FORM 10-KSB

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                     For the fiscal year ended June 30, 2007
                         Commission file number 0-17449

                               PROCYON CORPORATION
                               -------------------
                 (Name of small business issuer in its charter)

               Colorado                               59-3280822
               --------                               ----------
      (State of incorporation)                  (I.R.S. Employer ID No.)

              1300 South Highland Avenue, Clearwater, Florida 33756
              -----------------------------------------------------
               (Address of principal executive offices)(Zip Code)

         Issuer's telephone number, including area code: (727) 447-2998

    Securities registered pursuant to Section 12(b) of the Act:  None
    Securities registered pursuant to Section 12(g) of the Act:  Common Stock

Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act. [ ]

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes[ ] No [X]

Revenues for the fiscal year ended June 30, 2007: $2,536,577.

The aggregate market value of the 3,726,188 shares of Common Stock held by
non-affiliates was $1,676,785 on September 25, 2007 based on the average bid and
asked price of $.45 on such date. As of September 25, 2007, there were 8,049,588
shares of the issuers Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:
None.

Transitional Small Business Disclosure Format: Yes [ ] No [X]

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                                      INDEX


         Title                                                              Page

ITEM 1.  DESCRIPTION OF BUSINESS                                             3

ITEM 2.  DESCRIPTION OF PROPERTY                                             8

ITEM 3.  LEGAL PROCEEDINGS                                                   8

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS            9

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION           10

ITEM 7.  FINANCIAL STATEMENTS                                                16

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING         17
         AND FINANCIAL DISCLOSURE

ITEM 8A. CONTROLS AND PROCEDURES                                             17

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS           18
         AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF
         THE EXCHANGE ACT

ITEM 10. EXECUTIVE COMPENSATION                                              22

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT         25
         AND RELATED STOCKHOLDER MATTERS

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR         27
         INDEPENDENCE

ITEM 13. EXHIBITS                                                            28

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES                              29


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                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

History and Organization

     Procyon Corporation (the "Company" or "Procyon"), a Colorado corporation,
was incorporated on March 19, 1987 and was deemed a development stage company
until May 1996 when we acquired Amerx Health Care Corp. ("Amerx"), a corporation
based in Clearwater, Florida, which was wholly owned by John C. Anderson, our
former and deceased Chief Executive Officer. Amerx develops and markets
proprietary medical products used in the treatment of pressure ulcers,
dermatitis, inflammation and other skin problems. We formed Sirius Medical
Supply, Inc. ("Sirius"), a Florida corporation, in 2000 to operate as a full
service mail order medical supply company, selling primarily to Medicare
customers. Amerx and Sirius are wholly owned subsidiaries of Procyon.
Historically, Amerx's products have been sold through distributors to healthcare
institutions, such as physicians, nursing homes and home health care agencies,
and to retailers, including national and regional chain stores and pharmacies,
while Sirius's products are sold directly to Medicare and Medicaid patients.

Products

     Amerx Health Care Corp.

     Amerx sells various skin and wound care products , such as the AmeriGel(R)
Hydrogel Wound Dressing, Amerigel(R) Hydrogel Saturated Gauze Dressing,
AmeriGel(R) Preventive Care Lotion, AmeriGel(R) Preventive Barrier Lotion,
AmeriGel(R) Saline Wound Wash, and Amerigel(R) Post Op Surgical Kit. The
AmeriGel(R) Hydrogel Wound Dressing and Amerigel(R) Hydrogel Saturated Gauze
Dressing are formulated to be used as a wound dressing to manage stages I-IV
pressure ulcers, stasis ulcers, diabetic skin ulcers, post surgical incisions,
cuts, abrasions, first and second degree burns, and skin irritations. The
AmeriGel(R) Preventive Care Lotion is a therapeutic skin conditioner containing
emollients, which restore moisture to fragile skin, protect the skin against
tears and chafing, and assist in prevention of chronic pressure ulcers. The
AmeriGel(R) Barrier Lotion provides barrier protection to shield the skin from
excess moisture and reduce the harmful effects to the skin of urine and feces in
incontinent patients. The AmeriGel(R) Saline Wound Wash is a non-sterile wound
cleanser that contains saline and Oakin. The industry standard for wound
cleansing has been saline, since tap water contains chemicals and additives that
can potentially be harmful to a chronic wound.

     Amerx introduced one new product to the market in the year ended June 30,
2007 ("fiscal 2007"). As planned, Amerx introduced the AmeriGel(R) Post-Op
Surgical Kit in August 2006. The kit contains a tube of AmeriGel(R) Wound
Dressing, a 4 oz bottle of AmeriGel(R) Wound Wash, gauze and band-aids. The
Amerigel Post-Op Surgical Kit is designed to provide patients with everything
they need following post-op surgical care.

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     Amerx holds two Medicare reimbursement codes covering both of our wound
care products. The first reimbursement code relates to the Amerigel(R) Hydrogel
Wound Dressing, reimbursed at 3 ounces per month. The second reimbursement code
is for the Amerigel(R) Hydrogel Saturated Gauze Dressing and is reimbursed on a
per pad or per use basis. We believe that these reimbursement codes are
beneficial to Amerx's business, allowing customers to charge Medicare for use of
the product.

     Amerx spent approximately $5,700 towards research and development efforts
over the past fiscal year. These efforts were directed towards additional
studies aimed at expanding existing markets.

     Each Amerx product is based on proprietary formulations, which we protect
as trade secret information. Each product is also registered with the Food and
Drug Administration and receives a National Drug Code.

     Amerx's increase in sales during fiscal 2007 was primarily due to increased
market share and improved sales across the full Amerigel(R) product line. This
year Amerx made significant progress in causing its sales to be more evenly
distributed across its entire product line after additional marketing focus was
placed on secondary items. The Amerigel(R) product line continues to gain
acceptance within the medical community. Amerx's website, which can be viewed at
www.amerigel.com, provides general information about Amerx's products and is
equipped to handle direct sales to the public and medical professionals.

Sirius Medical Supply

     Sirius's product offering is directed to the diabetic community, and
consists primarily of diabetic supplies, glucose monitors, heating pads,
lancets, test strips, syringes and wound care products. Sirius expects to
continue to develop successful products for sale in the Medicare arena to
different specialties. The addition of these specialty customers would help
Sirius to reach its goal of becoming a full service mail order medical supply
company. Sirius continues to sustain its customer base with advertisements and
referrals and continually tests new methods for reaching new customers. Sirius
has a website (www.siriusmedical.com) to serve new and existing customers.
Sirius has not spent any funds on research and development over the past three
fiscal years.

Market for Products

     The institutional market for Amerx's skin and wound care treatment products
is primarily comprised of hospitals, nursing homes, home health care agencies
and other health care institutions. We believe that AmeriGel(R)products
represent a cost effective, efficacious treatment and prevention program for
chronic pressure ulcers and other skin problems, which are treated in health
care institutions. To date we have not realized the market penetration we had
hoped for in the institutional market. However, we have assembled a sales team
to pursue sales to government agencies, that will open upon approval of a
pending contract number with the Government Service Agency (GSA).

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     The retail market for Amerx's skin care and wound care products is
comprised mainly of national and regional chain stores as well as independent
retail pharmacies that sell such products to individuals. We believe that Amerx
made progress in the retail market in fiscal 2007, due to an increase in the
number of national distributors, who increased sales of multiple products in our
Amerx line.

     The market for Sirius's products is primarily comprised of diabetic
patients who receive benefits from Medicare or Medicaid, or from their insurance
companies. Sirius attracts these customers through advertising, direct marketing
and referrals.

Distribution and Sales

     Amerx's traditional method of distribution has been through retail and
institutional distributors. We expect to continue increasing our distributor
base, particularly with distributors capable of introducing Amerx's products in
new medical specialty markets, in new geographical areas and to new retail
chains. Distributors typically purchase products from Amerx on standard credit
terms. Amerx supports its distributors through product literature, advertising
and participation at industry trade shows. All existing distributors sell Amerx
products on a non-exclusive basis.

     We periodically receive inquiries about foreign market distribution for the
AmeriGel(R) product line . These inquiries have been generated by our
advertising, market presence and web sites (www.amerxhc.com and
www.amerigel.com). We respond to and pursue all such inquiries, while comlying
with international and foreign countries regulatory guidelines.

     Sirius distributes its products directly to consumers by mail order. We
have attracted and retained customers through our marketing efforts, which
include participating in trade shows, physician education, and customer
referral. Sirius developed a website in 2006, complete with an online shopping
cart to help develop other channels of product sales. We believe Sirius has
substantial potential for increased sales as the diabetic market contains over
20.8 million diabetics in the United States and will continue to grow according
to the American Diabetes Association.

     In fiscal 2007, Amerx generated gross revenues of approximately $2,244,000
and Sirius, $292,000, which constituted 88% and 12%, respectively, of our total
gross revenues.

Significant Customers

     During the year ended June 30, 2007, sales from one customer accounted for
approximately 12% of the Company's sales. The Company has been able to maintain
relationships with its distributors and has been able to establish relationships
with new distributors each year. Sirius has no significant single customers as
it sells only to end users.

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Manufacturing

     During fiscal 2007, manufacturing of most of Amerx's products was completed
by a non-affiliated manufacturing facility. This company also performed research
and development in the past, and we expect that it will perform research and
development activities for Amerx in the future, as needed. Amerx does not have a
written contract with this manufacturer and there are no minimum purchase
requirements. In fiscal 2007, Amerx used a second facility based in Dallas, TX,
to manufacture the AmeriGel(R) Saline Wound Wash. If circumstances deemed
necessary, this manufacturer could aid in manufacturing other AmeriGel(R)
products. Amerx believes there are other companies that could manufacture
Amerx's products according to its specifications, if necessary. The Company's
manufacturing and packaging activities are performed at a production facility
owned and operated by a non-affiliated pharmaceutical manufacturer. The sudden
loss or failure of our primary manufacturer could significantly impair Amerx's
ability to fulfill customer orders on a short-term basis and therefore, could
materially and adversely affect the Company's operations. However, we have
maintained a long-term relationship with this manufacturer and do not expect any
interruption in its production of wound care products in the near term. In
addition, the current and projected use of the second manufacturer would help
alleviate most short term delays.

     Amerx's manufacturing and packaging activities are performed pursuant to
current good manufacturing practices ("CGMP") as defined under the United States
Federal Food, Drug and Cosmetic Act, as amended (the "FFDC Act"), and the
regulations promulgated under the FFDC Act. All manufacturing activities are
required to comply with the product specifications, supplies and test methods
developed by Amerx specifically for its products, as well as the CGMP.

     A single manufacturer furnishes one proprietary ingredient contained in all
of Amerx's products. Amerx does not have a written contract with this supplier
and management believes that, if necessary, an alternative supplier could be
secured within a reasonable period of time. The manufacturer generally provides
other raw materials and ingredients and we believe there are numerous other
sources for these materials and ingredients. However, there can be no assurance
that Amerx would be able to timely secure an alternative supplier and the
failure to replace this supplier in a timely manner could materially harm
Amerx's operations. We believe that we have a good working relationship with
this supplier and do not anticipate any disruption of supplies.

     Sirius purchases its products from several different medical companies
either on a direct basis, or through medical distributors. Sirius carries most
major brands of diabetic testing products as well as some off brand products. We
believe that if Sirius lost one or more of its suppliers, this would not have an
adverse material impact on Sirius's business, as there are other suitable
suppliers, as well as an assortment of products that achieve similar results.

                                        6
<PAGE>

Proprietary Rights

     In January 1999, the United States Patent and Trademark Office registered
the Company's AmeriGel(R)trademark. Amerx also holds a registered Trademark for
the principal proprietary ingredient used in all of its currently available
products. Amerx relies on a combination of trademark and trade secret protection
and confidentiality agreements to establish and protect its proprietary rights.

Competition

     The market for skin and wound care treatment products in which Amerx
operates is highly competitive. Competition is based on product efficacy, brand
recognition, loyalty, quality, price and availability of shelf space in the
retail market. Amerx competes against several large well-capitalized companies
offering a broad range of skin treatment products as well as numerous small
competitors having a limited number of products. Amerx has established its
products efficacy and value within specialized professional markets and will
continue to expand this marketplace.

