FORM 10-Q


                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON D.C. 20549


                  QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                    OF THE SECURITIES EXCHANGE ACT OF 1934


   For the quarter ended September 30, 1997 Commission File Number 0-16594


                       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 ID Number)
incorporation or organization)


            12920  Automobile Boulevard,  Clearwater,  Florida 33762
            --------------------------------------------------------
                    (address of principal executive offices)

Registrant's telephone number, including area code:  (813) 576-6311
                                                     --------------

     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 of 15(d) of the  Securities  Exchange  Act of
1934 during the preceding 12 months (for shorter  period that the Registrant was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days. YES  X    NO
                                      ------   ------

     Indicate by check mark 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
                         ------   ------

    Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                Class                          Outstanding at September 30, 1997
                -----                          ---------------------------------

      Common Stock, $.01 par value                       6,107,173
      Preferred Stock, $.0001 par value                  6,500,000






<PAGE>




              MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES




                                    Index

                                                                       Page

Part I - Financial Information

Item 1.     Financial Statements

 Consolidated Balance Sheets -
    March 31, 1997 and September 30,1997................                 1

 Consolidated Statements of Operations -
    Three months and Six months ended September 30, 1997 and 1996        2

 Consolidated Statements of Changes in Stockholders' Equity (Deficit) -
    Six months ended September 30, 1997.................                 3

 Consolidated Statements of Cash Flow -
    Six months ended September 30, 1997 and 1996........                 4

  Notes to Consolidated Financial Statements............               5 - 7


Item 2.  Management's Discussion and Analysis of Financial
    Condition and Results of Operations.................               8 - 10


Part II - Other Information

Item 1.
  Legal Proceedings.....................................                10

Item 4.
  Submission of Matters to a Vote of Security Holders...                10

Item 6.
  Exhibits and Reports on Form 8-K......................                10


  Signature.............................................                10


                                      i






<PAGE>



                        PART I - FINANCIAL INFORMATION
Item 1.  Financial Statements

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

                                    ASSETS
<TABLE>
<CAPTION>
                                                       September 30,    March 31,
                                                           1997           1997
<S>                                                   <C>              <C>
Current Assets:                                        (Unaudited)
   Cash................................                 $    445        $    616
   Accounts Receivable, Net............                    3,689           3,041
   Inventories.........................                    2,411           2,260
   Prepaids and Other..................                      171             222
   Other Receivables...................                       50             350
                                                        ---------       ---------
   Total Current Assets................                    6,766           6,489

 Property and Equipment, Net..............                 3,645           4,004

Other Assets, Net.........................                 3,093           2,050
                                                        ---------       ---------

Total Assets..............................              $ 13,504        $ 12,543
                                                        =========       =========

                     LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
   Current Maturities of Long-Term Debt...              $    465        $    310
   Accounts Payable-Trade and Accrued 
     Liabilities..........................                 2,692           2,190
                                                        ---------       ---------
   Total Current Liabilities..............                 3,157           2,500

Liabilities Subject to Compromise.........                 1,087             -0-

Long-Term Debt, Less Current Maturities...                15,288          15,459
                                                        ---------       ---------
Total Liabilities.........................                19,532          17,959
                                                        ---------       ---------

Stockholders' Equity (Deficit):
     Voting Preferred Stock..............                      1               1
     Common Stock........................                     61              60
     Capital in Excess of Par Value......                  8,582           8,433
     Retained Earnings (Deficit).........                (14,341)       ( 13,579)
     Less: Treasury Stock................                (   331)       (    331)
                                                        ---------       ---------
     Total Stockholders' Equity (Deficit)                ( 6,028)       (  5,416)
                                                        ---------       ---------

Total Liabilities and Stockholders' Equity              $ 13,504        $ 12,543
                                                        =========       =========
</TABLE>


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











                                      1




<PAGE>



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

<TABLE>
<CAPTION>
                                                        Three Months Ended             Six Months Ended
                                                           September 30,                September 30,
                                                      1997            1996           1997           1996
                                                      ----            ----           ----           ----
                                                                   (Restated)                    (Restated)
<S>                                                   <C>            <C>            <C>            <C>   
                                                                                                        
Revenue:

    Net Sales and Services....................        $ 5,611        $ 4,755        $10,758        $ 9,637

Costs and Expenses:

