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 June 30, 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 ______

                                      10Q-1

<PAGE>
                                        i

                MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES

                                      Index

                                                                          Page

Part I - Financial Information

Item 1.  Financial Statements

         Consolidated Balance Sheets -
           June 30, 1999 and March 31, 1999.........................       1

         Consolidated Statements of Operations -
           Three Months Ended June 30, 1999 and 1998................       2

         Consolidated Statements of Changes in Stockholders' Equity (Deficit) -
           Three Months Ended June 30, 1999.........................       3

         Consolidated Statements of Cash Flow -
            Three Months Ended June 30, 1999 and 1998...............       4

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

Item 2.  Management's Discussion and Analysis of Financial
            Condition and Results of Operations.....................   9 - 12


Part II - Other Information

Item 6.   Exhibits and Reports on Form 8-K..........................      13

          Signature.................................................      13


<PAGE>
                                       1



Item 1.  Financial Statements

                         PART 1 - FINANCIAL INFORMATION

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

                                     ASSETS

<TABLE>
<CAPTION>
                                                             June 30,           March 31,
                                                               1999                1999
                                                           -------------     -------------
                                                            (Unaudited)
<S>                                                         <C>               <C>
Current Assets:
     Cash                                                   $        0        $      205
     Accounts Receivable, Net                                    2,207             2,473
     Inventories                                                 2,126             1,990
     Prepaids and Other                                            219                69
                                                           -------------     -------------
     Total Current Assets                                        4,552             4,737

Property and Equipment, Net                                      1,881             2,013
Other Assets, Net                                                1,284             1,761
                                                           -------------     -------------
Total Assets                                                $    7,717        $    8,511
                                                           =============     =============

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities:
     Current Maturities of Long-Term Debt                   $      833        $      874
     Accounts Payable and Accrued Liabilities                    2,417             2,405
                                                           -------------     -------------
     Total Current Liabilities                                   3,250             3,279

Net Liabilities of Discontinued Operations                          12             1,917
Long-Term Debt, Less Current Maturities                         14,706            14,915
                                                           -------------     -------------
Total Liabilities                                               17,968            20,111
                                                           -------------     -------------

Stockholders' Equity (Deficit):
     Voting Preferred Stock                                          1                 1
     Common Stock                                                   64                64
     Capital In Excess of Par Value                              8,583             8,583
     Accumulated Deficit                                       (18,571)          (19,920)
     Less:  Treasury Stock                                        (328)             (328)
                                                           -------------     -------------
     Total Stockholders' Equity (Deficit)                      (10,251)          (11,600)
                                                           -------------     -------------
     Total Liabilities and Stockholders' Equity (Deficit)   $    7,717        $    8,511
                                                           =============     =============

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

</TABLE>

<PAGE>
                                       2


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

                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                           Three Months Ended
                                                                                June 30,
                                                                  -----------------------------------
                                                                        1999               1998
                                                                  ----------------    ---------------

<S>                                                                 <C>                 <C>
Revenue:
Net Sales and Services                                              $      3,836        $     3,500

Costs and Expenses:
      Cost of Sales and Services                                           2,076              1,984
      Selling, General and Administrative                                  1,160                912
      Depreciation and Amortization                                          255                239
      Interest, Net                                                          294                285
                                                                  ----------------    ---------------
Total Costs and Expenses                                                   3,785              3,420
                                                                  ----------------    ---------------
Income from Continuing Operations Before
  Discontinued Operations and Extraordinary Gain                              51                 80

Loss from Operations of Discontinued Operations,
   Net of Income Tax                                                        (524)              (516)

Gain on Forgiveness of Debt of Discontinued Operations                         0                662

Gain on Disposal of Discontinued Operations,
  Net of Income Tax                                                        1,822                  0
                                                                  ----------------    ---------------

Net Income                                                          $      1,349        $       226
                                                                  ================    ===============