     The market for diabetic supplies is also highly competitive, and Sirius
competes with several large companies for market share. Sirius can compete on
the same level with these larger companies as to product offerings. However,
until Sirius's customer base grows, larger companies will benefit from volume
discounts on purchases from suppliers that Sirius does not yet receive. We
believe Sirius's success will hinge on customer service rather than product
margin.

Order Placement and Backlog

     During fiscal 2007, the Company experienced temporary backlogs in supplying
the newest product in the AmeriGel(R) product line due to higher than expected
demand. There was no material backlog in orders placed in the past two fiscal
years. Orders are only shipped when they are 100% complete.

Governmental Approvals and Regulations

     The production and marketing of our products are subject to regulation for
safety, efficacy and quality by numerous governmental authorities in the United
States. Amerx's advertising and sales practices are subject to regulation by the
Federal Trade Commission (the "FTC"), the FDA and state agencies. The FFDC Act,
as amended, the regulations promulgated thereunder, and other federal and state
statutes and regulations govern, among other things, the testing, manufacture,
safety, effectiveness, labeling, storage, record keeping, approval, advertising
and promotion of Amerx's products. The FDA regulates the contents, labeling and
advertising of Amerx's products. Amerx may be required to obtain FDA approval
for proposed nonprescription products. This procedure involves extensive
clinical research, and separate FDA approvals are required at various stages of
product development. The approval process requires, among other things,
presentation of substantial evidence to the FDA, based on clinical studies, as

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to the safety and efficacy of the proposed product. After approval,
manufacturers must continue to expend time, money and effort in production and
quality control to assure continual compliance with the Current Good
Manufacturing Practices (CGMP) regulations.

     Sirius's advertising and sales practices are subject to regulation by the
FTC, Medicare, and state Medicaid agencies. FDA approvals for its products are
obtained by the respective manufacturer. Medicare and Medicaid regulate
advertising, sales pricing, and the guidelines under which Sirius operates.

     We believe that we and our subsidiaries are in compliance with all
applicable laws and regulations relating to our and their operations in all
material respects. We believe that compliance with the various provisions of
national, state and local environmental laws and regulations has not had a
material adverse effect upon the capital expenditures, earnings, financial
position, liquidity or competitive position of the Company.

Employees

     As of September 1, 2007, the Company and its subsidiaries employ a total of
14 full time employees and 1 part time employee, consisting of 3 management
employees, 6 sales-related employees and 6 administrative employees. One
employee works under Procyon, eleven employees work under the Amerx subsidiary,
and three employees under Sirius.

ITEM 2.  PROPERTIES

We currently maintain our offices, and those of Amerx and Sirius, at 1300 South
Highland Ave, Clearwater, Florida 33756. Our offices consist of approximately
3,800 square feet of space. We believe the facility is adequate for our current
needs. The Company leased this building until July 2006, when it purchased the
building from the lessor for $550,000. In addition, at the same time, we closed
on a loan provided by Bank of America, N.A. in the amount of $508,000, evidenced
by a promissory note. Further, the purchase and loan were secured by a mortgage,
also dated July 21, 2006, between the Company and Bank of America. Our Chief
Executive Officer personally guaranteed the loan.

ITEM 3.  LEGAL PROCEEDINGS

     The Company and its subsidiaries are not a party to any pending material
legal proceedings nor is our property the subject of a pending legal proceeding.

                                       8
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                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     Since October 1996, the Company's Common Stock has been traded on the OTC
Bulletin Board, an electronic quotation system used by members of the Financial
Industry Regulatory Authority ("FINRA"). The following table sets forth for each
period indicated the high and low closing bid prices for the Common Stock, as
reported by National Quotation Bureau, LLC. Bid quotations reflect inter-dealer
quotations, without retail markups, markdowns or commissions, and do not
necessarily reflect actual transactions.

Fiscal 2006                                HIGH       LOW
First Quarter                             $  .42     $  .21
Second Quarter                            $  .55     $  .25
Third Quarter                             $  .35     $  .25
Fourth Quarter                            $  .55     $  .23

Fiscal 2007
First Quarter                             $  .40     $  .25
Second Quarter                            $  .34     $  .25
Third Quarter                             $  .32     $  .25
Fourth Quarter                            $  .55     $  .30

     As of September 18, 2007, there were approximately 158 record holders of
the Company's Common Stock. On September 18, 2007, the closing bid price of the
Company's common stock was $.50 and the closing ask price was $.50. On August
20, 2007, the last date on which a sale occurred, the last reported sale price
was $.50.

     Holders of Common Stock are entitled to receive such dividends if declared
by the Company's Board of Directors. We have not declared any dividends on our
Common Stock and have no current plans to declare a dividend in the immediate
future.

     Holders of the Series A Cumulative Convertible Preferred Stock (the
"Preferred Stock") are entitled to receive, if declared by the Board of
Directors, quarterly dividends at an annual rate of $.10 per share. Dividends
accrue without interest, from the date of issuance, and are payable in arrears
in cash or common stock, when and if declared by the Board of Directors. No
dividends had been declared or paid at June 30,2007, and dividends, if ever
declared, in arrears at such date total $206,351.

     Holders of the Preferred Stock have the right to convert their shares of
Preferred Stock into an equal number of shares of Common Stock of the Company.
In addition, every holder of preferred stock is entitled to that number of votes
equal to the number of shares of common stock into which the preferred stock is

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convertible. Such preferred shares will automatically convert into one share of
Common Stock at the close of a public offering of Common Stock by the Company
provided the Company receives gross proceeds of at least $1,000,000, and the
initial offering price of the Common Stock sold in such offering is equal to or
in excess of $1 per share. During fiscal 2007, holders of 1,000 shares of
Preferred Stock voluntarily converted their Preferred shares into 1,000 shares
of Common Stock.

     As reflected in the price quotations above, there have been significant
price fluctuations in the Company's Common Stock. Factors that may have caused
or can cause market prices to fluctuate include the number of shares available
in the public float, any purchase or sale of a significant number of shares
during a relatively short time period, quarterly fluctuations in results of
operations, issuance of additional securities, entrance of such securities into
the public float, market conditions specific to the Company's industry and
market conditions in general, and the willingness of broker-dealers to effect
transactions in low priced securities. In addition, the stock market in general
has experienced significant price and volume fluctuations in recent years. These
fluctuations, which may be unrelated to a Company's operating performance, have
had a substantial effect on the market price for many small capitalization
companies such as the Company. Factors such as those cited above, as well as
other factors that may be unrelated to the operating performance of the Company,
may significantly affect the price of the Common Stock.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

     This Report on Form 10-KSB, including Management's Discussion and Analysis
or Plan of Operation, contains forward-looking statements. When used in this
report, the words "may", "will", "expect", "anticipate", "continue", "estimate",
"project", "intend", "hope", "believe" and similar expressions, variations of
these words or the negative of those words, and, any statement regarding
possible or assumed future results of operations of the Company's and its
subsidiaries' business, the markets for its products, anticipated expenditures,
regulatory developments or competition, or other statements regarding matters
that are not historical facts, are intended to identify forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 regarding events, conditions
and financial trends including, without limitation, business conditions in the
skin and wound care market and the general economy, competitive factors, changes
in product mix, production delays, manufacturing capabilities, new and
unanticipated governmental regulations and other risks or uncertainties detailed
in other of the Company's Securities and Exchange Commission filings. Such
statements are based on management's current expectations and are subject to
risks, uncertainties and assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect, the
Company's actual plan of operations, business strategy, operating results and
financial position could differ materially from those expressed in, or implied
by, such forward-looking statements.

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     Our business in general is subject to certain risks including but not
limited to the following:

     -    we may not be able to produce or obtain, or may have to obtain at
          excessive prices, the raw materials and finished goods we need;
     -    we may not be able to use any tax loss carryforwards before they
          expire;
     -    the vendors on whom we rely for manufacturing certain products may go
          out of business, fail to meet demand or provide shipments on an
          untimely basis;
     -    competitive pressures may require us to lower our prices on certain
          products, thereby adversely affecting operational results;
     -    we may not be able to obtain, or obtain at uneconomic expense and
          protracted time, the regulatory approval of new products;
     -    consumers or distributors may not favorably receive our new or
          existing products; we may not be able to obtain adequate financing to
          fund our operations or expansion;
     -    a relatively small group of products may represent a significant
          portion of our net revenues or net earnings from time to time; if the
          volume or pricing of any of these products declines, it could have a
          material adverse effect on our business, financial position and
          results of operations;
     -    we could experience significantly reduced revenues and profits if
          Medicare or other government programs change, delay or deny
          reimbursement claims;
     -    the loss of senior management or other key personnel, or our inability
          to attract and retain additional senior management or other key
          personnel, could adversely affect our ability to execute our business
          plan;
     -    we could become subject to new unanticipated governmental regulations
          or fail to comply with regulations applicable to our products, which
          could materially and adversely affect our business, financial position
          and results of operations; and
     -    legislative or regulatory programs that may influence prices of
          prescription drugs could have a material adverse effect on our
          business.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     Our financial statements have been prepared in accordance with standards of
the Public Company Accounting Oversight Board (United States), which require us
to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and the related disclosures. A summary of
those significant accounting policies can be found in the Notes to the
Consolidated Financial Statements included in this annual report. The estimates
used by management are based upon our historical experiences combined with
management's understanding of current facts and circumstances. Certain of our
accounting policies are considered critical as they are both important to the
portrayal of our financial condition and the results of its operations and
require significant or complex judgments on the part of management. We believe
that the following critical accounting policies affect the more significant
judgments and estimates used in the preparation of our financial statements.

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Accounts receivable allowance

     Accounts receivable allowance reflects a reserve that reduces our customer
accounts and receivable to the net amount estimated to be collectible. The
valuation of accounts receivable is based upon the credit-worthiness of
customers and third-party payers as well as historical collection experience.
Estimating the credit worthiness of customers and the recoverability of customer
accounts requires us to exercise considerable judgment. Allowances for doubtful
accounts are recorded as a selling, general and administrative expense for
estimated amounts expected to be uncollectible from third-party payers and
customers. We base our estimates on our historical collection experience,
current trends, credit policy and on the analysis of accounts by aging category.
At June 30, 2007, our allowance for doubtful accounts totaled $2,500.

Advertising and Marketing

     The Company uses several forms of advertising, including sponsorships to
agencies who represent the professionals in their respective fields. The Company
expenses these sponsorships over the term of the advertising arrangements, on a
straight line basis. Other forms of advertising used by the Company include
professional journal advertisements, and mailing campaigns. These forms of
advertising are expensed when incurred.

Income Tax

     We account for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income taxes" ("SAS 109"). SAS 109 requires
the recognition of deferred tax assets and liabilities for the expected future
tax consequences of events that have been included in the financial statements
or tax returns. Under this method, deferred tax assets and liabilities are
determined based on the differences between the financial statement and the tax
basis of assets and liabilities using enacted tax provisions currently in effect
and rates applicable to the periods in which the differences are expected to
affect taxable income.

Revenue Recognition

     The Company recognizes revenue in accordance with Securities and Exchange
Commission Staff Accounting Bulletin No. 104, "Revenue Recognition, corrected
copy." which requires that four basic criteria must be met before revenue can be
recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has
occurred or services have been rendered; (3) the seller's price to the buyer is
fixed or determinable; and, (4) collectibility is reasonably assured. We
recognize revenue related to product sales upon the shipment of such orders to
customers, provided that the risk of loss has passed to the customer and we have
received and verified any written documentation required to bill Medicare, other
third-party payers and customers. We record revenue at the amounts expected to
be collected from Medicare, other third-party payers and directly from
customers. We delay recognizing revenue for shipments where the Company has not
received the required documentation, until the period when such documentation is
received.

