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, 2001

[ ]  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 ______


                                      10Q-1


<PAGE>


                                        i


                MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES


                                      Index

                                                                           Page
Part I - Financial Information


Item 1.   Financial Statements

          Condensed Consolidated Balance Sheets -
            December 31, 2001 and March 31, 2001.........................      1


          Condensed Consolidated Statements of Operations -
            Three Months and Nine Months Ended December 31, 2001 and 2000      2


          Condensed Consolidated Statements of Changes in Stockholders'
            Equity (Deficit) - Nine Months Ended December 31, 2001.......      3


          Condensed Consolidated Statements of Cash Flows -
            Nine Months Ended December 31, 2001 and 2000................       4


          Notes to Condensed Consolidated Financial Statements..........   5 - 9


Item 2.   Management's Discussion and Analysis of Financial
            Condition and Results of Operations......................... 10 - 13


Part II - Other Information


Item 6.   Exhibits and Reports on Form 8-K..............................      14


          Signatures....................................................      14



<PAGE>
                                       1


Item 1.  Financial Statements


                    PART 1 - FINANCIAL INFORMATION

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

<TABLE>
<CAPTION>
   ASSETS

                                                                            December                  March 31,
                                                                              2001                       2001
                                                                       -----------------          -----------------
                                                                          (Unaudited)
<S>                                                                     <C>                       <C>
Current Assets:
     Cash                                                               $           162            $            92
     Accounts Receivable, Net                                                     2,902                      2,567
     Inventories                                                                  2,082                      2,311
     Prepaids and Other                                                             225                        129
     Deferred Tax Benefits                                                        1,085                      1,085
                                                                       -----------------          -----------------
     Total Current Assets                                                         6,456                      6,184

Property and Equipment, Net                                                       2,541                      2,350
Other Assets, Net                                                                 2,171                      1,772
Deferred Tax Benefits                                                             3,688                      4,485
                                                                       -----------------          -----------------

Total Assets                                                            $        14,856            $        14,791
                                                                       =================          =================

            LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)


Current Liabilities:
     Current Maturities of Long-Term Debt                               $           908            $           963
     Accounts Payable and Accrued Liabilities                                     2,534                      2,898
                                                                       -----------------          -----------------
     Total Current Liabilities                                                    3,442                      3,861

Net Liabilities of Discontinued Operations                                          473                        641
Long-Term Debt, Less Current Maturities                                          11,148                     11,887
                                                                       -----------------          -----------------
Total Liabilities                                                                15,063                     16,389
                                                                       -----------------          -----------------

Stockholders' Equity (Deficit):
     Common Stock                                                                    43                         42
     Capital In Excess of Par Value                                               8,749                      8,715
     Accumulated Deficit                                                         (8,671)                   (10,027)
     Less:  Treasury Stock                                                         (328)                      (328)
                                                                       -----------------          -----------------
     Total Stockholders' Equity (Deficit)                                          (207)                    (1,598)
                                                                       -----------------          -----------------
     Total Liabilities and Stockholders' Equity (Deficit)               $        14,856            $        14,791
                                                                       =================          =================

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

</TABLE>

<PAGE>
                                       2


                MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                (In Thousands; Except Earnings Per Share Amounts)

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                Three Months Ended                  Nine Months Ended
                                                                    December 31,                       December 31,
                                                          -------------------------------     -------------------------------
                                                               2001             2000               2001              2000
                                                          -------------    --------------     --------------    -------------
<S>                                                       <C>              <C>                <C>               <C>
Revenue:
Net Sales                                                 $      5,808     $       5,073      $      17,012     $     14,602

Costs and Expenses:
      Cost of Sales                                              3,302             2,585              9,614            7,997
      Selling, General and Administrative                        1,183             1,355              3,742            3,678
      Research and Development                                      23                58                 80              110
      Depreciation and Amortization                                227               186                684              566
      Interest, Net                                                219               237                700              758
                                                          -------------    --------------     --------------    -------------

Total Costs and Expenses                                         4,954             4,421             14,820           13,109
                                                          -------------    --------------     --------------    -------------

Income from Continuing Operations Before
   Income Taxes and Discontinued Operations                        854               652              2,192            1,493

Income Tax Expense (Benefit)                                       320            (5,719)               796           (5,719)
                                                          -------------    --------------     --------------    -------------