Earnings per Basic and Diluted Common Share:
      Income from Continuing Operations                             $       0.01        $      0.01
      Income from Discontinued Operations                                   0.20               0.03
                                                                  ----------------    ---------------

Net Income per Basic and Diluted Common Share                       $       0.21        $      0.04
                                                                  ================    ===============

Weighted average Common Shares Outstanding - Basic and Diluted             6,406              6,128
                                                                  ================    ===============

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

</TABLE>


<PAGE>
                                       3



                MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                        THREE MONTHS ENDED JUNE 30, 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)

Net Income for Three Months
   Ended June 30, 1999                                                                   1,349                            1,349
                                      ---------------------------------------------------------------------------------------------

Balance, June 30, 1999                 6,406,191       $      64      $   8,583     $  (18,571)     $     (328)      $  (10,252)
                                      ===========     ===========    ===========   =============   ============     ============

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

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

Balance June 30, 1999                  6,500,000      $        1                                                     $        1
                                      -----------     -----------                                                   ------------
Total Stockholders' Equity
                                                                                                                    ------------
   (Deficit), June 31, 1999                                                                                          $  (10,251)
                                                                                                                    ============
The accompanying notes are an integral part of these financial statements.

</TABLE>

<PAGE>
                                       4

            MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (In Thousands)
                               (Unaudited)
<TABLE>
<CAPTION>
                                                                                              Three Months Ended
                                                                                                   June 30,
                                                                                    --------------------------------------
                                                                                         1999                    1998
                                                                                    -------------           --------------
<S>                                                                                 <C>                     <C>
Operating Activities
    Net Income (Loss) from Continuing Operations                                    $         51            $          80
                                                                                    -------------           --------------
    Adjustments to Reconcile Net Income (Loss) to Net Cash
         Provided (Used) by Operating Activities:
      Depreciation and Amortization                                                          255                      239
      Loss on Early Retirement of Fixed Assets                                                 0                       21
      (Increase) Decrease in:
         Accounts Receivable                                                                 266                      (58)
         Inventories                                                                        (136)                     (69)
         Prepaids and Other                                                                 (106)                     (22)
      Increase (Decrease) in:
         Accounts Payable and Other Accrued Liabilities                                       12                       93
                                                                                    -------------           --------------
    Total Adjustments                                                                        291                      204
                                                                                    -------------           --------------
    Net Cash Provided (Used) by Continuing Operations                                        342                      284
                                                                                    -------------           --------------
Investing Activities
    Expended for Property and Equipment                                                      (55)                     (18)
    Expended for Product Development                                                         (44)                       0
    Expended for Patents and Other Assets                                                     (2)                     (76)
                                                                                    -------------           --------------
    Net Cash Used by Investing Activities of Continuing Operations                          (101)                     (94)
                                                                                    -------------           --------------
Financing Activities
    Payments on Notes Payable and Long-Term Debt                                            (272)                     (13)
    Advances to Affiliates - Discontinued Operations                                        (174)                    (626)
    Proceeds from Borrowing on Notes Payable and Long-Term Debt                                0                        0
                                                                                    -------------           --------------
    Net Cash Used by Financing Activities of Continuing Operations                          (446)                    (639)
                                                                                    -------------           --------------
Net Decrease in Cash - Continuing Operations                                                (205)                    (449)
Cash at Beginning of Period - Continuing Operations                                          205                      465
                                                                                    -------------           --------------
Cash at End of Period - Continuing Operations                                       $          0            $          16
                                                                                    =============           ==============

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 three-month period ended June 30, 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 consolidated  financial  statements include the accounts of the Company
and its subsidiaries,  MTS Packaging Systems,  Inc. ("MTS  Packaging"),  MTL and
LifeServ. MTL and LifeServ represent discontinued  operations,  and accordingly,
these  discontinued  segments' 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  segments 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.