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     Medicare reimbursements are based upon government-established reimbursement
prices. The reimbursements that Medicare pays us is subject to review by
government regulators. Medicare reimburses at 80% of the government-determined
reimbursement prices and we bill the remaining balance to either third-party
payers, such as insurance companies, or directly to the customers.

Stock Based Compensation

     Effective January 1, 2006, we adopted Statement of Financial Accounting
Standards No. 123(R) ("SFAS 123R"), "Share-Based Payment". SFAS 123R requires
all share-based payments to employees, including grants of employee stock
options, to be recognized in the statement of operations based upon their fair
values and rescinds the acceptance of pro forma disclosure. SFAS 123R permits
two methods of adoption, a "modified prospective" method and a "modified
retrospective" method. Under the modified prospective method, stock-based
compensation cost is recognized, beginning with the effective date, based on the
requirements of SFAS 123R for all share-based payments granted after the
effective date and for all awards granted prior to the effective date that
remain unvested on the effective date. The modified retrospective method
includes the requirements of the modified prospective method and also permits
restatement of prior periods based on amounts previously reported in pro forma
disclosures pursuant to SFAS 123 for either all periods presented or for only
prior interim periods of the year of adoption. We adopted the modified
prospective method prescribed in SFAS 123R, effective January 1, 2006.

General

     Our continuing operations and revenues consist of the operations of and
revenues generated by Amerx and Sirius, our two wholly-owned subsidiaries.
Amerx's wound care and skin care products, marketed under the trademark
AmeriGel(R), are formulated to enhance the quality of skin and wound care and to
lower the treatment cost for those who suffer from various skin conditions and
wounds. Sirius markets and distributes diabetic supplies via mail order
primarily to Medicare patients.

     Amerx markets AmeriGel(R) products to institutional customers such as
nursing homes, hospitals and home health agencies and to retail customers.
Institutional sales are made either directly to the end user or through medical
supply distributors or physicians. Many institutional customers will not
purchase directly from the manufacturer; they will purchase products only
through a national distributor who warehouses the products and supplies the
products directly to the customer. Accordingly, Amerx must supply its
distributors with adequate inventory in order to successfully compete with other
manufacturers.

     Amerx reaches the retail consumer primarily through distributors, but in
some cases, through sales to retail store chains. Amerx's skin care products are
distributed to institutions and to retail stores through national, regional and
local distributors.


                                       13
<PAGE>

Recent Developments

     On July 3, 2007 Sirius achieved accreditation with the Joint Commission.
The Joint Commission evaluates and accredits nearly 15,000 health care
organizations and programs in the United States. An independent, not-for-profit
organization, the Joint Commission is the nation's predominant standards-setting
and accrediting body in health care. Since 1951, the Joint Commission has
maintained state-of-the-art standards that focus on improving the quality and
safety of care provided by health care organizations. The Joint Commission's
comprehensive accreditation process evaluates an organizations compliance with
these standards and other accreditation requirements. Joint Commission
accreditation is recognized nationwide as a symbol of quality that reflects an
organization's commitment to meeting certain performance standards. To earn and
maintain the Joint Commission Gold Seal of Approval TM, an organization must
undergo an on-site survey by a Joint Commission survey team at least every three
years.

     With accreditation in place, Sirius has submitted bids for ten competitive
bidding areas (CBA's) in the first round of the new CMS Medicare Competitive
bidding system. The new system is being implemented in an initial ten region
test. The test areas being used are Miami, FL, Orlando, FL, Dallas, TX, Kansas
City, MO, San Juan, PR, Cleveland, OH, Cincinnati, OH, Pittsburgh, PA, San
Bernardino, CA, and Charlotte, NC. Sirius hopes to win a CMS contract in one or
all of these areas which will increase its ability to reach customers on a
national basis.

     On July 15, 2007 Amerx received a Government Services Administration(GSA)
contract number. This number will permit Amerx to sell its products to the
government institutions including but not limited to the Veterans Administration
Hospitals and Department of Defense.

Future Developments

     Amerx expects to further penetrate the physician market through its
participation in industry trade shows, advertisements in trade journals,
development of additional distributor relationships, opening new geographical
territories (including foreign markets), and coordinating with physicians and
educational institutions to provide training to wound care professionals. Amerx
management seeks to develop additional products for the physician market as new
product needs become known through its association with health care
professionals.

     Amerx intends to pursue potential product developments in other medical
specialties and other wound care applications. Preliminary investigations of
these markets are ongoing.

     Sirius intends to aggressively attempt to expand its customer base through
the use of advertising, direct physician contact, referrals and possible
acquisition of similar business entities. We believe that product lines will
increase as customer needs dictate and economics allow.

                                       14
<PAGE>

Results of Operations

Comparison of Fiscal 2007 and 2006.

     Net sales during fiscal 2007 were approximately $2,537,000 as compared to
approximately $2,313,000 in fiscal 2006, an increase of approximately $224,000,
or 10%. We believe that this increase is primarily attributable to our continued
marketing efforts and resulting growth of our customer base. Sirius's net sales
slowed to a 42% reduction in sales, while Amerx increased sales by 14%,
respectively, over the previous year. Amerx is encouraged by the sales increase
since its emphasis shifted in fiscal 2007 to the physician market. Amerx hopes
to capture more of the physician market in fiscal 2008, as well as penetrate new
markets, such as government contracts. Sirius's customer base is expanding with
marketing efforts and product line expansion.

     Cost of sales increased to approximately $600,000 in fiscal 2007 as
compared to approximately $520,000 in fiscal 2006, or approximately 15%. Cost of
sales in fiscal 2007, as a percentage of net sales, increased by approximately
2% over the previous year . Sirius has realized the benefit of some volume
discounts in fiscal 2006 and 2007, and hopes to lower its costs by continuing
that trend in 2008. Amerx's costs have remained relatively consistent over the
past year with only a slight increase in some of its packaging cost.

     Gross profit increased to approximately $1,936,000 during fiscal 2007 as
compared to approximately $1,793,000 during fiscal 2006, an increase of about
$143,000, or 8%. As a percentage of net sales, gross profit was 76% in fiscal
2007, as compared to 78% in fiscal 2006.

     Operating expenses during fiscal 2007 were approximately $1,693,000,
consisting of approximately $842,000 in salaries and benefits and $851,000 in
selling, general and administrative expenses. This represents an increase in
expenses of approximately $258,000 in fiscal 2007 as compared to expenses in
fiscal 2006. Operating expenses in fiscal 2006 consisted of $681,000 in salaries
and benefits and $754,000 in selling, general and administrative expenses.
Selling, general and administrative expenses increased across numerous areas in
general. However, some of the increased expenses included a new accounting
system equipped to handle growth, expenses related to the acquisition of our
office building, and real estate taxes. As a percentage of net sales, operating
expenses during fiscal 2007 increased to 66%, as compared to 62% during fiscal
2006, as net sales increased $224,000 for the year on an $258,000 increase in
expenses.

     Profit from operations decreased to approximately $244,000 in 2007, as
compared to approximately $358,000 in fiscal 2006. Net Profit (after dividend
requirements for Preferred Shares) was approximately $479,000 during fiscal
2007, compared to a net profit of approximately $321,000 during fiscal 2006. The
Company also recorded approximately $277,000 of income tax benefit in arriving
at net income available to common shares.

                                       15
<PAGE>

     As of June 30, 2007, the Company had deferred tax asset of $401,032,
consisting primarily of the tax benefit of net operating loss carryforward. The
valuation allowance decreased by $635,765. The decrease in the valuation
allowance is due to an increase in expected utilization of net operating loss
carry-forwards. A valuation allowance of approximately $737,000 has been
provided to reduce the asset to the net amount of tax benefit management
believes it will more likely than not realize. As time passes, management will
be able to better assess the amount of tax benefit it will realize from using
the carry forwards.

Liquidity and Capital Resources

     Historically, we have financed our operations through a combination of
revenues from operations, shareholder loans, and the public sales of equity. As
of June 30, 2007, our principal sources of liquidity included inventories of
approximately $134,000, net accounts receivable of approximately $224,000, and
cash of approximately $423,000. We had working capital of approximately $840,000
at June 30, 2007.

     Operating activities provided cash of approximately $206,000 during fiscal
2007 and approximately $363,000 during fiscal 2006, consisting primarily of net
profit of approximately $498,000 in fiscal 2007 and $342,000 in 2006. Cash used
in investing activities during fiscal 2007 and 2006 was approximately $54,000
and $9,000, respectively. Cash used by financing activities during fiscal 2007
was approximately $18,000, and $92,000 during fiscal 2006.

     During fiscal 2007, holders of 1,000 shares of Preferred Stock converted
their shares to Common Stock.

Commitments of Capital Expenditures

     At June 30, 2007 the Company had no commitments for capital expenditures.

Off-Balance Sheet Arrangements

     During fiscal years 2007 and 2006, we did not have any relationships or
arrangements with unconsolidated entities or financial partnerships, such as
entities often referred to as structured finance or special purpose entities,
which would have been established for the purpose of facilitating off-balance
sheet arrangements or other contractually narrow or limited purposes.

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Consolidated financial statements as of June 30, 2007, and 2006 were
audited by Ferlita, Walsh & Gonzalez, P.A., the Company's independent auditors,
as indicated in their report included appearing at page F-1.

                                       16
<PAGE>

                          INDEX TO FINANCIAL STATEMENTS


                                                                            Page

Report of Independent Registered Public Accounting Firm                     F-1

Consolidated Balance Sheet June 30, 2007                                    F-2

Consolidated Statements of Operations For the Years Ended
     June 30, 2007 and 2006                                                 F-3

Consolidated Statements of Stockholders' Equity For the
     Years Ended June 30, 2007 and 2006                                     F-4

Consolidated Statements of Cash Flows For the Years Ended
     June 30, 2007 and 2006                                                 F-5

Notes to Consolidated Financial Statements                                  F-6


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

     None.

ITEM 8A. CONTROLS AND PROCEDURES.

     Management of the Company, with the participation of the Chief Executive
Officer and the Chief Financial Officer, has conducted an evaluation of the
effectiveness of the Company's disclosure controls and procedures pursuant to
Rule 13a-15 under the Securities Exchange Act of 1934 as of the end of the
period covered by this report. Based on that evaluation, management, including
the Chief Executive Officer and Chief Financial Officer, concluded that, as of
the date of this report, the Company's disclosure controls and procedures were
effective in ensuring that all material information relating to the Company
required to be disclosed in this report has been made known to management in a
timely manner and ensuring that this information is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
regulations.

     During the last quarter of fiscal 2007, the Company did not institute any
significant changes in its internal control over financial reporting that
materially affected or is reasonably likely to materially affect, the Company's
internal control over financial reporting.

                                       17
<PAGE>

     Our management, including our Chief Executive Officer and our Chief
Financial Officer, does not expect that our disclosure controls and procedures
or our internal controls over financial reporting will, in all instances,
prevent all errors and all fraud. A control system, no matter how well conceived
or operated, can only provide reasonable, not absolute, assurance that the
objectives of the control system are met. While our control systems provide a
reasonable assurance level, the design of our control systems reflects the fact
that there are resource constraints, and the benefits of such controls were
considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, within the financial reports
of the Company have been detected. These inherent limitations include the
realities that judgments in decision-making can be faulty, and that breakdowns
can occur because of simple errors or mistakes. Additionally, a control can be
circumvented by the individual act of some person, by collusion of two or more
persons, or by management's override of a specific control. The design of any
system of controls is also based in part on certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions.
Because of the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and not be detected.