   Cost of Sales..............................          2,917          2,492          5,802          5,338
   Selling, General and Administrative........          2,414          1,501          4,414          2,837
   Depreciation and Amortization..............            389            341            747            680
   Interest, Net..............................            283             72            556             70
                                                     --------       --------        -------        -------

               Total Costs and Expenses                 6,003          4,406         11,519          8,925
                                                     --------       --------        -------        -------


Net Income (Loss) From Continuing Operations
   Before Discontinued Operations and 
   Extraordinary Gain.........................        $  (392)       $   349        $  (761)       $   712

Gain on Forgiveness of Debt of Discontinued
   Operations.................................            -0-          2,700            -0-          2,700

Extraordinary Gain on Forgiveness of Debt.....            -0-          2,101            -0-          2,101
                                                      -------        -------        -------        -------

Net Income (Loss) ............................        $  (392)       $ 5,150        $  (761)       $ 5,513
                                                      =======        =======        ========       =======

Earnings (Loss) per Common Share Outstanding
   Continuing Operations .....................        $  (.07)       $   .06        $  (.13)       $   .13
   Discontinued Operations....................            .00            .48            .00            .49
   Extraordinary Gain.........................            .00            .37            .00            .37
                                                      -------        -------        -------        -------
   Net Income (Loss) .........................        $  (.07)       $   .91        $  (.13)       $   .99
                                                      =======        =======        =======        =======

Weighted average Common Shares outstanding....          5,918          5,680          5,918          5,563
                                                      =======        =======        =======        =======

</TABLE>



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















                                      2






<PAGE>



              MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
     CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
                     SIX MONTHS ENDED SEPTEMBER 30, 1997
                       (In Thousands Except Share Data)
                                 (Unaudited)

<TABLE>
<CAPTION>

                                                                    COMMON STOCK
                                -------------------------------------------------------------------------------
                                 Number       $.01       Capital in        Retained
                                   of          Par       Excess of         Earnings       Treasury
                                 Shares       Value      Par Value         (Deficit)        Stock         Total
                                 ------       -----      ---------         ---------        -----         -----

<S>                            <C>          <C>            <C>             <C>             <C>          <C>

Balance, March 31, 1997......  5,957,173    $   60         $8,433          $(13,579)       $ (331)      $ (5,417)

Net (Loss) for Three Months
 Ended June 30, 1997.........                                                  (370)                        (370)
                               ----------------------------------------------------------------------------------

Balance, June 30, 1997.......  5,957,173    $   60         $8,433          $(13,949)       $ (331)      $ (5,787)

Stock Issued.................    150,000         1            149                                            150

Net (Loss) for Three Months
 Ended September 30, 1997....                                                  (392)                        (392)
                               ----------------------------------------------------------------------------------

Balance, September 30, 1997..  6,107,173    $   61         $8,582          $(14,341)       $ (331)      $ (6,029)
                               ----------------------------------------------------------------------------------

</TABLE>


<TABLE>
<CAPTION>


                                                                    VOTING PREFERRED STOCK
                                   -----------------------------------------------------------------------------
                                     Number          $.0001
                                       of              Par
                                     Shares           Value
                                     ------           -----
<S>                                <C>               <C>                                                <C>

Balance, March 31, 1997            6,500,000         $    1                                             $      1
                                   ---------         ------                                             --------

Balance, June 30, 1997             6,500,000         $    1                                             $      1
                                   ---------         ------                                             --------

Balance, September 30, 1997        6,500,000         $    1                                             $      1
                                   ---------         ------                                             --------

Total Stockholders' Equity (Deficit),
   September 30, 1997                                                                                   $ (6,028)
                                                                                                        ========

</TABLE>

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






                                      3




<PAGE>



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

<TABLE>
<CAPTION>

                                                                  Six Months Ended
                                                                    September 30,
                                                               1997               1996
                                                               ----               ----
                                                                               (Restated)
<S>                                                          <C>                <C>    
Operating Activities

Net Income (Loss) ........................................   $ (761)            $5,513

Adjustments to Reconcile Net Income (Loss) to Net Cash
           Provided (Used) by Operating Activities:
  Depreciation and Amortization...........................      747                680
  Extraordinary Gain......................................      -0-             (2,101)
  Gain on Forgiveness of Debt of Discontinued Operations..      -0-             (2,700)