Income from Continuing Operations                                  534             6,371              1,396            7,212
    Before Discontinued Operations

Income (Loss) from Operations of
   Discontinued Operations, Net of Tax                               0              (212)               (40)            (190)
                                                          -------------    --------------     --------------    -------------

Net Income                                                $        534     $       6,159      $       1,356     $      7,022
                                                          =============    ==============     ==============    =============

Net Income Per Basic Common Share:
      Income from Continuing Operations                   $       0.12     $        2.11      $        0.33     $       2.62
      Loss from Discontinued Operations                           0.00             (0.07)             (0.01)           (0.07)
                                                          -------------    --------------     --------------    -------------

      Net Income Per Basic Common Share                   $       0.12     $        2.04      $        0.32     $       2.55
                                                          =============    ==============     ==============    =============

Net Income Per Diluted Common Share:
      Income from Continuing Operations                   $       0.12     $        2.11      $        0.31     $       2.61
      Loss from Discontinued Operations                           0.00             (0.07)             (0.01)           (0.07)
                                                          -------------    --------------     --------------    -------------

      Net Income Per Diluted Common Share                 $       0.12     $        2.04      $        0.30     $       2.54
                                                          =============    ==============     ==============    =============

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

</TABLE>


<PAGE>
                                       3


                MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                       NINE MONTHS ENDED DECEMBER 31, 2001
                       (In Thousands Except Share Amounts)

                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                            COMMON STOCK
                                      --------------------------------------------------------------------------------------
                                        Number          .01         Capital in     Retained        Treasury
                                          of            Par         Excess of      Earnings          Stock          Total
                                        Shares         Value        Par Value      (Deficit)
                                      -----------   -----------    -----------   ------------    ------------    -----------
<S>                                    <C>           <C>            <C>           <C>             <C>             <C>
Balance, March 31, 2001                4,217,028     $      42      $   8,715     $ (10,027)           (328)         (1,598)


Stock Issued                              50,000             0             19                                            19


Warrants and Options Exercised            59,133             1             15                                            16


Net Income for Nine Months
   Ended December 31, 2001                                                            1,356                           1,356
                                      --------------------------------------------------------------------------------------

Balance, December 31, 2001             4,326,161     $      43      $   8,749     $  (8,671)      $    (328)      $    (207)
                                      ===========   ===========    ===========   ============    ============    ===========

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

</TABLE>


<PAGE>
                                       4


                MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In Thousands)

                                  (Unaudited)


<TABLE>
<CAPTION>
                                                                                           Nine Months Ended
                                                                                              December 31,
                                                                                ---------------------------------------
                                                                                     2001                     2000
                                                                                --------------           --------------

<S>                                                                             <C>                      <C>
Operating Activities
    Net Income from Continuing Operations                                       $       1,396            $       7,212
                                                                                --------------           --------------
    Adjustments to Reconcile Net Income to Net Cash
       Provided by Operating Activities:
        Deferred Compensation                                                              29                       26
        Depreciation and Amortization                                                     684                      566
        Income Tax Expense (Benefit)                                                      796                   (5,719)
        (Increase) Decrease in:
           Accounts Receivable                                                           (335)                    (185)
           Inventories                                                                    229                       96
           Prepaids and Other                                                             (96)                     (22)
        Increase (Decrease) in:
           Accounts Payable and Other Accrued Liabilities                                (364)                     325
                                                                                --------------           --------------
    Total Adjustments                                                                     943                   (4,913)
                                                                                --------------           --------------
    Net Cash Provided by Operating Activities of Continuing Operations                  2,339                    2,299
                                                                                --------------           --------------

Investing Activities
    Expended for Property and Equipment                                                  (732)                    (693)
    Expended for Product Development                                                     (515)                    (521)
    Expended for Patents and Other Assets                                                 (27)                     (74)
                                                                                --------------           --------------
    Net Cash Used by Investing Activities of Continuing Operations                     (1,274)                  (1,288)
                                                                                --------------           --------------

Financing Activities
    Payments on Notes Payable and Long-Term Debt                                         (794)                  (1,037)
    Proceeds from borrowing on Notes Payable                                                0                       25
    Advances To Affiliates - Discontinued Operations                                     (201)                       2
                                                                                --------------           --------------
    Net Cash Used by Financing Activities of Continuing Operations                       (995)                  (1,010)
                                                                                --------------           --------------

Net Increase in Cash - Continuing Operations                                               70                        1
Cash at Beginning of Period - Continuing Operations                                        92                      172
                                                                                --------------           --------------
Cash at End of Period - Continuing Operations                                   $         162            $         173
                                                                                ==============           ==============

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

</TABLE>


<PAGE>
                                       5


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,
2001 are not necessarily  indicative of the results that may be expected for the
year ended  March 31,  2002.  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, 2001.

