SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q

(Mark One)


[x] Quarterly report pursuant to Section 13 or 15(d) of the Securities  Exchange
    Act of 1934

[ ] For the quarterly period ended December 31, 1999 or

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934

For the transition period from ______________________ to _______________________

                              0-16594
Commission file number  ________________________________________________________

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


         DELAWARE                                                 59-2740462
--------------------------------                          ----------------------
(State or other jurisdiction of                               (I.R.S.) Employer
Incorporation or Organization)                               Identification No.)


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

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


--------------------------------------------------------------------------------
              (Former Name, Former Address and Former Fiscal Year,
                          If changed since last report)


     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 ______


                     APPLICABLE ONLY TO ISSUERS INVOLVED IN
                        BANKRUPTCY PROCEEDINGS DURING THE
                              PRECEDING FIVE YEARS


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


<PAGE>

                                        i

                MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES


                                      Index

                                                                           Page

Part I - Financial Information

Item 1.  Financial Statements

         Condensed Consolidated Balance Sheets -
           December 31, 1999 and March 31, 1999............................    1


         Condensed Consolidated Statements of Operations -
           Three Months and Nine Months Ended December 31, 1999 and 1998...    2


         Condensed Consolidated Statements of Changes in Stockholders'
           Equity (Deficit) - Nine Months Ended December 31, 1999..........    3


         Condensed Consolidated Statements of Cash Flow -
           Nine Months Ended December 31, 1999 and 1998....................    4


         Notes to Condensed Consolidated Financial Statements..............  5-8


Item 2.    Management's Discussion and Analysis of Financial
              Condition and Results of Operations.......................... 9-11


Part II - Other Information


Item 4.   Submission of Matters to a Vote of Security-Holders..............   12

Item 6.   Exhibits and Reports on Form 8-K.................................   12


          Signature........................................................   12



                                       1
<PAGE>






Item 1.  Financial Statements


                         PART 1 - FINANCIAL INFORMATION

                MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In Thousands)


   ASSETS
<TABLE>
<CAPTION>
                                                                                      December 31,           March 31,
                                                                                          1999                 1999
                                                                                    ---------------       -------------
                                                                                              (Unaudited)
<S>                                                                               <C>                  <C>
Current Assets:
     Cash                                                                         $          107       $          205
     Accounts Receivable, Net                                                              2,531                2,473
     Inventories                                                                           2,267                1,990
     Prepaids and Other                                                                      154                   69
                                                                                    -------------        -------------
     Total Current Assets                                                                  5,059                4,737

Property and Equipment, Net                                                                1,684                2,013
Other Assets, Net                                                                          1,296                1,761
                                                                                    -------------        -------------
Total Assets                                                                      $        8,039       $        8,511
                                                                                  ===============      ===============

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)


Current Liabilities:
     Current Maturities of Long-Term Debt                                         $          771       $          874
     Accounts Payable and Accrued Liabilities                                              2,472                2,405
                                                                                  ---------------      ---------------

     Total Current Liabilities                                                             3,243                3,279

Net Liabilities of Discontinued Operations                                                   528                1,917
Long-Term Debt, Less Current Maturities                                                   14,432               14,915
                                                                                  ---------------      ---------------
Total Liabilities                                                                         18,203               20,111
                                                                                  ===============      ===============
Stockholders' Equity (Deficit):
     Voting Preferred Stock                                                                    1                    1
     Common Stock                                                                             64                   64
     Capital In Excess of Par Value                                                        8,583                8,583
     Retained Earnings (Deficit)                                                         (18,484)             (19,920)
     Less:  Treasury Stock                                                                  (328)                (328)
                                                                                  ---------------      ---------------
     Total Stockholders' Equity (Deficit)                                                (10,164)             (11,600)
                                                                                  ---------------      ---------------
Total Liabilities and Stockholders' Equity (Deficit)                              $        8,039       $        8,511
                                                                                  ===============      ===============
</TABLE>


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


                                       2
<PAGE>


                MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                  Three Months Ended                Nine Months Ended
                                                                     December 31,                      December 31,
                                                             ----------------------------     ----------------------------

                                                                 1999            1998             1999            1998
                                                             ------------    ------------     ------------    ------------
<S>                                                          <C>             <C>              <C>             <C>
Revenue:
      Net Sales                                              $     4,213     $     3,808      $    12,283     $    10,800

