SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

----------------------

FORM 10-Q

----------------------

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACTS OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 25, 1999

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACTS OF 1934 FOR

THE TRANSITION PERIOD FROM ______ TO ________.

COMMISSION FILE NUMBER 1-12912

------------------------

CENTENNIAL TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in its Charter)

DELAWARE 04-2978400
(State Or Other Jurisdiction (IRS Employer
Of Incorporation Or Organization) Identification Number)

7 LOPEZ ROAD, WILMINGTON, MASSACHUSETTS 01887
(Address of Principal Executive Offices) (Zip Code)

(978) 988-8848
(Registrant's Telephone Number, Including Area Code)

--------------------

INDICATE BY CHECK MARK WHETHER THE ISSUER (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [ ]

As of February 1, 2000, there were 3,179,479 shares of Common Stock, $.01
par value per share (the "Common Stock"), of the registrant outstanding.

CENTENNIAL TECHNOLOGIES, INC.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION PAGE NUMBER

Item 1. Financial Statements 3

Consolidated Balance Sheets at December 25, 1999 (Unaudited)
and March 31, 1999 3

Consolidated Statements of Income for three and nine
months ended December 25, 1999 and December 26, 1998
(Unaudited) 4

Consolidated Statements of Cash Flows for nine months
ended December 25, 1999 and December 26, 1999
(Unaudited) 5

Notes to Unaudited Consolidated Financial Statements 6

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

PART II. OTHER INFORMATION

Item 1. Legal Proceedings 21
Item 2. Changes in Securities 22
Item 3. Defaults Upon Senior Securities 22
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 5. Other Information 22
Item 6. Exhibits and Reports on Form 8-K 23

PART I

ITEM 1. FINANCIAL STATEMENTS

CENTENNIAL TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS)

DECEMBER 25, MARCH 31,
1999 1999
---- ----
(UNAUDITED)

ASSETS

Current assets:
Cash and cash equivalents.................................................... $ 5,193 $ 4,922
Short-term investments....................................................... 2,254 2,500
Trade accounts receivable, net............................................... 4,385 3,726
Recoverable income taxes..................................................... 106 125
Inventories.................................................................. 4,808 3,049
Other current assets......................................................... 269 231
--------- ---------
Total current assets.............................................................. 17,015 14,553

Equipment and leasehold improvements.............................................. 4,755 3,967
Less: accumulated depreciation and amortization.............................. (1,981) (1,508)
--------- ---------
2,774 2,459

Other assets...................................................................... 245 92
Investments in third parties...................................................... 1,948 1,700
--------- ---------

Total assets...................................................................... $ 21,982 $ 18,804
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued expenses........................................ $ 7,381 $ 7,072
Current portion of obligations under capital leases.......................... 228 36
--------- ---------
Total current liabilities......................................................... 7,609 7,108

Long-term obligations under capital leases........................................ 860 --

Contingencies (Note 8)

Stockholders' equity:
Preferred Stock, $.01 par value; 1,000,000 shares
authorized, none issued......................................................... -- --
Common Stock, $.01 par value; 6,250,000 shares authorized, 3,176,000
issued and outstanding at December 25, 1999 and 2,569,000 issued and
outstanding at March 31, 1999................................................... 32 26
Additional paid-in capital........................................................ 83,800 84,379
Accumulated deficit............................................................... (70,292) (72,697)
Accumulated other comprehensive loss.............................................. (27) (12)
--------- ---------
Total stockholders' equity........................................................ 13,513 11,696
--------- ---------

Total liabilities and stockholders' equity........................................ $ 21,982 $ 18,804
========= =========

The accompanying notes are an integral part of the
consolidated financial statements.

CENTENNIAL TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------ ------------------------------
DECEMBER 25, DECEMBER 26, DECEMBER 25, DECEMBER 26,
1999 1998 1999 1998
---- ---- ---- ----

Net sales.............................................. $ 8,567 $ 7,568 $ 22,881 $ 19,954
Cost of goods sold .................................... 5,209 4,978 14,902 13,809
----------- ----------- ----------- -----------
Gross profit................................... 3,358 2,590 7,979 6,145

Operating expenses:
Research and development.......................... 448 205 1,069 574
Selling, general and administrative expenses...... 1,631 1,808 5,326 4,706
----------- ----------- ----------- -----------
Operating income............................. 1,279 577 1,584 865

Proceeds from resolution of customer dispute........... -- -- -- 1,600
Revision of an estimate of a litigation settlement..... -- -- 940 --
Loss on investment activity............................ -- -- -- (733)
Loss on disposal of equipment.......................... -- (83) (345) (83)
Net interest income.................................... 80 79 230 224
Other Income........................................... -- -- 39 --
----------- ----------- ----------- -----------
Income before taxes.......................... 1,359 573 2,448 1,873

Income taxes........................................... 23 -- 43 --
----------- ----------- ----------- -----------
Net income............................................. $ 1,336 $ 573 $ 2,405 $ 1,873
=========== =========== =========== ===========

Net income per share - basic........................... $ .42 $ .18 $ .76 $ .67
Net income per share - diluted......................... $ .42 $ .18 $ .75 $ .66

Weighted average shares outstanding - basic............ 3,204 3,167 3,177 2,816
Weighted average shares outstanding - diluted.......... 3,217 3,174 3,229 2,832

The accompanying notes are an integral part of the
consolidated financial statements.

CENTENNIAL TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)

NINE MONTHS ENDED
--------------------------------
DECEMBER 25, DECEMBER 26,
1999 1998
---- ----

Cash flows from operating activities:
Net income.............................................. $ 2,405 $ 1,873
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization........................... 827 782
Loss on disposal of equipment........................... 345 85
Provision for loss on accounts receivable............... 75 130
Provision for loss on investments....................... -- 733
Recovery of loss on inventory........................... (145) --
Revision of an estimate of a litigation settlement...... (940) --
Change in operating assets and liabilities:
Accounts receivable................................ (734) (524)
Inventories........................................ (1,614) 105
Other assets....................................... (172) 541
Income taxes payable............................... (28) --
Accounts payable and accrued expenses.............. 737 129
----------- -----------
Net cash used in operating activities.............. 756 3,854

Cash flows from investing activities:
Capital expenditures.................................... (307) (500)
Disposal of capital equipment........................... -- 32
Proceeds from sale of securities held to maturity....... 3,144 --
Investments in third parties............................ (248) --
Purchase of short-term investments...................... (2,898) --
------------ -----------
Net cash used in investing activities.............. (309) (468)

Cash flows from financing activities:
Payments for fractional shares resulting from split..... (40) --
Proceeds from employee stock purchase plan.............. 7 --
Payments on equipment lease financing................... (128) (52)
------------ -----------
Net cash used in financing activities.............. (161) (52)
------------ -----------
Effect of exchange rate changes on cash...................... (15) (6)
------------ -----------
Net decrease in cash and cash equivalents.................... 271 3,328
Cash and cash equivalents at beginning of period............. 4,922 5,358
----------- -----------

Cash and cash equivalents at end of period................... $ 5,193 $ 8,686
=========== ===========

Supplemental disclosure of noncash investing and financing
activities:
Acquisition of equipment through capital lease transactions $ 1,180 $ --
=========== ===========

The accompanying notes are an integral part of the
consolidated financial statements.

