CENTENNIAL TECHNOLOGIES INC, 10-Q, 1999-02-08

CENTENNIAL TECHNOLOGIES INC
10-Q, 1999-02-08
COMPUTER PERIPHERAL EQUIPMENT, NEC

Previous: CENTENNIAL TECHNOLOGIES INC, 10-Q, 1999-02-08

Next: AMERICAN EAGLE OUTFITTERS INC, 424B3, 1999-02-08

<PAGE>

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

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

FORM 10-Q

(MARK ONE)

X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
- -------- EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
- -------- EXCHANGE ACT 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 (I.R.S. 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 Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]

As of January 15, 1999, there were 20,546,683 shares of Common Stock, $.01
par value per share (the "Common Stock"), of the Registrant outstanding.

<PAGE>

CENTENNIAL TECHNOLOGIES, INC.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NUMBER
<S> <C>

Item 1. Financial Statements 3

Consolidated Balance Sheets at December 31, 1996 and 3
June 30, 1996

Consolidated Statements of Operations for three and six 4
months ended December 31, 1996 and 1995

Consolidated Statements of Cash Flows for six months 5
ended December 31, 1996 and 1995

Notes to Consolidated Financial Statements 6

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

PART II. OTHER INFORMATION

Item 1. Legal Proceedings 17
Item 2. Changes in Securities 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 20
Item 6. Exhibits and Reports on Form 8-K 20
</TABLE>

<PAGE>
PART I

ITEM 1. FINANCIAL STATEMENTS

CENTENNIAL TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1996
-------- --------
(UNAUDITED) (RESTATED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ............................ $ 1,911 $ 6,182
Available-for-sale securities ........................ -- 4,932

Trade accounts receivable ............................ 7,340 11,635
Less allowances ................................. (533) (375)
-------- --------
6,807 11,260

Accounts receivable from affiliates .................. 4,706 --
Recoverable income taxes ............................. 7,356 3,142
Inventories .......................................... 11,322 8,248
Current portion of notes receivable .................. -- 1,809
Notes receivable from affiliate ...................... 249 --
Other current assets ................................. 1,345 1,444
-------- --------
Total current assets ...................................... 33,696 37,017

Equipment and leasehold improvements ...................... 3,858 2,609
Less accumulated depreciation and amortization ....... (967) (576)
-------- --------
2,891 2,033
Investments ............................................... 5,711 1,783
Notes receivable from affiliate ........................... 253 --
Other assets .............................................. 65 299
Investment in affiliate ................................... 15,575 --
-------- --------
Total assets .............................................. $ 58,191 $ 41,132
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving credit notes ............................... $ 12,681 $ 4,684
Obligations under capital leases ..................... 406 336
Accounts payable and accrued expenses ................ 8,174 3,836
-------- --------
Total current liabilities ................................. 21,261 8,856
Long-term obligations under capital leases ................ 320 367
Contingencies (Note 10)
Stockholders' equity:
Preferred Stock, $.01 par value; 1,000,000 shares
Authorized, none issued .............................. -- --
Common Stock, $.01 par value; 50,000,000 shares authorized,
17,731,378 issued and outstanding at December 31, 1996;
16,632,000 issued and outstanding at June 31, 1996 ...... 177 165
Additional paid-in capital ................................ 63,622 42,712
Accumulated deficit ....................................... (27,189) (10,968)
-------- --------
Total stockholders' equity ................................ 36,610 31,909
-------- --------
Total liabilities and stockholders' equity ................ $ 58,191 $ 41,132
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.

<PAGE>

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

THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
-------- -------- -------- --------
(RESTATED) (RESTATED)
<S> <C> <C> <C> <C>
Sales .................................. $ 7,216 $ 6,934 $ 17,370 $ 12,969
Costs and expenses:
Cost of goods sold ................ 6,776 7,187 15,582 13,104
Engineering costs ................. 439 457 783 691
Selling, general and administrative
expenses ....................... 3,794 879 5,194 1,177
Loss on investment activities ..... 9,356 -- 11,815 --
Net interest (income)/expense ..... 263 93 181 140
-------- -------- -------- --------
Total costs and expenses ..... 20,628 8,616 33,555 15,112
-------- -------- -------- --------
Loss before equity in earnings/(loss) of
affiliate ......................... (13,412) (1,682) (16,185) (2,143)
Equity in earnings/(loss) of affiliate . (82) -- (36) --
-------- -------- -------- --------
Net loss ..................... $(13,494) (1,682) $(16,221) (2,143)
-------- -------- -------- --------
-------- -------- -------- --------
Net loss per share ..................... $ (.77) $ (.12) $ (.94) $ (.16)
Weighted average shares outstanding .... 17,427 13,696 17,183 13,717

</TABLE>

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

<PAGE>

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

SIX MONTHS ENDED
------------------------------------
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- -----------------
(RESTATED)
<S> <C> <C>
Cash flows from operating activities:
Net loss ............................................... $(16,221) $ (2,143)
Adjustments to reconcile net loss to net cash from
(used in) operating activities:
Depreciation and amortization .......................... 746 210
Equity in earnings of affiliate ........................ (82) --
Provision for loss on accounts receivable .............. 158 305
Provision for loss on investments ...................... 13,947 --
Other non-cash items ................................... 34 --
Change in operating assets and liabilities:
Accounts receivable ............................... 4,295 (3,658)
Accounts receivable from affiliate ................ (4,706) --
Inventories ....................................... (3,074) (5,262)
Notes receivable .................................. 1,560 510
Recoverable income taxes .......................... (4,214) (387)
Other assets ...................................... 146 (655)
Accounts payable and accrued expenses ............. 4,338 --
-------- --------
Net cash from (used in) operating activities ...... (3,073) (11,080)
Cash flows from investing activities:
Capital expenditures ................................... (1,368) (1,007)
Purchase of available-for-sale securities .............. (27,250) --
Proceeds from sale of available-for-sale securities .... 32,183 --
Purchase of investments ................................ (8,154) (360)
Investment in affiliates ............................... (10,903) --
-------- --------
Net cash used in investing activities ............. (15,492) (1,367)
Cash flows from financing activities:
Net borrowings under line of credit .................... 7,997 6,125
Payments on equipment lease financing .................. 23 (106)
Borrowings from sales and leaseback of
Equipment ......................................... -- 702
Proceeds from exercise of stock options ................ 3,497 545
Proceeds from exercise of warrants ..................... 508 5,001
Net proceeds from public offerings of
Common Stock ...................................... 15 --
Proceeds from certain related party transactions ....... 2,254 1,047
-------- --------
Net cash provided by (used in) financing
activities .................................... 14,294 13,314
-------- --------
Net increase (decrease) in cash and cash equivalents ........ (4,271) 867
Cash and cash equivalents at beginning of period ............ 6,182 970
-------- --------
Cash and cash equivalents at end of period .................. $ 1,911 $ 1,837
-------- --------
-------- --------