Costs and Expenses:
      Cost of Sales                                                2,169           2,070            6,416           6,122
      Selling, General and Administrative                          1,189           1,027            3,499           2,949
      Depreciation and Amortization                                  240             235              749             721
      Interest, Net                                                  293             300              884             870
                                                             ------------    ------------        ---------      ----------
Total Costs and Expenses                                           3,891           3,632           11,548          10,662
                                                             ------------    ------------        ---------      ----------

Income  (Loss) Before Discontinued Operations                        322             176              735             138
      and Extraordinary Gain
(Loss) from Operations of Discontinued Operations                    (24)           (645)          (1,121)         (1,743)
Extraordinary Gain on Forgiveness of Debt                              0               0                0             662
Gain on Disposal of Discontinued Operations                            0               0            1,822               0
                                                             ------------    ------------     ------------    ------------
Net Income (Loss)                                            $       298     $      (469)     $     1,436     $      (943)
                                                             ============    ============     ============    ============

Earnings (Loss) Per Basic and Diluted Common Share:
      Income from Continuing Operations                             0.05            0.03             0.12            0.02
      Income (Loss) from Discontinued Operations                    0.00           (0.11)            0.11           (0.18)
                                                             ------------    ------------     ------------    ------------
Earnings (Loss) per Basic and Diluted Common Share           $      0.05     $     (0.08)     $      0.23     $     (0.16)
                                                             ============    ============     ============    ============
</TABLE>

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



                                       3
<PAGE>


                MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                       NINE MONTHS ENDED DECEMBER 31, 1999
                        (In Thousands Except Share Data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                            COMMON STOCK
                                      --------------------------------------------------------------------------------------
                                        Number          Par         Capital in    Retained         Treasury
                                          of           Value        Excess of     Earnings           Stock           Total
                                        Shares                      Par Value    (Deficit)
                                      -----------   -----------    -----------   ------------    ------------    -----------
<S>                                   <C>           <C>            <C>           <C>             <C>             <C>
Balance, March 31, 1999                6,406,191    $       64     $    8,583    $   (19,920)    $      (328)    $  (11,601)

Stock Issue                               40,000

Net Income for Nine Months
   Ended December 31, 1999                 -             -              -              1,436            -             1,436
                                      --------------------------------------------------------------------------------------

Balance, December 31, 1999             6,446,191    $       64     $    8,583    $   (18,484)    $       (328)   $  (10,165)
                                      ===========   ===========    ===========   ============    =============   ===========


                                                                   VOTING PREFERRED STOCK
                                      --------------------------------------------------------------------------------------
                                        Number          Par
                                          of           Value
                                        Shares
                                      -----------   -----------

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

Total Stockholders' Equity                                                                                       -----------
  (Deficit), December 31, 1999                                                                                   $  (10,164)
                                                                                                                 ===========
</TABLE>

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


                                       4
<PAGE>


                MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In Thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                               Nine Months Ended
                                                                                                  December 31,
                                                                                    --------------------------------------
                                                                                         1998                      1999
                                                                                    -------------           --------------
<S>                                                                                <C>                      <C>
Operating Activities
    Net Income (Loss) from Continuing Operations                                    $        735            $         138
                                                                                    -------------           --------------
    Adjustments to Reconcile Net Income (Loss) to Net Cash
         Provided (Used) by Operating Activities:

      Depreciation and Amortization                                                          749                      721
      (Increase) Decrease in:
         Accounts Receivable                                                                 (58)                    (108)
         Inventories                                                                        (277)                    (166)
         Prepaids and Other                                                                  (41)                     (57)
      Increase (Decrease) in:
         Accounts Payable and Other Accrued Liabilities                                       49                      140
                                                                                    -------------           --------------
    Total Adjustments                                                                        422                      530
                                                                                    -------------           --------------
    Net Cash Provided by Operating Activities                                              1,157                      668
                                                                                    -------------           --------------
Investing Activities
    Expended for Property and Equipment                                                     (260)                    (173)
    Expended for Product Development                                                         (78)                    (157)
    Expended for Other Assets                                                                (68)                    (135)
                                                                                    -------------           --------------
    Net Cash Used by Investing Activities                                                   (406)                    (465)
                                                                                    -------------           --------------