CENTENNIAL TECHNOLOGIES, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND CHANGE IN FISCAL YEAR

BASIS OF PRESENTATION

The consolidated financial statements of Centennial Technologies, Inc. (the
"Company") include the accounts of the Company and all wholly owned
subsidiaries. Investments in companies in which the company's ownership
interests range from 20 to 50 percent and in which the company exercises
significant influence over operating and financial policies are accounted for
using the equity method. Other investments are accounted for using the cost
method. All significant intercompany balances and transactions have been
eliminated. Certain reclassifications have been made to prior reported financial
statements to conform to the fiscal 2000 presentation.

The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all financial information and
disclosures required by generally accepted accounting principles for complete
financial statements. In the opinion of management, these financial statements
include all adjustments (consisting only of normal recurring accruals) necessary
for a fair presentation of the results of operations for the interim periods
reported and of the financial condition of the Company as of the date of the
interim balance sheet. The results of operations for interim periods are not
necessarily indicative of the results to be expected for the full year.

These financial statements should be read in conjunction with the Company's
consolidated financial statements and related notes included in the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 1999 along with
any other filing with the Securities and Exchange Commission since March 31,
1999.

FISCAL YEAR

The Company's fiscal year begins on April 1. Each fiscal quarter ends on the
Saturday of the thirteenth week following the beginning of the quarter, except
for the fourth quarter, which ends on March 31.

CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

Cash equivalents include highly liquid temporary cash investments having
maturities of three months or less at date of acquisition. Short-term
investments include commercial paper having a maturity longer than three months
but less than one year at date of acquisition.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
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.

2. CONCENTRATION OF CREDIT RISK

Financial instruments, which potentially subject the Company to
concentration of credit risk, consist principally of cash and cash equivalents,
short-term investments and trade receivables. At December 25, 1999,
substantially all of the Company's cash, cash equivalents and short-term
investments were held by one financial institution. The Company primarily sells
and grants credit to domestic and foreign original equipment manufacturers and
distributors. The Company extends credit based on an evaluation of the
customer's financial condition and generally does not require collateral. The
Company monitors its exposure for credit losses and

maintains allowances for anticipated losses. At December 25, 1999 and March 31,
1999, the allowance for doubtful accounts was $514,000 and $795,000,
respectively.

For the nine months ended December 25, 1999, one customer represented 10% of
the Company's sales. For the nine months ended December 25, 1999 and December
26, 1998, another customer represented 4% and 19%, respectively, of the
Company's sales. During fiscal 1999, this customer engaged several contract
manufacturers to complete the final assembly of a majority of its products for
which the Company has historically supplied PC cards. The Company's sales to
these contract manufacturers for the nine months ended December 25, 1999 and
December 26, 1998 represented 16% and 13% of the Company's sales. One of these
contract manufacturers recently merged with one of the Company's competitors,
which could result in a decrease of sales to this contract manufacturer. If any
of these customers were to reduce significantly the amount of business they
conduct with the Company, it could have a material adverse effect on the
Company's business, financial condition and results of operations.

For the nine months ended December 25, 1999 and December 26, 1998, sales
outside the United States were approximately 18% and 12%, respectively, of the
Company's sales. Sales outside the United States are primarily in several
Western European countries. No one country comprised more than 10% of the
Company's sales for the nine month periods ended December 25, 1999 or December
26, 1998.

3. NET INCOME PER SHARE

The Company computes net income per share in accordance with Statement of
Financial Accounting Standards ("SFAS") 128, "Earnings Per Share." Basic net
income per share excludes any dilutive effect of options, warrants and
convertible securities. Diluted net income per share includes all potentially
dilutive securities.

On July 20, 1999, the Company's shareholders approved a one-for-eight
reverse split of the common stock for shareholders of record as of the close of
business on July 22, 1999. In this report, all per share amounts and numbers of
shares have been restated to reflect a one-for-eight reverse stock split of the
Company's common stock, which was effective as of the opening of the
over-the-counter Bulletin Board on July 23, 1999.

The following table sets forth the computation of net income per share (in
thousands, except per share data). All shares issuable in connection with the
settlement of the Consolidated Litigation described in Note 7 are included in
the weighted average shares outstanding calculation as of July 20, 1998, the
date on which the Company's settlement of the Consolidated Litigation became
effective.

THREE MONTHS ENDED NINE MONTHS ENDED
---------------------------------- -------------------------------
DECEMBER 25, DECEMBER 26, DECEMBER 25, DECEMBER 26,
1999 1998 1999 1998
---- ---- ---- ----

BASIC NET INCOME PER SHARE
Numerator
Net income $ 1,336 $ 573 $ 2,405 $ 1,873
Denominator
Weighted average common shares outstanding 3,204 3,167 3,177 2,816
Basic net income per share $ .42 $ .18 $ .76 $ .67
======== ======== ======== ========

DILUTED NET INCOME PER SHARE
Numerator
Net income $ 1,336 $ 573 $ 2,405 $ 1,873
Denominator
Weighted average common shares outstanding 3,204 3,167 3,177 2,816
Stock options 13 7 52 16
-------- -------- -------- --------
Shares used in computing diluted earnings 3,217 3,174 3,229 2,832
per share
Diluted net income per share $ .42 $ .18 $ .75 $ .66
======== ======== ======== ========

4. INVENTORIES

Inventories consisted of (in thousands):

DECEMBER 25, MARCH 31,
1999 1999
---- ----

Raw material, primarily electronic components....... $ 3,376 $ 1,709
Work in process..................................... 900 399
Finished goods...................................... 532 941
------- -------
$ 4,808 $ 3,049
======= =======

The Company maintains levels of inventories that it believes are necessary
based upon assumptions concerning its growth, mix of sales and availability and
pricing of raw materials. Changes in those underlying assumptions could affect
management's estimates of inventory valuation.

In fiscal 1998, the Company reserved fully $1.8 million of costs related to
inventory specifically purchased and manufactured pursuant to a customer
purchase order (the "Custom Inventory"), as to which the customer later
attempted to cancel the purchase order. The Company disputed the customer's
claim that the purchase order cancellation was effective, and sought legal
remedies related thereto. During fiscal 1999, the Company agreed to settle its
claims against the customer, in return for a $1.6 million cash payment, which
was included in other income in the second quarter of fiscal 1999, and the right
to retain and sell the Custom Inventory at issue. The Company sold portions of
the Custom Inventory during the nine months ended December 26, 1998 and December
25, 1999 for approximately $1.0 million, which have been included in net sales.

5. INVESTMENT IN CENTURY ELECTRONICS MANUFACTURING, INC.

Since October 1996, the Company has held an equity interest in Century
Electronics Manufacturing, Inc. ("Century"), a contract manufacturer.

On February 4, 1998, Century redeemed a portion of the Company's debt and
equity holdings in Century in exchange for $9.7 million in cash, $4.0 million of
Century Series B Convertible Preferred Stock and the forgiveness of certain
interest. The Series B Convertible Preferred Stock is equivalent upon conversion
to approximately 5%, non-diluted, of Century's outstanding shares, is
non-voting, has no dividend, and has a liquidation preference of $4.0 million
senior to the common shareholders and subordinate to the holders of Century
Series A Convertible Preferred Stock. The Company recorded a loss on investment
activities of $5.1 million in the third quarter of fiscal 1998 to reflect the
difference between the fair value of the consideration received from Century and
the carrying value of the Company's investment in Century.