</TABLE>

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

<PAGE>

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 ownership interests range from
20 to 50 percent and the Company exercises significant influence over operating
and financial policies are accounted for using the equity method. Due to the
significance of the Company's investment in the investee's capitalization and on
the basis of the complementary nature of the Company's products and related
development plans, the Company is accounting for its 12% investment in ViA, Inc.
using the equity method. See Note 11. 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 years'
consolidated financial statements to conform to fiscal 1998 presentation.

The Company's investment in Century Electronics Manufacturing, Inc.
("Century"), of which the Company had a 67% ownership position at December 31,
1996, has been accounted for using the equity method. The Company had a plan of
disposition of a portion of the investment in place prior to the end of fiscal
1997 on March 31, 1997, and the transaction closed on June 30, 1997.
Accordingly, the equity method was used in preparing the Company's financial
statements for the nine-month fiscal period ended March 31, 1997. In connection
with the restatements of the Company's financial statements, as more fully
described in Note 2, the use of the equity method for the investment in Century
has been retroactively applied. See Notes 6 and 11.

The Company is a defendant in certain litigation, as more fully described
in Note 10 hereof.

The accompanying 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/A for the fiscal period ended March 31, 1997, the
Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1998,
and the Company's Quarterly Report on Form 10-Q for the quarterly period ended
December 26, 1998.

CHANGE IN FISCAL YEAR

On March 24, 1997, the Company's Board of Directors voted to change the
fiscal year end from June 30 to March 31. All references to fiscal 1998 in the
accompanying financial statements relate to the year ended March 31, 1998.
References to fiscal 1997 relate to the nine months ended March 31, 1997.
References to fiscal 1996, 1995 and 1994 relate to the respective years ended
June 30.

2. RESTATEMENT OF FINANCIAL STATEMENTS

On February 11, 1997 the Company announced that it had commenced a special
investigation into certain apparent financial and management irregularities and
that its previously published financial statements and related financial
disclosures could no longer be relied upon. On June 12, 1997, the Company
announced the completion of the financial review associated with the special
investigation, including condensed restated financial information, as well as
the financial results for the periods ended March 31,

<PAGE>

1997. The Company had previously changed its fiscal year end to March 31, in
order to accelerate the receipt of certain tax refunds and in order to complete
audited financial statements for the entire periods under review as quickly as
possible. The accompanying financial statements for the three and six months
ended December 31, 1995 give effect to adjustments arising from the financial
review.

The following table sets forth the effects of these adjustments on the
Company's financial position at September 30, 1995 and results of operations for
the three and six months ended September 30, 1995 (in thousands except per share
data):

THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, 1995 DECEMBER 31, 1995
------------------ -----------------
<S> <C> <C>
Sales:
As previously reported $ 8,478 $ 14,860
As adjusted ........... 6,934 12,969
Cost of goods sold:
As previously reported 5,295 9,303
As adjusted ........... 7,187 13,104
Net income (loss):
As previously reported 996 1,655
As adjusted ........... (1,682) (2,143)
Net income (loss) per share:
As previously reported .07 .12
As adjusted ........... (.12) (.16)
</TABLE>

AS OF DECEMBER 31,
------------------
1995
----
<S> <C>
Total assets:
As previously reported $31,496
As adjusted .......... $20,721
Total stockholders' equity:
As previously reported $19,646
As adjusted .......... $ 8,717

</TABLE>

The following table sets forth the summary of restatement adjustments (in
thousands):

THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, 1995 DECEMBER 31, 1995
------------------ -----------------
<S> <C> <C>
Reversal of invalid sales transactions..................... $ (1,525) $(1,866)
Additional accounts receivable adjustments ................ (19) (25)
-------- -------
Total adjustments to sales ................................ (1,544) (1,891)
Corrections to inventory pricing and physical counts ...... (1,300) (2,794)
Additional provisions for inventory obsolescence .......... (338) (675)
Reversal of certain additions to capital equipment,
net of related depreciation, which were not bona fide ..... (254) (229)
Other adjustments, net .................................... 123 734
Reversal of provisions for income taxes ................... 635 1,057
-------- -------
Total adjustments to net income (loss)..................... $ (2,678) $(3,798)
-------- -------
-------- -------

</TABLE>

3. CONCENTRATION OF CREDIT RISK

Financial instruments, which potentially subject the Company to
concentration of credit risk, consist principally of trade receivables. If any
of the Company's major customers fail to pay the Company on a timely basis, it
could have a material adverse

<PAGE>

effect on the Company's business, financial condition and results of operations.

For the three and six months ended December 31, 1996, three customers
accounted for approximately 49% and 60% of the Company's sales, respectively. At
December 31, 1996, these customers accounted for approximately $4.5 million, or
66% of the Company's net accounts receivable balance.

For the three and six months ended December 31, 1995, one customer
accounted for approximately 22% and 18% of the Company's sales, respectively. At
December 31, 1995, this customer accounted for approximately $1.1 million, or
18% of the Company's net accounts receivable balance.