Financing Activities
    Payments on Notes Payable and Long-Term Debt                                            (597)                    (100)
    Proceeds from Borrowing on Notes Payable and Long-Term Debt                                0                      350
    Advances to Affiliates - Discontinued Operations                                        (252)                    (378)
                                                                                    -------------           --------------
    Net Cash Used by Financing Activities                                                   (849)                    (128)
                                                                                    -------------           --------------
Net Decrease in Cash                                                                         (98)                      75
Cash at Beginning of Period                                                                  205                      465
                                                                                    -------------           --------------
Cash at End of Period                                                               $        107            $         540
                                                                                    =============           ==============
</TABLE>

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



                                       5
<PAGE>

                MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE NINE MONTHS ENDED DECEMBER 31, 1999



NOTE A - BASIS OF PRESENTATION

     The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally  accepted  accounting  principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation  S-X.  Accordingly,  they do not include all of the information
and notes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been included.  Operating  results for the nine-month  period ended December 31,
1999 are not necessarily  indicative of the results that may be expected for the
year ended  March 31,  2000.  The  unaudited  condensed  consolidated  financial
statements  should  be read  in  conjunction  with  the  consolidated  financial
statements  and notes thereto  included in the  Company's  annual report on Form
10-K for the year ended March 31, 1999.

     The  unaudited  condensed  consolidated  financial  statements  include the
accounts of the Company and its subsidiaries,  MTS Packaging Systems, Inc. ("MTS
Packaging"),   Medical  Technology  Laboratories,   Inc.  ("MTL")  and  LifeServ
Technologies,   Inc.  ("LifeServ").  MTL  and  LifeServ  represent  discontinued
operations, and accordingly,  these discontinued businesses' net liabilities are
shown  as one  amount  under  the  captions  "Net  Liabilities  of  Discontinued
Operations"  for fiscal 2000 and fiscal 1999. The results of operations of these
discontinued  businesses for fiscal 2000 and fiscal 1999 have been excluded from
the components of "Income (Loss) from Continuing Operations" and shown under the
caption "Loss from Operations of  Discontinued  Operations" in the Statements of
Operations.

     The  unaudited  condensed  consolidated  financial  statements  include the
classification  of the amounts  due  pursuant  to the  Company's  bank term loan
according  to the  repayment  terms of the loan  agreement.  Certain  events  of
default under the loan agreement may have occurred and the Company has requested
a waiver of these  events of default.  Although  the Company is  discussing  the
waivers  with  the  bank,  there  are no  assurances  that the  waivers  will be
obtained.  In the event that waivers are not obtained and the bank exercises its
rights  regarding the repayment of the loan, the  classification  of the amounts
due to the bank on the balance  sheet may change from  long-term to current.  If
the bank elects to exercise its rights under the loan  agreement  regarding  the
repayment of the indebtedness,  the Company's  results of operations,  liquidity
and financial condition would be adversely affected (See Note E).


NOTE B - INVENTORIES

     The components of inventory consist of the following:
<TABLE>
<CAPTION>
                                                                    December 31,            March 31,
                                                                        1999                  1999
                                                                  ----------------      ----------------
                                                                              (In Thousands)
<S>                                                               <C>                   <C>

               Raw Materials                                      $        1,131        $          767
               Finished Goods and Work in Progress                         1,276                 1,363
               Less:  Inventory Valuation Allowance                         (140)                 (140)
                                                                  ----------------      ----------------
                                                                  $        2,267        $        1,990
                                                                  ================      ================
</TABLE>

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

NOTE C - EARNINGS PER SHARE

     Net income per common share is computed by dividing net income by the basic
and diluted weighted average number of shares of common stock  outstanding.  For
diluted weighted average shares outstanding, the Company used the Treasury stock
method to  calculate  the common  stock  equivalents  that stock  options  would
represent.  The effect of all  options  and  warrants  were not  included in the
calculation of net income per diluted common share as the effect would have been
anti-dilutive.


                                       6
<PAGE>


NOTE D - DISCONTINUED OPERATIONS

     During the  fourth  quarter  of fiscal  1999,  the  Company  implemented  a
strategy of focusing its  resources on its core  business,  MTS  Packaging,  and
divesting the other two businesses it historically operated.