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE
         GOVERNANCE; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

Directors and Executive Officers

                                 Capacities in                          Director
NAME                      Age    Which Served                           Since
----                      ---    ------------                           -----

Regina W. Anderson        60     Chief Executive Officer, and           2005
                                 Chairman of the Board
Chester L. Wallack        66     Director                               1995
Fred W. Suggs, Jr.        60     Director                               1995
Alan B. Crane             57     Director                               1995
Jeffery S. Slowgrove      50     Director                               1999
Richard T. Thompson       57     Director (deceased)                    1998
James B. Anderson         37     Chief Financial Officer; President,    2006
                                 Sirius Medical Supply, Inc.
Justice W. Anderson       30     Vice President - Sales and Marketing;  2006
                                 President, Amerx Health Care Corp.
Michael T. Foley          69     Director                               2006


                                       18
<PAGE>

     Regina Anderson. Ms. Anderson has served as Chairman of the Board of
Directors since September 2005, and as our Chief Executive Officer since
November 2005. Ms. Anderson has 26 years experience in the medical field and 20
years of management experience. Ms. Anderson worked at HealthSouth
Rehabilitation Hospital for ten years as Outpatient Director, in charge of the
main outpatient center plus four satellite offices. As Outpatient Director, she
was responsible for budgets involving over thirty thousand outpatient visits per
year; marketing of multiple outpatient specialty programs; and staffing with
thirty employees reporting directly to her. Prior to her work at HealthSouth,
she worked as the lead clinician at Clearwater Rehabilitation Center. Regina was
Vice-President of Operations at Stuffit Direct Marketing Company from 1980
through 1989. She was in charge of franchise sales and training; coupon
processing/production as well as coordination among thirteen franchise offices.
Regina was co-owner and President of Foxy's T-Shirt Shops and Le Shirt Company
from 1978-1980. Foxy's had five locations. She worked as a Speech Language
Pathologist with Morton Plant Hospital from 1970 through 1976. Regina received
her Masters Degree from Kansas State University in 1970.

     Chester L. Wallack. Mr. Wallack has served as a director since 1995. He has
served as Chief Executive Officer of Felton West, Inc., a real estate
development and construction company in Dover, Delaware, since 1990. Mr. Wallack
is a retired United States Air Force officer having served as a pilot and in
various management capacities. He graduated from the University of Kansas with a
B.S. degree in Industrial Management and from Southern Illinois University with
an M.B.A. degree in Finance.

     Fred W. Suggs, Jr. Mr. Suggs has served on our Board of Directors since
1995. He has been a practicing attorney since 1975. He is a partner in the
Greenville, South Carolina office of Ogletree, Deakins, Nash, Smoak & Stewart,
specializing in labor and employment law. He has been certified as a specialist
in labor and unemployment law by the South Carolina Supreme Court and is a
frequent lecturer on labor and employment law issues. Mr. Suggs graduated from
Kansas State University with a B.S. degree and he received his J.D. degree from
the University of Alabama.

     Alan B. Crane. Mr. Crane has served on our board since 1995 and is a
partner in Crane Farms, a farming partnership in Larned, Kansas. In 1994, Mr.
Crane was appointed by the governor of Kansas to the Kansas Water Authority to
oversee project expenditures. He received a B.S. degree from Kansas State
University.

     Jeffery Slowgrove. Mr Slowgrove has served as a director since 1999. Since
1998, Mr. Slowgrove has been the President of JSS Management Consulting, Inc., a
consulting firm in Palm Harbor, Florida, providing funding for start up
organizations and advice on the business and management issues facing companies
during early rapid growth and expansion phases. He co-founded IMR Global Corp.
in 1988 and has served as a director since its inception. From 1988 to 1998, he
also served as Treasurer of IMR Global Corp., which is a public company
providing applications software-outsourcing solutions for the information
technology departments of large businesses. He received a B.B.A. from the
University of Michigan.

                                       19
<PAGE>

     Richard T. Thompson. Mr. Thompson died on October 19, 2006. Since 1989, Mr.
Thompson had been a principal of Sunproof Corporation of Florida, which markets
and installs products, such as window film and solar shades, to reduce heat and
glare in automobiles, residences and commercial offices. From 1986 to 1988, he
was an officer and owner of American Industries, an injection molding
enterprise. From 1979 through 1984, Mr. Thompson was the president and owner of
Pinellas Millwork Company. In 1970, he purchased an office furniture and supply
company, which was subsequently merged with another office products store to
create one of the largest office products store in the Midwest. Mr. Thompson
continued to serve as an officer and part owner until 1979.

     James B. Anderson. Mr. Anderson has served as our Chief Financial Officer
since June 2005. In addition, from September 22, 2005, until that position was
filled by Regina Anderson on November 1,2005, Mr. Anderson served as Interim
Chief Executive Officer. On June 28, 2005, Mr. Anderson was appointed to serve
as the President of Sirius Medical Supply, Inc. Since 1993, Mr. Anderson has
been involved with Amerx Health Care Corporation as its Chief Information
Officer. In 1996, Mr. Anderson became involved with Procyon Corporation after
its merger and has since performed the duties of Vice President of Operations.
Prior to Mr. Anderson's work with the Company, he was involved with importing
and exporting to Russia and Direct Mail Marketing. He received a B.S. from the
University of South Florida. Mr. Anderson is the son of John C. Anderson, our
late President, Chief Executive Officer and Chairman of the Board, the son of
Regina Anderson, the Company's Chairman of the Board and Chief Executive
Officer, and the brother of Justice W. Anderson, our Vice President of Sales &
Marketing and the President of Amerx Health Care Corporation. Mr. Anderson is
the son-in-law of our deceased former director, Richard T. Thompson.

     Justice W. Anderson. Since June 28, 2005, Mr. Anderson has served as our
Vice President of Sales and Marketing and the President of Amerx Health Care
Corporation. Since January of 2001, Mr. Anderson has been Vice President of
Sales for Amerx Health Care Corp. He also serves on the board of the American
Academy of Podiatric Practice Management. From August 2000 to January 2001 he
served as Senior Sales Representative, and as a sales representative from May
2000 to August 2000. He received a B.A. degree from the University of Florida.
Mr. Anderson is the son of John C. Anderson, our late President, Chief Executive
Officer and Chairman of the Board, the son of Regina Anderson, the Company's
Chairman of the Board and Chief Executive Officer and the brother of James B.
Anderson, our Chief Financial Officer and the President of Sirius Medical
Supply, Inc.

     Michael T. Foley. Mr. Foley is currently a Vice President and Director of
Suwannee Lumber Company, manufacturers of various lumber grades, garden mulch
and potting soil. From 1997 to 2003, Mr. Foley served as President and CEO of
Gypsum Products, Inc. of Largo, FL. From 1972 to 1996 Mr. Foley served in
various capacities at Florida Forest Products, Inc. including President,
Chairman and CEO. Prior to his association with these building material
suppliers, Mr. Foley worked for International Paper in pulp and newsprint sales.
Michael received his Bachelor of Business Administration degree from the
University of Notre Dame in 1960 and subsequently served on that university's
National Alumni Board. He obtained his MBA from the University of Florida in

                                       20
<PAGE>

1965. Mr. Foley has been a member of the Pinellas County Committee of 100 and
was appointed by Governor Lawton Chiles to the State of Florida Community Health
Purchasing Alliance (CHPA) Board. Mr. Foley is also a retired Captain in the
U.S. Naval Reserve.

Compliance with Section 16(a) of the Exchange Act

     Under the securities laws of the United States, our directors, executive
officers, and any persons holding more than ten percent of our Common Stock are
required to report their initial ownership of the Company's Common Stock and any
subsequent changes in that ownership to the Securities and Exchange Commission
and the Company. Specific due dates for these reports have been established and
we are required to disclose any failure to file, or late filing, of such
reports. Based solely on our review of the reports and amendments thereto
furnished to the Company and written representations that no other reports were
required to be filed in fiscal 2007, our officers, directors and beneficial
owners of more than ten percent of its Common Stock complied with all Section
16(a) filing requirements.

Committees of the Board

     The Board of Directors has delegated certain of its authority to a
Compensation Committee. The Compensation Committee is composed of Messrs.
Wallack, Suggs and Crane. No member of the Compensation Committee is a former or
current officer or employee of the Company.

     The primary function of the Compensation Committee is to review and make
recommendations to the Board with respect to the compensation, including
bonuses, of the Company's officers and to administer the Company's Option Plan.

     The Company formed an Audit Committee in July 2004, composed solely of Mr.
Slowgrove. Richard T. Thompson joined the Audit Committee as its Chairman in
March, 2006. Mr. Slowgrove resigned from the Audit Committee effective March 31,
2006. In October 2006, we determined that our remaining Audit Committee member,
Mr. Thompson, did not meet the definition of independence for purposes of audit
committee service as contained in the applicable rules of The Nasdaq Stock
Market, Inc. ("Nasdaq"). In addition, Mr. Thompson had been unable to serve on
the Audit Committee because of health-related concerns. On October 19, 2006, Mr.
Thompson died. In December 2006, the Board nominated Michael T. Foley as
director and Audit Committee member and Chair. The Board believes that Mr. Foley
is independent pursuant to Nasdaq rules and also meets the requirements of an
audit committee financial expert. In addition, we have determined that Mr. Foley
is also independent within the meaning of SEC Rule 10A-3(b)(1). The function of
the Audit Committee is to review and approve the scope of audit procedures
employed and to review and approve the audit reports rendered by the Company's
independent auditors and to approve the audit fees charged by the independent
auditors. In addition, pursuant to the Sarbanes-Oxley Act of 2002 and rules
promulgated thereunder, the Audit Committee is responsible for, among other
things, pre-approving all audit and non-audit services performed by the
independent auditors, approving the engagement of the auditors and receiving
certain reports from the independent auditors prior to the filing of the audit
report. The Audit Committee reports to the Board of Directors with respect to
such matters and recommends the selection of independent auditors. The Audit
Committee adopted a charter in October 2006.

                                       21
<PAGE>

     The Company does not have a Nominating Committee. However, the entire board
of directors, which is comprised of a majority of independent directors,
performs the function of a nominating committee.

     In fiscal 2007, the Board of Directors held six formal meetings. A majority
of directors attended each meeting in person or by telephone. The Compensation
Committee held one meeting during fiscal 2007. The Audit Committee held one
meeting during fiscal 2007.

Code of Ethics for Senior Financial Officers

     The Company has adopted a Code of Ethics for Senior Financial Officers. The
Code of Ethics applies to all senior financial officers of the Company,
including the Chief Executive Officer, the Chief Financial Officer, the
Treasurer and any other person performing similar functions. A copy of the Code
of Ethics may be obtained, free of charge, by requesting the same from the
Company by contacting the Company by telephone, at the telephone number shown on
the cover of this report, or by writing to James B. Anderson, Chief Financial
Officer, Procyon Corporation, 1300 S. Highland Avenue, Clearwater, Florida
33756.

ITEM 10. EXECUTIVE COMPENSATION.

     Summary Compensation Table. The following table sets forth compensation
information for the two fiscal years ended June 30, 2007 and 2006 of the
Company's Chief Executive Officer and the President of our subsidiary, Amerx
Health Care Corp. (the "Named Executive Officers"). Elements of compensation for
our Named Executive Officers include salary, discretionary cash bonuses and
other perquisites and benefits. We do not have a pension plan, do not pay
non-equity incentive plan based compensation and do not offer nonqualified
deferred compensation arrangements. We also did not grant stock awards in fiscal
year 2007. As a result, columns related to these items have been omitted from
the table below.

<TABLE>
<CAPTION>
<S> <C> <C>

                                                             All Other
Name and Principal Position    Year  Salary($)  Bonus($)  Compensation($)  Total($)
---------------------------    ----  ---------  --------  ---------------  --------

Regina W. Anderson,            2007  $156,317    $  500     $    -0-       $156,817
  President, Chief Executive   2006  $104,000    $1,000          -0-       $105,000
  Officer                      2005       -0-       -0-          -0-            -0-
Justice W. Anderson,           2007  $ 36,200    $2,500     $112,437(1)    $151,137
  President (Amerx Health
  Care Corp.)

----------
     (1)  Consists solely of commission on sales from Amerx Health Care Corp.
          Outstanding Equity Awards at 2007 Fiscal Year End

                                       22
<PAGE>

     The following table sets forth information regarding the outstanding equity
awards to our Named Executive Officers at June 30, 2007. We have not granted any
stock awards to our Named Executive Officers and, accordingly, we had no
outstanding stock awards during 2007. Thus, the columns related to stock awards
have been omitted from the following table.