Approximately 12% and 16% of the Company's sales for the three months ended
December 31, 1996 and 1995, respectively, and approximately 8% and 16% of the
Company's sales for the six months ended December 31, 1996 and 1995,
respectively, were outside the United States, primarily in several Western
European countries, Israel and Canada. No one area comprised more than 10% of
the Company's sales.

4. EARNINGS PER SHARE

Primary earnings per share data are based on outstanding Common Stock and
Common Stock assumed to be outstanding to reflect the dilutive effects of stock
options and warrants using the treasury stock method. Since all periods
presented in these financial statements reflect losses, such common stock
equivalents have been excluded, as they are anti-dilutive.

5. INVENTORIES

Inventories consisted of (in thousands):

DECEMBER 31, JUNE 30,
1996 1996
------- -------
<S> <C> <C>
Raw material, primarily electronic components .. $ 4,868 $ 4,967
Work in process ................................ 1,678 882
Finished goods ................................. 4,756 2,399
------- -------
$11,322 $ 8,248
------- -------
------- -------

</TABLE>

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

The Company included in its December 31, 1996 inventory balances $1.8
million of costs related to inventory specifically purchased and manufactured
pursuant to a customer's purchase order. 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. See
Note 11.

6. INVESTMENT IN CENTURY ELECTRONICS MANUFACTURING, INC.

During fiscal 1997, the Company completed three separate business
acquisitions of contract manufacturing activities. On July 10, 1996, the Company
acquired a majority equity position in Design Circuits, Inc. ("DCI") for
approximately $3.2 million in cash, 250,000 shares of the Company's Common Stock
and assumption of certain liabilities.

In October 1996, the Company and the minority shareholders in DCI exchanged
their DCI shares for shares of capital stock in a newly formed entity, Century
Electronics Manufacturing, Inc. ("Century").

Pursuant to a joint venture agreement executed in May 1996, the Company
invested $1.3 million during fiscal 1997 as its initial capital contribution
into its 51% owned contract manufacturing joint venture in Thailand. The
Company's joint venture partner's initial capital contribution was $3.7 million.

<PAGE>

On November 5, 1996, Century purchased Triax Technology Group Limited
("Triax"), a provider of contract manufacturing services located in the United
Kingdom for approximately $4.2 million in cash and approximately 2.2 million
shares of common stock of Century. The Company also contributed 25,000 shares of
Centennial Common Stock as a finder's fee. At the conclusion of the Triax
transaction, Triax and DCI were wholly-owned subsidiaries of Century, and
Centennial owned approximately 67% of Century. See Notes 2 and 11.

7. OTHER INVESTMENTS

On December 13, 1996, the Company completed merger agreements with
Intelligent Truck Project, Inc., Fleet.Net, Inc. and Smart Traveler Plazas, Inc.
(collectively, "ITP/Fleet.Net") agreeing to exchange 792,960 shares of Common
Stock of the Company for all of the outstanding common stock of the acquired
businesses. Subsequent to the Company's February announcement of financial
irregularities, the principal shareholder of ITP/Fleet.Net filed suit, alleging,
among other things, breach of representations and warranties as to the financial
statements of Centennial. On March 4, 1997, the Company and the principal
shareholder of ITP/Fleet.Net entered into a memorandum of understanding pursuant
to which the companies would unwind the merger agreements. The parties were
unable to reach mutually satisfactory terms to complete the unwinding and on May
15, 1997 agreed to complete the merger and exchange mutual releases of certain
claims. Based on the material uncertainties surrounding the value of
consideration on the original merger date, which uncertainties were not resolved
until the execution of a settlement and mutual release agreement, the Company
has recorded the merger and corresponding issuance of Common Stock as of May 15,
1997. Advances to ITP/Fleet.Net made during fiscal 1996 and fiscal 1997, certain
of which were previously characterized as advance payments for technology
license arrangements, have been included in loss on investment activities in the
periods the advances were made. The merger has been recorded using purchase
accounting, and the excess (approximately $3.2 million) of the purchase price
over the fair value of assets acquired has been written off as of the agreement
date (May 15, 1997) because of the uncertainties related to the future
operations of ITP/Fleet.Net.

8. DEBT

The Company had a revolving line of credit agreement with a bank that
limited borrowings to a percentage of receivables and inventories and contains
certain covenants relating to the Company's net worth and indebtedness, among
others. This credit agreement was collateralized by substantially all the assets
of the Company. At December 31, 1996 and June 30, 1996, the Company had
outstanding borrowings under this revolving line of credit agreement of $12.7
million and $4.7 million, respectively. See Note 11.

9. RELATED PARTY TRANSACTIONS

During fiscal 1997, 1996, 1995 and 1994, the Company rendered invoices for
non-existent products to certain businesses which appear to have been under the
control or influence of Centennial's former Chief Executive Officer. These sale
transactions have been reversed in connection with the restatement of the
Company's financial statements. See Note 2. In certain instances, these invoices
were paid with funds that appear to have originated from the former Chief
Executive Officer. The proceeds to the Company related to these transactions,
which proceeds amounted to $1,592,000 and $2,254,000 for the three and six
months periods ended December 31, 1996 and $1,162,700 and $1,354,080 for the
three and six months periods ended December 31, 1995, respectively, have been
reflected in the accompanying financial statements as additional paid-in
capital.

10. 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 35
purported class action lawsuits have been filed in or transferred to the United
States District Court for the District of Massachusetts. These complaints assert
claims against the Company under Section 10(b) 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. The complaints also
assert claims against some or all of the Company's Board of Directors, and some
complaints assert claims against certain of the Company's nondirector officers,
under Section 20(a) of the 1934 Act, as well as the same state law claims
asserted against the Company. The Company's independent accountants, Coopers &
Lybrand L.L.P. ("Coopers & Lybrand"), the Company's lead underwriter for its
March 1996 subsequent public offering, Needham & Company, Inc., and a financial
advisory subscription company, Cabot Heritage Corporation, have also been named
in some of the suits. These class

<PAGE>

action lawsuits were purportedly brought by and on behalf of purchasers of the
Company's Common Stock between the Company's initial public offering on April
12, 1994 and February 10, 1997 (the "Centennial Securities Litigation").