(Increase) Decrease in:
     Accounts Receivable..................................     (205)               (66)
     Income Taxes Receivable..............................      -0-                880
     Inventories..........................................     (120)               153
     Prepaid Expenses and Other Assets....................      351                (24)
  Increase (Decrease) in:
     Accounts Payable and Other Accrued Liabilities.......      501               (482)
                                                             ------             ------
Total Adjustments.........................................    1,274             (3,660)
                                                             ------             ------
Net Cash Provided by Operations...........................      513              1,853
                                                             ------             ------

Investing Activities
   Expended for Property and Equipment....................     (197)              (111)
   Acquisition, Net of Cash Acquired......................     (195)               -0-
   Expended for Product Development.......................     (198)               (63)
   Expended for Other Assets..............................      (79)               -0-
                                                             ------             ------
   Net Cash Used by Investing Activities..................     (669)              (174)
                                                             ------             ------

Financing Activities
   Payments on Notes Payable, Long-Term Debt..............     (216)            (1,213)
   Net Proceeds from Borrowing on Notes Payable and 
     Long-Term Debt.......................................       51                -0-
   Issuance of Common Stock...............................      150                114
                                                             ------             ------
   Net cash (Used) by Financing Activities................      (15)            (1,099)
                                                             ------             ------

Net Increase (Decrease) in Cash...........................     (171)               580

Cash at Beginning of Period...............................      616                965
                                                             ------             ------
Cash at End of Period.....................................   $  445             $1,545
                                                             ======             ======
</TABLE>


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






                                      4






<PAGE>



              MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997


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 and six months ended  September
30, 1997 are not necessarily  indicative of the results that may be expected for
the year ended March 31, 1998. 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, 1997.


NOTE B - INVENTORIES

      The components of inventory consist of the following:

<TABLE>
<CAPTION>

                                                      September 30,          March 31,
                                                         1997                   1997
                                                         ----                   ----
                                                                (In Thousands)
<S>                                                    <C>                    <C> 
                Raw Materials                          $  494                 $  588
                Finished Good and Work in Progress      1,917                  1,672
                                                       ------                 ------
                                                       $2,411                 $2,260
                                                       ======                 ======
</TABLE>


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


NOTE C - EARNINGS PER SHARE

      Earnings (loss) per common share were computed using the weighted  average
number of shares  outstanding.  Common stock equivalents  (warrants and options)
were excluded from the calculation, as their effect would be antidilutive.


NOTE D - LONG-TERM DEBT

     Long-term debt consists of the following:
<TABLE>
<CAPTION>
                                                                                         September 30,         March 31,
                                                                                             1997                1997
                                                                                             ----                ----
                                                                                                   (In Thousands)
<S>                                                                                        <C>                <C>    
                                                                                        
                                                                                                    
Plan Note I;  interest  only at 7.5% payable  monthly  until  September 1, 1998;
   installments of interest and principal monthly for ten years ending September
   1, 2006, with a lump sum payment of approximately $11.4 million on that
   date...........................................................................         $15,000            $15,000

Seller Financing Under Tampa Pathology Acquisition Agreement, face
  value of $478,000 discounted at 10%, with variable monthly payments
  until satisfied ................................................................             246                273

</TABLE>
                                      5




<PAGE>



              MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997


NOTE D - LONG-TERM DEBT, Continued

<TABLE>
<CAPTION>
                                                                                         September 30,         March 31,
                                                                                             1997                1997
                                                                                             ----                ----
                                                                                                   (In Thousands)
<S>                                                                                        <C>                <C>    
                                                                                        

Other Notes and Agreements; interest and principal payable monthly and
  annual at various amounts through March 2000....................................             507                496
                                                                                          --------            -------
Total Long-Term Debt..............................................................          15,753             15,769
Less Current Portion..............................................................            (465)              (310)
                                                                                          --------            -------
LONG-TERM DEBT DUE AFTER 1 YEAR...................................................         $15,288            $15,459
                                                                                          ========            =======
</TABLE>

NOTE E - SEGMENT INFORMATION

      The Company is a holding  company  operating  through a number of separate
subsidiaries. The operations of these subsidiaries are comprised of two business
segments;  (1) the Medication  Dispensing Systems segment which manufactures and
distributes  equipment,  systems and supplies to pharmacies who service  nursing
homes and  hospitals,  and (2) the Clinical  Laboratory  Services  segment which
provides diagnostic laboratory services to physicians.