     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,  the  discontinued  segments' net liabilities are
shown  as  one  amount  under  the  caption  "Net  Liabilities  of  Discontinued
Operations"  at December  31, 2001 and 2000.  The results of  operations  of the
discontinued  segment for the nine months  ended  December 31, 2001 and 2000 has
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.


NOTE B - INVENTORIES

     The components of inventory consist of the following:

<TABLE>
<CAPTION>
                                                                    December 31,           March 31,
                                                                        2001                  2001
                                                                  -----------------     -----------------
                                                                              (In Thousands)
               <S>                                                <C>                   <C>
               Raw Materials                                      $          993        $        1,053
               Finished Goods and Work in Progress                         1,129                 1,298
               Less:  Inventory Valuation Allowance                          (40)                 (40)
                                                                  ----------------     ----------------
                                                                  $        2,082        $        2,311
                                                                  ================     ================
</TABLE>


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


NOTE C - EARNINGS PER SHARE

     Income from continuing  operations per common share is computed by dividing
income from  continuing  operations  by the basic and diluted  weighted  average
number of shares of common  stock  outstanding.  For  diluted  weighted  average
shares outstanding,  the Company used the treasury stock method to calculate the
Common Stock  equivalents that the stock options would represent.  The number of
shares  outstanding  have been  retroactively  adjusted  for the 1 share for 2.5
shares reverse stock split that occurred in December 2000.


<PAGE>
                                        6


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

<TABLE>
<CAPTION>
                                                      Three Months Ended                   Nine Months Ended
                                              ---------------------------------    ---------------------------------
                                                December 31,      December 31,      December 31,       December 31,
                                                    2001              2000              2001               2000
                                              ---------------   ---------------    --------------    ---------------
<S>                                          <C>               <C>                <C>               <C>
Numerator:
   Income from Continuing Operations         $      534,000    $    6,371,000     $   1,396,000     $    7,212,000
                                             ================  ================   ===============   ================

Denominator:
  Weighted average shares outstanding -
  Basic                                           4,325,000         3,017,000         4,289,000          2,750,000
  Add: Effect of dilutive warrants and
  options                                           316,000             9,000           199,000              9,000
                                             ----------------  ----------------   ---------------   ----------------
  Weighted average shares outstanding -           4,641,000         3,026,000         4,488,000          2,759,000
  Diluted
                                             ================  ================   ===============   ================

Income from Continuing Operations Per
Common Share - Basic                         $         0.12    $         2.11     $        0.33     $         2.62
                                             ================  ================   ===============   ================

Income from Continuing Operations per
Common Share - Diluted                       $         0.12    $         2.11     $        0.31     $         2.61
                                             ================  ================   ===============   ================
</TABLE>


     The effect of all options and  warrants  except for  1,051,100  options and
warrants were not included in the  calculation  of net income per diluted common
share for the  quarter  ended and nine  months  ended  December  31, 2001 as the
effect  would have been  anti-dilutive.  The effect of all options and  warrants
except for 88,000  options and  warrants  for the quarter  ended and nine months
ended  December  31, 2000 were not  included in the  calculation  of income from
continuing  operations  per diluted  common  share as the effect would have been
anti-dilutive.


NOTE D - DISCONTINUED OPERATIONS

     During fiscal year 2000, the Company implemented a strategy of focusing its
resources on its core  business,  MTS  Packaging,  and  divesting  the other two
business  segments it  historically  operated.  The Company  sold the  principal
assets of its Health Care Information  Systems business,  LifeServ,  in May 1999
and its Clinical Laboratory Services business,  MTL, in January 2000. There were
no  operations  of these  businesses  conducted  during the first nine months of
fiscal 2002.  Losses from  discontinued  operations were comprised  primarily of
settlements paid to certain creditors of MTL.



