  the Company  entered  into a  temporary  agreement  with an
experienced  Bakersfield  California  oil  operator  (Operator)  to restore  and
operate at his expense,  two (2) selected  wells on the  Company's  Kern County,
California oil leases  (Leases)  located on the  Chico-Martinez  oil field.  The

                                       17
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COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1999 AND 1998 AND 1997
--------------------------------------------------------------------------------

NOTE E - PROPERTY AND EQUIPMENT (Continued)

COGENERATION SYSTEM AND THERMALLY ENHANCED OIL RECOVERY OPERATION (Continued)

purpose of the  arrangement  was to permit the  Operator to evaluate  the Leases
during an initial  operating  period ending  February 1999, with the expectation
and intent of the Company and the Operator entering into a definitive  agreement
for operation of the Leases.

In April 1999, the Company and the Operator  entered into a definitive oil field
operating  agreement (the  Agreement)  which provides,  among other things,  for
revenue  sharing  by the  parties  and,  at the  sole  funding  and  cost to the
Operator,  for the rehabilitation of the Leases and the restoration of crude oil
production.

Two (2) separate  periods,  the Recovery Period and the Option Period govern the
term of the Agreement. The term of the Recovery Period will be determined by the
operating  results,  in that the  Operator is  entitled  to  recover,  by way of
operations, his rehabilitation costs (Capital Costs) invested on the Leases (the
Recovery  Amount).  Upon receipt of the  Recovery  Amount by the  Operator,  the
Operator  has the option to  operate  the Lease for three (3)  additional  years
under a new revenue sharing agreement (the Option Period).

During the Recovery  Period,  the company is to receive ten percent (10%) of the
gross  revenues  from crude oil  production  and the  Operator is to receive the
balance of gross revenues net of payment to the royalty  interest holders by the
oil  refinery/purchaser.  For the Option  Period,  the Company and the Operator,
respectively, will have seventy-five percent (75%) and twenty-five percent (25%)
of the working interest in the oil production.

Under the Agreement, the Company retains supervision over the Operator including
control and approval of all Capital Costs expenditures.

As of April 30, 1999,  the Operator  had produced  1,100  barrels of oil and had
invested  approximately  $17,218 in Capital Costs. No oil sales had been made as
of the April 30th date by the Operator.

Under this  Agreement,  the Company will not require any  significant  amount of
additional capital to continue operations of it's oil properties in 1999 and the
next few years.

    OTHER MATTERS

Geological  and  geophysical  costs for the years  ended April 30, 1999 and 1998
were not significant.

                                       18
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COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1999 AND 1998 AND 1997
--------------------------------------------------------------------------------

NOTE F - INCOME TAXES

The provisions for income taxes consists of:

                                                    April 30
                                      -------------------------------------
                                       1999           1998           1997
                                      -------       --------       --------
     Current payable:
       Federal                        $46,500       $ 10,500
       State                           25,000         70,000       $    800
                                      -------       --------       --------
                                       71,500         80,500            800
                                      -------       --------       --------
     Deferred:
       Federal                          9,890         30,000         98,933
       State                                                         33,959
                                      -------       --------       --------
                                        9,890         30,000        132,892
                                      -------       --------       --------
                                      $61,610       $ 50,500       $133,692
                                      =======       ========       ========

The Company and its subsidiaries file  consolidated  Federal income tax returns.
There is an aggregate  Federal net  operating  loss  carryover of  approximately
$6,900,000  available  to reduce  future  federal  taxable  income of the parent
company.  These net operating  loss  carryovers  will expire in various  amounts
between 2001 and 2010.

