CENTENNIAL TECHNOLOGIES INC, 10-K, 2000-05-17

CENTENNIAL TECHNOLOGIES INC
10-K, 2000-05-17
COMPUTER PERIPHERAL EQUIPMENT, NEC

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 10-K
---------------

Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended March 25, 2000
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)

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

Securities registered pursuant to Section 12(g) of the Act:

Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock, $0.01 par value Not Applicable
Preferred Stock Purchase Rights Not Applicable

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 and Exchange Act of 1934
during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

The aggregate market value of the voting stock held by non-affiliates of the
registrant on May 8, 2000 was $27,018,423. The fair market value of the common
stock, $0.01 par value per share (the "Common Stock"), of the registrant on May
8, 2000 was $8.50 per share, based on information reported by certain
internet-based bulletin board services purporting to monitor trading activities.
The registrant is unable to verify the accuracy or completeness of such
information. As of May 8, 2000, there were 3,189,874 shares of Common Stock of
the registrant outstanding.

Certain items in Part III of this Form 10-K incorporate by reference certain
portions of the registrant's definitive proxy statement to be filed with the
Securities and Exchange Commission in connection with the registrant's 2000
Annual Meeting of Stockholders.

<PAGE>

CENTENNIAL TECHNOLOGIES, INC.

Fiscal Year 2000 Annual Report on Form 10-K

TABLE OF CONTENTS
<TABLE>
<S> <C>

PART I. PAGE NUMBER
Item 1 Business 3
Item 2 Properties 7
Item 3 Legal Proceedings 7
Item 4 Submission of Matters to a Vote of Security Holders 8
Item 4A Executive Officers of the Registrant 9

PART II.
Item 5 Market for Registrant's Common Equity and Related Stockholder Matters 11
Item 6 Selected Financial Data 11
Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 13
Item 7A Quantitative and Qualitative Disclosures About Market Risk 24
Item 8 Financial Statements and Supplementary Data 24
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 44

Part III.
Item 10 Directors and Executive Officers of the Registrant 45
Item 11 Executive Compensation 45
Item 12 Security Ownership of Certain Beneficial Owners and Management 45
Item 13 Certain Relationships and Related Transactions 45

Part IV.
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K 45

</TABLE>

<PAGE>

PART I

ITEM 1. BUSINESS

This report contains forward-looking statements regarding anticipated
revenues and expenses, possible price competition and erosion, expansion into
new markets, future sales mix, future supply of raw materials, gross margins,
raw material inventory procurement practices, customers, future developments
involving certain investments and future availability of financing. Our actual
results may differ materially from these statements because these statements
involve numerous risks and uncertainties including those discussed throughout
this document as well as under "Management's Discussion and Analysis of
Financial Condition and Results of Operations-Factors That May Affect Future
Results" beginning on page 13. Readers are cautioned not to place undue reliance
on these forward-looking statements. We assume no obligation to update these
forward-looking statements to reflect events or changes in circumstances after
the date hereof.

GENERAL

Centennial Technologies, Inc. and its subsidiaries ("Centennial") design,
manufacture and market an extensive line of PC card-based solutions to original
equipment manufacturers ("OEMs") and value added resellers ("VARs"). We sell
into a broad range of markets, including: Communications (routers, wireless
telephones, local area networks); Transportation (navigation, vehicle
diagnostics); Mobile Computing and Office Automation (hand-held data collection
terminals, notebook computers, personal digital assistants); Medical (blood gas
analysis systems, defibrillators, hand-held glucometers, holter devices) and
Consumer OEM (sewing machines and digital cameras). Our products and services
have been utilized by more than 250 OEMs, including Compaq Computer, Nortel
Networks, Lucent Technologies, 3Com, Solectron, Jabil Circuit, Symbol
Technologies, Intermec Technologies and United Parcel Service.

We commenced operations in 1987 to develop and commercialize font
cartridges for laser printers. In 1992, we began designing, manufacturing and
marketing cards which conformed to the specifications agreed upon by the
Personal Computer Memory Card International Association ("PCMCIA"). These cards
became known as "PC cards." Thereafter, we gradually de-emphasized and ceased
the marketing and sales of font cartridges and began to focus on the growing PC
card market. We were re-incorporated in Delaware in 1994. Our principal
executive offices are located at 7 Lopez Road, Wilmington, Massachusetts 01887,
and our telephone number is (978) 988-8848.

On December 29, 1999 we acquired the flash memory card business of Intel
Corporation for approximately $2.0 million in cash, a $4.0 million promissory
note and 60,000 shares of Series B Convertible Preferred Stock. This acquisition
included Intel's PCMCIA card families (Series 2, Value Series 100 and 200), its
miniature card families (Series 100 and 200) and inventory related thereto.

For purposes of this Annual Report on Form 10-K, all references to "fiscal
2000," "fiscal 1999" and "fiscal 1998" relate to the fiscal years of Centennial
ending March 25, 2000, March 31, 1999 and March 31, 1998, respectively. Our
fiscal year was changed and now ends on the last Saturday of March. For ease of
presentation, March 31 has been utilized for all financial statement captions
for the fiscal year ended March 25, 2000. All references to "fiscal 1997" relate
to the nine-month period ended March 31, 1997 following our change of fiscal
year from June 30 to March 31 and all references to "fiscal 1996" relate to the
fiscal year ended June 30, 1996.

On July 20, 1999, our stockholders approved a one-for-eight reverse stock
split of our common stock, which was effective as of the opening of the stock
markets based in New York on July 23, 1999. In this report, all per share
amounts and numbers of shares have been restated to reflect this reverse stock
split.

INDUSTRY OVERVIEW

In recent years, digital computing and processing have expanded beyond the
boundaries of desktop computer systems to include a broader array of electronic
systems, such as mobile communication systems, network switches, medical
devices, navigation systems, cellular telephones, portable computers, digital
cameras and portable data collection terminals. PC cards, with characteristics
such as high shock and vibration tolerance, low power consumption, small size
and high access speed, better meet the requirements of these emerging
applications than do traditional hard drive and floppy disk storage solutions.

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We believe that demand for PC cards will increase as a result of more uniform
and expanded adoption of PCMCIA standards by electronic equipment manufacturers,
the inclusion of PC card slots on next generation electronic devices, and the
development of PC cards offering new applications. In addition, we believe that
widening acceptance of certain hand-held computers, personal digital assistants
("PDAs"), and Palm Type Devices that use PC cards for storage and other
applications may stimulate demand for our products.

PRODUCTS

Our PC cards may contain one or more of the following components: memory
chips (such as flash (linear and ATA), static random access memory ("SRAM") or
one time programmable ("OTP") memory) for storage capacity, input/output chips
for transmitting and receiving data, and memory chips with programmed software
and other devices for specific applications. Application-specific PC cards are
generally designed by us in cooperation with an OEM for a specific industry or
commercial application. The following are some of the applications in which our
PC cards are used:

INDUSTRY APPLICATIONS
-------- ------------
Communications...................... Our products are used for storage in
certain wireless telephones and other
telecommunication devices such as screen
phones. Our cards are also used in other
communication devices, such as PBX
switches and network routers.

Transportation...................... Our products are used in navigation
systems, such as Global Positioning
Satellite ("GPS") equipment used in rental
cars, fleet vehicles, emergency and rescue
vehicles, airplanes, ships and military
vehicles. GPS systems interpret signals
from a dedicated network of satellites
that circle the earth, providing data on
the position, direction, altitude and
speed of an object. We also develop PC
cards used to interact with on-board
information systems embedded in air,
marine and land based vehicles.

Mobile Computing and
Office Automation.............. Our products are used for supplemental
data storage in portable computing
devices, such as laptop computers,
handheld computers, PDAs, and in office
automation products, such as laser
printers, fax machines and desktop
computers. Our memory products are also
used to display images recorded by a
digital camera on a personal computer.

Medical............................. Our products are used to store patient
data from medical monitoring and
diagnostic equipment. Applications include
blood gas analysis systems, defibrillators
and hand-held glucometers.

Consumer OEM....................... Our products are used by OEMs who design
and sell various consumer products, such
as sewing machines and digital cameras. In
these particular applications, PC cards
are used to store digital image and
embroidery pattern information.

We also provide other non-PC card (PCMCIA) products based on flash memory
technology. Flash memory devices have grown in popularity because they do not
require power to retain data, are reprogrammable and are extremely reliable.
Because of these advantages, flash memory solutions have become more prevalent
in equipment requiring data storage. We believe that other flash based products
which we manufacture such as, SIMMs, DIMMs (which are each defined below),
miniature cards, compact flash cards and custom modules provide our customers
with flexible alternatives to address data storage and processing requirements.

SMALL FORM FACTOR FLASH CARDS are removable flash memory modules that fit
into small electronic devices, such as compact digital cameras through slots
that are smaller than those designed for PC cards. Small form factor flash cards
increase memory capacity and functionality and are similar to PC cards in that
they are made with existing flash memory technology with modified mechanical

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<PAGE>

packaging and electrical connections. In addition to custom form factors
tailored to particular customer requirements, we offer four types of
standardized small form factor flash cards:

o The CompactFlash(TM) (a trademark of SanDisk Corporation) is based on
the standard endorsed by the CompactFlash Association, an industry
organization established to promote uniform standards for compact flash
cards, of which we are a member. The CompactFlash uses a design that
relies on an on-board microcontroller and NAND flash technology.

o The Compact Linear Flash, or CLF(TM) card, is based upon a design
promoted by us. The CLF(TM) card is based on linear flash devices, NOR
flash technology, and requires no on-board micro-controller. The
CLF(TM) card uses a similar housing to the CompactFlash(TM).

o The MiniatureCard(TM) is based upon a design promoted by Intel that we
acquired. The MiniatureCard is based on linear flash devices, NOR flash
technology, uses a linear design, as opposed to the design of the
CompactFlash, and requires no on-board microcontroller. The
MiniatureCard(TM) uses a different housing design than the CLF(TM) card
or CompactFlash(TM).

o The Half Card is based upon a proprietary design developed by us
utilizing linear flash technology .

FLASH SINGLE IN-LINE MEMORY MODULES ("SIMMS") AND DUAL IN LINE MEMORY
MODULES ("DIMMs"). SIMMs and DIMMS are types of compact circuit board assembly
consisting of flash memory devices and related circuitry. Electronic systems
increasingly employ SIMMs and DIMMs as building blocks in system design. SIMMs
and DIMMs allow OEMs to configure a system with a variety of different levels of
memory, thus enabling OEMs to address cost-effective multiple price points or
applications with a single module that is easily upgradable.

BUSINESS STRATEGY

Our goal is to become a leading worldwide provider of PC card-based
solutions to OEMs in the communications, transportation, mobile computing,
medical and consumer OEM industries. To reach our goal we intend to:

OFFER COMPREHENSIVE PC CARD-BASED SOLUTIONS. We offer an extensive PC card
product line as well as related value-added services, such as (i) in-house
design expertise, (ii) flexible manufacturing, including the ability to make
short production runs with minimum down time, (iii) private labeling, (iv)
programming and testing capabilities, (v) rapid order turnaround, and (vi)
just-in-time delivery programs. By offering comprehensive solutions for OEM PC
card requirements, from design to shipment, we believe we have a competitive
advantage in the PC card market.

FOCUS ON OEM CUSTOMERS. We market products and services to OEMs and VARs
that sell products for applications within our target industries. We believe
that we can achieve higher gross margins and customer loyalty by serving the OEM
market rather than consumer markets due to the OEM market's requirements for
value-added services, such as design expertise, programming and prototype
development. In addition, we believe that serving OEMs gives us exposure to new
technologies and emerging applications, which helps us respond to technological
advances and anticipate changes in market conditions.

PROVIDE FLEXIBLE, HIGH QUALITY MANUFACTURING SOLUTIONS. We have
periodically upgraded and automated our manufacturing facilities to expand and
enhance in-house production capacity. By manufacturing our PC cards in-house, we
can offer more flexible production schedules to accommodate OEMs that require
the delivery of a number of different products within a short time frame. Our PC
card manufacturing facility in Wilmington, Massachusetts is a certified ISO 9001
manufacturer. ISO certification is based on numerous aspects of our business,
including manufacturing, purchasing, human resources, engineering and research.

SALES AND MARKETING

We target industrial and commercial applications for PC cards primarily in
the communications, transportation, mobile computing, medical and consumer OEM
industries. We market our products through direct sales people, independent
manufacturer representatives and distributors. Our customer service staff
operates from our main office in Wilmington, Massachusetts. Field sales
representatives conduct business from our main office, and remote offices,
including our sales office in Cheshire, England.

5
<PAGE>

We generally market our products and capabilities directly to OEMs and
value-added resellers ("VARs"). Our sales staff and engineers work with OEM
engineers to design and engineer PC cards to OEM requirements, which often leads
to providing custom-designed PC cards for specific applications. We believe
interaction with OEM customers provide exposure to emerging technologies and
applications, facilitating a proactive approach to product design. The sales to
our OEM customers are made pursuant to purchase orders. We have sold products
and services to more than 250 OEMs, including Compaq Computer, Nortel Networks,
Lucent Technologies, 3Com, Solectron, Jabil Circuit, Symbol Technologies,
Intermec Technologies and United Parcel Service. We also pursue sales to the
military sector and to corporate end-users.

We generally enter into individual purchase orders with our customers and
we do not presently have any fixed long-term volume commitments from any of our
significant customers. Although Nortel Networks directly represented in excess
of 10% of our sales during fiscal 1999, no customer represented more than 10% of
our sales during fiscal 2000. However, during fiscal 1999, Nortel Networks
engaged several contract manufacturers to complete the final assembly of a
majority of its products for which we have historically supplied PC cards.
Nortel Networks combined with these contract manufacturers represented in excess
of 10% of our sales in fiscal 2000.

ENGINEERING AND PRODUCT DEVELOPMENT

We direct our engineering and design efforts towards products for which we
believe there is a growing and profitable market. In particular, we seek to meet
the requirements of our OEM customers for products aimed at emerging
applications in the communications, transportation, mobile computing, medical
and consumer OEM industries by applying the latest available technology and the
PC card design and engineering know-how gained from our focus on these markets.
We provide engineering and design support to many of our customers in order to
help integrate our products into OEM equipment. OEMs often require PC cards for
new applications within our target markets. We have developed a library of
several hundred designs through our work with OEMs. By working with these OEMs,
we have been exposed to new market opportunities for our PC card-based
solutions.

COMPETITION

<TABLE>
<S> <C>
o product quality and performance o order turnaround
o provision of competitive design capabilities o timely response to advances in technology
o timing of new product introductions by o production efficiency
Centennial, our customers and competitors o number and nature of our competitors
o price in a given market
o ability to obtain raw materials o general market and economic conditions

</TABLE>

RAW MATERIALS AND PRODUCT COMPONENTS

We are currently experiencing supply shortages, particularly with respect
to computer memory chips used to manufacture PC cards. Currently, certain memory
chips, which are an integral component of our products, are on industry-wide
allocation by suppliers. These shortages are currently having an impact on our
business and if they continue or expand, will have a material adverse effect on
our business, financial condition and results of operations. We believe we will
be able to meet most of our customers' orders for the first half of fiscal 2001.
At this time we are unable to determine what the impact will be thereafter. If
the current shortages become more severe, such shortages will prevent us from
growing our business as we currently contemplate.

6
<PAGE>

We purchase certain key components from single source vendors for which
alternative sources are not currently available. We do not maintain long-term
supply agreements with our 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 our business, financial condition and results of operations. No
assurance can be given that one or more of our vendors will not reduce supplies
to us.

EMPLOYEES

As of March 25, 2000, we had 130 full-time employees, of whom 8 were
executive officers, 23 were involved in sales and marketing, 16 were involved
with engineering and product development, 13 were involved with administration
and 70 were involved in manufacturing. None of our employees are represented by
a labor union.

ITEM 2. PROPERTIES

We maintain our principal executive offices, research and development and
ISO 9001 certified manufacturing operations in a 34,000 square foot leased
facility in Wilmington, Massachusetts. We currently pay rent of approximately
$23,000 per month pursuant to a lease that expires on April 30, 2002. The lease
contains an option to renew for an additional five-year period. The lease
provides for annual rent increases of 4% and provides that we pay to our
landlord, as additional rent, our pro rata share of certain operational and
maintenance costs at the facility during the term of the lease.

We conduct business through sales offices in the United States and our
United Kingdom office located in Cheshire, England. We believe that our
facilities are adequate for our current needs and that adequate facilities for
expansion, if required, are available at competitive rates.

ITEM 3. LEGAL PROCEEDINGS

We are party from time to time to legal proceedings arising out of the
normal course of our business. We do not believe that any such legal
proceedings, either individually or in the aggregate, will have a material
adverse effect on our business, financial condition or results of operations. In
addition, we have been or are parties to other litigation as summarized below.

CLASS ACTION LITIGATION

We have been party to various class action lawsuits which were commenced
principally during fiscal 1997 and 1998. A substantial number of the
participants in these class action lawsuits participated in settlements with us
that became effective during fiscal 1999. The following discusses the history of
these class action lawsuits, together with the settlements that were entered
into principally in fiscal 1999.

Since our announcement on February 11, 1997 that we were undertaking an
inquiry into the accuracy of our 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 us and
our Board of Directors, officers and former independent accountants, among
others, under certain federal and state laws. These class action lawsuits were
purportedly brought by and on behalf of purchasers of our Common Stock (i)
between our initial public offering on April 12, 1994 and February 10, 1997 or
(ii) on February 25, 1997.

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

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A number of class members elected not to participate in the Settlement
Agreement described above. In September 1999, we reached an agreement with a
number of these parties which calls for us 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, we believe that the applicable Federal statue of limitations has
likely expired and that we do not have material exposure to these parties.
During fiscal 2000, we revised our estimate of the allocation between cash and
common stock of the $20 million provision for settlement of all such shareholder
litigation recorded during fiscal 1997 related to the Class Action Litigation.
Accordingly, we reclassified certain amounts in fiscal 2000 from the original
settlement reserve to accrued liabilities, representing the 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 fiscal 2000, we
made a partial payment of $188,000 in settlement of certain of these claims. We
expect the remaining amount to be paid in the first quarter of fiscal 2001.

In fiscal 2000, the plaintiffs in the Consolidated Litigation reached an
agreement with our former Interim Chief Executive Officer, Lawrence J.
Ramaekers, and his employer, Jay Alix & Associates ("Jay Alix"), regarding the
plaintiffs' alleged claims against them. In fiscal 2000 we paid Jay Alix and Mr.
Ramaekers $1.0 million for legal fees incurred and Jay Alix and Mr. Ramaekers
released any and all claims against our affiliates our directors and us.

SECURITIES AND EXCHANGE COMMISSION INVESTIGATION

In February 1997, we were notified that the Boston District Office of the
Securities and Exchange Commission ("SEC") was conducting an investigation of
us. We cooperated fully with the SEC and believe, based on discussions with the
SEC, that we will be able to resolve the issues arising from the conduct of
former members of our senior management and the restatement of certain financial
statements in an acceptable manner, although we can not assure you that such
matters will be resolved in a manner acceptable to us.

WEBSECURE LITIGATION

On and after March 26, 1997, several complaints were filed against
WebSecure, certain officers, directors and underwriters of WebSecure, and us 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 claims against us included alleged violations of Sections 11 and 15 of the
Securities Act of 1933 (the "WebSecure Securities Litigation"). In fiscal 1997,
we established a reserve of $1.2 million in connection with the expected
settlement of this litigation.

In fiscal 2000, we settled the WebSecure Securities Litigation in return for
the issuance of 43,125 shares of our Common Stock, of which 14,375 shares had
been issued as of March 31, 2000, and the payment of $50,000 for notice and
administrative costs. In fiscal 2000, we revised our estimate of the expected
cost to resolve this matter based on the final settlement amounts, which
resulted in income of $940,000. All shares to be issued in connection with this
settlement are included in the weighted average shares outstanding calculation
from September 17, 1999 forward.

OTHER

On May 12, 2000, we received a complaint from Dennis M. O'Connor alleging
that he is owed approximately $485,000 in connection with legal services
provided by O'Connor, Broude & Aronson prior to May 12, 1997. Because of the
early stage of this litigation, we are not able to make an assessment as to its
likely outcome.

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

None.
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ITEM 4A. EXECUTIVE OFFICERS OF REGISTRANT

The executive officers and management of Centennial, their ages and
positions held in Centennial, are as follows:

<TABLE>
<CAPTION>
Name Age Position
---- --------
<S> <C> <C>
L. Michael Hone................ 50 President and Chief Executive Officer
Richard N. Stathes............. 54 Executive Vice President, Worldwide Sales and Marketing
Jacques Assour, Ph.D........... 67 Senior Vice President, Operations
Richard J. Pulsifer............ 41 Vice President, Chief Financial Officer and Secretary
Douglas S. Boehme.............. 41 Vice President of North American Sales
Mary A. Gallahan............... 52 Vice President of Administration and Human Resources
Grady D. Lambert............... 37 Vice President of Engineering
John C. Nugent................. 56 Managing Director of Centennial Technologies International Limited

</TABLE>

Executive officers are elected by and serve at the pleasure of the Board of
Directors. The following is a brief summary of the background of each executive
officer of Centennial.

L. MICHAEL HONE, President and Chief Executive Officer. Mr. Hone joined
Centennial as its President and Chief Executive Officer and Director in August
1997. Prior to Centennial, Mr. Hone was the Chairman and Chief Executive Officer
of PSC Inc., a publicly-held manufacturer of hand-held and fixed-position laser
based bar code scanners, scan engines and other scanning products, from 1992 to
1997; director of Telxon Corporation, a publicly-traded company engaged in the
global design and manufacture of wireless networks for mobile computing
solutions and information systems; director of Rochester Healthcare Information
Group, Inc., a company principally engaged in providing data processing
management to the health care industry; director of Association for the Blind
and Visually Impaired, Inc., a company principally engaged in assisting the
blind and visually impaired to achieve vocational and social independence. Mr.
Hone is a named inventor on 6 United States patents.

RICHARD N. STATHES, Executive Vice President, Worldwide Sales and
Marketing. Mr. Stathes joined Centennial as Senior Vice President of Sales and
Marketing in September 1997 and became Executive Vice President, Worldwide Sales
and Marketing in April 2000. From 1992 until 1997, Mr. Stathes served as Vice
President of Sales and Marketing for PSC Inc., a publicly-held manufacturer of
hand-held and fixed-position laser based bar code scanners, scan engines and
other scanning products. Mr. Stathes holds a Bachelor of Science degree in
Business Administration from Syracuse University.