<PAGE>
                                       7


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

<TABLE>
<CAPTION>
                                                                                   Total
                                                                               Discontinued
                                                                                Operations
                                                                    -----------------------------------
                                                                     December 31,          March 31,
                                                                         2001                 2001
                                                                    -------------        --------------

               <S>                                                  <C>                  <C>
               Current Assets                                        $        0          $         1
               Other Assets                                                   0                    0
                                                                    -------------        -------------
               Total Assets                                          $        0          $         1
                                                                    -------------        -------------

               Current Liabilities                                   $      473          $       642
               Long-Term Liabilities                                          0                    0
                                                                    -------------        -------------
               Total Liabilities                                     $      473          $       642
                                                                    -------------        -------------

               Net Assets (Liabilities) of
                   Discontinued Operations                           $     (473)         $      (641)
                                                                    =============        =============
</TABLE>

     Liabilities  are  comprised  of trade  accounts  payable and accrued  state
taxes.


NOTE E - LONG-TERM DEBT

     Long-term debt related to continuing operations consists of the following:

<TABLE>
<CAPTION>
                                                                                     December 31,       March 31,
                                                                                         2001             2001
                                                                                    -------------    --------------
                                                                                             (In Thousands)
  <S>                                                                               <C>              <C>
  Bank Term Loan; payable in installments of interest at 7.5% and principal
    monthly for ten years ending September 1, 2006, with a lump sum payment of
    approximately $7.2 million on that date secured by all tangible and
    intangible assets of the Company.                                                $  11,723       $    12,406

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

  Unsecured Note Payable plus interest at 3%, payable in monthly  installments
    of $2,394 through September 2006.                                                      128               146

  Unsecured Note Payable under settlement agreement with State of Florida
    Department of Revenue, payable in monthly installments of $2,500-$4,000
    for a period of four to eight years.                                                   182               219

  Other                                                                                     23                34
                                                                                    ------------     -------------
  Total Long -Term Debt                                                                 12,056            12,850
  Less Current Portion                                                                    (908)             (963)
                                                                                    ------------     -------------
  LONG-TERM DEBT DUE AFTER 1 YEAR                                                    $  11,148        $   11,887
                                                                                    ============     =============

</TABLE>

<PAGE>
                                       8


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

     The Company made principal  payments of  approximately  $100,000 during the
nine months ended December 31, 2001 pursuant to the excess cash flow  provisions
of its loan agreement.

     The  Company has  exceeded  the amount of capital  expenditures  allowed in
certain covenants of its loan agreement and requested the lender's consent to an
increase in the annual limit on these expenditures.  In addition, the lender has
advised the Company that they believe  that certain  excess cash flow  principal
payments have not been made in accordance with the loan  agreement.  The Company
believes  that it has  consistently  calculated  the excess cash flow  principal
payments in accordance with its interpretation of certain provisions of the loan
agreement. As a result, the Company has entered into discussions with the lender
to reach a compromise  on the excess cash flow  principal  payments  that may be
due.  Although  the  Company  believes  that these  discussions  will  result in
payments that are  satisfactory to the lender and that the lender will waive any
defaults that may have occurred,  there are no assurances that a compromise will
be reached.  The Company believes that it is appropriate to continue to classify
only the amount of principal  payments that are due within one year as a current
liability,  although it is possible that the lender could declare the loan to be
in default if discussions regarding the matter are not satisfactorily resolved.


NOTE F - CONTINGENCIES

     The Company  sold the assets of its  subsidiaries  LifeServ  and MTL during
fiscal  2000.  The buyers  assumed  certain  liabilities  of these  subsidiaries
including a certain long-term  obligation of approximately  $520,000 as of March
31,  2001  payable to a financial  institution  and  secured by  equipment  at a
customer  site and a contract  receivable.  The Company  was a guarantor  of the
obligation at the time the obligation originated and continues as a guarantor.

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

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

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


NOTE G - TAXES

     During the previous fiscal years, the Company had provided a 100% valuation
allowance on its deferred tax asset. During the quarter ended December 31, 2000,
the  Company  removed  its  valuation  allowance  and  recognized  an income tax
benefit.