During fiscal 1999, the Company reduced the carrying value of its investment
in Century by $733,000 to $1.7 million, reflecting management's assessment of
the deterioration in value of contract manufacturing businesses in general and a
permanent decline in the value of its investment. In August 1999, Century filed
a registration statement with the Securities and Exchange Commission in
preparation for a planned initial public offering of Century's common stock. The
preferred shares that Centennial owns are convertible into 667,667 shares of
Century's common stock. Centennial's shares of Century stock are subject to
certain restrictions on sales and are not readily saleable for a period of 180
days following the consummation of Century's initial public offering. There can
be no assurance that the initial public offering of Century common stock will
occur.

6. DEBT

defined. Allowable borrowings are based on accounts receivable and the cost of
equipment, and are secured by substantially all of the Company's assets. At
December 25, 1999 and March 31, 1999, the Company had no outstanding borrowings
under these credit facilities. This agreement expired in the third quarter of
fiscal 2000. The Company is negotiating a replacement contract under similar
terms, which it expects to be final in its fourth fiscal quarter.

LEASES

In April, 1999 and November, 1999, the Company entered into five year
capital leases for new manufacturing equipment. Monthly payments under these
leases are $6,318 and $16,217, respectively.

7. STOCK OPTION PLANS

On November 11, 1999, the Board of Directors of the Company adopted the 1999
Stock Option Plan (the "Plan") under which incentive and non-qualified stock
options may be granted to employees, officers, directors and consultants of the
Company. The Company reserved 1,000,000 shares of common stock for issuance
under the Plan. The vesting periods and the expiration date of options granted
under the Plan are established by the Compensation Committee of the Board of
Directors. In the quarter ended December 25, 1999, the Company granted options
to acquire 580,500 shares of the Company's common stock, exercisable at $3.50
per share under this plan. These options vest ratably on each of the first,
second and third anniversaries of the date of grant, although this vesting is
accelerated in three increments in the event certain stock price targets are
achieved.

8. CONTINGENCIES

CLASS ACTION LITIGATION

Since the Company's announcement on February 11, 1997 that it was
undertaking an inquiry into the accuracy of its prior reported financial
results, and that preliminary information had raised questions as to whether
reported results contained material misstatements, approximately 40 purported
class action lawsuits were filed in or transferred to the United States District
Court for the District of Massachusetts. These complaints asserted claims
against the Company and the Company's Board of Directors, officers and former
independent accounts, among others, under Section 10(b) and 20(a) of the
Securities Exchange Act of 1934 (the "1934 Act") and Rule 10b-5 promulgated
thereunder, and related state law claims of fraud, deceit and negligent
misrepresentation. These class action lawsuits were purportedly brought by and
on behalf of purchasers of the Company's Common Stock (i) between the Company's
initial public offering on April 12, 1994 and on February 10, 1997 or (ii) on
February 25, 1997.

On February 9, 1998, these class action lawsuits were consolidated (the
"Consolidated Litigation"), and the Company and lead counsel representing the
plaintiffs in the Consolidated Litigation filed a Stipulation of Settlement (the
"Settlement Agreement"), whereby the Company and certain of its officers and
directors would be released from liability arising from the allegations included
in the Consolidated Litigation. In return, the Company agreed to pay the
plaintiffs in the Consolidated Litigation $1.475 million in cash and to issue to
these plaintiffs 37% of the Company's Common Stock. The Company also agreed to
adopt certain corporate governance policies and procedures. The Settlement
Agreement became effective on July 20, 1998. The Company has issued 854,300
shares of common stock pursuant to the Settlement Agreement. All shares issued
in connection with the Consolidated Litigation are included in the weighted
average shares outstanding calculation from July 20, 1998 forward.

A significant number of class members elected not to participate in the
Settlement Agreement described above. In September 1999, the Company reached an
agreement with a number of these parties which calls for the Company to pay
$500,000 in cash to settle these claims (the "Additional Settlement Agreement").
For the remaining parties who did not participate in the Settlement Agreement or
the Additional Settlement Agreement, the Company believes that the applicable
Federal statue of limitations has likely expired and that it does not have
material exposure to these parties. In connection with the above, the Company
has revised its original estimate of the allocation between cash and common
stock of the $20 million provision for settlement of all such shareholder
litigation recorded during its fiscal year ended March 31, 1997 related to the
Class Action Litigation. Accordingly, the Company has reclassified $750,000 in
the second quarter of fiscal 2000 from the original settlement reserve to
accrued liabilities, representing the $500,000 Additional Settlement Agreement
described above and a remaining estimate of the probable costs to be incurred in
connection with the remaining parties not a party to the Settlement Agreement or
the Additional Settlement Agreement. In January 2000, the Company

made a partial payment of $188,000 in settlement of certain of these claims. The
Company expects the remaining amount to be paid in the next quarter.

The plaintiffs in the Consolidated Litigation have reached an agreement with
the Company's former Interim Chief Executive Officer, Lawrence J. Ramaekers, and
his employer, Jay Alix & Associates ("Jay Alix"), regarding the plaintiffs'
alleged claims against them. In return for the Company's agreement to reimburse
Jay Alix and Mr. Ramaekers in the third quarter of fiscal 2000 $1.0 million for
legal fees incurred, Jay Alix and Mr. Ramaekers have released any and all claims
against the Company and its affiliates and directors, including any claims to
indemnification and defense costs incurred by Jay Alix and Mr. Ramaekers in
defending the claims brought by the plaintiffs against them. The Plaintiffs in
the Consolidated Litigation have retained their claims against the Company's
former Chief Executive Officer, Emanuel Pinez, and the Company's former Chief
Financial Officer, James M. Murphy.

SECURITIES AND EXCHANGE COMMISSION INVESTIGATION

In mid-February 1997, the Company was notified that the Boston District
Office of the Securities and Exchange Commission ("SEC") was conducting an
investigation of the Company. The SEC has requested that the Company provide the
SEC with certain documents concerning the Company's public reports and financial
statements. The SEC indicated that its inquiry should not be construed as an
indication by the SEC or its staff that any violations have occurred, or as a
reflection upon the merits of the securities involved or upon any person who
effected transactions in such securities. The Company is cooperating with the
SEC in connection with this investigation, the outcome of which cannot yet be
determined.

The Company is currently considering withdrawing its application for
listing on the NASDAQ National Market because it has not yet fully resolved with
the SEC all of the issues arising from the conduct of former members of the
Company's senior management and the restatement of certain of the Company's
financial statements. The Company is cooperating fully with the SEC and
believes, based on discussions with the SEC, that it will be able to resolve
these issues in an acceptable manner. The Company is presently awaiting a formal
proposal from the SEC, however, until these issues are resolved with the SEC,
the Company believes that NASDAQ would not approve its current listing
application. The Company believes that it presently meets all of the
requirements for listing on the NASDAQ National Market. In the event the Company
withdraws its current application with the NASDAQ National Market, it intends to
promptly refile upon resolution of the matters with the SEC. The Company
believes that it may not be able to refile until after the filing of its Annual
Report on Form 10-K for the fiscal year ended March 31, 2000, in which case the
Company believes the review of the NASDAQ application should be completed by
June, 2000. There can be no assurance that the common stock will be approved for
listing on NASDAQ on a timely basis or at all.

WEBSECURE LITIGATION

On and after March 26, 1997, several complaints were filed against
WebSecure, certain officers, directors and underwriters of WebSecure, and the
Company in the United States District Court for the District of Massachusetts by
plaintiffs purporting to represent classes of shareholders who purchased stock
of WebSecure, Inc. ("WebSecure") between December 5, 1996 and February 27, 1997
(the "WebSecure Complaints"). The claims against the Company include alleged
violations of Sections 11 and 15 of the Securities Act of 1933 (the "1933 Act")
(the "WebSecure Securities Litigation"). In fiscal 1997, the Company established
a reserve of $1.2 million in connection with the expected settlement of the
WebSecure Securities Litigation.