NOTE B - INVENTORIES

     The components of inventory consist of the following:

<TABLE>
<CAPTION>
                                                                      June 30,             March 31,
                                                                        1999                  1999
                                                                  -----------------     -----------------
                                                                              (In Thousands)

               <S>                                                <C>                   <C>
               Raw Materials                                      $          925        $          767
               Finished Goods and Work in Progress                         1,341                 1,363
               Less:  Inventory Valuation Allowance                         (140)                 (140)
                                                                  ================      ================
                                                                  $        2,126        $        1,990
                                                                  ================      ================

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

</TABLE>


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.


NOTE D - DISCONTINUED OPERATIONS

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


<PAGE>
                                       6

     In May 1999, the Company sold LifeServ Technologies, Inc. ("LifeServ"), its
Health  Care  Information  Systems  business  segment.   The  Asset  Acquisition
Agreement provided,  among other things, for the buyer to receive  substantially
all the assets of LifeServ in  consideration of 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.

     The Company is  discussing  the possible  sale of its  Clinical  Laboratory
Services  subsidiary,  MTL, with several  potential  buyers. In the event that a
sale does not close, management has committed itself to a plan to dispose of MTL
either through a sale to another potential buyer or abandon the business.  MTL's
net revenue for the first quarter of fiscal 2000 and fiscal 1999 was  $2,445,000
and $1,819,000  respectively.  The net loss from the discontinued  operations of
MTL was $486,000 and $45,000 in the first quarter of fiscal 2000 and fiscal 1999
respectively.

     The Company  estimated  the loss on disposal of MTL to be $2.5  million and
recorded a charge of that amount in the fourth  quarter of fiscal 1999. The loss
on disposal  of MTL  included a reserve of $500,000  for the  estimated  cost of
disposal and operating  losses through the disposal  date. The Company  believes
the  estimated  loss  on  disposal  of  MTL is  reasonable  based  upon  current
circumstances.

     The carrying value of the net assets of discontinued operations at June 30,
1999 and March 31, 1999 is comprised of the following.

<TABLE>
<CAPTION>
                                                                                                    Total
                                           LifeServ                      MTL                    Discontinued
                                                                                                 Operations
                                   ------------------------    ------------------------   -------------------------
                                    June 30,     March 31,      June 30,     March 31,     June 30,      March 31,
                                      1999          1999          1999         1999          1999          1999
                                   ----------    ----------    ----------   -----------   -----------   -----------
<S>                                <C>           <C>           <C>           <C>           <C>          <C>
 Current Assets                    $    25       $ 1,047       $ 3,463       $ 3,945       $ 3,488      $  4,992
 Other Assets                            0         2,088             0            71             0         2,159
                                   ---------     ---------     ---------    ----------    ----------    ----------
 Total Assets                      $    25       $ 3,135       $ 3,463       $ 4,016       $ 3,488      $  7,151
                                   ---------     ---------     ---------    ----------    ----------    ----------

 Current Liabilities               $    25       $ 4,532       $ 2,166       $ 2,876       $ 2,191      $  7,408
 Long-Term Liabilities                   0           346         1,309         1,314         1,309         1,660
                                   ---------     ---------     ---------    ----------    ----------    ----------
 Total Liabilities                 $    25       $ 4,878       $ 3,475       $ 4,190       $ 3,500      $  9,068
                                   ---------     ---------     ---------    ----------    ----------    ----------
 Net Assets (Liabilities)
   of Discontinued Operations      $      0      $ (1,743)     $   (12)      $  (174)      $   (12)     $ (1,917)
                                   =========     =========     =========    ==========    ==========    ==========
</TABLE>


<PAGE>
                                       7


NOTE E - LONG-TERM DEBT

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

<TABLE>
<CAPTION>
                                                                                       June 30,         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 $11.4 million on that date secured by all tangible and
    intangible assets of the Company.                                                $  14,594       $    14,806

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

  Unsecured Notes Payable due September 1999 plus interest at 12%.                         185               200

  Unsecured Note Payable plus interest at 3%, payable in monthly  installments
    of $2,394 through September 2006.                                                      187               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.                                                  282               284

   Other Notes and  Agreements;  interest and  principal  payable  monthly and
    annually at various amounts through March 2000.                                        141               156
                                                                                    ------------     -------------
  Total Long -Term Debt                                                                 15,539            15,789
  Less Current Portion                                                                    (833)             (874)
                                                                                    ============     =============
  LONG-TERM DEBT DUE AFTER 1 YEAR                                                    $  14,706       $    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
operation  subsequent to July 1, 1999. The definitive  documentation  evidencing
the modifications is in the process of being completed.