                                                  Option Awards
                              Number of     Number of
                              Securities    Securities
                              Underlying    Underlying
                              Unexercised   Unexercised    Option
                              Options       Options        Exercise   Option
                              (#)           (#)            Price      Expiration
Name                          Exercisable   Unexercisable  ($)        Date
--------------------------------------------------------------------------------

Regina W. Anderson,                -              -         -         -
         Chief Executive
         Officer and
         Chairman of the
         Board of Directors

Justice W. Anderson,          50,000 (1)          -        $ .2125    12/2009
         President, Amerx     10,000 (1)          -        $ .1594    11/2010
         Health Care Corp.

----------
     (1)  As trustee of the John C. Anderson Trust in accordance with Mr.
          Anderson's will.

Compensation of Directors

     No employee of the Company receives any additional compensation for his
services as a director. No non-employee director receives any compensation for
his service; however, the Board of Directors has authorized payment of
reasonable travel or other out-of-pocket expenses incurred by non-management
directors in attending meetings of the Board of Directors. The Board of
Directors may consider alternative director compensation arrangements from time
to time.

Stock Option Plan

     The Company's 1998 Omnibus Stock Option Plan (the "1998 Plan") is designed
as a comprehensive benefit plan that gives the Company the ability to offer a
variety of equity based incentives and awards to persons who are key to the
Company's growth, development and financial success. The 1998 Plan permits the
grant of awards to directors, employees and consultants of the Company and its
subsidiaries. The 1998 Plan provides for the grant of incentive stock options

                                       23
<PAGE>

("Incentive Stock Options") within the meaning of the Code, non-qualified stock
options, restricted shares, performance units, performance shares, dividend
equivalent, share appreciation rights ("SARs") and other forms of awards,
including deferrals of earned awards, (collectively, the "Awards"). Employees
and non-employees to whom an offer of employment has been extended, directors
and consultants of the Company are all eligible participants for all Awards,
except that Incentive Stock Options may be granted only to employees.

     The 1998 Plan is administered by the Compensation Committee of the Board of
Directors, which construes and interprets the 1998 Plan, determines the terms
and conditions of the Awards granted under the 1998 Plan, including the
individuals who are to granted Awards, the exercise price, if any, the number of
shares subject to an Award and the vesting and duration of Awards, subject to
any restrictions contained in the 1998 Plan.

     The maximum number of shares of Common Stock reserved and available for
Awards under the 1998 Plan is 1,000,000 and the Compensation Committee may limit
the number of shares that may be awarded in the form of restricted stock Awards.

     The exercise price of Incentive Stock Options granted under the 1998 Plan
must be at least equal to the fair market value of the Common Stock of the
Company on the date of grant, and must be 110% of fair market value when granted
to an employee who owns shares representing more than 10% of the voting power of
all classes of stock of the Company. The exercise price of non-qualified stock
options granted under the 1998 Plan can not be less than 85% of the fair market
value of the Common Stock on the date of grant. The term of all options granted
under the 1998 Plan may not exceed ten years, except the term of Incentive Stock
Options granted to a 10% or more stockholder, may not exceed five years. The
1998 Plan may be amended or terminated by the Board of Directors, but no such
action may impair the rights of a participant under a previously granted option.

     The 1998 Plan provides for the award of SARs and Performance Units and
Performance Shares. A SAR is an incentive Award that permits the holder to
receive (per share covered thereby) the amount by which the fair market value of
a share of Common Stock on the date of exercise exceeds the fair market value of
such share on the date the SAR was granted or at such date as the Compensation
Committee designates. The Compensation Committee may grant SARs independently,
in addition to, or in tandem (such that the exercise of the SAR or related stock
option will result in forfeiture of the right to exercise the related stock
option or SAR for an equivalent number of shares) with a stock option Award. A
Performance Unit or Performance Share is an incentive Award whereby the Company
commits to make a distribution depending on the attainment of a performance
objective and condition established by the Committee and the base value of the
Performance Unit or Performance Share.

     Upon termination of services of a non-employee director or consultant, all
options issuable, but not yet granted, to such persons for services rendered
shall be granted and all options shall remain exercisable for the original
option term. Options granted to an employee are exercisable for specified
periods of time ranging from one month to one year following an employee's

                                       24
<PAGE>

termination depending on the circumstances of the termination, except that
options granted to an employee terminated for cause shall not be exercisable to
any extent after termination. An unexercised option is exercisable only to the
extent that it was exercisable on the date of termination.

     The 1998 Plan provides that, in the event the Company enters into an
agreement providing for the merger of the Company into another corporation, an
exchange of shares with another corporation, the reorganization of the Company
or the sale of substantially all of the Company's assets, unvested stock options
become immediately vested and exercisable. Upon the consummation of the merger,
exchange, reorganization or sale of assets, the successor corporation must
assume all Awards or substitute another Award on substantially identical terms
to the outstanding Award.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS.

     The following table sets forth certain information regarding beneficial
ownership of our Common Stock as of September 18, 2007 by (I) each person known
by the Company to own beneficially more than 5% of the outstanding Common Stock,
(ii) each director or director nominee, and (iii) all executive officers and
directors as a group. Each person has sole voting and sole investment or
dispositive power with respect to the shares shown except as noted. As to the
Company's preferred stock, as of September 18, 2007, no officer or director of
the company owned any preferred shares. In addition, no individual shareholder
beneficially owned more than 5% of the Company's preferred shares.

                                              Common Shareholdings
                                              on September 18, 2007

                                              Number of        Percent of
Name and Address(5)                           Shares           Class

Regina W. Anderson                               72,500           *
Chester L. Wallack (l)                          120,000(3)       1.5
Fred W. Suggs (l)                               160,000(3)       2.0
Alan B. Crane (1)                                80,000(3)       1.0
Jeffery S. Slowgrove                            716,200(4)       8.9
Richard T. Thompson(2)                           65,000(8)        *
James B. Anderson                               111,000(7)       1.4
Justice W. Anderson(6)                        3,483,500(3)      43.3
Michael T. Foley(2)                              30,000(9)
All directors and officers
as a group (eight persons)                    4,838,200         59.0%
RMS Limited Partnership, 50 W. Liberty St,    1,600,000         19.9%
Suite 650, Reno, NV 89501

----------
*Less than 1%

                                       25
<PAGE>

(1)  Member of the Compensation Committee.
(2)  Member of the Audit Committee. Mr. Thompson died on October 19, 2006.
(3)  Includes 60,000 shares subject to currently exercisable options or options
     which will become exercisable within 60 days.
(4)  Includes 10,000 shares of subject to currently exercisable options or
     options which will become exercisable within 60 days.
(5)  Except as noted above, the address for all persons listed is 1300 S.
     Highland Ave, Clearwater, Florida 33756
(6)  Mr. Anderson beneficially owns 3,350,500 shares of common stock and 60,000
     currently exercisable options to purchase shares of common stock as Trustee
     of the John C. Anderson Trust in accordance with Mr. Anderson's will. He
     also owns of record 73,000 shares of common stock.
(7)  Includes 30,000 shares subject to currently exercisable options and 10,000
     shares in joint name with his wife.
(8)  Includes 20,000 shares subject to currently exercisable options or options
     which will become exercisable within 60 days, and 15,000 shares in joint
     name with his wife.
(9)  Includes 5,000 shares in joint name with his wife.

Equity Compensation Plan Information

     The following table contains information regarding Procyon's equity
compensation plan as of June 30, 2007. The only equity compensation plan
maintained by Procyon is the company's Omnibus Stock Option plan (the "Option
Plan"). The Option Plan was approved by the shareholders of Procyon in 1998.

Plan Category            Number of Securities      Weighted-average          Number of securities
                         to be issued upon         exercise price of         remaining available for
                         exercise of               outstanding options,      future issuance under
                         outstanding options,      warrants and rights       equity compensation
                         warrants and rights                                 plans (excluding
                                                                             securities reflected in
                                                                             column (a))
                               ( a )                      ( b )                      ( c )
Equity compensation
plans approved by             300,000                     $0.20                     603,500
security holders

Equity compensation
plans not approved by               0                         0                           0
security holders

Total                         300,000                     $0.20                     603,500


                                       26
</TABLE>
<PAGE>

----------
1.   The total number of securities to be issued upon exercise of outstanding
     options, warrants and rights consists of options for the purchase of
     Procyon common stock issued pursuant to the Option Plan to employees,
     officers, directors and consultants. The total number of securities to be
     issued upon exercise of the options is stated, regardless of whether the
     options are currently vested.

2.   The outstanding options issued under the Option Plan range in exercise
     price from $0.15 to $0.25 per share.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
         INDEPENDENCE.

         Other than transactions described below, since July 1, 2006, there has
not been, nor is there currently proposed, any transaction or series of similar
transactions to which we were or will be a party:

     o    in which the amount involved exceeds $120,000; and,
     o    in which any director, nominee for director, executive officer,
          shareholder which beneficially owns five percent or more of our common
          stock or any member of their immediate family members, had or will
          have a direct or indirect material interest.

     Messrs. Wallack, Suggs, Crane and Thompson, have purchased a total of
261,000 shares of Preferred Stock at a price of $1 per share. Such purchases
were made on terms and conditions, which were identical to the purchases made by
all other private investors who purchased Preferred Stock. Regina W. Anderson,
our Chairman and Chief Executive Officer, personally guaranteed the loan we
secured from Bank of America, N.A., in the amount of $508,000, to purchase our
office building in July 2006as well as the $250,000 line of credit. Mr.
Slowgrove, a director, acted as a consultant to the Company for portions of
fiscal 2007, at a total compensation to him of approximately $27,500.

Director Independence.

     We have determined that the following directors are independent within
applicable Nasdaq rules: Messrs. Wallack, Suggs, Crane, Slowgrove and Foley. We
considered the fact that Mr. Slowgrove acted as a consultant to the Company for
portions of fiscal 2007, at a total compensation to him of approximately
$27,500. Regina, James and Justice Anderson are not independent as they are
executive officers of the Company and its subsidiaries. Accordingly, our Board
of Directors is composed of a majority of independent directors. Our
Compensation Committee and Audit Committee are composed entirely of independent
directors pursuant to applicable Nasdaq rules. In addition, Mr. Foley, our sole
Audit Committee member, also meets the definition of independence under SEC Rule
10A-3.

                                       27
<PAGE>

ITEM 13. EXHIBITS.

(a)  Exhibits

     1.   The financial statements filed herewith are listed in the Index to
          Financial Statements included in Item 7.

          Exhibit No.       Document
          -----------       --------

          * 3.1     Articles of Incorporation
          + 3.1.1   Articles of Amendment to Articles of Incorporation
          * 3.2     Bylaws
          + 4.1     Designation of Series A Preferred Stock
          # 10.1    1998 Omnibus Stock Option Plan
          - 10.1    Office Lease dated September 23, 2003
          / 10.2    Promissory Note dated July 21, 2006
          / 10.3    Mortgage dated July 21, 2006
          + 10.4    Loan and Security Agreement, dated as of January 1, 1995, by
                    and between the Company and Amerx Health Care Corp.,
                    including Promissory Notes issued there under.
          o  10.5   Agreement and Plan of Exchange, dated January 31, 1996, by
                    and between the Company and Amerx.
          ++14.1    Code of Ethics for Senior Financial Officers.
          x 31.1    Certification of Regina W. Anderson pursuant to Exchange Act
                    Rule 13a-14(a)/15d-14(a)
          x 31.2    Certification of James B. Anderson pursuant to Exchange Act
                    Rule 13a-14(a)/15d-14(a)
          x 32.1    Certification Pursuant to 18 U.S.C. ss. 1350, as Adopted
                    Pursuant to Section906 of the Sarbanes-Oxley Act Of 2002

----------
          *         Incorporated by reference to the Company's Registration
                    Statement on Form S-1, S.E.C. File No.33-13273.
          +         Incorporated by reference to the Company's Form 10-KSB for
                    the fiscal year ended June 30, 1995.
          o         Incorporated by reference to the Company's Form 8-K filed on
                    or about February 2, 1996.
          #         Incorporated by reference to the Company's Schedule 14A
                    filed on or about November 17, 1998.
          /         Incorporated by reference to the Company's Form 8-K filed on
                    or about August 8, 2006
          -         Incorporated by reference to the Company's Form 10-QSB for
                    the period ending September 30, 2003
          ++        Incorporated by reference to the Company's Schedule 14A
                    filed on or about October 15, 2004
          x         Filed herewith.