On September 17, 1999, the Company's agreement to settle the WebSecure
Securities Litigation received final approval by the Court. The settlement
agreement contemplates that the Company and certain of its officers and
directors will be released from any and all liability arising from the
allegations included in the WebSecure Securities Litigation in return for the
issuance to the WebSecure Securities Litigation class of 43,125 shares of the
Company's common stock, of which 14,375 shares have been issued as of December
25, 1999, and the payment to the class of up to $50,000 for notice and
administrative costs. In the second quarter ended September 25, 1999, the
Company revised its estimate of the expected cost to resolve this matter
resulting in income of $940,000. This revision of an estimate was based on the
final settlement amounts approved by the court.

9. COMPREHENSIVE INCOME

As of April 1, 1998, the Company adopted FASB Statement No. 130, REPORTING
COMPREHENSIVE INCOME (FASB 130). FASB 130 establishes new rules for the
reporting and display of comprehensive income and its components; however, the
adoption of this Statement had no impact on the Company's net income or
stockholders' equity. FASB 130 requires the Company's foreign currency

translation adjustments, which prior to adoption were reported separately in
shareholders' equity, to be included in other comprehensive income. Accumulated
other comprehensive loss is comprised of cumulative translation adjustments.
Comprehensive Income was $1,336,000 and $2,405,000 for the three and nine month
periods ended December 25, 1999, respectively, and was $573,000 and $1,873,000
for the three and nine month periods ended December 26, 1998, respectively.

10. SEGMENTS OF BUSINESS ENTERPRISE

Effective April 1, 1998, the Company adopted the FASB Statement No. 131,
DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION (FASB 131).
FASB 131 superseded FASB 14, FINANCIAL REPORTING FOR SEGMENTS OF A BUSINESS
ENTERPRISE. FASB 131 establishes standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports. FASB 131 also establishes
standards for related disclosures about products and services, geographic areas,
and major customers. The Company operates in a single industry segment, the
design and manufacture of high technology memory chip based products used in
industrial and commercial applications. As such, the adoption of FASB 131 did
not affect results of operations, financial position or the disclosure of
segment information.

11. SUBSEQUENT EVENT

On December 29, 1999, the Company acquired the flash memory card business
of Intel Corporation for a total purchase price of approximately $8.1 million.
The Company's acquisition includes the PCMCIA card families (Series 2, Value
series 100 and 200) and the miniature card families (Series 100 and 200) and
inventory valued at approximately $8.1 million. This acquisition will be
accounted for as a purchase combination in the fourth quarter of fiscal 2000. In
exchange, the Company made a cash payment of $2 million, issued a secured
promissory note for $4 million and issued 60,000 shares of preferred stock which
represents approximately 16 percent of the outstanding shares of Centennial, on
an as-converted basis. The note payable bears interest at the rate of 9% and the
note and interest are due and payable in one year. The Preferred Stock converts
at a ratio of 10 for 1 and has registration rights and a liquidation preference
of $4.8 million. The flash memory card business was concentrated with a few
customers. While there is a contingent payment of up to $4.5 million due in one
year based on units shipped related to the primary customer of the acquired
business, the Company has received notice by this primary customer of its intent
to discontinue purchasing from Centennial following the acquisition.
Accordingly, if this primary customer discontinues purchasing from Centennial,
no contingent payment will be due.

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

CAUTIONARY STATEMENT

Except for historical information contained herein, the discussions
contained in this document include forward-looking statements. By way of
example, the discussions include statements regarding price competition and
erosion, expansion into new markets, future sales mix, future supply of raw
materials, gross margins, raw materials inventory procurement practices, the
Company's customer base, future developments involving certain investments,
assessments regarding systems required to address Year 2000 issues, and future
availability of financing. Such statements involve a number of risks and
uncertainties, including, but not limited to, those (i) discussed below, (ii)
discussed under the heading "Factors That May Affect Future Results", and (iii)
identified from time to time in the Company's filings with the Securities and
Exchange Commission including those set forth in the Company's Annual Report on
Form 10-K for the fiscal year ended March 31, 1999 under the heading "Risk
Factors." These risks and uncertainties could cause actual results to differ
materially from those projected. Readers are cautioned not to place undue
reliance on these forward-looking statements. The Company assumes no obligation
to update these forward-looking statements to reflect events or circumstances
after the date hereof.

OVERVIEW

The Company designs, manufacturers and markets an extensive line of PC cards
used primarily by OEMs in industrial and commercial applications. The Company's
PC cards provide added functionality to devices containing microprocessors by
supplying increased storage capacity, communications capabilities and programmed
software for specialized applications.

The following discussion and analysis should be read in conjunction with the
Unaudited Consolidated Financial Statements and Notes thereto.

RESULTS OF OPERATIONS

The following table sets forth certain consolidated condensed statements of
income data of the Company expressed as a percentage of net sales:

THREE MONTHS ENDED NINE MONTHS ENDED
------------------------------- -------------------------------
DECEMBER 25, DECEMBER 26, DECEMBER 25, DECEMBER 26,
1999 1998 1999 1998
---- ---- ---- ----

Net sales......................................... 100.0% 100.0% 100.0% 100.0%
Cost of goods sold................................ 60.8 65.8 65.1 69.2
--------- --------- --------- ---------
Gross profit................................... 39.2 34.2 34.9 30.8

Operating expenses:
Research and development costs.................. 5.2 2.7 4.7 2.9
Selling, general and administrative expenses.... 19.0 23.9 23.3 23.6
--------- --------- --------- ---------
Operating income ............................ 15.0 7.6 6.9 4.3

Other income, net................................. -- (1.0) 2.8 4.0
Net interest income............................... 0.9 1.0 1.0 1.1
--------- --------- --------- ---------
Income before taxes.......................... 15.9 7.6 10.7 9.4

Income taxes...................................... 0.3 -- 0.2 --
--------- --------- --------- ---------
Net income................................... 15.6% 7.6% 10.5% 9.4%
========= ========= ========= =========

QUARTER AND NINE MONTHS ENDED DECEMBER 25, 1999 AND DECEMBER 26, 1998

NET SALES.

Net sales increased 13% to $8.6 million for the three months ended December
25, 1999 compared to $7.6 million for the same period a year ago. Net sales
increased 15% to $22.9 million for the nine months ended December 25, 1999
compared to $20.0 million in the same period a year ago. During the three and
nine months ended December 25, 1999, units shipped increased 4% and 11%,
respectively, from the same periods in fiscal 1999. Average selling prices
increased 7% in the third quarter of fiscal 2000 and increased 2% for the nine
month period ended December 25, 1999 compared to the same periods of the prior
year. Increasing component costs in the third quarter of fiscal 2000 partially
offset by a decline due to a product mix change, contributed to the increase in
the average selling price of the Company's products. The Company expects
component costs to continue to increase for the remainder of fiscal 2000, which
the Company believes should continue to cause an increase in its average selling
price. There can be no assurance that if component costs rise the Company will
be able to continue to increase its average selling price or that competitive
pricing pressures will not adversely affect the average selling price. The
Company believes there will be significant shortages of certain of its
components, particularly with respect to flash memory. Any such shortages could
have a material adverse effect on the Company's business, financial condition
and results of operations.