      The following is operating information for these business segments for the
three months ended September 30, 1997 and 1996:
<TABLE>
<CAPTION>

                                                       Three Months Ended                        Six Months Ended
                                                          September 30,                            September 30,
                                                     1997                1996               1997                1996
                                                     ----                ----               ----                ----
                                                           (In Thousands)                        (In Thousands)
<S>                                                 <C>                 <C>                <C>                 <C>   
Revenue of each Segment:
      Medication Dispensing Systems                 $ 4,062             $ 3,331            $  7,380            $  6,617
      Clinical Laboratory Services                    1,549               1,424               3,378               3,020
                                                    -------             -------            --------            --------
Total Revenue                                       $ 5,611             $ 4,755            $ 10,758            $  9,637
                                                    =======             =======            ========            ========

Operating Profit (Loss) of each Segment:
      Medication Dispensing Systems                 $   515             $   913            $    672            $  1,599
      Clinical Laboratory Services                      (35)                105                 246                 259
      Corporate                                        (872)               (669)             (1,679)             (1,146)
                                                    -------             -------            --------            --------
Total Operating Profit (Loss)                       $  (392)            $   349            $   (761)           $    712
                                                    ========            =======            ========            ========

Depreciation and Amortization Expense
of each Segment:
      Medication Dispensing Systems                 $   216             $   166            $    393            $    326
      Clinical Laboratory Services                       65                  55                 126                 122
      Corporate                                         108                 120                 228                 232
                                                    -------             -------            --------            --------
Total Depreciation and Amortization                 $   389             $   341            $    747            $    680
                                                    =======             =======            ========            ========

</TABLE>


                                      6






<PAGE>



              MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997


NOTE E - SEGMENT INFORMATION, Continued

<TABLE>
<CAPTION>

                                                       Three Months Ended                        Six Months Ended
                                                          September 30,                            September 30,
                                                     1997                1996               1997                1996
                                                     ----                ----               ----                ----
                                                          (In Thousands)                        (In Thousands)
<S>                                                 <C>                 <C>                <C>                 <C>    
Identifiable Assets of each Segment:
      Medication Dispensing Systems                 $ 8,522             $ 8,534            $  8,522            $  8,534
      Clinical Laboratory Services                    2,627               2,899               2,627               2,899
      Corporate                                       2,355               2,367               2,355               2,367
                                                    -------             -------            --------            --------
Total Assets                                        $13,504             $13,800            $ 13,504            $ 13,800
                                                    =======             =======            ========            ========

Capital Expenditures of  each Segment:
      Medication Dispensing Systems                 $    29             $     7            $    121            $     45
      Clinical Laboratory Services                        5                  62                  56                  64
      Corporate                                           5                   2                  20                   2
                                                    -------             -------            --------            --------
Total Capital Expenditures                          $    39             $    71            $    197            $    111
                                                    =======             =======            ========            ========

</TABLE>

NOTE F - BUSINESS ACQUISITION

      On  June  20,  1997,  the  Company,   through  its  subsidiary  Medication
Management Technologies, Inc. (MMT) concluded a merger with Cygnet Laboratories,
Inc. (Cygnet),  a California company which distributes  obstetrical  information
systems.  The plan of merger  provided  for the Cygnet  shareholders  to receive
nominal cash  consideration  in exchange for their  shares.  MMT assumed all the
liabilities of Cygnet as a result of the merger. The business combination of MMT
and Cygnet has been accounted for using the purchase  method.  Accordingly,  the
difference  between  the  cost of the  assets  acquired,  of  $526,000,  and the
liabilities assumed, of $1,440,000,  has been recorded as goodwill in the amount
of  $914,000.  The results of  operation  for Cygnet from the date of the merger
through  June 30, 1997 were not  significant.  The proforma  results,  as if the
business  combination  occurred  April 1, 1996 and April 1,  1997,  has not been
presented as the results of operation are not significant.


NOTE G - BANKRUPTCY MATTERS

     On July 10, 1997,  Medication Management  Technologies,  Inc. (MMT) filed a
voluntary  petition for relief under Chapter 11 of Title 11 of the United States
Bankruptcy  Code in the Middle  District  of  Florida,  Tampa  Division.  MMT is
currently in the process of preparing a plan of reorganization to present to the
bankruptcy  court for  approval.  The results of operation for the three and six
months  ended  September  30,  1997 do not  include  any  restructuring  charges
relating to the MMT bankruptcy which are material to the financial statements.