     The Company was served with a summons and complaint  relating to a replevin
action  commenced by a creditor (see  Contingencies).  The Company  notified its
bank of the action within ten (10) days of being served.  On July 29, 1999,  the
Company  received a notice from its bank asserting that a major event of default
occurred  when  the  Company  failed  to  immediately  notify  the  bank  of the
commencement of the litigation.  The Company  believes that the notification was
timely.


<PAGE>
                                       8


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 effect on the Company's  financial condition and results
of operation.

     In July 1999,  MTL was served  with a summons and  complaint  relating to a
replevin  action  commenced  by  a  secured   creditor  of  Community   Clinical
Laboratories,  Inc.  ("CCL").  MTL purchased  certain assets of CCL in September
1998.  The  replevin  action  seeks to allow  the  secured  creditor  to  obtain
possession of certain equipment used by MTL in the operation of its business. If
the secured creditor is successful in obtaining possession of the equipment, the
operations of MTL would be adversely  effected.  The Company has retained  legal
counsel and is in the process of responding to the action.

     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 effect on the financial  position,  results of operations or
liquidity of the Company.


<PAGE>
                                       9


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.

     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 June 30, 1999 and 1998
-----------------------------------------

     Net sales and services  for the three months ended June 30, 1999  increased
10% to $3.8 million from $3.5 million during the same period the prior year.

     Net sales  increased  primarily  as a result  of a greater  number of punch
cards and packaging machines sold to pharmacies.  MTS Packaging Systems,  Inc.'s
("MTS  Packaging")  customer  base  continues  to  consolidate  as a  result  of
acquisitions  that has  increased  the  number  of  pharmacies  serviced  by MTS
Packaging.  This  consolidation  has had a  favorable  impact  on the  volume of
product MTS Packaging sells to its existing customers,  however, it has caused a
slight decrease in selling prices of disposables.

     Cost of sales  and  services  for the  three  months  ended  June 30,  1999
increased 5% to $2.1 million from $2.0 million  during the same period the prior
year.  Cost of sales and  services as a percentage  of sales  decreased to 54.1%
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.

<PAGE>
                                       10


     Selling,  general and  administration  expenses  for the three months ended
June 30, 1999  increased  27% to $1.2 million from $0.9 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.

     Depreciation and amortization  expenses for the three months ended June 30,
1999 increased  6.7% to $255,000 from $239,000  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 June 30, 1999 increased 3.2% to
$294,000  from  $285,000  during the same  period the prior year.  The  increase
results  from  additional  debt,  which the Company  incurred  during the fourth
quarter of the previous fiscal year.

Year 2000 Compliance
--------------------

Introduction

     The Company's year 2000 ("Y2K") compliance project is intended to determine
the  readiness  of the  Company's  business  for the year 2000.  The Company has
identified three areas where the Y2K problem creates risk to the Company.  These
areas are a) internal information systems; b) system capabilities of third party
business  with  relationships  with the Company,  including  product  suppliers,
customers,  service  providers and companies that  interface  their software and
hardware  products with products sold by the Company;  and c) product  liability
claims  arising  out of the  non-performance  of computer  products  sold by the
Company.