JACQUES ASSOUR, PH.D., SENIOR VICE PRESIDENT, OPERATIONS. Dr. Assour joined
Centennial in September 1997. From 1995 until 1997, Dr. Assour provided
electronics design and financial planning consulting services to various client
companies, including Robotic Vision Systems, Inc. From 1990 until 1995, Dr.
Assour served as Senior Vice President of Operations for PSC Inc., a
publicly-held manufacturer of hand-held and fixed-position laser-based bar code
scanners, scan engines and other scanning products. Dr. Assour is a named
inventor on five United States patents. Dr. Assour holds a Bachelor of Science
degree and a Master of Science degree in Electrical Engineering, and a Ph.D. in
Electrophysics from Polytechnic Institute of Brooklyn.

RICHARD J. PULSIFER, VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND
SECRETARY. Mr. Pulsifer joined Centennial in June 1999. From 1996 to 1998, Mr.
Pulsifer served as Chief Financial Officer and Vice President for Praxis
International, Inc., Waltham, Massachusetts, a manufacturer of software products
for data movement. Previously, Mr. Pulsifer held financial management positions
with Chrysalis Symbolic Design, Summa Four, Trinzic, Altron and Coopers &
Lybrand L.L.P. Mr. Pulsifer holds a Bachelor of Science degree in Business
Administration from Suffolk University.

DOUGLAS S. BOEHME, VICE PRESIDENT OF NORTH AMERICAN SALES. Mr. Boehme
joined Centennial in 1998 as a Regional Sales Manager and became Vice President
of North American Sales in January 2000. Prior to joining Centennial, Mr. Boehme
was a Sales Director for PSC Inc. a publicly-held manufacturer of hand-held and
fixed-position laser-based bar code scanners, scan engines and other scanning
products.

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MARY A. GALLAHAN, VICE PRESIDENT OF ADMINISTRATION AND HUMAN RESOURCES. Ms.
Gallahan joined Centennial in October 1999. During 1999, Ms. Gallahan served as
Vice President of Human Resources for Schuff Steel, Phoenix, Arizona. From 1997
to 1999, Ms. Gallahan provided consulting services. From 1992 to 1997, Ms.
Gallahan was Vice President of Human Resources for PSC, Inc., a publicly-held
manufacturer of hand-held and fixed-position laser-based bar code scanners, scan
engines and other scanning products.

GRADY D. LAMBERT, VICE PRESIDENT OF ENGINEERING. Mr. Lambert joined
Centennial in May 1997 as a senior design engineer and was promoted to Director
of Advanced Technology in December 1998 and became Vice President of Engineering
in February 2000. From 1994 to 1997, Mr. Lambert was flash memory
product/engineering manager for AMP, Inc.'s PC Card Division located in Largo,
Florida. Mr. Lambert holds a Bachelor of Science degree and a Master of Science
degree in Electrical Engineering from the University of Alabama with
concentrations in the areas of digital communications and digital design.

JOHN C. NUGENT, MANAGING DIRECTOR OF CENTENNIAL TECHNOLOGIES INTERNATIONAL
LIMITED. Mr. Nugent joined Centennial as Managing Director of Centennial's
subsidiary, Centennial Technologies International Limited, in January 1998. From
1997 until January 1998, Mr. Nugent served as Sales Manager for Matco, Inc., a
contract manufacturer of electronic boards. From 1992 until 1997, Mr. Nugent
served as Vice President of International Operations for PSC Inc., a
publicly-held manufacturer of hand-held and fixed-position laser-based bar code
scanners, scan engines and other scanning products.

10
<PAGE>

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our Common Stock is not currently traded or quoted on an organized stock
exchange or automated quotation system. From March 1997 until May 1998, our
Common Stock was traded on the "pink sheets," and since May 1998, has traded on
the Over-the-Counter Electronic Bulletin Board under the symbol "CENL." For the
periods indicated, the following table sets forth the range of high and low sale
prices for the Common Stock based on information reported by certain
internet-based bulletin board services purporting to monitor trading activities.
We are unable to verify the accuracy or completeness of the internet-based
bulletin board information.

HIGH LOW
FISCAL 1999 ---- ---
April 1, 1998 through June 27, 1998.................. $ 21.00 $ 10.50
June 28, 1998 through September 26, 1998............. $ 13.50 $ 3.50
September 27, 1998 through December 26, 1998......... $ 11.00 $ 3.00
December 27, 1998 through March 31, 1999............. $ 12.00 $ 4.50
FISCAL 2000
April 1, 1999 through June 26, 1999.................. $ 9.36 $ 5.36
June 27, 1999 through September 25, 1999............. $ 9.05 $ 4.50
September 26, 1999 through December 25, 1999......... $ 5.06 $ 3.50
December 26, 1999 through March 25, 2000............. $ 12.00 $ 4.38

In fiscal 2000, we filed an application for listing on the Nasdaq National
Market. We believe that we presently meet all of the requirements for listing on
the Nasdaq National Market, except that we believe we need to fully resolve with
the SEC all of the issues arising from the conduct of former members of
Centennial's senior management and the restatement of certain financial
statements. We are cooperating fully with the SEC and believe, based on
discussions with the SEC, that we will be able to resolve these issues in an
acceptable manner, although we can not assure you that such issues will be
resolved with the SEC, or if the issues are resolved, that our Common Stock will
be approved for listing on the Nasdaq National Market on a timely basis, or at
all.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data set forth below should be read in
conjunction with our consolidated financial statements and related notes and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Annual Report on Form 10-K. The selected
consolidated financial data as of March 31, 1998 and 1997 and June 30, 1996 and
for the nine months ended March 31, 1997 and 1996 have been derived from
financial statements not included herein.

11
<PAGE>

CONSOLIDATED STATEMENT OF OPERATIONS DATA (IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS):

<TABLE>
<CAPTION>
Nine Months Ended Fiscal Year Ended
Fiscal Years Ended March 31, March 31, June 30,
--------- --------
------------------------------------------------------
2000 1999 1998 1997 1997 1996 1996
------------ ------------ ------------ ------------ ------------ ------------- --------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales...................... $ 35,580 $ 27,633 $ 28,263 $ 39,907 $ 28,263 $ 21,768 $ 33,412
Cost of goods sold............. 25,040 18,968 23,683 33,213 24,453 21,018 29,778
---------- ---------- ---------- ---------- ---------- ---------- ----------
Gross profit................ 10,540 8,665 4,580 6,694 3,810 750 3,634
Operating expenses:
Research and development.... 1,887 750 838 1,369 1,061 1,126 1,434
Selling, general and

administrative................. 6,673 6,132 9,957 8,416 7,318 2,705 3,803
---------- ----- ----- ----- ----- -----
Operating income (loss)..... 1,980 1,783 (6,215) (3,091) (4,569) (3,081) (1,603)
Other income (expense):
Loss on investment activities -- (733) (14,065) (16,689) (14,096) (69) (2,662)
Loss on disposal of equipment (343) -- -- -- -- -- --
Special investigation costs -- -- (597) (3,673) (3,673) -- --
Provision for settlement....
of shareholder litigation. -- -- -- (20,000) (20,000) -- --
Provision for loss on
inventory
subject to customer dispute -- -- (1,841) -- -- -- --
Proceeds from resolution of
customer dispute.......... -- 1,600 -- -- -- -- --
Other 940 -- -- -- -- -- --
Other income (expense)...... 46 (132) (258) -- -- -- --
Net interest income (expense) 185 344 (56) (234) (391) (174) (17)
---------- ---------- ----------- ----------- ----------- --------- ---------
Income (loss) before income
taxes 2,808 2,862 (23,032) (43,687) (42,729) (3,324) (4,282)
and equity in earnings of
affiliate
Equity in earnings of affiliate -- -- 423 959 959 -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before income 2,808 2,862 (22,609) (42,728) (41,770) ( 3,324) (4,282)
taxes
Provision for income taxes..... 155 56 -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss)........... $ 2,653 $ 2,806 $ (22,609) $ (42,728) $ (41,770) $ (3,324) $ (4,282)
========== ========== ========== ========= ========== ========== ===========

Net income (loss) per share - $ 0.83 $ 0.97 $ (9.80) $ (19.90) $ (19.24) $ (2.10) $ (2.51)
basic
Net income (loss) per share - $ 0.76 $ 0.96 $ (9.80) $ (19.90) $ (19.24) $ (2.10) $ (2.51)
diluted .......................
Weighted average shares
outstanding - basic......... 3,186 2,907 2,308 2,147 2,171 1,585 1,704
Weighted average shares
outstanding - diluted....... 3,508 2,939 2,308 2,147 2,171 1,585 1,704

Consolidated Balance Sheet Data (in thousands):

MARCH 31,
--------------------------------------------------- JUNE 30,
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- --------

Current assets...................... $ 24,912 $ 14,703 $ 11,497 $ 27,213 $ 37,017
Total assets........................ 30,373 18,954 17,078 52,090 41,132
Current liabilities................. 13,651 7,258 8,140 22,644 8,856
Working capital..................... 11,261 7,445 3,357 4,569 28,161
Stockholders' equity................ 15,895 11,696 8,902 29,446 31,909

</TABLE>

12
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Item 7 of this Annual Report on Form 10-K contains forward-looking
statements within the meaning of the federal securities laws. These
forward-looking statements include statements regarding anticipated revenues and
expenses, price competition and erosion, expansion into new markets, future
sales mix, future supply of raw materials, gross margins, raw materials
inventory procurement practices, Centennial's customer base, future developments
involving certain investments and future availability of financing.
Forward-looking 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 our periodic filings with the SEC. 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.
We assume no obligation to update these forward-looking statements to reflect
events or circumstances after the date hereof.

OVERVIEW

GENERAL

We design, manufacture and market an extensive line of PC cards used
primarily by OEMs in industrial and commercial applications. Our PC cards
provide added functionality to devices containing microprocessors by supplying
increased storage capacity, communications capabilities and programmed software
for specialized applications.

ACQUISITION OF THE FLASH MEMORY CARD BUSINESS OF INTEL CORPORATION.

On December 29, 1999, we acquired the flash memory card business of Intel
Corporation. The acquired business included the PCMCIA card families (Series 2,
Value series 100 and 200) and the miniature card families (Series 100 and 200)
and inventory related thereto. This acquisition has been accounted for as a
purchase in the fourth quarter of fiscal 2000. In consideration for the
acquisition, we paid cash of $2.0 million, issued a secured promissory note for
$4.0 million and issued 60,000 shares of Series B Convertible Preferred Stock
which represented approximately 16% of our outstanding shares, on an
as-converted basis. The promissory note bears interest at the rate of 9% per
annum, and is due and payable, together with interest thereon, in December 2000.
The Series B Convertible Preferred Stock converts at a ratio of 10 shares of
Common Stock per share of Series B Convertible Preferred Stock and has a
liquidation preference of $4.8 million. Intel Corporation received certain
registration rights with respect to the shares of Common Stock issuable upon
conversion of the Series B Convertible Preferred Stock. The flash memory card
business was concentrated with a few customers. While there is a contingent
payment of up to $4.5 million due January 2001 based on units shipped by the
acquired business to Cisco Systems, Inc. ("Cisco Systems"), we received notice
from Cisco Systems of its intent to discontinue purchasing from us. Accordingly,
we expect that we will not have to make any portion of the contingent payment.

The following discussion and analysis should be read in conjunction with the
consolidated financial statements and notes thereto included elsewhere in this
Annual Report on Form 10-K.

13
<PAGE>

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
Years Ended Nine Months Ended
March 31, March 31,
2000 1999 1998 1997 1997 1996
----------- ----------- ----------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net sales....................................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold.............................. 70.4 68.6 83.8 83.2 86.5 96.6
---------- --------- --------- -------- -------- --------
Gross profit.................................. 29.6 31.4 16.2 16.8 13.5 3.4
Operating expenses:
Research and development...................... 5.3 2.7 3.0 3.5 3.7 5.2
Selling, general and administrative........... 18.7 22.2 35.2 21.1 25.9 12.4
---------- --------- --------- -------- -------- --------
Operating income (loss)..................... 5.6 6.5 (22.0) (7.8) (16.1) (14.2)
Other income expense:
Loss on investment activities................. -- (2.7) (49.8) (41.8) (49.9) (0.3)
Loss on disposal of equipment................. (1.0) -- -- -- -- --
Special investigation costs................... -- -- (2.1) (9.2) (13.0) --
Provision for settlement of shareholder
Litigation................................. -- -- -- (50.1) (70.8) --
Provision for loss on inventory subject to
customer dispute........................... -- -- (6.5) -- -- --
Proceeds from resolution of customer dispute.. -- 5.8 -- -- -- --
Other......................................... 2.7 -- -- -- -- --
Other income (expenses)....................... 0.1 (0.4) (0.9) -- -- --
Net interest income (expense)................. 0.5 1.2 (0.2) (0.6) (1.4) (0.8)
---------- --------- ---------- --------- --------- ---------
Income (loss) before income taxes and equity
in earnings of affiliate................... 7.9 10.4 ( 81.5) (109.5) (151.2) ( 15.3)
Equity in earnings of affiliate................. -- -- 1.5 2.4 3.4 --
---------- --------- --------- -------- -------- --------
Income (loss) before income taxes............. 7.9 10.4 ( 80.0) (107.1) (147.8) ( 15.3)
Provision for income taxes...................... 0.4 0.2 -- -- -- --
---------- --------- --------- -------- -------- --------
Net income (loss)............................. 7.5% 10.2% ( 80.0)% (107.1)% (147.8)% ( 15.3)%
========== ========= ========= ========= ======== ========
</TABLE>

TWELVE MONTHS ENDED MARCH 25, 2000 AND MARCH 31, 1999

NET SALES.

Net sales increased 29% to $35.6 million for fiscal 2000 compared to $27.6
million for fiscal 1999. The increase in sales is attributable to an increase in
units shipped. In the fourth quarter of fiscal 2000, our sales to Cisco Systems,
the primary customer of the flash memory card business acquired from Intel
Corporation, were approximately $2.0 million. Following our acquisition of the
flash memory card business, Cisco Systems notified us that they would no longer
purchase from us and cancelled all remaining orders. Component costs (primarily
related to memory chips) increased significantly throughout fiscal 2000. We
expect component costs to continue to increase in fiscal 2001, which we believe
may cause an increase in our average selling price. We can not assure you that
if component costs continue to rise we will be able to continue to increase our
average selling price or that competitive pricing pressures will not adversely
affect the average selling price. We anticipate that there will be strong sales
growth in fiscal 2001 compared to fiscal 2000. We believe there will be
significant shortages of certain of our components, particularly with respect to
flash memory. Any such shortages could have a material adverse effect on our
business, financial condition and results of operations.

14
<PAGE>

We continue to experience limited backlog and advance bookings as our
customers, particularly our major customers, continue to expect short
lead-times. A majority of our anticipated quarterly 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," our
ability to adjust our operating expenses is limited in the short term. As a
result, if product revenues are lower than anticipated, our results of
operations will be adversely affected.

For fiscal 2000, no customer represented more than 10% of our sales. Nortel
Networks represented 5% and 14% of our sales in fiscal 2000 and 1999,
respectively. During fiscal 1999, Nortel Networks engaged several contract
manufacturers to complete the final assembly of a majority of its products for
which we have historically supplied PC cards. Our sales to these contract
manufacturers for both fiscal 2000 and 1999 represented 14% of our sales. One of
these contract manufacturers recently merged with one of our competitors, which
could result in a decrease of sales to this contract manufacturer. A relatively
small number of customers account for a significant percentage of our sales. If
these customers were to reduce significantly the amount of business they conduct
with us, it could have a material adverse effect on the our business, financial
condition and results of operations.

For fiscal 2000 and 1999, sales outside of the United States were
approximately 20% and 12%, respectively, of our sales. Sales outside of the
United States are primarily to customers in several Western European countries,
although sales to customers in any one country did not comprise more than 10% of
our sales for fiscal 2000 or 1999.

GROSS PROFIT.

Gross profit increased 22% to $10.5 million for fiscal 2000 compared to $8.7
million for fiscal 1999. Gross margins were 30% for fiscal 2000 and 31% for
fiscal 1999. The fourth quarter of fiscal 2000 included approximately $4.4
million of net sales of inventory acquired with the acquisition of the flash
memory card business of Intel Corporation. This acquired inventory is carried at
its estimated fair market value. Accordingly, the sale of this inventory
resulted, and will likely result in the future, in a lower gross margin than
sales of our other inventory. We anticipate that most of the acquired inventory
on hand as of March 31, 2000 should be sold during the first half of fiscal
2001. Excluding the effect of sales of the acquired inventory and related costs
of this acquired inventory, the gross margin for fiscal 2000 would have been 34%
as compared to 30%.

We anticipate that gross margins will continue to be strong in fiscal 2001;
however, the gross margins will likely be somewhat lower in the first two
quarters of fiscal 2001 as we anticipate certain of the remaining acquired
inventory will be sold during those periods. We also believe the gross margins
on sales by the acquired business, in general, will be somewhat lower than those
achieved by us on our existing products. We have been able to achieve higher
margins on our products primarily due to a significant amount of custom product
sales through our direct sales force combined with a small amount of software
and service revenue. Our existing products and services tend to have higher
margins than standard products, which comprise substantially all of the acquired
business' product line.

We experienced an increase in our flash memory costs throughout fiscal 2000.
We increased the average selling price of our products during fiscal 2000 as a
result of our increased component costs. This increase in our average selling
price enabled us to maintain our gross margin. We believe costs of certain
component memory devices will continue to increase during fiscal 2001. We can
not assure you that we will be able to continue to increase our average selling
prices to offset such component cost increases that might have an adverse affect
our gross margin.

RESEARCH AND DEVELOPMENT.

Our research and development expenditures increased significantly to $1.9
million or 5% of sales in fiscal 2000 compared to $0.8 million or 3% of sales
for fiscal 1999. The higher research and development costs are due generally to
increased spending on outside consultants, higher engineering material
expenditures and recruiting and relocation costs combined with an increased
percentage of employees focused on research and development projects. We expect
that we will continue to spend significant amounts on research and development
in the future.

SELLING, GENERAL AND ADMINISTRATIVE.

Selling, general and administrative expenses were $6.7 million or 19% of
sales in fiscal 2000 compared to $6.1 million or 22% of sales in fiscal 1999.
The $0.6 million increase in these expenses for fiscal 2000 is mainly attributed
to higher staffing costs necessary to generate and support our increase in
sales. We anticipate our selling, general and administrative expenses will
continue to increase as our sales grow.

15
<PAGE>

OTHER INCOME/EXPENSE.

In fiscal 2000, we incurred a loss of $343,000 on the disposal of certain
equipment that was replaced.

NET INTEREST INCOME/EXPENSE.

Net interest income was $185,000 for fiscal 2000 compared to net interest
income of $344,000 for fiscal 1999. This decrease is primarily attributable to
decreased funds invested or on deposit in interest bearing accounts, as well as
increased borrowing under capitalized leases during fiscal 2000 combined with
interest expense on the note payable.

NET INCOME PER SHARE.

On July 20, 1999, our shareholders approved a one-for-eight reverse stock
split of the 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 Corporation transaction described more fully below,
diluted weighted average outstanding shares increased by 600,000 shares as of
December 29, 1999.

Twelve months ended March 31, 1999 and March 31, 1998

NET SALES.

Sales decreased 2% to approximately $27.6 million for fiscal 1999 compared
to $28.3 million for fiscal 1998. The average selling price for our products
fell approximately 7% during fiscal 1999, which was partially offset by an
increase in the volume of PC cards sold of approximately 5%. Decreasing
component costs between periods and competitive pricing pressures contributed to
the decrease in the average selling price of our products.

Sales outside of the United States represented 12% of sales in fiscal 1999
compared to 14% of sales for fiscal 1998. At the end of fiscal 1998, we opened a
new sales office in Cheshire, England.

Sales to Nortel Networks represented 14% of sales in fiscal 1999 compared
to 29% of sales in fiscal 1998. During fiscal 1999, Nortel Networks engaged a
contract manufacturer to complete the final assembly of a majority of its
products for which we have historically supplied PC cards. Our sales to this
contract manufacturer represented almost 10% of our sales during fiscal 1999. No
other customer accounted for more than 10% of our sales during fiscal 1999.

GROSS PROFIT.

Gross profit increased 89% to $8.7 million for fiscal 1999 compared to $4.6
million for fiscal 1998. Gross margins were 31% for fiscal 1999 compared to 16%
for fiscal 1998. During fiscal 1999, we sold portions of some customized
inventory for approximately $1.2 million, the cost of which had been previously
fully reserved due to a dispute with the customer for whom the customized cards
were originally produced and who had attempted to cancel the order. The gross
margin for fiscal 1999, excluding this sale of fully reserved inventory, was
28%. Costs of goods sold include provisions for inventory obsolescence of $0 in
fiscal 1999 and $886,000 in fiscal 1998, representing 3% of sales in fiscal
1998, which reflects the strategy of prior management to build inventory in
anticipation of customer orders, a portion of which did not materialize. Our
gross margins were also negatively impacted during fiscal 1998 by declining
memory chip prices, which reduced PC card selling prices in certain situations
where we had already purchased memory chips at higher prices.

16
<PAGE>
RESEARCH AND DEVELOPMENT.

Research and development costs decreased by 11% to approximately $750,000
in fiscal 1999 compared to $838,000 for fiscal 1998.

SELLING, GENERAL AND ADMINISTRATIVE.

Selling, general and administrative expenses decreased by 39% to $6.1
million in fiscal 1999 compared to $10.0 million in fiscal 1998. This decrease
primarily resulted from the non-recurrence in fiscal 1999 of the following
expenses incurred in fiscal 1998: legal and consulting expenses relating to the
negotiation and finalization of the settlement of the class action litigation
against us, the settlement of several other legal claims, the filing of revised
tax returns, and the conclusion of our arrangements for interim senior
management consulting services. Bad debt expenses were also higher in fiscal
1998 than in fiscal 1999 as we provided specific reserves for several of our
former customers in fiscal 1998. We also paid non-recurring retention bonuses
during fiscal 1998 to several key employees following the announcement of the
special investigation into our prior reported financial results. We also
incurred non-recurring costs in fiscal 1998 in hiring a new senior management
team, and paid severance benefits to certain of the former officers and
employees. We also incurred non-recurring costs during fiscal 1998 in closing
its Canadian and UK offices and establishing a new sales office in Cheshire,
England. We incurred increased sales expenses related to its new UK sales office
during fiscal 1999. Employee benefits and commissions expenses increased in
fiscal 1999 as we implement a profit-sharing plan and a new commissions program.