On February 20, 1997, the Company received a subpoena from the United
States Department of Justice ("DOJ") to produce documents in connection with a
grand jury investigation regarding various irregularities in the Company's
previous press releases and financial statements. The DOJ also requested certain
information regarding some of the Company's former officers, certain stock
transactions by the Company's former Chief Executive Officer, and correspondence
with the Company's auditors. The DOJ has subsequently subpoenaed additional
Company records and files. The Company has not been notified by the DOJ that it
is a target or subject of this investigation.

On and after February 26, 1997, four complaints were filed in the United
States District Court for the District of Massachusetts by plaintiffs purporting
to represent classes of shareholders who purchased the Company's Common Stock on
February 25, 1997. The complaint also names the Company's former Interim Chief
Executive Officer, Lawrence J. Ramaekers, and alleges violations of Sections
10(b) and 20(a) of the 1934 Act (the "February 25 Securities Litigation").

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.

On and after March 26, 1997, several complaints were filed 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 WebSecure Complaints assert claims against WebSecure, certain
officers, directors and underwriters of WebSecure, and the Company. 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 addition, several shareholder derivative lawsuits have been filed by
purported holders of the Company's Common Stock seeking recovery for certain
alleged breach of fiduciary duties, alleged gross negligence, alleged breach of
contract and alleged insider trading by members of the Company's Board of
Directors between August 21, 1996 and February 10, 1997 (the "Derivative
Litigation").

On January 13, 1998, a plaintiff purporting to represent classes of
shareholders who purchased the Company's Common Stock on February 27, 1997 filed
a complaint in the United States District Court for the District of
Massachusetts. The complaint also names the Company's former Interim Chief
Executive Officer, Lawrence J. Ramaekers, and Mr. Ramaekers' employer, Jay Alix
& Co., and alleges violations of Sections 10(b) and 20(a) of the 1934 Act (the
"February 27 Securities Litigation").

On February 9, 1998, a consolidated amended complaint combining the
Centennial Securities Litigation, the February 25 Securities Litigation, the
February 27 Securities Litigation and the Derivative Litigation was filed in the
United States District Court for the District of Massachusetts (the
"Consolidated Litigation"). Also on February 9, 1998, 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 plaintiffs in the Consolidated Litigation have not yet reached an
agreement with the Company's former Interim Chief Executive Officer, Lawrence J.
Ramaekers, regarding their alleged claims against him. The plaintiffs have
agreed to release the Company from any direct liability related to those alleged
claims. In the agreement under which Mr. Ramaekers provided services to the
Company, the Company agreed to provide Mr. Ramaekers with the same
indemnification as is applicable to other officers of the Company pursuant to
the Company's By-Laws. The Company has agreed to indemnify, hold harmless, and
defend Mr. Ramaekers from and against certain claims arising out of his
engagement with the Company.

<PAGE>

The Court granted final approval of the Settlement Agreement of the
Consolidated Litigation on April 29, 1998, which became effective on July 20,
1998.

As of March 31, 1997, the Company recorded a provision for the settlement
of the Consolidated Litigation of $20.0 million, representing the cash portion
of the Settlement Agreement, 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
distributed 2,050,321 shares of the common stock component of the Settlement
Agreement during the second quarter of fiscal 1999, and expects to satisfy its
remaining obligations to distribute 4,784,083 shares of Common Stock by the end
of fiscal 1999.

A significant number of class members opted not to participate in the
Settlement Agreement. No assurance can be given that claims by class members who
declined to participate in the Settlement Agreement will not have a material
adverse effect on the Company's business, financial condition and results of
operations.

On November 13, 1998, the Company reached an agreement to settle the
WebSecure Securities Litigation. The settlement agreement contemplates that the
Company and certain of its officers and directors would 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 345,000 shares of the Company's Common Stock and the payment to the
class of up to $50,000 for notice and administrative costs. The settlement
agreement must be submitted to the Court for review and approval and,
thereafter, presented to class members for consideration. If a sufficiently
large number of class members opt not to participate in the settlement
agreement, the agreement may by withdrawn. No assurance can be given that the
Court will approve the settlement agreement, or that, if such approval is
obtained, that a material number of class members will not decline to
participate in the settlement.

11. SUBSEQUENT EVENTS

Significant events have transpired since the time periods covered in this
Quarterly Report on Form 10-Q, which are described in filings for subsequent
periods in Annual Reports on Form 10-K and Form 10-K/A and Quarterly Reports on
Form 10-Q and Form 10-Q/A, including but not limited to the events listed below.

NEW FINANCING AGREEMENTS. Since December 31, 1996, the Company has
refinanced its credit facilities on two occasions, as described in the Company's
Quarterly Report on Form 10-Q/A for the quarterly period ended September 27,
1997, filed with the Commission on May 8, 1998, and the Company's Quarterly
Report on Form 10-Q for the period ended December 26, 1998, filed with the
Commission on February 8, 1999.

WRITE-OFF OF INVESTMENTS IN DEVELOPMENT STAGE COMPANIES. After December 31,
1996, management decided to focus its financial resources on its core business,
and to suspend new investment activities in development stage companies. The
Company fully reserved the carrying value of its investments in these
development stage companies during fiscal 1997 and 1998, as described in the
Company's Quarterly Report on Form 10-Q/A for the quarterly period ended
September 27, 1997, filed with the Commission on May 8, 1998.