NOTE H - OTHER

     In April 2001,  the Company  issued  approximately  813,000  options to its
employees.  The options have an exercise price of $1.50 (which approximates fair
value at date of  grant)  and a term of ten (10)  years.  Approximately  213,000
options vested immediately, and 600,000 of these options will vest over a period
of three (3) years.


<PAGE>
                                       9


     During the second and third quarters,  the Company issued 55,000 options to
its employees and directors.  The options have exercise prices raging from $1.85
to $2.66 (which  approximates  fair value at date of grant) and will vest over a
period of three (3) years.

     In May 2001, the Company issued 50,000 shares of common stock to an officer
and director in lieu of $18,750 of cash compensation that is payable pursuant to
an employment contract.

     Through the third quarter,  certain holders of options and warrants elected
to exercise their rights to acquire 14,000 shares of the Company's common stock.
The options and warrants were exercisable at prices ranging from $1.13 to $1.50.
Also, during the second quarter,  a holder of warrants to purchase 70,000 shares
of the Company's  common stock elected to exercise their right to acquire 45,133
shares of common stock  pursuant to the  cash-less  exercise  rights  provisions
contained in the warrant  agreement.  The warrants  were  exercisable  at prices
ranging from $.85 to $1.50.


NOTE I - NEW ACCOUNTING PRONOUNCEMENTS

     On July 20, 2001, the Financial  Accounting  Standards  Board (FASB) issued
Statement of Financial Accounting  Standards (SFAS) 141, Business  Combinations,
and SFAS 142,  Goodwill and  Intangible  Assets.  SFAS 141 is effective  for all
business  combinations  completed after December 31, 2001. SFAS 142 is effective
for the fiscal year beginning April 1, 2002; however, certain provisions of that
Statement apply to goodwill and other intangible assets acquired between July 1,
2001 and the  effective  date of SFAS 142.  The Company has not yet analyzed the
effect,  if any, of these new standards;  accordingly,  the Company is unable at
present to state what effect,  if any, the adoption of these standards will have
on the Company's financial statements.

     In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. This statement addresses financial  accounting
and reporting for the impairment or disposal of long-lived assets and supersedes
FASB Statement No. 121,  Accounting for the Impairment of Long-Lived  Assets and
for  Long-Lived  Assets to be Disposed Of. The  provisions  of the statement are
effective  for  financial  statements  issued for fiscal years  beginning  after
December 15, 2001.  The Company is evaluating the impact of the adoption of this
standard  and has not yet  determined  the effect of adoption  on its  financial
position and results of operations.


<PAGE>
                                       10


                MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                              RESULTS OF OPERATIONS
                   FOR THE NINE MONTHS ENDED DECEMBER 31, 2001


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 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. In
particular  any  comments  regarding  possible  default  waivers  related to the
Company's loan agreement are forward-looking statements.

     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, 2001 and 2000
---------------------------------------------

     Net sales for the three months ended December 31, 2001  increased  13.7% to
$5.8 million from $5.1 million  during the same period the prior year. Net sales
increased primarily as a result of an increase in the amount of disposable punch
cards  and  machines  sold to new  and  existing  customers.  In  addition,  the
development of  international  markets,  including the United  Kingdom,  for the
Company's  disposable  products  has  contributed  to the increase in net sales.
Prices for  disposable  products  were stable during the third quarter of fiscal
2002  compared  to the prior  year.  The  Company  anticipates  that  pricing on
disposables  will continue to be stable  through the balance of the fiscal year.
The volume of disposable cards and machines is currently anticipated to continue
to grow as a  result  of the  addition  of new  customers  in  existing  and new
markets.

     Cost of sales for the three months ended December 31, 2001 increased  26.9%
to $3.3 million from $2.6 million during the same period the prior year. Cost of
sales as a  percentage  of sales  increased  to 56.9% from 51.0% during the same
period the prior year.  The  increase in cost of sales  results  from  increased
costs  associated  with  higher  revenue.  The  increase  in the  cost of  sales
percentage  is primarily due to  differences  in the product mix sold during the
three months ended  December 31, 2001 as compared to the same three month period
in the prior  fiscal year.  Certain  disposable  punch cards and  machines  have
higher direct manufacturing costs associated with them than other.