LOSS ON INVESTMENT ACTIVITIES.

Loss on investment activities consists of write-downs, valuation adjustments
and accruals for losses recorded associated with certain investments. During
fiscal 1999, we reduced the carrying value of our investment in Century
Electronics Manufacturing, Inc. ("Century") by $733,000 to $1.7 million,
reflecting our assessment of the deterioration in the value of this investment.

PROCEEDS FROM RESOLUTION OF CUSTOMER DISPUTE.

During fiscal 1998, we filed suit against a customer regarding inventory
specifically purchased and manufactured pursuant to a purchase order from the
customer (the "Custom Inventory"). The customer attempted to cancel a portion of
the purchase order. We disputed the customer's claim that the purchase order
cancellation was effective. During fiscal 1998, we fully reserved the cost of
the Custom Inventory of approximately $1.8 million due to the legal costs and
inherent uncertainties involved in litigation.

During fiscal 1999, we settled the litigation. As a result of this
settlement, we received $1.6 million in cash and the customer agreed that we
retain this Custom Inventory. During fiscal 1999, we recognized the cash payment
of $1.6 million as income. Also during fiscal 1999, after the settlement
agreement was reached, we sold portions of the Custom Inventory for
approximately $1.2 million, which was included in net sales.

OTHER EXPENSES, NET.

During fiscal 1999, we incurred a loss on the disposal of certain equipment
that had a net book value of approximately $132,000, which equipment was
replaced. During fiscal 1998, we increased its accrual for Special Investigation
Costs by $597,000 due to incremental costs. During fiscal 1998, we paid in full
our line of credit and lease financing obligations with the bank that was
previously providing us with credit facilities. That bank required us to pay
lease cancellation charges of approximately $258,000 in order to release its
lien on the equipment being financed pursuant to those leases.

NET INTEREST INCOME/EXPENSE.

Net interest income was $344,000 for fiscal 1999 and net interest expense
was $56,000 in fiscal 1998, reflecting cash available for investment in fiscal
1999 and outstanding borrowings during fiscal 1998.

17
<PAGE>

YEAR 2000 MATTERS

Over the past several years we made significant investments in new
manufacturing, financial and operating hardware and software. These investments
were made to support the growth of our operations; however, as a by-product of
this effort, we had year 2000 compliant hardware and software operating as we
entered into the year 2000. We upgraded or replaced systems which were not year
2000 compliant.

Our 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. We have not experienced, and do not anticipate, any significant
problems related to the transition to the year 2000. We estimate that we have
spent in aggregate approximately $600,000 in addressing year 2000 readiness
issues, of which $502,000 was capitalized. We do not anticipate any significant
future expenditures related to year 2000 compliance.

LIQUIDITY AND CAPITAL RESOURCES

Since inception, we have financed our operating activities primarily from
public and private offerings of equity securities, loans from financial
institutions and positive cash flows from operations. At March 25, 2000, we had
cash and cash equivalents of approximately $5.8 million and generated
approximately $1.2 million of cash from operating activities during the year
then ended. The $4.0 million promissory note, and related interest, issued in
connection with our acquisition of the flash memory card business from Intel
Corporation is due and payable on December 29, 2000. We believe the existing
cash and cash equivalents, short-term investments and available financing
arrangements will be sufficient to meet our current anticipated working capital
and capital expenditure requirements for the foreseeable future, including
satisfaction of the $4.0 million note obligation.

OPERATING ACTIVITIES.

At March 31, 2000 and 1999, working capital was $11.3 million and $7.4
million, respectively. The increase in working capital is primarily due to the
acquisition of the flash memory card business of Intel Corporation combined with
positive operating results partially offset by higher inventory levels. The
inventory balance increased from $3.0 million at March 31, 1999 to $14.6 million
at March 31, 2000. This significant increase is attributable to approximately
$7.5 million in inventory at March 31, 2000 that was acquired with the
acquisition of Intel's flash memory card business. In addition, we increased our
raw material levels of the flash memory component. The higher flash memory level
is due to higher planned purchases in the fourth quarter due to expected
shortages. Additionally, we have had to increase our inventory levels as
supplier lead times have increased.

INVESTING TRANSACTIONS.

Net capital expenditures amounted to $473,000 during fiscal 2000 compared to
$669,000 in fiscal 1999.

In fiscal 2000, we invested $248,000 for approximately a 7% interest in Elan
Digital Systems Limited ("Elan"). Elan was formed in the United Kingdom during
1976 and offers application engineering and design services for microcontroller
based solutions. We carry this investment on our balance sheet under
"Investments" and report its operating results under the cost method of
accounting.

FINANCING TRANSACTIONS.

In fiscal 2000, we entered into two five-year capital leases for new
manufacturing equipment with monthly payments that aggregate to $22,535.

18
<PAGE>

INVESTMENT IN CENTURY ELECTRONICS MANUFACTURING, INC.

Since October 1996, we have held an equity interest in Century Electronics
Manufacturing, Inc. ("Century"), a contract manufacturer. On February 4, 1998,
Century redeemed a portion of our 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 7%,
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's Series A Convertible
Preferred Stock. We 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 our
investment in Century. During fiscal 1999, we reduced the carrying value of our
investment in Century by $733,000 to $1.7 million, reflecting management's
assessment of the deterioration in value of our investment.

LEGAL PROCEEDINGS

CLASS ACTION LITIGATION

19
<PAGE>

SECURITIES AND EXCHANGE COMMISSION INVESTIGATION

WEBSECURE LITIGATION

OTHER

On May 12, 2000, we received a complaint from Dennis O'Connor alleging that he
is owed approximately $485,000 in connection with legal services provided by
O'Connor, Broude & Aronson prior to May 12, 1997. Because of the early stage of
this litigation, we are not able to make an assessment as to its likely outcome.

FACTORS THAT MAY AFFECT FUTURE RESULTS

From time to time, information we provided or statements made by our
employees may contain forward-looking information. Our 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. We assume no obligation to
update these forward-looking statements to reflect event or changes in
circumstances after the date hereof.

OUR INDUSTRY IS EXPERIENCING SHORTAGES IN THE SUPPLY OF CERTAIN COMPONENTS WHICH
MAY IMPACT OUR ABILITY TO FULFILL ORDERS AND MAINTAIN OUR MARGINS ON OUR SALES.

We are currently experiencing supply shortages, particularly with respect
to computer memory chips used to manufacture PC cards. Currently, certain memory
chips, which are integral components of our products, are on industry-wide
allocation by suppliers. These shortages are currently having an impact on our
business and, if they continue or expand, will have a material adverse effect on
our business, financial condition and results of operations. We believe we will
be able to meet most of our customers' orders for the first half of fiscal 2001.
At this time we are unable to determine what the impact will be thereafter. If
the current shortages become more severe, such shortages will prevent us from
growing our business as we currently contemplate.

WE DEPEND ON A SMALL NUMBER OF LARGE CUSTOMERS TO PURCHASE OUR PRODUCTS, THE
LOSS OF ONE OR MORE OF WHICH COULD ADVERSELY IMPACT OUR RESULTS.

20
<PAGE>

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

For fiscal 2000, no customer represented more than 10% of our sales. Nortel
Networks represented 5% and 14% of our sales in fiscal 2000 and 1999,
respectively. During fiscal 1999, Nortel Networks engaged several contract
manufacturers to complete the final assembly of a majority of its products for
which we have historically supplied PC cards. Our sales to these contract
manufacturers for fiscal 2000 and 1999 represented 14% of our sales. One of
these contract manufacturers recently merged with one of our 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 us, it could have a material adverse effect on our business, financial
condition and results of operations.

We generally enter into individual purchase orders with our customers and
have no firm long-term volume commitments from any of our major customers. We
have experienced fluctuations in order levels from period to period and expect
we will continue to experience such fluctuations in the future. Our business,
financial condition and results of operations depend in a significant part on
our ability to obtain orders from new customers, as well as on the financial
condition and success of these customers. Therefore, any adverse factors
affecting any of our customers or their customers could have a material adverse
effect on our business, financial condition and results of operations. Frequent
mergers, consolidations, acquisitions, corporate restructurings and changes in
management characterize the industries served by us, and we have, from time to
time, experienced reductions in purchase orders from customers as a result of
such events. We can not assure you that such events involving our customers will
not result in a significant reduction in the level of our sales to such
customers or the termination of our relationship with such customers. In
addition, the percentage of our sales to individual customers can and do
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 other customer orders cannot be assured. These risks are
exacerbated because a majority of our 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. We
anticipate that a significant portion of our sales for the foreseeable future
will continue to be concentrated in a small number of customers in the
electronics industry.

INTENSE COMPETITION COULD REDUCE OUR MARKET SHARE AND HARM OUR FINANCIAL
PERFORMANCE.

The market in which we compete is intensely competitive. We compete with
manufacturers of PC cards and related products, including M-Systems Flash Disk
Pioneers Ltd., SanDisk Corporation, Simple Technologies, Smart Modular
Technologies, Inc., Viking Components, Inc. and White Electronic Designs
Corporation as well as with electronic component manufacturers who also
manufacture PC cards, including Hitachi Semiconductor, Inc. and Mitsubishi
Electric Corporation. Certain of these competitors supply us 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 we can as a result of their higher
levels of integration. In addition, many of our competitors or potential
competitors have greater name recognition, larger installed bases of customers,
more extensive engineering, manufacturing, marketing, distribution and support
capabilities and greater financial, technological and personnel resources than
we do. We expect competition to increase in the future from existing competitors
and from other companies that may enter our existing or future markets with
similar or alternative products that may be less costly or provide additional
features. We believe that our ability to compete successfully depends on a
number of factors, including the following:

<TABLE>
<S> <C>
o product quality and performance o order turnaround
o provision of competitive design capabilities o timely response to advances in technology
o timing of new product introductions by o production efficiency
us, our customers and competitors o number and nature of our competitors
o price in a given market
o ability to obtain raw materials o general market and economic conditions

</TABLE>

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

21
<PAGE>

WE HAVE HISTORICALLY RELIED ON ONE PRODUCT LINE AND REDUCED DEMAND FOR THIS
PRODUCT LINE WOULD HARM OUR FINANCIAL PERFORMANCE AND FINANCIAL CONDITION.

PC cards and related services constituted 100% of our sales for fiscal 2000
and 1999. The market for PC cards is continually evolving and we can not assure
you that computing and electronic equipment that utilizes PC cards will not be
modified to render our PC cards obsolete or otherwise have the effect of
reducing demand for our PC cards. In addition, we face intense competition from
competitors that have greater financial, marketing and technological resources
than we have. This competition may reduce demand for our PC cards. Decreased
demand for the our PC cards as a result of technological change, competition or
other factors would have a material adverse effect on our business, financial
condition and results of operations.

REDUCTIONS IN OUR AVERAGE SALES PRICE AS A RESULT OF PRICING COMPETITION OR
CHANGES IN OUR PRODUCT MIX MAY REDUCE OUR GROSS MARGIN AND HARM OUR OVERALL
FINANCIAL PERFORMANCE.

Although we have recently experienced an increase in our average sales
prices, we have in the past experienced, and may in the future experience,
declining average sales prices for our products. The markets in which we compete
are characterized by intense competition. Therefore, we expect to incur
increasing pricing pressures from our customers in future periods, which may
result in declines in average sales prices for our products. We believe that we
must continue to achieve manufacturing cost reductions, develop new products
that incorporate customized features and increase our volume of PC card sales in
order to offset the effect of possible declining average sales prices. If we are
not able to achieve such cost reductions, develop new customized products or
increase our unit sales volumes, our business, financial condition and results
of operations could be materially adversely impacted. In addition, a relative
increase in the mix of our business towards lower margin, non-custom PC cards or
other products could have a material adverse effect on our business.

OUR QUARTERLY RESULTS MAY FLUCTUATE SIGNIFICANTLY AS A RESULT OF A VARIETY OF
FACTORS WHICH MAY NEGATIVELY IMPACT THE MARKET PRICE OF OUR COMMON STOCK.

Our 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:

<TABLE>
<S> <C>
o timing of receipt and delivery of o competitive pricing pressures
significant orders for our products o increases in raw material costs
o changes in customer and product mix o production difficulties
o quality of our products o write-downs of investments in other companies
o exchange rate fluctuations o market acceptance of new or enhanced versions
o litigation settlements and revisions of of products
estimates in connection with legal matters o raw material shortages

</TABLE>

Other factors, some of which are beyond our control, may also cause
fluctuations in our results of operations. We have short lead times from
customers, and accordingly do not have a significant backlog. Additionally, as
is the case with many high technology companies, a significant portion of our
orders and shipments often occurs towards the end of a quarter. As a result,
revenues for a quarter are not predictable, and our revenues may shift from one
quarter to the next, having a significant effect on reported results.

OUR TRADING PRICE MAY FLUCTUATE SIGNIFICANTLY WHICH MAY NEGATIVELY IMPACT OUR
STOCKHOLDERS' ABILITY TO OBTAIN LIQUIDITY AT ACCEPTABLE LEVELS, IF AT ALL.

The trading price of our common stock may fluctuate widely in response to,
among other things, the following:

<TABLE>
<S> <C>
o quarter-to-quarter operating results o industry conditions
o awards of orders to us o new product or product development
or our competitors announcements by us or our competitors
o changes in earnings estimates by analysts o resolution of pending SEC investigation

</TABLE>

22
<PAGE>
We can not assure you that our 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. Our common stock is currently traded on the over-the-counter Bulletin
Board, which we believe has resulted in a minimal amount of analyst coverage and
liquidity.

THE LOSS OF OUR SENIOR MANAGEMENT OR OTHER KEY PERSONNEL COULD ADVERSELY AFFECT
OUR BUSINESS.

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

FAILURE TO CONTINUE TO DEVELOP ENHANCEMENTS TO OUR PRODUCTS, NEW APPLICATIONS
AND FEATURES THAT RESPOND TO THE CHANGING NEEDS OF OUR CUSTOMERS, RAPID
TECHNOLOGICAL CHANGE AND ADVANCES INTRODUCED BY OUR COMPETITORS WILL IMPAIR OUR
ABILITY TO INCREASE OUR MARKET SHARE AND EXPAND OUR BUSINESS.

Rapid technological change, evolving industry standards and rapid product
obsolescence characterize the markets for our products. Rapid technological
development substantially shortens product life cycles, and our growth and
future success will depend upon our 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. In addition, even after
customer acceptance of these products, we will need to be able to promptly
implement enhancements and adaptations in response to the same industry drivers.
We have limited resources compared to our competitors and focus our development
efforts at any given time to a relatively narrow scope of development projects.
We can not assure you that we will select the correct projects for development
or that our development efforts will be successful. In addition, no assurance
can be given that we 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 our current or future
products will conform to applicable industry standards. If we are unable to
introduce new products or enhancements on a timely basis, our business,
financial condition and results of operations could be adversely affected.

WE DERIVE REVENUE FROM OUR INTERNATIONAL OPERATIONS AND ARE SUBJECT TO THE
GENERAL RISKS OF DOING BUSINESS ABROAD, AS WELL AS FOREIGN CURRENCY EXCHANGE
FLUCTUATIONS, EACH OF WHICH MAY ADVERSELY IMPACT OUR OPERATIONS AND FINANCIAL
PERFORMANCE.

For fiscal 2000 and 1999, we derived approximately 20% and 12%,
respectively, of our sales from outside the United States. Our international
operations are subject 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. We are continuing to assess the Euro's impact on our
business. We are reviewing the ability of our accounting and information systems
to handle the conversion, the legal and contractual implications of agreements,
as well as pricing strategies. We expect that any additional modifications to
our operations and systems will be completed on a timely basis and do not
believe the conversion will have a material adverse impact on our operations.
However, there can be no assurance that the we will be able to modify
successfully all systems and contracts to comply with Euro requirements.

23
<PAGE>

WE MAY BE UNABLE TO ADEQUATELY PROTECT OUR PROPRIETARY RIGHTS, WHICH COULD
SIGNIFICANTLY HARM OUR ABILITY TO GAIN MARKET SHARE AND INCREASE OUR REVENUES.

Our products require technical know-how to engineer and manufacture. To the
extent proprietary technology is involved, we rely on trade secrets that we seek
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 we will have adequate remedies for any breach, or
that our trade secrets will not otherwise become known to, or independently
developed by our existing or potential competitors. We historically have not
sought to protect our proprietary information through patents or registered
trademarks. There can be no assurance that our products will not infringe on
patents held by others. We may be involved from time to time in litigation to
determine the enforceability, scope and validity of our rights. Litigation could
result in substantial cost to us and could divert the attention and time of our
management and technical personnel from our operations.

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

OUR RECENTLY ACQUIRED BUSINESS IS CONCENTRATED WITH A LIMITED NUMBER OF
CUSTOMERS, OF WHICH THE PRIMARY CUSTOMER HAS NOTIFIED US THAT IT WILL NO LONGER
PURCHASE PRODUCTS FROM US, AND THE LOSS OF CUSTOMERS COULD IMPACT OUR FINANCIAL
PERFORMANCE AND RESULTS IF WE ARE UNABLE TO SUBSTITUTE NEW CUSTOMERS OR EXPAND
SALES TO EXISTING CUSTOMERS.

On December 29, 1999, we acquired the flash memory card business of Intel
consisting of the PCMCIA card families (Series 2, Value series 100 and 200) and
the miniature card families (Series 100 and 200), as well as inventory. Cisco
Systems, the principal customer of this acquired business, has discontinued
purchasing products from the acquired business. In the event we are unable to
replace the business from Cisco Systems or any other customers who may terminate
or reduce the extent of their relationship with us with additional business from
existing customers or business from new customers, our business, financial
condition and results of operations could be materially and adversely impacted.

OUR BUSINESS IS SUBJECT TO ENVIRONMENTAL REGULATIONS WHICH, IF NOT COMPLIED
WITH, COULD IMPAIR OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS
AND RESTRICT OUR ABILITY TO EXPAND OR ENHANCE OUR FACILITIES.

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

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information required by this Item is incorporated herein by reference from
the discussion under the heading Fair Value of Financial Instruments in the
notes to the consolidated financial statements included in this Annual Report on
Form 10-K.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

24
<PAGE>

REPORTS OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders of Centennial Technologies, Inc.

We have audited the accompanying consolidated balance sheets of Centennial
Technologies, Inc. (the "Company") as of March 25, 2000 and March 31, 1999, and
the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the two years in the period then ended. Our audits also
included the financial statement schedule listed in the Index at Item 14(a)(2).
These financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Centennial Technologies, Inc. at March 25, 2000 and March 31, 1999, and the
consolidated results of its operations and its cash flows for each of the two
years in the period ended March 25, 2000, in conformity with accounting
principles generally accepted in the United States. Also, in our opinion, the
related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.

/s/ Ernst & Young LLP

Boston, Massachusetts
May 1, 2000, except for the last paragraph of Note 15, as to which the date is
May 12, 2000

To the Board of Directors and Stockholders of Centennial Technologies, Inc.:

In our opinion, the consolidated financial statements listed in the
accompanying index on page 44 present fairly, in all material respects, the
results of operations and cash flows of Centennial Technologies, Inc. and
Subsidiaries for the twelve months ended March 31, 1998 in conformity with
generally accepted accounting principles. In addition, in our opinion, the
financial statement schedule listed in the index on page 44 presents fairly, in
all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. These financial
statements and financial statement schedule are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinions expressed above.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts
May 15, 1998
25
<PAGE>

CENTENNIAL TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
March 31,
2000 1999
--------------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................................... $ 5,780 $ 4,922
Short-term investments.............................................. -- 2,500
Trade accounts receivable, less allowances of $200 and $645,
respectively...................................................... 3,838 3,876
Inventories......................................................... 14,574 3,049
Other current assets................................................ 720 356
----------- -----------
Total current assets.................................................. 24,912 14,703

Equipment and leasehold improvements.................................. 4,821 3,967
Less accumulated depreciation and amortization...................... (2,131) (1,508)
------------ ------------
2,690 2,459
Investments........................................................... 1,948 1,700
Intangibles, net...................................................... 469 --
Other assets.......................................................... 354 92
----------- -----------

Total assets.......................................................... $ 30,373 $ 18,954
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued expenses............................... $ 9,436 $ 7,222
Note payable to related party....................................... 4,000 --
Obligations under capital leases, current portion................... 215 36
----------- -----------
Total current liabilities............................................. 13,651 7,258

Long-term obligations under capital leases............................ 827 --

Commitments and contingencies (Notes 8 and 15)

Stockholders' equity:
Preferred Stock, $0.01 par value; 1,000 shares authorized, 60 shares
issued and outstanding at March 31, 2000 and none at March 31, 1999
(liquidation preference value $4,800)............................ 1 --
Common Stock, $0.01 par value; 6,250 shares authorized, 3,186 and 2,569
issued and outstanding at March 31, 2000 and 1999, respectively.. 32 26
Additional paid-in capital......................................... 85,937 84,379
Accumulated deficit................................................ (70,044) (72,697)
Accumulated other comprehensive loss............................... (31) (12)
----------- ------------
Total stockholders' equity............................................ 15,895 11,696
----------- -----------

Total liabilities and stockholders' equity............................ $ 30,373 $ 18,954
=========== ===========
</TABLE>
See accompanying notes.

26
<PAGE>

CENTENNIAL TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

<TABLE>
<CAPTION>
Years ended March 31,
--------------------------------------
2000 1999 1998
---------- ---------- ----------
<S> <C> <C> <C>
Net sales......................................... $ 35,580 $ 27,633 $ 28,263
Cost of goods sold................................ 25,040 18,968 23,683
---------- ---------- ----------
Gross profit................................... 10,540 8,665 4,580

Operating expenses:
Research and development....................... 1,887 750 838
Selling, general and administrative............ 6,673 6,132 9,957
---------- ---------- ---------
Operating income (loss) ....................... 1,980 1,783 ( 6,215)

Other income (expense):...........................
Loss on disposal of equipment.................. (343) -- --
Loss on investment activities.................. -- (733) (14,065)
Special investigation costs.................... -- -- (597)
Provision for loss on inventory subject to
customer dispute............................. -- -- (1,841)
Proceeds from resolution of customer dispute... -- 1,600 --
Other.......................................... 940 -- --
Other income (expense)......................... 46 (132) (258)
Net interest income (expense).................. 185 344 (56)
-------- -------- --------
Income (loss) before income taxes and equity in
earnings of affiliate........................ 2,808 2,862 (23,032)
Equity in earnings of affiliate................... -- -- 423
--------- --------- ---------
Income (loss) before income taxes.............. 2,808 2,862 (22,609)
Provision for income taxes........................ 155 56 --
----------- -------- --------

Net income (loss)............................ $ 2,653 $ 2,806 $ (22,609)
========== ========== =========

Net income (loss) per share - basic............... $ 0.83 $ 0.97 $ (9.80)
Net income (loss) per share - diluted............. $ 0.76 $ 0.96 $ (9.80)
Weighted average shares outstanding -basic........ 3,186 2,907 2,308
Weighted average shares outstanding - diluted..... 3,508 2,939 2,308

</TABLE>
See accompanying notes.