SALE OF INTEREST IN CENTURY ELECTRONICS MANUFACTURING, INC. After December
31, 1996, the Company and Century entered into several transactions pursuant to
which, among other things, Century agreed to redeem the Company's investment in
Century and the Company agreed to contribute to Century its interest in the
Thailand joint venture, as described in the Company's Quarterly Report on Form
10-Q for the quarterly period ended December 26, 1998, filed with the Commission
on February 8, 1999.

CUSTOM INVENTORY. After December 31, 1996, the Company filed suit against a
customer regarding inventory specifically purchased and manufactured pursuant to
a purchase order from the customer (the "Custom Inventory"). The Company fully
reserved the cost of the Custom Inventory of approximately $1.8 million during
fiscal 1998, as described in the Company's Quarterly Report on Form 10-Q/A for
the quarterly period ended September 27, 1997, filed with the Commission on May
8, 1998. During fiscal 1999, the Company was successful in selling for
approximately $1.0 million a portion of the Custom Inventory, as described in
the Company's Quarterly Report on Form 10-Q for the quarterly period ended
December 26, 1998, filed with the Commission on February 8, 1999.

<PAGE>

CENTENNIAL TECHNOLOGIES, INC.

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

CAUTIONARY STATEMENT

Except for historical information contained herein, the discussions
contained in this document include forward-looking statements. For this purpose,
any statements contained herein that are not statements of historical fact may
be deemed to be forward-looking statements. Without limiting the foregoing, the
words "believes," "anticipates," "plans," "expects," and similar expressions are
intended to identify forward-looking statements. Such statements involve a
number of risks and uncertainties, including, but not limited to, those (i)
discussed below, (ii) discussed under the heading "Risk Factors", 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/A for the fiscal period ended March 31, 1997, the Company's Annual
Report on Form 10-K for the fiscal year ended March 31, 1998, and the Company's
Quarterly Report on Form 10-Q for the quarterly period ended December 26, 1998
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

THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995

Sales. Sales increased 4% to approximately $7.2 million in the 1996 period
compared to $6.9 million in the 1995 period, due to increased demand in the PC
card marketplace.

Sales to a major customer represented 36% of sales in the 1996 period,
compared to no sales to that customer in the 1995 period. Another significant
customer represented 11% of total sales in the 1996 period and 3% of total sales
in the 1995 period. If any of the Company's major 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. No other customer or group of related customers
accounted for more than 10% of the Company's sales.

Sales outside of the United States represented 12% of sales in the 1996
period compared to 16% of sales in the 1995 period.

Costs of Goods Sold. Cost of goods sold decreased 6% to $6.8 million for
the 1996 period compared to $7.2 million for the 1995 period. Gross margins were
6% for the 1996 period compared to (4)% for the 1995 period.

Engineering Costs. Engineering costs were $439,000 in the 1996 period
versus $457,000 in the 1995 period.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased to $3.7 million in the 1996 period compared to
$879,000 in the comparable 1995 period due primarily to increases in legal,
accounting, and professional consulting expenses and increases in bad debt and
notes receivable reserves.

Net Interest Expense. Net interest expense was $263,000 in the 1996 period
compared to $93,000 in the 1995 period. The increase

<PAGE>

in interest expense was primarily due to increased borrowings.

Loss on Investment Activities. Loss on investment activities consists of
write-downs, valuation adjustments and accruals for losses associated with
certain investments. The following table describes the elements and the amounts
reflected in this category for the three months ended December 31, 1996 (in
thousands):

THREE MONTHS ENDED
DECEMBER 31, 1996
-----------------
<S> <C>
Costs incurred in connection with ITP/Fleet.Net (See Note 7) .... $1,497
Loss on investment in Infos International ....................... 5,343
Loss on investment in Industrial Imaging Corporation ............ 2,053
Losses on other investments ..................................... 463
------
TOTAL ........................................................... $9,356
------
------

</TABLE>

SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995

Sales. Sales increased 34% to approximately $17.4 million in the 1996
period compared to $13.0 million in the 1995 period, due to increased demand in
the PC card marketplace.

Sales to a major customer represented 18% of sales in the 1996 period,
compared to no sales to that customer in the 1995 period. Another significant
customer represented 37% of total sales in the 1996 period, compared to no sales
to that customer in the 1995 period. A third customer represented 14% of total
sales in the 1996 period, compared to no sales to that customer in the 1995
period. If any of the Company's major 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. No other customer or group of related customers accounted for more
than 10% of the Company's sales.

Sales outside of the United States represented 8% of sales in the 1996
period compared to 16% of sales in the 1995 period.

Costs of Goods Sold. Cost of goods sold increased 19% to $15.6 million for
the 1996 period compared to $13.1 million for the 1995 period. Gross margins
were 10% for the 1996 period compared to 0% for the 1995 period.

Engineering Costs. Engineering costs were $783,000 in the 1996 period
versus $691,000 in the 1995 period.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased to $5.2 million in the 1996 period compared to
$1.2 million in the comparable 1995 period due primarily to increases in legal,
accounting, and professional consulting expenses and increases in bad debt and
notes receivable reserves.

Net Interest Expense. Net interest expense was $181,000 in the 1996 period
compared to $140,000 in the 1995 period. The increase in interest expense was
primarily due to increased borrowings.

SIX MONTHS ENDED
DECEMBER 31, 1996
-----------------
<S> <C>
Costs incurred in connection with ITP/Fleet.Net (See Note 7) .... $ 2,356
Loss on investment in Infos International ....................... 6,843
Loss on investment in Industrial Imaging Corporation ............ 2,053
Losses on other investments ..................................... 563
-------
TOTAL ........................................................... $11,815
-------
-------
</TABLE>

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Since its inception, the Company has financed its operating activities
primarily from public and private offerings of equity securities and loans from
financial institutions and others.