Plan to Address Y2K Compliance

     In December  1998,  the Company  formed a Y2K  compliance  project  team to
develop  an overall  plan to address  Y2K  readiness  issues.  The plan is being
developed in phases.

     o    Phase I

          a)   Identify all internal  hardware and software systems that must be
               compliant.

          b)   Appoint  individuals  within the  Company to be  responsible  for
               communication   with  third  party   businesses   regarding   Y2K
               readiness.

          c)   Appoint  individuals  within the  Company to be  responsible  for
               evaluation of product  liability  issues that may exist regarding
               products sold by the Company.

     o    Phase II - Identify Y2K problems that may exist in each risk area.

     o    Phase III - Repair,  modify or replace  systems that are determined to
          be non-compliant.

     o    Phase IV - Test systems to confirm that any repairs,  modification  or
          replacements have resulted in compliance.

State of Readiness

         Internal Systems
         ----------------

     The  Company  believes  that  the  internal   information  systems  in  its
Medication  Packaging and  Dispensing  Systems  subsidiary are in a state of Y2K
readiness.


<PAGE>
                                       11


     The  internal  information  systems  utilized  in  the  Company's  Clinical
Laboratory Services business are not Y2K compliant.  Management has committed to
a plan to dispose of this  business  and  anticipates  that the  disposal of the
business will occur before any Y2K readiness issues need to be addressed.

     Material Third Party Readiness
     ------------------------------

     Individuals  within  the  Company  have been  assigned  responsibility  for
communicating  with material  third-party  businesses  with whom the Company has
business  relationships  and  have  begun a survey  process.  The  Company  will
determine the readiness of third parties prior to September 30, 1999.

Product Liability

     The Company  believes the products  sold by the  Medication  Packaging  and
Dispensing Systems subsidiary do not have Y2K issues associated with them.

     The  Services  rendered  by  the  Company's  Clinical  Laboratory  Services
business are directly effected by the internal  information  systems utilized to
perform  analytical  laboratory  tests.  If the  Company  is not  successful  in
implementing  Y2K  compliant  internal   information  systems  in  its  Clinical
Laboratory  Services business,  it could adversely effect that business' ability
to perform  diagnostic tests and provide the results of those test to its client
physicians,  however,  management  has  committed  to a plan to  dispose of this
business before the Y2K readiness issues need to be addressed.

     The rights to sell the products of the  Company's  Health Care  Information
Systems business were sold in May 1999. Any liabilities  arising from Y2K issues
will be assumed by the buyer.

Cost of Project

     Expenditures  to date on Y2K  compliance  have  not  been  material  to the
Company's operation or financial condition.

LIQUIDITY AND CAPITAL RESOURCES

     During the first  quarter of the current  fiscal year,  the Company had net
income  from  continuing  operations  of $51,000  compared  to net  income  from
continuing  operations  of $80,000 the prior year.  Cash  provided by  operating
activities of continuing  operations was $342,000  during the three months ended
June 30, 1999 compared to $284,000  provided in the prior year.  The Company had
working capital of $1,302,000 at June 30, 1999.

     Cash was provided by operating  activities of continuing  operations during
the three months ended June 30, 1999 primarily due to profitable operations.

     Investing  activities used $101,000 during three months ended June 30, 1999
as a result of expenditures for capital equipment and product development.

     Financing  activities  used $446,000 during the three months ended June 30,
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 are  identified  and a  liquidation  strategy is
developed.

     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>
                                       12



     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 the capital expenditures,  product development and working capital needs
of MTS Packaging as well as support the operations of MTL until its disposal.

     In addition,  after the disposal of two business segments, the Company will
focus on its core business,  MTS  Packaging,  which has  historically  generated
positive  cash  flow from  operations.  As a result,  management  believes  that
certain  administrative  costs  that were  required  to support  three  separate
businesses can be reduced.


<PAGE>
                                       13



PART II - OTHER INFORMATION
---------------------------


Item 6.  Exhibits and Reports on Form 8-K

         A.       Exhibits

                  None

         B.       Reports on Form 8-K

                  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:  August 13, 1999            By:   /s/ Michael P. Conroy
----------------------                  ----------------------------------------
                                        Michael P. Conroy
                                        Vice President & Chief Financial Officer