27
<PAGE>

CENTENNIAL TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Three years ended March 31, 2000
(in thousands)
<TABLE>
<CAPTION>
Accumulated
Additional Other Total
Preferred Stock Common Stock Paid-in Accumulated Comprehensive Stockholders'
Shares Amount Shares Amount Capital Deficit Loss Equity
--------- ---------- ----------- ---------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1997...... 2,218 $ 22 $ 82,395 $ (52,738) $ (233) $ 29,446
Comprehensive income (loss):
Net loss..................... (22,609) (22,609)
Other comprehensive
income-foreign
currency adjustment........ (156) 233 77
-----------
Total comprehensive loss....... (22,532)
------------
Exercise of options............ 15 1 206 207
Issuance of Common Stock in
connection with
acquisition of
affiliates................... 99 1 2,180 2,181
Retirement of shares (20) (1) 1 0
repurchased....................
Settlement of claims related
to
ViA investment............... (400) (400)
------- ------- ---------- -------- ----------- ----------- ----------- -----------
Balance at March 31, 1998...... 2,312 23 84,382 (75,503) -- 8,902
------- ------- ---------- -------- ----------- ----------- ----------- -----------
Comprehensive income (loss):
Net income................... 2,806 2,806
Other comprehensive loss -
foreign currency
translation
adjustment................. (12) (12)
-----------
Total comprehensive income..... 2,794
-----------
Partial distribution of
shares in
settlement of class action
litigation.................. 257 3 (3) --_
------- ------- ---------- -------- ----------- ----------- ----------- -----------
Balance at March 31, 1999...... 2,569 26 84,379 (72,697) (12) 11,696
------- ------- ---------- -------- ----------- ----------- ----------- -----------
Comprehensive income (loss):
Net income................... 2,653 2,653
Other comprehensive loss -
foreign currency
translation
adjustment................. (19) (19)
-----------
Total comprehensive income..... 2,634
------------
Purchase of fractional
shares in connection with
1 for 8 reverse stock split.. (6) (35) (35)
Exercise of options............ 8 41 41
Issuance of Common Stock
under employee stock
option plan.................. 3 23 23
Issuance of Preferred Stock
in connection with
business acquisition......... 60 $ 1 2,075 2,076
Adjustment related to
settlement of litigation
matters...................... (540) (540)
Final distribution of shares
in
settlement of class action
litigation.................. 612 6 (6) --
------- ------- ---------- --------- ---------- ----------- ----------- -----------
Balance at March 31, 2000...... 60 $ 1 3,186 $ 32 $ 85,937 $ (70,044) $ (31) $ 15,895
======= ======= ========== ========= ========== =========== =========== ===========
</TABLE>
See accompanying notes.

28
<PAGE>

CENTENNIAL TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<TABLE>
<CAPTION>
Years ended March 31,
-----------------------------------------
2000 1999 1998
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)............................. $ 2,653 $ 2,806 $(22,609)
Adjustments to reconcile net income (loss) to
net cash used in operating activities
Depreciation and amortization................. 1,079 1,057 1,035
Equity in earnings of affiliate............... -- -- (423)
Provision for loss on accounts receivable..... (39) 170 177
Provision for losses on sale of equipment..... 343 -- (480)
Revision of an estimate of a litigation (940) -- --
settlement......................................
Provision for loss on investments............. -- -- 7,019
Provision for loss on investment in affiliates -- 733 5,142
Provision for loss on inventory............... -- (2,114) --
Loss on disposal of capital equipment......... -- 128 1,315
Other non-cash items.......................... -- 41 --
Change in operating assets and liabilities:
Accounts receivable.......................... 77 (1,237) 2,631
Accounts receivable from affiliate........... -- -- 676
Inventories.................................. (4,141) 1,374 5,485
Notes receivable from affiliate.............. -- -- 4,129
Recoverable income taxes..................... 171 7,019
Other assets................................. (238) 494 695
Accounts payable and accrued expenses........ 2,449 (904) (3,884)
Income taxes payable......................... 56 27
-------- --------- --------
Net cash provided by operating activities.. 1,243 2,775 7,954

Cash flows from investing activities:
Cash paid for acquired business............... (2,000) -- --
Capital expenditures.......................... (473) (669) (1,265)
Disposal of capital equipment................. 40 --
Purchase of held-to-maturity and
available-for-sale Securities............... -- (2,500) --
Maturities from sale of available-for-sale 2,500 -- --
securities......................................
Investment.................................... (248) -- --
Proceeds from sale of investment in affiliates -- -- 8,983
-------- -------- --------
Net cash (used in) provided by investing (221) (3,129) 7,718
activities......................................

Cash flows from financing activities:
Net repayments under line of credit........... -- -- (10,090)
Borrowings from term loans.................... -- -- 938
Repayments on term loans and leases........... (174) (70) (938)
Payments for fractional shares resulting from (35) -- --
split...........................................
Proceeds from employee stock purchase plan.... 23 -- --
Payments on equipment lease financing......... -- -- (566)
Proceeds from exercise of stock options....... 41 -- 208
Proceeds from exercise of warrants............ -- -- --
Foreign currency translation of equity -- -- 77
-------- -------- --------
investment......................................
Net cash used in financing activities...... (145) (70) (10,371)
-------- -------- --------
Effect of exchange rate changes on cash......... (19) (12) --
-------- -------- --------
Net increase (decrease) in cash and cash 858 (436) 5,301
equivalents.....................................
Cash and cash equivalents at beginning of period 4,922 5,358 57
-------- -------- --------
Cash and cash equivalents at end of period...... $ 5,780 $ 4,922 $ 5,358
======== ======== ========

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest..................................... $ 35 $ 4 $ 452
======== ======== ========
Income taxes................................. $ 138 $ -- $ 18
======== ======== ========

Non-cash transactions:
Preferred Stock issued in connection with
the acquired business....................... $ 2,076 $ -- $ --
======== ======== ========
Note payable issued in connection with the
acquired business........................... $ 4,000 $ -- $ --
======== ======== ========
Other assets received in connection with the
acquired business, net of transaction costs
of $165..................................... $ 223 $ -- $ --
======== ======== ========
Equipment acquired under capital leases...... $ 1,180 $ -- $ --
======== ======== ========
Issuance of Common Stock in connection with
purchase of investments..................... $ -- $ -- $ 2,181
======== ======== ========
Settlement of claim related to ViA investment $ -- $ -- $ 400
======== ======== ========
</TABLE>
See accompanying notes.

29
<PAGE>

CENTENNIAL TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

BASIS OF PRESENTATION

The consolidated financial statements of Centennial Technologies, Inc.
("Centennial;" also at times referred to as "we", "our" or "us") include the
accounts of Centennial and all wholly owned subsidiaries. Investments in
companies in which ownership interests range from 20 to 50 percent and
Centennial exercises significant influence over operating and financial policies
are accounted for using the equity method. Centennial's investment in Century
Electronics Manufacturing, Inc. ("Century"), of which we had a 67% equity
ownership position at March 31, 1997, has been accounted for using the equity
method for fiscal 1997 because Centennial had a plan of disposition of a portion
of the investment in place prior to March 31, 1997 and the transaction closed on
July 1, 1997. During fiscal 1998, Centennial further reduced its equity
ownership position in Century, and thereafter has accounted for its remaining
investment using the cost method. See Note 6. Other investments are accounted
for using the cost method. See Note 7. All significant intercompany balances and
transactions have been eliminated.

FISCAL YEAR

In the year ended March 25, 2000, we changed our fiscal year to a 52/53
week ending on the last Saturday of March. All references to "fiscal 2000",
"fiscal 1999" and "fiscal 1998" in the financial statements and accompanying
notes relate to the years ended March 25, 2000, March 31, 1999 and March 31,
1998, respectively. For ease of presentation, March 31 has been utilized for all
financial statement captions for the fiscal year ended March 25, 2000.

2. SUMMARY OF OTHER SIGNIFICANT ACCOUNTING POLICIES

REVENUE RECOGNITION

Revenue from product sales is recognized at time of shipment and when title
passes.

WARRANTY COSTS

We offer a limited warranty, normally for one year, on materials and
workmanship for our products. Costs relating to product warranty are generally
accrued at time of shipment. We have not experienced material costs associated
with our warranty policy.

RESEARCH AND DEVELOPMENT COSTS

Expenditures relating to the development of new products and processes,
including significant improvements and refinements to existing products that are
expensed as incurred.

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.

CONCENTRATION OF CREDIT RISK

Financial instruments, which potentially subject us to concentration of
credit risk, consist principally of cash and cash equivalents, short-term
investments and trade receivables. At March 31, 2000, substantially all of our
cash, cash equivalents and short-term investments were held by one financial
institution. We primarily sell and grant credit to domestic and foreign original
equipment manufacturers and distributors. We extend credit based on an
evaluation of the customer's financial condition and generally do not require
collateral. We monitor our exposure for credit losses and maintain allowances
for anticipated losses. At March 31, 2000 and 1999, the allowance for doubtful
accounts was $200,000 and $645,000, respectively.

30
<PAGE>
CENTENNIAL TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

2. SUMMARY OF OTHER SIGNIFICANT ACCOUNTING POLICIES (Continued)

For fiscal 2000 no customer represented more than 10% of our sales. Nortel
Networks represented 5%, 14% and 29% of our sales in fiscal 2000, 1999 and 1998,
respectively. During fiscal 1999, Nortel Networks engaged several contract
manufacturers to complete the final assembly of a majority of its products for
which we have historically supplied PC cards. Our sales to these contract
manufacturers for both fiscal 2000 and 1999 represented 14% of our sales. One of
these contract manufacturers recently merged with one of our competitors, which
could result in a decrease of sales to this contract manufacturer. A relatively
small number of customers account for a significant percentage of our sales. If
any of these customers were to reduce significantly the amount of business they
conduct with us, it could have a material adverse effect on our business,
financial condition and results of operations. At March 31, 1999 and 1998,
Nortel Networks accounted for approximately $.1 million or 2% and $1.1 million
or 40%, respectively, of our accounts receivable balance.

Approximately 20%, 12% and 14% of our sales in fiscal 2000, 1999 and 1998,
respectively, were outside the United States, primarily in several Western
European countries, Israel and Canada. No one country comprised more than 10% of
our sales.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Our financial instruments consist principally of cash and cash equivalents,
short-term investments, accounts receivable, accounts payable, accrued expenses
and a note payable. We believe all of the carrying amounts approximate fair
value.

INVENTORIES

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

EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Equipment is stated at cost. Major renewals and improvements are
capitalized while repair and maintenance charges are expensed when incurred.
Depreciation is provided over the estimated useful life of the respective
assets, ranging from three to seven years, on a straight-line basis. Leasehold
improvements are amortized over the lesser of the term of the lease or the
estimated useful life of the related assets. When assets are sold or retired,
their cost and related accumulated depreciation are removed from the accounts.
Any gain or loss is included in the determination of net income. Amortization of
equipment under capital leases is included with depreciation and amortization in
the accompanying financial statements.

INCOME TAXES

We account for income taxes by the liability method as set forth in
Statement of Financial Accounting Standards (SFAS) Statement No. 109, Accounting
for Income Taxes. Under the liability method, deferred taxes are determined
based on the difference between the financial statement and tax basis of assets
and liabilities using enacted tax rates in effect in the years in which the
differences are expected to reverse.

STOCK-BASED COMPENSATION

We account for stock-based awards to employees in accordance with
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees (APB 25) and have adopted the disclosure-only alternative to FASB
Statement No. 123, Accounting for Stock-Based Compensation.

INCOME (LOSS) PER SHARE

We compute net income (loss) 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 (which in our case are primarily stock options and the
Series B Convertible Preferred Stock). Diluted net income per share includes all
potentially dilutive securities using the treasury stock method unless the
effect of such potentially dilutive securities is anti-dilutive.

31
<PAGE>
CENTENNIAL TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

2. SUMMARY OF OTHER SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

On July 20, 1999, our shareholders approved a one-for-eight reverse stock
split of our common stock, which was effective as of the opening of the stock
markets based in New York on July 23, 1999. In the accompanying financial
statements, all per share amounts and numbers of shares have been restated to
reflect this reverse stock split of Centennial's common stock, which was
effective on July 23, 1999.

All shares issuable in connection with the settlement of the Consolidated
Litigation described in Note 15 are included in the weighted average shares
outstanding calculation as of July 20, 1998, the date on which our settlement of
the Consolidated Litigation became effective. All shares issuable in connection
with the settlement of the WebSecure litigation described in Note 15 are
included in the weighted average share outstanding calculation as of September
17, 1999, the date the settlement was effective.

The following table sets forth the computation of net income (loss) per
share for the years ended March 31, 2000, 1999 and 1998 (in thousands, except
per share amounts).

2000 1999 1998
---------- ---------- ------------
Basic Income (Loss) Per Share
Numerator
Net income (loss) $ 2,653 $ 2,806 $ (22,609)
Denominator
Common shares outstanding 3,186 2,907 2,308
---------- ---------- ----------
Basic income (loss) per share $ 0.83 $ 0.97 $ (9.80)
========== ========== ==========

Diluted Income (Loss) Per Share
Numerator
Net income (loss) $ 2,653 $ 2,806 $ (22,609)
Denominator
Common shares outstanding 3,186 2,907 2,308
Stock options and convertible
securities 322 32 --
---------- ---------- ----------
Shares used in computing
diluted income (loss) per share 3,508 2,939 2,308
---------- ---------- ----------
Diluted income (loss) per share $ 0.76 $ 0.96 $ (9.80)
========== ========== ==========

Options to purchase 39,875, 107,912 and 366,500 shares of common stock on
March 31, 2000, 1999 and 1998, respectively, were excluded from the calculations
of diluted net income (loss) per share above as the effect of their inclusion
would have been anti-dilutive.

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.

COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income (loss) is comprised of cumulative
translation adjustments.
32
<PAGE>
CENTENNIAL TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

2. SUMMARY OF OTHER SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

SEGMENTS OF BUSINESS ENTERPRISE

We operate in a single industry segment, the design and manufacture of high
technology memory chip based products used in industrial and commercial
applications.

ACCOUNTING PRONOUNCEMENTS

In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin 101, "Revenue Recognition in Financial Statements"
("SAB 101") which provides guidance related to revenue recognition based on
interpretations and practices followed by the SEC. SAB 101 is effective the
second quarter of fiscal 2001 and requires companies to report any changes in
revenue recognition as a cumulative change in accounting principle at the time
of implementation in accordance with APB Opinion No. 20, "Accounting Changes."
We do not expect the adoption of SAB 101 to have a material impact on our
financial position or results of operations.

RECLASSIFICATIONS

Certain amounts in the fiscal 1999 and 1998 consolidated financial
statements have been reclassified to conform to the current year presentation.

3. INVENTORIES

Inventories consisted of the following at March 31, 2000 and 1999 (in
thousands):

2000 1999
------- -------

Raw materials, primarily electronic components....... $ 7,989 $ 1,709
Work in process...................................... 454 399
Finished goods....................................... 6,131 941
------- -------
$14,574 $ 3,049
======= =======

We maintain levels of inventories that we believe are necessary based upon
assumptions concerning our growth, mix of sales and availability of raw
materials. Changes in those underlying assumptions could affect our estimates of
inventory valuation.

In fiscal 1998, we reserved fully $1.8 million of costs related to
inventory specifically purchased and manufactured pursuant to a customer
purchase order (the "Custom Inventory"). The customer later attempted to cancel
the purchase order. We disputed the customer's claim that the purchase order
cancellation was effective, and sought legal remedies related thereto. During
fiscal 1999, we agreed to settle our claim against the customer, in return for a
$1.6 million cash payment, which was included in other income in fiscal 1999,
and the right to retain and sell the Custom Inventory at issue. We sold portions
of the Custom Inventory during fiscal 2000 and fiscal 1999 for approximately
$1.0 million and $1.2 million, respectively, which have been included in net
sales for each respective fiscal year.

33
<PAGE>
CENTENNIAL TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

4. EQUIPMENT AND LEASEHOLD IMPROVEMENTS

Equipment and leasehold improvements consisted of the following at March
31, 2000 and 1999 (in thousands):

2000 1999
-------------- ---------

Equipment...................................... $ 3,442 $ 3,702
Equipment under capital leases................. 1,180 106
Leasehold improvements......................... 199 159
-------- --------
4,821 3,967
Accumulated depreciation and amortization...... (2,131) (1,508)
-------- --------
$ 2,690 $ 2,459
======== ========

During fiscal 2000, we incurred a $343,000 loss on the disposal of certain
equipment that was replaced. During fiscal 1999, we wrote off equipment with an
original cost of $885,000 and accumulated depreciation of $757,000 in connection
with the upgrading of our manufacturing processes and the remodeling of our
office space. We also disposed of equipment with an original cost of $73,000 and
accumulated depreciation of $33,000 in connection with these activities. During
fiscal 1998, we paid in full our lease obligations to the bank that had been
providing us with our line of credit (See Note 8), and disposed of equipment
having an original cost and accumulated depreciation of approximately $691,000.

Depreciation expense (including amortization of equipment under capital
leases) for fiscal 2000, 1999 and 1998 was approximately $1,079,000, $1,057,000
and $1,035,000, respectively.

5. ACQUISITION OF THE FLASH MEMORY CARD BUSINESS OF INTEL CORPORATION

On December 29, 1999, we acquired the flash memory card business of Intel
Corporation ("Flash Card Business") for a cash payment of $2.0 million, a
secured promissory note for $4.0 million, and 60,000 shares of Centennial Series
B Convertible Preferred Stock. The transaction has been recorded as a purchase
for accounting purposes and the consolidated financial statements include the
operating results of this business from the date of the acquisition.

The promissory note, secured by all of the assets of Centennial, bears
interest at the rate of 9% and the principal and interest are due and payable on
December 29, 2000. The convertible preferred stock is convertible into shares
our common stock at a ratio of ten shares of common stock for one share of
preferred stock. The preferred stock has certain registration rights and a
liquidation preference value of $4.8 million.

A summary of the assets acquired is shown below (in thousands).

Inventory $ 7,384
Intangible assets 469
Other 388
-------
8,241
Less:
Preferred stock issued (2,076)
Note payable (4,000)
Acquisition costs (165)
-------

Cash used to acquire the business
assets $ 2,000
=======

34
<PAGE>
CENTENNIAL TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

5. ACQUISITION OF THE FLASH MEMORY CARD BUSINESS OF INTEL CORPORATION(CONTINUED)

Intangible assets are being amortized on a straight-line basis over a
period of three years. There were no material liabilities assumed by us as a
result of this transaction. We review the value of intangible assets whenever
events or changes in circumstances indicate that the carrying value may not be
recoverable.

There is a contingent payment of up to $4.5 million due to Intel
Corporation ("Intel") in January 2001 based upon units shipped to Cisco Systems.
Following the acquisition, Cisco Systems discontinued purchasing from us. As a
result, we expect that we will not be required to make any portion of the
contingent payment. Cisco Systems represented approximately $2.0 of our net
sales in the fourth fiscal quarter of 2000.

The following unaudited pro forma consolidated results of operations have
been prepared as if the acquisition of the acquired business had occurred at the
beginning of the respective fiscal period.

Years Ended March 31, 2000 1999
---- ----
(in thousands, except per share amounts)

Revenues................................... $ 58,635 $ 57,002
Net income................................. $ 830 $ 1,776
Net income per share - diluted............. $ 0.21 $ 0.50

The unaudited pro forma financial statements do not purport to represent
what our results of operations would actually have been if the acquisition had
in fact occurred on such dates or to project our results of operations as of any
future date or for any future period. The unaudited pro forma data is not
indicative of the operating results that would have been achieved had the
acquisition been consummated at the dates indicated, nor is it indicative of
future operating results. The flash memory component used in the Flash Card
Business is reflected in the historical financial statements of the Flash Card
Business at Intel's actual manufacturing cost.

6. INVESTMENT IN CENTURY ELECTRONICS MANUFACTURING, INC.

Since October 1996, we have held an interest in Century Electronics
Manufacturing, Inc. ("Century"), a contract manufacturer. On February 4, 1998,
Century redeemed a portion of our debt and equity holdings in exchange for $9.7
million in cash, $4.0 million of Century Series B Convertible Preferred Stock
and the forgiveness of interest. The Series B Convertible Preferred Stock is
equivalent upon conversion to approximately 7%, 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. We recorded a loss
on investment activities of $5.1 million during fiscal 1998 to reflect the
difference between the fair value of the consideration received from Century and
the carrying value of our investment in Century. During fiscal 1999, Centennial
reduced the carrying value of its investment in Century by $733,000 to $1.7
million, reflecting our assessment of the decline in the value of this
investment.

7. OTHER INVESTMENTS

VIA, INC.

In December 1996, we issued 156,000 unregistered shares of our Common Stock
in exchange for a 12% interest in ViA, Inc., a development stage privately held
technology company that designs, develops, and markets miniature communication
and computing products. We accounted for this investment during fiscal 1997
using the equity method, and amortized the purchase price in excess of its
interest in the investee's underlying net assets, which excess amounted to $5.0
million, over 60 months. During fiscal 1998, we reserved the carrying value of
this investment, and recorded a loss on investment activities during fiscal 1998
related thereto of approximately $4.4 million.

35
<PAGE>
CENTENNIAL TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

7. OTHER INVESTMENTS (CONTINUED)

INTELLIGENT TRUCK PROJECT, INC., FLEET.NET, INC. AND SMART TRAVELER PLAZAS, INC.

On December 13, 1996, we entered into merger agreements with Intelligent
Truck Project, Inc., Fleet.Net, Inc. and Smart Traveler Plazas, Inc.
(collectively, "ITP/Fleet.Net") agreeing to exchange an aggregate of 792,960
shares of our Common Stock for all of the outstanding common stock of the
acquired businesses. On May 15, 1997, we and the principal shareholder of
ITP/Fleet.Net agreed to complete a merger. The merger has been recorded using
purchase accounting, and the excess (approximately $3.0 million) of the purchase
price over the fair value of assets acquired was written off in fiscal 1998
because of the uncertainties related to the future operations of ITP/Fleet.Net.