     In May 1999, the Company sold LifeServ, its Health Care Information Systems
subsidiary.  The Asset Acquisition  Agreement provided,  among other things, for
the buyer to receive  substantially  all the assets of LifeServ in consideration
for the assumption of certain stated  liabilities of  approximately  $5 million.
The sale  resulted  in a gain of  approximately  $1.8  million,  which  has been
recognized  in the  accompanying  financial  statements as a gain on disposal of
discontinued  operations.  During the first  quarter,  LifeServ  had  revenue of
$454,000  and  costs  and  expenses  of  $978,000   resulting  in  a  loss  from
discontinued operations of $524,000.  LifeServ had no operations after the first
quarter.

     In January  2000,  the Company  concluded  a sale of certain  assets of its
Clinical Laboratory Services subsidiary,  Medical Technology Laboratories,  Inc.
("MTL"). The Company sold the goodwill, laboratory equipment, computer equipment
and certain  accounts  receivable for one million dollars  ($1,000,000)  and the
assumption  of  approximately   four  hundred  thousand  dollars  ($400,000)  in
liabilities.  The  proceeds  of the  sale  were  primarily  used to  reduce  the
Company's  outstanding  indebtedness to its principal  lender.  According to the
terms of the Asset Purchase Agreement,  the Company will continue to operate MTL
for six months or until the buyer receives its Medicare provider number.  During
the fourth quarter of fiscal 1999, the Company  estimated a loss on the disposal
of MTL and recorded a charge of $2.5  million.  The loss on disposal  included a
reserve for $500,000 for the estimated  costs of disposal and  operating  losses
through the disposal date. The net loss from the operations of the  discontinued
operation through December 31, 1999 was $1,097,000 of which $500,000 was charged
to the  reserve  and  the  balance  of  $597,000  was  recorded  as a loss  from
operations of discontinued operations. The sale of the assets and liquidation of
the  remaining  assets is not  expected  to result in any  further  losses.  The
Company anticipates that the gain realized on the sale of assets,  which will be
recognized during the fourth quarter, will be approximately $400,000. The amount
of the potential gain on the liquidation can not be accurately  determined until
the liquidation of the remaining assets,  comprised of approximately  $1,800,000
in  accounts  receivable,  is  complete  and a  final  resolution  of  remaining
liabilities of approximately  $3.2 million not assumed by the buyer is obtained.
The Company  anticipates that the final  liquidation of assets and resolution of
liabilities will not be concluded until fiscal 2001.

     The carrying  value of the net  liabilities of  discontinued  operations at
December 31, 1999 and March 31, 1999 is comprised of the following.

<TABLE>
<CAPTION>
                                                                                                      Total
                                       LifeServ                          MTL                       Discontinued
                                                                                                    Operations
                              ---------------------------    ---------------------------   ----------------------------
                              December 31,    March 31,      December 31,    March 31,     December 31,     March 31,
                                  1999           1999            1999           1999           1999            1999
                              ------------   ------------    ------------   ------------   ------------    ------------
<S>                           <C>            <C>             <C>            <C>            <C>              <C>
Current Assets                $       0      $     1,047     $     2,963    $     3,945    $     2,963     $     4,992
Other Assets                          0            2,088              98             71             98           2,159
                              ------------   ------------    ------------   ------------   ------------    ------------
Total Assets                  $       0      $     3,135     $     3,061    $     4,016    $     3,061     $     7,151
                              ------------   ------------    ------------   ------------   ------------    ------------

Current Liabilities           $       0      $     4,532     $     2,280    $     2,876    $     2,280     $     7,408
Long-Term Liabilities                 0              346           1,309          1,314          1,309           1,660
                              ------------   ------------    ------------   ------------   ------------    ------------
Total Liabilities             $       0      $     4,878     $     3,589    $     4,190    $     3,589     $     9,068
                              ------------   ------------    ------------   ------------   ------------    ------------
Net Liabilities of
Discontinued Operations       $       0      $     1,743     $       528    $       174    $      528      $     1,917
                              ============   ============    ============   ============   ============    ============
</TABLE>


                                       7
<PAGE>


NOTE E - LONG-TERM DEBT

         Long-term  debt  related  to  continuing  operations  consists  of  the
following:
<TABLE>
<CAPTION>
                                                                                     December 31,       March 31,
                                                                                         1999             1999
                                                                                    -------------    --------------
                                                                                             (In Thousands)
  <S>                                                                               <C>              <C>
  Bank Term Loan;  payable in  installments  of interest  at 7.5% and  principal
    monthly for ten years ending  September 1, 2006,  with a lump sum payment of
    approximately $9.3 million on that date secured by all tangible and
    intangible assets of the Company.                                                $  14,371       $    14,806