OPERATING ACTIVITIES

At December 31, 1996, working capital decreased to approximately $12.4
million, compared to $28.2 million at June 30, 1996, due principally to
operating losses. In the 1996 period the Company experienced cash flow used in
operations of approximately $3.1 million, compared to cash flow used in
operations of $11.1 million for the comparable period in 1995. Days of sales
outstanding in accounts receivable amounted to 85 days at December 31, 1996
compared to 87 days at June 30, 1996. The Company's inventories represent
approximately 22 weeks of manufacturing output at December 31, 1996, compared to
12 weeks at June 30, 1996. Management has implemented new procurement practices
reflecting increased emphasis on reducing inventory levels.

As a result of the adjustments made to the Company's financial statements
in connection with its financial review, previous provisions for income taxes
have been reversed and the associated payments of approximately $7.4 million and
$3.1 million are classified as recoverable income taxes at December 31, 1996 and
June 30, 1996, respectively.

INVESTING TRANSACTIONS

Net capital expenditures amounted to $1.4 million in the 1996 period and
$1.0 million in the 1995 period. As of December 31, 1996, the Company had
remaining obligations of $726,000 on equipment financing leases, which later
became in default due to cross-default provisions between a master lease
agreement and a revolving credit agreement to which the Company is a party, both
of which are with the same bank lender. The Company repaid these leases using
proceeds from its term loan facility with Congress Financial.

The Company had no commitments for future capital equipment expenditures as
of December 31, 1996. Included in accounts payable and accrued expenses are
invoices for capital equipment amounting to $453,000. The Company financed these
expenditures, in part, through a new term loan and a new capital acquisition
facility.

FINANCING TRANSACTIONS

In November 1996, the Company renewed and amended its revolving line of
credit with a bank, pursuant to which the Company could borrow up to specified
limits based on the Company's eligible receivables and inventory, including
eligible receivables and inventory of Design Circuits, Inc. ("DCI"). See
" -- Investment in Century Electronics Manufacturing, Inc." Borrowings on the
DCI borrowing base were made by the Company and subject to a DCI guarantee. All
borrowings were collateralized by substantially all of the assets of the
Company. The agreement required the Company to comply with certain covenants
relating to the Company's net worth and indebtedness, among other things. On
February 14, 1997, the Company received a notice of default, and on March 18,
1997, entered into a forbearance agreement whereby the bank agreed to continue
to extend credit under certain conditions. The forbearance agreement was
subsequently extended to August 15, 1997.

On August 14, 1997, the Company entered into a credit agreement, effective
through August 13, 2000 unless terminated sooner, with Congress Financial Corp.
("Congress Financial"), a commercial credit institution, for a revolving credit
facility and term loan facility of up to $4.1 million and $0.9 million,
respectively, and a $2.0 million capital equipment acquisition facility, based
on certain limitations and covenants. Allowable borrowings were based on
accounts receivable and the cost of equipment, were secured by substantially all
of the Company's assets, and were based on certain limitations and covenants. On
August 15, 1997, the Company paid in full its line of credit and lease financing
obligations with the bank that was previously providing the Company with its
credit facilities.

On November 24, 1998, the Company terminated its credit agreement with
Congress Financial and entered into a new credit agreement with Fleet National
Bank ("Fleet") 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. Allowable borrowings are based on accounts receivable and the cost
of equipment, are secured by substantially all of the Company's assets, and are
based on certain limitations and covenants.

14
<PAGE>

INVESTMENT IN CENTURY ELECTRONICS MANUFACTURING, INC.

In October 1996, the Company and the minority shareholders in DCI exchanged
their DCI shares for shares of capital stock in a newly formed entity, Century
Electronics Manufacturing, Inc. ("Century").

On November 5, 1996, Century purchased Triax Technology Group Limited
("Triax"), a provider of contract manufacturing services located in the United
Kingdom for approximately $4.2 million in cash, and approximately 2.2 million
shares of common stock of Century. The Company also contributed 25,000 shares of
Centennial Common Stock as a finder's fee. At the conclusion of the Triax
transaction, Triax and DCI were wholly-owned subsidiaries of Century, and
Centennial owned approximately 67% of Century.

On March 14, 1997, Century entered into an agreement in principal with the
Company, whereby Century agreed to redeem a portion of its shares in exchange
for $1.3 million in cash and a $6.0 million subordinated debenture, reducing the
Company's equity ownership position to 45%. The debentures bear interest at a
rate of 6% and mature in ten years. Under certain conditions, the debentures
will be convertible into the capital stock of an entity with which Century may
merge. In addition, the Company agreed to contribute to Century its interest in
the Thailand joint venture. Century also agreed to repay an 8.5% note payable to
Centennial in the amount of $4.1 million and to take the necessary steps to
remove all outstanding guarantees of third-party indebtedness.

On June 30, 1997, the aforementioned transaction was completed. In order to
remove certain guarantees of equipment subleased to DCI, Centennial executed
lease buyouts amounting to $2.4 million and sold the underlying equipment to
Century for cash and a $1.9 million 9% promissory note due December 1998.

On February 4, 1998, the Company entered into a transaction with Century
whereby Century redeemed the Company's remaining holdings of Century common
stock, repurchased its $1.9 million 9% promissory note due December 1998, and
satisfied its $6 million 6% Convertible Subordinated Debenture due June 2007, in
exchange for $9.7 million in cash and $4.0 million of Century Series B
Convertible Preferred Stock. The Company recorded a loss on investment
activities of $4.2 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 the second quarter of 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.
During the third quarter of fiscal 1999, Century agreed to redeem the Company's
remaining interest in Century for $1.7 million. The Company expects to complete
this transaction in February 1999.

CONTINGENCIES

The Company is 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. See "Part II, Item 1 --
Legal Proceedings." The Company has been granted final approval of its proposed
settlement of the Consolidated Litigation, has entered an agreement to settle
the WebSecure Securities Litigation, and believes that such lawsuits will be
settled substantially in accordance with the description contained in "Part II,
Item 1 -- Legal Proceedings." The Company believes that such settlements will
not have a material adverse impact on its liquidity. As of March 31, 1997, the
Company recorded a provision for the settlement of the Consolidated Securities
Litigation of $20.0 million, representing 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 distributed 2,050,321 shares of
the common stock component of the Settlement Agreement during the second quarter
of fiscal 1999, and expects to satisfy its

<PAGE>

remaining obligation to distribute 4,784,083 shares of Common Stock by the end
of fiscal 1999.