The Company continues to experience limited bookings visibility as customers
continue to expect short lead-times, particularly with the Company's major
customers. A majority of the Company's anticipated next quarter revenues are
expected to be orders that will be received and fulfilled in the same quarter.
Due to a number of factors described herein and in "Factors That May Affect
Future Results," the Company's ability to adjust its operating expenses is
limited in the short term. As a result, if product revenues are lower than
anticipated, the Company's results of operations will be adversely affected.

GROSS PROFIT.

Gross profit increased 31% to $3.4 million for the three months ended
December 25, 1999 compared to $2.6 million for the same period a year ago. Gross
margin increased to 39% for the three months ended December 25, 1999 from 34%
for the same period a year ago. Gross profit increased 31% to $8.0 million for
the nine months ended December 25, 1999 compared to $6.1 million for the same
period a year ago. The Company experienced a significant increase in its flash
memory costs in the quarter ended December 25, 1999. The Company increased its
average selling price during the quarter as a result of its increased component
costs. During the quarter the Company matched older inventory costs (FIFO
method) against the current higher selling price. This caused the gross margin
to be higher than might normally be expected by approximately 9%. The Company
does not believe the higher gross margin will be maintained. Gross margin
increased to 35% for the first nine months of fiscal 2000 from 31% for the
comparable period of fiscal 1999. The Company believes costs of certain of its
component memory devices will continue to increase during fiscal 2000. There can
be no assurance the Company will be able to continue to increase its average
selling price to offset such component cost increases which might adversely
affect the Company's gross profit amounts and percent.

RESEARCH AND DEVELOPMENT COSTS.

Research and development costs increased 118% to $448,000 for the three
months ended December 25, 1999 compared to $205,000 for the three months ended
December 26, 1998. For the nine months ended December 25, 1999, research and
development costs increased 86% to $1,069,000 from $574,000 in the same period
of fiscal 1999. The higher research and development costs for the three and nine
months ended December 25, 1999 are due generally to increased spending on
outside consultants combined with an increased percentage of employees focused
on development projects. The Company expects that it will continue to spend
significant amounts on research and development in the future.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.

Selling, general and administrative expenses decreased 11% to $1.6 million
for the third quarter of fiscal 2000 from $1.8 million in the same period of
fiscal 1999. Selling, general and administrative expenses increased 13% to $5.3
million for the first nine months of fiscal 2000 from $4.7 million in the same
period of fiscal 1999. The $0.6 million increase in expenses for the first nine
months of fiscal 2000 is mainly attributed to termination costs of an executive
in the second quarter of 2000. Net insurance costs are also higher for the nine
month period ending December 25, 1999 due to an offsetting refund in directors
and officers liability insurance premiums on policies that were rescinded in
February 1997, which refund was recorded in the first quarter of fiscal 1999.
Selling, general and administrative expenses are expected to be slightly higher
in absolute dollars for the remainder of fiscal 2000 as compared to the third
fiscal quarter of 2000.

OTHER INCOME.

On September 17, 1999, the Company's agreement to settle the WebSecure
Securities Litigation received final approval by the Court. The settlement
agreement stated that the Company and certain of its officers and directors will
be released from any and all liability arising from the allegations included in
the WebSecure Securities Litigation in return for the issuance to the WebSecure
Securities Litigation class of 43,125 shares of the Company's common stock and
the payment to the class of up to $50,000 for notice and administrative costs.
In the second quarter ended September 25, 1999, the Company revised its estimate
of the expected cost to

resolve this matter resulting in income of $940,000. This revision of an
estimate was based on the final settlement amounts approved by the court.

During the second quarter of fiscal 2000, the Company incurred a loss on the
disposal of certain equipment that had a net book value of approximately
$345,000, which equipment was replaced.

Net interest income was $80,000 for the quarter ended December 25, 1999
compared to $79,000 for the quarter ended December 26, 1998.

NET INCOME PER SHARE.

On July 20, 1999, the Company's shareholders approved a one-for-eight
reverse stock split of its common stock, which was effective as of the opening
of the stock markets on July 23, 1999. In this report, all per share amounts and
numbers of shares have been restated to reflect the reverse stock split.

As a result of the Intel transaction described more fully below, the
Company's weighted average outstanding shares increased by 600,000 as of
December 29, 1999.

SUBSEQUENT EVENT.

On December 29, 1999, the Company acquired the flash memory card business
of Intel Corporation for a total purchase price of approximately $8.1 million.
The Company's acquisition includes the PCMCIA card families (Series 2, Value
series 100 and 200) and the miniature card families (Series 100 and 200) and
inventory valued at approximately $8.1 million. This acquisition will be
accounted for as a purchase combination in the fourth quarter of fiscal 2000. In
exchange, the Company made a cash payment of $2 million, issued a secured
promissory note for $4 million and issued 60,000 shares of preferred stock which
represents approximately 16 percent of the outstanding shares of Centennial, on
an as-converted basis. The note payable bears interest at the rate of 9% and the
note and interest are due and payable in one year. The Preferred Stock converts
at a ratio of 10 for 1 and has registration rights and a liquidation preference
of $4.8 million. The flash memory card business was concentrated with a few
customers. While there is a contingent payment of up to $4.5 million due in one
year based on units shipped related to the acquired business, the Company has
received notice by Intel's primary customer of its intent to discontinue
purchasing from Centennial following the acquisition.

In the purchase price allocation process, the acquired inventory of
approximately $8.1 million is expected to be recorded at fair value.
Accordingly, the gross margins on the sale of the acquired inventory will be
negligible in the fourth quarter of fiscal 2000. The Company believes most of
this inventory will be sold in the fourth quarter of fiscal 2000 and the first
quarter of fiscal 2001. The Company also believes the gross margins on sales
other than the sales of the acquired inventory will be significantly lower than
those achieved by the Company's existing products. The Company is able to
achieve higher margins on its products primarily due to a significant amount of
custom product sales through its direct sales force combined with a small amount
of software and service revenue. Both of these products tend to have higher
margins than standard products, which is what substantially all of the acquired
business consists of. Additionally, the Company primarily sells through its
direct sales force while a portion of the acquired business is sold through
distributors. Margins achieved through distributors are typically lower than
through a direct sales force. The Company is planning to add several people in
sales and marketing related to the acquired business.

LIQUIDITY AND CAPITAL RESOURCES

Since inception, the Company has financed its operating activities primarily
from public and private offerings of equity securities, loans from financial
institutions and positive cash flows from operations. Management believes the
existing cash and cash equivalents, short-term investments and available
financing arrangements will be sufficient to meet the Company's currently
anticipated working capital and capital expenditure requirements for the
foreseeable future.

OPERATING ACTIVITIES

At December 25, 1999, and March 31, 1999 working capital was $9.4 and $7.4
million, respectively.

On November 24, 1998, the Company entered into a credit agreement with Fleet
National Bank for a revolving credit facility, equipment term loan facility and
foreign exchange facility of $3.5 million, $1.5 million and $2.0 million,
respectively. This arrangement contains certain limitations and covenants,
including a covenant regarding the maintenance of the Company's liquidity, as
defined. Allowable borrowings are based on accounts receivable and the cost of
equipment, and are secured by substantially all of the Company's assets. At
December 25, 1999 and March 31, 1999, the Company had no outstanding borrowings
under these credit facilities. This agreement expired in the third quarter of
fiscal 2000. The Company is negotiating a replacement contract under similar
terms, which it expects to be final in its fourth fiscal quarter.