                                       28
<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

     Audit Fees. In fiscal 2007, the Company paid to its independent accountants
$34,749 in fees related directly to the audit and review of the Company's
financial statements. In fiscal 2006, the Company paid to its independent
accountants $31,549 in fees related directly to the audit and review of the
Company's financial statements.

     Audit-Related Fees. The Company's independent accountants performed no
other audit-related services for the Company during fiscal 2006 and 2007 other
than the audit services described above.

     Tax Fees: In fiscal 2007, the Company paid to its independent accountants
$1,350 in fees related directly to tax preparations. In fiscal 2006, the Company
paid to its independent accountants $1,000 in fees related directly to tax
preparations.

     All Other Fees: The Company's independent accountants performed no other
services for the Company during fiscal 2006 and 2007 other than the audit and
tax services described above.









                                       29
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, there unto duly authorized.

                                               PROCYON CORPORATION

                                               By: /s/ Regina W. Anderson
                                               Regina W. Anderson, Chief
                                               Executive Officer

Date: September 27, 2007


Pursuant to the requirements of the Securities Exchange Act of 1934, the
following persons on behalf of the registrant and in the capacities and on the
dates indicated have signed this report below.


Signature                            Title                           Date
---------                            -----                           ----

/s/ Regina W. Anderson     Chief Executive Officer,           September 27, 2007
Regina W. Anderson         President

/s/ James B. Anderson      Chief Financial Officer,           September 27, 2007
James B. Anderson          President (Sirius) and Director

/s/ Justice W. Anderson    President (Amerx) and Director     September 25, 2007
Justice W. Anderson

/s/ Alan B. Crane          Director                           September 27, 2007
Alan B. Crane

/s/ Michael T. Foley       Director                           September 26, 2007
Michael T. Foley

/s/ Jeffery S. Slowgrove   Director                           September 26, 2007
Jeffery S. Slowgrove

/s/ Fred W. Suggs, Jr.     Director                           September 25, 2007
Fred W. Suggs, Jr.

/s/ Chester L. Wallack     Director                           September 26, 2007
Chester L. Wallack

                                       30
<PAGE>

                                  EXHIBIT INDEX


Exhibit No.       Document                                              Item No.
-----------       --------                                              --------

* 3.1     Articles of Incorporation                                          3
+ 3.1.1   Articles of Amendment to Articles of Incorporation                 3
* 3.2     Bylaws                                                             3
+ 4.1     Designation of Series A Preferred Stock                            4
# 10.1    1998 Omnibus Stock Option Plan
- 10.1    Office Lease dated September 23, 2003
/ 10.2    Promissory Note dated July 21, 2006
/ 10.3    Mortgage dated July 21, 2006
+ 10.4    Loan and Security Agreement, dated as of January 1, 1995, by      10
          and between the Company and Amerx Health Care Corp.,
          including Promissory Notes issued there under.
o  10.5   Agreement and Plan of Exchange, dated January 31, 1996, by
          and between the Company and Amerx.
++14.1    Code of Ethics for Senior Financial Officers.
x 31.1    Certification of Regina W. Anderson pursuant to Exchange Act      31
          Rule 13a-14(a)/15d-14(a)
x 31.2    Certification of James B. Anderson pursuant to Exchange Act       31
          Rule 13a-14(a)/15d-14(a)
x 32.1    Certification Pursuant to 18 U.S.C. ss. 1350, as Adopted          32
          Pursuant to Section906 of the Sarbanes-Oxley Act Of 2002

----------
     *         Incorporated by reference to the Company's Registration
               Statement on Form S-1, S.E.C. File No.33-13273.
     +         Incorporated by reference to the Company's Form 10-KSB for
               the fiscal year ended June 30, 1995.
     o         Incorporated by reference to the Company's Form 8-K filed on
               or about February 2, 1996.
     #         Incorporated by reference to the Company's Schedule 14A
               filed on or about November 17, 1998.
     /         Incorporated by reference to the Company's Form 8-K filed on
               or about August 8, 2006
     -         Incorporated by reference to the Company's Form 10-QSB for
               the period ending September 30, 2003
     ++        Incorporated by reference to the Company's Schedule 14A
               filed on or about October 15, 2004
     x         Filed herewith.

<PAGE>















                      PROCYON CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED FINANCIAL STATEMENTS
                       Years Ended June 30, 2007 and 2006






<PAGE>

TABLE OF CONTENTS



                                                                        Page No.


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM                     F-1




FINANCIAL STATEMENTS



Consolidated Balance Sheet                                                  F-2

Consolidated Statements of Operations                                       F-3

Consolidated Statements of Stockholders' Equity                             F-4

Consolidated Statements of Cash Flows                                       F-5

Notes to Financial Statements                                               F-6


<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors
Procyon Corporation and Subsidiaries
Clearwater, Florida


We have audited the accompanying consolidated balance sheet of Procyon
Corporation and Subsidiaries as of June 30, 2007 and the related statements of
operations, stockholders' equity, and cash flows for the years ended June 30,
2007 and 2006. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Procyon Corporation and
Subsidiaries as of June 30, 2007 and the results of its operations and its cash
flows for the years ended June 30, 2007 and 2006, in conformity with accounting
principles generally accepted in the United States of America.


/s/ Ferlita, Walsh & Gonzalez, P.A.
FERLITA, WALSH & GONZALEZ, P.A.
Certified Public Accountants
Tampa, Florida

September 11, 2007

                                       F-1
<PAGE>

PROCYON CORPORATION & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
June 30, 2007


ASSETS

CURRENT ASSETS
         Cash                                                       $   422,876
         Accounts Receivable, less allowance of $2,500                  224,460
                for doubtful accounts
         Inventories                                                    133,892
         Prepaid expenses                                               129,476
         Deferred Tax Asset                                             169,758
                                                                    -----------
                TOTAL CURRENT ASSETS                                  1,080,462

PROPERTY AND EQUIPMENT, NET                                             589,141

OTHER ASSETS
         Deposits                                                         1,515
         Deferred Tax Asset                                             231,274
                                                                    -----------
                                                                        232,789

TOTAL ASSETS                                                        $ 1,902,392
                                                                    ===========


LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
         Accounts Payable                                           $   108,076
         Accrued expenses                                               111,316
         Current Portion of Mortgage Payable                             21,201
                                                                    -----------
                TOTAL CURRENT LIABILITIES                               240,593

LONG TERM LIABILITIES
         Mortgage Payable                                               469,191
                                                                    -----------
                TOTAL LONG TERM LIABILITIES                             469,191

STOCKHOLDERS' EQUITY
         Preferred stock, 496,000,000 shares
                authorized, none issued.
         Series A Cumulative Convertible Preferred stock,               159,750
                no par value; 4,000,000 shares authorized;
                203,900 shares issued and outstanding
         Common stock, no par value, 80,000,000 shares                4,411,876
                authorized; 8,047,588 shares issued and
                outstanding.
         Paid-in Capital                                                  6,000
         Accumulated deficit                                         (3,385,018)
                                                                    -----------
                TOTAL STOCKHOLDERS' EQUITY                            1,192,608
                                                                    -----------


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                          $ 1,902,392
                                                                    ===========


    The accompanying notes are an integral part of these financial statements

                                       F-2
<PAGE>

PROCYON CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended June 30, 2007 and 2006


                                                         2007           2006
                                                     -----------    -----------


NET SALES                                            $ 2,536,577    $ 2,313,345

COST OF SALES                                            600,175        519,889
                                                     -----------    -----------

GROSS PROFIT                                           1,936,402      1,793,456

OPERATING EXPENSES
         Salaries and Benefits                           841,540        681,422
         Selling , General and Administrative            851,070        753,940
                                                     -----------    -----------
                                                       1,692,610      1,435,362

INCOME FROM OPERATIONS                                   243,792        358,094

OTHER INCOME (EXPENSE)
         Interest Expense                                (34,614)        (3,283)
         Interest Income                                  12,059          2,892
         Other Income                                        293            530
                                                     -----------    -----------
                                                         (22,262)           139
                                                     -----------    -----------

INCOME BEFORE INCOME TAXES                               221,530        358,233

INCOME TAX BENEFIT (EXPENSE)                             276,850        (16,004)
                                                     -----------    -----------

NET INCOME                                               498,380        342,229

Dividend requirements on preferred stock                 (19,490)       (21,240)
                                                     -----------    -----------

Basic net income available to common shares          $   478,890    $   320,989
                                                     ===========    ===========

Basic net income per common share                    $      0.06    $      0.04
                                                     ===========    ===========

Weighted average number of common
         shares outstanding                            8,049,832      8,043,928
                                                     ===========    ===========


Diluted net income per common share                  $      0.06    $      0.04
                                                     ===========    ===========

Weighted average number of common
         shares outstanding, diluted                   8,359,977      8,363,578
                                                     ===========    ===========


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

                                       F-3
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>

PROCYON CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended June 30, 2007 and 2006



                                       Preferred Stock                Common Stock
                                  --------------------------    -------------------------     Paid-in     Accumulated
                                    Shares         Amount          Shares        Amount       Capital       Deficit         Total
                                  -----------    -----------    -----------   -----------   -----------   -----------    -----------
Balance, June 30, 2005                214,900    $   170,750      8,036,588   $ 4,400,876   $     6,000   $(4,225,627)   $   351,999

  Conversion of preferred stock
       to common stock                (10,000)       (10,000)        10,000        10,000          --            --             --

  Net Income                                0              0              0             0                     342,229       342,229
                                  -----------    -----------    -----------   -----------   -----------   -----------    -----------

Balance, June 30, 2006                204,900    $   160,750      8,046,588   $ 4,410,876   $     6,000   $(3,883,398)   $   694,228

  Conversion of preferred stock        (1,000)        (1,000)         1,000         1,000             0             0              0
       to common stock
  Net income                                0              0              0             0             0       498,380        498,380
                                  -----------    -----------    -----------   -----------   -----------   -----------    -----------

Balance, June 30, 2007                203,900    $   159,750      8,047,588   $ 4,411,876   $     6,000   $(3,385,018)   $ 1,192,608
                                  ===========    ===========    ===========   ===========   ===========   ===========    ===========



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

                                                                F-4
<PAGE>

PROCYON CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended June 30, 2007 and 2006


                                                                2007         2006
                                                             ---------    ---------

CASH FLOWS FROM OPERATING ACTIVITIES

Net income                                                   $ 498,380    $ 342,229
Adjustments to reconcile net income to net cash
     used in operating activities:
        Depreciation                                            36,207       23,589
        Deferred Income Taxes                                 (276,850)      16,004
        Decrease (increase) in:
            Accounts receivable                                (78,014)        (473)
            Inventory                                           16,973       (4,542)
            Prepaid expenses                                    (8,960)     (65,910)
            Other assets                                         7,235       17,701
        Increase (decrease) in:
            Accounts payable                                   (17,572)      25,149
            Accrued expenses                                    29,096        9,462
                                                             ---------    ---------
                                         NET CASH PROVIDED
                                   BY OPERATING ACTIVITIES     206,495      363,209

CASH FLOWS FROM INVESTING ACTIVITIES

        Purchase of property & equipment                       (54,388)      (9,052)
                                                             ---------    ---------
                                             NET CASH USED
                                   BY INVESTING ACTIVITIES     (54,388)      (9,052)

CASH FLOWS FROM FINANCING ACTIVITIES

        Payments on note payable releated party                      0      (90,000)
        Payments of capital lease obligations                        0       (2,360)
        Payments on Mortgage Payable                           (17,608)           0
                                                             ---------    ---------
                                             NET CASH USED
                                   BY FINANCING ACTIVITIES     (17,608)     (92,360)
                                                             ---------    ---------

                                        NET CHANGE IN CASH     134,499      261,797

CASH AT BEGINNING OF PERIOD                                    288,377       26,580
                                                             ---------    ---------

                                     CASH AT END OF PERIOD   $ 422,876    $ 288,377
                                                             =========    =========


SUPPLEMENTAL DISCLOSURES

Interest Paid                                                $  33,765    $   3,283
Taxes Paid                                                   $    --      $    --


NONCASH TRANSACTION DISCLOSURE:
Conversion of Series A cumulative convertible
     preferred stock to common stock                         $   1,000    $  10,000
Purchase of Office Building Financed by Mortgage             $ 508,000    $    --


    The accompanying notes are an integral part of these financial statements

                                       F-5
</TABLE>
<PAGE>

PROCYON CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business Activity

Procyon Corporation has two wholly-owned subsidiaries, Amerx Health Care Corp.
(Amerx) and Sirius Medical Supply, Inc. (Sirius). Amerx manufactures and markets
wound and skin care products primarily in the United States whereas Sirius
markets diabetic supplies primarily to Medicare patients in the United States.