There can be no assurance that claims by shareholders who opted not to
participate in the class action settlement will not be material, or that the
claims against Lawrence J. Ramaekers, the Company's former interim Chief
Executive Officer, in connection with the February 25 Securities Litigation and
the February 27 Securities Litigation, as to which the Company may have
indemnification obligations will be settled, and such inability to settle
pending litigation could have a material adverse affect on the Company's
liquidity, business, financial condition and results of operations.

RISK FACTORS

From time to time, information provided by the Company or statements made
by its employees may contain forward-looking information. The Company's actual
future 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 in the
Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1998
filed with the Commission on June 29, 1998 under the heading "Risk Factors," and
in particular the factors described below.

Losses in Prior Periods; Liquidity and Financing Risks. The Company has
experienced significant losses from operations from fiscal 1994 through fiscal
1998. The Company has taken measures since the firing of its former Chief
Executive Officer in February 1997 to reduce those losses, including appointing
a turnaround specialist, reducing various expenses and implementing new cost
controls. If cost savings are not achieved or revenues are not increased, the
operating plan for the Company could include further cost reductions. If cost
savings are not achieved, or revenues are not increased, it would significantly
impair the ability of the Company to continue as a going concern. The Company
believes that its cash balances, bank financing, and anticipated future cash
flows will be sufficient to fund operations for the foreseeable future.

Dependence on Major Customers; Concentration of Credit Risk. Bay Networks,
Inc. and a subsidiary of Philips Electronics, N.V. accounted for approximately
37% and 14%, respectively, of the Company's sales for the six month period ended
December 31, 1996, compared to no sales to these customers for the six months
ended December 31, 1995. The loss of, or a significant curtailment of purchases
by these customers, or any other significant customer of the Company, could have
a material adverse effect on the Company's business, financial condition and
results of operations. Substantially all of the Company's sales to Philips were
in connection with Philips' sales of screen phones to a single customer. The
Company fulfilled all purchase orders with Philips, and the Company received no
additional orders from Philips pursuant to the screen phone program. 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 in the past
experienced, and is likely in the future 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.

Fluctuations in Quarterly Results. The Company's results of operations may
be subject to quarterly fluctuations due to a number of factors, including the
timing of receipt and delivery of significant orders for the Company's products,
competitive pricing pressures, increases in raw material costs, costs associated
with the expansion of operations, changes in customer and product mix,
production difficulties, quality of the Company's products, write-downs or
writeoffs of investments in other companies, exchange rate fluctuations and
market acceptance of new or enhanced versions of the Company's products, as well
as other factors, some of which are beyond the Company's control. 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.

The trading price of the Company's Common Stock may fluctuate widely in
response to, among other things, quarter-to-quarter operating results, industry
conditions, awards of orders to the Company or its competitors, new product or
product development announcements by the Company or its competitors and changes
in earnings estimates by analysts. There can be no assurance that the

<PAGE>

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.

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.

PART II- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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 35 purported
class action lawsuits have been filed in or transferred to the United States
District Court for the District of Massachusetts. These complaints assert claims
against the Company under Section 10(b) 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. The complaints also
assert claims against some or all of the Company's Board of Directors, and some
complaints assert claims against certain of the Company's nondirector officers,
under Section 20(a) of the 1934 Act, as well as the same state law claims
asserted against the Company. The Company's independent accountants, Coopers &
Lybrand L.L.P. ("Coopers & Lybrand"), the Company's lead underwriter for its
March 1996 subsequent public offering, Needham & Company, Inc., and a financial
advisory subscription company, Cabot Heritage Corporation, have also been named
in some of the suits. These class action lawsuits were purportedly brought by
and on behalf of purchasers of the Company's Common Stock between the Company's
initial public offering on April 12, 1994 and February 10, 1997 (the "Centennial
Securities Litigation").

On February 20, 1997, the Company received a subpoena from the United
States Department of Justice ("DOJ") to produce documents in connection with a
grand jury investigation regarding various irregularities in the Company's
previous press releases and financial statements. The DOJ also requested certain
information regarding some of the Company's former officers, certain stock
transactions by Mr. Pinez, and correspondence with the Company's auditors. The
DOJ has subsequently subpoenaed additional Company records and files. The
Company has not been notified by the DOJ that it is a target or subject of this
investigation.

<PAGE>

On January 13, 1998, a plaintiff purporting to represent classes of
shareholders who purchased the Company's Common Stock on February 27, 1997 filed
a complaint in the United States District Court for the District of
Massachusetts. The Complaint also names the Company's former Interim Chief
Executive Officer, Lawrence J. Ramaekers, and Mr. Ramaekers' employer, Jay Alix
& Co., and alleges violations of Sections 10(b) and 20(a) of the 1934 Act (the
"February 27 Securities Litigation").

The Court granted final approval of the Settlement Agreement of the
Consolidated Litigation on April 29, 1998, which became effective on July 20,
1998.

As of March 31, 1997, the Company recorded a provision for the settlement
of the Consolidated Litigation of $20.0 million, representing the cash portion
of the Settlement Agreement, 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
distributed 2,050,321 shares of the common stock component of the Settlement
Agreement during the second quarter of fiscal 1999, and expects to satisfy its
remaining obligation to distribute 4,784,083 shares of common stock by the end
of fiscal 1999.

ITEM 2. CHANGES IN SECURITIES NOT APPLICABLE.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES NOT APPLICABLE.

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

On November 6, 1996, the Company held its Annual Meeting of Stockholders
(the "Annual Meeting") to vote on several proposals. Of the 8,521,270 shares of
the Company's Common Stock entitled to be voted at the Annual Meeting, a total
of 7,033,147

<PAGE>

were represented by person or by proxy, or approximately 83% of the Company's
issued and outstanding shares of Common Stock entitled to vote on these matters.