INVESTING TRANSACTIONS

Net capital expenditures amounted to $307,000 in the nine months ended
December 25, 1999 compared to $468,000 in the nine months ended December 26,
1998.

On November 11, 1999 the Company invested $248,000 for 990 Ordinary shares,
or approximately a 7% interest in Elan Digital Systems Limited ("Elan"). In
addition, the Company loaned $124,000 to Elan and in connection Centennial
received a note receivable bearing interest at the annual rate of prime plus
1.5%. The principal is due and payable in three years, while the interest is
payable quarterly. Elan was formed in the UK during 1976 to offer application
engineering and design services for microcontroller based solutions.
Diversification has moved the company into the design and manufacture of
proprietary device programming equipment, the distribution of hardware and
software products including compilers and support utilities, subcontract SMD
product assembly, and into providing totally integrated services for PC Card
applications.

FINANCING TRANSACTIONS

In April, 1999 and again in November 1999, the Company entered into five
year capital leases for new manufacturing equipment. Monthly payments under
these leases are $6,318 and $16,217, respectively.

INVESTMENT IN CENTURY ELECTRONICS MANUFACTURING, INC.

Since October 1996, the Company has held an equity interest in Century
Electronics Manufacturing, Inc. ("Century"), a contract manufacturer.

During fiscal 1999, the Company reduced the carrying value of its investment
in Century by $733,000 to $1.7 million, reflecting management's assessment of
the deterioration in value of contract manufacturing businesses in general and a
permanent decline in the value of its investment. In August 1999, Century filed
a registration statement with the Securities and Exchange Commission in
preparation for a planned initial public offering of Century's common stock. The
preferred shares that Centennial owns are convertible into 666,667 shares of
Century common stock. Centennial's shares of Century stock are subject to
certain restrictions on sales and are not readily saleable for a period of 180
days following the consummation of Century's initial public offering. There can
be no assurance that the public offering of Century common stock will occur.

CONTINGENCIES

The Company has been a defendant in numerous lawsuits alleging violations
of securities and other laws in connection with the Company's prior reported
financial results and certain other related matters. These lawsuits are
described more fully in "Item 1 -- Legal Proceedings" which is incorporated
herein by this reference. The Company has been granted final approval of its
proposed

settlement of these suits, has issued cash and stock in satisfaction of its
obligations to the class action plaintiffs in the Consolidated Litigation. As of
March 31, 1997, the Company recorded a provision for the settlement of the
Consolidated Litigation of $20.0 million, representing its estimate of the cash
portion of the settlement, together with an amount equal to 37% of the estimated
market capitalization of the Company. The Company satisfied its obligations
regarding the cash portion ($1,475,000) of the Settlement Agreement by remitting
that amount into a settlement fund during fiscal 1998. The Company has issued
854,300 shares of common stock pursuant to the Settlement Agreement. The
Company's agreement with the opt outs calls for the Company to pay $500,000 to
settle these claims, and the Company has this amount reserved as of December 25,
1999. The Company's agreement to settle the Websecure litigation calls for the
Company to issue 43,125 shares of the Company's common stock and for a payment
of $50,000, which has already been made.

FACTORS THAT MAY AFFECT FUTURE RESULTS

From time to time, information provided by the Company or statements made by
its employees may contain forward-looking information. The Company's actual
results may differ materially from those projections or suggestions made in such
forward-looking information as a result of various potential risks and
uncertainties including, but not limited to, the factors discussed below.

DEPENDENCE ON MAJOR CUSTOMERS.

A relatively small number of customers have accounted for a significant
percentage of the Company's net sales. If these customers were to reduce
significantly the amount of business they conduct with the Company, it could
have a material adverse effect on the Company's business, financial condition
and results of operations.

The Company generally enters into individual purchase orders with its
customers and has no firm long-term volume commitments from any of its major
customers. The Company has experienced fluctuations in order levels from period
to period and expects it will continue to experience such cancellations and
fluctuations in the future. The Company's business, financial condition and
results of operations will depend in significant part on its ability to obtain
orders from new customers, as well as on financial condition and success of its
customers. Therefore, any adverse factors affecting any of the Company's
customers or their customers could have a material adverse effect on the
Company's business, financial condition and results of operations. The
industries served by the Company are characterized by frequent mergers,
consolidations, acquisitions, corporate restructuring and changes in management,
and the Company has from time to time experienced reductions in purchase orders
from customers as a result of such events. There can be no assurance that such
events involving customers of the Company will not result in a significant
reduction in the level of sales by the Company to such customers or the
termination of the Company's relationship with such customers. In addition, the
percentage of the Company's sales to individual customers may fluctuate from
period to period. Customer orders can be canceled and volume levels can be
changed or delayed. The timely replacement of canceled, delayed, or reduced
orders with new customers cannot be assured. These risks are exacerbated because
a majority of the Company's sales are to customers in the electronics industry,
which is subject to rapid technological change and product obsolescence. The
electronics industry is also subject to economic cycles and has experienced, and
is likely to experience, fluctuations in demand. The Company anticipates that a
significant portion of its sales will continue for the foreseeable future to be
concentrated in a small number of customers in the electronics industry.

RAW MATERIAL SHORTAGES AND DEPENDENCE ON SINGLE SOURCE SUPPLIERS.

The Company has from time to time experienced shortages in the supply of
computer memory chips and other electronic components used to manufacture PC
cards. The Company is currently experiencing supply shortages, particularly with
respect to computer memory chips and other electronic components used in
products targeted at high-growth market segments. Currently, certain

memory chips important to the Company's products are on industry-wide allocation
by suppliers. Such shortages could have a material adverse effect on the
Company's business, financial condition and results of operations. The Company
believes it will be able to mostly meet customers' orders for the Company's
fiscal fourth quarter. At this time the Company is unable to determine what the
impact will be thereafter.

The Company purchases certain key components from single source vendors for
which alternative sources are not currently available. The Company does not
maintain long-term supply agreements with any of its vendors. The inability to
develop alternative sources for these single source components or to obtain
sufficient quantities of components could result in delays or reductions in
product shipments, or higher prices for these components, or both, any of which
could materially and adversely affect the Company's business, financial
condition and results of operations. No assurance can be given that one or more
of the Company's vendors will not reduce supplies to the Company.

COMPETITION.

The market in which the Company competes is intensely competitive. The
Company competes with manufacturers of PC cards and related products, including
SanDisk Corporation, Viking Components and Smart Modular Technologies, Inc., as
well as with electronic component manufacturers who also manufacture PC cards,
including Advanced Micro Devices, Inc., Hitachi Semiconductor, Inc. and
Mitsubishi Electric Corporation. Certain of these competitors supply the Company
with raw materials, including electronic components, which are occasionally and
are at present, subject to industry wide allocation. These competitors may have
the ability to manufacture products at lower costs than the Company as a result
of their higher levels of integration. In addition, many of the Company's
competitors or potential competitors have greater name recognition, a larger
installed base of customers, more extensive engineering, manufacturing,
marketing, distribution and support capabilities and greater financial,
technological and personnel resources than the Company. The Company expects
competition to increase in the future from existing competitors and from other
companies that may enter the Company's existing or future markets with similar
or alternative products that may be less costly or provide additional features.
The Company believes that its ability to compete successfully depends on a
number of factors, including the following:

- - product quality and performance - order turnaround
- - provision of competitive design capabilities - timely response to advances in technology
- - adequate manufacturing capacity - production efficiency
- - timing of new product introductions by the - number and nature of the Company's competitors
Company, its customers and its competitors in a given market
- - price - general market and economic conditions
- - ability to obtain raw materials

In addition, market conditions are expected to lead to intensified price
competition for the Company's products and services, which could materially and
adversely affect the Company's business, financial condition and results of
operations. There can be no assurance that the Company will compete successfully
in the future.