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

The  reconciliation  of income tax computed at U.S.  Federal and State statutory
rates to the income tax  provision  for the years  ended April 30, 1999 and 1998
are as follows:

                                       19
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1999 AND 1998 AND 1997
--------------------------------------------------------------------------------

NOTE F - INCOME TAXES (Continued)
                                                             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)
                                                    ========         =======

                                                             1998
                                                  --------------------------
                                                       Currently Payable
                                                  --------------------------
                                                  Consolidated      Deferred
                                                  ------------      --------

     Pre-tax accounting income                    $ 3,117,068
                                                  ===========
     Tax at statutory rates:
       Federal                                        968,100        (30,000)
       State                                          185,000
       Utilization of net operating
         loss carryforward                         (1,072,600)
                                                  -----------       --------
                                                  $    80,500       $(30,000)
                                                  ===========       ========

The  deferred  tax asset at April 30, 1999 and 1998 is  attributable  to accrued
State income taxes.

                                       20
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1999 AND 1998 AND 1997
--------------------------------------------------------------------------------

NOTE G - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts  payable and accrued  liabilities at April 30, 1999 and 1998 consist of
the following:

                                                            1999        1998
                                                          --------    --------
     Trade accounts payable                               $508,097    $103,356
     Accrued vacation payable                               68,179      73,121
     Accrued salaries and wages payable                                170,398
     Other accounts payable and accrued liabilities          6,266       9,936
                                                          --------    --------
                                                          $582,542    $356,811
                                                          ========    ========

NOTE H - NOTES AND CONTRACTS PAYABLE

The following is a summary of notes and contracts  payable at April 30, 1999 and
1998:

                                                            1999        1998
                                                         ----------   ---------
Unsecured notes payable to individuals due in monthly
installments of $2,955, including interest at 8%,
through December 2001 (see Note I).                       $  46,837   $  72,091

Note payable secured by treasury stock, due in monthly
installments of $2,000 plus accrued interest at 6.67%
through March, 2000.                                          8,591      42,422

Stipulated judgment for $201,875 for settlement of
litigation involving a well drilling contractor at the
Company's Mitchell and Bacon Hills lease. Interest at
accruing 10% per annum. The Note was settled
For approximately $100,000 in 1999.                               0     394,271

Advance against full lease/purchase finance which
was not completed at April 30, 1999                         217,731           0
Other unsecured notes payable                                31,376           0

                                       21
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1999 AND 1998 AND 1997
--------------------------------------------------------------------------------

NOTE H - NOTES AND CONTRACTS PAYABLE (Continued)

Note payable to bank, secured under general security
agreement, due in monthly installments of interest
only at prime plus 1% until June 1999.                       99,270           0

Note payable to bank, secured under general security
agreement, due in monthly installments of $19,258,
including interest at 9.75%, through March 2002.            616,301           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.                                       1,000,000           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.           213,217     282,291
                                                         ----------   ---------
    TOTAL                                                 2,233,323     791,075
                                                          1,651,949     510,369
                                                         ----------   ---------
    Less: current portion                                $  581,374   $ 280,706
                                                         ==========   =========

Aggregate maturities of long-term borrowings over the next five fiscal years are
as follows:

     Year ended April 30                                   Amount
     -------------------                                 ---------
           2000                                          $1,729,220
           2001                                          $  315,352
           2002                                          $  266,022
                                                         ----------
                                                         $2,310,594
                                                         ==========

                                       22
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1999 AND 1998 AND 1997
--------------------------------------------------------------------------------

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 Indicators 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,  USA, 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 20 years.

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   (unauditied)   information  assumes  the
acquisition had occurred on April 1, 1998 and 1997:

                                       23
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1999 AND 1998 AND 1997
--------------------------------------------------------------------------------

NOTE I - ACQUISITION OF VITSAB AB (Continued)

                                        1998             1997
                                     ----------      -----------
     Net assets                      $7,934,711      $ 4,435,997
                                     ==========      ===========

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

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

NOTE J - ACQUISITION OF NATIONAL ON-SITE CHECK CASHING, INC. OF NEVADA

In March,  1997,  the Company  issued 350,000 shares of common stock in exchange
for 75% of the issued and outstanding  stock of "National On-Site Check Cashing,
Inc.  of Nevada"  (NOCC).  NOCC  cashes  payroll  checks for a fee using  mobile
armored  trucks for  facilitating  the  transactions.  The Company  recorded the
transaction using the purchase method of accounting and valued the shares issued
at $.10 per share.  The transaction was rescinded in April,  1998.  There was no
significant gain or loss in the transaction.