  Unsecured Notes Payable plus interest at 12% through  February 1999, and 18%
    until repaid.                                                                          150               150

  Unsecured  Notes  Payable plus  interest at 13% in monthly  installments  of
    $8,905 through September 2001.                                                         164               200

  Unsecured Note Payable plus interest at 3%, payable in monthly  installments
    of $2,394 through September 2006.                                                      152               193

  Unsecured  Note  Payable  under  settlement  agreement  with  State of Florida
    Department of Revenue, payable in monthly installments of $2,500-$3,500
    over a period of four to eight years.                                                  270               284

   Other Notes and  Agreements;  interest and  principal  payable  monthly and
    annually at various amounts through March 2000.                                         96               156
                                                                                    -------------    --------------
  Total Long -Term Debt                                                                 15,203            15,789
  Less Current Portion                                                                    (771)             (874)
                                                                                    -------------    --------------
  LONG-TERM DEBT DUE AFTER 1 YEAR                                                    $  14,432       $    14,915
                                                                                    =============    ===============
</TABLE>

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

     On July 15, 1999,  the Company  received a waiver of certain  defaults that
occurred under its bank term loan agreement  through June 30, 1999. In addition,
the bank and the  Company  agreed to modify the loan  agreement  for  results of
operations subsequent to July 1, 1999. To date the bank and the Company have not
agreed on the terms of the modification. The Company has requested that the bank
extend its waiver of certain  defaults  past June 30, 1999 and has requested the
bank to waive certain other events of default that may have occurred.  There are
no  assurances  that the bank will  extend  the  waiver or waive any  additional
events  of  default  that may have  occurred.  If the bank  does not  ultimately
provide a waiver of events of default  and/or a loan agreement  modification  is
not executed,  long-term debt of approximately $14.4 million may be reclassified
as current and thereby,  adversely  affect the Company's  results of operations,
liquidity and financial condition.



                                       8
<PAGE>


NOTE F - CONTINGENCIES

     On November 19, 1998,  MTL received a refund  request in the amount of $1.8
million from Medicare Program  Safeguards ("MPS") and $104,000 from the State of
Florida Agency for Health Care Administration  ("AHCA").  The request follows an
onsite review in May 1997, by federal and state agencies,  of MTL's Medicare and
Medicaid billing  practices in 1996. MTL has conducted an internal review of the
billing procedures, records and services in question and disputes MPS's findings
and determination.  On December 17, 1998, MTL responded to the MPS determination
and  subsequently  received a response  from MPS in which MPS  informed MTL that
recoupment  of the  refund  amount  would be  stayed  while MPS  reviewed  MTL's
response.  Although MTL believes  that MPS's  determination  and the request for
refund are without  merit,  there can be no  assurance  that this matter will be
resolved over the near term or that the ultimate  outcome of the matter will not
have a material adverse affect on the amount of the gain the Company may realize
in the sale of assets and liquidation of MTL.

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


NOTE G - INCOME TAXES

     The  Company's  utilization  of net  operating  loss  carry  forwards  from
continuing and discontinued  operations that have not been previously recognized
substantially eliminated the current periods income tax provision.


NOTE H - SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
                                                                                              December 31,
                                                                                      -----------------------------
                                                                                          1999             1998
                                                                                      ------------    -------------
                                                                                              (In Thousands)
  <S>                                                                                 <C>             <C>
  Cash Paid for Interest - Continuing Operations                                      $      883      $       870

  Cash Flow Information for Discontinued Operations:

      Operating Activities
          Net Cash (Used) by Discontinued Operations                                        (284)            (370)

      Investing Activities
          Net Cash (Used) by Investing Activities of Discontinued Operations                (103)            (186)

      Financing Activities
          Net Cash Provided by Financing Activities of Discontinued Operations               96               320
                                                                                      ------------    ------------
      Net (Decrease) in Cash - Discontinued Operations                                      (291)            (236)
      Cash at Beginning of Period - Discontinued Operations                                   61             (142)
      Cash Provided by Continuing Operations                                                 252              378
                                                                                      ------------    ------------
      Cash at End of Period - Discontinued Operations                                  $      22      $         0
                                                                                      ============    ============
</TABLE>