INFOS INTERNATIONAL, INC.

During fiscal 1997, we acquired an interest in Infos International, Inc.
("Infos"), a supplier of intelligent hand held data collection equipment for
route and shop floor accounting. The purchase price amounted to approximately
$3.0 million in cash and 230,000 shares of our Common Stock having a fair market
value of $3.9 million at date of acquisition. On February 6, 1998, we, Infos and
shareholders of Infos entered into a transaction whereby we agreed to return our
shares of Infos capital stock in exchange for an agreement to sell Infos
inventory and equipment arising from the contract manufacturing relationship
between Infos and Century, which relationship was terminated. Accordingly, the
full amount of the investment cost ($7.0 million) has been written off.

INDUSTRIAL IMAGING, INC.

We purchased for $730,000 in cash and conversion of $200,000 of notes a
minority interest in Industrial Imaging, Inc. which designs, manufactures and
markets automated optical vision and individual imaging systems for inspection
and identification of defects in printed circuit boards. In addition, effective
April 1, 1996 and expiring June 30, 1997, we agreed to provide procurement
services and buy material using our credit arrangements for a service fee of
$200,000. Purchases aggregating $1.4 million were made during the aforementioned
period on behalf of the investee. During fiscal 1997, we determined that the
investee was unable to repay us for the material purchased, and also determined
that the value of the equity investment was permanently impaired. We agreed to
convert our accounts receivable into common stock of the investee and has
recorded a valuation reserve equal to the carrying value of the investment.
During fiscal 1998, we sold our investment in Industrial Imaging, Inc. for
$550,000.

WEBSECURE, INC.

During fiscal 1996 we purchased for $569,000 a minority interest in
WebSecure, Inc. ("WebSecure"), a corporation that provided Internet services.
The former president, a shareholder of WebSecure, was a Director of Centennial
from February 1994 through November 1995. In connection with WebSecure's initial
public offering, we realized a gain of $1.2 million from the sale of a portion
of our investment; however, based upon the WebSecure shareholder complaints and
related litigation described in Note 15, we provided a reserve in an amount
equal to this gain. As described in Note 15, the WebSecure litigation was
settled during fiscal 2000 and the amount of the reserve in excess of the
settlement was recognized in income, as a revision of an estimate. This is
included as other income in the accompanying financial statements. The remaining
investment cost ($560,000) was fully reserved as of March 31, 1997 on the basis
that its value appeared to have been permanently impaired. During fiscal 1998,
we sold this remaining investment for $125,000.

ELAN DIGITAL SYSTEMS LIMITED

On November 11, 1999 we invested $248,000 for approximately a 7% interest in
Elan Digital Systems Limited ("Elan") which is included in Investments. Elan was
formed in the UK during 1976 and offers application engineering and design
services for microcontroller based solutions. Elan is accounted for under the
cost method.

36
<PAGE>
CENTENNIAL TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

8. DEBT

On August 14, 1997, we entered into a credit agreement with Congress
Financial Corporation ("Congress Financial") 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. On August 15, 1997,
Centennial paid in full its line of credit and lease financing obligations with
the bank that was previously providing Centennial with its credit facilities.

On November 24, 1998, Centennial 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. At March 31, 2000, 1999 and 1998, Centennial had no outstanding
borrowings under any of the above credit arrangements.

LEASES

In fiscal 2000, we entered into two five-year capital leases for new
manufacturing equipment. Monthly payments under these leases total $22,535. The
subject equipment is recorded as an asset for financial statement purposes, and
is being amortized accordingly.

We lease our facilities under operating leases with renewal options, which
expire at various dates through fiscal 2003. The lease on our headquarters and
manufacturing facility contains an option to renew for an additional five-year
period, provides for annual rent increases of 4% and provides that we will pay
to our landlord as additional rent our pro-rata share of certain operational and
maintenance costs at the facility during the term of the lease.

At March 31, 2000, the minimum annual rental commitments under
non-cancelable operating lease and capital lease obligations were as follows (in
thousands):

Operating Capital
Years ending March 31, Leases Leases
--------- -------

2001................................................. $ 261 $ 270
2002................................................. 254 270
2003................................................. 20 270
2004 and thereafter.................................. -- 384
----- -----
Total minimum lease payments...................... $ 535 1,194
=====
Lease amounts representing inputed interest.......... 152
-------
Present value of minimum lease payments........... 1,042
Less current portion................................. 215
-------
Capital lease obligations, less current portion... $ 827
=======

Rental expense under operating leases totaled $267,000, $250,000 and
$427,000 in fiscal 2000, 1999 and 1998, respectively. Interest expense totaled
$124,000, $4,000 and $452,000 in fiscal 2000, 1999 and 1998, respectively.

9. INCOME TAXES

The income (loss) before income taxes consisted of the following for the
years ended March 31, 2000, 1999 and 1998 (in thousands):

2000 1999 1998
------------ ----------- -----------
U.S........................ $ 2,791 $ 2,842 $ (22,609)
Foreign.................... 17 20 --
------------ ---------- ----------
$ 2,808 $ 2,862 $ (22,609)
============ ========== ==========

37
<PAGE>
CENTENNIAL TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

9. INCOME TAXES (CONTINUED)

The provision for income taxes consisted of the following for the years
ended March 31, 2000, 1999 and 1998 (in thousands):

2000 1999 1998
------------- ------------- ----------
Current:
Federal.................... $ 85 $ 40 $ --
State...................... 64 9 --
Foreign.................... 6 7 --
------------ ---------- ----------
Total current........... $ 155 $ 56 $ --
============ ========== ==========

Provision for income taxes.... $ 155 $ 56 $ --
============ ========== ==========

The provision for income taxes differs from the amount computed by applying
the statutory federal income tax rate to income (loss) before income taxes as
follows for the years ended March 31, 2000, 1999 and 1998:

<TABLE>
<CAPTION>
2000 1999 1998
-------------- -------------- ---------
<S> <C> <C> <C>
Tax provision (benefit) at U.S. statutory rates.. 34.0% 34.0% (34.0)%
State taxes, net of federal benefit.............. 7.0 6.4 (3.4)
Utilization of net operating losses and change in (40.0) 37.5
valuation allowance.............................. (38.1)
Alternative minimum tax.......................... 2.0 1.6 --
Other............................................ 0.6 -- (0.1)
---------- ------- -------
5.5% 2.0% -- %
========== ======= =======
</TABLE>

The components of deferred income taxes were as follows at March 31, 2000,
1999 and 1998 (in thousands):

2000 1999 1998
------------ ------------ -----------
Allowance for doubtful accounts....... $ 140 $ 406 $ 230
Notes receivable reserve.............. -- 349 349
Inventory reserve and capitalization.. 609 581 1,557
Investment reserve.................... 5,517 5,648 5,355
Accrued expenses...................... 1,556 1,410 1,378
Equipment, net........................ 339 371 211
Net operating losses.................. 13,610 19,970 20,633
Capital loss carryforward............. 1,473 1,473 1,473
----------- ----------- -----------
23,244 30,208 31,186
Less valuation allowance.............. (23,244) (30,208) (31,186)
----------- ----------- -----------
Net deferred taxes.................... $ -- $ -- $ --
============ =========== ===========

We have evaluated the positive and negative evidence bearing upon the
realizability of our deferred tax assets, which are comprised principally of net
operating losses and reserves. We have considered our history of losses and
concluded that there is insufficient evidence that it is more likely than not
that we will generate future taxable income prior to the expiration of these net
operating losses in 2013. Accordingly, the deferred tax assets have been fully
reserved.

At March 31, 2000, we had federal net operating loss carryforwards of
approximately $34.0 million available to offset future taxable income expiring
in 2009 through 2013, and federal capital loss carryforwards of approximately
$4.3 million, which expire in 2013. Approximately $2.1 million of our net
operating loss is attributable to the exercise of stock options which, when
utilized, will be credited as additional paid-in capital.

38
<PAGE>
CENTENNIAL TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

10. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following at March
31, 2000 and 1999 (in thousands):

2000 1999
---------- ---------
Trade accounts payable................................ $ 4,823 $ 1,720
Accrued compensation.................................. 1,356 1,144
Accrual related to WebSecure litigation............... -- 1,200
Accrued special investigation costs................... 727 1,197
Other accrued expenses, principally accrued legal..... 2,530 1,961
--------- ---------
Total accounts payable and accrued expenses. $ 9,436 $ 7,222
========= =========

Accrued special investigation costs represent professional and legal fees
and settlement costs in connection with Centennial's special investigation and
shareholder litigation. See Note 15.

11. STOCKHOLDERS' EQUITY

We are authorized to issue up to 890,000 additional shares of $0.01 par value
preferred stock without further stockholder approval with such additional
designations, powers, preferences, rights, qualifications, limitations and
restrictions as may be designated by Centennial's Board of Directors from time
to time.

In connection with the acquisition of the flash memory card business of
Intel Corporation, we issued 60,000 shares of Series B Convertible Preferred
Stock, par value $0.01 per share. The Series B Convertible Preferred Stock
converts at a ratio of 10 for 1 and has a liquidation preference value of $80.00
per preferred share. The Series B Convertible Stock is not redeemable. The
Series B Convertible Preferred Stock ranks senior to the common stock and to all
other classes and series of equity securities of Centennial which by their terms
do not rank senior to the Series A Junior Participating Preferred Stock.
Preferred shares are entitled to a number of votes on any matter submitted to
the stockholders of Centennial equal to the number of shares of common stock
into which they are then convertible.

The holders of convertible preferred stock shall be entitled to receive,
when and if declared by the Board of Directors of Centennial, dividends in the
same amount per share as would be payable on the number of shares of common
stock into which the preferred stock is then convertible, payable in preference
and priority to any payment of any cash dividend on common stock or any other
class of stock or series thereof.

In March 1999, the Board of Directors adopted a stockholder rights plan and
declared a dividend of one right to purchase Series A Junior Participating
Preferred Stock for each outstanding share of Common Stock. The rights become
exercisable based upon the occurrence of certain events including certain
acquisitions of Centennial's capital stock, tender or exchange offers and
certain business combination transactions involving Centennial. In the event one
of the events occurs, each right entitles the registered holder to purchase a
number of shares of preferred stock of Centennial or, under limited
circumstances, of the acquirer. The rights are redeemable at our option under
certain conditions, for $0.01 per right and expire on March 16, 2009.

12. STOCK OPTION PLANS

Under our 1999 Stock Incentive Plan and 1994 Stock Option Plan, incentive
and non-qualified stock options may be granted to employees, officers, directors
and consultants of Centennial. The amount reserved for issuances under these two
plans at March 31, 2000 are 1,000,000 and 750,000 shares, respectively. Under
the plans, the Compensation Committee of the Board of Directors establishes the
terms and conditions of grants.

39
<PAGE>
CENTENNIAL TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

12. STOCK OPTION PLANS (CONTINUED)

On November 11, 1999, our Board of Directors adopted the 1999 Stock
Incentive Plan under which incentive and non-qualified stock options may be
granted to our employees, officers, directors and consultants. We reserved
1,000,000 shares of common stock for issuance under the 1999 Stock Incentive
Plan. The Compensation Committee of the Board of Directors establishes the
vesting periods and the expiration date of options granted. In fiscal 2000, we
granted options to acquire 585,500 shares of our 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 vesting is
accelerated in the event certain stock price targets are achieved. These options
became fully vested in fiscal 2000.

Under our Formula Stock Option Plan (the "Formula Plan"), non-qualified
options may be granted to non-employee directors. Under the Formula Plan,
options will be granted pursuant to a formula that determines the timing,
pricing and amount of the option awards using objective criteria. We have
reserved 37,500 shares of Common Stock for issuance under the Formula Plan. The
exercise prices of the options granted to a non-employee director are granted at
fair market value. These options vest and are exercisable on the date of grant
and expire after 5 years. All other options granted under the Formula Plan vest
and are exercisable one year from the date of the grant. During fiscal 1998, a
non-employee director was granted options to purchase 1,875 shares at $28.00 per
share. During fiscal 2000 and 1999, non-employee directors were granted options
to purchase 2,250 shares at $7.28 per share and 6,375 shares at $6.00 per share,
respectively.

In addition, during fiscal 1998, Centennial granted options to acquire
130,625 shares outside of Centennial's stock option plans, exercisable at prices
ranging from $13.00 to $28.00 per share, of which 25,000 options were granted to
four non-employee directors and the balance to employees; the vesting period for
these options range from immediately upon grant to three years, and the options
expire in ten years.

FASB Statement No. 123, Accounting for Stock-Based Compensation, requires
that companies either recognize compensation expense for grants of stock, stock
options, and other equity instruments based on fair value, or provide pro forma
disclosure of net income and earnings per share in the notes to the financial
statements. There was no compensation costs recognized in fiscal 2000 and 1999
and in fiscal 1998 there was $34,000 of compensation costs recognized. Had
compensation cost for our stock-based compensation plans been determined based
on the fair value at the grant dates as calculated in accordance with Statement
No. 123, our net income (loss) and net income (loss) per share for the years
ended March 31, 2000, 1999 and 1998, would have been as indicated in the pro
forma amounts shown below:

<TABLE>
<CAPTION>
2000 1999 1998
----------------------------------- ----------------------------- -------------------
Net Income (Loss) Net Income Net Income Net Income
(in thousands) (Loss) (Loss) (Loss) Net Loss Net Loss
----------------- Per Share (in thousands) Per Share (in thousands) Per Share
--------- -------------- --------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
As Reported....... $ 2,653 $ 0.76 $ 2,806 $ 0.96 $(22,609) $ (9.80)
Pro forma......... $ (3,163) $ (0.99) $ (1,966) $ (0.68) $(29,869) $ (12.94)

</TABLE>

The fair value of each stock option is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions: an expected life of 5 years for grants prior to April 1, 1998, and
3 years for fiscal 2000 and 1999, expected volatility of 100% for fiscal 1998,
141% for fiscal 1999 and 321% for fiscal 2000, no dividends and a risk-free
interest rate of 7.0%, 6.0% and 6.0% for the years ended March 31, 2000, 1999
and 1998, respectively.

40
<PAGE>
CENTENNIAL TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

12. STOCK OPTION PLANS (CONTINUED)

The effects on fiscal 2000, 1999, and 1998 pro forma net income (loss) and
net income (loss) per share of expensing the estimated fair value of stock
options are not necessarily representative of the effects on reported net income
(loss) for future years due to such things as the vesting period of the stock
options and the potential for issuance of additional stock options and stock in
future years.

A summary of the status of Centennial's stock option plans as of March 31,
2000, 1999 and 1998 changes during the years ending on those dates is presented
below:

<TABLE>
<CAPTION>
2000 1999 1998
-------------------------- ----------------------- ---------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Price Exercise
Price Per Share Price
Number Per Share Number Number Per Share
------ --------- ------ -------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding at beginning
of period....................... 503,238 366,500 222,450
Granted........................... 840,875 $ 4.26 534,194 $ 6.40 322,625 $ 16.64
Exercised......................... (7,847) 5.17 0 -- (14,050) 14.00
Cancelled......................... (61,845) 33.97 (397,456) 14.56 (164,525) 131.36
----------- -------- ----------- ------- ----------- -------
Outstanding at period end......... 1,274,421 $ 6.32 503,238 $ 13.12 366,500 $ 24.32
Options exercisable at period end. 924,433 105,440 44,002
Weighted average fair value of
options granted during the year. $ 4.18 $ 4.72 $ 12.88

</TABLE>

The following table summarizes information about stock options outstanding
at March 31, 2000:

<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
Weighted-Average
Remaining
Range of Number Contractual Weighted-Average Number Weighted-Average
Exercise Prices Outstanding Life Exercise Price Exercisable Exercise Price
------------------ ----------- ------------------ ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
$3.44 - $3.50 586,125 9.7 $ 3.50 585,709 $ 3.50
$3.94 - $4.88 53,459 8.9 4.62 11,461 4.69
$5.20 - $5.20 341,401 7.5 5.20 253,910 5.20
$5.68 - $5.84 198,500 9.2 5.84 9,125 5.83
$5.88 - $9.88 55,061 6.8 8.13 24,353 8.08
$28.00 - $235.04 39,875 2.8 59.63 39,875 59.63
---------------- ---------- ----- ----- -- ------ --------
$3.44 - $235.04 1,274,421 8.7 $ 6.32 924,433 $ 6.55

</TABLE>

During fiscal 1999, we established a 1999 Employee Stock Purchase Plan (the
"ESPP") that provides for the grant of rights to eligible employees to purchase
up to 25,000 shares of Centennial's Common Stock at 85% of the fair market value
of the Common Stock at the end of the established offering period. There were
2,864 shares issued under the ESPP in fiscal 2000 and no shares issued under the
ESPP in fiscal 1999.

13. RELATED PARTY TRANSACTIONS

Included in other current assets is $493,000 due from Intel Corporation
("Intel") concerning the acquired business. Beginning in the fourth quarter of
fiscal 2000, we began regularly purchasing a significant portion of our raw
materials, mostly memory chips, from Intel. Excluding activity related to a
transition period with Intel and its contract manufacturer, we had purchases
from Intel of $443,000 for fiscal 2000, which is included in accounts payable as
of March 31, 2000.

Included in Other Assets is a $144,845 loan to our President and Chief
Executive Officer. The loan is due and payable on July 25, 2001 and bears
interest at the rate of 5.8%. In April 2000, we loaned this individual an
additional $204,500, which is also due and payable on July 25, 2001 and bears
interest at the rate of 6.45%.

41
<PAGE>
CENTENNIAL TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

14. SAVINGS PLAN

We have a 401(k) Savings Plan under which substantially all U.S. employees
may voluntarily defer a portion of their compensation and we may elect to match
a portion of the employee deferral. We made contributions of $57,000 and,
$29,000 respectively, to the plan related to contributions by employees during
fiscal 2000 and 1999. For fiscal 1998 there were no contributions to this plan.

15. CONTINGENCIES

LEGAL PROCEEDINGS

CLASS ACTION LITIGATION

In fiscal 2000, the plaintiffs in the Consolidated Litigation reached an
agreement with our former Interim Chief Executive Officer, Lawrence J.
Ramaekers, and his employer, Jay Alix & Associates ("Jay Alix"), regarding the
plaintiffs' alleged claims against them. In fiscal 2000, we paid Jay Alix and
Mr. Ramaekers $1.0 million for legal fees incurred and Jay Alix and Mr.
Ramaekers released any and all claims against our affiliates our directors and
us.

42
<PAGE>
CENTENNIAL TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

15. CONTINGENCIES (CONTINUED)

SECURITIES AND EXCHANGE COMMISSION INVESTIGATION

WEBSECURE LITIGATION

OTHER

16. FINANCIAL INFORMATION BY QUARTER (unaudited)

(in thousands, except per share amounts)

Fiscal 2000 quarters ended, June 26, September 25, December 25, March 25,
1999 1999 1999 2000
---- ---- ---- ----
Net sales $ 6,681 $ 7,633 $ 8,567 $ 12,699
Gross profit 2,125 2,496 3,358 2,561
Operating income 136 169 1,279 396
Net income 231 838 1,336 248
Net income per share - basic 0.07 0.26 0.42 0.08
Net income per share - diluted 0.07 0.26 0.42 0.06

Fiscal 1999 quarters ended, June 26, September 25, December 25, March 25,
1999 1999 1999 2000
---- ---- ---- ----
Net sales $ 6,235 $ 6,151 $ 7,568 $ 7,679
Gross profit 1,645 1,910 2,590 2,520
Operating income 35 253 577 918
Net income 99 1,201 573 933
Net income per share - basic 0.04 0.41 0.18 0.36
Net income per share - diluted 0.04 0.41 0.18 0.35

43
<PAGE>

Centennial Technologies, Inc.
Valuation and Qualifying Accounts
For the years ended March 31, 2000, 1999 and 1998
<TABLE>
<CAPTION>
Schedule II

Balance at Charged to Charged to
beginning of costs and other Balance at end
Description period expenses accounts Deductions of period
----------- -------------- ----------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Accounts receivable allowance
Fiscal 2000............................. $ 645 $ (39) $ 406 $ 200
Fiscal 1999............................. 868 170 $(150) 243 645
Fiscal 1998............................. 692 588 412 868

Notes receivable reserve
Fiscal 2000............................. $ 971 $ 971 $ -
Fiscal 1999............................. 971 971
Fiscal 1998............................. 971 971

Investment reserve
Fiscal 2000............................. $13,095 $8,085 $ 5,010
Fiscal 1999............................. 13,095 13,095
Fiscal 1998............................. 8,669 $4,426 13,095

Inventory reserve
Fiscal 2000............................. $ 1,371 $ 145 $ 1,226
Fiscal 1999............................. 3,485 2,114 1,371
Fiscal 1998............................. 2,083 $2,676 1,274 3,485

</TABLE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

44
<PAGE>

PART III

Items 10 to 13 are incorporated herein by reference to Centennial's
definitive proxy statement to be filed with the Securities and Exchange
Commission within one hundred twenty days following Centennial's March 25, 2000
fiscal year end.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1) Financial Statements. The financial statements required to be filed by
Item 8 are as follows:

<TABLE>
<CAPTION>
Page
<S> <C>
Report of Independent Auditors.........................................................................25

Consolidated Balance Sheets as of March 25, 2000 and March 31, 1999....................................26

Consolidated Statements of Operations for the years ended March 25, 2000, March
31, 1999 and March 31, 1998............................................................................27

Consolidated Statements of Stockholders' Equity for the years ended March 25,
2000, March 31, 1999 and March 31, 1998................................................................28

Consolidated Statements of Cash Flows for the years ended March 25, 2000, March
31, 1999 and March 31, 1998............................................................................29

Notes to Consolidated Financial Statements.............................................................30

(a)(2) Financial Statement Schedules. The financial statement schedule required
to be filed herewith is included in Item 8 of this report: Schedule II -
Valuation and Qualifying Accounts, page 44.

All other schedules have been omitted either because they are not required
or the information is included in the financial statements.

(a)(3) Exhibits.