The following proposals were adopted, with the exception of proposal number
3 which did not receive a vote of at least two-thirds of the issued and
outstanding shares required to pass that resolution, with the vote totals as
follows:

Proposal 1: To elect seven (7) Directors of the Company for the ensuing year,
the nominees being:

Emanuel Pinez
John J. McDonald
James M. Murphy
John J. Shields
J.P. Luc Beaubien
William M. Kinch
William J. Shea

VOTES FOR VOTES WITHHELD
--------- --------------
<S> <C> <C>
Emanuel Pinez 6,985,948 47,199
John J. McDonald 6,981,248 51,899
James M. Murphy 6,985,948 47,199
John J. Shields 6,984,902 48,245
J.P. Luc Beaubien 6,985,948 47,199
William M. Kinch 6,985,706 47,441
William J. Shea 6,985,798 47,349

</TABLE>

Proposal 2: To approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Common Stock from
15,000,000 shares to 50,000,000 shares.

Votes For Votes Against Abstentions
--------- ------------- -----------
<S> <C> <C>
6,595,830 423,259 14,058
</TABLE>

Proposal 3: To approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Preferred Stock
from 1,000,000 shares to 2,000,000 shares.

Votes For Votes Against Abstentions
--------- ------------- -----------
<S> <C> <C>
4,017,766 278,184 16,961

</TABLE>

Proposal 4: To approve an amendment to the Company's 1994 Stock Option Plan to
increase the number of shares of Common Stock reserved for issuance under the
plan from 750,000 shares to 1,500,000 shares.

Votes For Votes Against Abstentions
--------- ------------- -----------
<S> <C> <C>
3,905,755 432,441 20,028
</TABLE>

Proposal 5: To approve an amendment to the Company's 1994 Formula Stock Option
Plan to increase the exercise price of options granted under the plan to a
non-employee Director upon his/her first election as a Director from 85% of the
fair market value of the shares of Common Stock on the date of grant to 100% of
the fair market value of the shares of Common Stock on the date of grant.

<PAGE>

Votes For Votes Against Abstentions
--------- ------------- -----------
<S> <C> <C>
6,087,651 49,852 20,974

</TABLE>

Proposal 6: To ratify the appointment of Coopers & Lybrand L.L.P. as the
independent accountants for the Company for the fiscal year ending June 30,
1997.

<TABLE>
<CAPTION>
Votes For Votes Against Abstentions
--------- ------------- -----------
<S> <C> <C>
7,016,776 5,098 11,273

</TABLE>

ITEM 5. OTHER INFORMATION NOT APPLICABLE.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

<TABLE>
<S> <C>
3.1 - Certificate of Incorporation (1)

3.2 - Shareholder Voting Agreement between Centennial
Technologies, Inc. and the Shareholders who are a party
thereto, dated November 27, 1996 (2)

10.1 - Investment and Stockholders Agreement by and between
Centennial Technologies, Inc. and ViA, Inc., dated
November 27, 1996 (2)

27 - Financial Data Schedule Filed
Herewith
</TABLE>

(1) Incorporated by reference to the similarly described exhibit to the
Company's Quarterly Report on Form 10-Q for the quarterly period ended
September 26, 1998, filed with the Commission on November 6, 1998.

(2) Incorporated by reference to the similarly described exhibit to the
Company's Annual Report on Form 10-K/A for the fiscal period ended March
31, 1997, filed with the Commission on April 28, 1998.

(b) Reports on Form 8-K. The Company filed the following reports on Form
8-K during the fiscal quarter ended December 31, 1996:

1. Report on Form 8-K dated October 17, 1996, filed with the Commission on
October 17, 1996, regarding the purchase of shares of Infos International,
Inc.;

2. Report on Form 8-K dated November 20, 1996, filed with the Commission on
November 20, 1996, regarding the acquisition by a majority-owned subsidiary
of the Company of all of the outstanding capital stock of TRIAX Technology
Group, Ltd.; and

3. Report on Form 8-K dated November 26, 1996, filed with the Commission on
November 26, 1996, amending the Report on Form 8-K filed on October 17,
1996.

<PAGE>

SIGNATURES

IN ACCORDANCE WITH SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED, THE REGISTRANT CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF
BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.

CENTENNIAL TECHNOLOGIES, INC.

Dated: February 8, 1999 BY: /S/ L. MICHAEL HONE
------------------------- -------------------------------
L. Michael Hone
President and Chief Executive Officer

Dated: February 8, 1999 BY: /S/ DONALD R. PECK
------------------------- -------------------------------
Donald R. Peck
Secretary, Treasurer and General Counsel

<PAGE>
<ARTICLE> 5
<CIK> 0000919006
<NAME> CENTENNIAL TECHNOLOGIES, INC
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 1,911
<SECURITIES> 0
<RECEIVABLES> 7,340
<ALLOWANCES> 533
<INVENTORY> 11,322
<CURRENT-ASSETS> 33,696
<PP&E> 3,858
<DEPRECIATION> 967
<TOTAL-ASSETS> 58,191
<CURRENT-LIABILITIES> 21,261
<BONDS> 12,681
0
0
<COMMON> 177
<OTHER-SE> 36,433
<TOTAL-LIABILITY-AND-EQUITY> 58,191
<SALES> 17,370
<TOTAL-REVENUES> 17,370
<CGS> 15,582
<TOTAL-COSTS> 15,582
<OTHER-EXPENSES> 5,977
<LOSS-PROVISION> 158
<INTEREST-EXPENSE> 181
<INCOME-PRETAX> (16,185)
<INCOME-TAX> 0
<INCOME-CONTINUING> (16,185)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (16,221)
<EPS-PRIMARY> (.940)
<EPS-DILUTED> (.940)

</TABLE>