HISTORICAL SINGLE PRODUCT CONCENTRATION.

PC cards and related services constitute 100% of the Company's sales for
fiscal 1999 and the first nine months of fiscal 2000. The market for PC cards is
still developing and there can be no assurance that computing and electronic
equipment that utilize PC cards will not be modified to render the Company's PC
cards obsolete or otherwise have the effect of reducing demand for the Company's
PC cards. In addition, the Company faces intense competition from competitors
that have greater financial, marketing and technological resources than the
Company, which competition may reduce demand for the Company's PC cards.
Decreased demand for the Company's PC cards as a result of technological change,
competition or other factors would have a material adverse effect on the
Company's business, financial condition and results of operations.

DECLINING AVERAGE SALES PRICES.

Although the Company is currently experiencing increases in average sales
prices, the Company has in the past experienced, and may in the future
experience, declining average sales prices for its products. The data storage
markets in which the Company competes

are characterized by intense competition. Therefore, the Company expects to
incur increasing pricing pressures from its customers in future periods, which
may result in declines in average sales prices for the Company's products. The
Company believes that it must continue to achieve manufacturing costs
reductions, develop new products that incorporate customized features and
increase its volume of PC card sales in order to offset the effect of these
declining average sales prices. If the Company were not able to achieve such
cost reductions, develop new customized products or increase its unit sales
volumes, each of these factors could have a material adverse effect on the
Company's business, financial condition and results of operations.

FLUCTUATIONS IN QUARTERLY RESULTS.

The Company's quarterly and annual operating results have fluctuated
significantly in the past and we expect that they will continue to fluctuate in
the future. This fluctuation is a result of a variety of factors, including the
following:

- - timing of receipt and delivery of - competitive pricing pressures
significant orders for the Company's products - increases in raw material costs
- - changes in customer and product mix - production difficulties
- - quality of the Company's products - write-downs or write-offs of investments in other companies
- - exchange rate fluctuations - market acceptance of new or enhanced versions
- - litigation settlements and revisions of the Company's products
estimates thereon in connection with - raw material shortages
the company's legal matters

Other factors, some of which are beyond the Company's control, may also
cause fluctuations in the Company's results of operations. The Company has short
lead times from customers, and accordingly does not have a significant backlog.
Additionally, as is the case with many high technology companies, a significant
portion of the Company's orders and shipments typically occurs in the last few
weeks of a quarter. As a result, revenues for a quarter are not predictable, and
the Company's revenues may shift from one quarter to the next, having a
significant effect on reported results.

FLUCTUATIONS IN TRADING PRICE.

The trading price of the Company's Common Stock may fluctuate widely in
response to, among other things, the following:

- - quarter-to-quarter operating results - industry conditions
- - awards of orders to the Company - new product or product development
or its competitors announcements by the Company or its competitors
- - changes in earnings estimates by analysts - resolution of pending SEC investigation

There can be no assurance that the Company's future performance will meet
the expectations of analysts or investors. In addition, the volatility of the
stock markets may cause wide fluctuations in trading prices of securities of
high technology companies. The Company's Common Stock is currently traded at the
over-the-counter Bulletin Board, which the Company believes has resulted in a
minimal amount of analyst coverage.

DEPENDENCE ON KEY PERSONNEL.

The Company's success depends to a significant degree upon the efforts and
abilities of members of its senior management and other key personnel, including
technical personnel. The loss of any of these individuals could have a material
adverse effect on the Company's business, financial condition and results of
operations. The Company's business also depends upon its ability to continue to
attract and retain senior managers and skilled technical employees. Failure to
attract and retain such senior personnel could materially and adversely affect
the Company's business, financial condition and results of operations.

NEED TO RESPOND TO RAPID TECHNOLOGICAL CHANGE.

The markets for the Company's products are characterized by rapid
technological change, evolving industry standards and rapid product
obsolescence. Rapid technological development substantially shortens product
life cycles, and the Company's growth and future success will depend upon its
ability, on a timely basis, to develop and introduce new products, to enhance
existing products and to adapt products for various industrial applications and
equipment platforms, as well as upon customer acceptance of these products,
enhancements and adaptations. The Company, having more limited resources than
many of its competitors, focuses its development efforts at any given time to a
relatively narrow scope of development projects. There can be no assurance that
the Company will select the correct projects for development or that the
Company's development efforts will be successful. In addition, no assurance can
be given that the Company will not experience difficulties that could delay or
prevent the successful development, introduction or marketing of new products,
that new products and product enhancements will meet the requirements of the
marketplace and achieve market acceptance, or that the Company's current or
future products will conform to applicable industry standards. Any inability of
the Company to introduce on a timely basis new products or enhancements that
contribute to profitable sales would have a material adverse effect on the
Company's business, financial condition and results of operations.

ANTI-TAKEOVER PROVISIONS.

The Company has taken a number of actions that could have the effect of
discouraging a takeover attempt. For example, the Company has adopted a
Shareholder Rights Plan that would cause substantial dilution to a stockholder
who attempts to acquire the Company on terms not approved by the Company's Board
of Directors. In addition, the Company's Certificate of Incorporation grants the
Board of Directors the authority to fix the rights, preferences and privileges
of and issue up to 1,000,000 shares of Preferred Stock without stockholder
action. The Board of Directors has reserved 50,000 shares of Preferred Stock for
issuance pursuant to the Company's Shareholder Rights Plan. Issuing shares of
Preferred Stock, could have the effect of making it more difficult and less
attractive for a third party to acquire a majority of our outstanding voting
stock. Preferred Stock may also have other rights, including economic rights
senior to the Common Stock that could have a material adverse effect on the
market value of the Common Stock. In addition, the Company is subject to the
anti-takeover provisions of Section 203 of the Delaware General Corporation Law.
This section provides that a corporation shall not engage in any business
combination with any interested shareholder during the three-year period
following the time that such stockholder becomes an interested shareholder. This
provision could have the effect of delaying or preventing a change in control of
the Company.

YEAR 2000 COMPLIANCE.

Over the past two to three years the Company made significant investments in
new manufacturing, financial and operating hardware and software. These
investments were made to support the growth of its operations; however, the
by-product of this effort is that the Company had year 2000 compliant hardware
and software running as we entered into the year 2000. In fiscal 1999 the
Company established a task force to evaluate all tertiary systems and equipment.
The Company upgraded or replaced systems which were not year 2000 compliant. The
Company estimates that it has spent in aggregate approximately $600,000 in
addressing Year 2000 readiness issues, of which $502,000 was capitalized.

The Company's computer systems and equipment successfully transitioned to
the year 2000. However, there may be latent problems that surface at key dates
or events in the future. The Company has not experienced, and does not
anticipate, any significant problems related to the transition to the year 2000.
Furthermore, the Company does not anticipate any significant expenditure in the
future related to year 2000 compliance.

RISKS OF INTERNATIONAL OPERATIONS AND EURO CURRENCY.

For the nine months ended December 25, 1999 and December 26, 1998, the
Company derived approximately 18% and 12%, respectively, of its sales from
outside the United States. The Company's international operations subject the
Company to the risks of doing business abroad, including currency fluctuations,
export duties, import controls and trade barriers, restrictions on the transfer
of funds, greater difficulty in accounts receivable collection, burdens of
complying with a wide variety of foreign laws and, in certain parts of the
world, political instability.