ITEM LOCATION
NO. DESCRIPTION SEE NOTE:
- --- ---------

3.1 -- Certificate of Incorporation (originally filed as Exhibit 3a)........................................(3)
3.2 -- Certificate of Amendment to the Certificate of Incorporation.........................................(1)
3.3 -- Amended and Restated By-Laws ........................................................................(2)
3.4 -- Shareholder Voting Agreement between Centennial Technologies, Inc. and the
Shareholders who are a party thereto, dated November 27, 1996 .......................................(1)
3.5 -- Certificate of Designations of Series A Junior Participating Preferred Stock ........................(8)
3.6 -- Certificate of Designation of the Rights, Preferences and Terms of the Series B
Convertible Stock....................................................................................(9)
4.1 -- Specimen Stock Certificate ..........................................................................(2)
4.2 -- Rights Agreement, dated as of March 16, 1999....................................................... (8)
4.3 -- Amendment No. 1 to Rights Agreement, dated as of December 29, 1999................................. (10)
10.1 -- Form of Centennial's Domestic Distributor Agreement between Centennial and its
domestic distributors (originally filed as Exhibit 10.10)............................................(3)
10.2 -- Form of Centennial's Agreement with its Manufacturer's Representatives (originally
filed as Exhibit 10.11) .............................................................................(3)
10.3 -- Investment and Stockholders Agreement by and between Centennial Technologies, Inc. and
ViA, Inc., dated November 27, 1996 (originally filed as Exhibit 10.13)...............................(1)
</TABLE>

45
<PAGE>

<TABLE>

<S> <C>
10.4 -- 1994 Stock Option Plan, as amended (originally filed as Exhibit 10.1)................................(4)
10.5 -- 1994 Formula Stock Option Plan, as amended (originally filed as Exhibit 10.2)........................(4)
10.6 -- 1999 Employee Stock Purchase Plan....................................................................(8)
10.7 -- 1999 Stock Option Plan....................................................................Filed Herewith

10.8 -- Lease Agreement by and between Centennial Technologies, Inc. and Michael A. Howland,
as Trustee of the Hownat Trust, dated April 17, 1997 (originally filed as Exhibit
10.27)...............................................................................................(5)
10.9 -- Employment Agreement between Centennial Technologies, Inc. and L. Michael Hone
effective August 19, 1997 (originally filed as Exhibit 10.31)........................................(7)
10.11 -- Letter Agreement between Centennial Technologies, Inc. and John C. Nugent dated as of
January 12, 1998 (originally filed as Exhibit 10.2).................................................(12)
10.12 -- Executive Retention Agreement between Centennial Technologies, Inc. and L. Michael
Hone dated as of February 26, 1999...................................................................(8)
10.13 -- Executive Retention Agreement between Centennial Technologies, Inc. and Richard N.
Stathes dated as of February 26, 1999................................................................(8)
10.14 -- Executive Retention Agreement between Centennial Technologies, Inc. and Jacques Assour
dated as of February 26, 1999........................................................................(8)
10.15 -- Executive Retention Agreement between Centennial Technologies, Inc. and John C. Nugent
dated as of February 26, 1999........................................................................(8)
10.16 -- Executive Retention Agreement between Centennial Technologies, Inc. and Richard J.
Pulsifer dated as of September 13, 1999..............................................................(9)
10.17 -- Executive Retention Agreement between Centennial Technologies, Inc. and Mary A.
Gallahan dated as of December 16, 1999..............................................................(10)
10.18 -- Executive Severance Agreement between Centennial Technologies, Inc. and Jacques Assour
dated as of April 11, 2000................................................................Filed Herewith
10.19 -- Executive Severance Agreement between Centennial Technologies, Inc. and Richard N.
Stathes
dated as of April 11, 2000................................................................Filed Herewith
10.20 -- Executive Severance Agreement between Centennial Technologies, Inc. and Richard J.
Pulsifer
dated as of April 11, 2000................................................................Filed Herewith
10.21 -- Executive Severance Agreement between Centennial Technologies, Inc. and Mary A.
Gallahan
dated as of April 11, 2000................................................................Filed Herewith
21 -- Schedule of Subsidiaries .................................................................Filed Herewith
23.1 -- Consent of Ernst & Young LLP, Independent Auditors........................................Filed Herewith
23.2 -- Consent of PricewaterhouseCoopers LLP, Independent Auditors...............................Filed Herewith
27 -- Financial Data Schedule ..................................................................Filed Herewith

</TABLE>

(1) Incorporated by reference to the Exhibits to Centennial's Annual
Report on Form 10-K/A filed with the Securities and Exchange
Commission (the "Commission") April 28, 1998.

(2) Incorporated by reference to the Exhibits to Centennial's
Registration Statement on Form 8-A filed with the Commission on
November 19, 1998.

(3) Incorporated by reference to the Exhibits to Centennial's Form SB-2
Registration Statement (No. 33-74862-NY) declared effective by the
Commission on April 12, 1994.

(4) Incorporated by reference to the Exhibits to Centennial's Quarterly
Report on Form 10-Q filed with the Commission on November 6, 1998.

(5) Incorporated by reference to the Exhibits to Centennial's Quarterly
Report on Form 10-Q filed with the Commission on August 14, 1997.

(6) Incorporated by reference to the Exhibits to Centennial's Quarterly
Report on Form 10-Q filed with the Commission on February 10, 1997.

(7) Incorporated by reference to the Exhibits to Centennial's Quarterly
Report on Form 10-Q filed with the Commission on February 8, 1998.

46
<PAGE>

(8) Incorporated by reference to the Exhibits to Centennial's Annual
Report on Form 10-K for the fiscal year ended March 31, 1999 filed
with the Commission on June 4, 1999.

(9) Incorporated by reference to the Exhibits to Centennial's Quarterly
Report on Form 10-Q filed with the Commission on November 9, 1999.

(10)Incorporated by reference to the Exhibits to Centennial's Quarterly
Report on Form 10-Q filed with the Commission on February 8, 2000.

(11)Incorporated by reference to the Exhibits to Centennial's
Registration Statement on Form 8-A/A filed with the Commission
February 1, 2000.

(12)Incorporated by reference to the Exhibits to Centennial's Quarterly
Report on Form 10-Q filed with the Commission on February 8, 1999.

(b) Reports on Form 8-K. During the last quarter of the period covered by
this report, Centennial filed a Form 8-K on January 12, 2000 (amended March 13,
2000 and February 1, 2000) regarding Centennial's acquisition of Intel
Corporation's flash memory card business and Centennial's amendment of its
Shareholder Rights Plan in connection with Intel's acquisition of convertible
preferred stock of Centennial, respectively.

47
<PAGE>

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

CENTENNIAL TECHNOLOGIES, INC.

Dated: May 15, 2000 By: /s/ L. MICHAEL HONE
----------------------------------------
L. Michael Hone
President and Chief Executive Officer

Dated: May 15, 2000 By: /s/ RICHARD J. PULSIFER
----------------------------------------
Richard J. Pulsifer
Vice President, Chief Financial Officer
and Secretary

In accordance with the Securities Exchange Act of 1934, as amended, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.

Name Capacity Date
- ---- -------- ----
<S> <C> <C>
/s/ L. MICHAEL HONE President, Chief Executive Officer and Director May 15, 2000
- -------------------------- (Principal executive officer)
L. Michael Hone

/s/RICHARD J. PULSIFER Vice President, Chief Financial Officer and May 15, 2000
- -------------------------- Secretary (Principal accounting and financial
Richard J. Pulsifer officer)

/s/ WILLIAM J. SHEA Chairman of the Board May 15, 2000
- --------------------------
William J. Shea

/s/ EUGENE M. BULLIS Director May 15, 2000
- --------------------------
Eugene M. Bullis

/s/ STEVEN M. DEPERRIOR Director May 15, 2000
- --------------------------
Steven M. DePerrior

/s/ JAY M. EASTMAN Director May 15, 2000
- --------------------------
Jay M. Eastman

/s/ DAVID A. LOVENHEIM Director May 15, 2000
- --------------------------
David A. Lovenheim

/s/ JOHN J. SHIELDS Director May 15, 2000
- --------------------------
John J. Shields

</TABLE>

Centennial Technologies, Inc.

1999 STOCK INCENTIVE PLAN

1. PURPOSE

The purpose of this 1999 Stock Incentive Plan (the "Plan") of
Centennial Technologies, Inc., a Delaware corporation (the "Company"), is to
advance the interests of the Company's stockholders by enhancing the Company's
ability to attract, retain and motivate persons who make (or are expected to
make) important contributions to the Company by providing such persons with
equity ownership opportunities and performance-based incentives and thereby
better aligning the interests of such persons with those of the Company's
stockholders. Except where the context otherwise requires, the term "Company"
shall include any of the Company's present or future subsidiary corporations as
defined in Section 424(f) of the Internal Revenue Code of 1986, as amended, and
any regulations promulgated thereunder (the "Code").

2. ELIGIBILITY

All of the Company's employees, officers, directors, consultants and
advisors (and any individuals who have accepted an offer for employment) are
eligible to be granted options, restricted stock awards, or other stock-based
awards (each, an "Award") under the Plan. Each person who has been granted an
Award under the Plan shall be deemed a "Participant".

3. ADMINISTRATION, DELEGATION

ADMINISTRATION BY BOARD OF DIRECTORS. The Plan will be administered by
the Board of Directors of the Company (the "Board"). The Board shall have
authority to grant Awards and to adopt, amend and repeal such administrative
rules, guidelines and practices relating to the Plan as it shall deem advisable.
The Board may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem expedient to carry the Plan into effect and it shall be the sole and final
judge of such expediency. All decisions by the Board shall be made in the
Board's sole discretion and shall be final and binding on all persons having or
claiming any interest in the Plan or in any Award. No director or person acting
pursuant to the authority delegated by the Board shall be liable for any action
or determination relating to or under the Plan made in good faith.

DELEGATION TO EXECUTIVE OFFICERS. To the extent permitted by applicable
law, the Board or any Committee (as defined in Section 3(c)) may delegate to one
or more executive officers of the Company the power to make Awards to new
employees of the Company, excluding directors and officers, and to exercise such
other powers under the Plan as the Board may determine, provided that the Board
shall fix the maximum number of shares subject to Awards and the maximum number
of shares for any one Participant to be made by such executive officers.

APPOINTMENT OF COMMITTEES. To the extent permitted by applicable law,
the Board shall appoint a committee or subcommittee of the Board (a "Committee")
of not less than two members, each member of which shall be an "outside
director" within the meaning of Section 162(m) of the Code and a "non-employee
director" as defined in Rule 16b-3 promulgated under the Securities Exchange Act
of 1934 (the "Exchange Act"). All references in the Plan to the "Board" shall
mean the Board or a Committee of the Board or the executive officer referred to
in Section 3(b) to the extent that the Board's powers or authority under the
Plan have been delegated to such Committee or executive officer.

A-1
<PAGE>

4. STOCK AVAILABLE FOR AWARDS

NUMBER OF SHARES. Subject to adjustment under Section 8, Awards may be
made under the Plan for up to 1,000,000 shares of common stock, $.01 par value
per share, of the Company (the "Common Stock"). If any Award expires or is
terminated, surrendered or canceled without having been fully exercised or is
forfeited in whole or in part or results in any Common Stock not being issued,
the unused Common Stock covered by such Award shall again be available for the
grant of Awards under the Plan, subject, however, in the case of Incentive Stock
Options (as hereinafter defined), to any limitation required under the Code.
Shares issued under the Plan may consist in whole or in part of authorized but
unissued shares or treasury shares.

PER-PARTICIPANT LIMIT. Subject to adjustment under Section 8, the
maximum number of shares of Common Stock with respect to which Awards may be
granted to any Participant under the Plan shall be 500,000 per calendar year.
The per-Participant limit described in this Section 4(b) shall be construed and
applied consistently with Section 162(m) of the Code ("Section 162(m)").

5. STOCK OPTIONS

GENERAL. The Board may grant options to purchase Common Stock (each, an
"Option") and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a "Nonstatutory Stock
Option".

INCENTIVE STOCK OPTIONS. An Option that the Board intends to be an
"incentive stock option" as defined in Section 422 of the Code (an "Incentive
Stock Option") shall only be granted to employees of the Company and shall be
subject to and shall be construed consistently with the requirements of Section
422 of the Code. The Company shall have no liability to a Participant, or any
other party, if an Option (or any part thereof) which is intended to be an
Incentive Stock Option is not an Incentive Stock Option.

EXERCISE PRICE. The Board shall establish the exercise price at the
time each Option is granted and specify it in the applicable option agreement;
provided, however, that the exercise price shall be not less than 100% of the
fair market value of the Common Stock, as determined by the Board, at the time
the Option is granted.

DURATION OF OPTIONS. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Board may specify in the applicable
option agreement; provided, however, that no Option will be granted for a term
in excess of 10 years.

EXERCISE OF OPTION. Options may be exercised by delivery to the Company
of a written notice of exercise signed by the proper person or by any other form
of notice (including electronic notice) approved by the Board together with
payment in full as specified in Section 5(f) for the number of shares for which
the Option is exercised. No Option that is classified as an Incentive Stock
Option may be exercised within one year of the date of grant of such Option.

PAYMENT UPON EXERCISE. Common Stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:

(1) in cash or by check, payable to the order of the Company;

(2) except as the Board may, in its sole discretion, otherwise provide
in an option agreement, by (i) delivery of an irrevocable and unconditional
undertaking by a creditworthy broker to deliver promptly to the Company
sufficient funds to pay the exercise price or (ii) delivery by the Participant
to the Company of a copy of irrevocable and unconditional instructions to a
creditworthy broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price;

A-2
<PAGE>

(3) by delivery of shares of Common Stock owned by the Participant
valued at their fair market value as determined by (or in a manner approved by)
the Board in good faith ("Fair Market Value"), provided (i) such method of
payment is then permitted under applicable law and (ii) such Common Stock was
owned by the Participant at least six months prior to such delivery;

(4) to the extent permitted by the Board, in its sole discretion and
consistent with applicable law, by (i) delivery of a promissory note of the
Participant to the Company on terms determined by the Board, or (ii) payment of
such other lawful consideration as the Board may determine; or

(5) by any combination of the above permitted forms of payment.

6. RESTRICTED STOCK

GRANTS. The Board may grant Awards entitling recipients to acquire
shares of Common Stock, subject to the right of the Company to repurchase all or
part of such shares at their issue price or other stated or formula price (or to
require forfeiture of such shares if issued at no cost) from the recipient in
the event that conditions specified by the Board in the applicable Award are not
satisfied prior to the end of the applicable restriction period or periods
established by the Board for such Award (each, a "Restricted Stock Award").

TERMS AND CONDITIONS. The Board shall determine the terms and
conditions of any such Restricted Stock Award, including the conditions for
repurchase (or forfeiture) and the issue price, if any. Any stock certificates
issued in respect of a Restricted Stock Award shall be registered in the name of
the Participant and, unless otherwise determined by the Board, deposited by the
Participant, together with a stock power endorsed in blank, with the Company (or
its designee). At the expiration of the applicable restriction periods, the
Company (or such designee) shall deliver the certificates no longer subject to
such restrictions to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by a Participant to
receive amounts due or exercise rights of the Participant in the event of the
Participant's death (the "Designated Beneficiary"). In the absence of an
effective designation by a Participant, Designated Beneficiary shall mean the
Participant's estate.

7. OTHER STOCK-BASED AWARDS

The Board shall have the right to grant other Awards based upon the
Common Stock having such terms and conditions as the Board may determine,
including the grant of shares based upon certain conditions, the grant of
securities convertible into Common Stock and the grant of stock appreciation
rights.

8. ADJUSTMENTS FOR CHANGES IN COMMON STOCK AND CERTAIN OTHER EVENTS

CHANGES IN CAPITALIZATION. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than a normal
cash dividend, (i) the number and class of securities available under this Plan,
(ii) the per-Participant limit set forth in Section 4(b), (iii) the number and
class of securities and exercise price per share subject to each outstanding
Option, (iv) the repurchase price per share subject to each outstanding
Restricted Stock Award, and (v) the terms of each other outstanding Award shall
be appropriately adjusted by the Company (or substituted Awards may be made, if
applicable) to the extent the Board shall determine, in good faith, that such an
adjustment (or substitution) is necessary and appropriate. If this Section 8(a)
applies and Section 8(c) also applies to any event, Section 8(c) shall be
applicable to such event, and this Section 8(a) shall not be applicable.

LIQUIDATION OR DISSOLUTION. In the event of a proposed liquidation or
dissolution of the Company, the Board shall upon written notice to the
Participants provide that all then unexercised Options will (i) become
exercisable in full as of a specified time at least 10 business days prior to
the effective date of such liquidation or dissolution and (ii) terminate
effective upon such liquidation or dissolution, except to the extent exercised
before such effective date. The Board may specify the effect of a liquidation or
dissolution on any Restricted Stock Award or other Award granted under the Plan
at the time of the grant of such Award.

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<PAGE>

ACQUISITION EVENTS

DEFINITION. An "Acquisition Event" shall mean: (a) any merger
or consolidation of the Company with or into another entity as a result of which
the Common Stock is converted into or exchanged for the right to receive cash,
securities or other property or (b) any exchange of shares of the Company for
cash, securities or other property pursuant to a statutory share exchange
transaction.

CONSEQUENCES OF AN ACQUISITION EVENT ON OPTIONS. Upon the
occurrence of an Acquisition Event, or the execution by the Company of any
agreement with respect to an Acquisition Event, the Board shall provide that all
outstanding Options shall be assumed, or equivalent options shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof). For purposes hereof, an Option shall be considered to be assumed if,
following consummation of the Acquisition Event, the Option confers the right to
purchase, for each share of Common Stock subject to the Option immediately prior
to the consummation of the Acquisition Event, the consideration (whether cash,
securities or other property) received as a result of the Acquisition Event by
holders of Common Stock for each share of Common Stock held immediately prior to
the consummation of the Acquisition Event (and if holders were offered a choice
of consideration, the type of consideration chosen by the holders of a majority
of the outstanding shares of Common Stock); provided, however, that if the
consideration received as a result of the Acquisition Event is not solely common
stock of the acquiring or succeeding corporation (or an affiliate thereof), the
Company may, with the consent of the acquiring or succeeding corporation,
provide for the consideration to be received upon the exercise of Options to
consist solely of common stock of the acquiring or succeeding corporation (or an
affiliate thereof) equivalent in fair market value to the per share
consideration received by holders of outstanding shares of Common Stock as a
result of the Acquisition Event.

Notwithstanding the foregoing, if the acquiring or succeeding
corporation (or an affiliate thereof) does not agree to assume, or substitute
for, such Options, then the Board shall, upon written notice to the
Participants, provide that all then unexercised Options will become exercisable
in full as of a specified time prior to the Acquisition Event and will terminate
immediately prior to the consummation of such Acquisition Event, except to the
extent exercised by the Participants before the consummation of such Acquisition
Event; provided, however, that in the event of an Acquisition Event under the
terms of which holders of Common Stock will receive upon consummation thereof a
cash payment for each share of Common Stock surrendered pursuant to such
Acquisition Event (the "Acquisition Price"), then the Board may instead provide
that all outstanding Options shall terminate upon consummation of such
Acquisition Event and that each Participant shall receive, in exchange therefor,
a cash payment equal to the amount (if any) by which (A) the Acquisition Price
multiplied by the number of shares of Common Stock subject to such outstanding
Options (whether or not then exercisable), exceeds (B) the aggregate exercise
price of such Options.

CONSEQUENCES OF AN ACQUISITION EVENT ON RESTRICTED STOCK
AWARDS. Upon the occurrence of an Acquisition Event, the repurchase and other
rights of the Company under each outstanding Restricted Stock Award shall inure
to the benefit of the Company's successor and shall apply to the cash,
securities or other property which the Common Stock was converted into or
exchanged for pursuant to such Acquisition Event in the same manner and to the
same extent as they applied to the Common Stock subject to such Restricted Stock
Award.

CONSEQUENCES OF AN ACQUISITION EVENT ON OTHER AWARDS. The
Board shall specify the effect of an Acquisition Event on any other Award
granted under the Plan at the time of the grant of such Award.

9. GENERAL PROVISIONS APPLICABLE TO AWARDS

TRANSFERABILITY OF AWARDS. Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either

A-4
<PAGE>

voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the life of the Participant, shall be exercisable only
by the Participant. References to a Participant, to the extent relevant in the
context, shall include references to authorized transferees.

DOCUMENTATION. Each Award shall be evidenced by a written instrument in
such form as the Board shall determine; such written instrument may be in the
form of an agreement signed by the Company and the Participant or a written
confirming memorandum to the Participant from the Company. Each Award may
contain terms and conditions in addition to those set forth in the Plan.

BOARD DISCRETION. Except as otherwise provided by the Plan, each Award
may be made alone or in addition or in relation to any other Award. The terms of
each Award need not be identical, and the Board need not treat Participants
uniformly.

TERMINATION OF STATUS. The Board shall determine the effect on an Award
of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, the Participant's legal
representative, conservator, guardian or Designated Beneficiary may exercise
rights under the Award.

WITHHOLDING. Each Participant shall pay to the Company, or make
provision satisfactory to the Board for payment of, any taxes required by law to
be withheld in connection with Awards to such Participant no later than the date
of the event creating the tax liability. Except as the Board may otherwise
provide in an Award, when the Common Stock is registered under the Exchange Act,
Participants may, to the extent then permitted under applicable law, satisfy
such tax obligations in whole or in part by delivery of shares of Common Stock,
including shares retained from the Award creating the tax obligation, valued at
their Fair Market Value. The Company may, to the extent permitted by law, deduct
any such tax obligations from any payment of any kind otherwise due to a
Participant.

AMENDMENT OF AWARD. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant's consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.

CONDITIONS ON DELIVERY OF STOCK. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company's counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.

Acceleration. The Board may at any time provide that any Options shall
become immediately exercisable in full or in part, that any Restricted Stock
Awards shall be free of restrictions in full or in part or that any other Awards
may become exercisable in full or in part or free of some or all restrictions or
conditions, or otherwise realizable in full or in part, as the case may be.

10. MISCELLANEOUS

NO RIGHT TO EMPLOYMENT OR OTHER STATUS. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.
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<PAGE>

NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.

EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective on the
date on which it is adopted by the Board, but the classification of an Option
granted to a Participant under the Plan as an Incentive Stock Option shall be
conditioned upon the approval of the Plan by the Company's stockholders within
one year of the effective date of the Plan. No Award granted to a Participant
after the first anniversary of the effective date of the Plan that is intended
to comply with Section 162(m) shall become exercisable, vested or realizable, as
applicable to such Award, unless and until the Plan has been approved by the
Company's stockholders to the extent stockholder approval is required by Section
162(m) in the manner required under Section 162(m) (including the vote required
under Section 162(m)). No Awards shall be granted under the Plan after the
completion of ten years from the earlier of (i) the date on which the Plan was
adopted by the Board or (ii) the date the Plan was approved by the Company's
stockholders, but Awards previously granted may extend beyond that date.