<PAGE>
                                       11


     Selling,  general and  administration  expenses  for the three months ended
December 31, 2001 decreased  14.3% to $1.2 million from $1.4 million in the same
period during the prior year primarily due to an adjustment in the Company's bad
debt  reserve.  The  estimated  reserve for bad debt is evaluated by  management
quarterly.   Based  on  historical   data  regarding   collections  of  accounts
receivable,  management  determined that the estimated reserve should be reduced
by $89,000.

     Research and development  expenses for three months ended December 31, 2001
decreased  60.3% to $23,000 from $58,000  during the same period the prior year.
The decrease resulted  primarily from the fact that the Company directed more of
its  development  resources to the  completion of new products as opposed to the
research of new products.

     Depreciation and amortization  expenses for the three months ended December
31, 2001  increased  22.0% to $227,000 from $186,000  during the same period the
prior year.  The increase is a result of new assets  placed into service  during
the second half of the prior  fiscal year as well as in the first nine months of
the current fiscal year.

     Interest  expense for the three  months ended  December 31, 2001  decreased
7.6% to  $219,000  from  $237,000  during the same  period the prior  year.  The
decrease  results  from a reduction  in existing  debt  resulting  from  regular
monthly  principal  payments made  according to the terms of the Company's  loan
agreement.

     Income tax expense was $320,000  during the three months ended December 31,
2001 compared to an income tax benefit of $5,719,000 the prior year.  During the
third  quarter of the prior  fiscal  year,  the  Company  recorded an income tax
benefit of $5,719,000  resulting  from the  recognition of tax benefits that had
not previously been recognized.

Nine Months Ended December 31, 2001 and 2000
--------------------------------------------

     Net sales for the nine months ended  December 31, 2001  increased  16.4% to
$17.0  million  from $14.6  million  during the same period the prior year.  Net
sales increased primarily as a result of an increase in the amount of disposable
punch  cards  and  machines  sold  to new and  existing  customers.  Prices  for
disposable  products  increased  slightly during the first nine months of fiscal
2002  compared  to the prior  year.  The  Company  anticipates  that  pricing on
disposables  will continue to be stable  through the balance of the fiscal year.
The volume of disposable  cards and machines is  anticipated to continue to grow
as a result of the addition of new customers in existing and new markets.

     Cost of sales for the nine months ended December 31, 2001  increased  20.0%
to $9.6 million from $8.0 million during the same period the prior year. Cost of
sales as a  percentage  of sales  increased  to 56.5% from 54.8% during the same
period the prior year.  The  increase in cost of sales  results  from  increased
costs  associated  with  higher  revenue.  The  increase  in the  cost of  sales
percentage is primarily due to  differences  in the product mix sold as compared
to the same nine month period in the prior  fiscal year.  The cost of sales as a
percentage  of sales for  machines is typically  higher than that of  disposable
punch cards.  The proportion of revenue  associated with machine sales increased
during the nine months ended December 31, 2002 compared to the prior year.

     Selling,  general and  administration  expenses  for the nine months  ended
December 31, 2001 increased 1.6% to $3.74 million from $3.68 million in the same
period  during  the  prior  year  primarily  due to  increases  in  selling  and
administrative  costs  associated  with  increased  revenue.  The  increase  was
partially  offset by an adjustment in the Company's bad debt reserve  during the
third  quarter.  The  estimated  reserve for bad debt is evaluated by management
quarterly.   Based  on  historical   data  regarding   collections  of  accounts
receivable,  management  determined that the estimated reserve should be reduced
by $89,000.

     Research and  development  expenses for nine months ended December 31, 2001
decreased  27.3% to $80,000 from $110,000 during the same period the prior year.
The decrease resulted  primarily from the fact that the Company directed more of
its  development  resources to the  completion of new products as opposed to the
research of new products during the first nine months of fiscal 2002 compared to
the first nine months of the prior year.


<PAGE>
                                       12


     Depreciation and  amortization  expenses for the nine months ended December
31, 2001  increased  20.8% to $684,000 from $566,000  during the same period the
prior year.  The increase is a result of new assets  placed into service  during
the second half of the prior  fiscal year as well as in the first nine months of
the current fiscal year.

     Interest expense for the nine months ended December 31, 2001 decreased 7.7%
to $700,000  from $758,000  during the same period the prior year.  The decrease
results  from a  decrease  in  existing  debt  resulting  from  regular  monthly
principal payments made according to the terms of the Company's loan agreement.