                                       9
<PAGE>


ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     This Form 10-Q contains  forward-looking  statements  within the meaning of
that term in Section  27A of the  Securities  Act of 1933 and Section 21E of the
Securities  Exchange  Act of 1934.  Additional  written or oral  forward-looking
statements  may be made by the Company  from time to time,  in filings  with the
Securities and Exchange  Commission or otherwise.  Statements  contained  herein
that are not historical  facts are  forward-looking  statements made pursuant to
the safe harbor  provisions  described  above.  Forward-looking  statements  may
include,  but are not limited to,  projections  of  revenues,  income or losses,
capital  expenditures,  plans for future  operations,  the elimination of losses
under certain  programs,  financing  needs or plans,  compliance  with financial
covenants  in loan  agreements,  plans for sale of assets or  businesses,  plans
relating to products or services of the  Company,  assessments  of  materiality,
predictions of future events and the effects of pending and possible litigation,
as well as assumptions relating to the foregoing. In addition, when used in this
discussion, the words "anticipates",  "estimates", "expects", "intends", "plans"
and  variations  thereof  and  similar  expressions  are  intended  to  identify
forward-looking statements.

     Forward-looking   statements   are   inherently   subject   to  risks   and
uncertainties,  some of which can be predicted or  quantified,  based on current
expectations.  Consequently,  future  events and  actual  results  could  differ
materially  from  those  set  forth  in,  contemplated  by,  or  underlying  the
forward-looking  statements  contained  herein.  Statements  in  this  Quarterly
Report,  particularly  in "Item  2.  Management's  Discussion  and  Analysis  of
Financial   Condition  and  Results  of  Operations"   and  Notes  to  Condensed
Consolidated  Financial Statements,  describe factors,  among others, that could
contribute to or cause such differences.  Other factors that could contribute to
or  cause  such  differences  include,  but are not  limited  to,  unanticipated
increases in operating costs, labor disputes, capital requirements, increases in
borrowing  costs,  product  demand,  pricing,  market  acceptance,  intellectual
property rights and litigation,  risks in product and technology development and
other risk factors detailed in the Company's  Securities and Exchange Commission
filings.

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


RESULTS OF OPERATIONS

Three Months Ended December 31, 1999 and 1998
---------------------------------------------

     Net sales for the three months ended December 31, 1999  increased  10.5% to
$4.2 million from $3.8 million during the same period the prior year.

     Net sales  increased  primarily  as a result  of a greater  number of punch
cards and other  disposable  supplies sold to existing  customers.  In addition,
prices to customers,  for certain punch cards, have increased  approximately 3%.
MTS  Packaging  also  continues to increase its customer base both in the US and
Canada.

     Cost of sales and services  for the three  months  ended  December 31, 1999
increased 5% to $2.2 million from $2.1 million  during the same period the prior
year.  Cost of sales and  services as a percentage  of sales  decreased to 51.4%
from 54.4% during the same period the prior year.  The decrease is primarily due
to certain  fixed  components  of cost of sales and services not  increasing  as
revenue increased.  Price increases to customers have generally offset increases
in raw material and direct labor costs incurred by the Company.


                                       10
<PAGE>

     Selling,  general and  administration  expenses  for the three months ended
December 31, 1999  increased  20% to $1.2  million from $1.0 million  during the
same period the prior year. The increase resulted  primarily from an increase in
personnel  costs that  resulted  from the addition of  personnel to  accommodate
increased  sales and  services.  In  addition,  the Company has  dedicated  more
resources to trade show and other marketing activities during fiscal 2000.

     Depreciation and amortization  expenses for the three months ended December
31, 1999 increased 2% to $240,000 from $235,000 during the same period the prior
year. This increase is a result of new assets being placed into service.

     Interest  expense for the three months ended December 31, 1999 decreased 2%
to $293,000  from $300,000  during the same period the prior year.  The decrease
results  from a  reduction  in  long-term  debt  associated  with the  continued
amortization of the its bank indebtedness.


Nine Months Ended December 31, 1999 and 1998
--------------------------------------------

     Net sales for the nine months ended  December 31, 1999  increased  13.7% to
$12.3 million from $10.8 million during the same period the prior year.