NOTE H - LIABILITIES SUBJECT TO COMPROMISE

      Liabilities  subject to  compromise  of  $1,087,000  at September 30, 1997
represent  the amounts  payable to unsecured  creditors of Cygnet  Laboratories,
Inc. which were assumed by Medication Management  Technologies,  Inc. as part of
the merger with Cygnet Laboratories, Inc.

NOTE I - RESTATED RESULTS OF OPERATION

     The results of operation  for the three and six months ended  September 30,
1996 have been restated for certain amounts relating to the restructuring of the
Company's bank debt and forgiveness of debt. The  restructuring of bank debt and
forgiveness of debt resulted from the confirmation of the plan of reorganization
of the Company's  major  subsidiaries  by the  bankruptcy  court on September 4,
1996.  These  items  are  more  fully  described  in  Note  19 to the  unaudited
consolidated financial statements of the Company for the fiscal year ended March
31, 1997 which are included in Form 10-K dated July 2, 1997.


NOTE J - ISSUANCE OF COMMON STOCK

     The Company  issued  150,000 shares of Common Stock to a former officer and
director  in  September  1997.  The stock was  issued  pursuant  to a  severance
agreement  which was entered  into  between the Company and the officer in March
1996.

                                       7


<PAGE>

              MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES


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

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
statement  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," "intends," "expects," "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 of the 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.


Three Months Ended September 30, 1997 and 1996

     Net sales for the three months ended  September  30, 1997  increased 18% to
$5,611,000  from  $4,755,000  during the same  period  the  previous  year.  The
increase  in net sales  resulted  from an  increase  in revenues of 21.9% in the
medication  dispensing  systems  business  segment.  Revenues  in this  business
segment  increased  primarily as a result of (a)  increased  sales of disposable
medication  punch cards to existing  customers who have expanded  their business
through the  acquisition  of additional  pharmacies and (b) sales of obstetrical
information  systems  by  the  Company's   subsidiary,   Medication   Management
Technologies, Inc. which acquired Cygnet Laboratories in June 1997. Revenues for
the clinical  laboratory  services  segment  increased  8.8% in the three months
ended  September  30, 1997  compared to the same period the previous  year.  The
increase in this segment  resulted  primarily  from an increase in the number of
physicians serviced.

     Cost of sales for the three months ended September 30, 1997 increased 17.0%
to $2,917,000  from  $2,492,000 the same period the previous year. Cost of sales
as a percentage of sales decreased to 52.0% for the three months ended September
30, 1997 compared to 52.4% the same period the previous year. The minor decrease
in cost of sales as a percentage of sales resulted from incremental gross margin
on increased  sales which was  partially  offset by increases in costs.  Cost of
sales as a percentage of sales for the medication  dispensing system segment was
49.7%  compared to 50.7% the prior year.  Cost of sales as a percentage of sales
for the clinical  laboratory  services segment increased in fiscal 1998 to 58.0%
from 56.4% the previous year.

     Selling,   general  and   administrative   expenses  increased  60.8%  from
$1,501,000  to  $2,414,000  for the three  months  ended  September  30, 1997 as
compared to the same period the previous  year.  The  increase in SG&A  expenses
resulted  primarily from increases in personnel and selling related costs in the
medication  dispensing  business.   In  addition,   the  acquisition  of  Cygnet
Laboratories,  Inc. in June 1997 resulted in the addition of personnel necessary
to sell and service the  customers of this  business.  SG&A  expenses  increased
$745,000 in the medication  dispensing  business segment,  $4,000 in the holding
company and $163,000 in the clinical laboratory segment.

     Depreciation and amortization expense increased $48,000 to $389,000 (14.1%)
for the three  months ended  September  30, 1997 from  $341,000  during the same
period  the  previous  year.  The  increase   resulted  from   depreciation  and
amortization of assets acquired during the first six months of fiscal 1998.

     Interest  expense  (net of  interest  income)  for the three  months  ended
September 30, 1997 increased  $210,000  compared to the same period the previous
year.  During the three months ended  September 30, 1996,  the  Companies  major
subsidiaries  were  in  Chapter  11,  consequently   interest  payments  on  the
outstanding  secured  debt  were  suspended  until  confirmation  of the plan of
reorganization on September 4, 1996.

     Net loss from continuing  operations and before extraordinary items for the
three months ended  September 30, 1997 was $392,000  compared to a net income of
$349,000 in the same period the previous year. The net loss for the three months
ended  September  30, 1997 compared to the net income during the same period the
previous year resulted from increased SG&A expenses and interest expense,  which
offset increased gross margin realized on higher revenues.  