AMENDMENT OF PLAN. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, provided that to the extent required by
Section 162(m), no Award granted to a Participant after the first anniversary o
the effective date of the Plan and after the date of such amendment that is
intended to comply with Section 162(m) shall become exercisable, realizable or
vested, as applicable to such Award, unless and until such amendment shall have
been approved by the Company's stockholders are required by Section 162(m)
(including the vote required under Section 162(m)).

GOVERNING LAW. The provisions of the Plan and all Awards made hereunder
shall be governed by and interpreted in accordance with the laws of the State of
Delaware, without regard to any applicable conflicts of law.

A-6

EXECUTIVE SEVERANCE AGREEMENT

This EXECUTIVE SEVERANCE AGREEMENT ("Agreement") is made April 11,
2000, between Centennial Technologies, Inc., a Delaware corporation (the
"Company"), and Jacques Assour ("Executive").

WHEREAS, the Executive is employed by the Company as a Senior Vice
President; and

WHEREAS, the parties desire to set forth their respective rights and
obligations in the event Executive ceases to be employed by the Company.

NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:

1. Termination. Executive's employment hereunder may be terminated under the
following circumstances:

(a) DEATH. Executive's employment hereunder shall terminate upon his
death.

(b) DISABILITY. If, as a result of Executive's incapacity due to
physical or mental illness, Executive shall have been absent from his duties
hereunder on a full-time basis for one hundred eighty (180) calendar days in the
aggregate in any twelve (12) month period, the Company may terminate Executive's
employment hereunder.

(c) TERMINATION BY COMPANY FOR CAUSE. At any time the Company may
terminate Executive's employment hereunder for Cause if such termination is
approved by a majority of the Board of Directors of the Company (the "Board") at
a meeting of the Board called and held for such purpose. Executive shall be
given notice of any such meeting of the Board and shall be afforded the
opportunity to make an oral presentation and provide written materials to the
Board. For purposes of this Agreement, "Cause" shall mean: (A) conduct by
Executive constituting a material act of willful misconduct in connection with
the performance of his duties, including, without limitation, misappropriation
of funds or property of the Company or any of its affiliates other than the
occasional, customary and de minimis use of Company property for personal
purposes; (B) criminal or civil conviction of Executive, a plea of nolo
contendere by Executive or conduct by Executive that would reasonably be
expected to result in material injury to the reputation of the Company if he
were retained in his position with the Company, including, without limitation,
conviction of a felony involving moral turpitude; (C) continued, willful and
deliberate non-performance by Executive of his duties hereunder (other than by
reason of Executive's physical or mental illness, incapacity or disability)
which has continued for more than thirty (30) days following written notice of
such non-performance from the Board; (D) a breach by Executive of any of the
provisions contained in Sections 3 or 4 of this Agreement; or (E) a violation by
Executive of the Company's employment policies which has continued following
written notice of such violation from the Board.

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<PAGE>

(d) TERMINATION WITHOUT CAUSE. At any time the Company may terminate
Executive's employment hereunder without Cause if such termination is approved
by the Chief Executive Officer of the Company. Any termination by the Company of
Executive's employment under this Agreement which does not constitute a
termination for Cause under Section 1(c) or result from the death or disability
of the Executive under Section 1(a) or (b) shall be deemed a termination without
Cause.

(e) TERMINATION BY EXECUTIVE. At any time Executive may terminate his
employment hereunder for any reason, including but not limited to Good Reason.
Executive agrees, if requested at any time by the Company, to continue to work
for the Company and to assist in the transition of his duties and
responsibilities to another person for 30 days following his Notice of
Termination (as defined below). For purposes of this Agreement, "Good Reason"
shall mean that Executive has complied with the "Good Reason Process"
(hereinafter defined) following the occurrence of any of the following events:
(A) a substantial diminution or other substantive adverse change, not consented
to by Executive, in the nature or scope of Executive's responsibilities,
authorities, powers, functions or duties; (B) demotion of Executive from his
position as Senior Vice President of the Company; (C) an involuntary reduction
in Executive's salary except for across-the-board reductions similarly affecting
all or substantially all senior executives of the Company; (D) a breach by the
Company of any of its other material obligations under this Agreement and the
failure of the Company to cure such breach within thirty (30) days after written
notice thereof by Executive; (E) the involuntary relocation of the Company's
offices at which Executive is principally employed to a location more than fifty
(50) miles from such offices, or the requirement by the Company that Executive
be based anywhere other than such offices on an extended basis, except for
required travel on the Company's business to an extent substantially consistent
with Executive's business travel obligations; or (F) the failure of the Company
to obtain the agreement from any successor to the Company to assume and agree to
perform this Agreement as required by Section 6. "Good Reason Process" shall
mean that (i) Executive reasonably determines in good faith that a "Good Reason"
event has occurred; (ii) Executive notifies the Company in writing of the
occurrence of the Good Reason event; (iii) Executive cooperates in good faith
with the Company's efforts, for a period not less than ninety (90) days
following such notice, to modify Executive's employment situation in a manner
acceptable to Executive and Company; and (iv) notwithstanding such efforts, one
or more of the Good Reason events continues to exist and has not been modified
in a manner acceptable to Executive. If the Company cures the Good Reason event
in a manner acceptable to Executive during the ninety (90) day period, Good
Reason shall be deemed not to have occurred.

(f) NOTICE OF TERMINATION. Except for termination as specified in
Section 1(a), any termination of Executive's employment by the Company or any
such termination by Executive shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon.

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<PAGE>

(g) DATE OF TERMINATION. "Date of Termination" shall mean: (A) if
Executive's employment is terminated by his death, the date of his death; (B) if
Executive's employment is terminated on account of disability under Section 1(b)
or by the Company for Cause under Section 1(c), the date on which Notice of
Termination is given; and (C) if Executive's employment is terminated by the
Company under Section 1(d), or terminated by the Executive under Section 1(e),
thirty (30) days after the date on which a Notice of Termination is given.

2. COMPENSATION UPON TERMINATION OR DURING DISABILITY.

(a) DEATH OF EXECUTIVE. If Executive's employment terminates by reason
of his death, the Executive's beneficiaries shall receive the proceeds of the
applicable life insurance policies maintained by or through the Company, subject
to the terms and conditions thereof. Upon the death of the Executive, the
Executive's options to purchase stock of the Company which would have vested
within 90 days following the Date of Termination had he remained as an employee
of the Company shall be deemed vested as of the Date of Termination. The
Executive's estate or other legal representatives shall have the remaining
option term to exercise all stock options which were vested as of the Date of
Termination or which vested effective as of such date pursuant to the
immediately preceding sentence.

(b) DISABILITY OF EXECUTIVE. During any period that Executive fails to
perform his duties as an employee as a result of incapacity due to physical or
mental illness, Executive shall receive at the election of the Company either
his then current salary or the applicable benefits to which he would be entitled
pursuant to any short-term or long-term disability benefits program maintained
by the Company, in each case until Executive's employment is terminated due to
disability in accordance with Section 1(b) or until Executive terminates his
employment in accordance with Section 1(e), whichever first occurs. Following
such termination, Executive may receive benefits under the Company's long-term
disability plan subject to the terms and conditions thereof. Upon the Date of
Termination, the Executive's options to purchase stock of the Company which
would have vested within 90 days following the Date of Termination had he
remained as an employee of the Company shall be deemed vested as of the Date of
Termination. The Executive shall have the remaining option term to exercise all
stock options which were vested as of the Date of Termination or which vested
effective as of such date pursuant to the immediately preceding sentence.

(c) TERMINATION BY EXECUTIVE. If Executive's employment is terminated
by Executive other than for Good Reason as provided in Section 1(e), then the
Company shall have no further obligations to Executive provided any such
termination shall not adversely affect or alter Executive's rights under any
employee benefit plan of the Company in which Executive, at the Date of
Termination, has a vested interest, unless otherwise provided in such employee
benefit plan or any agreement or other instrument attendant thereto. In
addition, all vested but unexercised stock options held by Executive as of the
Date of Termination shall cease to be exercisable by Executive 90 days after the
Date of Termination or the end of the option term, if earlier.

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<PAGE>

(d) TERMINATION WITHOUT CAUSE. If Executive terminates his employment
for Good Reason as provided in Section 1(e) or if Executive's employment is
terminated by the Company without Cause as provided in Section 1(d), then,
subject to the execution by Executive of a general release of claims in a form
and manner satisfactory to the Company, Executive shall receive the following
benefits.

(i) Executive shall be paid severance pay equal to his salary
for the following number of months following the Date of Termination
based on the number of full calendar months Executive was employed by
the Company:

Number of Full Calendar Number of Months of Salary
Months Employed by Company to be paid to Executive
-------------------------- -----------------------

Less than 12 months 6
12 months or more but less 12
than 18 months
18 months or more 15

The amount of such severance pay shall be based on Executive's salary
in effect on the date Notice of Termination is given. The severance
payment may be paid at the discretion of the Company either (A) in a
single lump-sum amount payable within 30 days following the Date of
Termination, or (B) in bi-weekly installments (without interest)
consistent with the Company's normal policies for the payment of its
executives. Executive shall be responsible for all taxes payable on the
severance payments and the Company is authorized to withhold from any
such payment the appropriate withholding amounts.

(ii) The Company shall provide Company-paid coverage under its
general medical and dental plans (as they may be modified or amended
from time to time) for Executive for that number of months following
the Date of Termination equal to the applicable number of months of
severance pay that the Company is required to pay Executive under
Section 2(d)(i) above. Notwithstanding the foregoing, the Company's
obligation under this Section 2(d)(ii) shall terminate as soon as
Executive is eligible to be covered under any other medical or dental
plan, including any plan of any subsequent employer of Executive.
Executive agrees to give prompt written notice to the Company whenever
he becomes eligible to participate in any other medical or dental plan.

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<PAGE>

stock options which were vested as of the Date of Termination or which
vested effective as of such date pursuant to the immediately preceding
sentence.

(e) TERMINATION FOR CAUSE. If Executive's employment is terminated by
the Company for Cause as provided in Section 1(c), then the Company shall have
no further obligations to Executive, provided any such termination shall not
adversely affect or alter Executive's rights under any employee benefit plan of
the Company in which Executive, at the Date of Termination, has a vested
interest, unless otherwise provided in such employee benefit plan or any
agreement or other instrument attendant thereto. In addition, all unvested stock
options held by Executive as of the Date of Termination shall immediately
terminate and be of no further force and effect. In addition, all vested but
unexercised stock options held by Executive as of the Date of Termination shall
cease to be exercisable by Executive 90 days after the Date of Termination or
the end of the option term, if earlier.

(f) CONSTRUCTION. Executive may be a party to an Executive Retention
Agreement which provides for benefits in the event Executive is terminated
following a change in control of the Company (a "Change in Control Agreement").
In the event Executive is entitled to receive benefits under both this Agreement
and a Change in Control Agreement, then Executive shall not receive benefits
under both such agreements but instead must elect in writing within 20 days
following his Date of Termination under which such agreement he will receive
benefits. If Executive fails to make such election within such time period, then
the Company shall have the right to elect under which such agreement it will pay
benefits. The election made by Executive or the Company as set forth in this
Section 2(f) is irrevocable, and once made the agreement not selected shall
immediately terminate and become null and void.

3. UNAUTHORIZED DISCLOSURE.

(a) CONFIDENTIAL INFORMATION. Executive acknowledges that in the course
of his employment with the Company, he has been allowed to become, and will
continue to be allowed to become, acquainted with the Company's business
affairs, information, trade secrets, and other matters which are of a
proprietary or confidential nature, including but not limited to the Company's
and its affiliates' operations, business opportunities, price and cost
information, finance, customer information, business plans, various sales
techniques, manuals, letters, notebooks, procedures, reports, products,
processes, services, and other confidential information and knowledge
(collectively the "Confidential Information") concerning the Company's and its
affiliates' business. Executive understands and acknowledges that the
Confidential Information is confidential, and he agrees not to disclose such
Confidential Information to anyone outside the Company except to the extent that
(i) Executive deems such disclosure or use reasonably necessary or appropriate
in connection with performing his duties on behalf of the Company; (ii)
Executive is required by order of a court of competent jurisdiction (by subpoena
or similar process) to disclose or discuss any Confidential Information,
provided that in such case, Executive shall promptly inform the Company of such
event, shall cooperate with the Company in attempting to obtain a protective
order or to otherwise restrict such disclosure, and shall only disclose
Confidential Information to the minimum extent necessary to comply with any such
court order; (iii) such Confidential Information becomes generally known to and
available for use in the Company's industry, other than as a result of any
action or inaction by Executive; or (iv) such information has been published in

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<PAGE>

a form generally available to the public prior to the date Executive proposes to
disclose or use such information. Executive further agrees that he will not
during employment and/or at any time thereafter use such Confidential
Information in competing, directly or indirectly, with the Company. At such time
as Executive shall cease to be employed by the Company, he will immediately turn
over to the Company all Confidential Information, including papers, documents,
writings, electronically stored information, other property, and all copies of
them provided to or created by him during the course of his employment with the
Company.

(b) Heirs, successors, and legal representatives. The foregoing
provisions of this Section 3 shall be binding upon Executive's heirs,
successors, and legal representatives. The provisions of this Section 3 shall
survive the termination of this Agreement for any reason.

4. COVENANT NOT TO COMPETE. EXECUTIVE AGREES AS FOLLOWS:

(a) NONCOMPETITION. During Executive's employment with the Company and
for the Post-Termination Period (as defined below), Executive will not, directly
or indirectly, as an owner, director, principal, agent, officer, employee,
partner, consultant, or otherwise, carry on, operate, manage, control, or become
involved in any manner with any business, operation, corporation, partnership,
association, agency, or other person or entity which is engaged in a business
that is competitive in any geographic area with any of the Company's products
which are produced by the Company or any affiliate of the Company as of the date
of Executive's termination of employment with the Company; provided, however,
that the foregoing shall not prohibit Executive from owning up to one percent
(1%) of the outstanding stock of any publicly held company. As used herein,
"Post-Termination Period" means the period following termination of Executive's
employment with the Company for any reason whatsoever equal to the longer of 12
months or the period for which the Executive is receiving any benefits from the
Company pursuant to Section 2 hereof.

(b) NONSOLICITATION. During Executive's employment with the Company and
for the Post-Termination Period, Executive will not directly or indirectly
solicit or induce any present or future employee of the Company or any affiliate
of the Company to accept employment with Executive or with any business,
operation, corporation, partnership, association, agency, or other person or
entity with which Executive may be associated, and Executive will not employ or
cause any business, operation, corporation, partnership, association, agency, or
other person or entity with which Executive may be associated to employ any
present or future employee of the Company without providing the Company with ten
(10) days' prior written notice of such proposed employment.

5. NOTICE. For purposes of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States certified mail, return
receipt requested, postage prepaid, addressed as follows:

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if to the Executive:

At his home address as shown
in the Company's personnel records;

if to the Company:

Centennial Technologies
7 Lopez Road
Wilmington, MA 01887
Attention: Chief Executive Officer

or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.

6. SUCCESSOR TO COMPANY. The Company shall require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company expressly to assume
and agree to perform this Agreement to the same extent that the Company would be
required to perform it if no succession had taken place. Failure of the Company
to obtain an assumption of this Agreement at or prior to the effectiveness of
any succession shall be a breach of this Agreement and shall constitute Good
Reason if the Executive elects to terminate employment.

7. VALIDITY. The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect. The
invalid portion of this Agreement, if any, shall be modified by any court having
jurisdiction to the extent necessary to render such portion enforceable.

8. COUNTERPARTS. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

9. ARBITRATION; OTHER DISPUTES. In the event of any dispute or controversy
arising under or in connection with this Agreement, the parties shall first
promptly try in good faith to settle such dispute or controversy by mediation
under the applicable rules of the American Arbitration Association before
resorting to arbitration. In the event such dispute or controversy remains
unresolved in whole or in part for a period of thirty (30) days after it arises,
the parties will settle any remaining dispute or controversy exclusively by
arbitration in Boston, Massachusetts, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. Notwithstanding the above,
the Company shall be entitled to seek a restraining order or injunction in any
court of competent jurisdiction to prevent any continuation of any violation of
Section 3 or 4 hereof. In addition, in the event Executive violates any of the
provisions of Section 4, then in addition to all other rights and remedies
available to the Company at law or in equity, the duration of the covenant
contained in Section 4 shall automatically be extended for the period of time
from which Executive began such violation until he permanently ceases such
violation. Furthermore, should a dispute occur concerning Executive's mental or
physical capacity as described in Section 1(b) or 2(b), a doctor selected by

7
<PAGE>

Executive and a doctor selected by the Company shall be entitled to examine
Executive. If the opinion of the Company's doctor and Executive's doctor
conflict, the Company's doctor and Executive's doctor shall together agree upon
a third doctor, whose opinion shall be binding.

10. THIRD-PARTY AGREEMENTS AND RIGHTS. Executive represents to the Company that
Executive's employment with the Company does not violate any obligations
Executive may have to any employer or other party, and Executive will not bring
to the premises of the Company any copies or other tangible embodiments of
non-public information belonging to or obtained from any such previous
employment or other party.

11. LITIGATION AND REGULATORY COOPERATION. During and after Executive's
employment, Executive shall reasonably cooperate with the Company in the defense
or prosecution of any claims or actions now in existence or which may be brought
in the future against or on behalf of the Company which relate to events or
occurrences that transpired while Executive was employed by the Company;
provided, however, that such cooperation shall not materially and adversely
affect Executive or expose Executive to an increased probability of civil or
criminal litigation. Executive's cooperation in connection with such claims or
actions shall include, but not be limited to, being available to meet with
counsel to prepare for discovery or trial and to act as a witness on behalf of
the Company at mutually convenient times. During and after Executive's
employment, Executive also shall cooperate fully with the Company in connection
with any investigation or review of any federal, state or local regulatory
authority as any such investigation or review relates to events or occurrences
that transpired while Executive was employed by the Company. The Company shall
provide Executive with compensation on an hourly basis (to be based on his
salary in effect at the Date of Termination) for requested litigation and
regulatory cooperation that occurs after his termination of employment.

12. MISCELLANEOUS. No provisions of this Agreement may be modified, waived, or
discharged unless such waiver, modification, or discharge is agreed to in
writing and signed by Executive and such officer of the Company as may be
specifically designated by the Board. No waiver by either party hereto of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, unless specifically referred to herein,
with respect to the subject matter hereof have been made by either party which
are not set forth expressly in this Agreement. Any references herein to any year
shall mean the fiscal year of the Company. Any use of masculine terms such as
"he" or "his" shall be deemed to mean the corresponding feminine terms if the
Executive is female. The validity, interpretation, construction, and performance
of this Agreement shall be governed by the laws of the Commonwealth of
Massachusetts (without regard to principles of conflicts of laws).

8
<PAGE>

IN WITNESS WHEREOF, the parties have executed this Agreement as a
sealed instrument effective on the date and year first above written.

CENTENNIAL TECHNOLOGIES, INC.

By: /S/ L. MICHAEL HONE
--------------------------
L. Michael Hone,
Chief Executive Officer

EXECUTIVE

/S/ JACQUES ASSOUR
-----------------------------
Jacques Assour

EXECUTIVE SEVERANCE AGREEMENT

This EXECUTIVE SEVERANCE AGREEMENT ("Agreement") is made April 11,
2000, between Centennial Technologies, Inc., a Delaware corporation (the
"Company"), and Richard N. Stathes ("Executive").

WHEREAS, the Executive is employed by the Company as an Executive Vice
President; and

WHEREAS, the parties desire to set forth their respective rights and
obligations in the event Executive ceases to be employed by the Company.

1. TERMINATION. Executive's employment hereunder may be terminated under the
following circumstances:

(a) Death. Executive's employment hereunder shall terminate upon his
death.

(b) Disability. If, as a result of Executive's incapacity due to
physical or mental illness, Executive shall have been absent from his duties
hereunder on a full-time basis for one hundred eighty (180) calendar days in the
aggregate in any twelve (12) month period, the Company may terminate Executive's
employment hereunder.

(c) Termination by Company For Cause. At any time the Company may
terminate Executive's employment hereunder for Cause if such termination is
approved by a majority of the Board of Directors of the Company (the "Board") at
a meeting of the Board called and held for such purpose. Executive shall be
given notice of any such meeting of the Board and shall be afforded the
opportunity to make an oral presentation and provide written materials to the
Board. For purposes of this Agreement, "Cause" shall mean: (A) conduct by
Executive constituting a material act of willful misconduct in connection with
the performance of his duties, including, without limitation, misappropriation
of funds or property of the Company or any of its affiliates other than the
occasional, customary and de minimis use of Company property for personal
purposes; (B) criminal or civil conviction of Executive, a plea of nolo
contendere by Executive or conduct by Executive that would reasonably be
expected to result in material injury to the reputation of the Company if he
were retained in his position with the Company, including, without limitation,
conviction of a felony involving moral turpitude; (C) continued, willful and
deliberate non-performance by Executive of his duties hereunder (other than by
reason of Executive's physical or mental illness, incapacity or disability)
which has continued for more than thirty (30) days following written notice of
such non-performance from the Board; (D) a breach by Executive of any of the
provisions contained in Sections 3 or 4 of this Agreement; or

<PAGE>

(E) a violation by Executive of the Company's employment policies which has
continued following written notice of such violation from the Board.

(d) Termination Without Cause. At any time the Company may terminate
Executive's employment hereunder without Cause if such termination is approved
by the Chief Executive Officer of the Company. Any termination by the Company of
Executive's employment under this Agreement which does not constitute a
termination for Cause under Section 1(c) or result from the death or disability
of the Executive under Section 1(a) or (b) shall be deemed a termination without
Cause.