     Net sales  increased  primarily  as a result  of a greater  number of punch
cards and other  disposable  supplies sold to existing  customers.  In addition,
prices to customers,  for certain punch cards, have increased  approximately 3%.
MTS  Packaging  also  continues to increase its customer base both in the US and
Canada.

     Cost of sales and  services  for the nine months  ended  December  31, 1999
increased  4.9% to $6.4  million  from $6.1  million  during the same period the
prior year.  Cost of sales and  services as a percentage  of sales  decreased to
52.2%  from  56.7%  during  the same  period the prior  year.  The  decrease  is
primarily  due to certain  fixed  components  of cost of sales and  services not
increasing as revenue  increased.  Price  increases to customers  have generally
offset increases in raw material and direct labor costs incurred by the Company.

     Selling,  general and  administration  expenses  for the nine months  ended
December 31, 1999  increased  21.0% to $3.5 million from $2.9 million during the
same period the prior year. The increase resulted  primarily from an increase in
personnel  costs that  resulted  from the addition of  personnel to  accommodate
increased  sales and  services.  In  addition,  the Company has  dedicated  more
resources to trade shows and other marketing activities.

     Depreciation and  amortization  expenses for the nine months ended December
31, 1999 increased 3.9% to $749,000 from $721,000  during the same period of the
prior year. This increase is a result of new assets being placed into service.

     Interest expense for the nine months ended December 31, 1999 increased 1.6%
to $884,000 from $870,000 during the same period of the prior year. The increase
results  from  additional  debt,  which the Company  incurred  during the fourth
quarter of the previous fiscal year ending March 31, 1999.

LIQUIDITY AND CAPITAL RESOURCES

     During the first nine months of the current  fiscal  year,  the Company had
net income from  continuing  operations  of 735,000  compared to a net income of
$138,000 in the prior year. Cash provided by operating  activities of continuing
operations  was  $1,157,000  during the nine  months  ended  December  31,  1999
compared to $668,000 provided in the prior year. The Company had working capital
of $1,816,000 at December 31, 1999.

     Cash was provided by operating  activities of continuing  operations during
the nine months ended December 31, 1999 primarily due to profitable operations.

     Investing  activities  used $406,000  during the nine months ended December
31,  1999  as a  result  of  expenditures  for  capital  equipment  and  product
development.


                                       11
<PAGE>

     Financing  activities  used $849,000  during the nine months ended December
31, 1999  primarily  as a result of  payments  made to the  Company's  principal
lenders.  In addition,  the  operations of MTL required cash to support  working
capital needs while potential buyers were identified.

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

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

     The Company believes that cash generated from operations will be sufficient
to meet its capital expenditures,  product development and working capital needs
for the next twelve months.

     In January 2000,  the Company  concluded the sale of certain  assets of its
Clinical  Laboratory  Services  subsidiary,   MTL.  The  consideration  received
included  $1,000,000 in cash,  which was used  primarily to reduce the Company's
outstanding  indebtedness to its principal lender.  The remaining assets will be
liquidated  by  MTL,  and  the  proceeds  of the  liquidation,  less  the  costs
associated with the liquidation, will be used to further reduce long-term debt.

     Certain  events of  default  may have  occurred  under the  Company's  loan
agreement  with its bank.  Although the Company has  requested a waiver of these
events of default, there are no assurances that the waivers will be obtained. If
the bank elects to exercise its rights under the loan  agreement  regarding  the
repayment of the indebtedness,  the Company's  results of operations,  liquidity
and financial condition would be adversely affected.


YEAR 2000 COMPLIANCE

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


                                       12
<PAGE>


PART II  -  OTHER INFORMATION


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

         NONE

Item 6.  Exhibits and Reports on Form 8-K

         A.       Exhibits

                  27 - Financial  data  schedule as of December 31, 1999 filed
                  herewith (for SEC use only).

         B.       Reports on Form 8-K

                  Form 8-K dated January 18, 2000

Signature

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


                        MEDICAL TECHNOLOGY SYSTEMS, INC.



Date:  February 14, 2000   By: /s/ Michael P. Conroy
                              --------------------------------------------------
                              Michael P. Conroy
                              Vice President & Chief Financial Officer
                              (Principal Financial and Chief Accounting Officer)