     Extraordinary  income for the three months ended  September 30, 1996 was $0
compared to $2,101,000 the prior year. The  extraordinary  income the prior year
resulted from the  adjustment  of the unsecured  claims held by creditors of the
Company's  subsidiaries  pursuant to the plan of reorganization  approved by the
bankruptcy court.

     Gain on forgiveness of debt of discontinued operations for the three months
ended  September 30, 1997 was $0 compared to  $2,700,000  during the same period
the previous year. The gain  recognized in the three months ended  September 30,
1996  resulted  from the  adjustment  in the amount to be paid to the  unsecured
creditors of the Company's subsidiary,  Vangard Labs, Inc., pursuant to the plan
of reorganization which was confirmed by the bankruptcy court.



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<PAGE>

                  MEDICAL TECHNOLOGY SYSTEMS, INC. AND SUBSIDIARIES

Six Months Ended September 30, 1997 and 1996

      Net sales for the six months ended  September 30, 1997 increased  11.6% to
$10,758,000  from  $9,637,000  during the same  period the  previous  year.  The
increase in net sales resulted  primarily from increased sales of MTS Packaging,
Inc.  products and an increase in the number of physicians  serviced by MT Labs,
Inc. Revenues for the medication  dispensing  systems business segment increased
11.5% in fiscal 1998  compared to the previous  year.  Revenues for the clinical
laboratory  services  segment  increased  11.9% in fiscal  1998  compared to the
previous year.

     Cost of sales  for the six  months  ended  September  30,  1997,  increased
$464,000  (8.7%) to  $5,802,000  from  $5,338,000  during  the same  period  the
previous year. The increase resulted  primarily from the increase in revenues in
each business  segment.  Cost of sales as a percentage of sales was decreased to
53.9% in the three  months ended  September  30, 1997 from 55.4% the same period
the  previous  year.  Cost of sales as a percentage  of sales in the  medication
dispensing  systems  business  segment  decreased to 53.9% from 54.3% during the
same period the previous year primarily as a result of incremental profit margin
on increased revenue.  Cost of sales as a percentage of sales decreased to 54.0%
in fiscal  1998 from 57.7% the prior  year in the  clinical  laboratory  segment
primarily as a result of additional  revenues which did not require increases in
certain fixed operating costs.

     Selling,  general and administrative  expenses increased $1,577,000 (55.6%)
to  $4,414,000  from  $2,837,000  for the six months  ended  September  30, 1997
compared to the same period the previous  year. The reasons for the increase are
substantially   the  same  as  those  outlined  in  the  comparative   quarterly
discussions.  SG&A expenses  increased  $1,242,000 in the medication  dispensing
segment,  $50,000 in the holding company and $285,000 in the clinical laboratory
segment.

     Depreciation and amortization  expense increased $67,000 to $747,000 (9.9%)
for the six months ended September 30, 1997 compared to $680,000 during the same
period the  previous  year.  The reasons for the  increase in  depreciation  and
amortization for the six months ended September 30, 1997 are  substantially  the
same as those outlined in the comparative quarterly discussions.

      Interest  expense (net of interest income)  increased  $486,000 during the
six months ended  September 30, 1997 compared to the previous  year. The reasons
for the increase in interest  expense during the six months ended  September 30,
1997 are substantially  the same as those outlined in the comparative  quarterly
discussions.

     Net loss from  continuing  operations  and before  extraordinary  items was
$761,000 for the six months ended  September  30, 1997 compared to net income of
$712,000  the same period the previous  year.  The reasons for the net loss from
continuing  operations  for the six months ended  September 30, 1997 compared to
net income the prior year are  substantially  the same as those  outlined in the
comparative quarterly discussions.

      Extraordinary  income for the six months ended  September  30, 1997 was $0
compared to $2,101,000 the prior year. The  extraordinary  income the prior year
resulted from the  adjustment  of the unsecured  claims held by creditors of the
Company's  subsidiaries  pursuant to the plan of reorganization  approved by the
bankruptcy court.

     Gain on forgiveness of debt of  discontinued  operations for the six months
ended  September 30, 1997 was $0 compared to  $2,700,000  during the same period
the previous year. The gain  recognized in the three months ended  September 30,
1996  resulted  from the  adjustment  in the amount to be paid to the  unsecured
creditors of the Company's subsidiary,  Vangard Labs, Inc., pursuant to the plan
of reorganization which was confirmed by the bankruptcy court.