(e) Termination by Executive. At any time Executive may terminate his
employment hereunder for any reason, including but not limited to Good Reason.
Executive agrees, if requested at any time by the Company, to continue to work
for the Company and to assist in the transition of his duties and
responsibilities to another person for 30 days following his Notice of
Termination (as defined below). For purposes of this Agreement, "Good Reason"
shall mean that Executive has complied with the "Good Reason Process"
(hereinafter defined) following the occurrence of any of the following events:
(A) a substantial diminution or other substantive adverse change, not consented
to by Executive, in the nature or scope of Executive's responsibilities,
authorities, powers, functions or duties; (B) demotion of Executive from his
position as Executive Vice President of the Company; (C) an involuntary
reduction in Executive's salary except for across-the-board reductions similarly
affecting all or substantially all senior executives of the Company; (D) a
breach by the Company of any of its other material obligations under this
Agreement and the failure of the Company to cure such breach within thirty (30)
days after written notice thereof by Executive; (E) the involuntary relocation
of the Company's offices at which Executive is principally employed to a
location more than fifty (50) miles from such offices, or the requirement by the
Company that Executive be based anywhere other than such offices on an extended
basis, except for required travel on the Company's business to an extent
substantially consistent with Executive's business travel obligations; or (F)
the failure of the Company to obtain the agreement from any successor to the
Company to assume and agree to perform this Agreement as required by Section 6.
"Good Reason Process" shall mean that (i) Executive reasonably determines in
good faith that a "Good Reason" event has occurred; (ii) Executive notifies the
Company in writing of the occurrence of the Good Reason event; (iii) Executive
cooperates in good faith with the Company's efforts, for a period not less than
ninety (90) days following such notice, to modify Executive's employment
situation in a manner acceptable to Executive and Company; and (iv)
notwithstanding such efforts, one or more of the Good Reason events continues to
exist and has not been modified in a manner acceptable to Executive. If the
Company cures the Good Reason event in a manner acceptable to Executive during
the ninety (90) day period, Good Reason shall be deemed not to have occurred.

(f) Notice of Termination. Except for termination as specified in
Section 1(a), any termination of Executive's employment by the Company or any
such termination by Executive shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon.

<PAGE>

(g) Date of Termination. "Date of Termination" shall mean: (A) if
Executive's employment is terminated by his death, the date of his death; (B) if
Executive's employment is terminated on account of disability under Section 1(b)
or by the Company for Cause under Section 1(c), the date on which Notice of
Termination is given; and (C) if Executive's employment is terminated by the
Company under Section 1(d), or terminated by the Executive under Section 1(e),
thirty (30) days after the date on which a Notice of Termination is given.

2. COMPENSATION UPON TERMINATION OR DURING DISABILITY.

(a) Death of Executive. If Executive's employment terminates by reason
of his death, the Executive's beneficiaries shall receive the proceeds of the
applicable life insurance policies maintained by or through the Company, subject
to the terms and conditions thereof. Upon the death of the Executive, the
Executive's options to purchase stock of the Company which would have vested
within 90 days following the Date of Termination had he remained as an employee
of the Company shall be deemed vested as of the Date of Termination. The
Executive's estate or other legal representatives shall have the remaining
option term to exercise all stock options which were vested as of the Date of
Termination or which vested effective as of such date pursuant to the
immediately preceding sentence.

(b) Disability of Executive. During any period that Executive fails to
perform his duties as an employee as a result of incapacity due to physical or
mental illness, Executive shall receive at the election of the Company either
his then current salary or the applicable benefits to which he would be entitled
pursuant to any short-term or long-term disability benefits program maintained
by the Company, in each case until Executive's employment is terminated due to
disability in accordance with Section 1(b) or until Executive terminates his
employment in accordance with Section 1(e), whichever first occurs. Following
such termination, Executive may receive benefits under the Company's long-term
disability plan subject to the terms and conditions thereof. Upon the Date of
Termination, the Executive's options to purchase stock of the Company which
would have vested within 90 days following the Date of Termination had he
remained as an employee of the Company shall be deemed vested as of the Date of
Termination. The Executive shall have the remaining option term to exercise all
stock options which were vested as of the Date of Termination or which vested
effective as of such date pursuant to the immediately preceding sentence.

(c) Termination by Executive. If Executive's employment is terminated
by Executive other than for Good Reason as provided in Section 1(e), then the
Company shall have no further obligations to Executive provided any such
termination shall not adversely affect or alter Executive's rights under any
employee benefit plan of the Company in which Executive, at the Date of
Termination, has a vested interest, unless otherwise provided in such employee
benefit plan or any agreement or other instrument attendant thereto. In
addition, all vested but unexercised stock options held by Executive as of the
Date of Termination shall cease to be exercisable by Executive 90 days after the
Date of Termination or the end of the option term, if earlier.

<PAGE>

(d) Termination without Cause. If Executive terminates his employment
for Good Reason as provided in Section 1(e) or if Executive's employment is
terminated by the Company without Cause as provided in Section 1(d), then,
subject to the execution by Executive of a general release of claims in a form
and manner satisfactory to the Company, Executive shall receive the following
benefits.

Number of Full Calendar Number of Months of Salary
Months Employed by Company to be paid to Executive
-------------------------- -----------------------

Less than 12 months 6
12 months or more but less 15
than 24 months
24 months or more 18

(iii) Upon the date of Termination, the Executive's options to
purchase stock of the Company which would have vested within 90 days
following the Date of Termination had he remained an employee of the
Company shall be deemed vested as of the Date of Termination. Executive
shall have the remaining option term to exercise all stock options
which were vested as of the Date of Termination or which vested
effective as of such date pursuant to the immediately preceding
sentence.

<PAGE>

(e) Termination for Cause. If Executive's employment is terminated by
the Company for Cause as provided in Section 1(c), then the Company shall have
no further obligations to Executive, provided any such termination shall not
adversely affect or alter Executive's rights under any employee benefit plan of
the Company in which Executive, at the Date of Termination, has a vested
interest, unless otherwise provided in such employee benefit plan or any
agreement or other instrument attendant thereto. In addition, all unvested stock
options held by Executive as of the Date of Termination shall immediately
terminate and be of no further force and effect. In addition, all vested but
unexercised stock options held by Executive as of the Date of Termination shall
cease to be exercisable by Executive 90 days after the Date of Termination or
the end of the option term, if earlier.

(f) Construction. Executive may be a party to an Executive Retention
Agreement which provides for benefits in the event Executive is terminated
following a change in control of the Company (a "Change in Control Agreement").
In the event Executive is entitled to receive benefits under both this Agreement
and a Change in Control Agreement, then Executive shall not receive benefits
under both such agreements but instead must elect in writing within 20 days
following his Date of Termination under which such agreement he will receive
benefits. If Executive fails to make such election within such time period, then
the Company shall have the right to elect under which such agreement it will pay
benefits. The election made by Executive or the Company as set forth in this
Section 2(f) is irrevocable, and once made the agreement not selected shall
immediately terminate and become null and void.

3. UNAUTHORIZED DISCLOSURE.

(a) Confidential Information. Executive acknowledges that in the course
of his employment with the Company, he has been allowed to become, and will
continue to be allowed to become, acquainted with the Company's business
affairs, information, trade secrets, and other matters which are of a
proprietary or confidential nature, including but not limited to the Company's
and its affiliates' operations, business opportunities, price and cost
information, finance, customer information, business plans, various sales
techniques, manuals, letters, notebooks, procedures, reports, products,
processes, services, and other confidential information and knowledge
(collectively the "Confidential Information") concerning the Company's and its
affiliates' business. Executive understands and acknowledges that the
Confidential Information is confidential, and he agrees not to disclose such
Confidential Information to anyone outside the Company except to the extent that
(i) Executive deems such disclosure or use reasonably necessary or appropriate
in connection with performing his duties on behalf of the Company; (ii)
Executive is required by order of a court of competent jurisdiction (by subpoena
or similar process) to disclose or discuss any Confidential Information,
provided that in such case, Executive shall promptly inform the Company of such
event, shall cooperate with the Company in attempting to obtain a protective
order or to otherwise restrict such disclosure, and shall only disclose
Confidential Information to the minimum extent necessary to comply with any such
court order; (iii) such Confidential Information becomes generally known to and
available for use in the Company's industry, other than as a result of any
action or inaction by Executive; or (iv) such information has been published in
a form generally available to the public prior to the date Executive proposes to
disclose or use such information. Executive further agrees that he

<PAGE>

will not during employment and/or at any time thereafter use such Confidential
Information in competing, directly or indirectly, with the Company. At such time
as Executive shall cease to be employed by the Company, he will immediately turn
over to the Company all Confidential Information, including papers, documents,
writings, electronically stored information, other property, and all copies of
them provided to or created by him during the course of his employment with the
Company.

4. COVENANT NOT TO COMPETE. EXECUTIVE AGREES AS FOLLOWS:

(a) Noncompetition. During Executive's employment with the Company and
for the Post-Termination Period (as defined below), Executive will not, directly
or indirectly, as an owner, director, principal, agent, officer, employee,
partner, consultant, or otherwise, carry on, operate, manage, control, or become
involved in any manner with any business, operation, corporation, partnership,
association, agency, or other person or entity which is engaged in a business
that is competitive in any geographic area with any of the Company's products
which are produced by the Company or any affiliate of the Company as of the date
of Executive's termination of employment with the Company; provided, however,
that the foregoing shall not prohibit Executive from owning up to one percent
(1%) of the outstanding stock of any publicly held company. As used herein,
"Post-Termination Period" means the period following termination of Executive's
employment with the Company for any reason whatsoever equal to the longer of 12
months or the period for which the Executive is receiving any benefits from the
Company pursuant to Section 2 hereof.

(b) Nonsolicitation. During Executive's employment with the Company and
for the Post-Termination Period, Executive will not directly or indirectly
solicit or induce any present or future employee of the Company or any affiliate
of the Company to accept employment with Executive or with any business,
operation, corporation, partnership, association, agency, or other person or
entity with which Executive may be associated, and Executive will not employ or
cause any business, operation, corporation, partnership, association, agency, or
other person or entity with which Executive may be associated to employ any
present or future employee of the Company without providing the Company with ten
(10) days' prior written notice of such proposed employment.

<PAGE>

addressed as follows:

if to the Executive:

At his home address as shown
in the Company's personnel records;

if to the Company:

Centennial Technologies
7 Lopez Road
Wilmington, MA 01887
Attention: Chief Executive Officer

or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.

8. COUNTERPARTS. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

<PAGE>

the event Executive violates any of the provisions of Section 4, then in
addition to all other rights and remedies available to the Company at law or in
equity, the duration of the covenant contained in Section 4 shall automatically
be extended for the period of time from which Executive began such violation
until he permanently ceases such violation. Furthermore, should a dispute occur
concerning Executive's mental or physical capacity as described in Section 1(b)
or 2(b), a doctor selected by Executive and a doctor selected by the Company
shall be entitled to examine Executive. If the opinion of the Company's doctor
and Executive's doctor conflict, the Company's doctor and Executive's doctor
shall together agree upon a third doctor, whose opinion shall be binding.

<PAGE>

IN WITNESS WHEREOF, the parties have executed this Agreement as a
sealed instrument effective on the date and year first above written.

CENTENNIAL TECHNOLOGIES, INC.

By: /S/ L. MICHAEL HONE
------------------------
L. Michael Hone,
Chief Executive Officer

EXECUTIVE

/S/ RICHARD N. STATHES
-----------------------------
Richard N. Stathes

EXECUTIVE SEVERANCE AGREEMENT

This EXECUTIVE SEVERANCE AGREEMENT ("Agreement") is made as of April
11, 2000, between Centennial Technologies, Inc., a Delaware corporation (the
"Company"), and Richard J. Pulsifer ("Executive").

WHEREAS, the Executive is employed by the Company as a Vice President;
and

WHEREAS, the parties desire to set forth their respective rights and
obligations in the event Executive ceases to be employed by the Company.

1. TERMINATION. Executive's employment hereunder may be terminated under the
following circumstances:

(a) Death. Executive's employment hereunder shall terminate upon his
death.

<PAGE>

(E) a violation by Executive of the Company's employment policies which has
continued following written notice of such violation from the Board.

(e) Termination by Executive. At any time Executive may terminate his
employment hereunder for any reason, including but not limited to Good Reason.
Executive agrees, if requested at any time by the Company, to continue to work
for the Company and to assist in the transition of his duties and
responsibilities to another person for 30 days following his Notice of
Termination (as defined below). For purposes of this Agreement, "Good Reason"
shall mean that Executive has complied with the "Good Reason Process"
(hereinafter defined) following the occurrence of any of the following events:
(A) a substantial diminution or other substantive adverse change, not consented
to by Executive, in the nature or scope of Executive's responsibilities,
authorities, powers, functions or duties; (B) demotion of Executive from his
position as Vice President of the Company; (C) an involuntary reduction in
Executive's salary except for across-the-board reductions similarly affecting
all or substantially all senior executives of the Company; (D) a breach by the
Company of any of its other material obligations under this Agreement and the
failure of the Company to cure such breach within thirty (30) days after written
notice thereof by Executive; (E) the involuntary relocation of the Company's
offices at which Executive is principally employed to a location more than fifty
(50) miles from such offices, or the requirement by the Company that Executive
be based anywhere other than such offices on an extended basis, except for
required travel on the Company's business to an extent substantially consistent
with Executive's business travel obligations; or (F) the failure of the Company
to obtain the agreement from any successor to the Company to assume and agree to
perform this Agreement as required by Section 6. "Good Reason Process" shall
mean that (i) Executive reasonably determines in good faith that a "Good Reason"
event has occurred; (ii) Executive notifies the Company in writing of the
occurrence of the Good Reason event; (iii) Executive cooperates in good faith
with the Company's efforts, for a period not less than ninety (90) days
following such notice, to modify Executive's employment situation in a manner
acceptable to Executive and Company; and (iv) notwithstanding such efforts, one
or more of the Good Reason events continues to exist and has not been modified
in a manner acceptable to Executive. If the Company cures the Good Reason event
in a manner acceptable to Executive during the ninety (90) day period, Good
Reason shall be deemed not to have occurred.

<PAGE>

2. COMPENSATION UPON TERMINATION OR DURING DISABILITY.

<PAGE>

exercisable by Executive 90 days after the Date of Termination or the end of the
option term, if earlier.

Number of Full Calendar Number of Months of Salary
Months Employed by Company to be paid to Executive
-------------------------- -----------------------

Less than 12 months 6
12 months or more but less 9
than 24 months
24 months or more 12

<PAGE>

stock options which were vested as of the Date of Termination or which
vested effective as of such date pursuant to the immediately preceding
sentence.

3. UNAUTHORIZED DISCLOSURE.

<PAGE>

use in the Company's industry, other than as a result of any action or inaction
by Executive; or (iv) such information has been published in a form generally
available to the public prior to the date Executive proposes to disclose or use
such information. Executive further agrees that he will not during employment
and/or at any time thereafter use such Confidential Information in competing,
directly or indirectly, with the Company. At such time as Executive shall cease
to be employed by the Company, he will immediately turn over to the Company all
Confidential Information, including papers, documents, writings, electronically
stored information, other property, and all copies of them provided to or
created by him during the course of his employment with the Company.

4. COVENANT NOT TO COMPETE. EXECUTIVE AGREES AS FOLLOWS:

<PAGE>

if to the Executive:

At his home address as shown
in the Company's personnel records;

if to the Company:

Centennial Technologies
7 Lopez Road
Wilmington, MA 01887
Attention: Chief Executive Officer

or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.

8. COUNTERPARTS. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

<PAGE>

contained in Section 4 shall automatically be extended for the period of time
from which Executive began such violation until he permanently ceases such
violation. Furthermore, should a dispute occur concerning Executive's mental or
physical capacity as described in Section 1(b) or 2(b), a doctor selected by
Executive and a doctor selected by the Company shall be entitled to examine
Executive. If the opinion of the Company's doctor and Executive's doctor
conflict, the Company's doctor and Executive's doctor shall together agree upon
a third doctor, whose opinion shall be binding.

<PAGE>

IN WITNESS WHEREOF, the parties have executed this Agreement as a
sealed instrument effective on the date and year first above written.

CENTENNIAL TECHNOLOGIES, INC.

By: /S/ L. MICHAEL HONE
------------------------
L. Michael Hone,
Chief Executive Officer

EXECUTIVE

RICHARD J. PULSIFER
-----------------------------
Richard J. Pulsifer

EXECUTIVE SEVERANCE AGREEMENT

This EXECUTIVE SEVERANCE AGREEMENT ("Agreement") is made as of April 11,
2000, between Centennial Technologies, Inc., a Delaware corporation (the
"Company"), and Mary Gallahan ("Executive").

WHEREAS, the Executive is employed by the Company as a Vice President;
and

WHEREAS, the parties desire to set forth their respective rights and
obligations in the event Executive ceases to be employed by the Company.

1. TERMINATION. Executive's employment hereunder may be terminated under the
following circumstances:

(a) Death. Executive's employment hereunder shall terminate upon his
death.

<PAGE>

(E) a violation by Executive of the Company's employment policies which has
continued following written notice of such violation from the Board.

(e) Termination by Executive. At any time Executive may terminate his
employment hereunder for any reason, including but not limited to Good Reason.
Executive agrees, if requested at any time by the Company, to continue to work
for the Company and to assist in the transition of his duties and
responsibilities to another person for 30 days following his Notice of
Termination (as defined below). For purposes of this Agreement, "Good Reason"
shall mean that Executive has complied with the "Good Reason Process"
(hereinafter defined) following the occurrence of any of the following events:
(A) a substantial diminution or other substantive adverse change, not consented
to by Executive, in the nature or scope of Executive's responsibilities,
authorities, powers, functions or duties; (B) demotion of Executive from his
position as Vice President of the Company; (C) an involuntary reduction in
Executive's salary except for across-the-board reductions similarly affecting
all or substantially all senior executives of the Company; (D) a breach by the
Company of any of its other material obligations under this Agreement and the
failure of the Company to cure such breach within thirty (30) days after written
notice thereof by Executive; (E) the involuntary relocation of the Company's
offices at which Executive is principally employed to a location more than fifty
(50) miles from such offices, or the requirement by the Company that Executive
be based anywhere other than such offices on an extended basis, except for
required travel on the Company's business to an extent substantially consistent
with Executive's business travel obligations; or (F) the failure of the Company
to obtain the agreement from any successor to the Company to assume and agree to
perform this Agreement as required by Section 6. "Good Reason Process" shall
mean that (i) Executive reasonably determines in good faith that a "Good Reason"
event has occurred; (ii) Executive notifies the Company in writing of the
occurrence of the Good Reason event; (iii) Executive cooperates in good faith
with the Company's efforts, for a period not less than ninety (90) days
following such notice, to modify Executive's employment situation in a manner
acceptable to Executive and Company; and (iv) notwithstanding such efforts, one
or more of the Good Reason events continues to exist and has not been modified
in a manner acceptable to Executive. If the Company cures the Good Reason event
in a manner acceptable to Executive during the ninety (90) day period, Good
Reason shall be deemed not to have occurred.

<PAGE>

2. COMPENSATION UPON TERMINATION OR DURING DISABILITY.

<PAGE>

exercisable by Executive 90 days after the Date of Termination or the end of the
option term, if earlier.

Number of Full Calendar Number of Months of Salary
Months Employed by Company to be paid to Executive
-------------------------- -----------------------

Less than 12 months 6
12 months or more but less 9
than 24 months
24 months or more 12

<PAGE>

stock options which were vested as of the Date of Termination or which
vested effective as of such date pursuant to the immediately preceding
sentence.

3. UNAUTHORIZED DISCLOSURE.

<PAGE>

4. COVENANT NOT TO COMPETE. EXECUTIVE AGREES AS FOLLOWS:

<PAGE>

if to the Executive:

At his home address as shown
in the Company's personnel records;

if to the Company:

Centennial Technologies
7 Lopez Road
Wilmington, MA 01887
Attention: Chief Executive Officer

or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.

8. COUNTERPARTS. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

9. ARBITRATION; Other Disputes. In the event of any dispute or controversy
arising under or in connection with this Agreement, the parties shall first
promptly try in good faith to settle such dispute or controversy by mediation
under the applicable rules of the American Arbitration Association before
resorting to arbitration. In the event such dispute or controversy remains
unresolved in whole or in part for a period of thirty (30) days after it arises,
the parties will settle any remaining dispute or controversy exclusively by
arbitration in Boston, Massachusetts, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. Notwithstanding the above,
the Company shall be entitled to seek a restraining order or injunction in any
court of competent jurisdiction to prevent any continuation of any violation of
Section 3 or 4 hereof. In addition, in the event Executive violates any of the
provisions of Section 4, then in addition to all other rights and remedies
available to the Company at law or in equity, the duration of the covenant

<PAGE>

IN WITNESS WHEREOF, the parties have executed this Agreement as a
sealed instrument effective on the date and year first above written.

CENTENNIAL TECHNOLOGIES, INC.

By: /S/ L. MICHAEL HONE
-------------------------
L. Michael Hone,
Chief Executive Officer

EXECUTIVE

/S/ MARY GALLAHAN
-----------------------------
Mary Gallahan

Centennial Technologies, Inc.
Schedule of Subsidiaries
As of March 25, 2000

Name of Entity Location % Ownership
- -------------- -------- -----------
Centennial Capital Corporation Massachusetts 100%
Centennial Technologies International Ltd. United Kingdom 100%
Centennial Technologies Canada, Inc. Canada 100%

Consent of Independent Auditors

We consent to the incorporation by reference in the Registration Statements
(Forms S-8 No. 333-83591, 333-75335, 333-75331, 333-75329, and 033-89154)
pertaining to the 1999 Qualified Employee Stock Purchase Plan, 1999 Employee
Stock Purchase Plan, 1994 Formula Stock Option Plan, 1994 Stock Option Plan, and
Post-Effective Amendment No. 1 to the 1994 Stock Option Plan and the 1994
Formula Stock Option Plan, respectively, of Centennial Technologies, Inc. of our
report dated May 1, 2000, except for the last paragraph of Note 15, as to which
the date is May 12, 2000, with respect to the consolidated financial statements
and schedule of Centennial Technologies, Inc. included in the Annual Report
(Form 10-K) for the year ended March 25, 2000.

ERNST & YOUNG LLP

Boston, Massachusetts
May 15, 2000

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-83591, No. 333-75335, No. 333-75329, No.
033-89154) pertaining to the 1999 Qualified Employee Stock Purchase Plan, 1999
Employee Stock Purchase Plan, 1994 Formula Stock Option Plan, 1994 Stock Option
Plan, and Post-Effective Amendment No. 1 to the 1994 Stock Option Plan,
respectively of Centennial Technologies, Inc. of our report dated May 15, 1998
relating to the financial statements and financial statement schedules, for the
twelve months ended March 31, 1998 which appear in this Form 10-K.

PricewaterhouseCoopers LLP

Boston, Massachusetts
May 15, 2000

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