Principles of Consolidation

The consolidated financial statements include the accounts of Procyon
Corporation and its wholly-owned subsidiaries, Amerx and Sirius. All material
inter-company accounts and transactions are eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

The Company recognizes revenue in accordance with Securities and Exchange
Commission Staff Accounting Bulletin No. 104, "Revenue Recognition, corrected
copy," which requires that four basic criteria must be met before revenue can be
recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has
occurred or services have been rendered; (3) the seller's price to the buyer is
fixed or determinable; and, (4) collectibility is reasonably assured.

The Company recognizes revenue related to product sales to customers who have
placed orders upon shipment of such orders, provided that risk of loss has
passed to the customer and the Company has received and verified any written
documentation required to bill Medicare, other third-party payers, and
customers. The Company records revenue at the amounts expected to be collected
from Medicare, other third-party payers, and directly from customers. Revenue
recognition is delayed for product shipments for which the Company has not yet
received the required written forms, until the period in which those documents
are collected and verified.

                                       F-6

<PAGE>

Revenue related to Medicare reimbursement is calculated based on
government-determined reimbursement prices for Medicare-covered items. The
reimbursements that Medicare pays the Company are subject to review by
appropriate government regulators. Medicare reimburses at 80% of the
government-determined reimbursement prices for reimbursable supplies, and the
Company bills the remaining balance to either third-party payers or directly to
customers.

Accounts Receivable and Concentration of Credit Risk

Amerx grants credit to customers most of whom are national pharmaceutical
distributors, drug stores nationwide and physicians. Amerx wholesales its
products to national pharmaceutical distributors and drug stores at a sales term
of 2/10, net 30. Amerx does not have a written return policy with its customers.
Each return request is reviewed by management for approval. Sales to physicians
are at contracted rates and standard payment term is 30 days.

Sirius grants credit to patients who are eligible for Medicare coverage. Sales
are at standard payment term of 30 days.

Accounts receivable are generally due from Medicare, private insurance
companies, and customers. The collection process is time consuming, complex and
typically involves the submission of claims to multiple payers whose payment of
claims may be contingent upon the payment of another payer. In accordance with
applicable regulatory requirements, the Company makes reasonable and appropriate
efforts to collect accounts receivable, including deductible and copayment
amounts, in a consistent manner for all payer classes. The valuation of accounts
receivable is based upon the credit-worthiness of customers and third-party
payers as well as historical collection experience. Estimating the credit
worthiness of customers and recoverability of customer accounts requires us to
exercise considerable judgment. Allowances for doubtful accounts are recorded as
a selling, general and administrative expense for estimated amounts expected to
be uncollectible from third-party payers and customers. The Company bases its
estimates on its historical collection and write-off experience, current trends,
credit policy, and on analysis of accounts receivable by aging category. As of
June 30, 2007, accounts receivable allowance was $2,500, or approximately 1% of
gross accounts receivable.

Inventories

Inventories are valued at the lower of average cost or market determined by the
first-in, first-out method.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed on a
straight-line basis over their estimated useful lives. Leased equipment is
recorded at it's fair market value at the beginning of the lease term and is
depreciated over the life of the equipment. Depreciation on leased equipment is
included in depreciation expense.

                                       F-7
<PAGE>

Cash and Cash Equivalents

For the purpose of the Statements of Cash Flows, the Company considers
cash-on-hand, demand deposits in banks and highly liquid investments purchased
with an original maturity of three months or less to be cash equivalents.

Shipping and Handling Costs

Shipping and handling costs incurred were approximately $81,000 and $77,000 for
the years ended June 30, 2007, and 2006, respectively, and were included in
selling, general and administrative expenses.

Advertising and Marketing

The company records advertising and marketing expenses in the periods in which
they are incurred. During the years ended June 30, 2007 and 2006, approximately
$311,000 and $288,000, of advertising and marketing costs were included in
selling, general and administrative expenses for each respective year.

Income Taxes

The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). SFAS 109 requires
the recognition of deferred tax assets and liabilities for the expected future
tax consequences of events that have been included in the financial statements
or tax returns. Under this method, deferred tax assets and liabilities are
determined based on the differences between the financial statement and the tax
basis of assets and liabilities using enacted tax provisions currently in effect
and rates applicable to the periods in which the differences are expected to
affect taxable income.

Net Income Per Share

The Company computes net income per share in accordance with SFAS No. 128,
"Earnings per Share" (SFAS 128). SFAS 128 requires presentation of both basic
and diluted earnings per shares (EPS) on the face of the income statement. Basic
EPS is computed by dividing net income available to common shareholders
(numerator) by the weighted average number of common shares outstanding
(denominator) during the period. Diluted EPS gives effect to all dilutive
potential common shares outstanding during the period including stock options,
using the treasury stock method, and convertible preferred stock, using the
if-converted method. In computing diluted EPS, the average stock price for the
period is used in determining the number of shares assumed to be purchased from
the exercise of stock options. Diluted EPS excludes all dilutive potential
common shares if their effect is anti-dilutive.

                                       F-8
<PAGE>

Fair Value of Financial Instruments

The carrying value of cash, accounts receivable, prepaid expenses, deposits,
inventory, accounts payable, accrued expenses and notes payable approximate fair
value.

Considerable judgement is required in interpreting market data to develop the
estimates of fair value, and accordingly, the estimates are not necessarily
indicative of the amounts that the Company could realize in a current market
exchange.

Stock Based Compensation

In December 1998, the Company adopted a 1998 Omnibus Stock Option Plan that
provides for the granting of equity-based incentive and other awards to
employees and directors of the Company, its subsidiaries and selected
consultants. The Plan is administered by the Compensation Committee of the Board
of Directors. Any employee, directors who are not employees of the Corporation
or a subsidiary, and consultants who are not employees or directors of the
Corporation are eligible to participate in the Plan. The maximum number of
shares of common stock issuable on exercise of options or other awards granted
under the Plan is 1,000,000. Non-qualified options granted must have an exercise
price not less than 85% of the fair market value of the underlying shares of
common stock. Incentive options must have an exercise price not less than 100%
of the fair market value of the underlying shares of common stock. The term of
the options cannot be more than ten years. Awards may be granted in the form of
restricted stock. Awards can also be granted in the form of stock appreciation
rights. A stock appreciation right entitles the participant to receive from the
Company an amount equal to the positive difference between the fair market value
of common stock on the date of exercise of the stock appreciation right and the
grant price. No stock appreciation rights have been issued to date.

Additional information with respect to the Plan's stock option activity is as
follows:

                                                               Weighted
                                                 Number of      Average
                                                   Shares    Exercise Price
                                                  -------    --------------
      Outstanding at June 30, 2005                300,000       $0.20
        Granted                                         -           -
        Exercised                                       -           -
        Expired                                         -           -
                                                  -------       -----
      Outstanding at June 30, 2006                300,000       $0.20
        Granted                                         -           -
        Exercised                                       -           -
        Expired                                         -           -
      Outstanding at June 30, 2007                300,000       $0.20
                                                  =======       =====
      Options exercisable at June 30, 2006        300,000       $0.20
                                                  =======       =====
      Options exercisable at June 30, 2007        300,000       $0.20
                                                  =======       =====

                                       F-9
<PAGE>

The following table summarizes information about stock options outstanding at
June 30, 2007:

                                         Stock Options Outstanding
                                    ----------------------------------
                                    Weighted Average
                    Number of       Remaining           Weighted
  Range of          Shares          Contractual Life    Average
  Exercise Prices   Outstanding     In Years            Exercise Price
  ---------------   -----------     --------            --------------

  $0.15 - $0.20     65,000            3.39                 $0.16

  $0.20 - $0.25     235,000           2.51                 $0.21
                    -------
                    300,000           2.70                 $0.20
                    =======


Effective January 1, 2006, we adopted Statement of Financial Accounting
Standards No. 123(R) ("SFAS 123R"), "Share-Based Payment". SFAS 123R requires
all share-based payments to employees, including grants of employee stock
options, to be recognized in the statement of operations based upon their fair
values and rescinds the acceptance of pro forma disclosure. SFAS 123R permits
two methods of adoption, a "modified prospective" method and a "modified
retrospective" method. Under the modified prospective method, stock-based
compensation cost is recognized, beginning with the effective date, based on the
requirements of SFAS 123R for all share-based payments granted after the
effective date and for all awards granted prior to the effective date that
remain unvested on the effective date. The modified retrospective method
includes the requirements of the modified prospective method and also permits
restatement of prior periods based on amounts previously reported in pro forma
disclosures pursuant to SFAS 123 for either all periods presented or for only
prior interim periods of the year of adoption. We adopted the modified
prospective method prescribed in SFAS 123R, effective January 1, 2006.

On June 30, 2007, there were outstanding options to purchase 300,000 shares of
our common stock at exercise prices ranging from $0.16 to $0.21 per share and
expiration dates between December 2009 and November 2010. These options were
vested at the time of grant. During the year ended June 30, 2007, no options
were granted. Therefore, the adoption of SFAS 123R does not have an impact on
the statement of operations for period ending June 30, 2007.

The fair value of a stock option is determined using the Black-Scholes
option-pricing model, which values options based on the stock price at the grant
date, the expected life of the option, the estimated volatility of the stock,
the expected dividend payments, and the risk-free interest rate over the life of
the option.

The Black-Scholes option valuation model was developed for estimating the fair
value of traded options that have no vesting restrictions and are fully
transferable. Because option valuation models require the use of subjective
assumptions, changes in these assumptions can materially affect the fair value
of the options. Our options do not have the characteristics of traded options,
therefore, the option valuation models do not necessarily provide a reliable
measure of the fair value of our options.

                                      F-10
<PAGE>

There were no options granted during fiscal years ended June 30, 2007 and 2006.
Had there been options issued during the fiscal years ended June 30, 2007 and
2006, the fair value of the options would have been determined using the
Black-Scholes option-pricing model, which values options based on the stock
price at the grant date, the expected dividend payments, and the risk-free
interest rate over the life of the option.

Equity instruments issued to non-employees in exchange for goods, fees and
services are accounted for under the fair value-based method of SFAS No. 123(R).

NOTE B - INVENTORIES

Inventories consisted of the following:


                   Finished Goods   $   36,509
                   Raw Materials        97,383
                                    ----------
                                    $  133,892
                                    ==========

NOTE C - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

                                          Owned         Leased          Total
                                        ---------      ---------      ---------

Office Equipment                        $ 112,867      $  26,928      $ 139,795

Furniture and Fixtures                     20,726                        20,726

Software                                   19,471                        19,471

Leasehold improvements                     13,589                        13,589

Production Equipment                       34,436                        34,436

Building                                  474,168                       474,168

Land                                       64,547                        64,547
                                        ---------      ---------      ---------

                                          739,804         26,928        766,732

Less accumulated depreciation            (151,448)       (26,143)      (177,591)
                                        ---------      ---------      ---------

                                        $ 588,356      $     785      $ 589,141
                                        =========      =========      =========

                                      F-11
<PAGE>

NOTE D - RELATED PARTY TRANSACTIONS

The Company had a note payable with John C. Anderson, at 8% interest per annum.
Shortly after his passing the note was paid in full. Interest expense for the
year ended June 30, 2006 were $1,531. Mr. Slowgrove, a director, acted as a
consultant to the Company for portions of fiscal 2007, was paid a total
compensation to him of approximately $27,500. Our Chief Executive Officer,
Regina W. Anderson, guaranteed a loan to us in the amount of $508,000, issued in
connection with our purchase of our office building in July 2006, as well as the
$250,000 line of credit.