LIQUIDITY AND CAPITAL RESOURCES

      Cash  provided  from  continuing  operations  for  the  six  months  ended
September 30, 1997 was $513,000 compared to $1,853,000 during the previous year.
Cash was provided from continuing  operations primarily as a result of increases
in trade credit provided to the Company.

     Investing   activities  utilized  $669,000  during  the  six  months  ended
September 30, 1997 compared to $174,000 the previous  year. The increase in cash
used by  investing  activities  resulted  from product  development  and capital
expenditure programs which resumed in fiscal 1998, as well as the acquisition of
Cygnet Laboratories, Inc. in June 1997.

      Financing  activities  used $15,000 during the six months ended  September
30, 1997  compared to  $1,099,000  the previous  year.  The Company made certain
payments to its secured  lender during the first six months of the prior year as
part  of the  Chapter  11  reorganization  of its  principal  subsidiaries.  The
Company's  current secured debt requires  interest only payments until September
1998,  therefore  financing  activities  currently  do not require  repayment of
principal on outstanding secured debt.


                                       9




<PAGE>



      The Company had working capital of $3,609,000 as of September 30, 1997 and
has no other source of working  capital other than that which is generated  from
operations.

     On October  28,  1997,  the  bankruptcy  court  ordered the Company to make
payments of approximately  $270,000 to unsecured  creditors pursuant to the plan
of  reorganization  which was confirmed on September 4, 1996 for MTS  Packaging,
Inc.  and  MT  Laboratories,   Inc.  In  addition,   approximately  $172,000  in
administrative  claims  have been  filed  with the court of which  approximately
$67,000  have  previously  been paid,  resulting  in a balance of $105,000 to be
paid. The Company had placed  $250,000 in escrow with its bankruptcy  counsel to
provide for payments to  unsecured  creditors  and  administrative  claims.  The
amounts remaining to be paid to unsecured  creditors and  administrative  claims
($375,000)  will be paid from the escrow funds,  as well as funds generated from
future operations.


PART II - OTHER INFORMATION


Item 1.  Legal Proceedings

      On July 10, 1997, Medication Management  Technologies,  Inc. (MMT) filed a
voluntary  petition for relief under Chapter 11 of Title 11 of the United States
Bankruptcy  Code in the Middle  District  of  Florida,  Tampa  Division.  MMT is
currently in the process of preparing a plan of reorganization to present to the
bankruptcy court for approval.

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

     The Annual Meeting of the Shareholders of the Company was held on September
10,  1997.  Messrs.  Todd E. Siegel,  David  Kazarian,  Michael  Conroy and John
Stanton were elected  directors of the Company for one year terms with 5,112,303
shares of Common Stock and 6,500,000  shares of Voting Preferred Stock voting in
favor,  11,819 shares of Common Stock and zero shares of Voting  Preferred Stock
voting  against,  and 178,705  shares of Common  Stock and zero shares of Voting
Preferred Stock abstaining.

     In addition, the appointment of Grant Thornton as the Company's independent
certified public  accountants for the fiscal year 1998 was ratified by a vote of
5,204,456  shares of Common Stock and 6,500,000 shares of Voting Preferred Stock
in favor,  and 39,050 shares of Common Stock and zero shares of Voting Preferred
Stock  voting  against,  and 45,353  shares of Common  Stock and zero  shares of
Voting Preferred Stock abstaining.

     The  proposal to adopt the adoption and  amendment  of the  Company's  1997
Stock Option Plan was approved by a vote of 4,819,914 shares of Common Stock and
     6,500,000 shares of Voting  Preferred  Stock.  There were 354,058 shares of
Common
Stock and zero shares of Voting  Preferred Stock voting against the proposal and
114,887  shares of  Common  Stock and zero  shares  of  Voting  Preferred  Stock
abstaining.

Item 6. Exhibits and Reports on Form 8-K

     27 - Financial data schedule as of September 30, 1997 (for SEC use only), 
          filed herewith.

Signature

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant has duly caused this  Quarterly  Report to be signed on its behalf by
the undersigned,  thereunto duly authorized, in the County of Pinellas, State of
Florida, on the 13th day of November, 1997.

MEDICAL TECHNOLOGY SYSTEMS, INC.



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
















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