Beginning in 1999, 11 member countries of the European union established
fixed conversion rates between their existing sovereign currencies and adopted
the Euro as their common legal currency. During the three year transition, the
Euro will be available for non-cash transactions and legacy currencies will
remain legal tender. The Company is continuing to assess the Euro's impact on
its business. The Company is reviewing the ability of its accounting and
information systems to handle the conversion, the legal and contractual
implications of agreements, as well as pricing strategies. The Company expects
that any additional modifications to its operations and systems will be
completed on a timely basis and do not believe the conversion will have a
material adverse impact on its operations. However, there can be no assurance
that the Company will be able to modify successfully all systems and contracts
to comply with Euro requirements.

PROTECTION OF PROPRIETARY INFORMATION.

The Company's products require technical know-how to engineer and
manufacture. To the extent proprietary technology is involved, the Company
relies on trade secrets that it seeks to protect, in part, through
confidentiality agreements with certain employees, consultants and other
parties. There can be no assurance that these agreements will not be breached,
that the Company will have adequate remedies for any breach, or that the
Company's trade secrets will not otherwise become known to, or independently
developed by, existing or potential competitors of the Company. The Company
historically has not sought to protect its proprietary information through
patents or registered trademarks, although it instituted a patent program in
fiscal 1999. There can be no assurance that the Company's products will not
infringe on patents held by others. The Company may be involved from time to
time in litigation to determine the enforceability, scope and validity of its
rights. Litigation could result in substantial cost to the Company and could
divert the attention and time of the Company's management and technical
personnel from the operations of the Company.

The Company currently licenses certain proprietary and patented technology
from third parties. There can be no assurance that the Company will be able to
continue to license such technology, that such licenses will be or remain
exclusive or that any patented technology licensed by the Company will provide
meaningful protection from competitors. In the event that a competitor's
products were to infringe on patents licensed by the Company, it would be costly
for the Company to enforce its rights in an infringement action and such an
action would divert funds and management resources from the Company's
operations.

RISKS OF ACQUISITIONS AND INVESTMENTS IN OTHER COMPANIES.

ENVIRONMENTAL COMPLIANCE.

The Company is subject to a variety of environmental regulations relating
to the use, storage and disposal of hazardous chemicals used during its
manufacturing processes. Any failure by the Company to comply with present and
future regulations could subject the Company to significant liabilities. In
addition, such regulations could restrict the Company's ability to expand its
facilities or could require the Company to acquire costly equipment or to incur
other significant expenses in order to comply with regulations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's financial instruments consist principally of cash and cash
equivalents, short-term investments, accounts receivable, and accounts payable
and other accrued expenses. The Company believes all of the carrying amounts
approximate fair market value.

The Company invests cash balances in excess of operating requirements in
short-term securities, generally with maturities of longer than three months but
less than one year. As of December 25, 1999, the Company did not have any
borrowings outstanding under any credit agreement. The Company believes that the
effects, if any, of possible near-term changes in interest rates on the
Company's financial position, results of operations and cash flows should not be
material. The Company denominates substantially all sales in U.S. dollars and
has limited expenses denominated in foreign currencies. Consequently, the
Company has limited exposure to fluctuations in foreign currencies. The Company,
to date, has not attempted to hedge this limited foreign currency exposure. The
Company does not enter into financial instrument transactions for trading or
other speculative purposes.

PART II- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

CLASS ACTION LITIGATION

them. In return for the Company's agreement to reimburse Jay Alix and Mr.
Ramaekers in the third quarter of fiscal 2000 $1.0 million for legal fees
incurred, Jay Alix and Mr. Ramaekers have released any and all claims against
the Company and its affiliates and directors, including any claims to
indemnification and defense costs incurred by Jay Alix and Mr. Ramaekers in
defending the claims brought by the plaintiffs against them. The Plaintiffs in
the Consolidated Litigation have retained their claims against the Company's
former Chief Executive Officer, Emanuel Pinez, and the Company's former Chief
Financial Officer, James M. Murphy.

SECURITIES AND EXCHANGE COMMISSION INVESTIGATION

WEBSECURE LITIGATION

On September 17, 1999, the Company's agreement to settle the WebSecure
Securities Litigation received final approval by the Court. The settlement
agreement states that the Company and certain of its officers and directors will
be released from any and all liability arising from the allegations included in
the WebSecure Securities Litigation in return for the issuance to the WebSecure
Securities Litigation class of 43,125 shares of the Company's common stock, of
which 14,375 shares have been issued as of December 25,1999, and the payment to
the class of up to $50,000 for notice and administrative costs. In the second
quarter ended September 25, 1999, the Company revised its estimate of the
expected cost to resolve this matter resulting in income of $940,000. This
revision of an estimate was based on the final settlement amounts approved by
the court.

ITEM 2. CHANGES IN SECURITIES

In consideration of our acquisition of the flash memory card business of
Intel Corporation, which we completed effective December 29, 1999, the Company
issued 60,000 shares of Series B preferred stock to Intel Corporation. The
Series B preferred stock, which is convertable into common stock, represents
approximately 16% of the outstanding shares of Centennial on an as converted
basis. The Series B preferred stock converts at a ratio of 10 for 1 and has
registration rights and a liquidation preference of $4.8 million. The Company's
acquisition includes the PCMCIA card families (Series 2, Value series 100 and
200) and the miniature card families (Series 100 and 200) and inventory valued
at approximately $8.0 million. See Note 11 to the financial statements appearing
elsewhere in this report for additional information regarding this transaction.
In connection with this issuance, the Company relied on the exemption

from registration provided under Section 4(2) of the Securities Act of 1933. The
Company did not engage in any advertising or general solicitation in connection
with the offer and sale of the securities.

Sales of Unregistered Securities. In the quarter ended December 25, 1999,
the Company granted options to acquire a total of 580,500 shares of the
Company's common stock exercisable at $3.50 per share. The securities issued
were offered in reliance upon the exemption from registration under Rule 701 of
the Securities Act.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not Applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not Applicable.

ITEM 5. OTHER INFORMATION

Not Applicable.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits. The exhibits listed on the Exhibit Index filed as a part of
this Quarterly Report on Form 10-Q are incorporated herein by
reference.

(b) Reports on Form 8-K. During the quarter ended December 25, 1999 the
Company filed the following reports on Form 8-K.

1. On January 13, 2000, the Company filed a Current Report on Form
8-K with the Securities and Exchange Commission announcing the
purchase of Intel's Flash card business.

SIGNATURES

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

CENTENNIAL TECHNOLOGIES, INC.

Dated: February 8, 2000 By: /s/ L. MICHAEL HONE
-------------------------------------
L. Michael Hone
President and Chief Executive Officer

Dated: February 8, 2000 By: /s/ RICHARD J. PULSIFER
-------------------------------------
Richard J. Pulsifer
Chief Financial Officer

INDEX OF EXHIBITS

ITEM
NO. DESCRIPTION

3.1 Certificate of Amendment of Certificate of Incorporation of Centennial
Technologies, Inc. dated December 28, 1999

10.1 Key Employment Agreement between Centennial Technologies, Inc. and Mary
Gallahan dated December 16, 1999

10.2 Lease Agreement by and between Centennial Technologies, Inc. and Crocker
Capital

10.3 1999 Stock Option Plan

27 Financial Data Schedule