     Income tax expense was $796,000  during the nine months ended  December 31,
2001 compared to an income tax benefit of $5,719,000 the prior year.  During the
third  quarter of the prior  fiscal  year,  the  Company  recorded an income tax
benefit of $5,719,000  resulting  from the  recognition of tax benefits that had
not previously been recognized.

     On July 20, 2001, the Financial  Accounting  Standards  Board (FASB) issued
Statement of Financial Accounting  Standards (SFAS) 141, Business  Combinations,
and SFAS 142,  Goodwill and  Intangible  Assets.  SFAS 141 is effective  for all
business  combinations  completed after December 31, 2001. SFAS 142 is effective
for the fiscal year beginning April 1, 2002; however, certain provisions of that
Statement apply to goodwill and other intangible assets acquired between July 1,
2001 and the  effective  date of SFAS 142.  The Company has not yet analyzed the
effect,  if any, of these new standards;  accordingly,  the Company is unable at
present to state what effect,  if any, the adoption of these standards will have
on the Company's financial statements.

     In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. This statement addresses financial  accounting
and reporting for the impairment or disposal of long-lived assets and supersedes
FASB Statement No. 121,  Accounting for the Impairment of Long-Lived  Assets and
for  Long-Lived  Assets to be Disposed Of. The  provisions  of the statement are
effective  for  financial  statements  issued for fiscal years  beginning  after
December 15, 2001.  The Company is evaluating the impact of the adoption of this
standard  and has not yet  determined  the effect of adoption  on its  financial
position and results of operations.


LIQUIDITY AND CAPITAL RESOURCES

     During the first nine months ended  December 31, 2001,  the Company had net
income from  continuing  operations  of  $1,396,000  compared to net income from
continuing  operations of $7,212,000 the prior year.  Cash provided by operating
activities of continuing  operations was $2,339,000 during the nine months ended
December 31, 2001 compared to $2,299,000 provided in the prior year. The Company
had working capital of $3,035,000 at December 31, 2001.

     The  increase  in cash  provided  by  operating  activities  of  continuing
operations  during the nine months ended  December 31, 2001 compared to the same
period the prior year was primarily due to increases in operating income.

     Investing  activities used $1,274,000 during the nine months ended December
31, 2001 compared to $1,288,000 the prior year.

     Financing  activities  used $995,000  during the nine months ended December
31, 2001 compared to $1,010,000 the prior year. The decrease resulted  primarily
from a one-time  principal  payment to the  Company's  lender  made in the prior
fiscal year. In addition,  the Company made  advances to affiliates  during this
fiscal year that were used to extinguish liabilities of discontinued  operations
that had been guaranteed by the Company.

     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 anticipated to
support an increase in accounts receivable.




<PAGE>
                                       13


     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 at least the next twelve months.

     The  Company has  exceeded  the amount of capital  expenditures  allowed in
certain covenants of its loan agreement and requested the lender's consent to an
increase in the annual limit on these expenditures.  In addition, the lender has
advised the Company that they believe  that certain  excess cash flow  principal
payments have not been made in accordance with the loan  agreement.  The Company
believes  that it has  consistently  calculated  the excess cash flow  principal
payments in accordance with its interpretation of certain provisions of the loan
agreement. As a result, the Company has entered into discussions with the lender
to reach a compromise  on the excess cash flow  principal  payments  that may be
due.  Although  the  Company  believes  that these  discussions  will  result in
payments that are  satisfactory to the lender and that the lender will waive any
defaults that may have occurred,  there are no assurances that a compromise will
be reached.  The Company believes that it is appropriate to continue to classify
only the amount of principal  payments that are due within one year as a current
liability,  although it is possible that the lender could declare the loan to be
in default if discussions regarding the matter are not satisfactorily resolved.


<PAGE>
                                       14



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.       Reports on Form 8K

                  None



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 5, 2002           By: /s/ Michael P. Conroy
------------------------           --------------------------------------------
                                   Michael P. Conroy
                                   Vice President & Chief Financial Officer



                                    By: /s/ Mark J. Connolly
                                    -------------------------------------------
                                    Mark J. Connolly
                                    Principal Accounting Officer and Controller