NOTE E  - MORTGAGE PAYABLE

     On July 21, 2006, we entered into a mortgage loan, guaranteed by our C.E.O.
Regina W. Anderson, for $508,000 with the Bank of America for the purchase of
our corporate office building. The mortgage loan is due in 15 years and interest
is fixed at 7.25%. Interest expense was $ 34,614 for the fiscal year end June
30, 2007.

Maturities of long-term debt associated with the mortgage payable are as
follows:



         Year Ending June 30,
         --------------------------------------------

                 2008                                 $   21,201

                 2009                                     22,790

                 2010                                     24,498

                 2011                                     26,335

                 2012                                     28,309

                 2013 and thereafter                     367,259
                                                      ----------

                                                         490,392

                 Less current portion                     21,201
                                                      ----------

                                                      $  469,191
                                                      ==========





                                      F-12
<PAGE>

NOTE F - COMMITMENTS AND CONTINGENCIES

Leases
------

In September 2003, the Company entered into a lease for office space for a term
of three years. Monthly rent was approximately $4,100 plus sales tax. The
Company purchased the building and its property on July 21, 2006. Rent expense
for the years ended June 30, 2007 and 2006 were approximately $2,546 and
$53,000, respectively.

In addition, the Company also leases certain equipment under various operating
leases expiring through year 2011. The minimum lease payments due under the
equipment lease agreements for fiscal years ended June 30 is as follow:


                           2008             $ 11,458
                           2009               11,458
                           2010               11,362
                           2011                9,447
                                            --------
                                            $ 43,725
                                            ========

Purchase Commitments
--------------------

Sirius entered into a two-year contract with one of its suppliers in June 2004
to purchase a minimum quantity of various diabetic supplies at a discounted
price each year. In accordance with the terms of the contract, the supplier
could retroactively adjust the purchase price based on actual quantities
purchased. During the fiscal year this contract expired with the vendor, with no
penalty. Instead of renewing this contract Sirius has begun to purchase the same
products from a different vendor. In accordance with the Statement of Position
94-6, Disclosure of Certain Significant Risks and Uncertainties ("SOP 94-6"),
Sirius believes that while there is concentration of products purchased from
this vendor, the concentration did not make the Company vulnerable to the risk
of a near-term severe impact, as defined in SOP 94-6. Sirius also has the
ability to purchase the same product from third-party vendors at a slightly
higher price. Further, management believes that it is not reasonably possible
that this event could cause severe near-term impact to the Company.

NOTE G - LONG-TERM DEBT

The Company had a note payable with John C. Anderson, at 8% interest per annum.
Shortly after his passing the note was paid in full. Interest expense for the
years ended June 30, 2007 and June 30, 2006 was $0 and $1,531 respectively.


                                      F-13
<PAGE>

NOTE H - STOCKHOLDERS' EQUITY

During January 1995, the Company's Board of Directors authorized the issuance of
up to 4,000,000 shares of Series A Cumulative Convertible Preferred Stock. The
preferred stockholders are entitled to receive, if declared by the board of
directors, quarterly dividends at an annual rate of $.10 per share of Series A
Cumulative Convertible Preferred Stock per annum. Dividends accrue without
interest and are cumulative from the date of issuance of the Series A Cumulative
Convertible Preferred Stock and are payable quarterly in arrears in cash or
publicly traded common stock when and if declared by the board of directors. As
of June 30, 2007, no dividends have been declared. Dividends in arrears on the
outstanding preferred shares total $206,351 or approximately $1.01 per share as
of June 30, 2007. The preferred stockholders have the right to convert each
share of Series A Cumulative Convertible Preferred Stock into one share of the
Company's common stock at any time without additional consideration. Each share
of Series A Cumulative Convertible Preferred Stock is subject to mandatory
conversion into one share of common stock of the Company, effective as of the
close of a public offering of the Company's common stock provided, however, that
the offering must provide a minimum of $1 million in gross proceeds to the
Company and the initial offering price of such common stock must be at least $1
per share. In addition to the rights described above, the holders of the Series
A Cumulative Convertible Preferred Stock have voting rights equal to the common
stockholders based upon the number of shares of common stock into which the
Series A Cumulative Convertible Preferred Stock is convertible. The Company is
obligated to reserve an adequate number of shares of its common stock to satisfy
the conversion of all of the outstanding Series A Cumulative Convertible
Preferred stock.

NOTE I - EARNINGS PER SHARE

As required by FASB Statement No. 128, the following table sets forth the
computation of basic and diluted earnings per share:

                                                        Years Ended June 30,
                                                        2007            2006
                                                    -----------     -----------
Numerator:
----------
Net income                                          $   498,380     $   342,229
Adjustment for basic earnings per share:
Dividend requirements on preferred stock                (19,490)        (21,240)
                                                    -----------     -----------
Numerator for basic earnings per share-
Net income available to common
stockholders                                        $   478,890     $   320,989

Effect of dilutive securities:
Numerator for diluted earnings per share-
Net income available to common
stockholder                                         $   478,890     $   320,989
                                                    -----------     -----------

Denominator:
------------
Denominator for basic earnings per share-
Weighted-average common shares                        8,049,832       8,043,928
Effect of dilutive securities:
Stock options                                           105,489         104,997
Dilutive potential common shares                        204,656         214,653
                                                    -----------     -----------
Denominator for dilutive earnings per share-

Adjusted weighted-average shares and
assumed conversions                                   8,359,977       8,363,578
                                                    ===========     ===========

Basic income per share                              $      0.06     $      0.04
                                                    ===========     ===========
Diluted income per share                            $      0.06     $      0.04
                                                    ===========     ===========

                                      F-14
<PAGE>

NOTE J - INCOME TAXES AND AVAILABLE CARRYFORWARD

As of June 30, 2007, the Company had consolidated income tax net operating loss
("NOL") carryforward for federal income tax purposes of approximately
$3,016,000. The NOL will expire in various years ending through the year
2023.The utilization of certain of the loss carryforwards are limited under
Section 382 of the Internal Revenue Code.

The components of the provision for income taxes (benefits) are attributable to
continuing operations as follows:

                                    2007          2006
                                  ---------    ---------
                       Current
                       Federal    $    --      $    --
                       State           --           --

                       Deferred
                       Federal     (236,386)      13,665
                       State        (40,464)       2,339
                                  ---------    ---------
                                  $(276,850)   $  16,004
                                  =========    =========

Deferred income taxes reflect the net tax effects of the temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities are as follows:


                                      F-15
<PAGE>

                                                         Current     Non-Current
                                                        ---------    -----------

Deferred tax assets:
         NOL and contribution carryforwards             $ 168,818     $ 975,409
         Allowance for doubtful accounts                      941          --
         Valuation allowance for deferred tax assets         --        (737,284)
                                                        ---------     ---------
                                                          169,758       238,125

Deferred tax (liabilities):
         Excess of tax over book depreciation                --          (6,851)
                                                        ---------     ---------
                                                          169,758       231,274

Net deferred tax asset (liability)                      $ 169,758     $ 231,274
                                                        =========     =========


The change in the valuation allowance is as follow:

         June 30, 2006                   $ (1,373,049)
         June 30, 2007                       (737,284)
                                         ------------

Decrease in valuation allowance          $   (635,765)
                                         ============

The decrease in the valuation allowance is due to the expected utilization of
net operating loss carryforwards. A valuation allowance of approximately
$737,000 has been provided to reduce the asset to the net amount of tax benefit
management believes it will more likely than not realize. As time passes,
management will be able to better assess the amount of tax benefit it will
realize from using the carryforward.

Income taxes for the years ended June 30, 2007 and 2006 differ from the amounts
computed by applying the effective income tax rates of 37.63% and 37.63%,
respectively, to income before income taxes as a result of the following:

                                                           2007          2006
                                                         ---------    ---------

Expected provision at US statutory rate                  $  75,320    $ 121,799
State income tax net of federal benefit                      8,042       13,004
Nondeductibles                                               3,540          169
Change in estimates in available NOL carryforwards         272,013         --
Change in valuation allowance                             (635,765)    (118,968)
                                                         ---------    ---------

Income tax expense / (benefit)                           $(276,850)   $ (16,004)
                                                         =========    =========

                                      F-16
<PAGE>

NOTE K - CONCENTRATION OF SUPPLY RISK

The Company's manufacturing and packaging activities are performed at a
production facility owned and operated by a non-affiliated pharmaceutical
manufacturer. At the present time, the manufacturer is the major source of the
Company's wound care products. The sudden loss or failure of this manufacturer
could significantly impair Amerx's ability to fulfill customer orders on a
short-term basis and therefore, could materially and adversely affect the
Company's operations. However, the Company has maintained a long-term
relationship with this manufacturer and does not expect a discontinuance of its
wound care products from the manufacturer in the near term.

During the year, Sirius purchased approximately 13% of its diabetic supplies
from a non-affiliated supplier. Sirius does not anticipate supply from this
vendor will be lost in the near future. Sirius has a good long term working
relationship with this vendor. In the event of loss of this supplier, Sirius
could still purchase such products from other suppliers in the industry.

NOTE L - MAJOR CUSTOMERS

During the year ended June 30, 2007, sales from one customer accounted for
approximately 12% of the Company's sales. The loss of this single customer would
have a material adverse effect on our financial condition or the results of our
operations. During the year ended June 30, 2006 no customers accounted for more
than 10% of Company sales. Amerx's customer base has become more diversified
compared to previous fiscal years.

NOTE M - SEGMENT INFORMATION

The Company operates in the following two business segments:

1.   Sale of skin and wound care products - Amerx operates in the skin and wound
     care products segment. The marketing of these products is targeted
     primarily to diabetic patients who have difficulties providing proper care
     and treatment of wounds due to their diabetic condition and physicians who
     recommend the products to their patients.

2.   Sale of diabetic supplies - Sirius provides meters, test strips, monitors,
     syringes, etc. primarily to diabetic patients. The Company is then
     reimbursed by Medicare and/or patients' secondary insurance.






                                      F-17
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>

Each separately managed segment offers different products requiring different
marketing and distribution strategies. Segments Information

                                    Wound Care   Diabetic
                        June 30,     Products    Products     Other     Consolidated
                        --------     --------    --------     -----     ------------
Revenues                   2007     $2,244,314   $292,263   $     -      $2,536,577
                           2006      1,972,381    340,964         -       2,313,345

Gross Profit               2007      1,805,827    130,574         -       1,936,402
                           2006      1,634,721    158,735         -       1,793,456

Identifiable Assets        2007        572,358    169,407    1,160,627    1,902,392
                           2006        388,846     58,665      463,648      911,159
Property and Equipment
Additions                  2007          4,200       -         558,186      562,386
                           2006          9,052       -            -           9,052

Depreciation               2007         11,692        544       23,972       36,207
                           2006         14,718      3,059        5,812       23,589

Geographical Information

The Company operates and sells its products to its customers primarily within
the United States. All assets are located within the United States.

NOTE N - LINE OF CREDIT

The Company has a $250,000, due-on-demand line of credit with a financial
institution, collateralized by the Company's inventory and accounts receivable
assets. The line of credit is renewable annually on April of 2008. The C.E.O. of
the Company personally guaranteed the line of credit to the Company. At June 30,
2007, the Company owed $0 on the line of credit. Interest expense for the years
ended June 30, 2007 was $0. The line of credit extends terms of cash advances at
a variable rate set equal to the banks prime rate at the time of advance. The
interest rate can fluctuate according to the banks changes in its published
prime rate.



                                      F-18
</TABLE>