NOTE K - 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.

NOTE L - RELATED-PARTY MATTERS

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

                                       24
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1999 AND 1998 AND 1997
--------------------------------------------------------------------------------

OWNERSHIP INTERESTS

The  ownership of the  Company's  common stock by Mr. Cox, Vitsab,  AG (Vitsag),
Company directors,  employees and other related parties (relatives,  friends and
business  associates  of Mr.  Sprenger)  is  summarized  as of April 30, 1999 as
follows:

                                                        Percentage
                                                        ----------
         Mr. Cox                                           20.1
         Vitsab, AG                                        14.8
         Other directors and employees                      3.8
         Others                                             9.2

As fully disclosed in previous  Financial  Statements,  the Company entered into
common stock issuance  agreements with the then  President,  Alfred P. Sprenger,
and his wife Dorothy V. Sprenger  (Sprenger),  and with other related parties in
1984 and 1985, which amounted in the aggregate to 3,300,000 restricted shares.

In October 1984, the Company issued 2,000,000 restricted shares to Sprenger at a
price of $1.00 per share.  The trading  price at the date of the  agreement  was
$1.00 per  share.  Subsequently,  the price per share was  adjusted  to $0.65 to
conform  with the per share price of the 1985 common stock  purchase  agreements
entered into with the other related parties. This action resulted in an adjusted
sale price of $1,250,000.  In December 1992,  Sprenger assigned 1,950,000 of the
shares to a non-profit  organization.  As of April 30, 1998, a total of $728,321
had been credited to the Sprenger  promissory note by application of $598,000 in
accrued salary compensation and $130,321 in debt due Sprenger.

In December 1985, the Company issued 1,300,000 restricted shares of common stock
to certain  related  parties in exchange  for  promissory  notes  secured by the
issued shares at price of $0.625 per share.  The market price at the date of the
transaction  was $0.62 to $0.875 per share.  The aggregate  dollar amount of the
promissory  notes was  $812,500.  As of April 30,  1998, a total of $458,779 had
been paid on those promissory notes.

The amount due on the Sprenger and other  related  party  promissory  notes have
been  reflected  in  the  consolidated   Balance  Sheets  as  a  deduction  from
shareholders' equity.

                                       25
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1999 AND 1998 AND 1997
--------------------------------------------------------------------------------

NOTE L - RELATED-PARTY MATTERS (Continued)

In  October  1998,  the Board of  Directors  (Board)  reviewed  the  status  and
longevity  of these  agreements.  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.  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 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.

NOTE M - SEGMENT INFORMATION

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

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

Temperature  Recorder Segment  manufactures and distributes  transit temperature
recording  instruments  both in the  United  States 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  in  which  will  indicate   deterioration  in  the
consumability  of  perishable  food  products.  The Company  owns the  worldwide
distribution rights to this product.

                                       26
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COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 30, 1999 AND 1998 AND 1997
--------------------------------------------------------------------------------

The Oil Production  segment is located in Kern County,  California.  The company
produced a minimal  amount of oil on this  property in 1999 and 1998 and none in
1997. More information on the property can be found in Note E.

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

NOTE N - PRIOR PERIOD ADJUSTMENT

During the period from 1993 through  1995,  the former  President of the Company
issued his own shares,  from time to time, to help meet the  obligations  of the
Company.  Most of these  transactions  occurred  when the  Company's  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 O - 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 leases are as follows:

              Year ending April 30
              --------------------
                          1999                             $67,642
                          2000                             $67,642
                          2001                             $67,642
                  Through 2005                            $248,043

Rent  expense  for the years ended April 30,  1999,  1998 and 1997 is  $137,136,
$134,852, and $125,380, respectively.

                                       27